Ujf'T.Muc Ow 'Rbe ~ ~Iuf'Pi. N·R, et al. vs. The Commissioner of Internal Revenue, et al.

DECISION -

- 2 - office located at No. 36 Mai n Avenue , Cubao, Quezon City.

Respondent is the duly designated Commissioner . of Internal Revenue, vested with aut hority to act as such, including, inter alia , the power to grant refunds of erroneously or illegally collected internal revenue taxes.

Respondent Commissioner

holds office at the National Office Building of the Bureau of I nternal Revenue, Diliman, Quezon City where he may be served with summons. On March )5, 1982, petitioner f iled its 1981 corporate annual income tax return with respondent's Bureau.

In said return , it declared a net incom e of El , 375,204 and total tax due thereon in t he amount of E600,176 consisting of P-471,321 and P-128,355, representing income and corporate development taxes , respectively.

After it credited the am ount s of 8193 and E6 4 ,396 totalling 864,589 , representing income tax payments for t he first and third qu a rters of fiscal year ended November 30 , 1981, re spectively : the amounts of E535,587 was due and payable.

Said

amount of 8535,587 which include s the corporat e su

DECISION -

CTA CASE NO . 3746 -- 3 - development t~x of El28,855 was paid on March 15, 1982 under Cent·ral Bank Confirmation Receipt No. 9089996 and Revenue Tax Receipt No. 8725866. I n computing its corporate development ta x liability for the year in que s ti on , petitioner made the following allocation of t ax rates on the basis of the effectivity date of Presidenlial Decree No . 1773:

Prior to 1-16-81 (12-l-80 to 1-15-81) ~1,375,204 X 5% X 46/365 [~ 8, 666 After l-16-·8J.

(1-16-81 to 11-30-81) 81,375,204 X 10% X 319/365·

Total

Contend i ng that under Presidential Decr ee No. 1773 and BIH (Burea u of Internal Hevenue) Ruling No . 92-85 dated March 30, 1982, petitioner was not liable to pay the corporate development tax on it s net taxable income for the period January 16, 1981 to Nov~mber 30, 1981, petitioner filed with res- ponden t' s Bureau a cla.irn for th e refund of the amount of 8120, 189 , computed as follo ws : 91

- 4 - Corporat~ development tax paid Less: Corporate development tax due for the period 12-l-80 to 1-16-81

Overpayment

8128,855 ~--8~,6 66) Petitioner filed its petitio n for review wit h this Court on March 14, 1982 in accordance with Section 292 of the then in for ce National Internal Revenue Code .

As stated earlier, respondent has not taken action on petitioner's cla im for refund althougl1 he has denied the same through his answer filed on May 2 , 1984.

The lone question tendered for re so lution is whether or not petitioner is entitled to a refund o~ overp aid corporate de vel opme nt tax. Presidential Decree No. 1773 whi ch took effect on Ja nuary 14, 1981 increased the corporate develop- ment t ax from 5% to 10 % of the taxable ne t income . Petitioner, therefore , be ing a closely-held corpo- ratio~ continu ed in 1981 to be s ubject to the corpo- rate development tax but at the increased rate of 10% of its taxable net in c om e . Thi s is not disputed by petitioner . Responden t avery ‘ed it as’a special and affirmative defense in his anewer, and since petitiongsr submitted this case for judgment on the pleadings without giving res- pondent an opportunily to introduce evidence, peti-~ tioner must be understood ta admit the ruth of this material and relevant allegation of respondent, (Bauermann vs. Casas, etcal., 14 Phil, 3863 Evangelis vs. Co lo Rosa, 70 Phil, 115.)

1982, year Thus,

oF Tt

1964 However, in BIR Ruling Na, GS-02 dated Mereh 30, respondent's Bureau held thal - "x x» x With respect to corporations an the fiscal vear basis, the said inereasec rate of corporate development ti ir taxable y which

OY ON

"Ir view thereof, ration operating on a your f J98i b i9@l, the incr dev ‘elo pen t ta beginns

VOU a0 a On Pp Ch

and Petitioner is a corpuration operating on a fiscal -) basis and the ruling should alsn apply to it. as correctly stated by petitioner in paraqraph 8 petition for review, “Tinasmuch as petitioner's fiscal year begun am Denember 1, L9AL, the ‘ rg i -· 6 - applicable to it on sa i d date, and not prior thereto." (Emphasis supplied . )

Consequently, since petitioner pcid the increased rate of 10% corporate development tox from January 10, 1981 to November 30 , 1981 , in s tead of starting from December 1, 1981, there is an overpayment in the amount of 860,095, computed as follows: Corpora t e development tax paid Less: Cor porate development tax due for the fiscal year ended November 30 , 1981 ( e l , 375 , 2D4 x 5% = 868,760) Amount re fu ndable er2B,B55

WHEREFORE , respondent Commissioner of Internal Revenue is hereby ordered to grant petitioner Mennen Philippi nes , I nc., the refund/credit of the amount of e60 , 095 representing overpaid corporate develop- ment tax for fiscal year ended Novemb e r 30 , 1981. No costs.

DEC ISTON -

CTA CASE NO, 3746

AMANTE FELLER

Presiging Judae

WE CONCUR: Vi

Ae

Lies tiv) —~, esi ROAQUIN

Associate Judge

“ os co

Gi