CTA Case No. 3213 (Decision)

REPUBLIC OF THE PHILIPPINEB COURT OF TAX APPEALS QUEZON CITY ATENEO DE MANILA UNIVERSITY, Petitioner, - versus - C.T.A. CASE NO. 3213 COMMISSIONER OF INTERNAL REVENUE, Respondent . ~�~ ---- -- - - � - - :�~ DECI s I 0 N Thi s case is s ubmitted for decision on the question of whether or not petitione r Ateneo d e Manila University is entitled to its claim for r-efund of the amounts of F'6,760.94 and P67,1 23 . 23 representing alleged overpaid income ta:-: for the fi s cal year ended March 3 1, 1979 and Mar�ch 3 1, 1980, respectively, after the parties have agreed that this Court has no jurisdiction to rule on the : deficiency assessment of respondent Commissioner of Internal Revenue for the payment of deficiency income and percentage ta:�:es by petitioner in the respective amount of P834, 3 55.35 and F'182,500.73 , Yinterposed as special and affirmative defense,

DECISION CTA CASE NO. 3213 2 among others, by respondent in his amended answer, because there is yet no decision of the Commissione~ appealable to this Court. After petitioner has offered its ev idenc:e in support cif its entitlement to its claim for refund, and the same was admitted by the Court, this case was set for hearing for r�espondent to pr�esent his evidence. Respondent's counsel however failed to appear in the sc heduled hearing for� the reception of his ev idenc:e in support o �f his case. The Court therefore ordered� this case submitted for decision on the basis of the pleadings and the re~ords, together with the evidence presented by petitioner, which was not controverted or disputed by respondent. (pp. 189 & 190, CTA records.) The facts as alleged in the pleadings and borne out by the evidence may thus be considered as not disputed. As narrated by petitioner: Petitioner is a corporation duly organized and e}:isting by virtue of the laws of the Republic: of the Phi 1i ppines , with address at Loyo 1a Heights, Quezon City. It is a religious educational insti- tution. 1. For fiscal year ended 31 March 1979, 353

DECISION CTA CASE NO. 3213 - 3- petitioner f i 1 ed its income ta :�: return within the time prescribed by 1aw and an amended income ta:< return on 25 De tober 1979 dec 1ar ing therein the following pertinent data: Gross Income p 8,453, 968.00 Total deductions A1la.nt SLtbject to tax __l:h31..--x), 5�;_?. (X) Income ta:< due therecn ~----~::~: ~--:~..:=~~2?: Income tax withheld at sa..trce A1la.nt refLndable p 15,.!39.00 ____';2._,rm �.94 p (6, 760.94) 2. For fiscal year ended 31 March 1980, petitioner filed : its income ta:�: return on 15 July 1980 and an amended income tax return on 22 October 1980 declaring therein the following pertinent data: Gr�oss Income p 8,595,862.(X) Total deductions A1la.nt SLtbject to tax _j..O, ~~~:L?.Z.!.!6! p Q,_l;!-le Income ta>: due therecn none Income tax withheld Withheld in 1978-79 p 6,760.94 Withheld in 1979-80 A1la.nt refLndable ~Z..,..!.~:;!_. ~ 3. That on 27 November 1980, petitioner f i 1ed a c 1aim for refund with respondent for the sum of Seventy Three Thousand Eight Hundred Eighty Four Pesos and 17/100 (P73,884.17) which represents 359

DECISION CTA CASE NO. 3213 - 4- the total amount refundable for the following periods: Fiscal year ended 31 March 1979 p 6, 7ct).94 Fiscal year� ended 31 March 19B) ___gz!\_~2~--~~~ ~---!3! 884. 17 T0 t a 1 4. That respondent did not act on .. petitioner� s claim for refund thus, this instant case for� the refund of ta:<es paid was f i 1ed on 12 March 1981 , inasmuch as the two-year period '' provided in Section 292 [now Sec. 203] of the National Internal Revenue Code of 1977, as amended, was about to expire. As spec:ial and affirmative defenses, res- pendent in his answer alleges that: The in question was collected in accordance with law; In an action for refund, the burden of proof is upon the taxpayer to establish its right to refund and fai l ure to sustain this burden is fatal to the action for refund; It is incumbent upon petitioner to show that it has complied with the provisions of Sections 292 and 295 of the National Internal Revenue Code of 1977; 360

DECISION CTA CASE NO. 3213 - 5 ��- Assuming but not admitting that petitioner is entitled to the tax refund, the right to claim the refund has prescribed with respect to the period prior to March 12, 1979. Is petitioner entitled to its claim for refund for income tax withheld in excess of its income tax liability for the fiscal years ended March 31, 1979 and March 31, 1980? On the special and affirmative defense of respondent that it is incumbent upon petitioner to show that it has complied with the provisions of Sections 292 and 295 of the National Internal Revenue Code of 1977, theta:{ code applicable to this case, regarding the f i 1ing of a c 1aim for refund with the Commissioner of Internal Revenue and commencement of the suit for refund with this Court within two years from date of payment of the tax, the r�ule is that a ta:�:payer whose income is withheld at source will be deemed to have paid his . ~ ta:< 1 iabi 1 i ty when the same fa 11 s due at the end of the tax year. (Gibbs vs. Co��issioner of Internal Revenue, L-17406 1 November 20, 1965 1 15 SCRA 318.) And in this case where the ta:�: is payable by the ta:�:payer in quarterly installments, the final 36 1

DECISION CTA CASE NO. 3213 - 6- payment is the last quarter payment at the end of the tax year when it is finally ascertainable that the taxpayer either made profits or suffered losses in the operations. (Co��issioner of Internal Revenue vs. Asia Australia Express Ltd.~ G.R. No. 85956~ April 10~ 1989.) In the instant case, petitioner had until July 15, 1979 and July 15, 1980, respectively, the fourth month following the close of its fiscal year, within which to file its adjustment return and make its f ina 1 payment. Since the c: 1aim for refund was filed with the Commissioner of Internal Revenue on November 27, 1980, it is thus clear that it was well within the two- year period provided for in Section 292 of the appl i c: ab 1e Na tiona 1 In tern a 1 Revenue Code. The same is true with res pect to the f i 1ing of the petition for review with this Court on March 12, 1981. Under the first cause of action, petitioner is claiming a refund of P6,760.94 for the fiscal year ended March 31, 1979, which arose: Income ta>: due �������.�����.��.. P15, ~'-<R. 00 Income ta:-: withheld ������������� --~,099!'..~1 Income ta:�: refundable . � � . � � . . � . . � . P 6, 7YJ.94 362

DECISION CTA CASE NO. 3213 - 7- The components of the "income ta:-: wi thhe 1d" are: ..1..,.... Claim far refund far 1.976 p 8,864.08 Merill Lynch International, Inc � 8,807.09 (E:�:hs. A-9, A-10, A-11) 3. Metrabank (E~:hs. A-3, A-4, A-5, f:t-6) 765.17 4. Interbank (E:�ih. A-12) 42.50 5. Pq:x..tlation Carvnission (E:-:h. A-7) 2!1(~1.23 6. Planning Resa.trces (E>:h. A-8) 1, 575.(X) ., 7 . Bookmar-k (E~:h. A-13) ______...1.!.�32: Total Income Taxes Withheld Peti tianer ~g_r.n,J.j;_~ , and right 1 y as can be seen above under No. 1: , that i t "erroneous 1 y included a �claim far refund far 1976' in its �income ta:�:es withheld ' portion of its income ta:-: return far the fiscal year ended 31 March 1979. Very clearly, the same has already prescribed, because a claim far refund must be demanded from the Commissioner within two years from payment thereof. Consequently, the same is nat a proper subject of refund nor a credit to an e:dsting ta:�: liability. Based an the for-egoing, peti tianer is withdrawing the amount of P8,804.08 from its claim far refund." (p. 216, CTA records) With this admission of petitioner that its right to claim the refund of the amount of 36 3

DECISION CTA CASE NO. 3213 - 8- P8,864.08 for 1976 has already prescribed~ and therefore ~_!j;._b_g_r:.9.~J..D_9. this amount from i t s c 1 aim, the total income tax withheld would only be P13,235.86 instead of P22,099.94. With an income tax due �'of P15,339.00 for fiscal year ended March 31, 1979, there is still an unpaid amount of .. P2,103.14 � Under the second cause of action, petitioner is claiming a refund of P67,123.23 representing total income tax withheld during the fiscal year ended March 31, � 1980. It appears that petitioner suffered a net loss in this year, and therefpre all income ta>: wi thhe 1d are proper s ubject of a c 1aim for refund and/or ta:-: credit. An e>:aminaTion of the different components of the income tax withheld reveals that they consist of the following: 1. 1'1erill Lynch (E:<hs. B-4 to B-13) p 3,:289.:S 2. Industrial Finance Corp. (E>:h. 14) 18, (X.". Q. 00 �-��'":!" Metrobank (E:�:hs. 815, 816, 817, 818) 940.16 4. Batangas Bay Carrier, Inc. (E:-:h. B-20) 6,125.00 5. Filinvest Credit Corp. (E>:h. B-19, 3, 9<.."Q � !Xl B-21' B-22' B-24) 6. Far East Bank 8, Tn...tst Co. (E>:h. B-23) 1 ' ::;:.'(_)() . (l(l 7. M Finance (Exh. 8-44, B-45, B-46) 3,144.26 8. Herdis Gn:x..tp, Inc. (E>:h. B-27) :;~). ()(l 9. 1\CR Corporation (E>:h. 8-:::n, B-3 1) B).OO 10. Edna A. Penaloza (E:-:h. B-32) 9(_)().00 11. Equitable Banking Corp. (E:-:hs. B-25, 207 .(X) B-26) 364

DECISION CTA CASE NO. 3213 - 9 -- 12. Ministry of Agrarian Reform (Exh. 2,662.15 B-33) 13. Planning Resa..1rc:es, Inc:. (E}:h. ::!4) 1, 125.(X) 14. Interbank (E}:hs. B-35, B-::!.6) 42.::51) 15. Empire Insurance C.o. (E>:h. B-37 ) 156.(X) 16. Rizal Cc:mn'l. Bclnking Corp. (ENh. 30.(X) B-::!8 ) 17. Bac:notan (E}:h. B-39) 165.(X) 18. Jomscn I!( Jomscn (Exh. B-40) 2.70 19. Capitol Industrial C.onstn..1c:tion 245.(X) (E:-:h. B-41) �'0. Central Ceme!nt Corp. (E:�th. B-42) 15.45 .. 21. Phanna Industries, Inc:. (EN h. B-42) 5:'5!).(X) 22 � Industrial Insurance Co.' Inc:. 6.(X) (E:{h. B-47 ) 23. National Irrigation Administration 24,~3.93 (E}:h. B-48) 24. Bookmark, Inc:. (E:-:hs. B-28, B-29) -----~~-~~-Z~<2 Total Inc:~ taHes withheld E'_~�g~~ �1~ The above items represent essentially .income tax withheld from interest income from saving ac:c:ounts, bonds, time deposits, etc:., and creditable income tax from certain income payments, like lease of classrooms, auditoriums, seminar rooms and other facilities, professional fees, guidance counselling, psychological testing and royalties. Proof of withholding is established by copies of statements duly issued by the various payors to petitioner as evidenced by E:-:hibi ts B-4 to B-48, inclusive. And from the sc:hedL1le of ta:< receivable for fiscal year ending March 31, 1980 (E>thibit B-2), which is attached to petitioner's 365

DECISION CTA CASE NO. 3213 - 10 - income tax return (Exhibit B), it appears that the aggregate interest income on bank deposits and certain income payments to petitioner were included in the total gross income. The record makes it clear that petitioner� s income ta:< return for the ta:�:able year in question has shown losses. Respondent has not issued an~ deficiency assessment nor disputed the correctness thereof. (Dataprep CPhils.J, Inc. vs. o-( Internal Revenue, CTA Case No. 3600~ Harch 30~ 1984.) No controv~rting evidence was presented by respondent. Neither was any evidence di~puting petitioner ' s entitlement to its claim for refund was presented by respondent. And this case having been submitted for decision on the pleadings and on the face of the unrebutted evidence of petitioner showing that it is entitled to the refund of P67,123.23 under the second cause of action, respondent may be considered to have no serious objection or opposition to petitioner's entitlement to the refund. The circumstances obtaining in the case at bar compels us therefore to sustain the tenabi 1 i ty of petitioner� s right to the r-efund of P67,123.23 based on the evidence and pleadings. 3C G

DECISION CTA CASE NO. 3 21 3 11 - We n o t e~ h o w ever- ~ as s h m"ln a b ove ~ that petitione r- h as s t i 11 a deficiency i n co me ta:�: of P2 ~10 3 . 1 4 und er- i ts f i rst cause o f action for- th e f i.s c a 1 y ea !"� e nded Mar"c h 3 1 , 1979. Deducti n g th is a mo un t a f P 2, 103.14 fr- o m t h e r-e fund ab l e s um o f ~ P67 ,1 23.23 , pe t i tioner- A te n eo De Ma n ila Un iver-sity is e n ti tl e d t o a cefu nd o f P6 020 . 09 . The a mount r"ef und ab 1 e t o t h e t a:�: p aye r- may be applied by the Comm i.ssio n r2r- o f In ter.. n a l Reve n ue to t h e f o r-mer-'s pe n di ng ta :�: 1 ia b i 1 i ty . ( See Tax Servi c e of the Philippine s vs. : cmtHttissioner of Internal Revenue .� CT A Ca s e No. 2326, Se p t. 30 .� 1?72 .� ce)r t 1.orar1. de ni ed i n L- 3603 2 , Ja n . 8, 1?73. ) WHEREFORE, respondent Commissioner of Internal Revenue is hereby ordered to grant a refund and/or tax credit to petitioner Aten eo de Manila University in the amount of P65,020.09 representing overpaid income tax for the fiscal year ended March 3 1, 1980. No costs. SO ORDERED. Quezon City, Metr-o Mani l a, Ju l y 28~ 1989. ~~~ AMANTE F LER Pr-esidi n

DECISION CTA CASE NO. 3213 - 12 - WE CONCUR: (on leave) CONSTAN,TE C. ROAQUIN Associate Judge C~:a.TIFIC.ATION I he~eby ce~tify that this decision was ~eached after due consultation among the membe~s of the Cou~t of Tax Appeals in acco~dance with Section 13~ A~ticle VIII of the Constitution. AMANTE ILLER F'~esiding Judge Cou~t of Tax Appeals 36 3