CTA Case No. 3973

DECISION

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This is a judicial clai m for efund of erroneously paid withholding ta x_j n the sum of E94,872.00 f or the ...._ year 1984.

Petitioner filed its 4th and final quarter corpo- r ate income tax for 1984 s howing a loss of E6 ,336 .00. In said year 1984, petit i oner had allegedly paid with- holding tax in the s um of E94,872.00 which amo un t repre- sents asserted exc ess income tax payments, which is herein sought to be refunded in this c as e. On A~ril 29, 1985 , petit ioner filed a cl aim for refund wi th the Commissioner of I nt ernal Revenue of th e said excess income t ax payment of E94,872.00. Fr om the time of the filing of the aforesaid clai m fa~ refund, the Commissi oner of Internal Reven ue failed \ 41

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DECISION -

CTA CASE NO. 397 3

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to act on petiti oner's claim.

Without waiting for a decision on its claim for refund, petitioner filed its Petition for Review or judicial claim for refund with this Co ur t on September 12, 1985.

On January 25, 1986, respondent filed his Answer thereto, which asserted, among others, th ~ t it has no knowledge of the ·veracity of the contents of petitio ner's income tax return showing a loss of 86,336.00 and for which it is not liable for cor porate income tax, and a refundable excess payment of wi~hholding tax in the sum of 894,872.00 in Annex A (Exh. D, p. 3, CTA rec.); and asserted in its special and affirmative defenses that this case does not involve illegally or erroneously collected taxes and, hence, a petition for review does not lie in this case; that under BIR Memo. Circular No. 10-77, any excess of the total quarterly payments over the actual tax compu ted per adjusted or f inal corporate income tax return shall be refunded to the taxpayer, or be credited against the estimate d quarterly income tax liabilities for the quarter of the succeeding taxable year; t hat in the case corpotate annual income tax re-

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turhs showing refundable amounts arising from overpaid \ 41i DECISION ....

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.,•' ' quarterl y income tax~ unde r the authority of Revenue Memorandum Order No. 32-76 dAted June 11, 1976, t he :retuL'ns are then pre~·audil:ecl and the r efund or tax t , credit is gra n t~ d; and t hat, consequently, there is no need of ~he petition for review to preserve the right to claim for refund or tax credi t within the 2-year period from date of payment of the tax~

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pendent Commissioner of Interna l Revenue finally asse rts .

reassuringly, in his affirmative defense against h rein petit ioner 1 s cla i m for refu n d~ th at a taxpayer may r ecover from t he BIR excess inco me tax pai under Secti on B6 of th e Tax Code, being an ob l igation created by l a w, wit hin ten ( 10) :y ears frorn date of pa yment purs uan t to Art ic l~ 1144 of the Civil Code. Ten days after the filing of the Answer by the respondent Com mi ssioner of Internal Hevenue to tho instant judicial c1a i rn for refundp said .respondent has not compli ed with Section 2y Rule 7 of the Rules of the Court of lax AppeRls, whic h categorically req uires that he shall certify ·and forward to this Court all the re cor ds of this case in hi s possession~ 1i th pages duly numbered and i f in sepa r ate folders~ then the foLders shall be duly numbered.

Until the presen t \ 412

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DECI SI ON

CTA CA SE NO. 39 73 - l~ - .I· writing no record s on t he cl8i m f or r e f und was e ve r certified and forward e d as di r ecte d , whi ch i s in '· direct contempt to the l aw ful s ummo ns of th is Court. Nev er t he l ess , dur ing the he ar ing, i t was only the pet i tion er who had prese nt ed i ts e vid e nce , both documentary a nd t es t i moni al, s howin g th a t a cl aim f o r r e fund wa s f il e d wi th t he Commis sion er o f Inter na l Revenue in t he amount o f e94,87 2 . 00 as overp a i d or e xce s s income tax pa ym e nt for 19 84; th at i t h ad pre- s ented document ar y e vide nce of the.withho ld i ng t ax pa ymen ts (E xhs . E to E-7) whi c h r e pre s e nt s t he to tal ove rpaid inco me ta x i n th e sai d s um of e94, 872 .D O. Th e only iss ue pr esent e d to Us for de t ermi nati on is whether pr not the s um o f e9 4, 872 .00 i s a n overpayme nt of in come tax fo r 1984 a nd whe th er or not the petitio ner is enti t led to the r e fund the reo f . The e vi de nc e pre se nte d by pe titioner cons is ti ng o f t he wit hho l ding inco me tax pa ym e nt s ( Ex hs. E t o EM7), we re withh e l d on inc omes due f or s e rvi ce s r e n- dered by peti t ione r to va r io us c ompa ni es ( America n I n t e r n a t i o n a l U n d er w r i t e r s ( Ph i 1 s • ) I n c o ; A me r i c a n

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Int~rn at ion al Grou p Ser vices Corp . ; AI C Data Ce nter \ 410

- 5 - Manila, Inc .; Manila Adjust e rs & Surveyors Co~; Phi l . Am . Life Ins . Co.; Philippine Home Assurance Corpo- t .

iation; Japan Marine Surveyors & Sworn Measures Corp.), and which shows the amounts of withholding tax payments in 1984, viz:

Withholding Agent

AI U (Phils.) Inco

Service

A m o u n t \H t h h e 1 d Am . Int. Group

Services Corp~

AIC Data Center

Management &

Technical

Profession a l fees Profess ional Manila, Inc.

fees

Manila Adjusters & Professional

Su rvey ors Co.

fees Phil . Am. Gen. Ins. Services

Co~

Phi l . Amq Life Ins.

Co.

Ph il. Home Assu- rance Co rp.

Japa n Marin~ Sur- veyors & S1tJorn tv!easures Corp~

Professional

fees

Profeasional

fees

Professional

fees T o t a 1 e 8,358 .19 1,577.68 170.61 1,316.78 2,684.90 420 .. .41' ~ -~f~.t§~ 2:!~9 ---- ·--- ------ Accordingly, petitioner, as shown above , is only entitled to the re fund of such overpayment as it can prove.

Having prov e n an excess payment in the amount of on 1 y e\8 8 , 6l1- 5 • 3C 1 pet i t ion e r i s on 1 y e n tit 1 e d to the )

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refund of this amount of E88,645.30 not the alleged sum of 894,872.00 claimed by it, '· Anent the legal point presented by respondent Commissioner to the effect that there is no need for petitioner to file a petition for review (or judicial claim for refund) to be brought to this Court, because this case does not involve illegally or erroneously collected taxes; that any claim for refund due to over- payment shall be granted by respondent after pre-audit; and that this claim for the refund of taxes can be anyway recovered within 10 years under Article 1144 of the Civil Code is not only to beg the issue but thes~ contentions are not legally and factually meri- torious.

Not only was there no expeditious investi- gation or pre-audit conducted by respondent regarding this claim with the end in view of granting a refund. And we think that this case involves erroneously collected taxes and, therefore, a proper subject of a judicial claim for a refund within the proper jurisdiction of this Court. Under the law (Section 54(f) of the Tax Code), any income upon which any creditable tax is required to be withheld at source under Section 53 of the same Code, ' such tax withh~ld shall be included in the return of \ 410

- 7 - its recipient-taxpayer; however, any exce s s of the amount of tax so withheld over the La x du e on the recipie nt-ta xpa yer' s return s h all b e re f und e d to him s ubj ect to t he provisipns of Sec ti o n 295 ; a nd if the income tax dollected at sourc e i s J e ss th a n the tax due on his return, the di ff e re nc e s hall be p aid in accordance with the provi s ion s of Sect ion 51 ( 54 ) (As amended by BP Big . 4l) o And th a t und e r Se ction 29 5(3) of the Tax Code , a s a dverted to abo ve, it pro- vides that - "x xx No credit or r e fund of ta xes or pen alties shall be all owed unl ess the t ax,payer files in w r i~_ing with t he

Commissioner

~ claim for r e fund withi n two' y e a r s a f t e r t h e p a y me n :r--Of-the t a x or penalty.

(.309) (as am ended by PO 177 3 .)"

It can be gathered from the above authority of la w that there is a need to file a c l a im for refund wit h th e Commissioner of Inte r nal Rev e nu e ; a nd in case of the fai lure o f the latt e r to a ct on the said refund, there i s need for the fili ng of a judicial claim for refund by way of a " Pet ition fo r Re view" brought w i~ hin the two- year pe rio d c omputed from the payme nt of the t a x.

The authority grant e d, under \ 41 t .

DECISION -

C.TA CASE NO . 39 73 .. 8 - Section 292 6f the Tax Code , to the Commissi oner th at he "may" eve n vJithout. a \<J ritt~..!2__Elai_!!l th ere for~efun cl or credit any taxt..._where on th e _fac~_f_!.J2.£...~_tt:! ... E.D_~o n which (Under U n in g -~J1 1 i.e d) is mere 1 y d j /~c ... tory on his part and calls for a greater l eewa y of discreti on , which may, as i t di d in this case, give ri s e to so much delay in the ref und of overpaid t axes which if given or granted with spee d, the over pai d taxes may alreGrly hav e long been utilized by petitioner-taxpayer to it s greater advantage as this amount is undoubt edly ne eded in its operatio n and business .

WHEREFORE, respondent Commissioner of Internal Revenue is her eb y ordered to refund to petitioner Commo nwealth Manage- ment & Services Corporation the s um of eBB,645.30 as overpaid income tax for 1984.

No pronoun ceme nt as to costs .