CTA Case No. 4783 (Decision)

Republic of the Philippines COURT OF TAX APPEALS Quezon City VAN ~ELLE <Phi1s. >, INC., Petitioner, - versus - C.T.A. CASE NO. 4783 COMMISSIONER OF INTERNAL Promu1gated: REVENUE, FEB 08 1995 Respondent. X ---------------------------------------- DEC I S I 0 N This case involves a claim for refund of overpaid income tax for the calendar year ending December 31, 1989 in the amount of Pl,017,465.00. Petitioner is a domestic corporation, engaged in the business as a confectioner. On April 7, 1990, petitioner filed its annual income tax return for the year ended December 31, 1989 which shows a taxable income of P3,167,666.00 and an income tax due of P1, 108,683.00. In its 'quarterly income tax return for the first quarter, petitioner paid its income tax liability in the amount of P2,126,148.00 which is computed as follows:

DEC I S I 0 N- C.T.A. Case No. 4783 -2 - Quarter A:HOUHT 1st 817570203 05-31-89 655,711.00 678,423.00 2nd 817395984 08-31-89 792,014.00 p 2,.126,.148.00 3rd 817493960 11-29-89 ============= TOTAL INCOHE TAX PAID FOR 1989 Petitioner averred that it overpaid its income tax liability for the year 1989 in the amount of P1,017,465.00, instead of its actual liability which is P1,108,683.00. On April 7, 1991, petitioner filed its annual income tax return for its calendar year ended December 31, 1990 showing a net loss of P5,352,455.00. Petitioner alleged that since he was not able to utilize its excess tax payments made in 1989 during the taxable year 1990 and 1991, it is entitled to the refund pursuant to Section 69, in relation to Section 230 of the National Internal Revenue Code. On March 22, 1991, petitioner filed its written claim for refund of overpaid income tax for 1989 in the amount of P1,017,465.00. To this date, respondent has not yet acted upon petitioner's claim for refund. Hence, this petition for review inorder to toll the running of the two year prescriptive period prescribed in Section 230 of the Tax Code. 238

DEC I S I 0 N- C.T.A. Case No. 4783 -3 - Upon these facts, respondent raised as special and affirmative defenses lack of cause of action under Section 204 of the Tax Code, wherein the Commissioner of Internal Revenue may refund or credit taxes erroneously or illegally received. Furthermore, respondent assert that petitioner failed to establish that the tax liability in the amount of P1,017,465.00 was erroneously and illegally collected. Tax refund are construed strictly against the taxpayer as they are in the nature of tax exemption. The sole issue raised in this petition is whether or not petitioner is entitled to the refund of overpaid income tax for the year 1989. Petitioner presented the following documents in support of its claim: ( 1 ) Exhs. "A" and "E" - 1989 and 1990 Annual Income Tax Returns. <2> Exhs. "B", "B-1", "C", "C-1", "D" and "D-1" Payments orders and Confirmation Receipts for the first three quarters of 1989. (3) Exh. "I" - Claim for refund dated March 21, 1991, filed with the BIR on March 22, 1991. Clearly, petitioner proved its proper entitlement to its claim for refund. 239

DEC I S I 0 N- C.T.A. Case No. 4783 -4- Records reveal that, in a resolution dated October 27, 1992, respondent was declared in de�ault �or �ailure to file his answer within 30 days, �rom April 30, 1992 to May 30, 1992. It was only on September 22, 1992, or a period of more than three months, when respondent filed hj~ answer. Again, in an Order dated August 9, 1993, respondent �ailed to �ile her comment on petitioner's �ormal o��er of evidence within the time given by the Court. On the hearing held on October 20, 1993, respondent �ailed to appear prompting petitioner to ask the Court to declare respondent's absence as a waiver on her part to present evidence. It can be seen that there was no clear attempt on the part o� respondent to contest and challenge th& veracity o� petitioner's evidence and neither did the �ormer submit her own evidence. In summary, respondent slept on her rights in de�ending this case to the prejudice o� the interest o� the government o� which she is primarily bound to protect, while petitioner showed to the full satis�action of the Court its clear entitlement to the relie� sought for. Petitioners 1989 Corporate Income Tax �iled on April 7, 1990 Office No. 31,

DEC I S I 0 N- C.T.A. Case No. 4783 -5- clearly shows its refundable amount and marked as Exhibit "A" with the following computations: Gross inco1e: , 45,058,366.00 Fro� operations ISch.ll Loss fro� sales or exchange of 21,500.00) property other than capital assets 1Sch.2l , 2,162,585.00 Other sources 47,199,451.00 4410311785.00 Total gross inco1e p 3,167,66&.00 Less: deductions Net inco1e ,================ 1,108,683.00 A1ount of tax due Deduct: quarterly tax pay~ents Qtr. O.R. lo. Date Aaount 1st 817570203 05-31-89 , 655, 711.0021 2.126,148.00 2nd 817395984 08-31-89 678,423.003 3rd 817493960 11-29-89 792,014.00 Total a10unt of tax refundable , 1,017,465.00 =============::: Respondent may be considered as not questioning seriously petitioner's entitlement to its claim for refund. Moreso, when the evidence presented were not disputed by respondent, sufficiently established petitioner's right to the refund <Sanitary Wares Nfg. vs. Commissioner of Internal Revenue, CTA Case No. 4150, August 21, 1992, Sun Life Insura11ce Office Ltd. vs. The Acting Commissioner of Internal Revenue, CTA Case No. 3205, June 23, 1989. Exh.�c�. 1 '8'. 241 Ex h. 2 ''I'':'!�3

DEC I S I 0 N- C.T.A. Case No. 4783 -� 6 - WHEREFORE, in view o� the �oregoing circumstances, respondent is hereby ordered to REFUND or issue tax credit in �avor o� the petitioner the amount o� P1,017,465.00 representing its overpaid income tax for the year 1989. SO ORDERED. GRUBA Associate Judge WE CONCUR: ~~\9..~ ERN TO D. ACOSTA RA~,O~~~ Associate ~lu~W CERTIFICATION I hereby certi�y that this decision was reached a�ter due consultation among the members o� the Court o� Tax Appeals in accordance with Section 13, Article VIII, o� the Constitution. 242 ~(2-~ ERHESTO D. ACOSTA Presiding ~Tudge Court o� Tax Appeals