CTA Case No. 5094 (Decision)

� REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY INGASCO, INC., Petitioner, - versus - C.T.A. CASE NO. 5094 COMMISSIONER OF INTERNAL _?fij _Pro!m~uBlg_aot~ed:!9~B REVENUE, Respondent. X- - - - - DECISION This appeal involves petitioner's claim for refund of income tax paid for the calendar year ended December 31' 1991 in the amount of One Mi I I ion Two Hundred Four Thousand One Hundred Twenty One (P1,204,121.00) Pesos. The claim is anchored on income tax exemption granted by the Board of Investments (801, for brevity) to petitioner. Petitioner is a domestic corporation organized and existing under Philippine laws. It is engaged in the manufacture of oxygen, nitrogen and argon gases and is registered with the BOI (Exhibit "C"). For taxable year 1991, petitioner applied with the BOI for income tax holiday for new/expanding domestic producers under paragraph (b),� Article 37 of E.O. 226. However, the BOI failed to act immediately on the

DECISION C.T.A. CASE NO. 5094 - 2- petitioner's application for tax holiday. Thus, on Apri I 15, 1992, petitioner was constrained to file a tentative Corporate Annual Income Tax Return for the calendar year ended December 31, 1991 . The return reflected a taxable income of P3,446,598.00 and an income tax due in the amount of P1,204,121.00 (Exhibit "G"). Subsequently, the 801 approved the petitioner's app I i cation for a tax hoI i day and granted an income tax exemption in the approximate amount , of P2,68.1,925.00. On August 17, 1992, petitioner filed an amended Income Tax Return for the calendar year ended December 31 ' 1991 with a refundable amount of P1,204,121.00 (Exhibit "H"). On October 22, 1992, the 801 informed the Bureau of Internal Revenue (BIR> that the petitioner is indeed entitled to a tax exemption (Exhibit "K"). Thus, petitioner filed an administrative claim for refund or issuance of a tax credit certificate with the BIR through a letter dated November 29, 1993 which was received by the latter on December 8, 1993 (Exhibit "8"). There having been no action taken by the respondent on this claim for refund, the petitioner filed . the instant petition for review on April 15, 1994. In the Answer filed by respondent, she made a sweeping denial of a I I material a II egat ions in the

DECISION C.T.A. CASE NO. 5094 - 3- petition by merely stating that she had no knowledge or information sufficient to form a belief as to the truth thereof. As "special and affirmative defenses", respondent claimed that: X X X X "6. In an action for refund, the taxpayer has the burden to show that the taxes paid were erroneous Iy or iII ega I Iy co I Iected and fa i I ure to do so is fatal to the action; 7. Claims for tax refunds are construed strictly against the taxpayer. Taxpayer- petitioner has no cause of action." The issue brought to the fore is simply whether or not the petitioner is entitled to the refund or tax credit in the amount of P1,204,121.00 representing income tax payment for the calendar year ended December 31, 1991 . We rule in favor of the petitioner. There is no question that the claim was filed on time. For the calendar year 1991, the reckoning period is April 15, 1992, the date when petitioner filed its tentative Corporate Annual Income Tax Return for the said calendar year <Exhibit "G"), which return showed an income tax due of P1,204,121.00, subject of this claim for refund. Petitioner, therefore, had two years from Apr i I 15, 1992 or up to Apri I 15, 1994 within which to f i I e its claim for refund with the BIR and seek judicial

DECISION C.T.A. CASE NO. 5094 - 4- reI i ef thereafter. The letter/claim for refund ) dated November 29, 1993 <Exhibit "B")) was received by the Bureau of Internal Revenue on December 8, 1993 and this petition was f i Ied on Apr i I 15' 1994, both within the aforementioned two-year per i od prescribed by Sections 204 and 230 of the NIRC, the pertinent provisions of which are quoted hereunder: "Sec. 204. XXX (3) xxx No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner claim for credit or refund within two years after the payment of the tax or penalty." "Sec. 230. Recovery of tax erroneously or illegally collected. No suit or proceeding shall be maintained in any court for the recovery of any nat i ona I i nterna I revenue tax hereafter a I Ieged to have been erroneous Iy or i I legally assessed or collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, unti I 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 shal I 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 face of the return upon which payment was made, such payment appears clearly to have been erroneously paid."

DECISION C.T.A. CASE NO. 5094 - 5- With reference to petitioner's entitlement to refund, petitioner submitted various documents to substantiate its claim, to wit: a. Original duplicate letter/claim for refund dated November 29, 1993 and stamped "Received" by the 81R on December 3, 1993 <Exhibit "8"); b. Tentative Corporate Annual Income Tax Return for the calendar year ending December 31,1991 showingthe dateof filingon April 15, 1992 (Exhibit "G"); c. Amended Corporate Annual Income Tax Return for the calendar year ending December 31, 1991 showing the date of f iIi ng on August 17, 1992 (Exhibit "H"); d. Tax Debit Memo No. SN007150 issued on Apri I 14, 1992 by 81R in payment �of the amount of P124,933.00 for the income tax due for the calendar year ending December 31, 1991 <Exhibit " I" ); e. Tax Debit Memo No. SN007151 issued on April 14, 1992 by 81R in payment of the amount of P1,079,128.00 for the income tax due for the calendar year ending December 31, 1991 <Exhibit "J"); and f. Corporate Annual Income Tax Return for the calendar year ending December 31, 1992, showing the amount of income tax due for said year as "NIL" <Exhibit "L"). More importantly, the Ietter of the Chemical Industries Department of the 801 dated October 22, 1992, addressed to the respondent, informing the latter that petitioner is entitled to an income tax exemption as 801 incentive in the amount of P2,681,925.00 for the taxable year 1991 <Exhibit "K"), is uncontroverted.

DECISION C.T.A. CASE NO. 5094 - 6- F ina I Iy, it bears stressing that in opposing the instant petition, respondent rei ied solely on the testimony of her lone witness, Mr. Tomacruz, Attorney I I of the Appel late Division of the BIR, who claimed that petitioner's request for refund was not acted upon due to petitioner's fa i I ure to submit a c Iear copy of the return showing payment of the income tax sought to be refunded. It appears, however, that the case was assigned to Mr. Tomacruz only in June 1994 when petitioner's right to judicial recourse would have already prescribed. Hence, we cannot give credence to the opposition of the respondent. WHEREFORE, judgment is hereby rendered ordering the respondent to refund or issue a tax credit certificate to petitioner in the amount of P1,204,121.00 representing wrongly-paid income tax for the calendar year ended December 31, 1991. .;..:. ~.JJ SO ORDERED. RAMON 0. DE VE ~ Associate Jud e WE C~CUR: ~ - Q~~ ERNESTO D. ACOSTA

DECISION C.T.A. CASE NO. 5094 - 7- CERTIFICATION hereby certify that the above decision was reached after due consultation with the members of the Court of T~x Appeals in accordance with Section 13, Article VI I I of the Constitution. ~ - ~C2-.-A- ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals