CTA Case No. 2871 (Decision)

- ~tJBLtC .0 fl 1'H ~HIUPP'fNlf\ COURT OF TAX .PPK:' 1-~ QU~ON C'11V CALTEX (PHILIPPINES) I1C., ~ Pet1tioner , - versus - C.T.A. CA&E NO. 2871 COMMISS _ONER OF INTERNAL REVENUE, Respondent. X- - - - ------X i7 DE C I S I 0 N ln i ts petition for review filed with this Court en j April 22, 1977, praying that, aft 2~ hearin g. th:s Co rt i ssue a j udg~ent ordering respondent Commi ssi oner of I n t erna l Revenue to refurd petiTioner Caltex (Philippines) In c. the amount o f ~352 1 185.00 rep re senting alleged ex- cess tax on int 2 rest paymentd, peti~ioner alleges that: l. It is ~ corporat ion duly organ~zed and e xisting under the laws of the Philip- pines, with princi~~l offices at 540 Padre Faur a St. , 1anila, while respondent is the duly appointed ~ommissicner of Internal Revenue of the Philippines with offices at the BIR Building , Diliman, Quezon City, where i~ may be served with summons. Res- p ondent may likewise be served with summons through the Solicitor General at his off ic ial adr,ress. 2. On December 9, 1975, petitioner fil e d with the Office of the Commiss i oner of ~nternal Revenue , the herein r espondent, a claim for refund in the amount of P352,185.00 represent i ng t he excess of withheld taxes on accrued interest due petitioner's suppliers for c~uJe oil ad lube/grease imporlations, copy of the claim 36

DECI SION - CTA CASE NO. 2871 - 2- ~ for r efund is attached hereto and made an integ ra l part her eof as Annex A. These withheld taxes were paid to the Bureau of In ternal Rev enue on Apr i l 25, 1975 and Ju~y 25, 1975. Up to �this time, he r ein responde nt has not ac t ed on the said requ es t. Under Section 306 of the Na tional Intern c- 1 Reve ,, ue Code, here i n petitioner has only two years from t he date of pa ymen t of the tax within which to initia t e this petition. 3. Petitioner, in processing i~s crud e pe t roleum require ''' eJl : s from over- seas, is c ommitted to pay an interest of 12 % pe r a1 num on all mo ni es due and un paid to its for eign suppliers which interest would commence a nd accruQ 30 d ay s (w ai ch later was extended to 60 days ) f r om date of l oading of the crude p e ~rol~um. 4. Petiti o ner , in c o mpliance with Pr esidential De cr ee No. 131 a nd the per t i- nent BIR withholding tax r egulat i d 1s, has withheld from the accrued interes t pay- ments it made to its su p pliers t he 15% tax on in t e re st of foreign l oans. 5. During t he period January 1 to Se ptember 30, 1975, petitioner accrued a tota l cf �l6, 138,763. Of this total, P5,435,353 per tains to the interest due for t he period Jan, a �y 1 to June 30 , and the correspon ding 15% wil .holding tax p a i d in the amo u n t of P815,303.00. 6. The net remittable amount to the ove r s eas ;o:;, pplier s (interest due l e ss t ax withheld) of the P6,1 38 ,7G3 was ~5,217,949 aft er d ~d uct~ng from the form s r the amoun t of P9~0,8 J.4 00 t he withheld tax . Petition er has already raid tl1e Bureau of Intern&l Rev enue t he sum of P8 15,303 as required by the withholding tax r e gulat i on requiring a qu arter l y fi~ing ~n d p a yment of income ta with- held at source for the quarter ending June 30, 1975. 37

DECISION - CTA CASE NO. 2871 - 3- ~ 7. Petitionsr, under constraints of Cen tral Bank regulations, was not able to re mit in full the net remittable amount of ~5 ,2 17 ,9 63 because of t e deferred payment plan of the Ce ntral Bank. It only was able to secure the ap ~ r oval of the Ce ntra l B'nk for the a mount of P3,222,228.00, which it remit- t ed to its suppl i ers. 8. The remit ted amount c overs the interest d~e on such loans o nLy to the exten t of P3 , J90,857.00. There is there- f or e a balance of ~2,347, 906 .00 s t i l l unremitted, with 15% L:,: : t hereon already vJit hheld ;;t n d paid to the Bu r e au of Inter- nal Revendc . 9. Subsequently, hewever, peti- tione ~'s suppl i er s decided to fo reg o the c o llection of t he balance of interest due and not ye t r emitted to t hem in t he amount of P2,347,906.00 and issued credit memos therefor dated September 30, 1975 . . 10. Meanwhile, said a mount of P2,347 1 906 rather than being an expe nse ot herein pet'tioner to be de bited, bec ame a credit and t hu s formed part of the taxable i ncome for 1975 for whi6h the 35% tax on the same was paid. Said amount was therefore taxed tw ice , to wit: ( i ) the t ax of 15% under P.D. 131 a n d ( ii) i he tax of 35% on corpo rate inc o me urider the National Int e rnal Revenue Code or a t o t ul o r 50%. 11. Pe titioner therefore filed with thG herein respondent a claim for refund o f the 15% tax withheld in the amount of ~ 352 ,1 85.00 (P 2,347,906 .00 x lS%) which is an excess tax on interest payments and w1ich is p a rt of the total wi thhold ing t a x of ~ 81 5,303.00 (P5, 43 5 ,3 53 . 00 x 15 %) paid to the Bureau of In te rnal Revenue, which h oweve r remains unacted up to this t ime. The summary of th e above � i g ',,"E.S are fo u nd in An nex A of this pet ition. 38 I /

-------- - - -� DECI S ION - CTA CASE NO . 2871 - 4- ~ In hi s answer to the petition for revi e w, r espon- dent admitted the allegations in paragraph 1 but spe ci fically de ni ed the all e gat ions i n par a gr a ~ h s 3, 4, 5, 6; 7, 8, 9 and 10, for lack of k n o wledg e or information suff icient to form a belief as t o the truth the r eof . Wtile r e spond e nt ad mitted t he alle- gations in p a rag r aph 2 to the effec t tha t i n a letter dated De cember 9 , 1 975, whic h ~ o s r e c e ived by him on December 18, 1J 'i5 , petitioner req uested f or the r e fund or credit of alleged excess pqyme nts of withholdi ng tax on interests for 1975, responde n � spe cifically denied the r e st of the a ve rments made ther e in including t he contents of Annex "A" of t he Pet i tion for being erro- neou s conc lu s ions of fact and/or law, the truth o f t he ~ a tt e r being those stated in the spec� al a nd a f fi rma t ive defenses of his answer. Likew i se , whi l e responde nt admitted th e allegati o n in par:agr~apll 11 th c:t pe ti' �i on er f iled a cl o im for refund , he s pecifically den i ed t he re st of the averme n ts fuerein for being e rr oneo us cone - lusions of fac t s a nd/or law, the tru t h of the ma tt er �be ing that respondent acted on peti t i oner's claim for refund and credi t by causing the investigation the reof . And by wa y of speci a l and affirmative defen se s, responde nt ave rs that: 5 . . The taxes in que s~ ion were collected in accordance with law; and 3 9.

--- .. - ---- � -- �- -...... � - -�~� � ......... ~~~-._ ............._._ ..,. DECIS I ON - CTA CASE NO . 2871 - 5- ~ 6. In an ac tion for tax refu nd, pe titioner has t he burden of proof to s how that it is entitled to the ~efund of t he amount claimed as refundable beca use taxe s are presumed to ha\ e been collected in accordance with laws and r e~ulations on t he matter. After the i ssues we e joined , petitioner filed on November 9, 1977 a manifestation and notion to suspend p r oceedings on the g r ound " t hat there is presently a pendi n g cla i m involving the ::- a~ �::~ amount a nd subject mat te r by her ei r. petitioner bef re the Appellate Division of t he Bur e au of I nternal RevQnue" . An d the petition for r ev i ew at bar v�las " filed for pur pos ~s of arresting the two (2 ) year per i od pr ovided by laH." The records reveal that after the above motion was g r an t ed by t he Court, petitioner, with the cone� rrence .or wi t hout o b jection of resp8ndent, si mp ly req ues t e d, whe n eve r t his case was set for hearing, [or t he cancel l - a tion or postponement of such hearing on the ground that it s c laim for refund was still being administratively proc essed by� the appel late divi s ion of the Bu re au of In t e rn al Revenue. As a matter of fact, ther e wer e even in stances when pe ti t ioner ~anifes t ed in open court th a t i ts c laim has already been favorably recommended and a ppr ova l thereof by t he Commissioner of Internal nevenue was ju s t be ing awaited . Howeve ~ , whe n this case was called for hearing on 40

DECI S ION - CTA CASE NO. 28 71 ~ 6- A't1 g ust 7 , 19 8 5, p e t itione r Caltex (Phi l ippi n es) Inc , , wi t h o ut of feri. g p r o of as to the tr uth o f its own alle gati o ns, move d f or its submission for decision on t he b a si s o f th e ple adings. No obje ct ion was interposej by r esponden t . Th i s c ase i s theref cre submi tted for judgme nt only on the basi s o f t he pleading s, githout a n y Bur e a u of lilt.er n a l RevenJe records for war d e d to t his Court , and wit[1gut pe t i tioner c -fering any proof as t o t he t ru th o f i~s own all ega t i o ns which were all in effect spe cif i ca lly denied by responden t . Se tt l ed is t he r ul e that the pa r ty who p r ays for jud gme nt o n the p leadings wi t hou t offering proof us to th e truth of h is ovm a llegations an d witho u t s;i.v ing the opposing party a n opportunity to i ntroduc e evidence , mu s t be un derstood to adm i t the t r uth of all t he materia l a n d r e l e va nt all egat ion s of the opposing pa~ty and t o r es t his mo tion f o r judg ..en t o n those allegations taken t o g e the r wi t h such c� LLs o wn a s are ad1d tted in the pl ead ings . (B~ue rman n vs . Casas, e t. al. , 10 Phjl. � 386; Evangelista vs. De l a Ro sa , 76 Phil . 115.) I t fo llow~ t ha t p et iti one~, as mov a nt , must b e taken to h-ve sub- mitted and r e sted i t s c ase o n the materi3l and re levant alleg ati on s of re sponde n t taken together with such o f i ts own as are admi tte d . (E v angelista vs . De la Ro Ga, 41 /

--------�----~-~ DECISION - CTA CAS E NO . 2871 - 7- ~ The only material and relevan t allegations of r espon d ent are his special and affir m~tive defenses t hat (1 ) t he taxes i n quest ion were collected in acc ordan~ e wit h lawi and (2) in an action for tax r efund , p et i tior; er 1-.:a s the burde1 of proof to s hm1 tha t i t is ent itled to the ref und o f t he amount claimed as r efun d21 bl2 be cau s e taxes are p res umed to hav e been c ol l ected in ac c ordance wit h la� . �c; and regulations on the m:1 t te r . A~:a t he per t inent allegations of pe ti- t i oner as ar e admitted by resp.cndent ar e t hat (1) peti- tione r i s a corpor a tion duly organ i zed and existing und2r the l a ws of the Ph il i p pines, wit h principal offic s at 540 Padre Faura St. , Manila ; (2) in a letter dated Decembe r 9, 1975, which was rec e i v ed b y respondent on pec ember 18, 1 975 , petit ioner req uested for the refund o r c r edit of alleged excess payme ~ ts of wit hho ld i ng tax o n i nte rests f o r 1975; and (3 ) peti ~i on er filed a clai m for re f und thereof although the averments the re i n were s pecificall y �den ied fo r being errone ous conclusions of f a ct s a n d / o r law. No evidence what soever wa s off er ed by ~e tition er in s~pp ort of its al l eg a tions that it i s entitled to the refund of t he arnou ~t of P352 , 185.00 " r ep r e sen ting a ll e ge d exc es s tax c:;. inter est paymen ts � .It is thus clear beyond do� � r. t t hat ther e is no ground or bas is upon which this Court can issue a judgm8nt 42

DECISION - CTA CASE NO. 2871 - 8- crrdering responde nt to refund herein petitioner the a mount involved in its claim. As correctly contended by respondent, and admitted by petitioner, in an action for tax 'refund, petitioner hau the bur den of proof to show that it is entitled to the refund of the amcunt claimed as refundable because taxes are presumed to ave been collected in accordance with laws and regulations on the matt er. Pe tition er h vi ~ CJ failed to sustain the burden placed u~on it by presenting proof that it i~ entitled to th e refund of the~amount involved herein, th i s Court could .ot l ook with approval to the grant of the refund. And more so when it is considered t ha t a refund of taxes undoubtedly partake s of the nature of an exem:- ~ion , an d the sane cannot e allowed unless granted in the most explicit and categorical l&nguage. (Resins , Inc. v s. Auditor General, L-17888, Oct. 29 , 1968, 2J ~ CRA 754.} Claims for refund are c onstr uPJ strictly against claim- ants since a�claim for refund is in the nature of an exemption from taxa tion . (Commissioner of Inter1al Revenue vs. LeJcsma, L-17509, Jan. 30, 1 970, 31 SCRA 95.) As set forth L1 Cornmissione :: of In � en.al Rev c..~�ll:.e ~:s. Guerrero, L-~0812, Sept. 12, 1~,67, 21 SCRA 180: "From 19 06, in Catholic Church vs. Hastings to 1966, in Esso Standard E1stern, Ire. vs. Ac t ing Commissioner o~ Custcms, 43

DECIS ION - CTA CASE NO. 2871 - 9- i~ has been the constant and uniform holding that ex - emption from t axation i s not favored ai1d is n2ver pre- sume d, so ~hat if granted it must be strictly construed aga ins t the taxpayer. Affirmatively put , he lsw fro~n3 on exe mption from taxation,_ hence, a~ exempting provis ion should be construed s t rictissimi jur�s." (Catholic Church vs. Hastings, 5 Phil. 701; Esso Standard Eastern, Inc. vs . Acting Commissioner of Cc:~ t' ':r:s, L-2l841,�0ct. 28, 1966, 18 SCRA 488; Plil. Acetylene vs. Comm issioner of Internal Reven uee L-19707, Aug~ 17, 1967, 20 SCRA 1056; Commissioner of Internal Revenue vs. Gue rrero, L-20942, Sept. 22, 1967, 21 SCRA 180; Manila Electric Co. s Vera, L- 29 987, Oct. 22, 1975, 67 SCRA 351.) WHEREFORE, find i ng the petition for revi ew without merit , the same is dismissed and the refund/credit sought is hereby denied. SO ORDEPE;). Qu ez on City, Metro Mani la, January 29, 1986. -/ / cL.tk~-..'(7~-1,.~~' +~(-"-4 "" / AMANTE ILLER Presidi g Judge VJE CONCUR: 1 ,/ Ct O/lbf~t)"~~( ROAQUIN /Associate Judge ~~jl / / Gi~x . z. REY}( As soc 1ate .T ur"!ge 41