F. JACINTO GROUP, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY Fa JACINTO GROUP~ INC.! C.T.A. CAS~ NO. 5508 Petitioner~, "":'l'OJ in.l�J' .1.��(�.�~.��t cr.:wr~ ..u ' - v e t' s �_t s - ___Sf� 71999_ ._ COMMISSIONER OF INTERNAL --- --- - - REVENUE, Respondent. ~{ -- -- �-� DECISION This is a petit1on for rev1ew filed by Petitioner. F .. JACII\!TO GFWUP, INC., against Resoondent COMMISS:ONER OF INTERNAL REVENUE for the failure of the latter to act on the former's claim fot~ t'efu.nd :'.n the amount of r.;.1, 613,231. oo, allegedly represent1ng its over��oaid ot' unutil1zed creditable withhold1ng taxes for the year As represented, Pe~itioner is a domestic corporat1on dit~ectlv engaged in render1ng management s e t-� v i c e s t o s e v et~a 1 corporat1ons, witn offices located at 4/F. F. Jacinto House, ll 6 !~ada St. , Legasoi Makati C1 t y. On Apt~il 10, 1 ':3'35, Petitioner filed with Traders Royal Bank- Paseo Bt~anch its Cot~p01�~ate Annual Income Tax Ret Ul�~n for the year 1'3'34 <Exh. (~) declaring a taxable income of Pl.760,6g8.04, ~'llith tax due in the amount P616,244.31, tax credttslpayments o~ P4?348,432.03 and a

DECISIQi"-.1 - C.T.A. CASE NO. 5508 tax refundable amount ot P 3,732, 187.76. by the Petitioner that for the year 1994~ the total creditable withholding taxes which were withheld and remitted to the Bureau of Internal Revenue <BIR) by its payers/withholding pur~s uant to Revenue Regulations No. 6-85. as amended, totaled P1,613,231.00 (page i=: 8, 14-3, docket), su m mat~ized as fo l lm�J~~= Withholding Agent A11ount Exhibit Mindanao Steel Corporation p 634,344.00 B & B-1 317,172.00 C & C-1 Camara Steel Industries, Inc. 158,586.00 0 & D-1 Camara Steel Industries, Inc. 158,586.00 E & E-1 50,000.00 F & F-1 Camara Steel Industries, Inc. 38,247.00 G & G-1 Australasia Cylinder Corporation 256,296.00 H & H-1 Jacinto Iron &Steel Sheets Corporation Pl, 613,231.00 Beatriz Marketing &Trading Corporation received by t he Res po n de n t's 11' 19'37, wh 1ch ltoJas Bureau on April 14, 1997' Petitioner filed a claim for refund of the aforesaid creditable wit h h olding taxe s f or 1994 in the total am ou nt of P1,613~231.00 on the ground that said amount was not utilized by it in 199'+; neither' was it utilized in the yeat' 1995, as its tax due was only P10,709.25 (Exh. which was paid by applying its creditable withholding tax for the same y ear (pa ges 3 & 144, d ocket ) . On the same date, that (-=ipr' 1 l 19'37' Petitioner filed with this Court the instant Petit i on for Review.

DEC IS I 01\i -- C.T.A. CASE NO. 5508 3 Petitioner presents the propos1tion that it is e n titled to the refund of the amoun t of P1,613,231.00 representing its unutilized creditable withholding taxes for the y ear 1994 cit i ng as 1ts authority Sect1on 69, taken in 1�~elat1on to !3ection i~04(.3), of th~ Ta>< Code, which pY'OV i des~ Sec. 69. Final adjustment r~etur~n. Every corporation liable to tax un der Section 24 shall f ile a final adjustment return covering the total taxable 1ncome for t~e preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year the corporation shall either: (a) Pay the excess tax still due; or (b) Be r~efunded the excess amount paid, as the case may be; In case the corporation is e nt itled to a refund of the excess estimated quarterly income taxes paid. The refundable amount shown an its final adjustment return may be cred1ted against the estimated quarterly income tax liabilities far the taxable quarter of the succeeding t axab 1 e year~. Sec. 204. ~uthority oF the Commissioner to compr~omi se 7 abate 1 and r~eFund/cr~edi t taxes. The Com missioner may - x x x (~' Cred1t or refund t axes erroneously or illegally received, penalties imposed without authority, refund the value of internal revenue stamps wh en they are retur ne d i n good condition by the purchaser~ and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or r efund of taxes or penalties shall be allowed unl~ss the taxpayer files in writing with the Commissioner a claim for credit or refund

DECISION -��� C.T.A. CASE NO. 5508 �- 4 - within two years after the payment of the tax oJ�' penalty. Respondent,1 by way of special and a ff i J�~mat i v e was filed on April 14, 1997 on the same date that this petition was f1led before this Honorable Court, (2) the alleged tax withheld must be shown to have been paid and remitted to the Respondent's Bureau, the best evidence of payments and remittances of the alleged taxes withheld .:n~e the official �r'eceipts, (3) in a claim fol�' ~'efund, it is incumbent upon Petitioner to prove that i t is entitled to failure to do so is fatal to its claim for refund. ( 4) claims for refund are construed strictly against claimant, the same being in the nature of exemption from taxe~;, and ( 5) it is incumbent upon Petitioner to show that it has complied with the provisjon of Section 230 of the Tax Code. It is already settled rule that there is no legal impediment in filing the administrative claim for refund with the BIR simultaneously with the Petition for Review with this Court as long as these two acts fall within the two-year prescriptive period prescribed by Section 230 of the Tax Code (see Gi bbs v s . Co l l ecto r, L- 153543, Februar y 2 9, 1960 and Manila Electric Compan y vs. The Commissi oner of I n ternal Reve n ue , CTA Ca se No. 5 091 , Oct o ber 2 , 1997). Thus, the focal point which is pr'esent ed Ol..ll"' consideration is whether or not Petitioner 1�; entitleci to

DECISION -- C.T.A. CASE NO. 5508 -- .:::� ,_) the refund of its unut1lized creditable withhold1ng taxes for the year 1994 in the total amount of P1,613,231.00. We find nothing ambiguous nor obscure in the language of ~3ection 69 of the Tax Code, insofal�' as the to bear upon the circumstances of the in the case at baY'. The pr'ovision itself fur-'nishes the best means by its own exposition that any excess of the amount of tax so withheld over the actual income tax computed and shown in the adjustment 01�' f i n ;:1.1 cor'pOr' at e income tax return shall be refunded to the The is nothiTHJ net.--J. The Supreme Court has already laid down the requisites needed f 01--- t h ~? r:want of refund of creditable withholding taxes, to wit: 1.) that it was shown on the return of the recipient that the income payment received was declared as part of the gross income (Sec. 10, Revenue Regulations No. 6-85, ACCRA Investment Corp. vs. CA, 204 SCRA 957) ; .-. ) the fact of withholding is established by a ..:::.. g ' copy of the statement CBIR Fot'm 174-3. 1) duly issued by the payor Cwithholding agent) to the payee, showing the amount of income paid and the amount of tax withheld therefrom (ibi~); -.'i� that the taxpayer filed its claim for refund '-'� ~'llithin the h\lo (<~)yea�,.-, pel�-:i.ocl pr-'e �::;c1�' i bed und e1�-- Section 230 of the Tax Code. scr'ut iny of the evidence presented by Petitioner reveal that Petitioner successfully hurdled the second require ment above mentioned but fe:iiled to meet

DECISION �-- C.T.A. CASE NO. 5508 - b- the fit"'st and third requisites. ThE~ CTf~ditable withholding taxes were duly supported by Cert1ficates of Creditable Withholding Tax at Source 1n accordance w1t~ the r e quirements of Revenue Regulations No. 6-85 <Exhs. B, c' D' and H) , Petitioner fa1led to satisfaction of the Court that t h e income show t o the from which taxes were w1thheld was included as part of Petitio ne r's g r oss in c o me fat~ 1994. Pe t i tion er me rely adduced in evidence the first page of its 19<JL~ 1~nnua.l Corporate Income Tax Return CITR) to the exclusion of the ether pages of said ITR. There is no way by which the Court can determine whether the income upon which the creditable w1thholding taxes were paid were included in Petiti o n e r ' s 19g4 ITR. In othet~ wot~ds, Petitionet~ failed its duty in not complete documents which are indispensable to prove its case. The Cotwt further finds that the claim for refund was already bar red b y prescription. The 1ssue as to when the two year prescriptive period provided in Section 230 ( n 0 ~--~ c~c: ':3) of the Tax Code in filing a claim for refund commences to run has long been settled in several cases decided by the Supreme Court. In tl�-�e case of Commissioner of Internal Reven ue vs. Asia Austral i a Express Ltd. , G.R. No. L-85956, April 10, 1989, the Supreme Court in a resolution said that "the two-year prescriptive period within which to claim a

DECISION - C.T.A . CASE NO. 5508 7- refund commences to run at the earliest on the date of filing of the adjusted final tax r~et'JY'n." ( und er�'scor~ :i. n n supplied) In the case of ACCRA Inve s tment Corporation vs. Commissioner of I n terna l Rev en u e , 204 SC RA 957, thP Supt~eme Court held that "the t��ationale in comput1ng the two-year~ pr~e scr~ i pt i v e pel�~iod with r�'espect to the Petitioner corp oration's clai m for r e f und from the time it filed its final adiustment return is the fact that it is only then that ACCRAIN could ascertain whether it made or~ofits ot~ i nc1.n~1�~ed losses in i t s business opet~ations." (Underscoring Ours). In the case of Commissioner of Internal Revenue vs . TMX Sales, Inc., 205 SCRA 184, the Supreme Court held that "the most r~easonable and l ogical applica t ion of the law would be to compute t he two-year prescriptive period at the time of fi 1 i ng the Final Adjustm e nt Retur~n at~ the Ann 1.1a 1 Income Tax Ret m~n, when it can be finallv ascertained if t he taxpayer has still to oav additional income tax or if he is entitled to a refund of over paid income tax." <U n derscoring supplied) Again, in Commissioner of Internal Revenue vs. Philipp i ne American Life Insurance Co., 244 SCRA 446, the Suoreme Court reiterated its previous decisions on the matter~, by saying that the two-year prescriptive to claim refund commences to run only from the time the

DECISION --� C.T.A. CASE NO. 5508 ��- 8 - refund is ascertained. which can only be determined after a final adjustment return is accomplished. of Commissioner of Internal Reven u e vs. CA, CTA and Ban k of the Philippine Islands as Liquidator of Paramount Acceptance Corporation, G. R. No . 11 7254, J anuar y 21 , 1999, categorically declared, thus: "Petitionf~Y' disagr~ees with the fol�~ego:i.ng decision of the Court of Appeals. He contends that the two-year prescriptive period should be comput e d from April 2, 1984, when the f inal adjustment return was actual l y filed, b e cause that is the time of paymen t o f the tax within the meaning of Section 230 of the NIRC. XXX XXX XXX Thus, it can be deduced ft'om the fcwegoing that in the co n text of Sect ion ;:?30, whi.ch provides for a two-year period of prescription counted "ft�o m the date of payment of the tax" for actions for refund of corporate income tax, the two-year period should be c o mputed from the time o f actual filin g of the Adjustment Retur n or An n ual I ncome Tax Return. This is so because at that point, it can alr�eady be determined whether there has been an overpayment by the taxpayer. (Underscoring supplied) It is explicitly clear from the cited rulings of the that thE' two-year prescriptive per1od starts to r un fro m the t i me the taxp a y er f i led its adjusted final tax retur n , that 15 on or before the 15 th~ day of April or of the fourth month following the close

DECISIOI'-1 C.T.A. CASE NO. 5508 - '3 - of the � 1rcal VPar coverinq the entire ~axable income of preceding calendar or f1scal year. Ir ~he case at ba�', 1t 1s u. n d l s out e d I; h a. t Pet 1 t i on e r� has filed its Coroorate Annual Income Tax Return for� the taxable year� l '3'3'-1� on nm�� l 1 i 0, On this date.! Petitioner had already ascertained the results of 1 t s business ope�,�2tions fol' the VE'al�' ::.9'3'-1�. 1�-ler-ce. i"':: is f1�orn th1s date. Aor�1l 10, 1'3'35. that the two-vear pres~r1otive pe�~iod commenced to r' _t n. In Petitioner had until Aoril 1.0, 1'3'37 to iudicially file -1; h f' - n s t c. n t (~ 1 a i m f o ~- t' e f' u n cJ w i t h t h i s C o '-ll"' t . Sir~e thP action ~or refund was filed with th1s Court only on Aor�il 4, 1'3'37. We hold that the r1qht to brir-g th1s ~ase ~1th this Court has already prescribed. IN VIEW OF ALL THE FOREGOING , the instant Petition for Review is hereby DISMISSED. SO ORDERED. ~� ON 0. ;D_E, ~~/ nssoclat e Jud e WE CONCUR: ~tQ.o~ ERNESTO D. ACOSTA Pr� e s i d � n g J ud q e

DECISION - C.T.A. CASE NO. 5508 - 10 - CERTIFICATION I hereby certify that the above dec1sion was reached after due consul~at1on with the members of the Court of Tax Appeals in accordance with Section 13. Article VIII of the Constitution. ~ ~- ~ ERNESTO D. ACOSTA P~~esJdi.no .Judgl'?