CTA Case No. 4687 (Decision)

Republic of the Philippines COURT OF TAX . APPEALS Quezon City BENGUET CORPORATION, Pet i t .i oner, versus - C.T.A. CASE NO. 4687 COMMISSIONER OF INTERNAL .DEC 2 ~ Pro�ulgated: REVENUE, Respondent. fI fQQ.l, X --------------------------------------------- -- X This case involves a claim for refund or tax credit of overpaid income taxes for taxable years 1989 and 1990 in the total amount of FilL~, 956, 985. 00. Petitionet~, is a domestic existing under and by virtue of Philippine laws, with principal office at No. 1.2 ADB Avenue, Mandaluyong, Petitioner is engaged in the mining business which includes the expl ot~a t ion, development, and operation of mining properties for pur~oses of commercial production, and the marketing oF marketable mine products pt~o d uced by it. 10, 1990, petib. onet~ filed its Annual Income � Tax Return <ITR> fat~ the calendat~ year ended December 31, 1989 with respondent's Revenue District Office No. 31, Mandaluyong, Manila, showing a tax a ble income . of 1=12 02,037,838.00

- DE C I S I 0 N- C.T.A. Case No. 4687 2 and an income tax of ~70,713,243.00. Howevet~, in its quarterly income tax returns for the first three quarters of the same taxable year, petitioner alleged that it paid as income tax the total amount of ~81,731,645.00. More so, creditable expanded withholding taxes in the total amount of ~177,626.00 were withheld by various parties from their income payments to petitioner during the same calendar year 1989. The income taxes paid is computed as follows: CRIPO No. Alount lst Quarter B7144583/C4986852 05-3Q-89 ~ 33,008,851.00. 2nd Quarter B7144648/C5371971 08-29-89 37,866,474.00 3rd Quarter B7144717/C6277510 11-29-89 10,856,320.00 Creditable 177,626.00 Expanded Withholding various ~---8---1--,9--0-9---,2--7-1---.0--0- Total Inco1e Tax Paid for 1989 Petitioner all~ged that it paid income tax in the total amount of ~81,909,271.00 for CY 1989 wherein it should only be held liable for ~70,713,243.00 as income tax liability. Petit i onet~ claimed that t~ere was overpayment in the amount of ~11, 196,028.00.

- DE C I S I 0 N- C.T.A. Case No. 4687 -- 3 - On ~)pt~ i J. 15, 1991' petitioner filed its Annual Income Tax Return for it 5 cal endat~ yeat~ ended Dec!?mbet~ 31, l990 showing a net loss of f=l68, 37E:, 485. 00. During the same year, a total of f=l3,770,957.00 representing creditable expanded withholding taxes were withheld by various parties \ from their income paym�nts to herein petitioner. Petitioner contended that it overpaid its income taxes for the years l989 and 1990 in the amounts of Fill, 196,028.00 and FI3,770,957.00, respectively. On August 1991' petitioner filed a claim for refund or tax 6redit corresponding to the alleged overpaid income taxes of Fill, 196,028.00 for 1989 and Fl3, 770,957.00 fot~ l990. <Exh. JJ. > To this date, respondent has not yet acted upon petitioner's .claim for refund or tax credit. Hence, this petition was filed on December 20, 1991' as a way of tolling the two (2) year ' pres~riptive period prescribed in Section 230 of the Tax Code. In answer to the petition, t~espondent as spe~ial and affjrmative defenses alleged that: 1. The present petition for review is premature as petitioner's claim for refund or tax credit is stilJ pendin~ investigation by respond e nt ;

.. 0 > 7 DE C I 9 I N- C. T . A. Gase No ~ - 4 Ga7. 2 . I n a n act io n for refund or t ax cr ed t t, ~ h e t a~ p ~ ye r mus t show th a t t he ta xes we r ~ paid e r ron~ously or ~ol le c t ed i 11 ega ll y, Fa il ltr I!! t n 111 e e t t h is � bwr d en is fatal to th� ~etlan for refund, � .. �� ' t ��� , � .� � / 3. C l ~i~ ~ - fo r rRf und a r~ co n mt ~ u e d s trictly �~ � ib� t cl ~ im~nts since ' tb ~ Y ar e in th" � ~~ ~u re of An �xe~ption . fr bm t a X at i 0 n � 1\0~ _-,:�.: � 4. Taw e~ � a r e presumed to hav e ~~ e n pai d an ~ : col l~ ~ t ed . th accordance - ~i th l a w. ' ' �~ :I � �, ' ...._.... . . ':; ~ : o/ n~ ~ Thesole I i �tl.lD to be t~ ~solved ~ .n this '�=~I ! ., \ c a se is whether pet~t~onet~ i~- ' to e ntit l ed ":: �, ) ' � .... ~ 1 1, 19s,o2 e.oo � n~ -~ ~a,?70,957.oo. t~,p f.,. ~ ~ g ov er pa id taxea ent in i ,:. ., : ..... );.. f o~ the years 1989 ~n ~ � 19'30t t~ ~Ji pe c tively. ~ . ... ' . ~~ ~'' .~ �� .. 1 P e titione r pre 5~ ~ te ~ the following doc uments I. ,, ~\ in su pport of it ' ~ l a t ~ fo r tax c r edit: �� ] � .. . ... ~.-; '' .... � cp~ po r a t e ' Annual ,.', .:� Ex h. "A'' ~ ~~~rn for caleri~ar l ncpn!e Ta x ended Exh . yv .tlr : Ex h . . ... P ~.F ~ttt> e t~ 3~ 1 . .. . 1989, . ~ .. ... . ~ ~�r:. ''V '' b or ~ar ate Annual I n co~t~e� Tax Ret ~ r n f or calendar y ~ ~t ' ended R7~-~ ~ ti.er� � ~t, : 199et.' � �~ .~ ,/ ~ ~- t. - � 1 1 II ~~ - ca~pb rate ~nnuat ln c9~e Ta x ended '' R ~' o r n for ~ alen~ar . .. y.~ilt': �~{< P ~ p ~~ b e r a ~, 199 1 . I:' �.. I �1: ''

- DE C I S I 0 N- C.T.A. Case No. 4687 - 5- Quarterly Inco�e Tax Returns and Quarterly Income Tax Pay�ents for 1989: Ex h. "B" Quat~tet~ly Income Tax Return for Exh. "C" the Fi ..-~ st Quarter ending March Exh. "E" 31' 198'3� . Exh. "F" Exh. "J" Central Bank Confirmation Exh. "K" - Receipt No. B7144583, dated May 30, 1989, fo..-~ the amount of f=t33,008,851.00. Quarterly Income Tax Return for the Second Quarter ending June 30, 1989. Centt~a 1 Bank Con f it~.nJat ion Receipt No. B71L�L�EA8, dated Aug. 29, 1989, for the amount of f=t37,866,474.(l0 Quarter Income Tax Return for the Third Quarter ending September 30, 1989. Central Bank Confirmation Receipt No.B7144717, dated Nov. 29, 1989, for the amount of f=t10,856,320.00. Certificates of Creditable Taxes Withheld for 1989 and 1990: Exhs. "N" to "U" , -- Ce..-~tificates of Creditable Income Taxes Withheld at Source for the calendar yeat~ 1989. Exhs. "W" to FF" Ce..-~tificates of Creditable Withheld at Income Taxes ~ Source for the calendar yeat~ 1990. Ex h. "GG" Confirmation Receipt No. B 18895988, representing payment of tax withheld on s ale of rea property in 99(.

- DE C I S I 0 N- C.T.A. Case No. 4687 - 6- Inco�e Subject to Creditable Withholding Tax were included in the co�putation of Gross lnco�e for 1989 and 1990: Exh. A - 3 11 11 The income received from rentals and leases from various payees in the sum of ~3,552,523.00 forms part of the gross income for 1989. Exh. "A-4" The gross income for 1989 in the total amount of ~3,918,866,679.00 include among others the income subjected � to creditable withholding tax. Exh. "V-4" The income receiyed as service fees of ~168, 101.00 subjected to withholding taxes were included in the computation of its gross income for 1990. Exh. "V - 5" The income received from rentals and leases in the sum of ~3,956,837.00 subjected to withholding taxes were included in the computation of its gross income for 1990. Exh. "V - 6" - The intet~est income received in the sum of ~1,633,115.00 not subjected to final withholding taxes wet~e included in the computation of its gross income fat~ 1990. Ex h. "V - 7" - The income l-~eceived from the sale or exchange of property other than capital assets in the sum of ~19,329,807.00 subjected to withholding taxes we~e included in the computation cif its gross income fat~ 1990. Ex h. "JJ" Letter claim for refund dated f-=!pt~ i 1 21, 1991, filed with the BIH on Aug. 23 , 1991.

- D EC l ~I 0 N.- C.T .A . Case No. 4687 �- 7 - As borne ou t b y the records, pet it i one t~ fi l~d it s 1989 Corpo r a te Income Tax Re t ur n on A p t~i 1 10, 1990 , sho wi ng a refundable amo unt of 1311, 196,02B.Op, comput4td as follows: lncoll! : Sales (Sch. U ~ 3,752,284,278.00 Gold Trading (Sch. Jl 154,085, 948.00 Rentals/Lease$ - Uarious ISch, 41 3,552, 523.00 Interest not s.ubjed t o Final Wi~h- holding tax <Sch, 5l a, 22s, 337. oo . Discounts froa purchases (Sch, J ) 712, 474.00 Sale or exchanges of prop~rt� other than capit al a~stla ~~~.8l 6, 11'3.00 GROSS INCOME ' �'' Less : Total Deductions 3,750,&11,004.00 p 168,255,675.00 Net Inco1e 33,78~~163.00 Add: Excess of NP.rlal Depreciation ~ 202,03718JS. OO Jaxable Inco�e ' :::~::::==-.-...~=== Tax due ~ess: al Prior year's excess credit bl Quarterly Tax�payaents ' Gtr. Date ,_ount 1st B71445S3/C498G851~ 05/30/89 , 33, oos, 851. 00 2nd BB771144447G1478//CC563277179~7110~ , 01~8//2299//8899 37,866,474.00 3rd 10, 856,320.00 81,731,6.\5. 00 T O T A~ . .4 cl Creditable tax withheld 177,626;00- 81,909,271.00 TDTIL IVWff ~ � f 11, 196,028. 00 ~ Exhs. �c� and "D". 3 Exhs. "F" and "G" 1 Exhs. "K" and "L" : Exhs. "N" t o "U"1 Their cort 3 ! ~ �d1ng incoae 4as declared in thP 98~ ~co �e t ax r .urn : 1ed as E~. A-3". ... {

'� - DE C I 8 I 0 N- ~. T.R. Case No. 46 ~7 ..,.. 8 - the amo unt of ~11, 19 6 ,028 .00 was a uto matically carried o ve r to t~e succ eedi~~ taxa ~l e year � 1990 by petit ion er as s~o wn in � its Return whic h was �'�' la belled as "prior~ y~ er' s excess credit'' <Se e Exh. �~ .v. " ) . The same .. i hco ~e tax return refl e~ ted a .., ~ withhol~ing) in ' credit a ble tax with h. eld . . <ex. panded the amount of ~3, 770 , ~5. 7~. 00 (See Exh. "!N" tQ . "GG "). The excess credit i n: 1989 and the credit aple tax of �; t i 199Q ~ 0 a total '' J'll14 , 956,9 85. 00. Unf qt~t!.,l nately, ir1 19'30 pe~ :i.ti onet~ - '.: ' ' .. <tl 'uffe re d a net l o s s . - i n i ts oper~tion. Cpnsider~ ing �~ that no Ra ~ n � Wa ~ r eaJized for th at year, l ' ' . ro ipcom ~ t~ x liability could ~ia. ~. Peti tio~e r ~~ ~ed to se t aside its r ight to I l ', , l� au tomati ca lly ~ p ply tha sar~ as ta x cr edit in vie w � ,t I 1' ~ i k ewi se inc ur ~ ed a lPijs ip its o pera tion s. .. We fi n~ fittin~, as ~asis f or peti t t oner's clai m for r ef u nd br . ta~ credit, Section &9 � o f the \��' T ~x Code which r ~ad a as follow ~� 'SE:.L t 9~ F l ' 1 d.Ju 't en t � r~0 r t , � 1 i t> l :> t () ,- c;.~ I Eve r y El Ec t 1 on O::'�+' �~'1a } �. fllr< a f.n 1 r-- c tu r 1 t..'JVfH'illQ H.: tot. l 11 ~?t tnc om e t h e pt~ t� �ed 1.�1 g� ,~ 1 Plld.:n�� �H f i sea 1 I f t ile !'1\n of -~~ q�t�H te �

/ -� D E C I S I 0 N. - C. T.A. Case No. 4~87 �- 9 - made during the ~ai~ taxable year is no t eq ual to the total tax due on the en tire taxable � net � ~ n come of that year the c o r p o r a.�t� i o n ' s.h~.ll e i t h. e r : . ' . a> Pay : ~he excess tax still'' ._~ ~u e; ' - ~; 0~~ . b~ Be r ~funded _the excess amount p~id~ . a~ th~ case may b~. nI ell!:> e r .~�' t1� e cor�p o t' at i on i s en t :i. t l e d to a r efund ~~ the excess estima te d quat'tet'lY �.� :1.;1~Pme taxes paid, �~..the re fundable a~qunt shown on its fipal .:::1 clj�-1stm~n~ .; t~~~Ut'n may pe � ct~ eqtted a gain s~ ~h� ~~tlmated quarterly inc~~e tax liabilj~i p~ ' for ~he taxabl. qua~t ~rs . Of the SL\CC99~~':'q t~xable yea)''; II ,' .~- : .. '; ' ... ~ : �. ~ In vie~ �of ~h �e . evidence the '� ' < IJ � , '� pe titioner, thi s Cou~ t believes that petit ~ oner has show n to ~~~ � sat~ s fact:t.on of the Cou rt, its entitl ement ~ .� . Ot' .. f; respondent who so ught fot~. ��� verily, i ~ . is , � I . the has '� failed ~ n t'~IH' q u e s t to ~etitioner's a$~~r~ion: .' Instead of com i ng up with . I �� � 'i I ' � ! ~ ' matet'ial � evidence ' \n � ot~der to tilt the balance in ~ ��� ' . ' ~l ' : � ,. . >' J� ' ' I ' ,' I ' her~ favor, resp9ndent � casually s ubm~tted the cas e ' i~ f ' ~~se. It ... . .', . . '' . ' . . .. ~ pa sed on tl"!~~ plei:.\din~ f> fill~ rf?cor�' tls qf the ~{ t: :-:� ' . ' .. ' 'J ��' li k e wi s� ~ e s ai d t~ a~ res ~ o n~ en ~ may be 1!:. p>ti t i o n e t�~s 'l'tJt l 8i n._, J;~� t~ c J.aim for� r.fund Ot' t x c r ec'�t. _ 0-1r� t~ helmin9 t the 1. �1an t u m ,~ 'to -, u sta.;n r /

- DECI~.3IUN C. T � f.l. C '"' ~; e l\ l u � ttL B 7 �-- :1. 0 ... t h e evtden~ ~ � prese n te d were nu t '' is putE~cl by l"'<'~ !5ij ond~=nt. ( r1 -,~1 sa m ~= t�:v iclen c ~= s ui�f' ic iently e S t C:\ b J i :; t�) �~ cl p �' t; i t j, 0 n f~ , ' ' S t '' i !;;I h t t D t h e t' P f U I 1d D 1��' t a X Lr edit s ought . <Co mmonwea lth Mana gement & Serv ices Corpora t ion vs. Com~i s s i oner o f I nt e rn al Reven ue , CTA Ca s e No . 3232 , ~~ n e 26; 1985 >. WHE REFORE , pt . ~ ~ ~ses cuns id er ed 1 re spo ndent is ord e re d tu r ef und or issue ta x credi t in ta~ur of Bengue t Corpor atio n the / ' I, :OIIliClU.nt of ~14,9~~,985 .0 0, repres entin g / income t axes for taxdble year s � 1989 a nd 1990. S O ORDJ:;~ED � . �f �J GRUBA .Judge WE CONCUR: 8. T 1 0 I I~-~ l' t.' U'y t; h .1. ~ � I ,_ < l. Ul ,...c:l~o� i;l.C hf~d c: l't e:�' c.j ~ 8 t: vi'' 111 ll '� 111 em be ;'S ; 11 c.l :r: () J. t h f:~ .:cJu� ;; Co itut 'P ~�J.ith 1 .) , ;L ., \ b _ct :i. on n. ~-�- '')~ ERNESlO J ACOSTA I� 'i''l' ., 1. d I 11. J l.ld q (�' ~nut L� of 'li-'f'E~i;;\1~