CTA Case No. 5562 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PHILAM FUND MANAGEMENT, INC., C.T.A. CASE NO. 5562 Petitionet~, Pl�~omulgated: COMMISSIONER OF INTERNAL REVENUE, M~R 24 199S 1fv_j!h~ Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION This case involves a claim for refund in the amount of P605,654.22 allegedly representing overpaid and unutilized creditable withholding taxes fat~ ca 1 end at~ years 1995 and 1996. The antecedent facts of the case are as follows: Petit i onet~, formerly named Philamlife - PDCP Fund Management, Inc. is a domestic cot~pat~ation ot~ganized and existing under Philippine Laws with principal office at 5tn Float~ Gamon Centt~e, 126 Alfat~o St., Salcedo Village, Makati City; and is engaged in rendering management and technical services <TSN, January 12, 1998, pp. 5 and 6). On Apt~ i 1 11, 1996, petitionet~ filed its 1995 Annual Income Tax return reflecting a total income tax due in the amount of P23,619.00 as against its creditable taxes withheld from management and technical services income fat~ the pet~iod Januat~y to Decembet~, 1995 in the total amount of P314,444.86, t~esulting in the alleged

DECISION - C.T.A. CASE NO. 5562 2 o v et~pa y ment of its income tax in the total amount of P290,825.86 for that year <Exh. A, p. 63, CTA records). For calendar year 1996, petitionet~ filed its Annual Income Tax t~ettwn on Febt~uary 13, 1997 t~eflecting a "NIL" income tax due and tax refundable in the amount of P605,654.22 <Exh. D>. The amount of f-'605,654.22 allegedly refers to the aforementioned 1995 excess credit in the amount of P290,825.86 and unutilized creditable tax withheld from its management and technical income for the period January to December 1996 in the amount of P314,828.36. On March 3, 1997, petitioner filed with the BIR a written claim for refund in the amount of f-'605,654.22 allegedly representing overpaid and unutilized creditable tax withheld for calendar years 1995 and 1996 <Exh. F). Since no action was taken by the respondent and the two <2> year period was about to lapse, petitionet~ filed a petition for review with this Court on November 4, 1997. Upon these facts, respondent advances the following special and affirmative defenses, thus: 1. Petitioner's right to claim refund has pat~tially, i f not totally pt~esct~ibed; 2. Petitioner's claim for refund is still pending administrative investigation and evaluation;

DECISION - C.T.A. CASE NO. 5562 .., ~I - 3. Taxes paid and collected are presumed to have been in accordance with law and regulations, and hence, not refundable; 4. In an act ion fot"' tax t"'efund, the burden of proof is on the taxpayer to establish its right to refund and failure to sustain the burden is fatal to the corresponding action; 5. Claims for refund are strictly construed against claimants since they partake of the nature of an exemption from taxation. The only issue to be resolved in this case is whether or not petitioner has satisfactorily proven its claim for refund in the amount of P605,654.22 allegedly representing overpaid and unutilized creditable tax withheld for calendar years 1995 and 1996. In suppot"'t of its case, petitioner presented in evidence various documents which, among others, consist of the following: a. Annual Income Tax Returns for the years 1995 and 1996 <Exhs. A and D) together with its corresponding auditor's report as an attachment; b. Certificates of Creditable Withholding Tax at Source <Exhs. A-14 and D-1>; c. Administrative Claim for Refund <Exh. F>; d. Monthly Remittance Ret ut"'n of Income Taxes Withheld for calendar years 1995 and 1996 <Exhs. C to C- 11, E-1 to E-12).

DECISION - C.T.A. CASE NO. 5562 - 4- On the other hand, respondent failed to submit any cant r~overt i ng evidence. Petitioner~ submitted its memorandum while respondent did not. After a careful scrutiny of all the evidence presented before Us, We rule in favor of the petitioner. This Cour~t, in a long line of cases of similat~ nature and issue, has already laid down three (3) basic requirements for the granting of a claim for refund of excess and unutilized withholding tax payments, to wit: 1. That the claim for refund is filed within the two (2) year period prescribed under Sections 204 and 230 of the Tax Code; 2. That the income upon which the taxes were withheld were included in the return of the recipient; and 3. The fact of withholding is established by a copy of the statement <BIR Fot~m 1743.1) duly issued by the payot~ <withholding agent) to the payee showing the amount paid and the amount of tax withheld thE�!t~efr~om <Section 10, Rev. Regs. No. 6-85, See Citytrust Finance Corpot�ation vs. Co��issioner ot= Intet�nal Revenue, CTil Case No. 4134, November 11, 1991, affir�ed by the Court of Appeals in CA-G.R. SP No. 28239, March 14, 1994; Citytrust Finance Corporation Ct=ormerly Investors Finance Cot�poration/FNCB Finance:/ vs. Co 111miss i onet� o t= Interna 1 Revenue, CTil Case No. 4046, Febt�uary 24, 1993, affirmed by the Court of Appeals in CA-G.R. SP No. 31104, April 18, 1994 and Paseo Realty and Develop�ent Cot�poration vs. Co111111issioner at= Internal Revenue, CTil Case No. 4254, f:lugust 10, 1993, affirmed by the Court of Appeals in CA-G.R. SP No. 32927, February 28, 1994). Petitioner satisfactorily complied with the first requirement when it filed its claim for refund with the

DECISION - C.T.A. CASE NO. 5562 - 5- Bureau of Internal Revenue on March 3, 1997 and with this Cout~t on November~ 4, 1997. Said claim was filed within the two-year prescriptive period required under Section 204 and 230 of the Tax Code since the taxes sought to be refunded were considered paid on April 11' 1996 and February 13, 1997, the dates the Corporate Annual Income Tax returns for calendar years 1995 and 1996 were filed <Ay ala Li ~e Ass urance , Inc . vs. Co��issioner o~ Internal Rev en u e , CTA Ca se No. 4 596, J anuary 6, 1995) . The second requirement was also met by the petit i onet~ when it offet~ed in evidence Annual Income Tax return for calendar years 1995 and 1996 <Exhs. A to A-11, D to D-15). In said returns, petitioner declared as part of its income the management/professional fees derived from its management set~vices r~endet~ed to Philam Fund, Inc. <PFI>, which wet~e subject to withholding taxes. With regard to the third requirement, the fact of withholding was established by a copy of the statements duly issued by the withholding agent <Philam Fund, Inc. ) to the petitioner as payee showing the amount paid and the amount of tax withheld therefrom. The pt~oof of withholding was well established by the presentation of Certificates of Creditable Income Tax Withheld at Source <BIR Fot~m 1743-1750) showing that the amount subject of the claim was in fact withheld by the withholding agent

DECISION - C.T.A. CASE NO. 5562 - 6- and remitted to the BIR <Exhs. A-14 and D-1) for the cal endat~ yeat~s 1995 and 1996. Thus, petitionet~ has satisfactorily proven its claim for refund. As the t~espondent' s contention that petitioner's claim for refund is premature as the same remains pending administrative investigation this Court finds it unavailing and without basis in fact and in law. The pendency of an administrative claim for refund is not a valid ground for this Court not to decide the instant petition since it has already acquired jurisdiction over the claim and this is not bound to wait indefinitely for whatever actions respondent may take. Unlike disputed assessments, no decision of respondent is requi t~ed before the taxpayer can come to this Court <Greenfields Development Corporation vs. CIR, CTA Case Nos. 4669 and 4867, January 30, 1996). t~espondent failed to manifest any reasonable effort to rebut or controvert the oral and documentat~y evidence pt~esented by petit i onet~. Respondent's failure to present evidence and defense which is anchored as usual on the principle that claims construed cannot possibly withstand as it is always vulnerable to overwhelming evidence which petitioner was able to present to prove its claim <Shangri-la Plaza Corporation ~s. Co1111issioner of Internal Revenue, CTA Case No. 5346, January 9, 1998).

DECISION - C.T.A. CASE NO. 5562 - 7- When the evidence presented were not disputed by the Commissionet~, this sufficiently establishes the taxpayer's right to the refund <Van Melle [Phils.J, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 4783, February 6, 1995, citing Sanitary Wares Mfg. vs. Commissioner of Internal Revenue, CTA Case No. 4150, August 21, 1992; Sun Life Insurance Office Ltd. vs. The Acting Commissioner of Internal Revenue, CTA Case No. 3205, June 23, 1989) In conclusion, We find that petitioner has adequately proven its case before this Court. WHEREFORE, in view of all the foregoing, Respondent is hereby ORDERED to REFUND in favor of Philam Fund Management, Inc. the total amount of P605,654.22 ovet~paid and unutilized ct~editable withholding taxes for calendar years 1995 and 1996. SO ORDERED. WE CONCUR:

DECISION - C.T.A. CASE NO. 5562 - 8- CERTIFICATION I hereby certify that the above decision was reached after due consultation with the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. ~ o. O~ ERNESTO D. ACOSTA Pt~esiding Judge