JS Steel Corp. v. Commissioner of Internal Revenue

[C.T.A. CASE NO. 5520. January 12, 2000.] JS STEEL CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N This is a case involving a claim for refund of excess or overpaid income tax in the amount of P3,159,687.00 for the calendar year ended December 31, 1995. Petitioner is a domestic corporation engaged in the manufacture of steel blanks for use by manufacturers of automotive, electrical, electronics in industrial and household appliances. Petitioner filed an Amended Corporate Annual Income Tax Return on June 4, 1996 (Exh. A) declaring a net taxable income of P9,461,597.00 (Exh. A-1), tax credits of P6,471,246.00 and tax due in the amount of P3,311,559.00 (Exh. A-2) Petitioner also reported quarterly payments for the second and third quarters of 1995 in the amounts of P2,328,747.26 (Exh. C) and P1,082,108.00 (Exh. B), respectively. It is the proposition of the Petitioner that for the year 1995, several of its clients withheld taxes from their income payments to Petitioner and remitted the same to the Bureau of Internal Revenue (BIR) in the sum of P3,159,687.00 (Exh. A-3). Petitioner further alleged that due to its income/loss positions for the three quarters of 1996 (Exhs. CA, CB, CC), it was unable to use the excess tax paid for and in its behalf by the withholding agents. Thus, an administrative claim was filed by the Petitioner on April 10, 1997 (Exh. CD) for the refund of P3,159,687.00 representing excess or unused creditable withholding taxes for the year 1995. The instant petition was subsequently filed on April 18, 1997. Respondent, in his Answer, averred, among others, that: 1) Petitioner has no cause of action; 2) Petitioner failed to comply with the procedural requirements set out in Section 5 of Revenue Regulations No. 12-94; 3) It is incumbent upon Petitioner to prove by competent and sufficient evidence that the tax refund or tax credit being sought is allowed under the National Internal Revenue Code and its implementing rules and regulations; and 4) Claims for tax refund or tax credit are construed strictly against the taxpayer as they partake the nature of tax exemption. To buttress its claim, Petitioner presented documentary and testimonial evidence. Respondent, on the other hand, presented the Revenue Officer who conducted the examination of Petitioner's claim and found Petitioner liable for deficiency value added tax (see TSN Feb. 4, 1998 & March 4, 1998). Petitioner also presented rebuttal evidence. The sole issue submitted for Our determination is whether or not Petitioner is entitled to the refund of P3,159,687.00 representing excess or overpaid income tax for the taxable year 1995. We rule against the Petitioner. cdll Records will disclose that for the year 1995, Petitioner had total tax credits of P6,471,246.00. The tax due for the period was P3,311,559.00. Hence, the amount of P3,159,687.00 appears refundable. Section 69 of the Tax Code, as amended, provides: SEC. 69. Final Adjustment Return . Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either : (a) Pay the excess tax still due; or (b) Be refunded the excess amount paid, as the case may be . (Emphasis Supplied.) Accordingly, the said excess amount of P3,159,687.00 can only be applied to the tax liabilities of the succeeding quarters of taxable year 1996. However, it appears on record that Petitioner submitted only the three quarterly returns for the year 1996. It is emphasized that these are insufficient proofs that indeed the excess tax credits of 1995 were not utilized in 1996 due to its major loss position on the third quarter thereof. There still remained the fourth quarter of 1996 which would reflect the financial position of the company for that particular period. We clearly note that the claim for refund involves the year 1995 and this case was filed only on April 18, 1997. It is logical to assume that the 1996 Annual Corporate Income Tax Return had already been filed on April 15, 1997, at the latest. Furthermore, Petitioner finished the presentation of its evidence only on September 25, 1997. It had therefore more than sufficient time to study its case and to know what documents need to be submitted to fully substantiate its case. Besides, this is not a case of first impression and Petitioner should likewise know or be aware of the evidence necessary to prove its claim. In short, the evidence submitted by the Petitioner was not sufficient. We have no way of determining if the amount of P3,159,687.00, subject of this claim, remain unutilized in the succeeding taxable year of 1996. A claim for refund is in the nature of tax exemption and should be construed in strictissimi juris against the taxpayer ( Commissioner of Internal Revenue vs. Tokyo Shipping Co. Ltd ., 244 SCRA 332.) LexLib WHEREFORE, in the light of the foregoing, the instant Petition for Review is hereby DENIED for insufficiency of evidence. SO ORDERED. (SGD.) RAMON O. DE VEYRA Associate Judge WE CONCUR: (SGD.) ERNESTO D. ACOSTA Presiding Judge (SGD.) AMANCIO Q. SAGA Associate Judge