K.EPUBLIC Op T He PHIL.LPPTNE$ Court of Tax Appeals Q.U&Zon City ~Nscor Container Corporation vs. Commissioner of Internal Revenue

DECISION -

CTA CASE NO. 34:44:

- 2 - !1669 , 314.0 0 , re:presen ting; ov'erpa id 1978 i ncome t ax plus income t axes wi thheld and i ncome tax. payments f or the ,_ fi rst 3 quarte:rs of 1979, r espectively , or a total of !1680, 089 . 00 , leaving a balance of !1211,113.00 , which was paid on Apr il 14:, 1980 , hence , a t otal i ncome tax. pa i d o f !1891, 202.00;

3 .

That on April 13 , 198 2, petiti oner filed an amended i ncome t ax r eturn f or 1979 after i t discove r ed that its purchases fo r 1979 were under stated and r eported a corrected net taxabl e income of only !11 , 761 , 007.0 0 and an i ncome tax due of ii694 , 403;oo . Since i t had previous- ly paid !110 ,775. 00 and !1880 ; 427.00, or a t otal of !1891 , 20 2. 00 , t here was an obvious erroneous and/ or il- l egal paymen t of !1196, 799 . 00 ; 4 .

That on April 13, 1982 , petiti oner f i led wi th respondent a claim f or r efund of t he aforesaid overpa id i ncome tax of iil96i, 799 .. 00 paid on April 14,, 1980; and 5.

Tha t petiti oner has insti tuted t his appeal to preserve i ts r i ghts under Sec:tion 29 2 of t he Revenue Code .

Petitioner therefore asks t hat respondent be ordered to r efund to petitioner t he sum of ~196 , 799.00 r epre- senting alleged err oneous and/6r illegal payment of income tax. f or 1979 .

Except f or partial denials of certain averments in par agraphs 2, 3 , 4 and 5 , allegedly for lac k of ( \

DECISION -

CTA CASE NO. 3444:

- 3 - knowledge or information sufficient to f orm a belief as to the truth thereof , although they ar e· invar iably within re~ sponde~nt's competency to c:hec:k or verify, respondent prac tically admitted i n his answer the aforestated allegations of petitioner. At any rate, when this case was heard by the Court, petitioner manifested that since i t s claim for refund was still being administratively processed by t he Bureau of I n- ternal Revenue and this appeal has been instituted to preserve petitione~'s rights under Section 292d the Revenue Code, i t might be propitious to wa i t for: the find i ngs and recommendation of responde~n t • s off i c:er s concerned .

Then during the hearing on May 7, 1985, the parties s ubmitted this case for decision on t he basis of t he Me:mor:andum for t he Commissioner dated October 2, 198 4 of the: Chief of the Appellate Division , which was con- cur:red in by t he Revenue Service Chief (Legal Office ) '· recommending, for reasons stated therein, that the amount of ~138 , IDI.OO be credited to petitioner Anscor Container Corporation .

(pp. 314,- 315, BIR records .)

To put an end t o this litigation , petitioner manife·sted i ts willing- ness to accept the tax credit of ~138 , 10 1 . 00 i nstead of i ts or iginal claim of ~196 ,7 99.00 . To quote the ab6ve- mentioned memorandum for the Commiss i oner: (pp . 314.- 315, BIR records.)

•

DECISION -

CTA CASE NO. 344:4 -

4. -

MEMORANDUM FOR:

The Commissioner

.SUBJECT:

This refers to the claim filed on April 13, 1982 by Atty. Demosthenes A. Gadioma, in behalf of his client, ANSCOR CONTAINER CORPORATION, for tax credit of ~196,799.00 as alleged erroneously paid income' tax for 1979 {p. 238) •.

FACTS:

Taxpayer is a domestic co v.:poration , organized and existing under Philippine Laws, and i s engaged in the manufacture of steel drums and pails.

Recently, tax- payer disc:ove:r.ed that i ts purchases ac·coun t

in 1979 with the National Steel Corporation

(NSC) , the principal sup~lier of its raw materfals in the manuf?cture of its steel drums and pails was understated thereby resulting in the said overpayment of in- c:ome tax for the said year.

As claimed by taxpayer's ac:counting personnel, the error or r.econciling i terns were attributable to the breakdown of the company's accounting machines, turn-ower of pe'rsonnel and the change of ac:coun ting • systeme Based on such rec:onciliation, the 1979 balance of the liability acc:ouht due National Steel Corporation as of the end of the year , should be ~3 , 48 7,305 . 08 as against the unreconciled balance of only ~2,826,862.83 or a difference of ~660,442 .2 5 whi ch normally represents the under-record- i ng of its purchases account.

Out of such difference, the r·econc:ilia tion statement showed further that t he net amount of only ~353,463.53 constituted the net additional adjustments to the purchase account cover- ing the year 1979 {pls . see doc. on pp . 203- 20 4) e.

Taxpayer's payments wer:e verified remitted to the Bureau {p.

266) ~ ' .u

- 5 -

FINDINGS AND RECOMMENDATION:

The claim is meritorious.

Investi-

~ation made by the examiner showed a refundable amount of only £1138,101.00 instead of £1196,799.00 as c:laimed com- puted as follows:

Total adjustment for: 1979 • • £1353,463.53 Disallowed adjustment • • • 8, 211.18

Net

••• £1345,252.35

Refundable

The original i nvestigation o f the 1979 income and business tax liabilities of said corporation d isclosed a defic:iency income tax of £1693,901.41, a deficiency withholding tax of £1115,677. 81 and deficien~y 3% con- tractor's tax of £186,122.91.

The afore- mentioned tax l iabilitie~ were, however , cancelled and settled upon payment and com- pliance by taxpayer of Revenue Memorandum Or der No. 38-83 dated November 14, 1983 (pls. see doc . on pp . 243-244) ~ In view of all the foregoing and as the claim was filed wi thin two (2) years from date of payment of the tax, it "is respect- fully recommended that the amount of £1138,101 . 00 be credited to Ansc:or Container Corporation, 18 EDSA , Mandaluyong, Metro Manila, pursuant to Section 295 of the Tax Code .

I CONCUR:

Respectfully submitted:

(SGD .} EULOGIO H. NATIVIDAD Chief, Appellate Division (SGD.) REYNOSO B. FLOREZA

Rev-enue Service Chief

(Legal Office)

In view of respondent ' s recognition of the meri- tor iousness of petitioner's claim for refund in the ( ' )

DECISION -

CTA CASE NO . 3444 - 6 - amount o f ~138,101 . 0 0, instead of Pl96, 799 . 00 as claimed , and willing;ness that such amoun t of ~138,101.00 be credited to petitioner, pur suant to Secti on 295 of the National Internal Revenue Code, and peti- tioner's acceptance thereof , instead of ~196 ,7 99 . 00 as or i ginally claimed by i t, the parties maybe con- sidered to have ente·red i nto a compromise agre ement to put an end to this appeal thru t_he rendition of a j udgment , as praye d for by them, incorporating such agreemen t or stipulation .

(See Republic of the

Phil i ppines vs . Marcelo B.

G~ray, L-21416, Dec. 31 , 196>5, 15 SCRA 695. )

WHEREFORE , respondent Commissioner of Internal Revenue is hereby ordered to grant a tax credit to petitioner Anscor Container Corporation in the amount of ~138 , 101.00 representing erroneously paid i ncome tax for 1979 .

Wi thout pronouncement as to costs.

WE CONCUR:

cLln~~~ · ~ /

AMANTE

ILLER (./ Presidi g Judge (\ ,

I