Commissioner of Internal Revenue v. PNZ Packers, Inc.

THIRD DIVISION [CA-G.R. SP No. 35087. September 28, 1994.] (C.T.A. Case No. 4835) COMMISSIONER OF INTERNAL REVENUE , plaintiff-petitioner , vs . PNZ PACKERS, INC., and THE COURT OF TAX APPEALS , defendants-respondents . D E C I S I O N GUINGONA , J p : We have before Us a petition for review which seeks the reversal of the decision of the Honorable Court of Tax Appeals in CTA Case No. 4835, the dispositive portion of which reads as follows: WHEREFORE, We find the petition meritorious. Respondent is hereby ordered to refund or issue a tax credit certificate in favor of petitioner PNZ Packers, Incorporated in the amount of P298,658.00 representing overpaid income taxes for the calendar year 1990 and 1991. Without pronouncement as to costs. (CTA Decision, p. 7) The facts of the case at bar are narrated by the questioned decision of the Court of Tax Appeals, Thus: This case involves a claim for the refund of P289,658.00 allegedly representing overpaid income taxes for the years 1990 and 1991 pursuant to Section 230 of the Nat iona l Internal Revenue Code. Petitioner is a corporation duly organized and existing under the laws of the Philippines engaged in the business as a packing contractor. Petitioner is principally engaged in the processing and packing of milk products for PNZ Marketing, Incorporated (PMI), an affiliate. For the calendar year ending December 31, 1990 petitioner filed its Annual Corporate Income Tax Return on April 13, 1991 showing a net loss of P550,587.00 (Exhs. A and A-3). However, it paid for the first quarter ending March 30, 1990 the income tax amounting to P188,152.00 (Exhs. B, C and E) and the amount of P35,670.00 was withheld by PNZ Marketing, Inc. from petitioner representing 1% of the contractor's fees paid amounting to P3,566,970.00 (Exhs. A-5 and D). Petitioner likewise included as part of its refundable income tax the amount of P44,137.00 representing prior year's (1989)excess credit. Thus, petitioner's 1990 Income Tax Return showed a total refundable amount of P267,959.00 which was applied as tax credit to the succeeding year. The succeeding year 1991 also proved to be fruitless for it still incurred losses amounting to P152,619.00 (Exh. F). During the year, a 1% tax on contractor's fee was withheld from petitioner in the amount of P74,836.00 (Exh. G). Petitioner filed on April 15, 1992 its 1991 Income Tax Return showing a refundable amount of P342,795.00, inclusive of the prior year's excess tax credit of P267,959.00 and the tax withheld for 1991 in the amount of P74,836.00. On July 8, 1992, petitioner thru its auditors filed a claim for refund or the issuance of a tax credit certificate in the amount of P289,658.00, representing overpaid income tax for the year 1990 and 1991, itemized as follows: Amount of Year Excess Tax Paid 1990 P233,822.00 1991 74,836.00 P298,658.00 ========== Petitioner did not include in its claim the amount of P44,137.00 representing its 1989 excess tax credit considering that the same have prescribed. Thus, only the first quarter payment for 1990 in the amount of P188,152.00 and the creditable tax withheld of P35,670.00 was claimed for 1990, totaling P223,822.00. For 1991, the creditable withholding tax of P74,836.00 was likewise included in the claim for refund and tax credit. Without waiting for respondent's decision on the matter, petitioner instituted this petition for review on July 30, 1992 pursuant to Section 230 of the Na tio nal Internal Revenue Code. The issue is whether or not petitioner is entitled to the refund of P298,658.00 as alleged overpaid income tax for the years 1990 and 1991. Respondent alleged that the petition states no cause of action for failure on the part of the petitioner to state in the petition that the tax collected was erroneous and illegal. Tax refund are construed strictly against the taxpayer. The burden is on the petitioner claiming for a refund or tax credit to show that the tax collected has been erroneously or illegally paid. Failure on its part to overcome said burden is fatal to its claim for refund or tax credit. Petitioner presented and offered in evidence the following documents which were properly identified by its witness: 1. 1990 Corporate Annual Income Tax Return together with its attachments consisting of: a. Audited Financial Statements; b. 1989 Annual Corporate Income Tax Return showing a refundable amount of P44,137.00; c. First Quarter Income Tax Return ending March 31, 1990 showing the amount of P188,151.99 as tax due and the payment thereof as evidence by BIR Confirmation Receipt No. B19910070 dated May 30, 1990; d. 1990 Certificate of Creditable Income Tax Withheld At Source (BIR Form No. 1743.1) showing a 1% tax withheld on contractor's fee of P35,669.70; and e. BIR Certificate dated October 7, 1992 showing that the amount of P188,151.99 was received by the Bureau of Internal Revenue. 2. 1991 Corporate Annual Income Tax Return together with its attachment namely: a. Audited Financial Statements; and b. 1991 Certificate of Creditable Income Tax withheld At Source (BIR Form No. 1743.1) showing the income tax withheld at source in the amount of P74,835.52; 3. Letter claim for refund or issuance of tax credit certificate dated July 2, 1992 filed with the respondent's regional office on July 8, 1992. Respondent failed to object or comment to the evidence presented by petitioner. Neither did she present any witness or evidence to rebut the same. She also failed to submit to the Court her memorandum discussing the merits of her claim that the petition states no cause of action instead she submitted the case for decision based on the pleadings. (CTA Decision, pp. 1-5) The petitioner has submitted for Our consideration the following lone issue: Whether or not petitioner is entitled to the refund of P298,658.00 as alleged overpaid income taxes for the year 1990 and 1991. (Petition, p. 5) Contending that the Tax Court's decision is contrary to law, petitioner Commissioner of Internal Revenue argues thus: The aforementioned decision of the Tax Court is contrary to law, considering that it is anchored principally upon the documentary evidence presented by the respondent PNZ Packers, Incorporated. The aforesaid documentary evidence are self-serving and immaterial to the facts and issue to the instant case. The Tax Court failed to establish on the merit the admissibility and weight of the above-mentioned evidence and likewise failed to aver the provisions of the law upon which the refund in question is anchored upon. The Tax Court sweepingly stated that after a careful examination of the evidence presented by PNZ Packers, Incorporated, the Honorable Court finds that the burden of proof in calling for refund or tax credit has been overcome by PNZ Packers, Incorporated, and that the evidence is sufficient to grant its claim for refund or tax credit. Actually, no sufficient evidence was ever offered by PNZ Packers, Incorporated. (Petition, p. 6) This Court finds the petition before Us to be bereft of merit. Contrary to the petitioner's assertion, We find the documentary evidence presented by the private respondent and enumerated in the Court of Tax Appeal's questioned decision (supra) to be material in the determination of the case at bar. As aptly observed by the court a quo , Section 230 of the National Internal Revenue Code is applicable to the instant case (Decision, p. 6). It is not only in instances when the taxes are paid erroneously or illegally, but also in case where excess tax payments are made, that recovery of taxes paid should be effected by complying with the two-year prescriptive period provided for in the cited Section 230. In Commissioner of Internal Revenue vs. TMX Sales, Inc. (205 SCRA 184, 186) where TMX Sales declared an income of P571,174.31 for the first quarter of 1981 although at the end of the taxable year (1981) it found itself with a net loss of P6,156,525 and resultantly asked for a refund of P247,010 representing overpaid income tax, the Honorable Supreme Court applied the two-year prescriptive period found in Section 230 of the Tax Code. The same ruling vis-a-vis the two-year prescriptive period was made by this Court in Servicewide Specialists, Inc. vs. Commissioner of internal Revenue, et al., CA G.R. SP No. 25893 (February 14, 1992). The other challenges made by the petitioner (PNZ Packers' alleged failure to offer sufficient evidence in support of its claim and the Court of Tax Appeal's alleged failure to establish on the merit the admissibility and weight of the documents presented by herein private respondent) deserve scant consideration by this Court. We note that the petitioner through counsel, in her single page argument, contented herself with mere manifestation with absolutely nothing to support the same. It is a fundamental and elementary rule that manifestations do not constitute evidence. It is the petitioner who has made sweeping unsupported statements as if the said petitioner expected this Court to figure out for Ourselves why the evidence presented by the private respondent (which parenthetically We find and declare to be sufficient to sustain its claim) is insufficient and why the Court of Tax Appeals had failed to establish on the merit "the admissibility and weight of the above-mentioned evidence". This Court takes cognizance of the fact that, as pointed out by the Court of Tax Appeals in its Resolution of July 14, 1994 (which denied herein petitioner's motion for reconsideration): . . . Worse, the records of the case would show that respondent's counsel waived the presentation of evidence and moved to file a memorandum in support of his case which he never did. For such failure of the respondent to submit the memorandum within the period granted by the court, the case was considered submitted for decision. (CTA records, pp. 117, 128). Note that respondent also failed to file any comment/objection to petitioner's formal offer of evidence within the time given her by the court. (CTA records, p. 107) . . . (Resolution, p. 3) In view of the foregoing, We find the instant petition for review, as the Court of Tax Appeals had found herein petitioner's motion for reconsideration, to be "pro-forma and intended to delay the proceedings" (Resolution, p. 2) PREMISES CONSIDERED, the instant petition for review is hereby DISMISSED. SO ORDERED. Buena and Barcelona JJ., concur.