MERMAC, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS� QUEZON CITY MERMAC, INC., Petitioner, -versus- C.T.A. CASE NO. 5632 COMMISSIONER OF %-' P1 )lnulgated: INTERNAL REVENUE, FEB 15 2000 Respondent. X----- - - - - - -- - ----- - - - - - - - - - - ----- - -- - - - - ----- - - - - - ---------X DECISION This is a judicial claim for refund of alleged overpaid credi :able withholding tax in the amount ofP-230,692.00 covering the taxable year 1995. Petitioner is a corporation organized and existing und� r and by virtue of Philippine laws with office address at 35th Floor, Tower One, Ayala Triangle, Ayala Avenue, Makati City, Metro Manila. It is authorized to engage in ;msiness as a holding company for the purpose, an1ong others, of acquiring and investhg in stocks of other corporations. The facts are simple. On April 15, 1996, Petitioner filed its Corporation Annuai Income Tax Return ended December 31, 1995 showing a net loss and reflecting an excess of creditable withholding tax in the amount of !2230,692.00 (Exhibit A). In the ( nsuing year of 1996, Petitioner was not able to utilize said an1ount of tax for the reason ti at it suffered again a net loss (Exhibit K). 24u

DECISION- C.T.A. CASE NO. 5632 - 2- On December 2, 1997, Petitioner filed a claim for refu ��td with Respondent's Bureau in the amount of 12230,692.00 representing such unutilized Teditable withholding tax. Respondent did not act on said claim for refund. To obviate therefore., the lapse of the two-year peremptory period for the filing of a judicial claim for refund as provided in Section 230 of the Tax Code, as amended, Petitioner instituted the instant claim for refund on April15,1998. At bar, Petitioner restates its stance a quo. Responden , on the other hand, interposed, among others, the affirmative and special defense that �he burden of proof is on the taxpayer to establish its right to the refund and failure on i .s part to sustain such burden is fatal to the action for tax credit. As We see it from the facts, the sole issue confronting this Court is whether or not Petitioner has submitted sufficient evidence to prove its entitleme 1t to the herein claim for refund. We rule in Petitioner's favor. There are three requirements in claiming refund for excess reditable withholding taxes and these are: 1. that Petitioner filed a claim for refund witJ:- n the two (2) year period as prescribed under Section 230 of the Tax Code, as amended; 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 1: y a copy of statement or certificate of creditable tax withheld at sour e (BIR Form 1743.1, now 1743-750) duly issued by the payor (withho.:iing agent) to the payee showing the amount paid and the amount o � tax withheld therefrom. (Section 10, Revenue Regulations No. 6-85; Cit�;trust Finance Corporation vs. The Commissioner of Internal Revenue, �.:'TA Case No. 4134, November 11, 1991; Citytrust Finance Corpora ion (formerly Investors Finance Corporation/FNCB Finance) vs. Co '1missioner of Internal Revenue, CTA Case No. 4046, February 24, 1993. Paseo Realty and Development Corporation vs. Commissioner of Intc.rnal Revenue, CTA Case No. 4254, August 10, 1993,� Commissioner of In ernal Revenue 24.1

DECISION- C.T.A. CASE NO. 5632 -3 - vs. Court of Tax Appeals and Paseo Realty and Developmeu Corporation, CA-G.R. SP No. 32927, February 28, 1994; and, Far East J'ank and Trust Company vs. Court of Tax Appeals and Commission, ,. of Internal Revenue, CA-G.R. SP No. 41666, May 7, 1997) Petitioner has satisfied the filing of the instant claim for 1 :fund within the two- year period as prescribed in Section 230 of the Tax Code, as amended. The final adjustment return for year 1995 was filed on April 15, 1996, the l. st day required under Section 77 of said Code, and the petition at bar was filed on April 15, 1998, or exactly on the last day of the two-year reglementary period. With regard to the second requirement, Petitioner's final .:tdjustment return for year 1995 showed indubitably under Section E thereof (Exhibit . -.) that the amount of P230,692.00 was duly reported and included in said return. Going into the last requirement, records show that Peitioner submitted in evidence the following Certificates of Creditable Tax Withheld A Source in satisfying proof of withholding of the amount of tax by the payor, to wit: Withholding Agent Amount of Tax Withheld Exh. Smart Communications, Inc. P103,300.00 B Toyota Motor Phils., Corp. 3,500.00 c Stephen D. Williams c/o Caltex (Philippines), Inc. 12,700.00 D DHL Aviation (Phils.), Inc. 51,000.00 E Griffin Securities Corp. 11,191.66 F Ayala Corporation 1,000.00 G Procter & Gamble Phils. 48,000.00 H TOTAL �230.691.66 Based on the preceding compliance by the Petitioner of 1 le requirements for a successful refund of creditable withholding tax, this Court is left '1ith no alternative but to act favorably on its claim for refund at bar. 24

r DECISION- C.T.A. CASE NO. 5632 - 4- WHEREFORE, in view of the foregoing, the instant P tition for Review is hereby GRANTED. Accordingly, Respondent Commissioner o,� Internal Revenue is ORDERED to REFUND the amount of�230,691.66 to the Petitio.�ler immediately. SO ORDERED. WE CONCUR: - ERNESTO D. ACOSTA Presiding Judge 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. -Q_, ERNESTO D. \.COSTA Presiding .' udge 243