THE Supreme Court (SC) on Tuesday ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax- credit certificate to Manila Electric Co. (Meralco) in the amount of P107.64 million representing overpaid income taxes for the years 1987 and 1988.

In an 11-page decision penned by Associate Justice Conchita Carpio Morales, the Court’s Second Division dismissed the petition for review filed by the BIR seeking to reverse the ruling of the Court of Appeals (CA) issued on August 23, 1995, which affirmed the order of the Court of Tax Appeals (CTA) for the BIR to refund the Lopez-owned power company.

Records show that Meralco had been paying 2 percent franchise tax based on its gross receipts, in lieu of all other taxes and assessments, pursuant to its legislative franchise.

For the last quarter of December 1987, Meralco filed on April 15, 1988, its tentative income tax reflecting a refundable amount of P101,897,741 million, but only P77, 931,812 was applied as tax credit for the succeeding taxable year 1988, leaving an unpaid balance of P23.96 million for 1987.

On June 27, 1988, the BIR conducted its regular investigation of tax liabilities of the power firm for the year 1987. The report made by Revenue Officer Frederick Capitan showed that Meralco was liable for deficiency income tax in the amount of P2.34 million and deficiency franchise tax in the amount of P2.84 million.

A year after, Meralco filed its amended final corporate income-tax return ending December 1988, reflecting a refundable amount of P107.64 million.

Thus, it filed on March 30, 1990 a letter-claim for refund of the said amount.

Owing to the failure of the BIR to act on its request, Meralco filed a petition before the CTA seeking refund of its overpaid income taxes.

In granting Meralco’s petition, the CTA held that from the 1987 final income-tax return, the respondent had income-tax liability of P142.08 million which was set off against three-quarter payments in the sum of P243.98 million.

Thus, based on its computation, the tax court said Meralco has a refundable amount of P101.89 million which the power company opted to be applied as tax credit to succeeding taxable year 1988.

However, in 1988, only the amount of P77.9 million was utilized as tax credit, therefore leaving a balance of P23.96 million for 1987.

For the 1988 an annual income tax of P62.49 million was due from Meralco, which it settled by crediting the P77.9 million excess payment plus payments of P53.33 million and P14.91 million for the first and third quarters of 1988, respectively.

Thus, the CTA said, Meralco overpaid the income tax due by P83.68 million.

The tax court noted that in Meralco’s 1988 income tax return, it opted to use its P23.96 million unapplied balance in 1987, and the P83.68 million overpaid income tax in 1988 be carried over as tax credit in 1989 to 1990.

However, the amount was not utilized in both years, leaving Meralco with overpaid income taxes of P108 million. The CA subsequently affirmed the CTA ruling.

In upholding the CTA ruling, the SC did not give credence to BIR’s contention that the CA failed to consider Meralco’s failure to present evidence to prove its entitlement to a tax refund or credit in the amount of P107.64 million.

“The issue of whether respondent adduced sufficient evidence to prove its entitlement to a refund is a question of fact. It bears noting that the tax court and the appellate court found respondent’s claim for tax refund or credit meritorious on the basis of the testimonial and documentary evidence adduced by the parties,” the SC said.

The SC said it is “doctrinal” that the factual findings of the CTA, when supported by substantial evidence, cannot be overturned on appeal unless it can be proven by the petitioner that the tax court committed grave error in evaluating the facts of the case.

The Court noted that the BIR failed to dispute the authenticity of Meralco’s quarterly income-tax returns as well as the final adjustment returns for the 1987 and 1988 and proofs of payment of its tax liabilities.

Concurring with the ruling were Associate Justices Leonardo Quisumbing, Antonio Carpio, Dante Tinga and Presbitero Velasco Jr.

THE Supreme Court (SC) has cancelled the bail posted by the widow of former government corporate counsel Jun Valerio and ordered her arrest and detention for allegedly masterminding the killing of her husband seven years ago.

THE Senate ways and means committee is reviewing proposals to overhaul and amend the Tariff and Customs Code and other related laws as Congress crafts remedial legislation aimed at curbing rampant smuggling that has resulted in forgone revenues amounting to some P300 billion yearly.

THIS is how the vaunted government antismuggling effort is being conducted—with sacred cows—as witnessed when the Bureau of Customs (BOC) was almost in disarray after “Big Mama” arrived in a huff and demanded immediate release of computer accessories shipped from Hong Kong.

THE Supreme Court (SC) on Tuesday ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax- credit certificate to Manila Electric Co. (Meralco) in the amount of P107.64 million representing overpaid income taxes for the years 1987 and 1988.

ZAMBOANGA CITY—A number of US troops stationed in Western and Central Mindanao areas will be replaced as part of the standard rotation of US military personnel deployed in the Southern Philippines, a Philippine military official said.

THE head of the Catholic Bishops’ Conference of the Philippines (CBCP) on Tuesday lauded the National Police’s program to change its “problematic image.”