CTA Case No. 4014 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY BOGO-MEDELLIN MILLING CO., INC., Petit i one~.. , - versus - C.T.A. CASE NO. 4014 COMMISSIONER OF INTERNAL REVENUE, Rt<!pondent. X- - - - ------X D E C XS X0 N This case inv olves a claim for refund of overpaid capital gains tax in the amount of P1G1,58G. 28 for the fiscal year ended September 30, Petitioner is a domestic corporation organized and existing under Philippine laws. On Jan1..1a~"Y 15, 1985, petitione~" filed i t s final adjusted Stock Transaction Ca pital Gains Tax Return for its fiscal year ended September 30, 1984. The said return which covered all of petitioner's stock transactions during said taxable year reflected a net capital gains of P2,301,280.67 indicated as follows:

DECISION CTA CASE NO. 4014 - 2- No. Unit Total Cost llncl. of Selling Selling Expenses of Nan of Co1pany Sharu Price Price Sales> Gain Allied Guarant@e 1~,062 2~7.90 3,485,969.80 376,757.75 3,109,212.05 Insurance Co. 1 Inc. Marinduqut Mining &Industrial Corporation 132,500 6.00 7~,000.00 1,222, ~61. 25 ( 427,~61.25) Atlas Consolidated Mining 98,700 various 2,353,086.~3 1,892,646.56 460,439. 87 Far East Wire & Cable Corporation 84,091 NIL NIL 840,910.00 ( 840,910.00) ------------ ----------- ---------- 6,63~,056.23 4,332,775.56 2,301,280.67 On the said ca p ita l gain of P2,301,280.67, petitioner computed a tax due of P450,256. 13, thus= On the first Ptoo,ooo.oo, 10~ p 10,000.00 On the eXC@SS of P1oo,ooo,oo, 20~ 440,256.13 P4501 256.13 !P2,201,280.67 x 20~) a a a a a. .a a a a T 0 T AL During the same taxable howe vel'~ , petitioner made a tax payment of P611,842.41 <Confirmation Receipt Order No. 2567714 ~nd Payment Order No. 2021386, both dated Janual'"Y 4, 1984) on its net capital gain of P3, 109,212.05 upon the sale of its shares of stock in Allied l31.1arantee

DECISION CTA CASE NO. 4014 - 3- Insurance Co., Inc:. The sai d net capital gain of P3, 109,212.05 was reported in its final adjusted Stock Tr nsaction Capital Gains Tax Return. (pp. 124-123, BIR rec.) As a r ult, th sum of P16 1,586,28 is allegedly refundabl to petitioner inas�uch as its tottll tax liability amounted to only P450,256 .1 3 , W!'HJI"'tHU it e. tot!lll pay ment .SIIICWnt d to P611, 842.41 whiQh 11 ~OMp utt d ~~ followsl Ta~ P�id � ����� ��� �~!�� P611,842.41 L ~~~� T~x DY� ��� A���� 4 ;.;;, 0,2~6. 13 Refundebl Amount � � ��� .P.1.6.1..,3..8.6...2.8. <Exn. A., P� 132 SIR ree.) On Feb~uary ~2, 1984, p titian r filed a claim for refund of overpaid capit 1 gains t ax in the atnount of P161,586. 2 S <Annex A, Petition for Respondent has not yet granted petitioner's claim for r e fund, hence a petition f or review was filed on December 27, 1985 to stop the running of the 2 year pr escriptive period to judicially claim MeantiMe, an investigation was conducted by respondent's Revenue District Office No. 32-A 29 .1

� DECISION CTA CASE NO. 4014 - 4- p�..trs �..tant t o an Indorsement b y the App e ll ate Div is i on. As a result of said investigati on, i t was fo �..tnd out by Examiner Fernan d o Cani za.res that ~ i j the amo�.mt of P 161 , 58E..28 was an ovet~payment of capital gains t ax re f undab l e t o pe titione r. ~ <Exhibit A, p p . 131-134 BI R t"ec . > S a id Examiner Fernando Canizares in his report ~aid: "In view o f the f ot~ egoing and it appe a rin g th a t t he c l a im was seasonably filed, i t is respe ct ful l y recommended that the amount of P 1E. 1, 5 86 .28 be refunded to BOGO - MEDELL I N MI LLING CO., INC." <Exhibit "8 -� i"p. 131, BI R Re c ords ). This finding of E x a mi n e r Can i zares was never cont r overted by respo ndent, inasnn.tch as he submit t ed hi s cas e on t he basis of the pleadings and BIR reco r d. The only issue brought befot"e th is coln"t i s whether or not pe t i t i oner is entitled to a refund/tax credit o f the amount of P161, 586.28 as overpaid capital gains tax for it~ fiscal year ended September 30, 1984. Petitioner cont e nds that it is entitled to the refund/or tax credit the amount of P161,586. 28 representing overpaid capital gains tax for its .fiscal year ended September 30, 1984. 2~?

DECISION CTA CASE NO. 4014 - 5- On the other hand, respon dent contends that petitioner's ~lleged overpai d capita l gains tax for the year in question hinges on petitioner's having written off a loss of its shares of stock in the Far East W.i re an d Cable Corporation in the a11ount of P840,091.00 representing the va lue of its 840,091 sh~res o f stocks with aforesai d Corporation whieh M~m b@QOM9 worthless by rea$on of the alleged d1sa~1utiQM of said corpor~ti on. We ag~0~ with pet iti on er th at it is ent it 1 ed to the refund of P161,586.28 representing its overpaid capit~l ga ins t4x for its fiscal year ended Sept ember 30, 1984. Examiner Canizares in his report found petitione r entitled to the refund of the said overpaid capita l gains tax <Exhibits A & A-1, pp. 131-134, BIR rec. >; and the same respondent having submitted his case based upon the pleadings and the BIR record, practically ad111itted the veracity and truth of what is found in said BIR records. The claim of respondent that the refund hinges on in the writing off the shares of stock in the Far East Wire and Cable Corporation in the amount of P840,091.00 is unavailing inasmuch as ExaMiner

DECI SION CTA CASE NO. 4014 -� 6 - Canizares �aid that the PS40,091.00 shares of stock became worthless by reaso n of the dissolution of said corporation and that the Wt"i t i ng off of the amount of PS40,091.00 was in accordance with Section 30 <e> (J) of t he tax code. We quote Examiner Can iz reGI "Oul"'ing th e same tax ab l e yeat", the t xpayer wr ot: e-o ff the tot l a.molmt of PS40,091. 00 repre senting the value of 84,091 $hares of stock ofF r East Wire & Cable Ca�<porat ion which beoam wot"'ht 1 ess by re4~0n of the dis elution of said co~po r�t ion. Said write- off was in eeeo'r"d ne w th Section 30(e) (3) of the i x Code whi c h states1 a., '' ( 3) C. I.Jr..i.tl!UL_._~-~.,!;..9 m1D..Q. h!.!?. l"'~..hJ..!.~..l!i� - I f t'lny I CI.H"ities 1 d fine d i n Section 20 iU'e a$e rtain~d to be wo rt hl ~as and eh!T!rge off within the taxable year and a re capital assets, th loss r es ultin g th refr om hal in the c as of a t xp yer other than above or trust company inco rporated und r the laws of the Ph ili ppin~s a subs tanti al pat"'t of whol bu iness is the r oipi nt of deposit, fol'" the p1..1rpo a of thi s Titles be cons idel"'ed a~S J. ss fl'"O m the H.~ ...9.1:_ . ~l:.M.__,n..�L.7 on the last d My of tntch taxable year, of SAPJ..ta .~.1.. t .. <Emphasis OU\"" t Ex h ibit A) Respondent's c-onten tion that the .t"tu::ommendat ion of his examiner (refet"ring to 2~4.

DECISION CTA CASE NO. 4014 - 7- Caniza~res) is not binding to him is therefore without merit. In the tax return, it ha s sho wn losses of shares of stock in the Far East Wire and Cable Corpora~tion in the amount of P840 , 091. 00 representing the value of its 840,091 shares of stock with aforesai d corporation which has beco111e worthless by reason of the al leged dissolution of said corporation. Responden t , however, has n ot issued any deficiency assessment nor serio us ly di spt..tted the correctness thereof. <Dataprep tPhil.J, Inc., vs. Internal CTA Case No. 3600, March 30, 1984. ) Neither has he submitted particular controvertin;/ evidence except that this case was sub111itted based/ ~ j on the pleadings and the BIR recot'ds. Responden , therefore, may be considet' ed to have no serious objection or opposition to pet itioner's entitle111ent "xxx The record makes it clear that { / petitioner's income tax return for the taxable year in question has shown 1 osses. Respondent has not i ssuttd any deficiency assessment nor disputed thtt correctness thereof. <Dataprep [Phils.J, Inc. vs. Co��issioner o"f Int�rnal R�v�nu�, CTA Case No. 3600, March 30, 1984.) 2~5

DECISION CTA CASE NO. 4014 - 8- "No controverting evidence was /� presented by respondent. Neithe'r~ was C\ny evidence � disp�..1ting petitioner's ent~tle ment to its c laim for refund was presented by respondent and this case � having been submitted for decision on the pleadings and on the face of the �.tnrebutted evidence of petition showing that it is entitled to � refLmd ><><><, responde n t may be considered to hav e no �eriou~ object i on o r opposition t o petition e~~ � s enti tlement to t he t"'ef un d. The circumstances obtaining ><><>< compels us therefore t o su st ain the ><><>< the petitioner's right to the refund ><><>< based on the evidence and ~le dingg." <Ateneo de Manila Univers y vs. Co��issioner of Int ernal Rev nue, CTA Case No. 32 13, July 28, 1989) WHEREFORE, p et itioner Bogo-Medellin Milling Co., Inc. is entitl ed to the refund/or ta>< credit in the aMount of P161,586.28 representing overpaid capital gain s tax for the fisca l year ended Septe�ber 30, 1984. Without pronounce ment as to costs. SO ORDERED. Quezon City, Metro Manila, � August 1991 � �

DECISION - CTA CASE NO. 4014 - 9- WE CONCURa tih..J /&~dingZ. R S J1.1dge ~~Q,~ ERNESTO D. ACOSTA Associate Judge C E RT I F I CAT I 0 N 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. ~X~ P~~P.siding Judge Court of Tax Appeals 2!=l7