Bogo-Medellin Milling Co., Inc., et al. vs. Commissioner of Internal Revenue, et al.

DECISION

No.

Unit of Selling Nan of Co1pany Sharu Price - 2 - Total Selling Price Cost llncl.

Expenses of Sales> Gain Allied Guarant@e Insurance Co. 1 Inc.

1~,062 2~7.90 3,485,969.80 376,757.75 3,109,212.05 Marinduqut Mining & Industrial Corporation 132,500 6.00 7~,000.00 1,222, ~61. 25 ( 427,~61.25) Atlas Consolidated Mining 98,700 various 2,353,086.~3 1,892,646.56 460,439. 87 Far East Wire & Cable Corporation 84,091 NIL NIL 840,910.00 ( 840,910.00) ------------ ----------- ---------- 6,63~,056.23 4,332,775.56 2,301,280.67 On the said capita l gain of P2,301,280.67, petitioner computed a tax due of P450,256. 13, thus= On the first Ptoo,ooo.oo, 1 0~ On the eXC@SS of P1oo,ooo,oo, 20~ !P2,201,280.67 x 20~)

T 0 T A L

During the same p 10,000.00 440,256.13 P4501256.13 aaaaa .. aaaa taxable howe vel'~ , petitioner made a tax payment of P611,842.41 <Confirmation Receipt Order No. 2567714 ~nd Payment Order No.

2021386, both dated Janual'"Y 4, 1984) on its net capital gain of P3, 109,212.05 upon the sale of its shares of stock in Allied l31.1arantee - 3 - Insurance Co., Inc:.

The sai d net capital gain of P3, 109,212.05 was reported in its final adjusted Stock Tr nsaction Capital Gains Tax Return. (pp.

124-123, BIR rec.)

As a r ult, th sum of P16 1,586,28 is allegedly refundabl to petitioner inas•uch as its tottll tax liability amounted to only P450,256 .1 3 , W!'HJI"'tHU it e.

tot!lll payment .SIIICWnt d to P611, 842.41 whiQh 11 ~OMp utt d ~~ followsl Ta~ P•id • ••••• •·· ·~!·•

L ~~~•

T~x DY•

••• A••••

P611,842.41 4 ;.;;,0,2~6. 13 Refundebl Amount • • ••• P161,386.28 .............

<Exn. A., P• 132 SIR ree.)

On Feb~uary ~2, 1984, p titian r filed a claim for refund of overpaid capit 1 gains t ax in the atnount of P161,586. 2 S <Annex A, Petition for Respondent has not yet granted petitioner's claim for r e fund, hence a petition f or review was filed on December 27, 1985 to stop the running of the 2 year pr escriptive period to judicially claim MeantiMe, an investigation was conducted by respondent's Revenue District Office No.

32-A 29.1 •

- 4 - p•..trs •..tant t o an Indorsement b y the App e ll ate Div is i on.

As a result of said investigati on, i t was fo •..tnd out the amo•.mt of capital gains by Examiner Fernand o P 161 , 58E..28 was an t ax re f undab l e Cani za.res that ~ ovet~payment of ij t o pe titione r. ~ <Exhibit A, p p .

131-134 BI R t"ec. > Sa id Examiner Fernando Canizares in his report ~aid:

"In view o f the f ot~ egoing and it appe a rin g th a t t he c l a im was seasonably filed, i t is respect ful l y recommended that the amount of P 1E. 1, 5 86.28 be refunded to

BOGO- MEDELL I N

MI LLING

CO., INC." <Exhibit "8-· i"p. 131, BI R Re c ords ). This finding of Exa mi n e r Can i zares was never cont r overted by respondent, inasnn .. tch as he submit t ed hi s cas e on t he basis of the pleadings and BIR reco r d.

The only issue brought befot"e th is coln"t i s whether or not p e t i t i oner is entitled to a refund/tax credit o f the amount of P161, 586.28 as overpaid capital gains tax for it~ fiscal year ended September 30, 1984. Petitioner cont e nds that it is entitled to the refund/or tax credit the amount of P161,586. 28 representing overpaid capital gains tax for its .fiscal year ended September 30, 1984. 2~?

- 5 - On the other hand, respondent contends that petitioner's ~lleged overpai d capita l gains tax for the year in question hinges on petitioner's having written off a loss of its shares of stock in the Far East W.i re and Cable Corporation in the a11ount of P840,091.00 representing the va lue of its 840,091 sh~res of stocks with aforesai d Corporation whieh M~m b@QOM9 worthless by rea$on of the alleged d1sa~1utiQM of said corpor~ti on. We ag~0~ with pet iti oner that it is ent it 1 ed to the refund of P161,586.28 representing its overpaid capit~l ga ins t4x for its fiscal year ended Sept ember 30, 1984.

Examiner Canizares in his report found petitione r entitled to the refund of the said overpaid capita l gains tax <Exhibits A & A-1, pp.

131-134, BIR rec. >;

and the same respondent having submitted his case based upon the pleadings and the BIR record, practically ad111itted the veracity and truth of what is found in said BIR records.

The claim of respondent that the refund hinges on in the writing off the shares of stock in the Far East Wire and Cable Corporation in the amount of P840,091.00 is unavailing inasmuch as ExaMiner

-· 6 - Canizares •aid that the PS40,091.00 shares of stock became worthless by reaso n of the dissolution of said corporation and that the Wt"i t i ng off of the amount of PS40,091.00 was in accordance with Section 30 <e> (J) of t he tax code.

We quote Examiner Can iz reGI "Oul"'ing th e same tax ab l e yeat", the t xpayer wr ot: e-o ff the tot l a.molmt of PS40,091. 00 repre senting the value of 84,091 $hares of stock ofF r East Wire & Cable Ca¥<porat ion which beoam wot"'ht 1 ess by re4~0n of the dis elution of said co~po r•t ion.

Said write-off was in eeeo'r"d ne w th Section 30(e) (3) of the i x Code whi c h states1 '' ( 3) a., C. I.Jr..i.tl!UL_._~-~.,!;..9 m1D..Q. h!.!?. l"'~..hJ..!.~ . .l!i• -If t'lny I CI.H"ities 1 d fine d i n Section 20 iU'e a$e rtain~d to be wo rt hl ~as and eh!T!rge off within the taxable year and a re capital assets, th loss r es ultin g th refrom hal in the c as of a t xp yer other than above or trust company incorporated und r the laws of the Ph ili ppin~s a substanti al pat"'t of whol bu iness is the r oipi nt of deposit, fol'" the p1..1rpo a of thi s Titles be cons idel"'ed a~S J. ss fl'"O m the H.~ ...9.1:_. ~l:.M. __ , n..§L.7 on the last d My of tntch taxable year, of SAPJ..ta .. ~ .. 1 ... t ..

<Emphasis OU\"" t Exh ibit A) Respondent's c-ontention that the .t"tu::ommendat ion of his examiner (refet"ring to 2~4.

- 7 - Caniza~res) is not binding to him is therefore without merit.

In the tax return, it ha s shown losses of shares of stock in the Far East Wire and Cable Corpora~tion in the amount of P840 , 091. 00 representing the value of its 840,091 shares of stock with aforesai d corporation which has beco111e worthless by reason of the al leged dissolution of said corporation.

Responde n t , however, has n ot issued any deficiency assessment no r serio u s ly di spt..tted the correctness thereof.

<Dataprep tPhil.J, Inc., vs.

Internal CTA Case No.

3600, March 30, 1984. )

Neither has he submitted particular controvertin;/ evidence except that this case was sub111itted based/~ on the pleadings and the BIR recot'ds. Responden , j therefore, may be considet' ed to have no serious objection or opposition to pet itioner's entitle111ent "xxx The record makes it clear that {/ petitioner's income tax return for the taxable year in question has shown 1 osses.

Respondent has not i ssuttd any deficiency assessment nor disputed thtt correctness thereof.

<Dataprep [Phils.J, Inc.

vs.

Co••issioner o"f Int•rnal R•v•nu•, CTA Case No.

3600, March 30, 1984.)

2~5 •

- 8 - / "No controverting evidence was presented by respondent. Neithe'r~ was C\ny · evidence· disp•..1ting petitioner's ent~tle­ ment to its c laim for refund was presented by respondent and this case having been submitted for decision on the pleadings and on the face of the •.tnrebutted evidence of petition showing that it is entitled to · refLmd ><><><, responde n t may be considered to hav e no •eriou~ object i on or opposition t o petition e~~ • s enti tlement to t he t"'ef und.

The circumstances obtaining ><><>< compels us therefore t o sust ain the ><><>< the petitioner's right to the refund ><><>< based on the evidence and ~le dingg."

<Ateneo de Manila Univers y vs.

Co••issioner of Int ernal Rev nue, CTA Case No. 32 13, July 28, 1989)

WHEREFORE, pet itioner Bogo-Medellin Milling Co., Inc. is entitl ed to the refund/or ta>< credit in the aMount of P161,586.28 representing overpaid capital gain s tax for the fisca l year ended Septe•ber 30, 1984.

Without pronounce ment as to costs.