CTA Case No. 4161

DECISION

- 2 - petitioner paid for- the 1 ~:.~. , 2~~~~ ~. and 3~~~. quarter-s of taxable year- 1985, the total amount of P203,950 as its quar-ter-ly income tax liabilities on May 27, 1985, August 29, 1985 and November- 27, 1985.

The payments are summar-ized as follows: lltar-ter Ending 1'1ar-ch 31 ~ 1985 June 30 ~ 1985 Sept. 30~ 1985 Ta:·:able Inccme PH.19 ~856. 55 ~1~341.92 611~285.56 Ta:{ Dt..ie p 28~4~.()) 123~470.0) 2l"l3~9~.oo Total Ta:·: Paid P 28~4~.(X) 95~02l).00 80~49).00 (Exhs.

C~ D & F, pp. 132, 133, CTA rec.; F~ G & H, 134, 135, CTA r-ec.; Exh. I) Al so , for- the calendar year 1985, petitioner- paid cr-editable withholding taxes amounting to P156,105.00, representing taxes withheld on its commission income.

Upon the filing of its final income tax r-eturn for December- 31~ 1985 (Exh . B, p. 13 1, CTA rec.)~ it will appear that its taxable income for the year 1985 is P109~539.00 and paid the tax due ther-eon in the sume of P28,339.00. (E:·:h.

C~ p.

132~ CTA r-ec.;

E:-:hs.

D 8( E~ p.

133, CTA rec.)

Having paid a withholding ta>: payment fat- the 1 ~.~.:=:. , 2nc:1 and 3:, :~~ ..

quar-ters in that year of the total sum of P203,950.00 and having had a total taxes, v-Jithheld 5??.

DECISION

CTA CASE NO~ 4161

- 3 - on commission income of P156~105.00~ it had a total withheld of P360~055.00.

The sum of P203,95o.6o quarterly tax payments and the creditable withheld tax on commission income has been c 1 aimed by petitioner· as e>:cess ta:~ payment for the succeeding taxable year 1986. (Ex hs. K ~

L ~

M ~ N, 0 ~ P, Q, R ~

S ~

T , U, V ~ (I.J ~ X ,

Y ~

Z ,

AA ~

BB ~

pp. 139-153, CTA rec.) Deducting~ therefore~ the sum of P28~339.00 which was the ta:·: paid on the total net income of petitioner fr·om the total sum of ta:·: withheld in the sum of P360~055.00~ there remain a balance of P331~716 as creditable amount to ta >:payer Manila Overseas Commercial~ Inc. This amount was carried over to the succeeding ta>:able year 1986 pursuant to Section 79 (now Section 69) of the Ta:.: Code ( E>: h. B) • For the calendar year ending December 31~ 1986~ petitioner had a ta:.:able income of P166~658 and a tax due thereon was P58~330.

Petitioner likewise had creditable taxes that were withheld by withholding agents on its commission income amounting to P340~836. Thus~ the total tax credit or refund that petitioner was legally entitled to as of December 31~ 1986 amounts to P614~222

- 4 - computed as follows:

Tax credit/refund for 1985 Tax withheld on commission income for 1986 T o t a 1 Less:

Tax liability for 1986 Refundable amount (F'331~716.00) (P672,552.00) ( ........ .... ~Sl .. !I .. ~ .. :;;Q-!' .. Q.~~. ) For the calendar ending December 31, 1987, petitioner had a ta}:ab le lncome of P 1, 939,038 and tha ta}: due thereon was P678, 663. For the same year, petitioner also had creditab le taxes Withheld on its commission income amounting to P362,578.

Applying the 1986 refundable tax on P614,222, petitioner as of December 31, 1987 had a total tax credit or refund of P298,137 arrived as follows: Tax credit/refund for 1986 Tax withheld on commission income for 1987 Total Less:

Tax liability for 1987 Refundable amount (P614, 222 .00) (F'976,800. 00) ( ..... 9...7J~. !I 9..9..::::: .!.S:~Q. ) For the calendar year ending December 31~ 1988, the taxable income of petitioner amounted to P1,648,435 and the ta}: dw~ ther·eon was P576,952. For the first three

(3) quar ters of its taxable year, petitioner paid the tota l amount of P141,901 as its quarterly income tax liabilitiefli.

I In

- 5 - addition~ petitioner has to .its credit the ta }:es withheld on its commission income amounting to F'390~847.

From the above~ the refundable or cred i tab 1 e ta:-:

of petitioner as-, of December 3 1 ~ 1988 amounts to F'253,933 computed as follows: Tax credit/refund for 1987 Tax withheld on commis9ion income fo1'· 1988 Quarterly payments made dur .i ng the yea1~ Less :

Tax liability ·for· 1988 Refuhdable amount (F'298,137.00) 390,847.00) 141,901.00) From the foregoing, the computation of the claim for tax refund or c:redi t is summariz.ed as fo 1101-'IS:

0...1arterly

EWT 0'1

Inct'nE ti\>~ Ta:-: n:?fLind x~~r.

P.9Yf.!~.::tt§ ~9T.ffi.!.§§!QJ§ ______ P.9Y~_l?.l§L ~:t ..... Y.§r. .... ~Q. 1985 :203~ 9~-.(l 156,105 ( 28,.:':.09) 331,716 1986 340,El.<.6 ( 58,330) 614, 7',-• .. • 1987 -::.62,578 ( 6 78' b._L-3 ) 298,137 1988 l~l.!l.~"l+ ~_ .. M?

.C~ZQ, 9.~1 .t~.~.!\ .9.~..>..

On June 24, 1986, petitioner filed a s upplemental claim for· tax c:redit dated J. I,.IJJ .~- -- .. +..Z..s .

.

L9.~.Z, supplemental to that of May 23, 1971, a copy of which is attached and made as Anne }: B, of the petition for review.

This c la im for tax credit was filed within two (2) years from the date the refundab le amount was paid to the government.

- 6 - Up to this date~ r·espondent Commissioner of Internal Revenue has not granted the tax credit allowed.

The sole issue in this case is whether or not petitioner is entitled to the refund in the amount of P253~933.

It is claimed by petitioner that it is entitled to the refund of P253~933 representing overpaid i~come tax or the issuance of a tax credit 'I cer-tificate covering the amount of P253 ~ 933. It alleges that "Under Section 69 of the Tax Code (former-ly Section 79)' in rel,3tion to Revenue Memor-andum Circular Nos. 7-85 and 32-76~ petitioner is entitled to be refunded !, ot- given a tax credit cer·ti f icate for· the e>tcess ta:-t cr-edit or-' over-paid income taxes as of December 31, 1988 which was not applied or- utilized in the succeeding taxable year-

( 1989) • II

Pet-tinent por-tion of Section 69 of the Ta>: Code states as follows: "Final adjustment r-eturn.

Ever-y corpor-ation liable to tax under· Section 24 shall fi l e a final adjustment r-etur-n covering the total net income for the pr-eceding calendar- or fiscal year. If the sum of the quarter-ly ta:-t payments made dur-ing the said taxable year- is not equal to the total tax due on the entir-e taxab l e net income of the year~ 1 the cor-por-ation shall either-:

(a) Fay the excess tax still dues or | (6b) Be refunded the excess amount Paid. as the case may he.

In case the corporation is entitled: to a refund of the excess estimated quarterly incame taxes paid, the refundable amount shown on. its fi inebeeeer tne ‘@oniiee) The pertinent provision of the ‘R 1] venue Memorandum Circular No. 7-85 dated April 1, 19848, implementing Section 69 of the Tax Code (formerly Section 79), relative to the processing of refund states that:

"In the above provision of the Regulations (Section 7 of the Revenue Regulations No. 10-77), the corporation may request for the refund of the overpaid incame tax or. claim for automatic credit. To... insure prompt corporate annual. tax the office has promuiga ated Revenue Memorandum Order No. 22-76 dated June il, 1976, containing the procedures in processing said returns. Under these procedures, the returns are merely pre- audited which consist mainly of checking mathematical accuracy of the fiqures in the return, After which. the refund. or ._aranted 3 ands this i" see eo BAW ‘hewaitine Gansu I From the above-quoted Tax Code provision, and O77 DECISION CTA CASE NO . 4161 - 8 - implementing circular issued by the respondent himself governing refund of overpaid corporate income tax, it is evident that if the corporate ta}:payer did not apply or utili z e the excess ta}: cr·edi t or overpaid income ta}:es in the succeeding taxable year~ such taxpayer is entitled to be refunded or given a tax credit ce r tificate~ and the processing or approval thereof should come as a matter of course.

• I

While the sum of P253~933 was proven to be the ct-editable amount in favor of th<E ta :-: payet- Manila Overseas Commercial~ Inc. for the year 1988~ this ~ourt notes that no claim for refund/or tax credit has been filed.

I t is on l y on J~t.D.t':L ... :?..4. 11 •.••• .! .9. .~? that petitioner had filed a claim for· tax credit (Exhibit J) ~ ~1hich c 1 aim clid not cover the year 1988, which was in the s um of P253 ,933. Petitioner therefore had violated Sections 292 ,:11nd 293 (no~J Sections 230 and 204) of the Tax Code by not filing a claim for tax r-efund/ tax credit with the Commissioner of Internal Revenue within two (2) years for the payment of the tax for the year 1988 in the sum of P253,933. For lack or failure to file a claim for refund ~~~i th the Commiss ioner of Internal Ravenqe, it· is

- 9 - fatal to this judicial claim for ref und and must evidently fail.

WHEREFORE, the judicial claim of petitioner Manila Overseas Commercial~ Inc. is hereby DENIED , with costs against petitioner.

I CONCUR:

Cev..X;Q, c~ ERNESTO D. ACOSTA Associate Judge CERTIFICATION I hereby certify that this decision was reached after due consultation between the members of the Court of Ta x Appeals in accordance with Section 13~ Article VIII of the Constitution. 5 ·~q \

I '

"---- C. ROAQUIN ssociate Judge Court of Tax 'Appeals