Benguet Corporation, et al. vs. Commissioner of Internal Proulgated: Revenue, et al.

Republic of the Philippines COURT OF TAX . APPEALS Quezon City BENGUET CORPORATION, Pet i t .i oner, versus - C.T.A. CASE NO. 4687

COMMISSIONER OF INTERNAL

Pro•ulgated:

REVENUE, . DEC f 2 fQQl ~ Respondent.

I .,

X --------------------------------------------- --

X This case involves a claim for refund or tax credit of overpaid income taxes for taxable years 1989 and 1990 in the total amount of FilL~, 956, 985. 00.

Petitionet~, is a domestic existing under and by virtue of Philippine laws, with principal office at No.

1.2 ADB Avenue, Mandaluyong, Petitioner is engaged in the mining business which includes the expl ot~a t ion, development, and operation of mining properties for pur~oses of commercial production, and the marketing oF marketable mine products pt~o d uced by it.

10, 1990, petib. onet~ filed its Annual Income · Tax Return <ITR> fat~ the calendat~ year ended December 31, 1989 with respondent's Revenue District Office No. 31, Mandaluyong, Manila, showing a tax a ble income . of 1=1202,037,838.00 - D E C I S I 0 N - C.T.A. Case No. 4687 2 and an income tax of ~70,713,243.00. Howevet~, in its quarterly income tax returns for the first three quarters of the same taxable year, petitioner alleged that it paid as income tax the total amount of ~81,731,645.00.

More so, creditable expanded withholding taxes in the total amount of ~177,626.00 were withheld by various parties from their income payments to petitioner during the same calendar year 1989.

The income taxes paid is computed as follows:

CRIPO No.

lst Quarter B7144583/C4986852 2nd Quarter B7144648/C5371971 3rd Quarter B7144717/C6277510 Creditable Expanded Withholding various Total Inco1e Tax Paid for 1989 05-3Q-89 08-29-89 11-29-89 Alount ~ 33,008,851.00.

37,866,474.00 10,856,320.00 177,626.00 ~ 81,909,271.00 -------- --------------- Petitioner all~ged that it paid income tax in the total amount of ~81,909,271.00 for CY 1989 wherein it should only be held liable for ~70,713,243.00 as income tax liability. Petit i onet~ claimed that t~ere was overpayment in the amount of ~11, 196,028.00.

- D E C I S I 0 N - C.T.A. Case No. 4687 -- 3 - On ~)pt~ i J.

15, 1991' petitioner filed its Annual Income Tax Return for it 5 cal endat~ yeat~ ended Dec!?mbet~ 31, l990 showing a net loss of f=l68, 37E:, 485. 00. During the same year, a total of f=l3,770,957.00 representing creditable expanded withholding taxes were withheld by various parties \ from their income paym•nts to herein petitioner.

Petitioner contended that it overpaid its income taxes for the years l989 and 1990 in the amounts of Fill, 196,028.00 and FI3,770,957.00, respectively. On August 1991' petitioner filed a claim for refund or tax 6redit corresponding to the alleged overpaid income taxes of Fill, 196,028.00 for 1989 and Fl3, 770,957.00 fot~ l990.

<Exh. JJ. > To this date, respondent has not yet acted upon petitioner's .claim for refund or tax credit.

Hence, this petition was filed on December 20, 1991' as a way of tolling the two ' (2) year pres~riptive period prescribed in Section 230 of the Tax Code.

In answer to the petition, t~espondent as spe~ial and affjrmative defenses alleged that: 1.

The present petition for review is premature as petitioner's claim for refund or tax credit is stilJ pendin~ investigation by respond ent ;

SDECTBIONS: *

C.T.A. Gase Noi. 4687 . ~ 4 ne

2. In an action for refund or tax credit, the taxpayer must show that the taxes wer# paid erraneausly or collected illega}ly, Failure ta meet this: burden is fatal] ta the actian for refunds pars 3.

merits for refund are construed strictly against claimants since “they — are in Phe snapure af an epeapetep arte a and:

74 a Ay Taxes: ‘are presumed to have been paid and: (Pad Hep ee in accordance with Law. "5 ae dag. | Bs The sole iseue ta pa resolved in this Gen 2 ao case is whether or not petitioner is entitled to i?

“the refund = or ban: eredit of. the amounts of P11,136,028.00 and PB, 770, 957.00, ranfasenting aveppaid taxes fpr the years 1989 ane® 1990, egipectively. ee edie OE Lahey ses Petitioner presented ene Following documents in support of ite elain for bax credit: : i:

‘ Eee ¢ & »?

se, Exh, a “AN es “Ey secs ty Exh.

Ine “Forporate Annual tngpme Tax Returiies “eh 2 ei oirate Annual facie Return for calendar year, Recegber 34, 1989, fo borperate Annual Income Return for calendar year : December Ady. 1990, Le Corporate Annual Income Return (for galendar perepber 3h, 1994.

oe bet Ee Pee * ~ Tax ended Tax ended Tax vege ended - D E C I S I 0 N - C.T.A. Case No. 4687 - 5 - Quarterly Inco•e Tax Returns and Quarterly Income Tax Pay•ents for 1989: Ex h. "B" Exh. "C" Exh. "E" Exh. "F" Exh. "J" Exh.

"K" -

Quat~tet~ly the Fi ..-~ st 31' 198'3 • .

Income Tax Return for Quarter ending March Central Bank Confirmation Receipt No. B7144583, dated May 30, 1989, fo..-~ the amount of f=t33,008,851.00.

Quarterly Income Tax Return for the Second Quarter ending June 30, 1989.

Centt~a 1 Bank Con f it~.nJat ion Receipt No.

B71L•L•EA8, dated Aug.

29, 1989, for the amount of f=t37,866,474.(l0 Quarter Income Tax Return for the Third Quarter ending September 30, 1989.

Central Bank Confirmation Receipt No.B7144717, dated Nov. 29, 1989, for the amount of f=t10,856,320.00. Certificates of Creditable Taxes Withheld for 1989 and 1990: Exhs. "N" to "U" , -- Ce..-~tificates of Creditable Income Taxes Withheld at Source for the calendar yeat~ 1989.

Exhs. "W" to FF" Ce..-~tificates of Creditable Income Taxes Withheld at ~ Source for the calendar yeat~ 1990.

Ex h.

"GG" Confirmation Receipt No.

B 18895988, representing payment of tax withheld on s ale of re a property in 99(.

- D E C I S I 0 N - C.T.A. Case No. 4687 - 6 - Inco•e Subject to Creditable Withholding Tax were included in the co•putation of Gross lnco•e for 1989 and 1990: Exh.

11 A-3

11 The income received from rentals and leases from various payees in the sum of ~3,552,523.00 forms part of the gross income for 1989. Exh. "A-4" The gross income for 1989 in the total amount of ~3,918,866,679.00 include among others the income subjected · to creditable withholding tax. Exh. "V-4" The income receiyed as service fees of ~168, 101.00 subjected to withholding taxes were included in the computation of its gross income for 1990. Exh.

"V - 5"

The income received from rentals and leases in the sum of ~3,956,837.00 subjected Exh.

Ex h.

Ex h.

"V- 6" -

to withholding taxes were included in the computation of its gross income for 1990. The intet~est the sum of subjected to taxes wet~e computation fat~ 1990.

income received in ~1,633,115.00 not final withholding included in the of its gross income

"V - 7" -

The income l-~eceived from the sale or exchange of property other than capital assets in the sum of ~19,329,807.00 subjected to withholding taxes we~e included in the computation cif its gross income fat~ 1990.

"JJ" Letter claim for refund f-=!pt~ i 1 21, 1991, filed with BIH on Aug. 23 , 1991. dated the ~DEC IS TtON.- C.T.A. Case No. 4687 As borne out by the records, petitioner filed its 1989 Corporate Income Tax Return on April 10, — 1930, showing a refundable amount of , P11,196,028.00, computed as follows:

Income :

Sales (Sch. 1) PB 3,752, 284, 278, 00 Gold Trading (Sch, 3) 154, 085, 948, 00 Rentals/Leaseg - Various (Sch. 4) - 3, So2, 523, 00 Interest not subject to Final With- holding fax (Sch. 9) 8, 225, 337. 00 Discounts from purchases (Sch. 1) 742, 474. 00 Sale or exchanges of property ats ~ > other than capital seth {fich. 8) 6, 119,00 : ; GROSS INCOME . : ee P 3, 918, 866, 679, 00 oe | i! ; . ’ ' n Less: Total Deductions 3,750, 611,004.00 Net Incone P 168, 255,675. 00 Add: Excess of Norsal Depreciation 33, 782, 163.00 Taxable Incose * P 202, 037, 838. 00 Saeas=esempees==== tax due P 70,743, B43. 00 Less:

a) Prior year's excess credit b) Quarterly Tax Payments — Qtr. cavROR No. Date feount ist B7144883/04986851! 05/30/89 33,008,851.00 2nd BTLAKGAB/CSS7I97IC . 08/29/89 37,866, 474.00 3rd B7LAATIT/CERT7SLO® 11/29/89 __10, 854, 320.00 TOTAL Faas c) Creditable tax withheld $77, 626.0 271.00 TOTAL AMOUNT REFUNDABLE =| , << P 11, 196, 028, 00 es ' CSS aS SSS Sy , % —_ > Exhs. °C" and "0", Exhs. “F* and "6", Exhs. “K" and *L".

_Exhs. "N" to “U", Their correspocding incese was declared in the nose pay refurn Bao xed as A-3". :

mr TO ~DECIBION- C.7.A. Case No. 4687 mpbuppenery Ener eto, the amount of P11, 196, 028. 00 nas automatically carried over to the ial aah tal taxable year 1990 by petitioner as shown in: its 1990, ‘Income Tax Return which was c uy * labelled as. "prior year's excess credit" (Bee. Exh. ayn). The same: income tax “return reflected a ‘epeditable tain withhedd (expanded withholding) in the amount of PS, 770, 987. ag (See Exh, w" ta," S56"), The excess credit in. 1989 and the creditable tax withheld for- 1999 amounted to a total of P14, 966, 985. 00. unfartunately, in 1990 petitioner suffered a net Ossi in its operat ion. Considering . ¢ % aa wet that no “gain Was, realized for | that - year, { necessarily no income ian Liabjlity could: Lie. petitioner’ opted to set aside its right to automatically apply the, same as tax credit ee view of the fact ‘that far phe following year 4991 it t Likewise incurred a oes in. AEP operations.

aie We find: Fitting, as “able for “petitioner's claim for refund ere tay credit, Section 69 of the oQ & : ZA ' bi Tax Code which reads: as followss - sf 3 .

* ¥en te ; 46 "SEC 69. Farad Adjustment Returs. ~ Every orooragi 1 “to tar r Section 24 shad File a final adjustment return covering ne total net income yt the preceding’c lendar or fiscal y “ If the gum of $F quarterly tay paymen’s ty 4 * a -DECISION- C.T.A. Case No. 4687 made during the: ‘said taxable year is not equal to the total tax due on the entire taxable net income of that year ts corporation shall eaghery: , weak ad. Pay. “the excess tax still due; rim on: : : : * b) Be- Segunded the excess amount ae paids as the case may be, , tH case ‘the “net nal Lon is ‘anvibied to a “refund, af .the excess estimated quarterly’ ingame taxes paid, ° .the refundable | amgunt shown on its final adjustment ‘paturn ‘may . be . credited against | ‘the ‘pitimated quarterly inecpme tax: liabilities’ for the taxable aubnyers of the. sosneeding taxable year, " ast ait ed "+ * “ts In view. ‘of eh evidence presented by the petitioner, this court believes that petitioner has shown to _the’: “satlefaction of the Court, its * entitlement “ke “the income tar refund | ag eredit 4, sought for, . “verity, ‘sf is the respondent “who has failed miserably” “in her nape “tb “overturn paren renele* asbert ion! Instead of coming up with material ' evidence” ‘in’ ‘order ‘to tilt the balance in her favor, respofident: casualty submitted ‘the case based on the pleadings and, beeords of the case. it tt ‘ hay likewise be: kbid © that respondent maybe considered eo. ap estioni q ‘ertously we >. ; pt etitionern's entatler ont ts claim fo seFund or xX tredit. F i 4 er | overwhelmin t the . Bs . 4 antum fF proof Pecul 0 sustain ts. clain, ‘'~DECISLON=~ 4 C.T.A. Case No. 4687 {> - om 40 - Moresa, ene pysPance presented were not clisputed by ame peneeny ( The sane evidence sufficiently established petitioner's right to the refund or tax credit sOuUgHE . (cadabawedten Management & Services Corporation vs. Commissioner of Internal Revenue, CTA Case No. 3232, June 26, 15985).

“WHEREFORE, premises, considered, respondent is hereby ordered -to> refund or issue tax credit perhstipare ta) in: “Favor af Benauet Corporation the Wount of P14, 966; 995. 00, representing overpaid income taxes for taxable years 1989 and 1990,