Court of Tax Appeals

JS Steel Corporation vs. Commissioner of Internal Revenue

CTA Case No. 5799 April 18, 2001

JS STEEL

REPUBLIC OF T H E PHILIPPINES

COURT O F TAX APPEALS

QUEZON C ITY.

CORPORATION,

Petitioner,

-versus-

C.T.A. CASE NO. 5799

COMMISSIONER OF INTERNAL

REVENUE,

Promulgated:

APR 18 2001

Respondent.

c.:;YO'#~~~

x-----------------------------------------------------------x

DECISION

This is a judicial claim for refund of the amount of P3,457,723 .00 representing alleged excess unutilized creditable withholding tax filed by the Petitioner on April 15, 1999.

The facts of the case giving rise to the controversy at bar are as follows: Petitioner is a corporation organized and existing under and by virtue of the laws of the Philippines. It is primarily engaged in the manufacture of steel blanks for use by various manufacturers of automotive, electrical, electronics, industrial and household :- . •"1 appliances.

Petitioner alleges that it sold its products in the year 1996 to various industrial users belonging to the top 5,000 corporations. Pursuant to the Bureau of Internal Revenue's requirement on withholding taxes, the buyers allegedly withheld the required 1% tax on 505 its purchases amounting to P3,457,723.00 which was subsequently remitted to the government. This amount is now the subject of Petitioner's claim for refund. On April 15, 1997, Petitioner filed its annual income tax return for the year 1996 reflecting therein a gross income of P45,379,577.00 and business related deductions amounting to P46,558,954.00, thus resulting in a net loss ofP1,179,377.00. Having a tax credit of P3,457,723.00, Petitioner, in its return, registered its intention to carry-over the aforesaid amount to the immediately preceding taxable year (Exhibit "A"). Availing of the provisions of Section 69 of the National Internal Re\lenue Code, Petitioner applied its tax credits to its estimated quarterly income tax liabilities in the year 1997 but since it suffered again a net loss of P68,380,390.00, its creditable withholding tax for taxable year 1996 remained unutilized. On May 21, 1998, Petitioner filed with the Bureau of Internal Revenue a claim for refund of its unutilized creditable withholding tax for the year 1996 (Exhibit "1"). Fearing that its claim for refund might prescribe, Petitioner elevated its claim to this Court on April 15, 1999 via Petition for Review. In his Answer filed on May 21, 1999, Respondent denied Petitioner's allegations in its Petition for Review and by way qf Special and Affirmative Defenses, interposed the ~ ...

~ l following:

10.

That Petitioner has not substantiated much less proved the alleged losses it allegedly incurred for the year 1996; 11 .

That to be entitled to refund or tax credit, petitioner, has to prove by clear and convincing evidence that he is entitled to refund or tax credit he claims (sic);

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12.

That Petitioner is not entitled to the refund or tax credit of the amount claimed.

On January 26, 200 1, this case was considered submitted for decision sans the memorandum of the Respondent.

The vortex of the controversy now lies on whether or not Petitioner was able to substantiate by clear and convincing evidence its clai m for refund. As We have laid down in a number of cases, the grant of a taxpayer's claim for refund of overpaid creditable withholding tax is dependent upon its compliance with the following requisites, to wit:

I) That the claim for refund was filed within two years as prescribed under Section 230 of the Tax Code;

2) That the income upon which the taxes were withheld were included in the return of the recipient;

3) That the fact of withholding is established by a copy of a 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. [Section I 0, Rev. Regs. No. 6-85; see Citytmst Finance Corp01·ation vs. The Honorable Commissioner of Internal Revenue, CTA Case No. 4134, November 11, 1991; affirmed by the Court of Appeals in Citytrust Finance Corpo.-ation vs. Court of Tax Appeals and the Commissioner of Internal Revenue, C.A. G.R. SP No, 28239, Mar'd1 14, 1994; and Citytrust Finance Corporation (fonuedy Investot·'s Finance Corporation/FNCB Finance) vs. Commissioner of Internal Revenue, CTA Case No. 4046, February 24, 1993; affirmed by the Court of Appeals in Commissioner of Internal Revenue vs. Citytmst Finance Cot·poration (formerly Investor's Finance Corp./FNCB Finance) and the Court of Tax Appeals, C.A. G.R. SP No. 31104, April18, 1994).

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These aforementioned requisites were specifically mentioned and affirmed in the case of Citibank N.A. vs. Court of Appeals and Commissioner of Internal Revenue, 280 SCRA 459.

There is no dispute that Petitioner has complied with the two-year prescriptive period provided under Section 204 of the National Internal Revenue Code, the administrative claim for refund having been filed with the Respondent on May 21, 1998, and its Petition for Review filed with this Court on April 15, 1999. Both periods are well-within two years reckoned from April 15, 1997, the elate Petitioner filed its 1996 Final Adjustment Return.

As disclosed by Petitioner's Statements of Income and Retained Earnings (Exh. B- 3) attached to its 1996 annual income tax return, Petitioner cleclarecl as part of its gross income the amount of P541 ,594,668.00, the income from which the taxes were withheld in compliance with the second requirement. Likewise, to further bolster its stance, Petitioner presented during the trial various Certificates of Income Tax Withheld at Source for calendar year 1996, thus, proving its receipt of income payment and the corresponding taxes that were withheld therefrom. With all the evidence on recqrp veering towards th existence of Petitioner's excess . :·. · ..

creditable withholding tax whici1' n!li1ains unutilizecl as of this elate, this Court finds it ineluctable to grant the claim for refund but only in the amount of P3, 119,295.16 which Petitioner was able to fully substantiate by documentary evidence, computed as follows:

PERIOD

WITHHOLDING AGENT

EXHIBIT

COVERED

3-D Industries, Inc.

M

Jan-Mar 1996

P

5Ub

INCOME

PAYMENT

220,466.35 p

TAX

WITHHELD

2,204.67

3-D industries, Inc.

Concepcion Industries, inc.

Concepcion Industries, Inc.

Concepcion Industries, inc.

Concepcion Industries, Inc.

Cutler-Hammer Asia Corp.

Dai-ichi Denshi Industries

Dai-ichi Electronics Mfg.

Honda Philippines, Inc.

K, Nakajo Kozai, Inc Mercury Tinsmith Corp.

Mercury Tinsmith Corp.

Mitsuboshi Cutlery Co.

Mitsui Industria Corp.

Nissan Motors Philippines

Norkis Trading

P.1. Manufacturing Philippine Appliance Corp.

Philippine Appliance Corp.

Saisho Onkyo

Sanyo Philippines

Saisho Denshi, Inc.

PN«<xS<cCHHDOVOSEE x< <€cHonwWwowdvdeEe zaser AR eo LrTamm™moog x <€ecAnwgevdseIZAAzArTrTAcCKATPAmMooW

JJJ

Jul-Sep 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Oct-Dec 1996

Jan-Dec 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Oct-Dec 1996

Apr-Jun 1996

Jul-Sep. 1996

Oct-Dec 1996

Jan-Mar 1996

Jul-Sep 1996

Sep-Dec 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Oct-Dec 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Jan-Dec 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

No pd covered

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Jan-Mar 1996

Jul-Sep 1996

Oct-Dec 4996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Oct-Dec 1996

Jan-Mar 1996

Apr-Jun 1996

Jul-Sep 1996

Oct-Dec 1996

5SUy

444,245.45 22,071,378.81 29,014, 163.03 22,413,606.43 12,961,940.64 201,449.00 315,033.75 577,997.85 1,468,494.46 303,383.21 1,392,336.65 . 786,984.59 1,239,941.18 21,818.18 8,245.45 2,558,713.59 312,060.46 122,488.38 388,980.20 356,300.00 183,856.00 104,873.00 87,218.00 375,950.00 401,204.00 271,858.00 159,005.00 1,769,203.00 799,669.66 1,508,467.68 3,486,421.07 1,996,907.00 727,881.00 3,163,448.00 46,023.73 19,714,381.00 14,189,589.00 15,055,643.00 363,970.00 603,212.15 709,232.38 2,638,659.00 4,979,407.00 1,159,665.00 4,134,178.00 23,262.41 2,838.45 45,235.46 3,022.73 4,442.45 220,713.77 290,141.58 224,136.05 129,619.38 2,014.49 3,150.34 5,779.99 14,684.94 3,033.83 13,923.36 7,869.86 12,399.42 218.18 82.45 23,474.41 2,836.91 1,113.53 3,536.18 3,239.09 1,838.59 1,048.73 872.18 3,759.50 4,012.04 2,718.58 1,590.05 17,692.03 7,996.70 15,084.67 34,864.22 19,969.07 7,278.81 31,634.48 460.24 197,143.81 141,895.89 150,556.43 3,639.70 6,032.12 7,092.32 26,386.59 49,794.07 11,596.65 41,341.78 232.62 28.38 452.36 30.23

Sharp (Phils) Corp. KKK Jan-Mar 1996 1,425,720.00 14,257.20 Sharp (Phils) Corp. LLL Apr-Jun 1996 1,551,796.57 15,517.96 Sharp (Phils) Corp. MMM Jul-Sep 1996 663,996.86 6,639.96 Standard Electric Mfg. Corp. NNN Jan 1-31, 1996 1,042,360.16 10,423.60 Standard Electric Mfg. Corp. 000 Mar 1-31, 1996 1,141,755.00 11,417.55 Standard Electric Mfg. Corp. PPP Apr 1-30, 1996 1,045,902.17 10,459.02 Standard Electric Mfg. Corp. elele) May 1-31, 1996 1,008 ,629.47 10,086.30 Standard Electric Mfg. Corp. RRR Jun 1-30, 1996 718,100.04 7,181.00 Standard Electric Mfg. Corp. SSS Jul-Sep 1996 3,858,726.00 38,587.26 Standard Electric Mfg. Corp. TTT Oct-Dec 1996 2,430,085.00 24,300.85 Tisdall Industrial Corp. UUU Jan-Mar 1996 370,775.20 3,707.76 Tisdall Industrial Corp. VVV Apr-Jun 1996 1,715,190.63 17,151.93 Tisdall Industrial Corp. WWW Jul-Sep 1996 1,348,458.65 13,484.62 Tisdaill industrial Corp. XXX Oct-Dec 1996 1,114,256.63 11,142.59 Transunion Corp. YYY Jan-Mar 1996 75,422.05 754.22 Transunion Corp. Z2Z Oct-Dec 1996 26,439 44 264.39 Universal Stainlessware Mfg. AAAA Jan-Mar 1996 28,823.00 288.23 Universal Stainlessware Mfg. BBBB Jul-Sep 1996 40,074.00 400.74 Universal Stainlessware Mfg. CCCC Jan-Dec 1996 82,621.00 826.21 Matsushita Electric Phils. DDDD Jan-Mar 1996 24,961,310.00 249,613.10 Matsushita Electric Phils. EEEE Apr-Jun 1996 30,678,323.00 306,783.23 Matsushita Electric Phils. FFFF Jul-Sep 1996 37,268,912.00 372,689.12 Matsushita Electric Phils. GGGG Oct-Dec 1996 23,766,054.00 237 660.54 TOTAL 3,119,295.10 312,248,039.25

WHEREFORE, in view of all the foregoing, the Respondent is hereby ORDERED to REFUND or in the alternative, to ISSUE a Tax Credit Certificate in the amount of P3,119,295.10, in faver of the Petitioner representing overpaid creditable withholding tax for taxable year Tuc.

SO ORDERED.

aaa la. CLA ERNESTO D. ACOSTA

Presiding Judge

I CONCUR:

Associate

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CERTIFICATION

I hereby certify that the above 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.

•, ~ - Q_._Q~ ERNESTO D. ACOSTA

Presiding Judge

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