CTA Case No. 4669 (Decision)

\V~':~/.� -----.1- REPUBLIC OF nE PHILIPPUES COURT OF TAX APPEALS OlE:ZON CITY GREENFIELDS DEVELOPMENT C.T.A. CASE NOS. 4&&9 CORPORATION., and 48&7 PPt i t i onpt~~ Pt��o�u.l gated: COMMISSIONER OF INTERNAL JAN 30 1996 REVENUE., --" "- - DECISION This rpfprs to consolidatPd casE's for rPfund of GrPPnfiPlds DpvplopmPnt Corporation <GDC., for brPvity>, in of P2~808.,5&5.34 and P4.,414.,278.23 E'HCE'SS ta:te paympnt~ for thp ta:teab]p fiscal ypars PndPd July 31., 1989 and July 31., 1990, rPspPctivp]y. rPal PstatP businPss. For thE' fiscal yPar pnding July 31., 19B9, it fi)Pd its CorporatE' Annual <E:teh. "KK", a loss of P5.,47B,4&5.B4., prior ypar's ta:te crPdit of Pl,l2&.,597.3B, and total withholding ta:te of Pl,&81.,9&7.9& on its rPnta] and Miscpl]anpous i nco�p. of P2., BOB., 5E.~�. 34 which 186 .. ~�-.....'

,.. ! DECISION - C.T.A CASE NOS. 4669 & 4867 - 2- petitioner failed to apply for auto�atic ta~ credit in the succeeding taxable year as the corporation also overpaid its inco�e tax due for the year ended July 31, 1990. Consequent 1 y, 1991' petit i onet~ filed with the B.I.R. a written clai� for refund of the On the sa�e date, 1991, i t filed a petition fot~ t~eview with this Coll.n~t, docketed as CTA Case No. 4&&9, seeking refund of the aMount of P2,808,565.34. For the fiscal year ending July 31, 1990, petitioner filed its Corporate Annual Inco�e Tax Return <Exh. "LL", Petitionet"') taxable net tax due thereon of P857,21&.oo, ( 1989) of P2,808,565.34, and its current withholding ta~e~ of i nco111e. ln this return, petitioner clai111ed as refundable the a111ount of P4,414,278.23. ln a 1 ettet~., dated ~htl y 18, 199C:.!, filed with .~espondent's office on A�.tg�.t~.t &, 1992, petitioner sought for the refund of of P4,414,.278.23. The judicial clai� for this a�ount was filed with this Court on October 21, 1992 and was docketed as C.T.A. Case No. 4867. 187 .�

DECISION - C.T.A CASE NOS. 4669 &- 4867 - 3- Answer for C.T.A. Case No. was filed by �~espondent on Apt~i] 20, 1992, ad�itting only pcwagt~aphs 1 and 2 of the petition, and denying the rest of the allegations either for lack of knowledge ot~ sufficient to for� a belief as to the truth thereof, OJ~ for being erroneous conclusions of fact and/ot~ of law. The following were alleged as special and affit~~tative defenses: 1. The application for tan credit/refund is pending investigation by the BJR; 2. Jn an action for refund of tanes, the burden of proof is upon the tanpayer to show that the tanes paid or re�itted were erroneously or illegally collected; 3. lt is incu�bent upon petitioner to show that it has complied with the pertinent provisions of Section 230 of the TaK Code regarding the prescriptive period within which to file claims for refund; 4. Gt~ant i ng arg ...tendo that pay�ent of the has been made, the tax sought to be t"efunded the been paid by sa�e is pr~es�.Amed to have law; and taxpayer~ in accor~dance with 5. Clai�s for refund of taxes constr�ued strictly against the clai�ant, sa�e being in the nature of an exe�ption taxation. Fm~ C. T. A. Case No. 48&7, answer was filed on January 7, 1993. Similar to the first case. paragraphs 1 and 2 were also ad�itted and the sa�e grounds fm~ denial invoked for the rest of the allegations in the 188

DECISION - C.T.A CASE NOS. 4669 & 4867 - 4- petition. The following were stated as respondent's special and affir�ative defenses: l. Petitioner's clai� fot~ ���efund is still under ad�inistrative investigation; 2. Any a�ount to have been withheld �ust be shown to have been paid and re�itted to the Bureau of Internal Revenue; 3. It is incumbent upon petitiDner tD show that he has complied with the provisions of Sections 204 and 230 of the Tan Code; and 4. The �ere allegation of refundability does not ioso facto �erit a refund of tanes legally collected. On Oct obet~ 29, 1992, petitioner filed a �otion to consolidate the instant cases as there are evidence and witnesses to be p�~esented. In open couJ~t, on the sa�e given date, the �otion was duly granted. The lone issue to be resolved in the cases at bar is whether or not petitioner is entitled to the refund of the a�ounts of P2,808,5G5.34 and P4,414,278.23 or the total a�ount of P7,222,843.57. The Co ...wt rules in favor of the petitioner and the laid as it tackles the special and affir�ative defenses of respondent. Respondent's allegation that petitioner's claims are still under administrative investigation is not a valid ground for this Court not to decide the sa�e. It has already acquired jurisdiction over the clai�s and the 189

DECISION - C.T.A CASE NOS. 4669 & 4867 - 5- Court is not bound to wait indefinitely for no reason for whatever action respondent �ay take. At for refund and unlike disputed assess�ents~ no decision of respondent is required before one can go to this Ccu.wt. It �ay not be a�iss to state that until these consolidated cases were sub�itted for decision. no action �� was taken. whatsoever. in the ad�inistrative level. During the hearings conducted. petitioner presented ce�~t i ficates of cJ~edi table withheld (E,.hibits "A" to .. ~lJ .. , inclusive) and the �onthly/annual remittance returns of ta"es withheld as well as the pay�ent orders and confir�ation receipts corresponding to said re�ittances <E~hibits "TT" to "XXXX-3"� inclusive>. All of these docu�ents were properly identified by witnesses who also testified as to the i .~ contents. Said docu�ents were also confir�ed by respondent�s counsels to be faithful reproductions of the o�~ i gina 1 s. The only objection interposed by respondent�s counsel was that the subject docu�ents have not been verified/audited by s .~espondent' and hence~ self-serving ( j ��<l"� Respondent's Co��ents to Petitioner�s Formal Offer of Evidence. p. CTA reccwds). brushes aside this objection as 190

DECISION - C.T.A CASE NOS. 4669 & 4867 - E� - evidencPd by E)(hibit "PP" of pPtitioner which we reproduce hereundPr: A~�g~�st 20, 1991 GREENFIELD DEVELOPMENT CORPORATION 108 Rada Street, Legaspi Village Makati, Metro Manila S i ,-/Mada�: Jn connection with thP FY 8/1/88 - 7/31/89 and FY 8/1/89 - 7/31/90 intPrnaJ rPvPnuP ta)( investigation by Revenue OfficPrs Al�>)(ander D. Martinpz, Alejandro F. Felipe, LPonardo T. CabarlP and Rafael V. Lazo, covPrPd by LPttPr of Authority No. 002838 NA datPd April 29, 1991, pleas�> be infor�Pd that a report of invPstigation datPd July 22, 1991 has bPPn sub�ittPd to higher authoritiPs for �>valuation and final approval. As statPd in thP aforesaid rpport of investigation, thP following intPrnal rPvPnUP ta)(PS (including incrP�PntsJ WPrP found duP fro� you, to wit: DEFICIENCY VALUE-ADDED TAX FY 8/l/88 7/31/89 p FY 8/l/89 7/31/90 1,855,350.58 TOTAL Pl, 855,350. ~t8 Included upon request of the subject taxpayel''. <SGD.J CONRADO C. PAZ Assistant Co��issionPr Ovpr-all Coordinator, STAT clParly statPs that for fiscal yPars PndPd July 31, 1989 and July 31, 1990, pPtitioner has undPrgone rPYPnUP ta)( 191

DECISION - C.T.A CASE NOS. 4669 & 4867 - 7- investigations and the result showed petitioner having a deficiency value added taH liability of P1,855,350~58 which petitioner i��ediately paid as evidenced by Pay�ent Ol~del~ No~ 113813'32 CEHhibit "PP-1", Petit i one�~> and Confir�ation Receipt No~ 20213&51 (E)Chibit "PP-2", Petitionet~), both dated At..agust 28, 1'391. .~even~o.ae tax" incl\ldes and/or withholding tax and this being so, connotes that the investigations of petit i one�~ �entioned, al .~eady included withholding tax investigation. Hence, respondent's allegation and/or objection to the ad�issibility of Exhibits "TT" to "XXXX- 3" has no factual basis and should be set aside. Sections 204 and 230 of the 1'391 Ta" Code, thP provisions of which pertinent to clai111s quotpd herPundPr: "Sec. 204. Ruthority o' the Co��issioner to co�pro�ise~ abate~ and re,und/credit taNes- ThP Co��issionpr may - (1) XXX (2) XXX (3) CrPdit or refund taxes PrronPously or i 1 1 Pgal 1 y ,~ecPi ved, xxx~ No t ct~edi o,~ ,~efund of taxes or penaltiPs shall be allowed unless the taxpayer filPs in writing with thP Commissioner a claim for refund within two years after the paymPnt of thP tan or penalty." 192

DECISION - C.T.A CASE NOS. 4669 &� 4867 - B- ..Sec. 230. Rrc:ovr,�y o-F taN rr,�onrous1 y or i 11rga11 y c:o11ret rd. No suit ot~ pt~oce-ed i ng shall be �aintained in any com�t for the recovery of any national internal revenue taH hereafter alleged to have been erroneously or illegally assessed or collected, HNN until a clai� for refund or credit has been duly filed with the Co��issioner of lnternal RevenuF; but such suit or proceeding �ay be ~aintained, whether or not such taN, penalty, or su� has been paid 11.mdet~ pt�otest ot� d11.1ress. ln any case, no such suit or proceeding shall be begun after the eHpiration of two years fro� the date of pay�ent of the taN NNN." have been co�plied with by the petitioner. Petit. i onet� "KK"> 15, 1989. petitioner declared a refundable a�ount of P2,808,565.34. The written clai� for refund (EN h. "RR") filed with respondent's 14, 1991 <ENh. "RR-1">. date, petitioner filed with this Court tts pFtition for refund of the aforesaid amount. F ot� the f i seal yea�� ending J11.1 1 y 31, 1990, petit i onet� filed its corporate annual inco�e taN return <ENh. "LL'') lt declared a refundable a�ount of P4,414,278.23 in this return. Written clai� for refund (ENh. "55") filed with the B.l.R. on (ENh. "55-1 "). Petition for refund of this a~ount was filed with this Court on October 21, 1992.

DECISION - C.T.A CASE NOS. 4669 & 4867 - 9- Fro� all the foregoing, it can be gleaned that fro� the dates of filing of the corporate annual inco�e taM fOl~ the fiscal involved, the two-year prescriptive pe~iod has been observed by petitioner in the filing of its ad�inistrative and judicial ]n this Court has ruled that petitioner is not required to show the date of withheld at The e ,~11.1l is, a corporate taMpayer pays on a quarterly basis. The final payment is at the end of the taMable year or on the ts�~ day of the fourth �onth following the close of the calendar or fiscal This it can be finally ascertained that the taMpayers either �ade profit 0)~ suff et~ed a 1 oss in their operations <Ateneo de Manila University vs. CJR, CTA Case No. 3976, Oct. 18, 1989; Paseo Realty and Develop�ent Corp. vs. CIR, CTA Case No. 4528, Apri 1 30, l993; Jardine Davies, J nc. vs. CJ R, CTA Cases Nos. 3839, 4013 and 4124, January 20, 1994). Moreover. even in the absence of the above�entioned ,~ul i ng~ petitioner's withholding taMes foJ~ the fiscal years involved were all properly docu�ented. Petit i one�~ and ceJ~t if i cates of withholding taMes acco�plished by its withholding agents. As held in Ateneo de Manila v. Co��issioner o~ Internal; 194

DEC[S[ON - C.T.A CASE NOS. 4669 ,. 4867 - 10 - <CTA Case No. 3213, J\.tl y 28, 1389>, "pt~oof of withholding is established by copies of state�ents duly issued by the various payors to petitioner." When petitioner �ade a for�al offer of and cel~tificates as its evidence, respondent did not object to the e�istence of said e�hibits but only as to their purpose of proving the ta�es withheld. it was held that: "��� Respondent did not object to the e�istence of state�ents and certificates which were offered by petitioner as proof of the withholding ta�es but took e�ception to their contents and purpose. Despite said resel~vation, '-'P until the sub�ission of this case for decision, respondent was not heard to co�plain about the veracity of the contents of these docu�ents or e�hibits nor has it shown any irregularity in the sa�e which will taint their reliability or sufficiency as proofs of the ta�es withheld despite the fact that it is well within their co�petence to do so. Respondent is thereby considered to have ad�itted the truth of the contents of these exhibits. Hence~ those a�ounts of withheld tanes which are supported by corresponding state�ents in evidence shall be allowed as ta� credits." (Citytrust Banking Corporation vs. Co��ission�r of JntPrnaJ R�v�nu�, CTA Cas� No. 4099, p. 1~, May 28, 1991) refundability does not ipso facto �erit a refund of tanes legally collected" does not apply to the instant cases ,..her�e petitioner� has fully substantiated it5 claims thl''l.l docurnent.:u��y and testi�onial evidence. The crn�por-~t e ./ 1~�~

OEClSlON - C.T.A CASE NOS. 4669 & 4867 - l1 - annual inco�e taM returns of petitioner for the subject fiscal years were both supported by audited financial state�ents which to this Court's �ind had been thoroughly respondent's eMa�iners when the 1att e�~ cond1.1ct. ed an investigation of petitioner's i nt er�nal revenue taM liabilities for the fiscal yea,~s 1989 and 1990. As �entioned earlier, only a deficiency value was i�aediately paid by petitioner. The Court, just cannot co�prehend why respondent failed, as done in nuaerous cases in the past, to sub�it the B.l.R. records relative to the said cases to this Despite the absence of B. 1. R. respondent's counsel sti11 had the gal] to sub�it the cases at bar based on the records and pleadings CMinutes oF the hear~ i ng, November 9, 1994, p. 116, CTA r"ecor~ds). WHEREFO~E, f:inding the petition �e�"itot"ious and in accordance with law, the sa�e is het"eby GRANTED and respondent is ordered to refund or issue in favor of TaM Credit C~rtificates in the amounts of P2,808,5&5.34 and P4,414,278.23 as eMcess taM payments for the taMable fiscal years ended July 31, 1989 and July 31, 1'9'90, t"espectively. No pronouncement as to costs.

DECISION - - 12 - C.T.A CASE NOS. 4669 & 4867 SO ORDERED. / t.E CONCUR: ~(Q. 0-vv\-- / ERNESTO D. SRUBA C ERT IF I CAT ION [ hereby certify that this decision was reached after due consultation a�ong the �e�bers of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. ~ca~O~ ERNESTO D. ACOSTA p,~es i ding Judge Court of TaM Appeals 197