F. Jacinto Group, Inc. v. Commissioner of Internal Revenue

[C.T.A. CASE NO. 5349. April 1, 1998.] F. JACINTO GROUP, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N This is a judicial action for the refund of the sum of P972,780.42, representing overpaid creditable withholding tax for the calendar year ended December 31, 1993. The facts are undisputed. Petitioner is a domestic corporation duly organized and existing under the laws of the Philippines. It is engaged in the business of rendering management services with office address at F. Jacinto House, #116 Rada Street, Legaspi Village, Makati, Metro Manila. For the year 1993, petitioner filed its annual income tax return on April 12, 1994 showing taxable net income in the amount of P912,461.99, an income tax liability of P319,361.70 but with a refundable sum of P2,735,201.03 arising from its 1992 carried-over excess tax credit of P1,465,538.00 and the 1993 creditable withholding tax at source in the sum of P1,589,024.73. The details of which are as follows: Income: Services fees (Schedule 2) P31,781,382.56 Miscellaneous income (Schedule 3) 178,050.00 Total P32,378,318.04 Less: Deductions (Section D) 31,465,856.05 Net Income P912,461.99 =========== Tax Due P319,361.70 Less: a. Prior years excess credit P1,465,538.00 b. Quarterly payments made this year 0.00 c. Creditable tax withheld 1,589,024.73 Total P3,054,562.73 Amount Refundable P2,735,201.03 =========== Petitioner opted to carry over this overpaid income tax in the amount of P2,735,201.03 as tax credit for the succeeding taxable year 1994. However, out of the amount of P2,735,201.03, petitioner alleged that only the sum of P1,589,024.73 was carried-over and applied to income tax liability of 1994 in the amount of P616,244.31. The balance of P1,146,176.30 (P2,735,201.03 less P1,589,024.73) representing 1992 excess income tax payment was the subject of CTA Case No. 5231 which was already decided in favor of petitioner and has reached its finality through this Court's Entry of Judgment, dated September 5, 1997. Petitioner, on April 10, 1996, filed a letter-claim for refund with the Bureau of Internal Revenue pursuant to Section 69 of the National Internal Revenue Code, as amended, with respect to the balance of P972,780.42 out of the 1993 excess creditable withholding tax of P1,589,024.73 after applying the amount of P616,244.31 as income tax payment for 1994. cdll On April 11, 1996, a day after filing the administrative claim for refund, petitioner lodged its appeal with this Court in order to beat the running of the two-year prescriptive period to claim for the refund of excess income tax payment in accordance with Section 230 of the National Internal Revenue Code, as amended. The sole issue to be resolved by this Court is whether or not petitioner is entitled to the refund of the amount of P972,780.42, representing overpaid income tax for the year 1993 resulting from an excess payment of creditable withholding tax at source. The issue besetting this Court is nothing new. Earlier, we have already decided in favor of the same petitioner a number of claims for refund involving the same facts and issues, to wit: CTA Case Year Amount Date Entry of No. Involved Granted Decided Judgment 4971 1990 P1,096,272.00 04-05-95 06-29-95 5086 1991 965,628.00 01-16-97 02-02-97 5231 1992 1,096,272.00 08-15-97 09-05-97 In these previous cases, We have already laid down the basic requirements needed for a grant of refund of creditable withholding taxes, to wit: 1. that it filed a claim for refund within the two (2) year period as prescribed under Section 299 (now 230) of the National Internal Revenue Code; 2. that the income upon which the taxes were withheld were included in the return of the recipient; and 3. the fact of withholding is established by a copy of statement (BIR Form 1743.1) duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom. ( Sec . 10 , Rev . Reg . 6-85 ; see Citytrust Finance Corporation vs . The Commissioner of Internal Revenue , CTA Case No . 4134 , November 11 , 1991 ; and Citytrust Finance Corporation ( Formerly Investor ' s Finance Corporation/FNCB Finance ) vs . Commissioner of Internal Revenue , CTA Case No . 4046 , February 24 , 1993 ). A perusal of the evidence submitted by petitioner reveals that it has successfully met the above requirements. The claim for refund was timely filed within two years from the date of payment of the tax. Its claim for refund with the Bureau of Internal Revenue was filed on April 10, 1996 (Annex O, pp. 25 and 26, CTA records) and its Petition for Review with this Court was filed on April 11, 1996. The two-year period commences to run on April 12, 1994, the date when petitioner filed its final adjustment return for the year 1993 ( Commissioner of Internal Revenue v . TMX Sales , Inc . et al ., G . R . No . 837736 , January 15 , 1992 ). The income upon which the creditable withholding taxes were paid were included in petitioner's 1993 Corporation Annual Income Tax Return under Schedule No. 2 Section A (Exhs. E and E-1, p. 60, CTA records). The 1993 creditable withholding taxes were duly supported by Certificates of Creditable Withholding Tax at Source [BIR Form 1743.1] (Exhs. F, G, H, I, and J, pp. 62 to 65, CTA records) and were proven to have been remitted to the Bureau of Internal Revenue by copies of the Monthly Remittance Returns of Income Taxes Withheld of the respective withholding agents (Exhs. P, Q, R, S, T, U, V, W, X, Z, AA, BB, CC, DD, EE, FF, GG, HH, II, JJ, KK, LL, MM, NN, OO, PP, QQ, RR, SS, TT, UU, VV, WW, XX, YY, ZZ, AAA, BBB, CCC, DDD, EEE, FFF, GGG, HHH, III, JJJ, KKK, LLL, and MMM, pp. 72 to 121, CTA records). In fact, respondent did not have any objection with respect to petitioner's entitlement to the refund. It even presented in evidence the revenue examiner's report on the claim for refund of petitioner for the year 1993 recommending the granting of the amount of P972,780.42 (Exhs. 2, 2-a, and 2-b, pp. 137 and 138, CTA records), pertinent portions of which reads as follows: Considering that the herein taxpayer was already investigated for the year 1993 as per attached report of investigation, and that it appears from the above cited facts that the said claim for refund is valid and legitimate, it is therefore recommended that the claim for refund in the amount of P972,780.42 be granted. We agree with the aforequoted recommendation. Below is a tabular computation of petitioner's excess income tax payment for the year 1993: Amount of Amount of Withholding Agent Income Payment Tax Withheld Exh. Jacinto Iron & Steel Sheets Corp. P918,108.00 P45,888.00 F Camara Steel Industries, Inc. 9,546,590.00 477,324.00 G Jacinto Press Coat Corp. 478,494.55 23,924.73 H Mindanao Steel Corporation 14,512,152.00 725,592.00 I Beatriz Marketing & Trading Corp. 6,326,016.00 316,296.00 J Total P31,781,360.55 P1,589,024.73 =========== Less: 1994 income tax liability 616,244.31 AMOUNT REFUNDABLE P972,780.42 =========== WHEREFORE, finding the petition for review meritorious, respondent is hereby ORDERED to REFUND in favor of petitioner the sum of P972,780.42, representing overpaid income tax for the year 1993. llcd SO ORDERED. (SGD.) RAMON O. DE VEYRA Associate Judge WE CONCUR: (SGD.) ERNESTO D. ACOSTA Presiding Judge (SGD.) AMANCIO Q. SAGA Associate Judge