CTA Case No. 4018

DECISION -

FI9G6,874.00 on August 22, 1983 (Exhibits D, E, and F). For the third quarter ef 1883, petitioner declared a net taxable tnoceome of P2,515,671.00 and a tax due thereon of FU, 464, 00, After crediting the amo t of FS,08@. fea. 00 declared a refundable nance’ of PAL TA, (8&t. Cd (Ruhibit @).

For fits fearth oul .ffnad wyuarter ending December 31, 1983, petitioner auffered a lose and thereby had no income fax liability. An income tax refund totalling F3,291,841.00 as Indicated in the return represented the first and second quarterly ineome tax payments of FI,246,141.00 and PIS6, 874.00, respectively: F215, 742.00 as vithholding taxes on orenfel fneome for 1983; and the 12882 ineone tax oresttot applied as a tax credit for 1884 anounting to F172, 084.00 (Exhibit H).

In 1984, petitioner asain suffered a lose and declared ne income tax Idability. However, Petitioner applied as a tax eredit for 1984, the apount of FG,881,841.00, representing ite 1983 and 1982 overpatd dineome tax and 250,867.00 as withholding tax on rental income for 1984, or a total of F4,242,708.00 corporate income tax refundable for 1984 (Exhibit I).

On September 26, 1984, petitioner filed a claim for refund sith respondent ’s Appellate

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DECISION

CTA CASE RO. 40718 Division for ite 1982 facome tax refund of F133, 084.00. Tro month; Jater or on November 22, 1284, petitioner filed with this Court a petition for review (C.7T.A. Case No. 8868) with respect to ite 1982 elaim for refund of FIGd, 084,00, On December 16, 7865. petitioner filed another. olaim for reFunad f 1 rerpopdent “s Appellate Diviston in the agaregste amount of P4,108,624.00 computed as follows (Eyvyhibite J and J-1):

2282 income tar refundeble applyed as taw credit ...eee P 133, O84.00 1883 income tax rafuncde> le apolzged az tax cre ctyt ..ae 3,858, 737,00 i284 tan credit an vent» FNWTIMNE Feels Deere ne en eeae 200,987.00 Total wanwmrrevrarenerneane P 4,242, 708.00 less: [982 claim for refund already fited wrth the

SBIR and the CTA (Case

NO. SSES0 sc vie ec wwlel's a 3% 133,064.00 renee tai manent Net Amount Refundable so vseneeP 4, 109,624.00 ee rekon Without walting for respondent ’s decision, Petitioner filed the inetant petition for review on January 2, 1986 regarding ite 19983 and 1984 claims for refund amounting to F4,109,624, ag. | After an anewer has teen filed by reepondent, petitioner manifested that it filed with the Bureau an amended 18384 corporate dineome tax return ‘on

388A

April 15, 1986. Ar Additional tax eredit of F2,467,125.00 eqiudeatens fi. taxearz withheld on interest ineome For [8'd was added to ite 1984 dncome tex return. Fitl tot~ amominent, the total ineome tax refund allegeady due flor 1984 amounted to F&,708,8393.00 (F4,292. 709.00 plus P2, 467,125.00) [Exhibit K]. Likewise, op the same date (April 18, 1986), petitioner filed tts 1985 fnceme tax return crediting Ite prior year’s excess tax credit of P2,717,882.00 representing 1984 withholding taxes On rantal inaowe 7 PISO, 67,00 and 1984 Withholding tax on frtericn ft © P2,467,125.00 (1985 IT, p. 42, lA er) {The amendment of V8d corporate income tax return and ‘the lapis eation bf it’s 1984 withholding taxes on rereast income as a tax eredit in its 1985 tneeme tax return 6 igeeread petitioner to file a metion to edmit amene: Fa petition for review on May 30, 1986. Fetitionsr seught the amendment of its petition for revier in order to conform to the evidence presented changing its original eause of action. Without any objection from respondent the Court granted petd tioner’s motion.

The amended petition now Jinite petitioner's claim for refund to P3,888,757.00 representing

BRR

overpaid income tax for the year 1883 carried over to ite 1984 ineome tax return, computed as follows:

Calendar Year

Ending 12-31-83 Pate Paid C.Rs Noe Amount Paid First Quarter SRC NS BBPEPIIF =P, 246, 141.00 Secend Quarter OE -O3 BLIIALTS 396,874.00

1983 Withholding

Taxes on rental Eneme 215,742.00 (?837 Income Tay Refundable P3,8528, 757.

Cede dkarte dete tetertdeey--t-d This. case hae been eubmitted for decision based on the pleadings and the evidence presented by petitioner.

The issue posed ja whether or not petitioner is entitled to the refund sought.

Respondent in his +jectal and affirmative defengea alleged that pet! tte ner ww claim for refund of ite fire ard corr a gearteriv iInceme tax Payments made on Mav 0, 71999 and August £8, 12882, respectively, have alreadr preseribed pursuant to Seetion £92 of the Tax Code.

In determining the 2-year Prescriptive period in e@laiming a refund of «xcees quarterly ineome tax payment the reckoning period should be eounted from the date of final payment, 1.¢. the last quarter Payment at the end of the fiseal year when it ds finally ascertainable that the taxpayer elther made 327

» profits or suffered Joges in its business operation. (Commissioner of Internal Revenue v. Asia Avetralia Exprenn Ltd., represented by Soriamont Steamship Agencies, Inec., and Court of Tax Appeals, G.R. Ne SI 966, April 10, 1989, citing Collector of Internal Revenue v. Prieto, 2 SCRA 1007; Commissioner of Internal Revenue v. Palanca, Jr., 18 SCRA 496).

Fetitioner“’e fipal inceme tax return for 1983 was filed on April JG, 1884 (April 15, 1984 being a Sanday). It ads frir ‘is date (April 16, 1884) shen we eount the ¢ recor preasertiptive pertlod for Judtotalty aliudoine : re Fereye?, Therefore, petitioner has ap to Am i] 15, 1846 within which to file his claim for refund.

Petitioner filed fiz claim for vefund with the Bureau of Internal flevenue en December 16, 1988. Immediately thereafter, petitioner Filed a petition for revier a January 2, 1996, Clearly, petitions’ s elaio for ‘he refund of FI, 246,141,000 and P896,874.00 as excess Aneome tax payments for the firet and secon? quarters of 1883 have not yet Preseribed.

Regpondent further maintains that petd tioner need not file the instant petition for review for it may still recover cxcesa ineome tax payments

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DECTSIOW -

STA CASE NO. 4018 under Section 86 ef tis Tax Code within 10 years from date af payvinert oupsuant to Artiele 1144 of the Civil Code.

Taking cue fren the Citytrust Banking Corporation ease, wre have oeeaston to rule that excess payments of quarterly corporate income tax falls under the provietan of now Seetion 230 (then Section 295) of the National Internal Revenue Code. As emphasised the titl> of Seetian 230 “Recovery of fax erronecus ts Oo filegally ecl lected” standing alone ifs not controlling. (C.T.A. Case No, 4099, May 28, 1981) The governing provision of Seetion £30 of the National Internal Rovenue Code, insofar as pertinent, provides:

) “Gane hd coger at tax cape i” is - "No eulit Pec or bd poe iso gtend hectecd.

or proceed ivr shas 7 = matntained t2 an ooepet For thre €re pore ef any national intesrvnald mevcena: 4 eroart ow asleged te have heen ep reper pedy or illegally assessed or eolilected, or af any penalty elaimed to have lv«een collected without authority, oniof ene sum alleged_te. bave been... exvessive a tn AY MAN Neer wronefully eollected, until a clain for refund or credft has been duly filed with the Commissioner; but such euit or proceeding may be maintained, wshether or not such tax, penalty, or sum has been pald under protest cr duress.

In any ocvire. ho wuch suit aor preeeeding shal] he pwn after the expiration of two pear: fiom the date of 3849 parmene of of io} Popis rewardlegse of any ostpesrey os og 0 Stare that may arise after payment Fouvi@de?, bovever, that the Commiaedonor way, even without a written claim therofer, refund or credit any tax, Where on (se of the return apon vhiod? pasr6ment war made, such payment appears eleertys te have been erronecusly paid.

NOK . a? MEH.”

(Underroortme "tseliad,) It fe ervatal clear from the aforecited provieien Chat ang faudiclol elaim for refund or tax credit of exeesa internal revenue tax must be filed within two yearae from the date of payment. “To opine therefore that there ita na need to fille a petition for reyler fo preserve the right to elaim for a refund or tax eredit fa to go against the Positive mandate of ection 230," (Citytrust Banking Corporation v. Commissioner of Internal Revenue, supra. )

Ree pondent Lurtbes stressed Petitioner's allegation that ft owofCersd a lose does not Apso facto merit. a re fire ‘pod ae oa usual token of a defenses be demurs that faves are presumed to have been paid and eollecté: in aceerdanee with lawn. The burden of proof reste upon petitioner to show entitlement to the refund sought. Petitioner must also show compliance with the reqguicitea prescribed 390 |

DECISION -

CTA CASF NO. 4018 under Sections 282 and 295 of the National Internal Revenue Code relafit> to the recovery of erroneously on illegeil: collected taxes.

As aarlier discussed there is no quertion that petitioner hag compl iad with the statutory requirements of Sections 292 and 294A. Having filed & written claim for refund with the respondent and 4a suit (petition for jaview) with this Court on January 2, 1986 is well within the two-year preseriptive period i. 27 c¢+al eounted Prom the date of ftnal parmant fen April 25, 7884) aa prescribed by Seotion £82.

Fetitionar hare cversone the burden of proof insofar as the excess 18€S quarterly corporate ineome tax paymenta of FUL SdG,191 Of for the Firat quarter and Fa96, 974 00 ter the second quarter are concerned. Jts preasentetton of various documentary evidence such as ite frcoone tax returns (Exhibits A, D, G, H, H-i to ff ?, 1, 1-1 to 1-7, and K); the eorrespordinge cor firmotiy receipte and payment orders for income Cave: paid for the firet and second quarters of 1983 (Exhibits B, C, E, and F); and voluminous invoices and vouchers showing its expenses paid and inennred for the year 1989 subject matter of this sce (Exhibite M to Z, and

G3

D

* end

DECI ET OU

CTA CASE NO. 40£8 AA to AY, dinelwetvse) hove all established § the Propristy of dtm atrim cer roufund for excess 18483 gnarterty ingame try oar vite When ft was respeonient’s turn to present evidence he failed to present any documentary or teatimontal evidence itn support of his vase. Instead he opted toa postpone the hearings for several times and late. chose to submit the case for decision on the bacis of the records and the Pleadings of this care Respondent has ont wssused any defictency assesament ner dispu tad the correc tnere of petitioner’s 1983 fnaome tax Pe hutch to date. Although reepondent forsaided the BIR records relative to the abeois «ntitied case, the fame was not timety Pile, ! ? wip after the Court bag ardered cha yutvatrar it ¢ ‘He aage fou decision due to peutpoorent oe Ladder: (offs thao PTR peonarda did Ae subsequentiy aaeoan wurtertAaoueht submitted the records fo the Court (ace (Cider of the Court dated July 21, 1990). Even then the memorandum report of hig revenue in telligence officers and spectal dnvestigator merely estates fhat a proposed assessment wil 1 be final’sed only after hearing taxpayer's afde.of the ore (tee Memorandum letter dated January 12, I8f 1+. 8. BIR rec. ).

392

DECES TCH

CTA CASH NO. @0s& What a@eenms eimila in many or eo in tenor as in the case at bar vbew.r ft may be necessary to repeat once amore Op wt Tdi, thas:

‘Fut oye oo oe TE Ute Uepeeted, the eo fen oar dod ro iiftaened on the basta of the pleadings, totes fon and affidavit of the parties which neither provokes any unsettling gueadg tions Nom involves material factual fasue genuinely in Alepite, Tae ccmaniutrative machinery or process employed on the right to the elaim seems to have moved barely at idling apeed. To be relatively quiescent for some four (4) years on a elain of Buch Fe simple Mifare and not xO coms tderah ls, t’ake which no longer incites gontromsterv nor ewotfes 4 queasy senge of @xreecsts tev, creates but an wivarran ted Lemeagerratic inertia of fnaection. Readicy, a Jegal conciacten ean safely be reach>d, FPetitfoner or ane Similarly afreumrtsvpcad tanparenr Por that natter deserves a measure of fair dealing in & pore expedient and campetently responsive action.” (Commonwealth Pacific Consultants, Ltd., »v The Commissioner of Internal Revenve, © T A. Case No. 2953, May 15, 1982.)

Aw feo The pt ye ‘to #sithhelding taxee an reproal dream few te petitioner fafled tea present proof mi yn og fre en rental Jocome (BIR Form 1748-A) for renmott ice purpower, Section 10 of Revenue Regulations Mo. 13-78 (as amended by Revenue Regulations No, 6-79 wh t ch changes apply to income paymente shall [is Aiven due courge only when it fs shown on the return that _the..dpgome-paypenat .

3892 received) wae dea ore? 3 roof Cie wrase. Income and, the faat.of .'f 1 ving de established. by__a goby, of. the etateomentaulv leaved by. the payor. to the. paves. (BIR Form Ne. 1. da-Al. showing..the..amount bald and the amount ¢f tox withbeld. therefrom. ”

Petiitdemer part 7 : eavcdietfs the Gourt that thre geen ook PTE GT et ee ae tuallr been withheld and patd by its various withholding ae he, No other di a 2 presented to prove that rental ineome vas received Jess withholding taxes. Proper proof of this would be the official receipta of petitioner fosucd ta ite tenants reflecting the arogs Aneome earned for jo perftod, the withholding tax, and the net amornt teaoeaired by petitioner from its tenants. Again ne ech eweidenue was prosented. Thus, petitioner bas falled to overcome the burden of proof with reapect ¢> fts elaim for the refund of its 1983 withholdi:a ftoxese on rental income is concerned.

BYREPREPORE, pet. o. @ 6 @laim for refund of PA, 246,141 00 and Pee, 974 C representing excess corporate income tay porents for the first and second quarters of 1983, respectively, or a total of P3,643,015.00 is hereby GRANTED. Accordingly, respondent Commissioner of JIsternal Revenue, Is 394

DECISTON ~

hereby ordered to refund te petitioner Philippine American Life Jnaurance Comnciopy the total amount of | PI,693, 078 06.

e RICH resgpoet trou “yop cer njJain For refund Of PETIA, 742,00 repuy or 17 (780 atthholding taxes on rental Income the came Ip hereby DENIED for failure to prarnent preoatlo« C actual withholding and Payment with the Mavean of Internal Revenue. No costes OO ORDEREGT.

Wueson City, Metro VYaoila September 16, 1981.

ame.

LEX Zz.

“Preeiding Jute

WE CX INCU «

/ f d nm conSranen GC. ROAGQUIN (fesociate Judge Be 2. Qin Pr ERNESTO D. ACOSTA

Associate Judge

DECTS LOM

CTA CASE NOL F071

CERTIFUCATI ON

I freredby cart fre het fie decitalon was reached after due aensuj 9 top emcong the members of the Gourt of Taw Ami ov 3 itr aceordance with Mee flo Tal Ae ty ho bo ofp: fe comatitution, RUBE Z. REYES

Preaiding Judge

Court of Tax Appeals

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