F. Jacinto Group, Inc. vs. Commissioner of Internal Revenue

DECISION

This case refers to a claim for refund in the amount of P1 ,146,176.30 representing withholding taxes on the income payments made by various c I i ents of F.

Jacinto Group, Inc. for the year 1992.

Petitioner is a registered domestic corporation, with office address at 4/F, F.

Jacinto House, No.

1 1 6 Rada St., Legaspi Village, Makati, Metro Manila.

It is engaged in the business of providing management services.

On April 12, 1 993, it f i I ed income tax return (Exh. "B", Pet.;

its corporate annual

p. 52, CTA rec.)

for the year 1992.

It declared therein a gross income in the amount of P28,808,409.00 and business-related deductions in the sum of P27,263,853.00, resulting in a net income amounting to P1 ,544,556.00.

The tax due was computed at 8.)

u DECISION - C.T. A. CASE NO.

5 2 31 - 2 - P540,595.00, which was paid by applying the available tax credit from the excess tax carried over from 199 1.

F or the same year 1992, various clients of petitioner wi thheld and remitted to the government a total amount of P1,465, 538.00, detai Is of which are as fo I I ows·:

Name of C I i ent a) Mind anao Steel Corp. b) Beatriz Marketing and Trading C) Camara Steel Industries, Inc.

d) Jacinto Iron and Steel Sheets Corp.

T 0 T A L

Amount Withheld and Remitted

p. 692,350.00 283,226.00 444 , 074.00 4 5!888.00 ' p 1 , 465 , 538 . 00 "C-1" "D-1" "E-1" "F-1" (p. 53, BIR rec.)

(p. 54, BIR rec.)

(p. 5 5, BIR rec.)

(p. 56, BIR rec.)

As this amount was not used to pay any of petitioner's tax liabi ities for the year 1992, it was carried over to pay tax liabilities of petitioner for the following quarters of 1993.

In petitioner's 1 993 annual income tax return (Ex h.

" J " , Pet .; .. p. 60, CTA rec.), it declared a gross income of P32,378,31 8.04 (P31, 781,382.56, net of M i see I I aneous I ncome of P 596,935.4 8), and business-related expenses in the amount of P31,46 5, 856.0 5.

The result was a net i n come of P9 12,461.99 with a corresponding tax due of P3 19,361. 70.

In sett I i ng this tax due, petitioner applied the amount of P 1,465, 538.0 0, wllich was the {) '' 0 '_) ::

DECISION - C.T.A.

CASE NO.

5231 - 3 - unuti I ized withholding tax credits in 1992, giving rise to a refundable amount of P1,14 6,176.30.

On February 3, 1995, petitioner filed with the BIR a claim for refund of the amount of P1,14 6,176.30.

To to I I the running of the two-year prescriptive period, petitioner filed the instant petition with this Court on April 11, 1995.

Respondent's Answer (pp.

19-20, CTA rec.)

was f i I ed on May 24, 1995 alleging as Special Defenses the following:

and Affirmative " 4 .

Petitioner's claim for refund is pending administrative investigation;

5.

The amount of P1,14 6,176.30 claimed by Petitioner as alleged difference between its tax payments and I i ab iIi ties for the year 1992 and 1993 was not properly documented; 6.

Taxes co I I ected are presumed to have and been made in accordance with law regu I at ions, hence, not ref undab I e;

7.

In an action for tax refund the burden of proof is upon the taxpayer to establish its right thereto otherwise, failure to sustain the burden is fat a I to said action or claim;

8.

It is incumbent upon the petitioner to show that it has complied with the provisions of Section 204 in relation to Section 230 of the Tax Code as amended;

9.

Well settled is the rule that claims against nature of for refund are construed strictly claimants, since it partakes of the exemption from taxation (Resins, Auditor General, 25 SCRA 754, 1968)."

8-,l'" IV Inc.

v.

DECISION -

C.T.A.

CASE NO.

5231 - 4 - The lone issue to be resolved ln this case is, whether or not petitioner is entitled to the refund of the amount of P1, 146,176.30, as excess income tax payments in 1992 representing creditable withholding taxes co I I ected by various c I i ents. In the hearings conducted, petitioner presented Ms.

Josephine Reyes, its Finance and Administrative Officer, to identify the documentary evidence, consisting mainly of the following:

1.

Written claim for refund filed with the BIR Ex h.

"A";

2.

Income Tax Returns for the years 1992 and 1993 - Exhs. "B" and "J", respectively;

3.

Certificates of Creditable Income Tax Withheld At Source (BIR Form No. 1743-1) - Exhs.

"C", "D", "E" and "F";

4.

Corporate Quarterly Income Tax Returns for the calendar year 1993 - Exhs. "G", "H" and "I";

5.

Alphabetical Lists of Creditable Income Tax Withheld At Source - Exhs.

"BK-1", "BI-1", "BM- 1" and "BN-1";

and 6.

Monthly Remittance Returns of Withheld (BIR form No.

1743W) - '' W" , i n c I u s i v e .

Income Exhs.

Taxes "L" to Respondent also presented one witness in the person of Noel Marcellano who identified the two (2) documents presented and offered in evidence, name I y:

1 • Letter of Authority - Exh.

rec.)

and 8.,.,.

'} " 1 " ( p. 136, CTA DECISION - C.T.A.

CASE NO.

5231 - 5 - 2.

Memorandum Report dated January 15, "2" (pp. 137-138, CTA rec. >.

1996 - Exh.

In his Memorandum report, Mr.

Marce I I a no recommended the granting of the refund in the amount P1, 146,176.00.

He stated in his report that: "The following documents were submitted by the said taxpayer in support of its claim: 1.)

Income tax return for 1992, 1993

2. ) Formal claim for excess tax credit year 1992 refund for the for the taxable 3.)

Certificate of Creditable Income Tax Withheld At Source (1743.1) a.)

Mindanao Steel Corp.

P 692,350.00 b.)

Beatriz Marketing and Trading Corp.

283,226.00 c.)

Camara Steel Industries Inc.

d.)

Jacinto Iron and Steel Sheets Corp.

444,074.00 45,858.00 P1 ,465,538.00 4.)

Alphabetical List - Creditable Income Tax Return At Source of:

5. ) a.)

Mindanao Steel Corp.

b.)

Beatr i·z Marketing and Trading Corp.

c.)

Camara Steel Industries, Inc.

d.)

Jacinto I ron and Stee I Sheets Corp.

Monthly Remittance of Withheld (1743W) January 1992.

a.)

Mindanao Stee I Corp.

b.> Beatr i z Marketing and 0 '· '' (_) - ,:

Income Tax to December, of

- 6 - Trading c.)

Camara Steel Industries, Inc.

d.)

Jacinto Iron t:lnd Steel Sheets Corp.

XXX XXX XXX In view thereof, it is respectfully recommended that the claim for refund representing excess creditable withholding tax for 1992 be granted."

(Underscoring supp I i ed) After a car.eful perusal of the records of the case, plus the evidence presented by both parties, the Court found out that petitioner has complied with requirements to be entitled to a refund, namely:

1.

That it filed a claim for refund within the two-year period as prescribed under Section 292 (now 230) of the Tax Code, as amended;

2.

That the income upon which the taxes were withheld was included in the return of the recipient, the petitioner herein; and 3.

The fact of withholding is estab I i shed by a copy of statement

( B I R

Form 1743.1) duly issued by the payor to the payee, showing the amount paid and the amount of tax withheld therefrom.

(Sec. 10, Rev.

Regs.

6-85;

Citytrust Finance Corporation v.

The Commissioner of Internal Revenue, CTA Case No.

4134, ·· November 11, · 1991;

Citytrust Finance Corporation (formerly Investors Finance Corporation/FNCB Finance) v.

Commissioner of Internal Revenue, CTA Case No.

4046, February 24, 1993;

Paseo Realty and Development Corporation v.

Commissioner of Internal Revenue, CTA Case No. 4254, August 10, 1993;

Commissioner of Internal Revenue

v. Court of Tax Appeals and Paseo Realty and Development Corporation, CA-G.R.

SP No.

32927, February 28, 1994) the DECISION - C.T.A. CASE NO.

5231 - 7 - The Court, however, noted that petitioner did not report a I I the income payments reflected in the Certificates of Creditable Withholding Tax at Source (BIR Form No.

1743) as shown in Schedu I e 2 of its 1992 Income Tax Return.

Only the amount of P28,257,927.00 was reported instead of P29,307,888.00 which is the summation of income payments reflected in the certificates.

Due to the fact that only the amount of P28,257,927.00 was declared in its 1992 Income Tax Return, petitioner entitled to a refund of the P1,093,534.65, computed as follows:

Income Payments declared in the 1 992

I TR

Multiply by Corresponding Creditable Withholding tax Less:

1993 tax due Amount Refundable reduced amount P28,257,927.00 5% p 1,412,896.35 319 361.70 p 1,093,534.65 is of

WHEREFORE, in view of all the foregoing, respondent is hereby ORDERED to REFUND in favor of petitioner, the amount of P1,093,534.65 as withholding taxes on the income payments made by its various c I i ents for the year 1992.

DE RA

Associate Judge CIO Q S:G
Associate Judge - 8 - CERTIFICATION hereby certify that this decision was reached after due consultation with the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

8"u - ERNESTO D.

ACOSTA Presiding Judge Court of Tax Appeals