CTA Case No. 3868 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, Petitioner-, -�- VE? I'"S U S -- C.T.A. CASE NO. 3868 COMMISSIONER OF INTERNAL REVENUE, }! _ _ _ .._ Res pondent. ----'-}! I .i~ E C I I 0N In its letter- of September- 26, 1984 to r-espondent Commissioner.. of Inter-nal Revenue, pet.i t.ioner- the Phi 1 ippine Amer-ican L.i fe In sur-ance Company r-equested for- the r-efund of the amount of ~co m e P.1.33, 084. (H) r-epr-e se nting over-paid ta}: for- the calendar- year- ended December- 31, 1982. Since no action was taken seasonably by r-espondent on its C 1ai m �for.. t r efund, peti t.ioner- f i 1ed the instant petition for- r-eview for- r-ecover-y of the sai d amount a�f P.1. 33 , 084.00. The fa cts ar-e not disputed, r-espondent hav ing subm.i tted this case for- decision on the basis of the pleadings an~ re cor-ds after petitioner- has

--- -- DECISION -- CTA CASE NO. 3 868 - 2- presented its evidence. As alleged in the petition for review and admitted by respondent, and borne out by the records: 1. Petitione~ is a corporation organized and existing under Philippine laws, with principal office at the Philamlife Building, United Nations Avenue~ Ermita~ Manila; while Respondent is the government official who heads the Bureau of Internal Revenue and holds office at the BIR National Office Building, Diliman, Quezon City. 2. For the first quarter ended March 31~ 1982 , petitioner filed its quarterly income tax return 1-'li th the Burea u of Internal Revenue on May 31, 1982, in which return it declared a net taxable income in the amount of P19,685~876.00 and tax due thereon in the amount of P6,837,116.00. After crediting the amount of P18,730.00 representing foreign tax credits, petitioner's quarterly income tax return showed a tax in the amount of P6,818,386.00. This amount was paid on May 31, 1982. (Exhibits A, A-1, A-2, A-3, B, C.) 3. For the first and second quarters ended June 30, 1982, petitioner filed its cumulative quarterly income tax return with the Bureau of

DECISION CTA CASE NO. 3868 -3 Internal Revenue on August 30, 1982, in which return it declared a net taxable income in the amount of P31,619,689.00 and income tax due thereon in the amount of P.t0,966,962.00. After crediting the amount of P6,818,386.00 and P37,461.00, representing income tax paid for the first quarter and foreign tax credits, respectively, petitioner's cumulative quarterly income tax return showed a tax due in the amount of P4,111,115.00. This amount was paid on Augus~ 30, 1982. (Exhibits D, D-1, D- 2, D- 3, E, F. ) 4. . For the first, second, and third quarters - ended September 30, 1982 , petitioner filed its cumulative quarterly income ta x return with the Bureau of Internal Revenue on November 29, 1982, in which return it declared a net ta>:able income in the amount of P39,824,724.00 and income tax due ther�eon in the amount of P.1.3,773,417.00. After crediting the amounts of P6,818,386.00, P4,111,115.00 and P115,985.00 totalling P 11,045,486.00 representing income �ta>:es paid for the first and second quarters and foreign tax credits, respectively, against the aforementioned tax due, petitioner's cumulative quarterly income

DECISION - CTA CASE NO. 3868 - 4- tax return showed a tax due in the amount of P2 ,727 ,93 1.00. This amount was paid on November 29' 1982. (Exhibits G, G- 1, G-2, G-3 , H, I.) 5. For calendar year ended December 31, 1982, petitioner filed its final adjustments income tax return with the Bureau of Internal Revenue on .:. April 15, 1983, in which return, it declared a net taxable income in the amount of P39,661,701.00 and income tax due thereon in the amount of P1 3 ,871,595.00. After crediting the amounts of P1 3 ,657,432 .00, P208,786.00 and P138,461.00 totalling P14,004,679.00 petitioner 's final adjustment return showed a refund~ble amount of P133,084.00. The amounts credited c onsi s t of the following: In co me tax paid for the first P ~,818,386.00 quarter of 1982 In come tax paid for ttie second 4,111,115.00 quarter of 1982 Income tax paid for the third 2,727,931.00 quarter of 1982 Tax withheld on rental income- 208,786.00 Foreig ~ tax credits on __ . __!_~!2.-'-4_9_L QO d i vi ,� ?J n d s Tot a 1 ~-~!!. ~-~_9.1~Z5':!:fl_?._ (Exhibits J, J - 1 to J-17, L, M, N, O, P.)

DECISION CTA CASE NO. 3868 - 5- 6. On October 3, 1984, petitioner filed a claim for refund with respondent's Appellate Division in the total amount of P133,084.00 representing overpaid income tax for calendar year ended December 31, 1982. (Exhibits K, K-1, K-2.) To date, respondent has not yet granted petitioner's claim for the refund of the said amount of P133,084.00. Hence, this petition for review. The lone question teiJpered for resolution is whether or not petitioner is entitled to the refund of the amount of P133,084.00 representing overpaid income tax for the calendar year ended December 31, 1982. Respon ... .mt points to no legal nor factual reason or impediment which would hinder or interfere with the grant of the refund requested by petitioner. Respondent has not presented any evidence to rebut or contradict petitioner's evidence which sufficiently and adequately established petitioner's entitlement to the refund. As a matter of fact, even in his special and affirmative defenses in his answer to the petition for review, respondent seems to concede to the 5 :_ ~ �

DECISION CTA CASE NO. 3868 - 6- refundability of the amount requested by petitioner. Thus, 6. Implementing Sections 85 and 86 of the Tax Code, which require filing of corporate quarter 1y income tax retufns and corporate f ina 1 adjustment returns, the Ministry of Finance has issued B.I.R. Memor.andum Circular No. 10-77, p rov i d in g , among others , t IJ�.. __. L.-~o.y .?.~.�!':?_?..?.__._.Q ..f._j;..hg against the estimated quarterly income tax liabilities for the quarters of the succeeding taxable year; 7. To insure prompt action on corporate annual income returns showing refundable amounts arising from overpaid quarterly income tax, the B.I.R. promulgated Revenue Memorandum Order No. 32-76 dated June 11, 1976, pursuant to which, the returns are pre-audited and the ret.l:,~Q.f:l_ or ta>: credit is granted. In fact, under paragraph 9 of his answer, respondent even corit~nds that there is rio need for petitioner to file a petition for review with this 5' 0

DECISION - CTA CASE NO. 3868 - 7- Court to preserve .the right to refund or tax credit w.i thin the 2-year period. And odd 1 y, respondent asserts that a taxpay..er may recover from the Bureau of Internal Revenue excess income ta>: paid Ltnder Section 86 of the Tax Code within ten ( 10) years from date of payment allegedly pursuant to Article 1144 of the Civil Code. While respondent states under paragraph 5 of his answer that the excess tax payments involved in this case are not illegally or erroneously collected taxes and ther~fore petition for review does not lie, in Commonwealth Management and Service Corporation vs. The �ommissioner of Internal Revenue, CTA Case No. 3232, June 26, 1985, and Jardine Fleming (Philippines) Inc~ vs. The Acting Commissioner of Internal Revenue, CTA Case No. 3667, January 20, 1988, this Court ruled that such excess tax payments are taxes erroneously paid refundable to the taxpayer. Indeed, the Government must set an ' �:ample of fairness and honest dea 1 ing. At any rate, the factual setting and the question involved in the above-cited cases are on all fours with the case at bar and this Court has already ruled:

DECISION CTA CASE NO. 3868 - 8- "To prove these excess income tax payments, petitioner presented in evidence its income tax returns for the years involved, the corresponding official receipts for its income tax payments, as well as the various withholding tax certificates issued to petitioner. No controverting evidence was presented by respondent. As a matter 9f fact, as stated above, respondent submitted this case for decision on the basis of the pleadings and the records after petitioner has presented and off~red its evidence. Since one who prays for judgment on the pleadings without offering proof a* to the truth of his allegations, must be understood to have admitted the truth of all the material 'and relevant allegations of the opposing party, and to rest his motion for judgment on these allegations taken together with such of his own as are admit te( 1 ( Bauermann vs. Casas, 10 Phi 1. 386; Evcl llgelista vs. De la Rosa, et. al., 76 Phil. 115), respondent, as pointed out by peti t.ioner, may be considered as not questioned seriously petitioner's entitlement to its claim for refund. (p. 86, CTA records). We find no cogent reason to modify or depart from the c:onclusion reached in Commonwealth Management and Jardine Fleming, as expressed in th~ above- quoted opinion of the Court there, and the same should resolve the similar problem now brought before us in this proceeding. ACCORDINGLY, respondent Commissioner of Internal Revenue is hereby ordered to refund to petitioner the Phi 1ippine American Life Insurance

DECISIUI\l .... CTA CASE NO. 3868 - 9- Company the amount of P133~084.00 representing income ta :�: for calendar year� ended December 31~ 1982 . SO ORDERED. Quezon City, Metro Manila, August 24~ 1988. AMANTE F: F'res.id.in ~ ,Judge WE CONCUR : . ~QU I N �ssociate .:Judge ~~e�;; CE RT I F I CAT I 0 N I that this decision was reached after due cons ultation among the members of the Court of Tax Appeal s in accordance with Section 13~ Article VIII of the Constitution. AMANT Presidl.ng Judge Court of Tax Appeals