CTA Case No. 3200 (Decision)

~EPUBLIC OF THE PHILIPPINES C1URT OF TAX APPEALS QUEZON CITY ~Jtn. ~1~~~~Jr tf� ,,}\ (aJl PACIFIC PROCON LIMITED, v .; \. j Petitioner:, 1 - .versus. - C.T.A. CASE NO. 3200 COMMISSIONER OF INTERNAL REVENUE, Responde:n t. X - .- .- - - - X. DEC I S I 0 N Suit brought by petitioner Pacific Procon Limited for recovery of the amount of ,El29,408.34 representin ~;...-r---.... alleged overpaid corporate income tax: for the ye:ar after no action was; seasonably t a ken by respondent Com- missioner of Inter nal Re�venue on its claim for. refund. TJ;le: facts of the case ar.e not in controversy, peti- tioner having rested its case on the pleadings after marking the annexes of its petition for review as exhibits, and r espondent having submitted the case for decision on the basis ,also of the pleadings and the records of the Bureau of Internal Revenue pertaining to this proceeding. As alleged by petitioner in its petition for review and admitted by respondent: I Petitioner is a forei gn corporation duly au thorized to engage in business in the Philippines as a contractor, with office and business address at Joaquin Cunanan & Co., 13

DECISION - CTA CASE NO. 3200 - 2- 8th Floor, Rufino Bldg., Ayala Avenue, Makat,i, Metro Manila~ II Respondent is the Commissioner of Internal Revenue holding office at the BIR National Off i ce Building, Diliman, Quezon City where he may be served with summOI)S and other court processe� s~ III /;"~ st Petitioner, in the quarter of 1978, paid the amount of~29,408o34 a~ income tax for said quarter, said payment being evidenced by Revenue Tax Receipt No. 304604.63, a copy of which is hereto attached as Ann ex "A" hereof~ IV The operptions of the petitioner re- sulted in a ~oss for the calendar year 1978 as shown by the final income tax return petitioner filed with the Bureau of Internal Revenue for said year, a copy of which is hereto attached as Annex "B" hereof~ v The above amount of ~29,408.34 was applied as tax credit in the succeeding quarte~ rs of 1979 , but petitioner contin ued to incur losses up to the end of the tax~ able year as shown by the final income tai return petitioner filed with the Bureau of InteJCnal Revenue for said year, a copy of which is he�reto attached as Anne�x "C" hereof. VI Petitioner upon advice of its external auditor, filed a written claim with the re- spondent,;Commissioner of Interna l Revenu e for the ~ efund of the income taxes it had paid to the government, a copy of which claim is hereto attached� as Annex "D" hereof. VII As of the filing of this petition, re- spondent Commi ssioner has not yet acted upon the written claim for refund attached hereto as anne:lt "D" . 14 J

DECISION - CTA CASE NO. 3200 - 3- \'lliEREFORE, premises considered and after ,due hearing , it is most respect fully prayed of this Honorable Court that judg- . me�nt be re:ndered ordering respondent to refund to petitioner the amount of P29,408.34 representing refundable income taxes.� As special and affirmative defens.es, respondent in his ans.wer alle:ges: Ac SPECIAL AND AFFIRMATIVE DEFENSES Responde:n t r.espectfully alleges;: 5. That in claims for refund, the burden of proof l i es with the petitioner to show that he is entitled to the refund being claimed; G. That it is incu~bent upon petitioner to show that it lns complied with the provisions of Sections 292 and 295, both of the 1977 National Interna l Revenue Code; 7. That assuming that the taxes herein involved have been paid, the same are presumed to have been paid in accordance with law and no amount thereof is: refundable; and B. That cla i ms for refund are construed strictly against claimants: since a claim for ref und is in the nature of an exemption from taxation. (Com. of Int. Revo vs:. Ledesma, L-1.7509, Jan. 30, 1970, 31 SCRA 95) A refund partakes of the nature of an exemption, and the: same cannot be allowed unless granted in the most e xplic:it and categorical language. (Resins, Inc. vs:. Auditor Gen., L-17888, Oct. 29, 1968, 25 SCRA 7541:) (Limpan Investment Corp. vs. Com. of Int. Rev., ~TA Case No. 2424, Oct. 29, 1980) . However, in its memorandum dated December 1, 1983, respondent contends additionally that petitioner's petition for review filed on February 12, 1981 is already I / barred by prescription, the two-year period under Section " 15

DECISION - CTA CASE NO. 3200 - 4- ( 292 of the 1977 National Internal Revenue Code within which the: spit for the recovery of any national internal revenue tax.: hereafter alle�ged to have been erroneously or illegal ly collected having already elaps0d. Counting from May 30, 1978, when the subject corporate income t ax. . in the amount of Ei29, 4:08.34 was paid, up to February 12, 1981, when the present petition for review was instituted in this Court 1 two (2) _year~, eight (8) .mont?s_ and twelve --(12) d~s have already elapsed.. Since the petition was - filed out of time, respondent now argues that this Court has no jurisdiction to take cognizance of the c ase. Since jurisdiction can be challenged at any stage of I the proceedings and for lack of it, . a court can dismiss a case ~ ~ ~ (Commissioner of Internal Revenue vs. Villa, �L-2 3988 , January 2, 1968, 22 SCRA 4, citing u.s. vs. De la Santa, 9 Phil. 22; Vda. e Hijos de Pedro Roxas vs. Rafferty, 37 Phil. 957) '� we shall proceed to j.nquire first whether or not this Court has jurisdiction to enter- tain the instant case. Under Section 292 (formerly Section 3 06) .of _the National Internal Revenue Code, a claim for refI und of a tax alleged to have been erroneously or illegally collected shall be filed with the Commissioner of Internal Revenue within two ye~ars from the date of payment of. the tax, and that no suit or proceeding�for refund shall be begun - after the expiration of the said two-year period. (Sec . 16

DECISION - CTA CASE NO. 3200 - 5- 292 , National Internal Revenue Code~ Collector of Internal Revenue vs � . Court of Tax Appeals and Hume Pipe & Asbestos Co. Inc. L-~1497, January 28, 1~61, 1 SCRA 87-93; Guagua Electric Light Plant Co., Inc. vs. The Collector of Internal Revenue & ~he Hon. Cou rt of Tax Appeals, L-14421, April 29, 1961, 1 SCRA 1221-1226�.) As a matter of fact, the said section further provide:s that: x. X x "In any case, no such suit or proceeding shall be be<;:~un after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise af ter payment." r The two-year period for judicial recovery of the tax alleged to have been erroneously or illegally paid or col lected is a positive and mandatory requireme:nt of Section 306 (now Section 292) .of the Tax Code. (Gibbs vs. Collector of Internal Revenue, L-1341:.53, February 29, 1960, 107 Phil. 232; Guagua Electric Light Plant Co., Inc. vs. The Collector of Internal Revenue & The Hon. Court of Tax. Appea ls, supra .) . It is pre,scriptive (College of Oral & Dental Surgery vs. Court of Tax Appeals, 102 Phil. 912~ Panay Electric vs. Collector of Internal Revenue, 103 Phil. 819; Lu Do & Lu Ym vs. Central Bank of the Philippines, lOS Phil. 566) ~ and in order to confer jurisdiction upon the court, it is ne:cessary that in all ca�ses the suit must be brought within the statutory period of two years and the re:quirements provided for in 17

-J DECISION - CTA CASE NO. 3200 - .6 - Section 306 (now 292 ) ~ust have been duly c omp lied with. (C o llector of Internal Re~enue vs. The Court of Tax Appeals . & Hume Pipe & Asbestos Co., I nc ., su pra.). Moreove.r , the � provision is mandatory and is not s ubject to any qualifi- cation, hence , it appl ies regardless of the conditions . l under which payment may have been made. (IBM Phili p pines, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 2855, February 27, 1981, citing Guagua Electric Light P.lant Co., Inc. vs. Colle�ctor of I nternal Revenue, 1 SCRA 1221.) In the case at bar, petitioner Pacific Procon Limited paid the amount of P29,408. 34 6n May 30, 1978 as income tax for the first quarte r of 1978. This is in accordance with Section 85 of the 1977 National Internal Revenue Code which requires every c:orpo rati on to file in du plicate a quart~rly summary declaration of its gro ss income and deductions upon which the i ncome tax, as provided in Title II of the Co de' , should be levied, colle�cted and t1 "f.._'--fV paid on a -quarterly bas is. While the gross income and /, deductions declare:d in one quarter are now allowed to be cumulate�d with tho s e of t he succeeding quarters of the same taxable ye�ar, and the tax paid for any one quart er on cumulative basis i s creditable again s t the quarterly tax liabili ty for each succeeding quarters of the taxable year, the law has placed, as i n itiated by Presidential Decree No. 30, all corpora t ion� on a tax withholding system of income tax payment on a qua rte~ rly basis . (Sees. 18

DECISION - CTA CASE NO. 3200 -7 - 85, 86 & 87, National Internal Revenue Code; Manila Central University ~s. Commissioner of Internal Revenue, CTA Case No. 2848, October. 19, 1978.). Nevertheless, even on the assumption that the sum of ~29,408.34 as income tax for the first quarter of 1978 . remained outstanding as a refundable arn9unt until the incurrence of a loss at the end of the taxable year, �or until the filing of the final and adjustment return, the I I provision of Section 292 that "In any case,no such suit or proceeding, shall be: begun after the expiration of two years from the date o f paymeni of the tax or penalty I regardless of any supervening cause that may arise after \ payment" would still foreclose this Court' ~ jurisd iction \ to take cognizance of the instant case. The two-year p~escriptive period for bringing the s uit for refund to A the Court would still be� reckoned ; from the date of p ayment !\ /,' ,2!___!:he tax: on May 30, 1978. And conside,red, for the ~ sake of argument only, as a tax withheld at source deemed to have be:en paid when the same falls due at the end of the tax ye:ar or Dece'mber 31, 1978, when the two-year prescriptive period starts to run (Gibbs vs. Commissioner of Internal Revenue, L-17 406, Nov. 20, 1965, 15 SCRA 318) ~ the instant petition for review fil e d on February 12 , 1981 is still time barred. Accordingly, since the irlstant petition for review - was filed with this Court on February 12, 1981 and the 19 -, '

DECISION - CTA CASE NO. 320 0 - 8- corporate income tax in the amount of ~29 , 408.34 sought to be refun.ded was paid on May 30, 1978, it is thus clear beyond doubt that herein petitioner's suit for judicial recovery of the: tax: alleged to have been e:rroneously or illegally paid or collected came too late, more than two years having elapsed since the income tax wa~ paid. This Court has there� fore ~ jurisdiction o entertain the - case . With this conc:lu s ion '/ rt_� becomes unn e cessary to resolv e the second issue� brought by respond e nt as to whether pe- tit i oner has disc�harged the burden of establishing by clear and competent evidence its loss at the end of the taxable year. WHE EEFORE, the petition for review is hereby dismissed at petitioner ' ~ costs. 2~. ~~ ~ SO ORDERED. Quezon City, January ~AMAL NTE ~D ~;;-~ Presiding Judge WE CONCUR: z. REYES Associate Judg 20 /