CTA Case No. 3695 (Decision)

REPUBLIC 0~ THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ASIA AUSTRALIA EXPREqS~ LTD., represented by SORfA~ONT STEAMSHIP AGENCIES, INC., P e tition er ~ � ��- VP I,..S U S -- C.T.A. CASE NO. 3695 COMMISSIONER OF INTERNAL REVENUE, F;:es pond e n t � ~<------- DEC I I QN Invol ve d in thi s appeal is pe titio~er's c laim f or a refund or t ax credit -~f all e ged overpayme nt s of i-Pc:orne t:a:�:E~s fol'- _j;>'lo fi sc:e:'\ 1 y ea rs, 1981 a nd 1. 9f.32. The fo 11 ov~irHJ the f c:~ct.s as found <3.cco r�cl i ng 1 y. Asia Au stra l ia Express Ltd.~ is a foreign co rporation e ng age d in business as co mm o n carri er, with port of e n try in the Philippines. It is by its age n t in the Philippines,

DEC IS I CJN ��� CTA CASE 1\!Cl . 2 Soriamont St e amship Agencies~ Inc. ~ a domestic co t- poration ~ organized -'and e:-:i.sti.ng under� Philippine laws . For the second q~tarter of f isca 1 year ended September :::.o ~ 1981 ~ petitioner f i 1 ed its Cor� pora te I ��1c ome Ta:-: Return on t1ay 29 ~ 1981, dec l ar�i.ng ta :-:able net income of F"46 ~ 93:3 . 08 and on the same date~ paid the ta:-: due th�.~r� eon in th E? amount of F'11,708. 2 7 (E :-:hibits "A-1" ""nd "A -� 2"~ Pc-? t.it..i.oner). For� the Third Qu a r� ter o�f Fi sc al Year� ended September� 30, 1. 981 ~ pet.i tioner� f il. ed i t s Corporate Quarterly In c om e T a x Return on July 24, 1981~ dec lar��ing t h e l~e in t. a :-:a b l. f-..":' ne t income of F'.1.4 :3,260.88 ~md paid the ta:-: due t hereon in the amount of P:.28, 4 3:.2. 27 on ,July 27 ~ 1. 9 81 after c n :: d .i ting th e~ amount of F' .1. .1., 708.27 i t paid during For the last quar�ter of fi s c a l YE?ar ending September :::.o, .1981, "'Petitioner- filed its adjusted final Ta:< RetLtr� n m1 J anuary 14, 1982 / and declared therein a net taxable income of P131~918.80 and �the amount of F'36, 171. 58 was due thereon as the ta:1. lb

?s- CDTEACISC(I.O~SNE 3 NO. . . (9 -� 3 After c~editing the payment s mad ~ in the total amount of P40~141.00~ pe t itioner ' s said return resulted t:o a refund of the amount of� F'3 ~ 96t7. 4 2 (Anne:: C~ P e tition). On ,July 5, 1982 y pet.iticmer f i 1 ed an amended f ina 1 adju s ted cor�pora t:e Annua 1 Income Ta:< F\etut- n~ declar�i.ng therein a ta:�: due o �f P1,994.74 and after crediting previous payments, there is a r � f undable a mount of P 3 8~146.26. ~ (Annex c --1 ) . For th e-:~ fi.r� s t qu a r-ter� of Fisc a l Ye ar ending Septr~ mber.. 3 0~ 1982, it: filed .its Cor�porate Quarterly In c ome Tax Return on January 29, 1982 and ' paid the ta x due thereon .in the amount of F'8,280.23 on Janu a ry 2 9 ~ 1982 (E x hibit D-2 , P e titioner) after credit..i.ng th E� f.? :�:c:ess in c: orn e ta :-: p a yment s tat e d in .its unadj u st.e d quar� ter.. l y in c ome t a:-: r� etur�n .in the a mo unt of F' 3, 969.42, for th e la s t qu a rter of fiscal year ending September 30, 1981. (Anne:�: "C" ' Petition) For tt1 e second quarter� of f i s ea 1 year ending September 30, 1982, it f i 1ed a Corpor-ate Quarter Income Ta:-: Retur�n on April 28, 1982 declarin g a

DECISION -��� CHI CASE l\10 . --� 4 �- ta:-:able net income of P57~816.23 and paid th e corres ponding tax due thereon in the amount of F'14~454-.00 (E: :-~hibit.s "E-� 1" and "E - 2" ~ Petitioner) . For the third quarter of the s a me fiscal year~ it filed a Corporate Quarterly Income Tax Return on August 25~ 1982~ declaring a net taxable income in the amount of P80~502.00. Afte r crediting the amounts it pa id during the fir s t qua rter a nd second quarter in the amounts of P 8~ 2 80.2 3 and P14,454 . 00 r�espec ti vel y ~ plus the e:-~cess income ta:-: pay ment for the year in the amount of P38~146.26~ as stated in its adju s ted F ina 1 Corpor�a te Qu <::\rter 1 y Retu r� n ~ or a total amount of P60~380.49, said return sho wed a refund of the amount of P40,732.49. Fen�� it ~; f ina 1 quart.el"' l y n=~tunl for� the same fi s cal ye ar, it dec lare d ~ net loss of P2 24,732.54. Ac c or� d :i.. ng J. y, petitioner� thn.t J. et t e r dated t'lr::~y 9 ~ 1983 filed a c laim for refund of the excess pay ment . of income tax paid for the fiscal years ended _ September 30, 1981, and September 30~ 1 982~ in t h e tota l a mount of F'60 ~ 380 . 49. Wi t h ou t waiti n g fo r respond ent's action �in its c l ai m f o r r e fund, petitioner filed t he instant petition for review on October 26~ t983.

DECISION CTA CA!3E 1\lO. - � .c..�J -- ,, nes pcmdent maintains that. the creditable income tax payments prior to October 26~ 1981 have already prescribed when petitioner filed the instant. p et ition for� r�eview on October 26~ 1983. "F'etit.ion e:~r failed to file a for� mal claim therefor with the r�� espondent and instead~ opted to cr�edit. t.hr-, same for� the following fis ca l year~ thereby assuming th�? r�isk of its c laim to pn?scribe as i t has so presc ribed." Section 292 of the Tax Code so prescr�ibe s ~ "In a ny cas e ~ no s uit or proceeding s h,~ll b P begun aftc-?r� the e:-: pi r�a t ion of two years f t- orn d ate of pc:~yment (") �f the ta:�: �or pc.:.?na 1 ties regardless of any su perv e ning cause that may arise F' eti t.i.cmer�� i'.\Vet-s that pr-e sc ription does not operate as a bar in the i n stant case si nce what is involved are ta:-:es paid in quarterly installments and ~'lithheld at source. "When a ta:{ paid in i.n sta 11 men ts, the prescriptive per� iod of two years provided in Section 306 (now Sec. 292 ) of thE? National Internal Revenue .. Code shou ld b e counted fn::HTl the date of final payment~" Since t h e 1981 f ina 1 income ta:�: retl.trn was f i 1ed on its due .:a

DECI!3ION C TA C?)f:lE NO . 6 ��-� date~ i . e. ~ 14� ~ .1 982 ~ the two year-� presc r� i pti ve period runs from sa id date and the l~ efunc:f of all the quar- terly pE�? r�io d s concernf?c:f ha s not prescri bed. This rr::?c urT ing 1 ega 1 quE~stion wh.ic h seeming 1 y s o troubled the respondent as when to toll the two- year pr�escr� iptive p er iod was s qu an:d y fa ce d and ,... u 1. e d up on in t h E? r� e c en t c.::\ s e o f I.t':l.>.: .....!?..?.,J. ~ I .?...L.... D.r::;...~........'!.....~-- ( CH) Case No. pl .::d nl y applies~ �i����n�������t���e�����r�-��--��a-� -l�-.��i��a����.!1.. thus Th t-! app~1r� e n t co n te n t.ious qui bb 1 e on the comrutat ion of the 2-yea r prescriptive p er-�.i. oc:f u n de t�� Sect .io n :.?92 of t. he Ta:-: CodE? h a d be r n s qu are l y resolve d in ~ arl.ier decision s of th~ Su pr eme Court which lend sett ling e loquence to the preci s e issue i n the ca se at b.::.r. Thu s r� uJ.ed~ inter alia, "When <' t a :-: paid in insta llm e n t s ~ the p r� esc r� i p t :L ve pf?. r� i ocl n f two y e <~ r�~; p r� ov i. d ed :Ln Sectio n 306 (now Sec. 29 2 ) o f the f--;:evr:?nue Code s hould 1:-Je co unted fr� om the dat e of the �final or last installment. x x x This rule proceeds from t he theory t h at, in co nt e mplation of ta:-: la~'IIS~ there i s n o p <:\yment until the whole or entire tax li abi lity is completely paid. Thus~ a payme nt of a part or portion thereof, cann ot operate to start the commencement of the statute of l i mitations.� In thi s regar-d the word "ta:�: �" or words "the ta:-:" in statutory provisions compara ble to Section 306 of our � Revenue Code have been un i for� m1 y he 1 d to refer to th.~ entire ta:-: �

DEC IS I 01\1 ��� CTA CASE 1\10. -- 7 -- <:\nd not a por�tion th�:n��eot (Clad:: v. U.S. 69 F 2d 748; A.S. Kriedner Co. v . U.S. 30 F Supp. 724 ; Hills v. U.S. 50 F 2d 302~ 55 F 2d 100.1.) and the voca b 1es II payment of ta,.~ '' wi. thin stattJte~; rf.-? qLt.ir��i ng r-ef Ltnd claim, r�e�fer� to the date when a ll theta:-: was paid~ not wh en a portion was paid (Bt-aun v. U.S. 8 F Supp. � 869, 863; Collector of Internal Revenue ~. Prieto, 2 SCRA 1 007; Commissioner of In ternal Revenue v. Palanca~ 18 SCRA 496). Let it s uffice, petitioner had an overpaid income t."::l.:�:E"s �for�� the fiscal year endE>d September ~:r.o, .1.9Bl as s hown in its final adjustment retur n~ prescribed in Section 86 (now SE>c. 69) of the Tax Code, filed '1"\ J..~.J::l. l,l_0.C.Y.... .J..'.t~... J5'J:J..Z.,. which as earlier� ruled~ deemed the reckoning date to start the l'�� unn.i.ng (.J"f th e tv-m �- year per� iod of 1 imitation. It is an admitted fact that the petition er was clE>arly e ntitled to it but for the s prouting imprE>ssion of thE' '' r�i.sk of :i. t~:; c:l<:l.irn to pr�esCI'" .i.be '' by having the sa me credited against future tax liabilities as precipitately broached by the respondent. I Under� th e circu mstances disclos ed ~ petitioner 1 / availed o�f the automatic tax credit sc heme in co n so nance with law expressly providing: 11 In case the cor� por�ation is entitled to a refund of the e:-:c:ess estimated quarter�l y income ta:<es paid~ the 62 )

DE CI S ION J CTA C{.1 S E NCl. . . . :Jk Cf �-� f:3 r~ fundabl e a mo un t s h o wn on i t s f i n a l a dju st ment r�e tur-n may b e a g ai n ~; t t he esti mated -� qu a rt e r�l y in co mf..? t. a :-: l.i. a b :i. l.i.t.i es �f o r- th e t a:-: able qu a r-t:et�-s o f th e s u ccee cLing t a:-:a bl e year ." (Ibid.). We think t h a t thi s f?:�: p e d ie n t d ev ise ~~~hich I c onv e n i e n t.l y E!n s ur-es the c o 11 ec tion of ta:-:es due ope rat es not as a wa iv e r of a taxp a yer 's right to (~ n fon::e a c: 1 , .i. m for re�fund or- 1 i tig a t. e a s u.i t for r ec o ve ry o f exc e ss p a ym e nt s if s o wa r ranted. De th a t as i t ma y, th e final adj us tm e nt r e turn fil e d on No v e mb e r 2 9, 1 9 f:3 2 co v e r i ng th e total taxa bl e in c om e for t h e fi sca l year e nded S ept e mber 3 0, 1 9 8 :~ ha s s hown a r-efundab 1 E"! amount du e in the t.: ot a l s um of F'60,ElEl0.49 whi c h i s n ot in d.i ~; pute. Accord ingly , pet i t io n er f i l e d an c l a im a nd i n s t itu t ed a j ud icia l s u it f or t h e re fund t h e r e f o r o n May 9, 1983 a nd October 2 6, 1 Cjl f:3 3 ' r-es p ee t i v e 1 y . Thi s comp o rt s with the 2 �- year- s tatutory tolled 14, 1982. And, far be it from a comedy of err-or-s the .. conjured "r�i s k cJ"f p- rescription" posed, is nowhere he re nor there, s o tn s peak.

DECISION CTA Cf.'I~3E 1'-ICJ . �-� 9 ��- t ht-? ,~ c-'? for-e find the petitioner's entit l ement to a favorable determination as a -. matter of fact a nd l aw. llJHERE FORE, t he refund or�� ~dit of the a moun t soug ht for- the ta:-:ab l e~invol ved is No costs. [-30 ORDERED. Quezon City, Metro Manila, September 29, 1988 . i!>::Pz.~ Associate Judge WE CONCUF\: AMANTE ILLER Presid/g Judge f r---.-......... ~ C. ROAQUIN

DECI S ION - CTA CASE NO . - 10 - CERT I F I CAT I 0 N I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Con s titution. .. Judge Presidi Court of Tax Appeals C ~3