CTA Case No. 4699 (Decision)

/ -- Republic of the Philippines COURT OF TAX APPEALS Quezon City ROBINSON'S LAND CORPORATION, Petitioner, - versus - C.T.A. CASE NO. 4699 COMMISSIONER OF INTERNAL REVENUE, Respondent. X- DE C I S I 0 N This case involves a claim for refund of overpaid income tax in the amount of P994,919.45 arising from quarterly income tax and creditable income tax withheld at source for the fiscal year ending September 30, 1989. The facts are simple. Petitioner is a domestic corporation, organized and existing under the laws of the Republic of the Philippines with principal office at H. Adriatico Street, Ermita, Manila. Primarily, petitioner is engaged in the business of leasing commercial area/spaces. As alleged petitioner incurred a net operating loss of P83,385,421.00 for the fiscal year 1989.

DECISION - C.T.A. Case No.4699 -2- Thus, incurring a refundable income tax amounting to P994,919.4S which was carried over to the succeeding fiscal year 1990. Allegedly, petitioner again incurred a net operating loss in fiscal year 1990 in the amount of PS8, 857, 796. 00. On November 21, 1991, petitioner filed an administrative claim for refund with the Bureau of Internal Revenue, but up to this date the same remains unacted upon. Thus, to toll the running of the two-year prescriptive period, petitioner filed this petition for review. The sole issue to be resolved in this case is whether or not petitioner is entitled to the claim for refund in the amount of P994,919.4S arising from quarterly income tax and creditable income tax withheld at source for the year ending September 30, 1989. We find for the petitioner. Section 69 of the Nat~onal Internal Revenue Code provides, thus: Final Adjust�ent Return. - Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either: a) Pay the excess tax still due; or b) Be refunded the excess amount paid, as the case may be.

DECISION - C.T.A. Case No.4699 -3- In case the corporation is entitled to a re�und o� the excess estimated quarterly in,come taxes paid, the re�undable amount shown on its �inal adjustment return may be credited against the estimated quarterly income tax liabilities �or the taxable quarters of the succeeding taxable year. <Underscoring supplied> Inso�ar as the refundable amount shown on its �inal adjustment return for taxable year 1989 was not applied in the succeeding taxable year 1990 as petitioner again experienced tax loss positions, the automatic carry-over was therefore, impracticable. Moreover, in claims for refund the law requires the following: 1. that petitioner filed a claim �or re�und within the two <2> year period as prescribed by Sec. 292 <now 230> of the NIRC; 2. that the income upon which the taxes were withheld were included in the return o� the recipient; and 3. the fact of withholding is established by a copy of the statement duly issued by the payor to the payee <BIR Form 1743.1> showing the amount paid and the amount of tax withheld there�rom. <Sec. 10, Rev. Regs. No. 6-8; see Citytrust Finance vs. The Commissioner of Internal Revenue, CTA Case No. 4143, November 1, 1991, and Citytrust Finance Corporation <Formerly Investors Finance Corporation/FNCB Finance> vs. Commissioner 'o� Internal Revenue, CTA Case No. 4046 Supra>.

DECISION - C.T.A. Case No.4699 -4- The aforementioned requirement were satisf'actorily met by petitioner when it filed the subject claim for refund with the Bureau of Internal Revenue on November 29, 1991. Second, petitioner's witness Mr. Precioso J. Sapina testified during the hearing on February 4, 1993 that petitioner included in its income tax return for the fiscal year 1989 the particular income from which the various creditable taxes were withheld. <Exhibit "A" 1989 Income Tax Return of' Robinson's Land Corporation) Petitioner complied with the third requirement when it presented in evidence statements of' the tax withheld at source <BIR Form 1743>, certificates of' creditable income tax withheld at source <BIR Form 1743.1> and the Quarterly Income Tax Return <BIR Form 1702-Q) for the period in question. However, records reveal that petitioner marked the appropriate box in the lower left portion of' 1990 income tax return "to be carried as tax credit to the succeeding taxable year", nevertheless the same will not def'eat the granting of' the refund for taxes paid in 1989 as the law allows only an automatic carry-over on a succeeding year. Thus, petitioner cannot apply the payments made in 1989 to 1991. A cursory examination of the documents presented by petitioner reveals that some are not conclusive of' withholdings tax payments. These are those covered by withholding agent's monthly remittance returns of' income tax

DECISION - C.T.A. Case No.4699 -5- vi.thheld <BIR Form 1743-W > and vi.thholdi.ng agent's annual returns o� expanded withholding taxes <BIR Form 1743-B>. The payments covered by these documents were disregarded i.n the computation vhi.le the �ollovi.ng payment o� taxes were conclusively pai.d: a. Income Tax Payments: Date ED. lkder ~ Date Utr CD ED. a-t 1st 16236913 2.28.89 c 4461235 2.28.89 D p 38,431.40 2nd 16981977 5.29.89 42,195.65 Jrd 17814544 8.29.89 F 5162662 5.29.89 G 50,940.40 I 5897378 8.29.89 J P1311$6.45 TOTAL b. Creditable withholding tax at source: litlllloldi!g AQ!!It Taz litw.eld ED. JBS Enterprises p 1,423.11 R,S 2,862.50 T,U InteroatiODal CulinarJ Scbool 1,686.30 AA,Z I. S. Ocana CopJ Sf&tns/ 1,074.16 1,100.00 EE,BB,II lOCl'lJD Grace Ocana Pico D 5,511.24 loluo Handicraft 1,939.20 QQ 3,175.00 leech EDt. 16,350.00 IRJ,YY CorazoD E. Silva !Tots & Tf!I!'IIS 915.00 n,n, n,zz,AB 5,848.'!/ AC, AD, AE, AF, AG, AB, AI .. :~/��� EDt. l 'CIIAI.H' 9,578.25 AI YoJager Tnvrl & Tours, Ioo. 7,395.83 AI,AT,AU,AY 105,750.00 AV, AX, AY, AZ, BA Foto-le 3,825.50 OO,BB,BI,BJ,BI,BI. Vetpbil Corporation 16,905.94 BQ,BR 2,160.00 BY,BZ PS Pbotosme 6,415.78 CE,CS,CB CI,CI,CO lational Book Store 7,2CJI.OO CP,aJ,CI,CS,CT,CU,CY, 6,973.58 CV, Cl, CY, CZ, DA, DB, DC, GolcleD Donuts, Ioo. 1,661.46 DE,DF,OO,DB,DI DO,DP,DQ Robinson's Chickeo bene/ DT, Dl, DT, DZ, El, EB, EC ED PO's Burger Avenue Sbopper's Gain Supmart Food & Sucb Ioo. (Cafe Faunl Sinde's Gift Shop JCEE Barketing Corporation Usual JliJ, Inc. limn Supplies Alta-Food Services Goldi!D Ben Food Services, Inc.

DECISION - C.T.A. Case No.4699 llercury Drug Corporation -6- EG, Ell, EI, EJ Farucia Oliva 4,288.26 J/J lledical l Industrial Senice 10,821.13 �1, F.P, m, ER, ES, ET 1,200.00 Ell Sencio Richard tu EV,EI,FB (Lady Anoelle Sbopl 4,927.~ FC,FB,FI Faut.iDo 0. Salud/Trade !lark Iod. 3,799.48 FL,FI,FO Philippine Telegraph l Tel. Corp. 4,932.00 FP,FU FR,FS,FT Radio Coa. of the Pbils. IDe. 1,240.00 FU,FY,FV,FI FY 1.-: Express, IDC. 1,413.75 Gl,GB GC,GD,GF,GE Preseat Perfect Eat.erprisl!s, IDC. 4,001.74 GB,Ii. Jo-Di' 8 Cakes l Pastries, IDC. 1,035.00 GII,GI,GO GP,GQ lawratorld lDC. 4,640.49 GJI,GS,GT CiDdy' 8 Buburger, Ioo. 9,000.00 GJ Frosty Foods, lDC. 7,664.64 BD, BE, BF, JIG, HI BJ,BI,BL,BII,BI Tropbical Stitcb Ioo. 1,890.00 Ill BP .bat Garde Travel aDd Tours 2,762.~ BQ�� lleva Supplies 7,573.44 BJI,BS lirriaa Boutique 3,105.00 BT Coco Yilla ChiDese Rest. l larsoke 7,762.~ Frosty Foods, lDC. 5,400.00 Salvador Togle llliot lllartl 1,~.00 Tropical Stitch loo. 2,700.00 Ricohenseo Trading Corporation 1,276.44 Jlobiosoo'8 Ioo. 388,724.64 Jlobiosoo's Ioo lDC. _ _ _ _ _.....:.44!.1..,1:..:4.:.:.1�=~ TOTAL P735, 491.23 As it is, petitioner is only entitled to the amount o� P867, 057. 68 which was proven by evidence, whil.e petitioner claims the amount of P994, 919.45. Inso�ar as petitioner suffered a net loss position for the year 1990 as re�l.ected in its annual corporate income tax return, a re�und in the reduced amount of P867, 057.68 is in order. Savings Bank Inc. vs. CIR, .CTA Case No. 4325, Jfarch 17, 1994; lfaja Development Corp. vs. CIR, CTA Case No. 4788, September 30, 1994>.

DECISION - C.T.A. Case No.4699 -7- WHEREFORE, in view of all the foregoing, respondent is hereby ordered to refund or issue a tax credit in favor of the petitioner, the amount of P867,057.68 representing overpaid income tax. SO ORDERED. GRUBA .Judge WE CONCUR: e~l/lc~ D. ACOSTA ding .Judge AAMssOoN~ci0a.~ teD::;.~J~:r~ CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. B.._;; Q.~ ERNESTO D. ACOSTA Presiding .Judge Court of Tax Appeals