Amp Scientific Drilling International vs. The Commissioner of

DECISION

Petitioner seeks the refund of alleged overpaid withholding taxes in the amount of P2,959,700.00 for the year 1909.

iopsign corparation duly organized and existing under the laws o ile Philippines tircugh a Eranch with postal address at Desco directional drilling, free paint and back off and logging services to companies engaged in oil exploration and power development (See Exts. A [SEC Certificate of Registration No. 927] and B [BGI 820 poet

Ts

Pout

wi he ant rere ite fools and equipment to persons or entities engaged in goothermal exploration and development in the Philippines. hort), a service contractor engaged in oil or petroleum of its tools and equipment to Philippine Geothermal, Inc. (PGI), a resident foreigon company engaged in geothermal exploration and development in the Philippines.

Petitioner received technical service fees from Alcorn in the amount of P14.602,263.00 (U39$670,050.79 x P21.7928) for which it was withheld a final taxin the amount of F1,956,438.00. remitted to the BIE, computed as follows:

Firisl Ireoactae Tax ADU OF Tax facunit ot Withheld atiource Income Payment Pate Ten _ ithheld

Sp

and tosis Stor itr :

veotherrcmal cer 3 rioes Payiaents to P91 1608.94 1% 29,116.91

Total Final and

es editetie Tax

Withheld at Source FIGS TA 002 11

DECISION -

C.T.4. CASE WO. 4600 Mn April 11, 1990, petitioner filed iad TS een: a) Pric My Year's

Withheld 1

Atnount Refundable

ee letions bie Income clit: ats W ithheld fe T. Laz Credit Pe 208, amine 2S ay BO Oo - 3 -

Corporate Annual

ne!

60.00, Qi ad ee 991.00 5 O62 GFg00 Po 4.480 400.00 PAS, 165 800 00 13, {ear a Pod, $42 AS? OO 4 62.0 Me 4a eiyy 515.00 ceca

DECISION -

{T.A. CASE NO. 4600 erroneously paid withholding taxes for the year 1969, pursuant te Section 204(4) of the Tax Code. Petitioner claims that the income received from Alcorn should have been excluded from the computation of its gross income and accordingly, the 6% final tax withheld therefrom should therefore be excluded from the income of Pl4602 244.00 received from Alcorn was deducted from the Technical Service Income of P33,766,1b3.00. The fer 1989 Likewise, the original Creditable Income Tax Withheld for the current year (1949) of P3,353,991.00 should be reduced Ser.)

ta income earned from Pol should be the one subjected to the Return of petitioner for the year 1949. state a cause of action it appearing that petitioner failed to state The issue presented before us for resolution is whether or 823

DECISION

.7.A. CASE HG. 4600 - 5 - Although the petition Tailed fo aliege the date when the faues sought te be refunded or credited were paid, still a closer Wil show that the creditable income taxes withheld covers the respondent's office on April 12, 1991. In order to toll the twe- year prescriptive period for filing a claim for refund or tax credit, documentary as well as testimonial evidence to prove entitlement to the refund or tax credit sought to be recovered by way of this and offered in evidence, fo wit:

1} The original Corporate Income Tax Return for 1989 (Exh. Fi filed on April 11, 1990, together with its attachments ia) The Audited Financial Statements;

{b) schedule of Taxes and Licenses paid;

Is

) The Amended Corporate Income Tax Return for 1989 (Exh. G3) filed on Aucust 22, 1990, together with its attachments similar to the items abovye-enumerated:

4) Certificate of Final Income Taz Withheld at Seurce (Exh.

DECISION -

C.T.A.CaSE NO. 4606 "!) Certificate of Tax Withheld at Source issued by Alcorn 6) Surmary of Tax Withheld at Source issued by PGI for september (Exh. F), October (Exh. U), and December 1989 (Exh. Z} showing the amounts of taxes withheld by Pol from petitioner;

7) Central Bank Confirmation Receipts (Exhs. FE, N,Q, T, W, and Z) and BIE Payment Orders (Exhs. ], M, P, 8, ¥V, and Y) as proof PGI] from petitioner; and &) BIR Certification dated February 14, 1992 certifying verified fo be correct per their records (Exh. AA).

The income received as a sub-contractor of Alcorn, a ar service contractor engaged in petroleum operations under PD. 87, Provision of Section lef PD. 1454 {Imposing Final Income Tax On subcontractors And Alien Employees Of Service Contractors and

Subcontractors Encas

In Petroleum Operations In The

Philippines Under Presidential Decree No. 87], effective April 21 “SECTION 1. Yay of subcorirsciors - Every subcontractor, whether domestic or foreign, entering in bo a contract with a service contractor shall “be liable to a final income tax equivalent to aight percent (4%) of its gross income derived from sus ch oo ontra ct, such tax to be iti Hew of all Taxes, any inceme recerved from all, “other source within. and without the Philippines in the case of domestic oie tS 20

BECISUOH -

subcontractors and within the Philippines in the case ot foreign subcontractors shall be subject to the revilar income tax under the National Internal As such, the inceme received from Alcorn should be being a resident foreion corporation with an established Branch in the Philippines should be taxed under Section 25/a)(1) of the National Internal Revenue Code, which provides:

“Sec. 25. Rates of tax on foreign corporation. - (a} Taz on resident foreign corporations.

(1) In general. - Unless otherwise provided, a business within the Philippines, shall be subject to a tax equivalent to 35% of the taxable income derived in the preceding taxable year from all sources within the Philippines.”

cand ue rate of 35% instead of the 7.5% and 35% final withholding taz After having overcome the burden of proof in claims for refund or tax credit, We therefore see no reason why petitioner's _‘daim fer refund or issuance of a tax credit in the amount of P2939, 700.00, as appearing in its Amended Corporate Income should not be granted.

WHEREFORE, finding the petition meritorious and in P2 949,700.00, representing excessively paid income tax for 19649 due to an erronesusly withheld tax.

50 ORDERED.

ERNESTO D. ACOSTA

WE CONCUR:

MA K. GRUBA

Associate Judge

“Sn Vr RAMON 0. DE VEY

DtCISIOH-

C.T.A. CASE HO. 4600 - 9 -

CERTIFICATION

I hereby c:ertlf)r that t1us decision v~ras reached aiter due ,·:onsultation among the meml:)ers of the Court of Tax Appeals in ac(:ordance ·1'\~lth Sec:hon 1 3.. ArtKle VI I I of the Constitution. ~~(2-~ ERNESTO D. A COST A Presiding Judge .,,,

Court of Tax Appeals

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