Columbian Motors South Super, Inc., et al. vs. Commissioner of Internal Revenue

DECISION

This is a petition for review seeking for the refund or issuance of a tax credit certificate amounting to ~7,146,386.32 representing unutilized creditable income tax withheld at source for calendar year ended December 31, 1993.

The facts of the case are simple. Petitioner is a domestic corporation organized and existing under and by virtue of the laws of the Republic of the Philippines.

It is engaged in the assembly and manufacture of automobiles, including the sale and distribution of automotive spare parts. On April 15, 1994, petitioner filed its Annual Income Tax Return (ITR) for the calendar year 1993 (Exh.

A).

Subsequently, an amended return was filed on July 6, 1994 (Exh.

8), reflecting a net loss of P19,200,399.00.

For the same year, however, there were already several

DECISIO N -

C.T.A. CASE NO. 5345 - 2 - income tax payments made by petitioner which were wit hheld at source by vario u s withholding agents totalling P7,146,386.32, broken down as follows: Withholding Agent Amount of Income Withholding Tax Exh.

Columbian Autocar Corporation P95,522,569.60 P4,776,128.48 c Asian Carmakers Corporation 11,916,478.20 590,823 . 92 D Columbian Motors Corporation 33,547,066.40 1,677,353.32 E Sta. Rosa Motor Works Inc. 2,041,612.00 102,080.60 F P7,146 , 386.32 Since petitioner failed to apply the aforesaid amount to any tax liability for that year, it intended to do so on the next taxable year. For calendar year 1994, petitioner again s uffered a loss of P44,434,556.00 (Exh. H), thus, the P7,146,386.32 creditable taxes withheld during the year 1993 remained un utilized.

On March 29, 1996, a letter-claim for the refund of the P7,146,386.32 was filed with the Bureau of Internal Reven ue.

Petitioner anchored its claim on Section 69 of the National Internal Revenue Code in relation to Section 230 of t h e sa me Code, to state: Sec.

69.

F.inal adjust:ment:

ret:urn.

Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year.

If the su m of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable inco me of that year the corporation shall either: (a) Pay the excess tax still due; or (/!)

DECISION -

C.T.A. CASE NO. 5345 3 - ( b ) Be refunded the excess amount paid, as the case may be;

In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year.

SEC. 230.

Recovery o~ rax erroneous ly or ~llega l ly collecred. No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, 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 regardless of any supervening cause that may arise after payment:

Provided.

however.

That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. As said claim was not acted upon immediately, instant petition for review was filed on April 3, 1996. The sole issue for determination is whether or petitioner has complied with all the requirements for the not a valid claim for refund so as to be entitled to the relief sought.

DECISION -

C.T.A. CASE NO. 5345 - 4 - Petitioner, to support its following documents:

Exh.

Description A Photocopy of BIR Form No. 1702 or the Tentative Corporation Annual Income Tax Return of Columbian Motors South Super, Inc.

for calendar year (CY) 1993 filed on April 15, 1994 B c to F G Photocopy of BIR Form No. 1702 or the Final Corpo- ration Annual Income Tax Retut·n of Columbian Mo- tors South Super, Inc.

for

CY 1993

filed on July 6 ' 1994.

Photocopies of Various Certificates of Credita- ble Income Tax Withheld at Source for the year 1993 Photocopy of BIR Form No. 1702 or the Tentative Corporation Annual Income Tax Return of Columbian Motors South Super, Inc.

for CY 1994 filed on April 17, 1995 H Photocopy of BIR Form No. 1702 or the Final Corpo- ration Annual Income Tax Return for CY 1994 filed on July 28, 1995 I Administrative Claim for Refund of Creditable Tax Withheld in the amount of ~7,146,386.32 dated and filed by the peti- tioner with the BIR on March 28, 1996 case, submitted the Purpose To prove that petitioner filed with the BIR its Tentative Corporation Annual Income Tax Return for

CY 1993

To prove that petitioner filed with the BIR its Final Corporation Annual Income Tax Return for To prove the withholding To prove petitioner with the Tentative

CY 1993

fact of that filed BIR its Annual Corporate Income Tax for CY 1994 To prove that petitioner filed its Final Annual Corporate Income Tax for CY 1994.

To prove that peti- tioner filed with BIR on March 28, 1996 a request for refund on the creditable tax w/held in the amount of ~7,146,386.32

DECISION -

C.T.A. CASE NO. 5345 - 5 - J Photocopy of BIR Form No . 1702 or the Tentative Corporation Annual Income Tax Return of Columbian Motors Sout h Super, Inc.

for CY 1995 filed on April 15, 1996 To prove petitioner with the Tentative that filed BIR its Annual Corporate Income Tax for CY 1995 K Photocopy of BIR Form No. 1702 or the Final Corpo- ration Annual Income Tax Return for CY 1995 filed on October 7, 1996 To prove that petitioner filed its Final Annual Corporate Income Tax for CY 1995.

Respondent, on her part, did not introduce controverting evidence and even intimated petitioner's request is in order except that the copies of the documents presented by petitioner have yet been authenticated, thus: Q.

Mr. Witness, after this report, 18, 1997, do you have report aside from this? dated June any other A.

It should be the final report, Sir. Q.

So this memorandum, dated June 18, 1997 is your final action on this report, Mr .

Witness?

A.

Yes, Sir.

Q.

Now, the petitioner is clai ming tax refund in the amount of P7,146,386.32.

In your report, will you please tell us, did you grant the claim or not, Mr.

Witness?

A.

After considering the documents presented to me and I evaluated, I find the request to be in order that is amount in the total of P7,146,386.32 as requested in the letter of the petitioner, Sir.

any that xerox not

DECISION -

C.T.A. CASE NO. 5345 - 6 - Q.

Why do you find that it is in order?

What are your basis, Mr. Witness? A.

Because these are basically supported by After the previous BIR Form as I have stated which are the Monthly and in the Annual Return and there is another Annual Return including the payment or Monthly Remittance Returns made by the payors in favor of the petitioner we also included in that return, including the name of the bank.

However, if this (sic) records are required to be authenticated I would recommend so, for this purpose.

As of now, these xerox copies presented in favor of the petitioner are not yet authenticated, Sir. (TSN, Witness:

Officer, RD No.

1997, pp. 24-25) examining the Jose de Vera, Revenue 52, Hearing of July 17, evidence submitted by parties, We rule in favor of petitioner. the To be entitled to a refund, the following requirements have to be met: 1.

That the claim for refund was filed within the two

(2) year period prescribed under Section 230 of the National Internal Revenue Code; 2 .

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

That the fact of withholding is established by a copy of statement (BIR Form 1743.1) duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom. Petitioner's claim for refund filed with the Bureau of Internal Revenue on March 29, 1996 as well as its Petition for Review filed with this Court on April 3 '

DECISION -

C.T.A. CASE NO. 5345 - 7 - 1996, are both within the two year period from the date of payment of the tax. Second, the income tax return of petitioner for 1993 (Exh. B) likewise revealed that the income upon which the taxes were withheld were included in said return. And third, the fact of withholding was also established by petitioner's submission of the various Certificates of Creditable Income Tax Withheld at Source (Exhs. C to F).

Moreover, since in this case petitioner is seeking for the refund of the amount of P7,146,.86.32 which it previously declared in its ITR to be applied as tax credit to the succeeding taxable year but failed to do so, the 1994 and 1995 Income Tax Returns were also submitted by petitioner to prove that the amount sought to be refunded was never utilized. And, finally, respondent's testimony finding petitioner's request to be in order as it was adequately supported by the necessary documents further bolstered petitioner's claim for refund. WHER EFORE. in view of all the foregoing, this Court finds this petition meritorious and in accordance with law.

Respondent is hereby ORDER ED to RE FUND or in the alternative, ISSU E a TAX CREDIT CERTIFICATE in favor of petitioner the sum of P7,146,386.32, representing {f!! J

DECISION -

C.T.A. CASE NO. 5345 - 8 - unutilized creditable income tax withheld at source for the taxable year 1993.

WE CONCUR:

LIQ.o~ A TO D. ACOSTA iding Judge 14-. ).;~ J RAMON 0. D E~~A Associate Ju e CERTIFICATION I hereby certify that the above decision was reached after due consultatio n with the members of the Co u rt of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

~~o~ ERNESTO D. ACOSTA Presiding Judge