CTA Case No. 4835 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PNZ PACKERS,. INCORPORATED, Petitioner, - versus - C.T.A. CASE NO . 4835 THE COMMISSIONER OF INTERNAL ~~ f/C(<{ REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - X DECISION This case involves a claim for the refund of P2 9t\,6)3.00 allegedly representing overpaid income taxes for tl1e years 1990 and 199 1 pursuant to Section 230 of tl1e National Internal Revenue Code. Petitioner is a corporation duly organized and existing under tl1e lavvs of the Philippines engaged in the business as a packing contractor. Petitioner is principally engaged in t11e processing and packing of milk products for PNZ Jviarketing, Incorporated (PMI), an affiliate. For the calendar year ending December 31, 1990 petitioner filed its Annual Corporate Income Tax Return on April 13, 1991 < shovving a net loss of P550,537.00 (Exhs. A and A- 3). However, it 37 4

- DECISIOI- C.T.A. CASE IO. 4835 -2 - paid for the first quarter ending March 30, 1990 the income tax amounting to P loo5,152 .00 (Exhs. B, C and E) and the amount of P35,670.00 v~.s �vithheld by PNZ lvlarketing, Inc. from petition~r representing 1% of the contractor's fees paid amounting to P3,566,970.00 (Exhs. A-5 and D). Petitioner likewise included as part of its refundable income tax the amount of P44, 137.00 representing prior year's ( 19&9) excess credit. Thus, petitioner 's 1990 Income Tax Return showed a total refundable amount of P267,959.00 'YVhich was applied as tax credit to the succe-eding year. The Sl.;l.cceeding >rear 1991 also proved to be fruitless for it still incurred losses amounting to P 152,619.00 (Ex:h . F). During the year, a 1% tax on contractor's fee 1f\las withheld from petitioner in the amount of P74,836.00 (Exh. G). Petitioner filed on April 15, 1992 its 1gg 1 Income Tax Return stwvving a refundable amount of P.342,795.00, itvJusiv' of the prior year's excess tax credit of P267,959.00 and the tax withheld for 1991 in the amount of P74,836.00. On July (\, 1992, petitioner thru its auditors filed a claim for refm1d or the issuance of a tax credit certificate in the amount of P2 93,65�3.00, representing oT;erpaid income tax for the years 1990 and 1991, itemized as follows: Amount of Excess Tax Paid 1990 p 223,822.00 1991 74.&36.00 37

DECISION- LT.A. CASE HO. 483:> -3- Petitioner did not include in its claim the amount of �P44, 137.00 repre:::enting its 19f�9 excess t3.X credit considering th:::1.t the sa.me have prescribed. Thus, only the first quarter p:3yments for 1990 in the a.mount of P 106. 1:,2 .00 and the creditable ta.x V?ithheld of P.3:.)_.670.00 \.Yas clairned for 1990. totalling P2 21f;2 2.00. For 1991. the creditable TI'\Tithholcling t3.X of P7 4/�36.00 vyr::t:=: lil~HV?ise included in the claim for refund and tax credit. Vvitlwut waiting for respondent's decision on the matter. petitioner instituted this petition for review on July .30.. 1992 pursuant to Section 2.30 of Uw National Interna.l Revenue Code. Tl. . T�T1" �1 1f:? t"-r::-.o-:���]-)-"'="''" t"-,:~� vv H:�"�t-l�1<,:-:"._~- I.,-,~- ~-1(�.)t�. Ir-�-.-''">.t�t"t.t� "(~lf.1t-:"~1- 1..C_,� "o::'-f"1t.-t"t�.l�f�:?( t,(,�) t�l�16"='" refund of P29(3,6So.OO as alleged overp;:tid incorne taxes for the years 1990 and 199 1. Respondent alleged that the petition states no cause of action for failure on the part of the petitioner to state in the petition that the tax collected V11as erroneous and illegaL Tax refund are construed strictlv ;::1gainst the t.a~q:)aT>rer. The burden is I '-' �on the petitioner claiming for a refund or tax credit to shov? that the t:tx collected has been erroneously <:>r illegally paid. Failure on its part to overcome said burden is fatal to its claim for refund or tax credit. Petitioner presented ::.u1d offt?red in evidence the follov;ing 1. 1990 Corporz1.te Annu::1.l Income Tax Return together with its atta.clunents consisting of: a. Audited Financial St:J.t&tnents; ( I 376

DECISION- C.LA_ CASE HO_ 4835 -4- b . 19W) Annual Corporate Income Tax Return shovving a relundable amount of P44/137.00; c:. First Quarter Income Tax Return ending lvlarch 31, 1990 shov~ring tlie amount of P 100)51.99 as tax due and the payment thereof as evidence by BIR Confirmation Receipt No. B19910070 dated May 30/ 1990; cl. 1990 Certificate ol Creditable Income Tax V1ithheld At Source (BIR Form No. 174.3.1) shov;ing a l~t tax withheld on contractor's ieE? ol P .35~669 . 70; and e. .BIR Certificate dated October 7/ 1992 showing that the amount of P 08.1 C) 1.99 was received by the Bureau ol Internal Revenue. 2. 1991 Corporate Annua.l Income Tax Return together with its att:J.chment namely: a. Audited Financial Statements; and b . 1991 Certificate ol Creditable Income Tax Withheld At Sou.rce (.BIR Form No. 174.3.1) showing the income tax withheld at source in the amount of P74l>35.S2; 3. Letter claim lor rE?fund or issuance oi t:.1.x credit certificate dated July� 2/ 1992 filed with the re::::pondent's regional oHi<::e on .fulv' [)I 1992. Respondent la.iled to object or cotnment to t11e evidence presented by petitioner. Neither did she present any witness or evidence to ebut the same. She :~.1St) failP.( to su.bmit to the Court her meruc. '� ndU1'i -� 'Hscu::~:;in:! tl :,. Hkrit.:: of her claim that the 37 7

DECISION- LT.A. CASE HO. 483:> -5- petition states no cause of ::3.ction. Instead she submitted tl1e case for decision l::�ased on the pleadings. After careful examination of the evidence presented by petitioner V.Je find U1at the burden of proof in claims for refund or tax c:redit has been overcome by petitioner. The evidence offered by petitioner is su.fficient to grant its claim for retune:~ or t~lx credit. The claim of respondent that the petition states no cause of action is \�Vit.l1out merit. Section 2.30 of the National Internal Revenue Code provides: -sEC. 2 30. Recovery of tax erroneously or illegally collected_ - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to 1 d "1Q"". ~I� ~_, t..)..~.. ~._,!l ~.�.1� 1� '1.�/t"l ~... t.-)U,�c.J-1~I 7 t..'.lf" 1�11t;r',gt~:1. 11~I7 "i"_'l,C.._JC�.."J''V-�.C.JVC~- Of" collected, or of any penalty claimed to have \)een collected without authority, or of any sum alleged to have been excessive or in an)1 manner v.Jrongfully collected, until a claim for refunc! or credit has been (july filed V.Jith the Commissioner of Internal Revenue; but such suit or proceeding may be maintained, whether or not such tax. penalty, or su.tn has been paid under protest or duress. In any case, no such suit or proceeding shall l)e \)egun after the expiration or tv\70 years from the date of payment of the ta.x or penalty regardless of any supervening cause t11at may arise after payment: Pr..--wif1~f1. bmf?eV~J; That the Commissioner may_. even V�litl1ou.t a V�lritten claim therefor, refund or credit any tax_. where on the face of the return u.pon Volhicll payrnent V�JaS made, such payment* appears clearly to have been erroneously paid . XXX XXX." * Should read "ta.x". 37 8

DECISIOH- C.T _A_ CASE HO_ 483:> -6- This is a suit for the recovery of overpaid income taxes- for the years 1990 and 1991 . Thus, it falls VvTithin t_he ambit of Section 2.30. This Court reiterates its rr.Jfev"ious rn-�linioJ in the case of Citytrust Banking Corporation v _ Commissioner of Internal Revenue, CTA Case No_ 4099, May 28, 1991, affirmed by the Court of Appeals in Commissioner of Internal Revenue v _ Citytrust Banking Corporation, CA - G.R. SP No _26839, July 31, 1992, pertinent portion~ of which read as iollO'Io\TS: "Alt.l1ou.gh the title of Sec. 230 of the Tax Code is 'Recovery of Tax Erroneously or IllegaJly Collected'. the title alone is not controlling. By the tenor of Sec. 2Y\ the two-year limit applies t) actions to recover- 1. ;:my national internal revenue tax erroneously or illegally assessed or collected; 2. any penalty claimed to have been collected witlwu.t ;:uJ.Uwrity_: or 3. any sum alleged to have been excessive or in any manner wrongfully collected (See 1vlul1er 1!.:{ Phipps v . Commissioner of Internal Revenue, 10.3 Phils. 145, March 20, 1955). The overpai(l income taxes in this case fall under #.3 for alt11ou.gh tlley V�lere legally c:ollecte(l by virtue of t11e '.�Vit1111olding tax system and t11e requirement for qua.rterly income tax payrnents, t11ey v.Jere nonetheless 'ex(essive�... _.r.� .. t��' t- - . n 1.t . . lnhcu.~r '��LlV. '- !-l L�' f..J,;;;l~~ j r:;-j':-.�1... ( <.-. ~uar t~' l"lT1T ~itK� �' f-'Jlll}t::~>

DECISIOH- C.T.A . CASE HO. 4835 -7- evidence presented by petitioner. Petitioner having been able to comply with tl1e provisions of the law and established its right to be refunded or credited with a tax certificate is therefore entitled to the amount prayed for. WHEREFORE, we find U1e petition meritorious. Respondent is hereby ordered to refund or issue a tax credit certificate in favor of petitioner PNZ Packers, Incorporated in the amount of P298,658.00 representing overpaid income taxes for the calendar years 1990 and 1991 . Without pronouncement as to costs. SO ORDERED . Quezon City. Metro Manila, May l!J, 1994. ~tt.. ~ ERNESTO D. ACOSTA 7judge WE CONCUR: ., .GRUBA (on leave) RAMOf~ 0. DE VEYRA Associate Judge 380

DECISIOB- C_T_A_ CASE BO_ 483:> -8- CERTIFICATION I hereby certify that this decision -was reached after due consultation among the members of the Court of Tax Appeals in accordance ~.A!ith Section 13, Article VI II of the Constitution. ~Q~~ ERNESTO D_ ACOSTA Presiding Judge Court of Tax Appeals .I i 381