CTA Case No. 4522 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY LINCOLN PHILIPPINE L FE INSURANCE CORPORATION, INC., Petitioner, - versus - C.T.A. CASE NO. 4522 conniSSIONER OF INTERNAL REVENUE, Respondent. X - - - - - - -X DEC s I 0 N ln the ins tant case, petitioner prays that "a�tl'?r due hearing, judgment be rendered ordering respondent to re�und or grant a tax credit to petitioner in the amount o� P37,800.00, reprl?:=:~?nting overp::~id income tax as shown in i t s 1988 corporate annual income tax return" cnPetition For Review", p. 2 ; CTA Records, p. 2 ). In i t s ncorporate/Part ~ership Annual Income Tax Return" for taxable <calendar) year 1988 <Exh. "Au; CTA Records, p. 19), petitioner, a corporation duly organized and existing under Philippine l aw, declared a net loss of P1,300,816.00 CExh. "A -3 "; CTA Records, p. 19> and 710 �

DECISIOH C.T.A. CASE HO. 4522 -2- a corresponding tax due thereon of nil. In said return, petitioner also declared foreign tax credit in the amount of P3~,8oo.oo~ <Exh. "A-4"~ CTA Records, p. 19), which is equivalent to the amount claimed therein as "total amount refundable" for calendar year 1988 <Exh. "A-5"; CTA Records, p. 19). On December 17, 1990, petitioner, through counsel, filed with the Bureau of Internal Revenue a letter, dated December 14, 1990, "requesting for the refund/tax credit of the total amount of P37,800.00, representing its overpaid income tax as of December 31, 1988" <Annex "A", "Petition For Review"; CTA Records, p. 4). As respondent, admittedly, has not acted on this request for refund/tax credit, petitioner, in order to arrest the running of the two - year prescri ption period under the � Tax Code, filed the instant petition with the Court on December 19, 1990. In support of its instant claim for tax refund/credit, petitioner offered to the Court in 1 The Court notes that on the face of petitioner's Annual lnco~e Tax Return for 1988, this a110unt was declared as 'foreign tax credit', and not as 'creditable tax withheld', as clai~ in the petition for review and undisputed by respondent. However, a close exa�ination of its attachwnts, particularly Schedule 4, shows that the said a�ount, in fact, corresponds to the declared expanded withholding tax for the taxable !calendar) year 1988. For this reason, the Court w11 consider the said P37,800.00 as petitioner's declared creditable withholding tax payaents for 1988 instead of foreign tax credit. 711

DECISION C.T.A. CASE NO. 4522 -3- evidence its 1988 annual corporate income tax return <Exh. "A"; CTA Records, p. 19), as well as five certificates of ,creditable income tax withheld at source which cover withholding taxes on certain income payments allegedly received by petitioner for rentals of real property for the year 1988 <Exhs. "B" td "F", inclusive; CTA Records, pp. 40- 45). The Court hereunder summarizes the contents of these certificates, as follows: Withh olding Amount of Rental Tax -~g.�?_!}.~---�-� Income Payment ~j. t .t.!_l}eld Sandoz <Phil) Inc. P360,000.00 Pl8,000.00 300,000.00 15,000.00 Jardine Da~ies 90,000.00 4,500.00 Inc. 233,333.33 11,666.65 180,000.00 9,000.00 Conley & Associates Inc. The Systems Solution Corpdration Conley & Associates . Inc. Respondent, on the other hand, did not offer any evidence, and instead submitted the case at bar for decision based on the pleadings and memoranda (Hearing of January 30, 1992; See CTA Records, p. 59). The sole i'ssue brought before the Court for settlement in the instant case is whether petitioner is entitled to the refund/tax credit of the P37,800.00 it is claiming as allegedly overpaid income tax for taxable <calendar> year 1988. 712

DECISION C.T.A. CASE NO. 4522 - 4- Respondent, in refuting petitioner's claim for tax refund/credit , sets forth the following as its main argument: Petitioner, having .failed <allegedly in accordance with a Commission On Audit Memorandum) to submit Official or Central Bank Receipts evidencing actual payment of the P37, 800. 00 cl.aimed, must be deemed to have failed in proving its entitlement to the refund/tax credit � of said amount under the Withholding Tax System <See "Memorandum For Respondent", pp. 2 - 6: CTA Records, pp. 75-79). The Court cannot agree with respondent's stand. The Court reiterates its previous pronouncements that it is sufficient for the claimant to show three things in proving claim for refund/tax credit, namely: <1> overpayment of the tax: <2 > actual withholding of the same through the submission of certificates of creditable income tax withheld at source: and ( 3) declaration as' part of claimant's taxable income of the income from which the tax was withheld. There is no need for claimant to show the actual payment and receipt issued by the central government of the taxes sought be refunded/credited: this, notwithstanding the Commission on Audit memorandum quoted by respondent in its memorandum, is meant to 713

DECISION C.T.A. CASE NO. 4522 - 5- guide the actions of the BIR's Refund/Credit Division only. The said memorandum does not guarantee claims for tax refunds/credits. Neither can the Court agree with respondent's other argument against the claim, that it would be premature :for the Court to grant the tax re:fund/credi t .claimed since there is an on-going . investigation/examination. o:f said claim by the BIR. There is no merit to this contention because the purpose of this case is precisely :for the Court to make a determination, independent o:f any :findings made by the BIR, on whether the said claim :for refund/tax credit should be allowed. More importantly, under the provisions o:f R.A. 1125, the Court has properly acquired jurisdiction over the instant case and consequently, it can decide the case pending any investigation/examination by the BIR. Notwithstanding the Court's disagreements with respondent's contentions against petitioner's claim :for tax credit/refund, however, the Court nevertheless :finds that petitioner is entitled to only a partial tax refund o:f its 1988 income tax in the amount ~f P13,500.00. The Court stated earlier the three requisites :for th~ successful claim :for tax refund/credit. In 714

DECISION C.T.A. CASE NO. 4522 -6- the case at bar, it is evident from a scrutiny o:f the evidence submitted that there is no indication of actual withholding <that is, the second requisite> of the remaining P24,300.00 o:f the claim for re:fund/tax credit for which the Court disallows�. First, the total amount withheld in Exhibits �"B" to "F", inclusive, does not equal P37,800.00; and this amount is not equal to the sum o:f any two ,) or more o:f the withholding taxes evidenced by said certificates. Second, it must be noted that, among the attachment~ to petitioner's 1988 annual income tax return, is a breakdown of the P37,800.00 declared by petitioner in 1988 as creditable withholding tax (See CTA Records, p. 35 >, which reads as :follows: Schedule o:f Cr editable Income Tax Withheld at Source December 31, 1988 1987 Conley & Associates, Inc. P t._.___s_oo. oo 1988 Sandoz <Phils. > Inc. p 6,000.00 1988 Jardine Davies Inc. 3,750.00 1988 Conley & Associates, Inc 1988 Manila Garden Hotel 12,000.00 1988 The Systems Solution Corp. 3,300.00 TOTAL 11,250.00 P36,300.00 Clearly, this schedule can be reconciled with petitioner's Exhibits "A" to "F", inclusive <CTA 715

DECISION C.T.A. CASE NO. 4522 - 7- Records, pp. 40-45) only inso�ar as the tax withheld �rom Conley & Associates Inc., in the total amount o� P13, 500. 00. The other amounts do not tally with the certi�icates submitted to the Court in evidence, and in �act, no such certi�icate covering the alleged withholding by Manila Garden Hotel was o��ered as evidence. WHEREFORE, �inding _petitioner's claim �or re�und o� the amount o� P37,800.00 in alleged overpaid income taxes �or taxable <calendar) year 1988 partly without basis, the Court grants the same only in part. Respondent is hereby ordered to re�und to petitioner or to issue a tax credit in its name in the total amount o� P13,500.00, representing overpaid income tax �or 1988. The instant petition for review, with respect to the amount o� P24, 300. 00, is hereby dismissed �or lack of merit. SO ORDERED. Quezon City, Metro Manila, ber 1, 1992. ~ P-r.J.~ RAftOH 0. DE V Associate Judg 716

DECISION C.T.A. CASE NO. 4522 -8- WE CONCUR: Q~D~ , ERNESTO D. ACOSTA / Presiding Judge / CERTIFICATION .) I hereby certify that this decision was reached after due consultation between 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 Court of Tax Appeals 717