197

G.R. No. 206526, January 28, 2015

WINEBRENNER & IÑIGO INSURANCE BROKERS,

INC., Petitioner, v. COMMISSIONER OF INTERNAL
REVENUE, Respondents.

DECISION

MENDOZA, J.:

In this petition for review under Rule 45 of the Rules of Court and Rule
16 of the Revised Rules of the Court of Tax Appeals, Winebrenner &
Iñigo Insurance Brokers, Inc. (petitioner) seeks the review of the March
22, 2013 Decision1 of the Court of Tax Appeals En Banc (CTA-En Banc).
In the said decision, the CTA-En Banc affirmed the denial of petitioner’s
judicial claim for refund or issuance of tax credit certificate for excess
and unutilized creditable withholding tax (CWT) for the 1st to 4th quarter
of calendar year (CY) 2003 amounting to P4,073,954.00. In denying
the refund, the CTA-En Banc held that petitioner failed to prove that the
excess CWT for CY 2003 was not carried over to the succeeding
quarters of the subject taxable year. Under the 1997
National Internal Revenue Code (NIRC), a taxpayer must not have
exercised the option to carry over the excess CWT for a particular
taxable year in order to qualify for refund.

The Factual Antecedents

On April 15, 2004, petitioner filed its Annual Income Tax Return for CY
2003.

About two years thereafter or on April 7, 2006, petitioner applied for

the administrative tax credit/refund claiming entitlement to the refund
of its excess or unutilized CWT for CY 2003, by filing BIR Form No. 1914
with the Revenue District Office No. 50 of the Bureau of Internal
Revenue (BIR).

There being no action taken on the said claim, a petition for review was
filed by petitioner before the CTA on April 11, 2006. The case was
docketed as CTA Case No. 7440 and was raffled to the Special First
Division (CTA Division).

On April 13, 2010, CTA Division partially granted petitioner’s claim for
refund of excess and unutilized CWT for CY 2003 in the reduced amount
of P2,737,903.34 in its April 13, 2010 Decision2(original decision). The
dispositive portion of the decision reads:chanRoblesvirtualLawlibrary

In view of the foregoing, the Petition for Review is hereby PARTIALLY

GRANTED. Accordingly, respondent is
hereby ORDERED to REFUND or ISSUE A TAX CREDIT
CERTIFICATE in favor of the petitioner in the reduced amount of
P2,737,903.34 representing its excess/unutilized creditable withholding
taxes for the year 2003.

SO ORDERED.3

Petitioner filed a Motion for Partial Reconsideration with Leave to

Submit Supplemental Evidence. It prayed that an amended decision be
issued granting the entirety of its claim for refund, or in the alternative,
that it be allowed to submit and offer relevant documents as
supplemental evidence.

Respondent Commissioner of Internal Revenue (CIR) also moved for

reconsideration, praying for the denial of the entire amount of refund
because petitioner failed to present the quarterly Income Tax Returns
(ITRs) for CY 2004. To the CIR, the presentation of the 2004 quarterly
ITRs was indispensable in proving petitioner’s entitlement to the
claimed amount because it would prove that no carry-over of unutilized
and excess CWT for the four (4) quarters of CY 2003 to the succeeding
four (4) quarters of CY 2004 was made. In the absence of said ITRs, no
refund could be granted. In the CIR’s view, this was in accordance with
the irrevocability rule under Section 76 of the NIRC which
reads:chanRoblesvirtualLawlibrary

SEC. 76. Final Adjustment Return. – Every corporation liable to tax

under Section 27 shall file an adjustment return covering the total
taxable income for the preceding calendar or fiscal year. If the sum of
the quarterly tax payments made during the said taxable year is not
equal to the total tax due on the entire taxable income of that year, the
corporation shall either:chanRoblesvirtualLawlibrary
(A) Pay the balance of tax still due; or
(B) Carry-over the excess credits; or
(C) Be credited or refunded with the excess amount paid, as the case
may be.cralawred
In case the corporation is entitled to a tax credit or refund of the excess
estimated quarterly income taxes paid, the excess amount shown on its
final adjustment return may be carried over and credited against the
estimated quarterly income tax liabilities for the taxable quarters of the
succeeding taxable years. Once the option to carry-over and apply the
excess quarterly income tax against income tax due for the taxable
quarters of the succeeding taxable years has been made, such option
shall be considered irrevocable for that taxable period and no
application for cash refund or issuance of a tax credit certificate shall be
allowed therefor.

On July 27, 2011, the CTA-Division reversed itself. In an Amended

Decision,4 it denied the entire claim of petitioner. It reasoned out that
petitioner should have presented as evidence its first, second and third
quarterly ITRs for the year 2004 to prove that the unutilized CWT being
claimed had not been carried over to the succeeding quarters.
Thus:chanRoblesvirtualLawlibrary

WHEREFORE, in view of the foregoing, petitioner’s Motion for Partial

Reconsideration is hereby DENIED while respondent’s Motion for
Reconsideration is hereby GRANTED. Accordingly, the Decision dated
April 13, 2010 granting petitioner’s claim in the reduced amount of
P2,737,903.34 is hereby REVERSED AND SET ASIDE. Consequently,
the instant Petition for Review is hereby DENIED due to insufficiency of
evidence.

SO ORDERED.5

Aggrieved, petitioner elevated the case to the CTA En Banc praying for
the reversal of the Amended Decision of the CTA Division.

In its March 22, 2013 Decision,6 the CTA-En Banc affirmed the
Amended Decision of the CTA-Division. It stated that before a cash
refund or an issuance of tax credit certificate for unutilized excess tax
credits could be granted, it was essential for petitioner to establish and
prove, by presenting the quarterly ITRs of the succeeding years, that
the excess CWT was not carried over to the succeeding taxable quarters
considering that the option to carry over in the succeeding taxable
quarters could not be modified in the final adjustment returns (FAR).
Because petitioner did not present the first, second and third quarterly
ITRs for CY 2004, despite having offered and submitted the Annual
ITR/FAR for the same year, the CTA-En Banc stated that the petitioner
failed to discharge its burden, hence, no refund could be granted. In
justifying its conclusions, the CTA-En Banc cited its own case
of Millennium Business Services, Inc. v. Commissioner of Internal
Revenue (Millennium)7 wherein it held as
follows:chanRoblesvirtualLawlibrary

Since the burden of proof is upon the claimant to show that the amount
claimed was not utilized or carried over to the succeeding taxable
quarters, the presentation of the succeeding quarterly income tax
return and final adjustment return is indispensable to prove that it did
not carry over or utilized the claimed excess creditable withholding
taxes. Absent thereof, there will be no basis for a taxpayer’s claim for
refund since there will be no evidence that the taxpayer did not carry
over or utilize the claimed excess creditable withholding taxes to the
succeeding taxable quarters.

Significantly, a taxpayer may amend its quarterly income tax return or

annual income tax return or Final Adjustment Return, which in any case
may modify the previous intention to carry-over, apply as tax credit
certificate or refund, as the case may be. But the option to carry over in
the succeeding taxable quarters under the irrevocability rule cannot be
modified in its final adjustment return.

The presentation of the final adjustment return does not shift the
burden of proof that the excess creditable withholding tax was not
utilized or carried over to the first three (3) taxable quarters. It remains
with the taxpayer claimant. It goes without saying that final adjustment
returns of the preceding and the succeeding taxable years are not
sufficient to prove that the amount claimed was utilized or carried over
to the first three (3) taxable quarters.

The importance of the presentation of the succeeding quarterly income

tax return and the annual income tax return of the subsequent taxable
year need not be overly emphasized. All corporations subject to income
tax, are required to file quarterly income tax returns, on a cumulative
basis for the preceding quarters, upon which payment of their income
tax has been made. In addition to the quarterly income tax returns,
corporations are required to file a final or adjustment return on or
before the fifteenth day of April. The quarterly income tax return, like
the final adjustment return, is the most reliable firsthand evidence of
corporate acts pertaining to income taxes, as it includes the itemization
and summary of additions to and deductions from the income tax due.
These entries are not without rhyme or reason. They are required,
because they facilitate the tax administration process, and guide this
Court to the veracity of a petitioner’s claim for refund without which
petitioner could not prove with certainty that the claimed amount was
not utilized or carried over to the succeeding quarters or the option to
carry over and apply the excess was effectively chosen despite the
intent to claim a refund.

In the same vein, if the government wants to disprove that the excess
creditable withholding tax was not utilized or carried over to the
succeeding taxable quarters, the presentation of the succeeding
quarterly income tax return and the annual income tax return of the
subsequent taxable year indicating utilization or carrying over are [sic]
indispensible. However, the claimant must first establish its claim for
refund, such that it did not utilize or carry over or that it opted to utilize
and carry over to the 1st, 2nd, 3rd quarters and final adjustment return
of the succeeding taxable year.

Concomitantly, the presentation of the quarterly income tax return and

the annual income tax return to prove the fact that excess creditable
withholding tax was not utilized or carried over or opted to be utilized
and carried over to the 1st, 2nd, 3rd quarters and final adjustment
return of the succeeding taxable quarter is not only for convenience to
facilitate the tax administration process but it is part of the requisites to
establish the claim for refund. Section 76 of the NIRC of 1997 provides
that if the taxpayer claimant carries over and applies the excess
quarterly income tax against the income tax due for the taxable
quarters of the succeeding taxable years, the same is irrevocable and
no application for cash refund or issuance of a tax credit certificate shall
be allowed.8

Hence, this petition.

Noteworthy is the fact that the CTA-En Banc ruling was met with two
dissents from Associate Justices Juanito C. Castañeda (Justice
Castañeda) and Esperanza R. Fabon-Victorino (Justice Fabon-Victorino).

In his Dissenting Opinion9 which was concurred in by Justice Fabon-

Victorino, Justice Castañeda expressed the view that the CTA-En
Banc should have reinstated the CTA-Division’s original decision
because in the cases of Philam Asset Management Inc. v. Commissioner
of Internal Revenue (Philam);10State Land Investment Corporation v.
Commissioner of Internal Revenue (State Land);11Commissioner of
Internal Revenue v. PERF Realty Corporation (PERF
Realty);12 and Commissioner of Internal Revenue v. Mirant (Philippines)
Operations, Corporation (Mirant),13 this Court already ruled that
requiring the ITR or the FAR for the succeeding year in a claim for
refund had no basis in law and jurisprudence. According to him, the
submission of the FAR of the succeeding taxable year was not required
under the law to prove the claimant’s entitlement to excess or
unutilized CWT, and by following logic, the submission of quarterly
income tax returns for the subsequent taxable period was likewise
unnecessary. He found no justifiable reason not to follow the existing
rulings of this Court.

Petitioner’s reasoning in this petition echoes the dissenting opinion of

Justice Castaneda. It further submits that despite the non-presentation
of the quarterly ITRs, it has sufficiently shown that the excess CWT for
CY 2003 was not carried over or applied to its income tax liabilities for
CY 2004, as shown in the Annual ITR for 2004 it submitted. Thus,
petitioner insists that its refund should have been granted. Petitioner
further avers, in its Reply,14 that even if Millennium Business case was
applicable, such must be given prospective effect considering that this
case was litigated on the basis of the doctrines laid down in Philam,
State Land and PERF Realty cases wherein the submission of quarterly
ITRs in a case for tax refund was held by this Court as not mandatory.

In its Comment,15 the CIR counters that even if the taxpayer signifies
the option for either tax refund or carry-over as tax credit, this does
not ipso facto confer the right to avail of the option immediately. There
is a need, according to the CIR, for an investigation to ascertain the
correctness of the corporate returns and the amount sought to be
credited; and part of which is to look into the quarterly returns so that
it may be determined whether or not excess and unutilized CWT was
carried over into the succeeding quarters of the next taxable year.
Because the pertinent quarterly ITRs were not presented, the CIR
submits that the petitioner failed to prove its right to a tax refund.

Issue

The sole issue here is whether the submission and presentation of the
quarterly ITRs of the succeeding quarters of a taxable year is
indispensable in a claim for refund.

The Court’s Ruling

The Court recognizes, as it always has, that the burden of proof to

establish entitlement to refund is on the claimant taxpayer.16 Being in
the nature of a claim for exemption,17 refund is construed in strictissimi
juris against the entity claiming the refund and in favor of the taxing
power.18 This is the reason why a claimant must positively show
compliance with the statutory requirements provided for under the
NIRC in order to successfully pursue one’s claim. As implemented by
the applicable rules and regulations and as interpreted in a vast array of
decisions, a taxpayer who seeks a refund of excess and unutilized CWT
must:chanRoblesvirtualLawlibrary

1) File the claim with the CIR within the two year period from the date
of payment of the tax;chanrobleslaw

2) Show on the return that the income received was declared as part of
the gross income; and

3) Establish the fact of withholding by a copy of a statement duly issued

by the payor to the payee showing the amount paid and the amount of
tax withheld.19

The original decision of the CTA-Division made plain that the petitioner
complied with the above requisites in so far as the reduced amount of
P2,737,903.34 was concerned. In the amended decision, however, it
was pointed out that because petitioner failed to present the quarterly
ITRs of the subsequent year, there was an impossibility of determining
compliance with the irrevocability rule under Section 76 of the NIRC as
in those documents could be found evidence of whether the excess CWT
was applied to its income tax liabilities in the quarters of 2004. The
irrevocability rule under Section 76 of the NIRC means that once an
option, either for refund or issuance of tax credit certificate or carry-
over of CWT has been exercised, the same can no longer be modified
for the succeeding taxable years.20 For said reason, the CTA-En Banc
affirmed the conclusion in the amended decision that because of the
said impossibility, the claim for refund was not substantiated.

The CIR agrees with the disposition of the CTA-En Banc, stressing that
the petitioner failed to carry out the burden of showing that no carry-
over was made when it did not present the quarterly ITRs for CY 2004.

Petitioner disagrees, as the dissents did, that the non-submission of

quarterly ITRs is fatal to its claim.

Hence, the issue on the indispensability of quarterly ITRs of the

succeeding taxable year in a claim for refund.

The Court finds for the petitioner.

There is no question that those who claim must not only prove its
entitlement to the excess credits, but likewise must prove that no
carry-over has been made in cases where refund is sought.

In this case, the fact of having carried over petitioner’s 2003 excess
credits to succeeding taxable year is in issue. According to the CTA-En
Banc and the CIR, the only evidence that can sufficiently show that
carrying over has been made is to present the quarterly ITRs. Some
members of this Court adhere to the same view.

The Court however cannot.

Proving that no carry-over has been made does not absolutely require
the presentation of the quarterly ITRs.

In Philam, the petitioner therein sought for recognition of its right to the
claimed refund of unutilized CWT. The CIR opposed the claim, on the
grounds similar to the case at hand, that no proof was provided
showing the non-carry over of excess CWT to the subsequent quarters
of the subject year. In a categorical manner, the Court ruled that the
presentation of the quarterly ITRs was not necessary. Therein, it was
written:chanRoblesvirtualLawlibrary

Requiring that the ITR or the FAR of the succeeding year be presented
to the BIR in requesting a tax refund has no basis in law and
jurisprudence.

First, Section 76 of the Tax Code does not mandate it. The law merely
requires the filing of the FAR for the preceding – not the succeeding –
taxable year. Indeed, any refundable amount indicated in the FAR of
the preceding taxable year may be credited against the estimated
income tax liabilities for the taxable quarters of the succeeding taxable
year. However, nowhere is there even a tinge of a hint in any provisions
of the [NIRC] that the FAR of the taxable year following the period to
which the tax credits are originally being applied should also be
presented to the BIR.

Second, Section 5 of RR 12-94, amending Section 10(a) of RR 6-85,

merely provides that claims for refund of income taxes deducted and
withheld from income payments shall be given due course only (1)
when it is shown on the ITR that the income payment received is being
declared part of the taxpayer’s gross income; and (2) when the fact of
withholding is established by a copy of the withholding tax statement,
duly issued by the payor to the payee, showing the amount paid and
the income tax withheld from that amount.

It has been submitted that Philam cannot be cited as a precedent to

hold that the presentation of the quarterly income tax return is not
indispensable as it appears that the quarterly returns for the succeeding
year were presented when the petitioner therein filed an administrative
claim for the refund of its excess taxes withheld in 1997.

It appears however that there is misunderstanding in the ruling of the

Court in Philam. That factual distinction does not negate the proposition
that subsequent quarterly ITRs are not indispensable. The logic in not
requiring quarterly ITRs of the succeeding taxable years to be
presented remains true to this day. What Section 76 requires, just like
in all civil cases, is to prove the prima facie entitlement to a claim,
including the fact of not having carried over the excess credits to the
subsequent quarters or taxable year. It does not say that to prove such
a fact, succeeding quarterly ITRs are absolutely needed.

This simply underscores the rule that any document, other than
quarterly ITRs may be used to establish that indeed the non-carry over
clause has been complied with, provided that such is competent,
relevant and part of the records. The Court is thus not prepared to
make a pronouncement as to the indispensability of the quarterly ITRs
in a claim for refund for no court can limit a party to the means of
proving a fact for as long as they are consistent with the rules of
evidence and fair play. The means of ascertainment of a fact is best left
to the party that alleges the same. The Court’s power is limited only to
the appreciation of that means pursuant to the prevailing rules of
evidence. To stress, what the NIRC merely requires is to sufficiently
prove the existence of the non-carry over of excess CWT in a claim for
refund.

The implementing rules similarly support this conclusion, particularly

Section 2.58.3 of Revenue Regulation No. 2-98 thereof. There, it
provides as follows:chanRoblesvirtualLawlibrary

SECTION 2.58.3. Claim for Tax Credit or Refund.

(A) The amount of creditable tax withheld shall be allowed as a tax

credit against the income tax liability of the payee in the quarter of the
taxable year in which income was earned or received.
(B) Claims for tax credit or refund of any creditable income tax which
was deducted and withheld on income payments shall be given due
course only when it is shown that the income payment has been
declared as part of the gross income and the fact of withholding is
established by a copy of the withholding tax statement duly issued by
the payer to the payee showing the amount paid and the amount of tax
withheld therefrom.

xxx xxx xxx

Evident from the above is the absence of any categorical
pronouncement of requiring the presentation of the succeeding
quarterly ITRs in order to prove the fact of non-carrying over. To say
the least, the Court rules that as to the means of proving it, It has no
power to unduly restrict it.

In this case, it confounds the Court why the CTA did not recognize and
discuss in detail the sufficiency of the annual ITR for 2004,21 which was
submitted by the petitioner. The CTA in fact
said:chanRoblesvirtualLawlibrary

In the present case, while petitioner did offer its Annual ITR/Final
Adjustment Return for taxable year 2004, it appears that petitioner
miserably failed to submit and offer as part of its evidence the first,
second, and third Quarterly ITRs for the year 2004. Consequently,
petitioner was not able to prove that it did not exercise its option to
carry-over its excess CWT.22

Petitioner claims that the requirement of proof showing the non-carry

over has been established in said document.

Indeed, an annual ITR contains the total taxable income earned for the
four (4) quarters of a taxable year, as well as deductions and tax
credits previously reported or carried over in the quarterly income tax
returns for the subject period. A quick look at the Annual ITR reveals
this fact:chanRoblesvirtualLawlibrary

Aggregate Income Tax Due

Less Tax Credits/Payments
Prior Year’s excess Credits – Taxes withheld

Tax Payment (s) for the Previous Quarter (s) of the same taxable year
other than MCIT
 xxx xxx xxx

Creditable Tax Withheld for the Previous Quarter (s)

Creditable Tax Withheld Per BIR Form No. 2307 for this Quarter

xxx xxx xxx23

It goes without saying that the annual ITR (including any other proof
that may be sufficient to the Court) can sufficiently reveal whether
carry over has been made in subsequent quarters even if the petitioner
has chosen the option of tax credit or refund in the immediately 2003
annual ITR.

Section 76 of the NIRC requires a corporation to file a Final Adjustment

Return (or Annual ITR) covering the total taxable income for the
preceding calendar or fiscal year. The total taxable income contains the
combined income for the four quarters of the taxable year, as well as
the deductions and excess tax credits carried over in the quarterly
income tax returns for the same period.

If the excess tax credits of the preceding year were deducted, whether
in whole or in part, from the estimated income tax liabilities of any of
the taxable quarters of the succeeding taxable year, the total amount of
the tax credits deducted for the entire taxable year should appear in the
Annual ITR under the item “Prior Year’s Excess Credits.” Otherwise, or if
the tax credits were carried over to the succeeding quarters and the
corporation did not report it in the annual ITR, there would be a
discrepancy in the amounts of combined income and tax credits carried
over for all quarters and the corporation would end up shouldering a
bigger tax payable. It must be remembered that taxes computed in the
quarterly returns are mere estimates. It is the annual ITR which shows
the aggregate amounts of income, deductions, and credits for all
quarters of the taxable year. It is the final adjustment return which
shows whether a corporation incurred a loss or gained a profit during
the taxable quarter.24 Thus, the presentation of the annual ITR would
suffice in proving that prior year’s excess credits were not utilized for
the taxable year in order to make a final determination of the total tax
due.

In this case, petitioner reported an overpayment in the amount of

P7,194,213.00 in its annual ITR for the year ended December
2003:chanRoblesvirtualLawlibrary
Annual ITR 2003
Income Tax Due 1,259,259.00
Less: Prior Year’s Excess Credits (2002 Annual (4,379,518.00)
ITR)
Creditable Tax Withheld for the 4th Quarter (4,073,954.00)
Tax Payable / (Overpayment) (7,194,213.00)

For the overpayment, petitioner chose the option “To be issued a Tax
Credit Certificate.” In its Annual ITR for the year ended December
2004, petitioner did not report the Creditable Tax Withheld for the 4th
quarter of 2003 in the amount of P4,073,954.00 as prior year’s excess
credits. As shown in the 2004 ITR:chanRoblesvirtualLawlibrary

Annual ITR 2004

Income Tax Due 1,321,409.00
Less: Prior Year’s Excess Credits -
Creditable Tax Withheld for the 4th Quarter (3,689,419.00)
Tax Payable / (Overpayment) (2,368,010.00)

Verily, the absence of any amount written in the Prior Year excess
Credit – Tax Withheld portion of petitioner’s 2004 annual ITR clearly
shows that no prior excess credits were carried over in the first four
quarters of 2004. And since petitioner was able to sufficiently prove
that excess tax credits in 2003 were not carried over to taxable year
2004 by leaving the item “Prior Year’s Excess Credits” as blank in its
2004 annual ITR, then petitioner is entitled to a refund. Unfortunately,
the CTA, in denying entirely the claim, merely relied on the absence of
the quarterly ITRs despite being able to verify the truthfulness of the
declaration that no carry over was indeed effected by simply looking at
the 2004 annual ITR.

At this point, worth mentioning is the fact that subsequent cases affirm
the proposition as correctly pointed out by petitioner. State Land,
PERF and Mirant reiterated the rule that the presentation of the
quarterly ITRs of the subsequent year is not mandatory on the part of
the claimant to prove its claims.

There are some who challenges the applicability of PERF in the case at
bar. It is said that PERF is not in point because the Annual ITR for the
succeeding year had actually been attached to PERF’s motion for
reconsideration with the CTA and had formed part of the records of the
case.
Clearly, if the Annual ITR has been recognized by this Court in PERF,
why then would the submitted 2004 Annual ITR in this case be
insufficient despite the absence of the quarterly ITRs? Why then would
this Court require more than what is enough and deny a claim even if
the minimum burden has been overcome? At best, the existence of
quarterly ITRs would have the effect of strengthening a proven fact.
And as such, may only be considered corroborative evidence, obviously
not indispensable in character. PERF simply affirms that quarterly ITRs
are not indispensable, provided that there is sufficient proof that
carrying over excess CWT was not effected.

Stateland and Mirant are equally challenged. In all these cases

however, the factual distinctions only serve to bolster the proposition
that succeeding quarterly ITRs are not indispensable. Implicit from all
these cases is the Court’s recognition that proving carry-over is an
evidentiary matter and that the submission of quarterly ITRs is but a
means to prove the fact of one’s entitlement to a refund and not a
condition sine qua non for the success of refund. True, it would have
been better, easier and more efficient for the CTA and the CIR to have
as basis the quarterly ITRs, but it is not the only way considering
further that in this case, the Annual ITR for 2004 is sufficient. Courts
are here to painstakingly weigh evidence so that justice and equity in
the end will prevail.

It must be emphasized that once the requirements laid down by the

NIRC have been met, a claimant should be considered successful in
discharging its burden of proving its right to refund. Thereafter, the
burden of going forward with the evidence, as distinct from the general
burden of proof, shifts to the opposing party,25 that is, the CIR. It is
then the turn of the CIR to disprove the claim by presenting contrary
evidence which could include the pertinent ITRs easily obtainable from
its own files.

All along, the CIR espouses the view that it must be given ample
opportunity to investigate the veracity of the claims. Thus, the Court
asks: In the process of investigation at the administrative level to
determine the right of the petitioner to the claimed amount, did the
CIR, with all its resources even attempt to verify the quarterly ITRs it
had in its files? Certainly, it did not as the application was met by the
inaction of the CIR. And if desirous in its effort to clearly verify
petitioner’s claim, it should have had the time, resources and the liberty
to do so. Yet, nothing was produced during trial to destroy the prima
facie right of the petitioner by counterchecking the claims with the
quarterly ITRs the CIR has on its file. To the Court, it seems that the
CIR languished on its duties to ascertain the veracity of the claims and
just hoped that the burden would fall on the petitioner’s head once the
issue reaches the courts.

This mindset ignores the rule that the CIR has the equally important
responsibility of contradicting petitioner’s claim by presenting proof
readily on hand once the burden of evidence shifts to its side. Claims
for refund are civil in nature and as such, petitioner, as claimant,
though having a heavy burden of showing entitlement, need only prove
preponderance of evidence in order to recover excess credit in cold
cash. To review, “[P]reponderance of evidence is [defined as] the
weight, credit, and value of the aggregate evidence on either side and
is usually considered to be synonymous with the term ‘greater weight of
the evidence’ or ‘greater weight of the credible evidence.’ It is evidence
which is more convincing to the court as worthy of belief than that
which is offered in opposition thereto.26chanroblesvirtuallawlibrary

The CIR must then be reminded that in Philam, the CIR’s “failure to
present [the quarterly ITRs and AFR] to support its contention against
the grant of a tax refund to [a claimant] is certainly fatal.” PERF
reinforces this with a sweeping statement holding that the verification
process is not incumbent on PERF [or any claimant for that matter];
[but] is the duty of the CIR to verify whether xxx excess income taxes
[have been carried over].

And should there be a possibility that a claimant may have violated the
irrevocability rule and thereafter claim twice from its credits, no one is
to be blamed but the CIR for not discharging its burden of evidence to
destroy a claimant’s right to a refund. At any rate, a claimant who
defrauds the government cannot escape liability be it criminal or civil in
nature.

Verily, with the petitioner having complied with the requirements for
refund, and without the CIR showing contrary evidence other than its
bare assertion of the absence of the quarterly ITRs, copies of which are
easily verifiable by its very own records, the burden of proof of
establishing the propriety of the claim for refund has been sufficiently
discharged. Hence, the grant of refund is proper.

The Court does not, and cannot, however, grant the entire claimed
amount as it finds no error in the original decision of the CTA Division
granting refund to the reduced amount of P2,737,903.34. This finding
of fact is given respect, if not finality, as the CTA,27 which by the very
nature of its functions of dedicating itself exclusively to the
consideration of the tax problems has necessarily developed an
expertise on the subject.28 It being the case, the Court partly grants
this petition to the extent of reinstating the April 23, 2010 original
decision of the CTA Division.

The Court reminds the CIR that substantial justice, equity and fair play
take precedence over technicalities and legalisms. The government
must keep in mind that it has no right to keep the money not belonging
to it, thereby enriching itself at the expense of the law-abiding
citizen29 or entities who have complied with the requirements of the law
in order to forward the claim for refund. Under the principle of solution
indebiti provided in Article 2154 of the Civil Code, the CIR must return
anything it has received.30chanroblesvirtuallawlibrary

Finally, even assuming that the Court reverses itself and pronounces
the indispensability of presenting the quarterly ITRs to prove
entitlement to the claimed refund, petitioner should not be prejudiced
for relying on Philam. The CTA En Banc merely based its
pronouncement on a case that does not enjoy the benefit of stare decis
et non quieta movere which means "to adhere to precedents, and not to
unsettle things which are established."31 As between a CTA En
Banc Decision (Millennium) and this Court’s Decision (Philam), it is
elementary that the latter should prevail.

WHEREFORE, the Court partly grants the petition. The March 22, 2013
Decision of the Court of Tax Appeals En Banc is REVERSED. The April
13, 2010 Decision of the Court of Tax Appeals Special First Division
is REINSTATED. Respondent Commissioner of Internal Revenue is
ordered to REFUND to petitioner the amount of P2,737,903.34 as
excess creditable withholding tax paid for taxable year 2003.

SO ORDERED.