CTA Case No. 3767 (Decision)

8'~11::rlUC 01' '~UI tii!I .H"I'tttp�� o r \~OURT TAX hrf�tAt..t.t C'"' (l\....:....~u~ ACCRA INVESTMENTS CORPORATION, Pe titione r, - ;. - ver s us - C.T.A. CASE NO. 3767 COHMISS lOt-lim OF INTERNAL REVENUE, }{ - - - - Rcs pond c n t. - - -- - - -� - ~ D E C I S I �o N ACCRA Inve s tm e nt s Corporation is a dom es tic corporation existing under the laws of � the Philippines e ngage d in business as rea l estate investor pnd manage- ment con s ultancy. For the calendar year ended December 31, l98lt ACC Rl\ , in s hort, filed its corporate annual income tax return on l\pril 15; 1902, declaring therein a net loss of P2,957,142.0 0 . Thus, it did not incur any tax liabi- 1 i ty for said y e ar. ~n .. the same r0 turn, however, ACCRA credited all the taxes withheld at source by its variou s withholding agents namely: Angara, Concepcion, Regala and Cruz Law Offices, Phil" 'ippine Global Communication, Inc., Malayan Insurance Company and MJ Development Corporation, th e amounts of ~73,588.00, ~15,133.00 artd 134 .. .

DE C U>ION - C'fl\ Cl\SE lJO . 376'7 - 2- P2,002.00 or a total of ~90,722.00. The said amounts were withheld from ACCHJ\'s rental, cogimission and con- sultanr.::y income from the said \'lithholcling aqents. Since ACCRA incurred a nat loss for the calendar year ended December 31, 1901, 'it filed a claim for refunJ with respondent 1n a letter dated Dbcember 29, 1983 (Exh. G); of all creditabie taxes withheld at sou rce by its various withholdi~g agent herein mentioned alleg e dly in tli �. ! total amount of ~90,223.00. Said claim for refund was not acted upon by r~spondent, hence petitioner filed the instant petition for review. Considering that the last payme nt of the alleged overpaid income tax was Jan~ary 20, 1982, and the peti- tion for review was fil e d on l\pril 13, . 198~, more than two years have elapsed since th e l ~st � payment of the l: ax. The sole issue in this case is whether or not petitioner's claim for refund has prescribed. It is the position .of petitioner that the claim for refund has not piescribed. However, respondent is of the ~iew ard submits that petitioner's claim for refund had already pr~sdribed pursuant to S~ction 292 of the Tax Code of 1977 as amended. Section 292 of 135

/ / - DE C I S I O N CTA CASE NO. 3767 - 3- the Tax Code of 1977, as amended, provide s : Section 292. Recove ry of Tax Erroneously or Illegally Collected.- t�Jo suit or proceeding sha 11 be rna in- tain e d i.n any court for the recovery of any national internal revenue tax � h e reafter alleged to hav~ ~een crro, neously or ille gally assei~ c d or co llecte d, or of any penalty claim~d to have been collected without authority or of any sum alleged to have been ex- cessive or in any manner wrongly collected, until a claim for refund or credit has been duly fi16d . with the Commissioner : '- but such suit or proceed in_g . may be rna in- tained, whether or not such tax, penalty or sum has been paid under pr~~est or duress . !.12.-~-~~LS.~~, no s_~tch �.Y..i t_2!. . I2I..2~~ee <~_ing_ s ha 11 be b.�gun after th~ ~ei.�.9.l.i OJ:!.....?..f.__1y~~ r s from the date. S:?l....J2.0Y.~ n t of_!:.bS...J:�~~.I!<l 1 ~..Y-E�9.a r d- 1-.~.ss of .~!!.J'__ superv~~ cause that n'la~ ~ise._~tt~=-~ . J-2.~.Y~nt: Provided, however, 'l'ha t the Cc missioner me\y , even v1i thou t. a written claim therefor , refund or c redit any tax, where on the fac e of the ret ur n upon which payment wus made, s uch payme nt appears clearly to huve been erroneously puicl. (Und eu;~c or ing ours . ) Petitioner for the year e nded December. 31, 1981 filed its Corporate Income Tax Return on April 15, 1982. In the snid return, it credited the total amount of P90,723.00, allegedly representing the total amount of creditable withholding tax a t. source for the said year, by its various withholdinq agents aforementioned (Exhs. c, E and F) �. 'naving incurred a net loss, ACCRA sought ". .

,/ / �' DECISION CTA CASE NO. 3767 '.i -4 for the refund f all the tax withheld at source here- - �:. in stated. A review of all the receipts -of payments and/or remittance of the tax withheld, they were paid and remitted to the Bureau of Inter~' al Revenue by the \�lithholding agents from February . td December, 1981. (Exhs. C-1, C-1-a to C-12, C-12~a, inclusive: Exhs. D-1, D-1-a to D-10, D-10-a, inc1~sive: Exhs. F-2, F-2-a to F-11, F-11-a inclusive.) Furthermore, a computation of the alleged taxes withh e ld at source as supported by ~vid~nce only re- sulted to an amount of P82,751.91 and not ~90,723.00, computed as follows: WITHHOLDING AGENT AMOUNT WITllHELD . --- -~ � P 1,429.97 1. Malayan Insurance Co.i Inc. (Exh. "C", Pe titioner) 2. Angara Concepcion Regala & 73,588.00 Cruz Law Office (Exh. "D", I . titioner) 3. MJ Development Corp. 1,155.00 (Exh. "E", Petitioner) 4. Philippine Global Commt,mication,Inc. 6,578.94 (Exh. "F", Petitioner}� T 0 T A L � � � � � � � � . � ~~~:!1~~,;~~ Th~ instant petition fo~ review was filed only on April 13, 1904, or more than two ( 2) .Years from the 13 "{ . .~ .. .. ..,.,. . �.

-- DECISION - CTA CASE NO. 3767 - 5- dates of payment or remittance of the alleged overpaid income tax withheld at source. We have no doubt that petitioner's claim for refund had "already prescribed pursuant to Section 292 of the Tax Code of 1977, as amended. Moreover, as decided by this Court in the case of - :. Pacific Procon Limited, C.T.A. ~ase No. 3200, dated January 25, 1984, affirmed by t~~ Supreme Court by virtue of its denial of the petition for .teview filed by peti- tion0 r (G.R. No. L-68013, Nov. 12, 1984), held that: . \ "The two-year period for , judicial recovery of the tax alleged t6 have _-been erroneously or illegally paid or col- lected is a positive and mandatory requir e ment of Section 306 (now Section 292) of the Tax Code. (Gibbs vs. Collector of Internal Revenue, L-13453, _ Fe bruary 29, 1960, 107 Phil. 232; ~uagua Electric Light Plant Co., Inc. vs. The Collector of Internal Revenue & The Hon. Court of Tax Appeals, supra.) . It is prescriptive (College of Oral & Dental , Surgery vs. Court of Tax Appeals, 102 Phil. 912; Panay Electric-~s. Collector of Internal Revenue, 103 Phil. 819: Lu Do & Lu Ym vs~ tentral Dank of the � Philippines, 108 Phil. 566), and in order to confer jurisdiction upon the court, it is necessar.y that in all cases the suit must be brought within the statutory period of two years and the requirements provided for in Section 306 (now 292) _l 1st have been duly complied with. (Collector of Internal Revenue vs. 136 I I �� � � ~

-- DECISION CTA Cl\SE NO. 37tJ7 - 6- The Court of Tax Appeals & Hume Pi~e & ~sbestos Co., Inc., supra.) . More- over, the provision is mandatory and is not subject to any q~alificati6n, hence, it applies regardless - of the conditions under which payment may have been made." (IBM Philippines, Inc. vs. Commissioner of Internal Revenue, CTA �. Case No. 2855, February 21, 1981, citing Guagua Ele ctric Light Plant Co., Inc. vs. Collector of Internal Revenue, 1 SCHA 1221.) "x x x While . the gro~s income ~-� and deductions declared in ~ne quarter are now allowed .to be cumulated with those of t he succeeding quart~rs of the s a me taxa! 'e year, and the tax-' paid for any one quarter on cumulative basis is creditable against .the quarti3rly tax liability for ea~h ~ucceedi~g ' quarters of the taxable y e ar, the law �h~s pl~ced, as initiated by Presidential Decree No. 30, all corporations on a tax withholding system of income tax payment on a quarter- ly basis. (Sees. 85, 86 & 87, National Internal Hevenue Code: Manila Central University vs. Commissioner of Internal Revenue, CTl\ Case No. 2848, October 19, 1978.) l. "N e verth e less, ev e n on the assumption that the sum of P29,408.34 as income tax for the first quarter of , l978 remained outstanding as a refundable amount until the incurrence of a loss at the end of the taxable year, or until the filing of the final nnd adjustment return, the J?rovision of Section 292 that 1 �In any case, "no such suit or proceeqing shall be begun after the expiration of two years from the date of payment of the tax or pgnalty regard- less of any supervening cau s e that may arise after payment' would still foreclose 13 3 ' ' 'i" ''l flll � . �

w DECISION CTA CASE NO. 3767 - 7- this Court's jurisdiction to take cognizan<~ of the instant case. The two- yeu r :�rcscriptive period for bringing the s uit for refund to the Court would still be reckoned from the da te of payment of the tax on May 30, 1978. X X x" Finally, claims for refuhd are co~struecl strictly against claimants since a claim for refund partakes of t.lle nC~. tu re of an except ion � for tm<a t ion (Commi ssi.oner � .. of Internal Revenue vs. L e clesm~~ 31 SCRA 95) ~ and it is incurnben t: upon pe ti tione r to show that �it has com- plied with the provision of Section 292 of the Tax Code as amended and failur e to susta1~ ~'. , said burde n is fatal t.o i ts claim for refund�. \'HIEREFOI:.E , this instunt case fil e d by petit.ioner is hereby dis ��io sed. With costs against petition~i. SO ORDERED. ~ Quezon City , Metro Manila , \VE CONCUH: 14Cr ' l ' lfl

- .. .. DECISION CT~ CASE NO. 3767 - 8- CE RT t F I CAT I 0 N I hereby certify ~hat this decision was reached after due consultation among the members of the Court .; '� of Tax Appeals in accordance ~i~h Section 13, Article VIII of the Cc ~ Gtitution. ~~~� l- AMANTE ILLER Pres id :L1g Judge Court 6~ Tax Appeals \ .. 14 1