CTA Case No. 4161 (Decision)

./ REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEAI~S QUEZON CITY MANILA OVERSEAS COMMERCIAL, INC., Petitioner~ - Vf:;!I'"" SUS - C.T.A. CASE NO. 4161 COMMISSIONER OF INTERNAL REVENUE, }�: - - ..... - � Respondent. - - - - - - }! (.1) ,o DEC 0N This is initially a judicial claim for- , refund 'I by petitioner- of the sum of P331 ~ 716 r-epresenting the overpaid income tax for the ta xable year 1985. Petitioner Manila Overseas Commercial~ Inc. is engaged in the general business of insurance and/or r-ein s urance br-okerage along such lines as life~ health~ accident~ fire and allied lines~ motor car~ casualty~ surety and fidelity~ marine cargo~ marine hull~ comprehensive liability insurance and/or allied risks~ aviation insurance and/or such other insurance coverages allied with and incident to the above enumerated lines. For ca 1endar- year ending December 3 1 ~ 1985 ~ petitioner had a taxable income of P109~539 and the tax dues thereon being P28~339. PLII'""SLiant to the then Section 85 (now Section 78 .) of the National Revenue Code~ 5?.1.

DECISION CTA CASE NO. 4161 - 2- petitioner paid for- the 1 ~:.~. , 2~~~~~. and 3~~~. quarter-s of taxable year- 1985, the total amount of P203,950 as its quar-ter-ly income tax liabilities on May 27, 1985, August 29, 1985 and November- 27, 1985. The payments are summar-ized as follows: lltar-ter Ta:�:able Ta:{ Dt..ie Ta:�: Paid Ending Inccme 1'1ar-ch 31 ~ 1985 PH.19 ~856. 55 p 28~4~.()) P 28~4~.(X) June 30 ~ 1985 Sept. 30~ 1985 ~1~341.92 123~470.0) 95~02l).00 611~285.56 2l"l3~9~.oo 80~49).00 Total (Exhs. C~ D & F, pp. 1 32, 133, CTA rec.; F~ G & H, 134, 135, CTA r-ec.; Exh. I) Al so , for- the calendar year 1985, petitioner- paid cr-editable withholding taxes amounting to P156,105.00, representing taxes withheld on its commission income. Upon the filing of its final income tax r-eturn for December- 31~ 1985 (Exh . B, p. 1 3 1, CTA rec.)~ it will appear that its taxable income for the year 1985 is P109~539.00 and paid the tax due ther-eon in the sume of P28,339.00. (E:�:h. C~ p. 132~ CTA r-ec.; E:-:hs. D 8( E~ p. 1 33, CTA rec.) Having paid a withholding ta>: payment fat- the 1 ~.~.:=:. , 2nc:1 and 3:,:~~. quar-ters in that year of the total sum of P203,950.00 and having had a total taxes, v-Jithheld 5??.

DECISION CTA CASE NO~ 4161 - 3- on commission income of P156~105.00~ i t had a total withheld of P360~055.00. The sum of P203,95o.6o quarterly tax payments and the creditable withheld tax on commission income has been c 1 aimed by petitioner� as e>:cess ta:~ payment for the succeeding taxable year 1986. (Ex hs. K ~ L ~ M ~ N, 0 ~ P, Q, R ~ S ~ T , U, V ~ (I.J ~ X , Y ~ Z , AA ~ BB ~ pp. 139-153, CTA rec.) Deducting~ therefore~ the sum of P28~339.00 which was the ta:�: paid on the total net income of petitioner fr�om the total sum of ta:�: withheld in the sum of P360~055.00~ there remain a balance of P331~716 as creditable amount to ta >:payer Manila Overseas Commercial~ Inc. This amount was carried over to the succeeding ta>:able year 1986 pursuant to Section 79 (now Section 69) of the Ta:.: Code ( E>: h. B) � For the calendar year ending December 31~ 1986~ petitioner had a ta:.:able income of P166~658 and a tax due thereon was P58~330. Petitioner likewise had creditable taxes that were withheld by withholding agents on its commission income amounting to P340~836. Thus~ the total tax credit or refund that petitioner was legally entitled to as of December 31~ 1986 amounts to P614~222

DECISION CTA CASE NO. 4161 - 4- computed as follows: Tax credit/refund for 1985 (F'331~716.00) Tax withheld on commission income for 1986 To t a 1 (P672,552.00) Less: Tax liability ( ... . .. ~Sl. !I..~..:;;Q-!'.. Q.~~. ) for 1986 Refundable amount For the calendar ending December 31, 1987, petitioner had a ta}:ab le lncome of P1, 939,038 and tha ta}: due thereon was P678, 663. For the same year, petitioner also had creditab le taxes Withheld on its commission income amounting to P362,578. Applying the 1986 refundable tax on P614,222, petitioner as of December 31, 1987 had a total tax credit or refund of P298,137 arrived as follows: Tax credit/refund for 1986 (P614, 222 .00) Tax withheld on commission income for 1987 Total (F'976,800. 00) Less: Tax liability ( .. . 9...7J~. !I 9..9..::::: .!.S:~Q. ) for 1987 Refundable amount For the calendar year ending December 31~ 1988, the taxable income of petitioner amounted to P1,648,435 and the ta}: dw~ ther�eon was P576,952. For the first three (3) quar ters of its taxable year, petitioner paid the tota l amount of P141,901 as its quarterly income tax liabilitiefli.I In

DECISION CTA CASE NO. 4161 - 5- addition~ petitioner has to .its credit the ta }: es withheld on its commission income amounting to F'390~847. From the above~ the refundable or cred i tab 1e ta:-: of petitioner as-, of December 3 1 ~ 1988 amounts to F'253,933 computed as follows: Tax credit/refund for 1987 (F'298,137.00) Tax withheld on commis9ion 390,847.00) 141,901.00) income fo1'� 1988 Quarterly payments made dur .i ng the yea1~ Less : Tax liability �for� 1988 Refuhdable amount From the foregoing, the computation of the claim for tax refund or c:redi t is summariz.ed as fo 1101-'IS: x~~r. 0...1arterly EWT 0'1 Inct'nE ti\>~ Ta:-: n:?fLind P.9Yf.!~.::tt� ~9T.ffi.!.��!QJ� ______ P.9Y~_l?.l�L ~:t...Y.�r.. ..~Q. 1985 :203~ 9~-.(l 156,105 ( 28,.:':.09) 331,716 1986 ( 58,330) 614, 7',-� ..� 1987 l~l.!l.~"l+ 340,El.<.6 (678' b._L-3 ) 1988 .C~ZQ, 9.~1 298,137 -::.62,578 .t~.~.!\.9.~..>.. ~_..M? On June 24, 1986, petitioner filed a s upplemental claim for� tax c:redit dated J. I,.IJJ.~- -- ..+..Z..s. .L9.~.Z, supplemental to that of May 23, 1971, a copy of which is attached and made as Anne }: B, of the petition for review. This c la im for tax credit was filed within two (2) years from the date the refundab le amount was paid to the government.

DECISION CTA CASE NO. 4161 - 6- Up to this date~ r�espondent Commissioner of Internal Revenue has not granted the tax credit allowed. The sole issue in this case is whether or not petitioner is entitled to the refund in the amount of P253~933. It is claimed by petitioner that it is entitled to the refund of P253~933 representing overpaid i~come tax or the issuance of a tax credit cer-tificate covering the amount of 'I It P253 ~ 933. alleges that "Under Section 69 of the Tax Code (former-ly Section 79)' in rel,3tion to Revenue Memor-andum Circular Nos. 7-85 and 32-76~ petitioner is entitled to be refunded !, ot- given a tax credit cer� ti f icate for� the e>tcess ta:-t cr-edit or-' over-paid income taxes as of December 31, 1988 which was not applied or- utilized in the succeeding taxable year- ( 1989) � II Pet- tinent por-tion of Section 69 of the Ta>: Code states as follows: "Final adjustment r-eturn. Ever-y corpor-ation liable to tax under� Section 24 shall fi l e a final adjustment r-etur-n covering the total net income for the pr-eceding calendar- or fiscal year. If the sum of the quarter-ly ta:-t payments made dur-ing the said taxable year- is not equal to the total tax due on the entir-e taxab l e net income of the year~ 1 the cor-por-ation shall either-:

DECISION CTA CASE NO. 4161 - 7- (a) Pay the excess tax st ill due ; or- (b) ~I? ..r-�e._ ful}_d �' d _ the e. x cess amount p~id~ as the case ma y be. In case the cor-p<Jr-atiort is entitled � to a r-efund of the excess es t imated qu e:"\r- ter-1 y income ta :-:es paid~ t t.1e. r.:~e. .f.l,\f).�1.? l::lJ.e.. _____� IJ.l91,U:!:t__ .....~.h P..~:!n.... . . ..9.n. .... .:t.t?...........fJ.Q..::~ J. i29.J_q_;;_t r.D..�'.O..t ....r.::.�!_t_~,\_r:_n_____m?..Y...... P..f?... ~.r.::.e.9..:Lte.<:l...... ?.9.?..i.n !::::t. the e..?...:t..i..ID.?...t.?<::i q 1,.\ C\[.JE?r::J ..Y............ i.n.t:.9fi!E?... ........:t:?..>.: .t .;i;_�_p__:i,_1:i, :t;:i,_E.??.: .......1.'..P.r...........t.h.?..... .t._s,_:;_� __f:l_J _g_____q_~,-l_?r...te..r.::?. .... P .f :th.�_____________ _�l,~_<;::_ <;�?_? <::l :iQg___ __ ...................t.�::;?.I:JJ.!=? . ���������� ________Y.e..?.r.::. � II (Under-scor-ing applied) The per-tinent of the ' F<evenue Memor-andum Ci r-cular- No. 7-!35 d a t e d (~p r-� iJ. 1 ~ 19El5~ imp 1 ernen ting Sec tion 69 of the Ta :-: Co de (f or- m e l~ 1 v Section 79) ~ r-el a tive to the pr-oce s~:;i_nq of ,~e �fund states that: "In the C:\bove pt- ovif:; ion of t .he Requlations (Section 7 o f the Re ven ue Requ 1 a t .ions No. 1.0 -�- T T) ~ thr:> co n :lor-�a t.ion may t- equest for- t h '? t- ef und of the ove l- p aid income t.a:: 9!.::. c 1 aim fol -- automc:lt.i c cn?dit. To .:i..!J?..I,.\T?. Pr:q rn_pt_ �<;t:i.Pn ____ _ 9~) ..~. c::Pr P.P.r_a _t_ e _____ ~r)Qq?.) ......... :i..r:� c o_fl1.!2 _____ te~_ ;:: r.::e.:tqr:n ... ?..b.9',-:.!..-in q _ r.::E?._fqn_9.?...9J f?___ � ffi 9\-ltJ.t ?._____a r.:::i. ?. :i.n g :f .r.::.9.fT.l...........PY.�!CP .?. .:!:-.9. . ..... _g _q ?.t:te..cJ.y ____ j,1J <;.Pf.Tll:!...... ... t..;:~:-: E?. s ~ t he office ha s pr-omulg ated Rev enue Memor-andum Or-der- No. 32 - 76 d a t e d Ju n e 11~ 19 76~ containing the pr-o ce dur-e s in pl~ocessinq said r-et ur-n s . Under- thes.e pr-ocedur-es~ t.J.J!?..........r:.e tu r-r~.s ......C:\Tg _!)1�X:~-~J..Y.........Pr:?. ::: C:\1,-l<;l._;!. _t.,gq 11-Jh ic h co nsi s t mainl y of c h eckin g rna them c-1t i c a 1 c\CCL.It"� ac y of the f iqUI"�es i n th<2 r-e tu r� n � 0J .t.e..l"' 11-Jhi c th . .. j : he r:~:?.Tl:\11.9 ...<:Jr.:: t..?.!::........ .<;.r.::�'9 .!..t: ........... . J .?... ......9C!:j\Q:\;_~c:l ; an d~ '\; t-\ ,i?_ pr: g_~ ~:? q_qr:�' .............t!.~.':?......... ....�f:!qp:t..<~<::l .. ..........t:o ........ . .f.�<::: :i.:.! J t._;=.1_J E:?. .!. f.Df.D�'.Q_i � .t:.�' ..�.<; .t ~-.9..!J.... .9!:.L c: .9J?..? .? .....J ...!. ~_:._�' ......t..tl i __�:_" >: :-: ): I I (Under-scor-inq s uppli e d) I Fr-om th e a b o v e - quoted T ax Cede pr-o v ision~ and 5?'7

DECISION CTA CASE NO . 4161 - 8- implementing circular issued by the respondent himself governing refund of overpaid corporate income tax, it is evident that if the corporate ta}:payer did not apply or utili z e the excess ta}: cr�edi t or overpaid income ta}:es in the succeeding taxable year~ such taxpayer is entitled to be refunded or given a tax credit ce r tificate~ and the processing or approval thereof should come as a matter of course. �I While the sum of P253~933 was proven to be the ct-editable amount in favor of th<E ta :-: payet- Manila Overseas Commercial~ Inc. for the year 1988~ this ~ourt notes that no claim for refund/or tax credit has been filed. I t is on l y on J~t.D.t':L...:?..4. 11 �.���.! .9..~? that petitioner had filed a claim for� tax credit (Exhibit J) ~ ~1hich c 1ai m clid not cover the year 1988, which was in the s um of P253 ,933. Petitioner therefore had violated Sections 292 ,:11nd 29 3 (no~J Sections 230 and 204) of the Tax Code by not filing a claim for tax r-efund/ tax credit with the Commissioner of Internal Revenue within two (2) years for the payment of the tax for the year 1988 in the sum of P253,933. For lack or failure to file a claim for refund ~~~i th the Commiss ioner of Internal Ravenqe, it � is

DECISION CTA CASE NO. 4161 - 9- fatal to this judicial claim for ref und and must evidently fail. WHEREFORE, the judicial claim of petitioner Manila Overseas Commercial~ Inc. is hereby DENIED , with costs against petitioner. SO ORDERED. Quezon City~ Metro Manila, 10, 1991. I CONCUR: Cev..X;Q, c~ ERNESTO D. ACOSTA Associate Judge CERTIFICATION I hereby certify that this decision was reached after due consultation between the members of the Court of Ta x Appeals in accordance with Section 13~ Article VIII of the Constitution. "---- C. ROAQUIN ssociate Judge Court of Tax 'Appeals 5 �~q \ I'