THE PHILIPPINE BANKING CORPORATION (now known as GLOBAL BUSINESS BANK, INC.) v. COMMISSIONER OF INTERNAL REVENUE

REPUBLI OF T H E PHILIPPINES COURT OF TAX APPEALS Q EZON CITY THE PHILIPPINE BANKI NG CORPORATION (now known as GLOBAL BUSINESS BANK, I NC.), Petiti oner, -versus- C.T.A. CASE NO. 6280 COMMISSIONER OF INTERNAL Promulgated: REVENUE, AUG 16 2001~~ Responde nt. X--------------------- - - -- ------ -- --------------------------X RE SO LU T I ON On June 7, 2001 , Respondent fi led throu gh registered mail a "Motion to Dismiss" on the ground of lack of cause of acti on. According to Respondent, a perusal of Petitioner's 1998 Corporate Annual Income Tax Return would show that Petitioner marked "x" on the box correspon ding to the ph rase "To be carried as tax credit next year" and since an applicant for tax refund or tax credit is no longer allowed under Section 76 of the 1997 Tax Code, the Petiti oner has no cause of action against the Respondent for the grant of a tax refund. Petitioner opposed said mouo n on June 25, 2001 and at the same time filed a "Motion to Declare Respondent in Default' '. In its motion, Petitioner alleged that Respondent had until May 18, 200 ! within which to fil e his Answer to the Petition and to date, no Answer has been filed ; that the Motion to Dismiss cannot be considered since it

RESOLUT ION - CTA CAS E NO . 6280 PAGE2 was fil ed on June 7, 200 1, way beyo nd the May 18, 2001 deadline for fi ling a responsive pleading and that Respondent should now be considered to be in default on account of his failure to fi le his Answer w ithin the reglementary peri od . Peti tioner further argued that the motion contains a defective notice of heari ng as it failed to state the date and time fo r the hearing of the motion. We shall resolve first Petitio ner's " Moti on to Decl are Respondent in Default" because, if indeed, Respondent is in default then its "Mot ion to Dismiss" need not be passed upon. Records show that on May j . 200 I. Respo ndent fil ed through registered mail a " Motion fo r Extension of Time to Fi le An swer�' wh ich was rece ived by this Court only on May 18, 2001 (p. 137, CTA records ). Throu gh an ord er dated May 2 1, 200 1, the Court granted Respondent ' s motion and was give n a perio d of fi fteen (15) days from receipt of the said Order to fi le his Answer. Si nce Respondent rece ived the Order on May 23, 2001 , then he had until June 7, 2001 to fi le his Answe r. Veril y, therefore, the "Motion to Di smi ss" by Respondent sent th rough registered mail on June 7, 200 1 was timely fil ed and Respondent cannot be con sidered to be in defa ult. As to Petitioner's argumen t that the mot ion contains a defective Notice of hearing, the Supreme Court, in the case or Su n Un Giok vs. Matu sa, et. at. , 101 Phil. 727, held : "The notice incorpon1tcd in the motio n to di smi ss of counsel for the defendant requests merely thdt the motio n be submitted fo r the consideration of the Court and as soon thereafter as counsel can be heard, and contains a certification that copy of the motion was sent to the co unsel of plaintiff. Granting that the notice is defective for faiIure to specify the exact date when the motion to dismiss should be heard, the Court in taking cognizance of the motion on the date set for the heari ng the reof, cured wh atever iota of defect such pleading may have l18d. speci a ll y if it is taken into acco unt that upon

RE SOLUTION- CTA CASE NO. 6280 PAGE3 receipt of the motion to dismiss, plaintiff was properly notified of the existence of said pleading. "What the law prohibits is not the absence of previous notice, but the absolute absence thereof and lack of opportunity to be heard" (Borja vs. Tan, 93 Phil., 167; Duran Emoate vs. Penolio, 93 Phil. , 782). We proceed to Respondent ' s "Motion to Dismiss." Section 76 of the Tax Reform Act of 1997 provides in part: "Section 76. Final Adjustment Return. - x X X In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry-ov�>r and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor." (Emphasis supplied) The foregoing provision of law is clear and leaves no room for doubt. It cannot be interpreted otherwise than that an option once exercised, the same shall be considered irrevocable. Since Petitioner has already signified its intention to carry-over to the succeeding year its unutilized creditable taxes withheld for 1998, then it is no longer allowed to pursue the instant claim for refund . The case of Reliance Commercial Enterprises, Inc. vs. CIR (CTA Case No. 5701, January 4, 2001) is inapplicable because the said case involves a claim for refund of overpaid income tax involving the fiscal years ended September 30, 1996 and September 30, 1997, when the amendment introduced by the Tax Reform Act of 1997 was not yet in effect.

RESOLUTION - CTA CASE NO. 6280 PAGE4 Finally, while We agree with Petitioner that Respondent 's "Motion to Dismiss" should have been anchored not on lack of cause of action but failure to state a cause of action, this Court is nonetheless not precluded from ma_cing an order of dismissal when the complaint discloses facts sufficient to defeat the claim. WHEREFORE, premises considered, Petitioner's "Motion to Declare Respondent in Default" is hereby DENIED. Respondent Motion to Dismiss is hereby GRANTED . The instant Petition for Review is accordingly DISMISSED for fai lure to state a cause of action. SO ORDERED. ~~ ~ ~>.c....~ Associate Judge ERNESTO D. ACOSTA Presiding Judge