Pcci Securities Brokers Corpora 1'Ion, et al. vs. The Connissioner of Internal Revenue

DECISION -

3 Fot~ oF the amount oF P231, 388 . 71, representing alleged overpaid income tax For taxab l e year 1986 CExh.

"N";

Id., pp. · 4 - 6).

Rs respondent has, admittedly, not yet acted on said request For reFund, peti~ioner Filed the instant petition For review with the Court on May 27, 1988 in order to suspend the running oF the two-year pre scription period under the Tax Code. The issue beFore the Court For adjudication in the present case is, w~at amount, iF any, should be reFunded/credited to petitioner For allegedly overpaid inco•e tax ' For 1986.

In order to settle this issue, the Court shall discuss the diFFerent alleged 1986 tax payments set Forth in petitioner's 1986 income tax return and deducted From the income tax due For .that year, separately. 1.

Re: P95, 742. 00 in "Pri Ot' Year's Tax Credit" Respondent, in its "Answer" Cid., pp. annual declared 30-32) a nd me~orandum Cid., pp. 112-116), sets Forth For the issue oF prescription regarding the amount declared in petitioner's 1986 annual inco111e tax ..

C.T.R. CRSE NO.

4 2 75 -

DECISION -

4 return as alleged tax credit

1985 .

From taxable year Recording to respondent, "petitioner's right to claim the reFund oF the amount o F P95, 7 42.00 has prescribed" under the provisions oF Section 292 oF the 1977 Tax Code Cnow Section 230>, reFerring to the .amount reFundable to petitioner's Fro* taxable yea~ 1985 which it carried over to 1986 CSee Exhs.

"R", "0", and "0- 1";

Id., PP· 7 and t~ espect i vel y) .. The Tax Code provision adverted . .. "\ , r eads, in part, as Follows: "Section 230..

Recovery oF tax · \· erroneously or illegally collected .. No suit . or proceeding sl;lall be maintained in any court For the recovery oF any nationa l internal revenue tax hereaFt~r all e ged to have been erroneously or illegally assessed or collected, or oF any penalty claimed to have been collected without authority, or oF any sum alleded to have been exces s ive or in any manner wrongFully collected, unt i l a claim For reFund or credit has been dul~ Filed with the Commissioner;

but such suit or proceeding may be ~aintained, whether or not such t~x, penalty, or sum has been paid under protest or duress ..

In any case, no such suit or proceeding shall be begun aFter the expiration oF two years From the date oF payment oF the tax or penalty /~ I SB, to C. L R.

CASE NO.

4 2 75 -

DECISION -

- 5 - regardless oF any supervening cause that may arise aFter payment;

Provided, however, That the Commiss ioner may, even without a written claim thereFor, reFund or credit any tax, where on the Face oF the return upon which payment ~as made, such payment appears dlearly to have been erroneou s 1 y paid. ·~ Respondent contends that ~tHe a•ourit aF P95,74.2.00 was allegedly paid in 1985, but the petitioh £or • I ...

review was Filed on May 27, 1988 or a period or more than two years as prescribed by the aForesaid Section .230 oF the Tax Code" ("Memorandum For The ·., Respondent", p. 5 · , Id., p. 116)- The Court disagrees with respondent. The amount .

oF P95,742.00 was declat"'ed in petitioner's 1985 annual income tax (Exh.

"0", Id.) as the amount reFundable -For said taxable year.

Petitioner's intention to apply the same as tax credit For 1 9 86 i~ shown in sai~ return, by Exhibit "0-1" (Id. ).

In Fact, the excess tax payment For 1985 oF P95,74.2.00 was autoMatically set oFF against the income tax due dn petitioner ..

For the First quarter ending March 31, 1986.

(Exhibit

"B "'

I d., p. 8).

This is available to petitioner in .consonance with Section 69 (Formerly C.T.R. CRSE NO.

4275 -

DECISION -

- 6 - Section 8 7 ) o F the Tax Code which s tates Follows:

"Section 69.

Final f.ldjustment Return.

- Every corporation l iable to tax under Section 24 shall File a Final adjustment return covering the total taxable income For the precedinb c al endar or Fiscal year. IF the sum oF the quarterly tax payments made during the said ta~able year is not equal to the total tax due on the entire taxable income o F that year the corporation shall eith er:

(a) Pay the excess t ax still due; or CbJ Be reFunded th e exces s amount paid, as the case m ay ·- . b~.

In case the corporat ion is entit l ed to a reFund oF the excess esti mated quarterly income taxes paid, the reFundable amount shown on its Final adjustment return may be credited against the estimated quarterly income tax liabilities · Fo~ the taxable aua rters oF the succeeding taxable year."

(underscoring supplied) as Accordingly, the reFund being claimed by petitioner in the amount oF P 257,828.00 does not include ' the 1985 exces s ta x credit oF P95,742.00 since this was al r eady utilized as aForementioned. The conjured is sue oF precription oF P95,752.00 is nowhere n~~r. The question that needs to be add ressed next i s whether petitioner can claim the entire excess taxes paid oF P95, 742.00 shown on its 1985 annual ..

C.T.R. CRSE NO.

427 5 -

DECISION -

- 7 - income tax t~etu r n (Exhibit "0", Id., p. 58) . Us consider how it was arrived at : 1985 Inco1e Tax Due Less: 1984 Excess Tax Credits 1985 Quarterly Tax Paynnts 1st(} CR# B-6755624 P 268,935.00 3t'CfG CR# B-7610161 25,111.00 Balance of Tax Due (or credit available} Less: Tax Credits 1984 Creditable Withhol~ing Tax 1985 Creditable Withholding Tax TOTRL f¹/IKJIMT IXEIIREFUNMBLEJ p 261, 149. 00 p 19,293.00 294,046.00 313,339.00 p 2, 125.00 I 41,427.00 IP52,190.00J 43,552.00 IP95, 7112. OOJ iTo be llppl i ed as Tax Ct·edit to Succeeding Taxable Year} Let t •• The BIR Rudit Sheet For Corporate Annual Income Tax Return Showing Over Pa yment oF Income - ' Taxes Paid For taxable year 1985 (Exh'iBit "S", Id., p .

62) sh owed however, the amount For reFund/credit to be P32, 897.,00.

The computation is presented below:

1985 Inco1e Tax Due Deduct : 1985 Quarterly Tax Pay1ents lstO CR# B-6755624 3rd£1 CRII B-7610161 ll1~unt for Refund/Credit Petitioner oFFered Pe68,935.00 25,111. 00 P261,149. 00 294,046.00 e 3E,897.oo the Foregoing as pt~ov e that the BIR Mal<ati Regional evidence to OFFice has determined that petitioner had a reFundable amo'unt totalling P32,897.00. It appears that BIR did not tal<e into consideration the 1984 excess tax credits carried over to 1985 as well as the 1984 - C.T.R. CRSE NO. 4275 -

DEC ISION -

and 1 985 cred"f;ab l e - 8 - withholding taxes claimed.

The disallowan ce is on account' oF petitioner's Failure to attach supporting documents as required under Section 54 (now Section 51 ) oF the Tax Code, as amende d and its illfplementing t~ e g u 1 a f; i _ on s • ~s to the 1984 accounts, these can be credited only against esti•ated tax ,.

liabilities For the taxable quarters oF s ucceedi ng t axable year as provided by Section 69 <Fo r merly S e ction 87) oF th~ Tax Code or a written ·., claim For reFund or credit oF any n a tional i nternal rev enue tax must be Filed within two years FrdM the date oF Paymen.t;

<Section 230 [Fo rmerly Section 2921 oF the Tax Code).

Said determination by the BIR is entitled to g r eat weight.

~ccordingly, We hold that only P3e,897.00 oF the 1985 a l 'l eged ~ excess tax .

credits oF P95 ,742.00 can be cat~ried over to taxa ble year 1 986.

2.

Re:

The P251,707.00 in alleged 1986 quarterly f; ax pa y men f; s • Court Finds that petitioner's "C", "E" and "6" CCTA Records, pp.

60 Exhibits 11 - 13) C.T.A. CI1S E NO. 4275 -

DEC I S ION -

- 9 - s uF Ficiently evid e nce the payment b y peti tioner oF th e r e s p e ctive amounts oF P65, 5 6 9. 11, P78,112.42 a n d P1 0 8,025.65, For the First three quarters oF 1 986.

It is worthwhile to note that petition~r's i n c ome and business tax liabilities For 1986 have a l r eady been investigated and the deFiciehcy ; ta~es ,.

Found due thereon were already paid per Exhibi~ "H"' an d

"L "

!CTA Records, pp. 17- 18). 3.

Re :

P8,588. 0 0 i n alleged wit h held creditable tax For 1986.

·., P e t itioner submitted in evidenc~ Certi'f\icate oF Cred itable In c ome Tax Withheld at Source For the y e ar 1 9 86 !Exhibit "H", Id., p. 14) to prove that th e a mount oF P8, 5 5B. 03 wa s d e du c ted and withheld by MIESCOR on consultancy Fees paid to petitioner a mo unting to P171, 760. 54.

We Fi nd the suFFicient to show the act u a l withhdlding oF said amou n t.

The Court, however, Finds that di sa llow the t~eFund oF the amount declared in pe ti t ioner"s 1986 income tax return as creditable withholding ;ax, by reason oF petitioner's Failure to s how that the P171,760.54 in consultancy 6S C.T.R.

CRSE NO. 4275 -

DECISION -

- 10 - From which the P8,588.03 was withheld Forms part oF its declared income For 1986. W~11 ...:. settled is the rule that claims For tax cr~dit or reFund oF income tax deducted and withheld on income payment s shall given due course only w~en i t l is shown I be on the return that the income j payment received was .

• I declared as part oF the gross income ' and the Fact:

,.

oF withholding is established by a copy oF th6 statement duly issued by the payor to the payee (BIR Form 1743) showing the amount: paid and the , amount oF tax withheld "'h, ~ ' thereFrom (section 10, Revenue Regulation No. 13-78 as amended by Rervenue Regulations No ~ 6-85, Section 54 [now Section 51] (F) oF the Tax Code; Citytrust Finance Corporation v.

CIR, CTR Case No. 4134; November 11, 1991; BPI S avings Bank Inc. v. CIR, CTR Case No. 4412, August 1 7 , 1992).

We would now tackle the discr~pancy in the amount claimed as reFund/tax credit with the BIR and that claimed in the petition For r ev iew. Bas'ed on petitioner's l~tter to the BIR. dat:ed March 19, 1988, the amount claimed is P231,388.71 while in the petition . For review, it was P257, 828. 00. The diFFerence oF P 26,439.29 pertains to the e~mount ..

C.T.R. CASE NO.

4 275 -

DECISION -

- 11 - allegedly applied as automatic credit against petitioner's income tax liabilit~ as oF' the third quarter oF 1987 <Exhibt "N", CTI=J Records, pp. 4-6), which surprisingly was not borne out ~y the 1987 I=Jnnual Income Tax Return as it showed a tax due oF I "NIL" since it incurred 1 a loss For the <Exh:,i.bit Failure .

''P", Id.; P• 59). , 1 However, For t ' lack to File a clai• For· reFund/tax · credit I year or ...

oF • the balance oF P 26,439.29 with the Co•aissioner ' oF Internal Revenue within two (2) years From the payment oF the tax For 1986, ~,, "" petitioner•s clai• is still barred by law <Sections 292 and 295) \' fnow Section 230 and ?,04) oF the 1Tax Code as amended). ThereFore, based on the above Findings, the Court holds that petitioner is entitled to the reFund/tax credit oF the amount oF P159, 955. 71, thus computed:

l11ount of Inco1e Tax Due for- 1986 Less: Prior Year's (1985J Excess Tax Cre~it 1986 Quarterly Pay1ent s Balance of Tax Due lor Credit available for succeeding quarterly return) Le ~s : Tax Credit R1ount of Tax Still Due/fRefundableJ Less: Refundable a1ount credited against the inco1e tax liability for the Jr'C/ quarter of 1987

TOTRL RMOUNT REFIMJRBLE

P 32,897r00 251, 707~00 I I P98,209. 00 , 284,604.00 tPt86,~. ooJ ·~;It - lP186,395. OOJ 26,439.29 fP159, 955. 71J '' •j ' ' . I j' C.T.A. CASE NO. 4275

— DECISION -

IN VIEW OF THE FOREGOING, the Court GRANTS in 4+ part, petitioner’s instant clatm ‘for’ refund/tax credit. Respondent is hereby ordered to refund to or issue a tax credit in petitioner’s favor, in the total amount of P159,955.71, representing overpaid it gs ae income taxes for taxable year 1986 which has not eG been utilized. , re eee No costs. ;

WE CONCUR :

Cute Q. Gee { ERNESTO D. ACOSTA Presiding Judge Dati RAMON ©. DE Vv. RA Associate Jude si tS C.T.R. CRSE NO.

4275 -

DECISION -

- 13 - . ..,..

C:ERTIFIC:ATION I hereby certiFy that this decision was reached aFter due consultation a•ong the me•bers oF • the Court oF Tax Rppeals in accordance wi th Section 13, Rrticle VIII oF the Constitut~on.