CTA Case No. 5427 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY GREATER ASIA RESOURCES C.T.A. CASE NO. 5427 CORPORATION (formerly Ramie Textiles, Inc., then , Gaming Promulgated: ~ Interest and Franchise _JA_N_0_8 _19_98_~~ Technologies, Inc. ) , - - -x Petitioner , - versus - THE COMMISSIONER OF INTERNAL REVENUE , Respondent. X- - - - - - - - - - - - - - DECISION This case involves a judicial action for the refund of the sum of P9,056,250.00, representing overpaid creditable withholding tax for the fiscal year ended June 30, 1994. The antecedent facts of the case are as follows: Petitioner is a domestic corporation duly organized and existing under the laws of the Philippines. Its former names were Ramie Textiles, Inc. and Gaming Interest and Franchise Technologies, Inc .. Its principal office is located at Unit 502 Philippine Stock Exchange East Tower, Exchange Road, Ortigas Center, Pasig City. On October 17, 1994, petitioner filed its annual income tax return for fiscal year ended June 30, 1994 reflecting, among others, a net loss from operations in the sum of P159,290,050.00 but with a refundable income tax in the

DECISION - C.T.A. CASE NO . 5427. - 2- amount of P9,056,250.00, representing creditable withholding tax at source. This overpaid income tax arose from petitioner's sale of several parcels of land to San Miguel Corporation, located in Valenzuela, Metro Manila, for a total consideration of P345,000,000.00 paid on installment basis (see Dee d s o f Sale, Exhs. A a n d B, p p'. 71 to 8 4 , CTA recor d s). As agree d upon, the following payments were tendered and a co r responding 5% creditable wit hh olding tax were withheld and re mitted to the Bu rea u of Internal Revenue (Exhs. F, F-1, G and G-1, pp. 95 to 96, CTA records ) . The details of which are as follows: Date Amount 5% Withholding Tax Date Remitted p 86,250,000.00 p 4,312,500.00 02-19-91 2,587,500.00 10-15-91 11-19-92 51,750,000.00 1 , 293,750.00 12-10-92 05-19-93 25,875,000.00 1,293,750.00 06- 10- 93 11- 19- 93 25,875,000.00 7,762,500.00 12-27-93 12-27-93 155,250,000.00 01- 25-94 P17,250,000.00 Total P345,000,000.00 Petitioner, by way of this Petition for Review, seeks to recover the 5% creditable withholding tax in the total amount of P 9,056,250. 0 0 covering the p ay ments made by San Miguel Corporation on Nove mber 19' 1993 and December 2 7 ' 1993. On February 16,1995, petitio n er, purs u a n t to Section 230 of t h e National Inter n al Revenue Co de, as amended, filed

DECISION - C.T.A. CASE NO. 54 2 7 . - 3- its letter-claim for refund with the Bureau of Internal Revenue covering the aforesaid excessive income tax payment. On October 9, 1996, petitioner lodged its appeal with this Court in order to conform with the statutory prescriptive period of two years to judicially claim for tax refund. On January 22, 1997, upon oral motion of petitioner, respondent was declared in default d u e to her failure to file an Answer within the extended period allowed by the Court (see Minutes of the Session, p 0 56' CTA records). Confirming resol u tion was then issued on January 29, 1997. The sole issue to be resolved by this Court is whether or not petitioner is entitled to the refund sought. After a thorough review of the records and evidence of the case, we rule against the petitioner. An analysis of petitioner's June 30, 1994 annual income tax return reveals that an "X" was marked in the box "TO BE APPLIED AS CREDIT TO NEXT YEAR" ( Exhs o H to H-4, p o 97, CTA records), leading us to believe that petitioner applied the excess income tax payment to the succeeding taxable fiscal year ended June 30, 1995. We would like to emphasize that in t h is scenario, presentation of the succeeding year's income tax return is very material in order to determine whether or not petitioner applied the overpaid creditable withholding tax

DECISION - C.T.A. CASE NO. 5427. - 4- of the fiscal year ended June 30' 1994 to the succeeding taxable year. Time and again, we have denied several claims for refund due to the failure of petitioner to present the succeeding year's inco me tax return wherein the overpaid income tax sought to be refunded was opted to be carried over to t h e succeeding taxable year ( AF Holdings and Management Corporation v. Commissioner o f In t ernal Revenue. CTA Case No. 4529. March 16. 1993; Philippine Bank of Communications v. Commissioner of Internal Revenue. CTA Case No. 4309. May 20. 1993; BPI Data Systems Corporat i on (formerly Filipinas Management and Leasing Services. Inc.) v. Commissioner of Internal Revenue. CTA Case No. 4691. December 6. 1993; BPI Family Savings Bank. Inc. v. Commissioner of Internal Revenue. CTA Case No. 4694. D'ecembe r 24. 1993; Anscor Hagedorn Securities. Inc. v. Commissioner of Internal Revenue. CTA Case No. 4947. January 30. 1995; Pasig Land Corporation v. Commissioner of Internal Revenue. CTA Case No. 4773. May 30. 1995; Ronde! Management. Inc. v. The Commissioner of Internal Revenue. CTA Case No. 4787. January 3. 1996; Citytrust Investment Philippines . Inc. v. The Commissioner of Internal Revenue. CTA Case No . 4958. April 25. 1996). To grant a ref un d to petitioner who may h ave already applied its excess credit to the succeeding year would be tantamount to granting twice the

DECISION - C.T.A. CASE NO. 5427. - 5- refund being sought ( Paseo Realty and Development Corp. v. Commissioner of Internal Revenue, CA G.R. SP No. 33589, October 14, 1994 ). It mu st b e stressed t h at a refund of taxes partakes of t h e nature of a tax exe mptio n and are constr u e d in strictissimi juris against the tax p a y er an d in favor of the taxing aut h ority ( Insular Lumber Company vs. Court of Tax Appeals and Commissioner of Internal Revenue, G.R. No. L- 31057, May 29, 1981; Commissioner of Internal Revenue vs. Court of Tax Appeals and Insular Lumber Company, G.R. No . L- 31137, May 29, 1981, 104 SCRA 710; and Commissioner of Internal Revenue vs. Rio Tuba Nickel Mining Corporation and The Court of Tax Appeals, G.R. Nos. L-83583-84, March 25, 1992, 207 SCRA 549). WHEREFORE, in view of t h e f o regoi n g, the petition for review is hereby DISMISSED for lack of merit. Accordingly, petitioner's claim for refund is DENIED. SO ORDERED. ce:.462~ ERNESTO D. ACOSTA Presiding Judge

DECISION - C.T.A. CASE NO. 5427. - 6- CERTIFICATION I hereby certify that the above decision was reached after due consultation wit h the member s of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitutio n . ~ �~-~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals