CTA Case No. 897 (Decision)

I Republic of the Philippines OOURT OF TAX APPEALS ,MANILA MAYA TRADING OOMPANY, C. T.A. CASE NO. 897 Petitioner, - versus - OOMMISSIONER OF INTERNAL REVENUE , Respondent. X- - - - - - - ~ - - X DECISION On February 26 , 1958, the petitioner filed its income tax return for the year 1957 wherein it reported a net income of tl4 , 270.42, and paid an income tax in the sum of P2,854.00. Among the incomes included in petitioner's return were the sums of 5 , 610.00 and fl , 872.50 received as dividends from Palawan Quick- silver Mines and Palawan Consolidated Mining Company , respectively , or a total of 7,482.50. On May 15, 1959 , it filed a written claim for refund of ~1,122.37 , re- presenting alleged overpayment of its income tax for _ 1957 resulting from the erroneous treatment of ~.48~, dividends received from Palawan Quicksilver Mines and Palawan Consolidated Mining Company , as fully taxable when the same was allegedly taxable only to the extent of 25%, pursuant to Section 24(A) of the National Inter- nal Revenue Code , as amended by Republic Act No. 1148. Not receiving a decision from respondent on its claim for refund , and fearing that the case might not be de- cided within two years from the date of payment , peti- tioner filed a �PETITION FOR REVIEW� with this COurt

DECISION - C.T.A. CASE NO. 897 -2 praying for the refund of said amount. Except for the facts that the sum of P7,482o50 was included in petitioner's income tax return for 1957 and that it paid income tax in the sum of P2,854.00, all the other facts alleged in the petiti on for review are denied by respondent for lack _of knowledge or in- formation as to the truth thereof. By way of special ~ defense, respondent cl~ims that the appeal is premature as no decision has as yet been rendered on the claim for refund. In connection with respondent's special defense that the appeal is premature and should be dismissed as no decision has as yet been rendered on petitioner's claim for refund, it has been held that in cases involv- ing refunds of internal revenue taxes claimed to have been erroneously or illegally paid, a taxpayer need not wait for the decision of the Commissioner of Internal ' Revenue before instituting in the Court of Tax Appeals judici~l action for their recovery. (eibbs v. Collec- tor, G. Ra No. L-13453, February 29, 1960; Collector v. f _c.r.A., G. R. No. L-11494, Jan. 28, 1961.) This is so notwithstanding that Section 7 of Republic Act No. 1125 requires that there be a decision of the Commissioner of Internal Revenue and that the decision denying the refund must be filed with this Court within thirty days from the date of receipt of such decision, pursuant to Section 11 of said Act, which requirements are in con- flict with Section 306 of the Revenue Code. It has bean suggested, however, that �the legislative branch of the Government should take notice of such apparent conflicts

DECISION C. T.A. CASE NO . 897 - 3- in our statute books and start the elimination of the same by corresponding legislation. � . (College of Oral & Dental Surgery v. C. I . A., G. R. No. L- 10446 , Jan. 28 , 1958. ) Accordingly , the claim that the herein �peti - tion for review" is premature must be dismissed as un - tenable. Coming now to the merits of the case , we find that the sum of f5 , 610. 00 was received by petitioner as dividend from Palawan Quicksilver M,.nes , a new and neces - - sary industry , while the sum of ~1 , 872. 50 was received as dividend from Palawan Consolidated Mining Company , which is not a new and necessary industry but nonethe - less exempt from income tax as a �new mine" under He- public Act No. 909. Section 24(A) of the Revenue Code , as amended by Republic Act No. 1148, provides "That in the case of dividends re- ceived by a domesti c or r esident foreign corporat ion from a domestic corpor ation liable to tax under this Chapter or from a domestic corpora- tion engaged in a new and necessary industry , as defined under Republic Act Numbered Nine hundred and one , only twenty-five R~r centum thereof shall be returnable for purposes of the tax imposed by this section.� The law provides that dividends received by a domesti c corporation from another domestic corporation are tax- able only to the extent of 25% of such dividends if the distributing corporation is liable to the income tax or is exempt from such tax because it is a new and necessary industry under Republic Act No. 901. As the sum of ~5 , 610.00 was received by petition-

DECISION CoT.A. CASE NO. 897 4 er as dividend from Palawan Quicksilver Mines, a new and necessary industry exempt from income tax under Republic Act No. 901 , only 25% of such amount was tax- able in 1957. With respect to the sum of 1,872.50, which was received as dividend from Palawan Consolidated Mining Company , the evidence shows that said company is not a new and necessary industry , although exempt from income tax as a �new mine� under Republic Act No. 909. Therefore , the said amount is taxable in full. Dividends received from new mines , as provided in Re- public Act No. 909 , do not qualify for partial exemp- tion under Section 24(A) of the Revenue Code , as amend- ed by Republic Act No. 1148. / IN VIEW OF THE FOREOOING , petitioner made an over- payment of its income tax for 1957 in the sum of 842.00 , computed as follows: Net income reoorted ,.14 , 270.42 Deduct: 75% of 4 , 207~ 50 1!5 , 610. 00 fl0 ,062.92 Net taxable income IncoiTE tax due on P- 2,012.00 2, 854.00 10 ,062 at 20% ---------- Income tax paid ------------ t 842.00 Overpayment --------------- Respondent is, therefore, hereby ordered to re- fund to petitioner the sum of � 842..00, without pronounce- ment as to costs . SO ORDERED . Manila , November 6 , 1961. WE CONOJR: RJMAN M. UM.-'I.LI ~~~ Associate Judge p .J