CTA Case No. 5345 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY COLUMBIAN MOTORS SOUTH C.T.A. CASE NO . 5345 SUPER, INC., Petit i oner , - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. DECISION This is a petition for review seeking for the refund or issuance of a tax credit certificate amounting to ~7,146,386.32 representing unutilized creditable income tax withheld at source for calendar year ended December 31, 1993. The facts of the case are simple. Petitioner is a domestic corporation organized and existing under and by virtue of the laws of the Republic of the Philippines. It is engaged in the assembly and manufacture of automobiles, including the sale and distribution of automotive spare parts. On April 15, 1994, petitioner filed its Annual Income Tax Return (ITR) for the calendar year 1993 (Exh. A). Subsequently, an amended return was filed on July 6, 1994 (Exh. 8), reflecting a net loss of P19,200,399.00. For the same year, however, there were already several

DECISIO N - C.T.A. CASE NO. 5345 - 2- income tax payments made by petitioner which were wit h held at source by vario u s withholding agents totalling P7,146,386.32, broken down as follows: Withholding Agent Amount of Income Withholding Tax Exh. Columbian Autocar Corporation P95,522,569.60 P4,776,128.48 c Asian Carmakers Corporation 11,916,478.20 590,823 . 92 D Columbian Motors Corporation 33,547,066.40 1,677,353.32 E Sta. Rosa Motor Works Inc. 2,041,612.00 102,080.60 F P7,146 , 386.32 Since petitioner failed to apply the aforesaid amount to any tax liability for that year, it intended to do so on the next taxable year. For calendar year 1994, petitioner again s u ffered a loss of P44,434,556.00 (Exh. H), thus, the P7,146,386.32 creditable taxes withheld during the year 1993 remained un u tilized. On March 29, 1996, a letter-claim for the refund of the P7,146,386.32 was filed with the Bureau of Internal Reven u e. Petitioner anchored its claim on Section 69 of the National Internal Revenue Code in relation to Section 230 of t h e sa me Code, to state: Sec. 69. F.inal adjust:ment: ret:urn. Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the su m of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable inco me of that year the corporation shall either: (a) Pay the excess tax still due; or (/!)

DECISION - C.T.A. CASE NO. 5345 3- ( b ) Be refunded the excess amount paid, as the case may be; In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year. SEC. 230. Recovery o~ rax erroneous ly or ~llega l ly collecred . No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided. however. That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. As said claim was not acted upon immediately, the instant petition for review was filed on April 3, 1996. The sole issue for determination is whether or not petitioner has complied with all the requirements for a valid claim for refund so as to be entitled to the relief sought.

DECISION - C.T.A. CASE NO. 5345 - 4- Petitioner, to support its case, submitted the following documents: Exh. Description Purpose A Photocopy of BIR Form No. To prove that 1702 or the Tentative petitioner filed Corporation Annual Income with the BIR its Tax Return of Columbian Tentative Corporation Motors South Super, Inc. Annual Income Tax for calendar year (CY) Return for CY 1993 1993 filed on April 15, 1994 B Photocopy of BIR Form No. To prove that 1702 or the Final Corpo- ration Annual Income Tax petitioner filed Retut�n of Columbian Mo- tors South Super, Inc. with the BIR its for CY 1993 filed on July 6 ' 1994. Final Corporation c Photocopies of Various Annual Income Tax to Certificates of Credita- Return for CY 1993 F ble Income Tax Withheld at Source for the year To prove the fact of 1993 withholding G Photocopy of BIR Form No. To prove that 1702 or the Tentative petitioner filed Corporation Annual Income with the BIR its Tax Return of Columbian Tentative Annual Motors South Super, Inc. Corporate Income Tax for CY 1994 filed on for CY 1994 April 17, 1995 H Photocopy of BIR Form No. To prove that 1702 or the Final Corpo- ration Annual Income Tax petitioner filed Return for CY 1994 filed on July 28, 1995 its Final Annual Corporate Income Tax for CY 1994. I Administrative Claim for To prove that peti- Refund of Creditable Tax tioner filed with BIR Withheld in the amount on March 28, 1996 a of ~7,146,386.32 dated request for refund on and filed by the peti- the creditable tax tioner with the BIR on w/held in the amount March 28, 1996 of ~7,146,386.32

DECISION - C.T.A. CASE NO. 5345 - 5- J Photocopy of BIR Form No . To prove that 1702 or the Tentative petitioner filed Corporation Annual Income with the BIR its Tax Return of Columbian Tentative Annual Motors South Super, Inc. Corporate Income Tax for CY 1995 filed on for CY 1995 April 15, 1996 K Photocopy of BIR Form No. To prove that 1702 or the Final Corpo- petitioner filed ration Annual Income Tax its Final Annual Return for CY 1995 filed Corporate Income on October 7, 1996 Tax for CY 1995. Respondent, on her part, did not introduce any controverting evidence and even intimated that petitioner's request is in order except that the xerox copies of the documents presented by petitioner have not yet been authenticated, thus: Q. Mr. Witness, after this report, dated June 18, 1997, do you have any other report aside from this? A. It should be the final report, Sir. Q. So this memorandum, dated June 18, 1997 is your final action on this report, Mr . Witness? A. Yes, Sir. Q. Now, the petitioner is clai ming tax refund in the amount of P7,146,386.32. In your report, will you please tell us, did you grant the claim or not, Mr. Witness? A. After considering the documents presented to me and I evaluated, I find the request to be in order that is amount in the total of P7,146,386.32 as requested in the letter of the petitioner, Sir.

DECISION - C.T.A. CASE NO. 5345 - 6- Q. Why do you find that it is in order? What are your basis, Mr. Witness? A. Because these are basically supported by the previous BIR Form as I have stated which are the Monthly and in the Annual Return and there is another Annual Return including the payment or Monthly Remittance Returns made by the payors in favor of the petitioner we also included in that return, including the name of the bank. However, if this (sic) records are required to be authenticated I would recommend so, for this purpose. As of now, these xerox copies presented in favor of the petitioner are not yet authenticated, Sir. (TSN, Witness: Jose de Vera, Revenue Officer, RD No. 52, Hearing of July 17, 1997, pp. 24-25) After examining the evidence submitted by the parties, We rule in favor of petitioner. To be entitled to a refund, the following requirements have to be met: 1. That the claim for refund was filed within the two (2) year period prescribed under Section 230 of the National Internal Revenue Code; 2 . That the income upon which the taxes were withheld were included in the return of the recipient; and 3. That the fact of withholding is established by a copy of statement (BIR Form 1743.1) duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom. Petitioner's claim for refund filed with the Bureau of Internal Revenue on March 29, 1996 as well as its Petition for Review filed with this Court on April 3 '

DECISION - C.T.A. CASE NO. 5345 - 7- 1996, are both within the two year period from the date of payment of the tax. Second, the income tax return of petitioner for 1993 (Exh. B) likewise revealed that the income upon which the taxes were withheld were included in said return. And third, the fact of withholding was also established by petitioner's submission of the various Certificates of Creditable Income Tax Withheld at Source (Exhs. C to F). Moreover, since in this case petitioner is seeking for the refund of the amount of P7,146,.86.32 which it previously declared in its ITR to be applied as tax credit to the succeeding taxable year but failed to do so, the 1994 and 1995 Income Tax Returns were also submitted by petitioner to prove that the amount sought to be refunded was never utilized. And, finally, respondent's testimony finding petitioner's request to be in order as it was adequately supported by the necessary documents further bolstered petitioner's claim for refund. WHER EFORE. in view of all the foregoing, this Court finds this petition meritorious and in accordance with law. Respondent is hereby ORDER ED to RE FUND or in the alternative, ISSU E a TAX CREDIT CERTIFICATE in favor of petitioner the sum of P7,146,386.32, representing {f!! J

DECISION - C.T.A. CASE NO. 5345 - 8- unutilized creditable income tax withheld at source for the taxable year 1993. SO ORDERED. WE CONCUR: LIQ.o~ TO D. ACOSTA A ).;J~ iding Judge D E~~A 14-. RAMON 0. Associate Ju e CERTIFICATION I hereby certify that the above decision was reached after due consultatio n with the members of the Co u rt of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. ~~o~ ERNESTO D. ACOSTA Presiding Judge