CTA Case No. 4678 (Decision)

Republic of the Philippines COURT OF'TAX APPEALS G!uezon City TRANS-PHILIPPINES C.T.A. CASE NO. 4678 INVESTMENT CORPORATION, Pro�ulgated: Petitioner., HAY 0�219gj - versus THE COMMISSIONER OF INTERNAL REVENUE, Respondent.� X- - - - - - - - - - - fh:i.~s r.:-ase involves a claim for refund in the amount � o f F~n:,o,J.,.f.B.66 t~ept��esenting alleged ct���editabJ.e 1-'J:ithholding ta><es on maTE'I~~ement fees and rent :income Petitioner, Trans-Philippines Investment Corporation is a domestic corporation duly organized and existing under Philippine laws with principal office its Income rax Return for 1989 with Revenue District 3i:::�--n J. cl P c 1 a ..... :i. n g <~ n e t loss in the t f.:l. 1T1 0 1..\ l1 of ~32, 974,004.00. Petitioner allegedly was in a loss position in its operations during the taxable year 1989, as a result of this, it was not able to utilize its C"r"�editable withholding taxes on management fees and 1��ent income in the total amount of Fl750,468.66. The 744

DELIBIUI\I -- C.T.A. CASE NO. 4G78- dE�ti''lils c1f' tl�l,,? c'f"�t?dit~)l::..l.(�? t?><pc.~Tlded vJithhold:inu taxes withheld by various parties from their income payments Withholding ASP Royal ROC Total Agents Undergaraents Industrial Corporation Textile Corporation Division CY 1'383 Manageaent Fee 423,502.12 . 12, 038,83'3. 05 31,663.25 12,500,004.42 lnco1e per ITR Adjushents: 109,0'31.15 2,170.44 133,832.32) 33,833.63 - Mgt. fee (193, 8'32. 32) 12,147,'330.20 111,261.59 for 1'38'3 --------- w/tax for ============ 12,411,373.69 which was 1,691.68 re1itted 607,396.49 ============= ========= in 1988 ============ 620,5&8.66 - Mgt. fee 745 =========== for 19881 w/tax for which was re1itted in 1989 Per Certificate 229,603.80 of Creditable lncou Tax ========== Withheld At Source <1743.1> 5~ Tax With- 11,'+80. 49 held-Per Cert ifieate =========== of Creditable lncou Tax Withheld at Source (1743.1>

DECISION - C.T.A. CASE NO. 4678 - -3- LEASE ON REAL PROPERTY AG L P-AIISCO RUC Withholding Foundry Artefacts Textile Agents Inc. Inc. Division Total CY 1989 Rent Incoae per ITR Per Certificate =========== =========== ============= of Creditable ----------- ========== ------------ Incoae Tax Withheld at Source U743.ll ============== 51 Tax Withheld-Per Certificate of Creditable Incoae Tax Withheld at Source (1743.1) ------------- Subsequently, petitioner �iled on October 3, 1991, a written claim �or re�und or tax credit o� P750,468.66 with respondent representing unutilize tax credits as o� December 31, 1989. On December 18, 1991, there being no action on the claim �or re�und or tax credit, petitioner �iled this petition �or review as a way.o� tolling the two <2> year prescriptive period set by law. 746

DECISION - C.T.A. CASE NO. 4678 - - 4- Respondent alleged as special and a��irmative de�enses the following: 1. that the present petition is premature because the claim for refund o� petitioner is still pending investigation and consideration before the -o��ice of respondent and that no decision has as yet been rendered on petitioner's claim �or re�und. 2. petitioner likewise failed to show that it had strictly complied with the requirements of Section 204 of the Tax Code in relation to Section 230 thereof. 3. the burden is imposed on petitioner to show compliance with these requirements since a claim for refund and or tax� credit partake o� the nature o� tax exemption which is construed strictly against the claimant. The sole issue to be resolved in this case is whether or not petitioner is entitled to the refund or tax credit o� the amount of ~750,468.66 representing erroneously paid or unutilized creditable withholding taxes �or taxable year 1989. Petitioner in support o� its claim presented in evidence the Corporate Annual Income Tax Return <Exh. "B">, the Certi�icate of Creditable Income Tax Withheld at Source- BIR Form 1743.1 <Exh. "I"> and the claim for refund with the Bureau of Internal Revenue <Exh. "K">. Record shows that respondent failed to �ile his comment on petitioner's of�er o� evidence within the time given the Court. Likewise, neither memorandum nor 747

DECISION - C.T.A. CASE NO. 4678 - - 5- material evidence was ever �iled by herein respondent in support o� his case. It can very well be concluded that respondent is not questioning seriously petitioners right to the claim �or re�und. Respondent �ailed to controvert his opponent's claim and lacks material evidence to support his contention. A cursory examination o� the records o� the case, particularly petitioners income tax return reveals the �allowing computation: II COlE Withholding Agent Ex h. lgt. Fee Rental Tax Withheld AGP Industrial Corporation E 229,609.80 11,480.49 607,396.49 Royal Undergaraent Corp. F 12,147,929.83 1,691.68 Royal Underga�ent-Textile G 33,833.69 10,000.00 10,000.00 AG &P-AKSCO Foundry Inc. H-1 200,000.00 10,000.00 AG &P-AISCO Foundry Inc. 200,000.00 10,000.00 AG &P-AKSCO Foundry Inc. H-2 200,000.00 10,000.00 AG &P-AISCO Foundry Inc. 200,oo0.00 10,000.00 AG &P-AKSCO Foundry Inc. H-3 200,000.00 10,000.00 AG &P-AKSCO Foundry Inc. 200,000.00 10,000.00 AG &P-AKSCO Foundry Inc. H-4 200,000.00 10,000.00 AG &P-AKSCO Foundry Inc. 200,000.00 AG &P-AKSCO Foundry Inc. H-5 200,000.00 2,400.00 AG &P-AKSCO Foundry Inc. 7,500.00 H-6 48,000.00 Artecrafts, Inc. 150,000.00 H-7 Royal Undergaaent-Textile H-8 H-9 H-10 I J T 0 TAL P 12,411,373.32 P 2,198,000.00 P730,468.66 =============== ============== =========== Clearly, petitioner was able to satis�y the three basic requirements in claims �or a re�und o� overpaid creditable withholding tax to wit: 748

., DECISION - C.T.A. CASE NO. 4678- -6 - 1. �iling o� a claim within the two-year period prescribed under Sec. 230 o� the NIRC. 2. the income upon which the taxes were withheld were included in the return o� the recipient; and 3. the �act o� withholding is established by a copy o� statement <BIR Form 1743.1> duly issued by the payor to the payee. <Phil. American Life Insurance Co. vs. Comm. of Internal Revenue~ CTA Case No. 4018, Sept. 16, 1991> Likewise,_ petitioner was .able to show that the said re�undable amount was not credited to subsequent year because �or taxable year 1990 <Exh " L"> petitioner also incurred losses. Based on the requirements set �orth by law, undeniably petitioner was able to substantiate his claim by way o� material evidence. At this point, there is nothing le�t �or the Court but to give a��ordable relie� in petitioners �avor. <Citytrust Finance Corporation [Formerly Investors Finance Corporation] FNCB Finance vs. Comm. of Internal Revenue~ CTA Case No. 4046,aupra; Commonwealth Pacific Consultants Ltd. vs. Comm. of Internal Revenue, C.T.A. Case No. 2953, May 15, 1982; Comm. of Internal Revenue vs. The Philippine American Life Insurance Co. and The Court of Tax Appeals, CA G.R. SP. No. 2953, #arch 26, 1992; Filipinas Management & Leasing Services Corporation vs. Comm. of Internal Revenue, C.T.A. Case No. 4146, March 11, 1994) 749

DECISION - C.T.A., CASE NO. 4678 - -7- WHEREFORE, in view o� all the �oregoing respondent is'hereby ordered to re�und or issue tax credit in �avor o� petitioner Trans-Philippines Investment Corporation the sumo� P730,468.66 representing excess creditable withholding taxes paid for the calendar year 1989. SO ORDERED. WE CONCUR: <On Leave> ESTO D. ACOSTA res:di~ Ju}Pe ,....,... 0.~"D<E~u~.AI' RAMON Associate Ju1Je CERTIFICATION I hereby certi�y that this decision was reached a�ter due consultation among the members o� the Court of Tax Appeals in accordance with Section 13, Article VIIJI ~ of the Constitution. EL Associa Judge Court of Tax Appeals 750