Camara Steel Industries Inc. vs. Commissioner of Internal Revenue

DECISION

This is a petition seeking for the t~efund at~ issuance of a tax credit certificate amounting to One Million Nine Hundred Ninety One Thousand Sixty Nine Pesos <Pi, 991, 069. OO>, representing alleged ovet~paid income taxes for the year 1995. The facts of the case are as follows: Petitioner is a corporation duly organized and existing under and by virtue of the laws of the Ph i l i p pines.

It is a manufacturer of steel containers for various industrial and household purposes. On Apt~i l 15, 1996, Petitioner filed its annual income tax return for the calendar year ended December 31, 1995, declaring a taxable income of P11,381,630.00 and an income tax due of P3,983,570.00. During the year, Petitioner had already made three quarterly payments totalling P3,347,721.00, detailed as follows: Fi t~st quat~t et~ Second q uat~t et~ Thit~d quat~tet~ Total P1,708,099. 18 997,403.31 642,218.81 P3, 347,721.30 <Exh. A-5> <Exh. A-5-a) <Exh. A-5-b) Likewise, fat~ the same y eat~ 1995, i ndust t~i a l us et~s of Petitioner's products belonging to the top 5,000 c.T. A. “CASE NO. 5469 corporations withheid the required Ts os on obne@ir a ourohases toa Pebtikioner oan campliance with ReV ETE Megoranrium iLUircular No. bay uri ks Y én) income payments by top &, 00g carporationg, -[ncmome payments made hy of the bop five thousand (3,8 corparakilans, AS Lertnined tay Commissioner of Internal Revenue, ts kheir ~ fe.

v Le suppliers af goods withhedd hrg total amount af down as followss Withholding Agent Tax Withheld Annex ae a 3M Philippines Ine.

Alyson's Chesical Ent. Atos Chemicals Co. Inc. Australfsia Cyl. Corp. BASF Coating + ink Phils. Rayer Philippines, Inc. Border, Int?] Philippines Ls cue co og EA ro Fa ep ~ ~I pee ~— <= re Mg wg ao ~d .

.

a wioen [aa] Gu “= oo tl wo = fe Ces cH wo co ia + o =< rt ch cc { Ef “Ek i a H-10, Hell, H+l2, H H-14, +15, H+16, He H-19, H-19, H+20, H-24, H-22, H-23, H+E4, H-25, H-BE, H-i?, 4-28, +23, 7 tal re & Es RG + faa Cu f fe 31, H-32 5

H- '

H-35, & H-36 + tad a California Manufacturing Cc. 934.5 Caltex Phils. Ine. 125,959. 1 Caca Cola Export Corp. a, 407, 4 Dow-Elanco 2, O32, El Inventor Body 245, ce rs a ro me OE es ls sor,

T 4

on N Exxon Chemicals, Inc. ee, 041.52 f, Q-i Goodyear Phils. Inc. 654.55 Pp Hiagel industries {,412. 73 ag Hoechst Phils. Inc. 586. 36 P Inkote Phils. Inc, a, 410,26 5, S-i, S-2, $-3, S-4 Intel Phils. Ine. O41, 78 T = i Jacints Press Coat Corp. 1,500. 00

Mallinckroot Vet. Clinic NCH Phils. Inc.

Nippon Paint Phils. Inc. Northern Foods Corp.

Pacific Products, Inc. Pacific Rare Metal Ind. Philip Morris Phils.

Philippine Electric Co. Pilipinas Shell Saka1oto Orient Che1ical S.C. Johnson Scientific Industries - 3 - 3,573.62 3,460.07 18,433.50 61,295.46 8,419.35 10,298.82 7,878.80 15,191.53 1,669,679.23 6,366.99 Shell Phil. Petroleu1 Corp. Si1e Darby Phils.

2, 740.83 114.55 255,097.53 670.90 1,628.37 Stedrra Adhesives Unilever Philippines Unilox Industrial Corp. United Coconut Che1icals TOTAL PhP 48,153.31 128.82 174,613.90 2,626,918.38 V, V-1, V-2 W, W-1 1 W-2, w-3, W-4 X, X-1, X-2 Y, Y-1, Y-2 Z, Z-1, Z-2 AA, AA-1 AB AC, AC-1, AC-2 AD, AD-1 AE, AE-1, AE-2, AE-3, AE-4, AE-5, AE-6, AE-7 AF, AF-1, AF-2 AG AH, AH-1, AH-2 AI, AI-1 AJ, AJ-1, AJ-2, AJ-3 AJ-4 AK, AK-1 1 AK-2, AK-3 AL AM Thus, after applying the quarterly payments made by Petitioner amounting to P3,347,721.00 and the taxes withheld by its purchasers in the amount of P2,626,918.00 to its tax liability of P3,983,570.00, there resulted an overpayment of P1,991,069.00. Fot~ of 1996, Petit i onet~' s quarterly income tax return reflected a taxable income of P2,356,668.61 and a tax due thereon of P824,834.01. The creditable taxes withheld for the quarter totalled P777,245.55 leaving a balance of P47, 588. L~6 which Petitionet~ paid on May 29, 1996 <Exhibit "AN"). Fot~ the second and third quarters, however, no payment was made by Petitioner since the total of its creditable taxes withheld for these quarters plus the payment made during

- 4 - quarter far exceeded its income tax liability (see Exhibits "AO" and "AP"). On May 29, 1996, Petitioner filed with the Appellate Division of the Bureau of Internal Revenue a request to apply its overpaid income tax for the year 1995 to its monthly value-added tax liabilities <Annex AP-2, Petition fat' Review).

No action was undertaken by Respondent on this r~equest.

1997, Petitioner again filed with Revenue District No.

43 of Pasig City a letter-claim for the refund of the unused creditable taxes withheld <Exh.

AQ) for 1995 in the amount of P1,991,069.00.

was no immediate action on the part of herein Respondent, the instant petition was filed on Mar~ch 11, 1997.

Respondent, raised the following Special and Affirmative Defenses: 5.

Taxes are presumed to have been collected in accordance with law.

Thus, petitioner must prove that the taxes sought to be refunded were erroneously or illegally collected.

6.

Taxes allegedly withheld must be shown to have been remitted to the government. 7.

Petitioner must complied with the provisions and 230 of the Tax Code. show that it has of Sections 204(3) 8.

Claims for refund of taxes are construed strictly against claimants, the same being in the nature of an exemption from taxation <Manila Electr~ic Co. vs.

Commissioner~ of Internal Revenue, 67 SCRA 351).

- 5 - The lone issue We are tasked to resolve is whether or not Petitioner has fully substantiated its claim to be entitled to the relief sought. Petit i onet~, in support of its case, presented the following evidence:

Exhibits

A -

A-4 A--5 -A-5-b B to B-·-3;

C to C-3;

D, D-1; E;

F to F-3;

G; H to H-36;

I; J; K to 1-\-3; L, L-1;

M to M-3;

N, O, 0-1;

P; Q; R;

s t 0 g .. -4;

T; U; V to V-2;

W to W-4;

X to X-i.7~;

Y to Y-;:::;

z t a z-;~~;

AA, AA-1, AC to AC-2;

AD, AD-1;

AE to AE--7;

Desct~i pt ion Annual Income Tax Return (1995) Quarterly income tax t~ettn~ns <1st-3t~d) fat~ 1995 Cl·~editable Withholding Tax Certificates Purpose To pt~ave that petitioner filed for the year 1995 its annual income tax t~et l.ll"~n To pt~ave that petitionet~ filed its qual·~tet~ly income tax fat~ the fit~st three quat~tet~s of 1995 and paid the cat~t~espond i ng taxes for~ the said quat~ters To prove the fact of withholding AF to AF-C::;

AG; AH to AH-2; AI, AI-l; AJ to AJ-4; AK to AK-3;

AN, AN-1;

AO,A0-1;

AP, AP-1 AQ - 6 - Quarterly Income Tax Retur~ns <lst-3r~d) fat~ 1996 Fot~mal t~equest for issuance of tax t~efund or~ tax cr~ed it dated Febt~uat~y 13, 1997 To pr~ove that petitioner~ filed its quar~ter~ly income tax t~et twns for~ the fi t~st thr~ee quar~ter~s of 1996 which fact confit~ming that it was unable to use the excess ct~editable tax ft~om 1995 To pt~ove that petit i onet~ formally requested that it be issued a tax ct~edit or~ refund of the excess or overpaid tax.

Respondent, offered no controverting evidence and submitted the case for decision on the basis of the pleadings and BIR record. After an examination of the facts and evidence attendant to the case at bar, this Cour~t finds that, indeed, Petitioner is entitled to refund for excess or overpaid income yax for the year in question. Section 69 of the 1995 National Revenue Cod e pr-' o v i d e s : Sec.

69.

Final adjust•ent return. -Evet~y corporation liable to tax under Section 24 shall file a final adjustment return covering the total taxable income for the preceding

- 7 - calendar or fiscal year.

quarterly tax payments made taxable year is not equal to on the entire taxable income corporation shall either: If the sum of the during the said the total tax due of that year the <a> Pay the excess tax still due; or (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 quarter of the succeeding taxable year.

<Underscoring supplied) Clearly then, from the above-quoted provision, Petitioner may legally claim for the refund of the taxes withheld and remitted during the year 1995.

Petitioner has likewise complied with the requirements set forth under Revenue Regulations 6-85 in claiming for the refund of excess creditable withholding taxes: First, Petitioner filed the claim for refund within the two-year period prescribed under Sec. 230 of the National Internal Revenue Code. Second, it was shown on the return that the income payments received has been declared as part of the gross income; and Lastly, the fact of withholding was established by copies of the Withholding Tax Statements duly issued by the payers to the payees showing the amount paid and the amount of tax withheld therefrom.

- 8 - Petitioner's entitlement to the refund sought was even bolstered by Revenue Officer Lailo G.

Viernes who recommended to the Revenue District Officer of Revenue District No.

43 <Pasig City) that the amount of P1,991,069.00 be refunded to herein Petitioner <pp. 26- 27, BIR records).

In view, however, of the denial of Exhibits AB, AL and AM which are nowhere to be found from among the exhibits presented in Our Resolution, dated December 17, 1997, We can only grant such amount that has been duly proven which in this case is P1,808,447.48, computed as follows:

Total amount of claim Less: Exh. AB-Philip Morris Phils.

Exh. AL-Unilox Industrial Corp.

Exh. AM-United Coconut Chemicals Total amount refundable p 7,878.80 p 128.82 P174,613.90 P1,991,069.00 182,621.52 P1,808,447.48

WHEREFORE, in the light of the foregoing, Respondent Commissioner of Internal Revenue is hereby ORDERED to REFUND to Petitioner the sum of P1,808,447.48 representing overpaid income tax year 1995.

WE CONCUR:

G&>-o~ ERNESTO D. ACOSTA Pt~esiding Judge - 9 - CERTIFICATION I hereby certify that this decision was reached after due consutation with the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

Q ... :zcQ .. a~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals