The OSG filed a Rejoinder that petitioner’s 1989 tax return shows that the

PASEO REALTY AND DEVELOPMENT CORP. vs. CA
(G.R. No. 119286; 13 October 2004)
Facts:
Petitioner filed a its Income Tax Return (ITR) for the calendar year 1989. He
later filed with respondent CTA for a refund of excess creditable taxes
withholding (CTW) and income taxes for the years 1989 and 1990 in the
aggregate amount of 147, 036.15.
latter included 1988 excess credit which had already been segregated for
refund and specified that the full amount of Php 172, 479.00 be considered as
its tax credit for 1990. The OSG further contended that the remaining tax
credit for 1989 should be the excess credit to be applied against its 1990 tax
liability. Hence, petitioner ask for a refund of its CTW in 1989 because it had
been applied against its 1990 tax due.
Issue:
Whether or not the petitioner should be refunded.

Respondent Commissioner (CIR) filed an Answer stating some defenses. The
Court rendered decision in favor of the petitioner. However, CIR filed a
Motion for Reconsideration (MFR) alleging that the amount sought to be
refunded “has already been included in the 172, 447 which the petitioner
applied as tax credit for the succeeding taxable year 1990.
Upon the respondent Court (RC) dismissed the petition, the petitioner filed
MFR which was denied by the RC. Thus, petitioner filed a petition for
Review before the CA. The appellate court held that petitioner is not entitled
to a refund because it appears that the latter did not specify the amount to be
refunded and the amount to be applied as tax credit to the succeeding taxable
year, but only marked an “X” to the box indicating “to be applied as tax
credit to the succeeding taxable year” when the latter filed its income tax
return for the year 1989.
The Office of the Solicitor General (OSG) filed a Comment that the claimed
refund was to be applied against its tax liability for 1990.
Petitioner filed a Reply that the issue is not whether the 54,104 was included
as tax credit to be applied against its 1990 income tax liability but whether
the same amount was actually applied as tax credit for 1990.
Ruling:
No. The grant of refund is founded on the assumption that the tax return is
valid. Without the tax return, it is error to grant a refund since it would be
impossible to determine whether the proper taxes have been assessed and
paid.
In this case, petitioner did not present evidence to prove that its claimed
refund had already been automatically credited against its 1990 tax liability.
The burden of proof to establish the factual basis of claim for tax credit or
refund lies on the claimant. Tax refunds are construed strictly against the
taxpayer.
Under the provision, the taxpayer is allowed three (3) options if the sum of
its quarterly tax payments made during the taxable year is not equal to the
total tax due for that year:
pay the balance of the tax still due;
carry-over the excess credit; or
be credited or refunded the amount period