CTA Case No. 3761 (Decision)

.~::.PuB L iC OF J'liE .l"t11Lll'r ���. ~OURT OF TAX APPEA~ ~U�ZON Ci.,;tl GAGAYAN ELECTRIC POWER & L IGH T CO., INC., Petitioner, - versus - C.T.A. CASE NO. 3 76 1 CO~L''HSS IONER OF INTERNAL REV ENUE, Respondent. X- - - - ------X DE C I S I 0 N Submi tted tor decision in this case is the issue of jurisdiction, which has been ~aiscd as one of respond : t's affirmative defenses incor porated in his answer, filed on October 24, 1984. From the records . it appears that petitioner is a corporation duly organized and ..... . under the laws. CXlS'-lng .I t has its principal office at Suite A, 8th floor, Strata 100 Bldg., Emerald Avenue, Ortigas C G~.plex, Pasig, Metro Manila, and that said petitioner is a holder of a legis- lat ive franchise granted by Republic Act No. 3247, as amended by Republic Act Nos .. 570 and 602J, by virtue of which . it is engaged in tLe distribution of electric powE~ r in c ertain mL:n iL i pa l it ies in the Provinc e of hisamis Oriental and Cagayan de Oro . ity. (Pars. 1 and 3, Petition for Review, 5dmitted in Paragraph l , Answer, pp . 1 and 52 , CTA rec.)

DEC ISI ON - CTA CASE NO . 3761 - 2- ~ I n a letter o f petitioner dated J une 25, 1981, it reque sted responden t Commissioner of Inte r nal Revenue for a r ul i ng or c ertificat i on t o the e f fect that petition~r's i n come from t ime d eposits a n d depo sit substitu te s a re exemp t fr o m th e 2 0% withholdi ng tax under Revenue Regulation No . 1 12 -80 , i mp l emen ti ng P.D. No. 1739. (pp . lO-ll, CTA rec . ) In reply t o the aforesaid letter, respondent on Sep tember 3, 1981 informed p :t i ~ ione r that exemption from all t axes and assessments under a legislative franchise is limited only t o tho se incorpe der i ve d from its '; usiness covered by t he franchise , a nd al l i ncome derived from any a c t i vity o r business not specified by the franchiJ r is sub j e ct t o i n c ome tax . (An ne x "C", pp. 13 -14 CT.l\ rec.) I n a letter of petitioner dated December 14, 1981, it .reques t ed responde n t t o clarify his stand on this matter si n ce t here were s eve r al occasions wherein ~etitioner wes e xempted on t he same i ssue rai sed by it . (Annex "D", pp. 15-17, CT.l\ rec . } In a nswe r t o t he clarification lelter, r~spondent wr o te � petitioner a le tter dated October 11, 1983, and r e c eived by the latter on March 9, 1984, informing peti- t ion e r t h at the inte r est yield from deposit ~ubstitutes (mon y mark 0t placeme nts) .a re not subject tq franc hi~e t a x but t o 20% wi thholding income tax under Se ct i o n 24 (c c) of the Tax Code. (~. nnex "E" pp. 18-19, C'I'A rec;

------- DECISION - CTA CASE NO. 3761 - 3- ..a l so see paragraph 11, petition for revi ew ~ dmitted i ~ paragraph ans~er , pages l and 52, CTA rec.) On Apr il 6 , l984f pet itioner interposed its a ppeal to the Court and r espondent, on Octobe r 24, 1984, filed hi s answer raising th e fo l lowing speci al and af~irmative defenses: 4 . Pe t it i oner has no t filed a claim for re f und or credi t with respondent Commissiorier of Inter nal Reve nue; therefore, this Honor able Court acqu i r e s no jur i f: , ,ic � i on over th e case ; 5. The peti tion sta ~es no cause of a ction. It fails to all ege the da te whe n the tax was paid7 4 6 . On e who claims t o be exempt fro m payme nt of a partic ular t ax must do so under clear and unmis t akable terms found in t he statute . As held by the S:..1preme Court in the c ase of Coi. n;" ssi o ner o f Internal Revenue vs. Guerrero, 21 SCRA 183; "x x x The r ule app li c: d with undevia t i ng rigidity in the Philippines is that f or a tax exemption to exist, it must be so categoric � lly dec lared in word ::.; th a t admit no doubt. x x x." 7. Exempt ion from all taxes and assessments unde r a legislative franchise is limited to income der i ved from busines s covered by the franchise. I nte,est i ncome which accr ~e s on petitioner's time depos it substitutes is an extranebus income derived fr om busi ness not specified i n the fr anchis0; 8. Petitioner's intere s~ income /yield from money mv rk e t plac ement s is su bje ct to income tax ; consequently, i t i s subj ec t to t he 2 0 ~ withh o lding tax imposed by Se ction 24(cc) of t he Tax Code, as a mend ed b y P.D . _o. l7 39i 9. Any amount claimed to ha ve bee n with- held must be shown to have been p id to, and received by, the Bureau of Internal Revenue ; 2 �!

DECI S ION - CTA CAS E NO. 3761 - 4- 10 . Tne c o ll e ction of the t a x was made in a c cordance wi t h law and reg ulation s on t he ma t t e r nd , t ~er ef ore , the same is no t r e f undab l e ; 11. I t is i ncumbent upon pet i tioner t o s how t h a t it ha s c ompl i ed with t he pr ovi s i o ns of Sec t i on s 29 2 a nd 295 o f the Ta x Code . (pp . 5 2 - 5 4 CTA r ec. ) Di d p e ti t ion e r f ile a writt e n c l a i m t o r re f und o r ta x c r ed i t b e for e t he Commis s ione r of Int e r n a l Reven ue pursu an t t o S e ct i on 292 of t h2 Ta x Co d e 1 P e tit ion e~ conte n d s that the two l e tt e rs' da t e d Jun e 25 , 1 9 8 1 and Dece mbe r 14 , 1 98 1, speci f i ca l l y as k i ng 4 to r a ru l i n g or c ert i fic a ti o n of wh e t h e r it i s ex e mpt fro m the 20 % wi t hho l ding t ax on i t s income from time depos it or de posi t s ubs titutes points only t o one purpose, v i z: that t he t a xe s wi thhe ld by r espon den t be refu nded t o t he petit i o ne r , becaus e t he sa id l etters in t e nded c le ar ly to r e co ;e r t he amou n t wi t hheld by r ~3pon dent , and , therefore, i t has c omp l i ed with t he requi r ement of Se c t i o n 2 9 2 of t h e Tax Cod e, a nd t h i s c our t ha s j ur is - d ic tion ove r t he ins t a n t c a se . We c an n o t subscri be to p e ti t ion er' s v i e w. Se ct i o n 2 9 2 o f the Nat i o na l I n t er n a l Re v enue Code p rovide s: Se c. 292. Re co~~~of tax er ron eo u s ly o r lll eq all v coll e c ted . No suit o r pr oceed ing s ha l l be -�ma in t aine d in an y court for t he rec ove ry of any ~ a ti o nal in te rnal r e v enue ta x he r eafter a l leged t o have been e rr one ou sly or i l l ega l l y a sse ss ed o r c ol l ecte d, of a n y pe na l ~y cl aimed to ha ve bee n c ollected withou t au t hor ity, o r o f any s um� alleged to h ave bee n e x c e s si v e or i n . 20

------------~==============~z=~~.-~ DECISION - CTA CASE NO. 3761 - 5- . manner wrong fully c o l lected, until a claim for re fund or credit has been d uly filed with the Commission e r of I nte rr.al Re v enue i but s uch suit or proce eding may be mainta ine d, whet her c r not such tax, pena lty, or sum has been paid under protes t o r du ress . In a ny case, no such suit or pr oceeding sha ll be begun after the expir at io n t wo years from the date o f p ayment of the tax or penalty regardles s of any su per veni n g c a u se t hat may ar i se after p aymen t: Provided, howe v e r, That the Commissioner may eve~ without a writt e n c l a im there for, refund or cr e dit ~ny tax, whe r e on the fact of th e return upo n which payment was ma de , such p a yment appears c learly to have be~ n er r oneously pa i d . The law i 3 clear and explic it. The above law requires a taxpayer to file a written c laim for refund 4 before t he Commiss ioner of Internal Revenue within t he period of t wo years fro m the date t he tax was e r r::.>� � neously or illegally colle cted. The aforesaid two letters of petitioner addres se d t o the Commissio ne r of Interna l Revenue are not claims for refund or tax credit as contemplated under said Sect ion 292 of the Tax Code . A clo s e scrutiny o f the afo resaid l et ters sh ow that peti t ioner merely req ues t e d fo r a r uling or a certif i - catio:1 on the question as to �whether 1 t is ex empt f rom the 20 % tax withheld from its i ime deposi t and deposit � s ubs titutes. Surely, pet itioner may have the view of having t he said withheld taxes refunded to i t. But tl is in te nt i o n was .1eve r c lea!:" ly or expressly manifes t ed by petition er b y me ~ns of the filing o f a written claim seeking clearly the r efund o f e r roneous or i l leg a lly 2o o

DECISION - CTA CASE NO . 3761 - 6- collecte d taxes with the Commissioner.o~ Internal Re v enue as required under Section 292 of tbe Tax Code. Se ttled is th0 rule that a claim fo r refund as contemplated in the above quo ted provision of law, ha s been defined as a document filed within t he statutory p eriod in which� tl].e !:_axpayer_ has ind icated with r ea sonable clarit y th at h e i s demandins ~ ::_e tur_n of o veroaid taxes and the groun6s upo ~ which he j s mak i .g his dema n d . (Julia V. Forhan, 45 BTA '/99) Nowhere in the s aid 4 l e tters of petit ione r which s how, with defi n iter ess , a demand for the refund of the a mount of ta}~es alL 9 �' d to hav e been erroneously.or illegally paid, and which ultimately gives notice to the Gove rnment t hat s uc h collec t ion of taxes are questic ned or sought to be ref undeC; and if lhe taxes are truly erroneously or illegally paid , th en the co ll ec ti on there of be corr ec te ~ , or the t axes otherwise refunded. (Bermejo o r Coll. GR L-3029, Jul~ 29, 1950.) WHEREFORE , petit i oner havin f a iled to file a � proper writt e n claim fo r refund for erron e ously o~ illeg a lly paid taxes be f ore the Commiss ioner of Inte r nal Revenue as man d ator ily r equi r ed un der Se ction 292 of t he Tax Code , this Co ur t hGreby dismisses this case for lack of jurisdic tion.

DECISION CTA CASE NO. 3761 - 7- SO OIWER.ED . Quezon City, Metro Manila, October JO, 1985. / , , "~"-L.,.;- k.~;-;)~ ~ C "V1 ~~t."""J 1.1.t.1. A...Nml.o..:-J,._e R('-)AQJ u �Jr..tp\J Associate Judge l�7E CONCUR: atWOL."~- � ~ ~ /) ..l\ft"u"'.NTE FILLER.../ Pres id._nq Judge 7fl}-;~~JX(( ?,zQ. ARE_;,;Vs~)> As soc ia te ,J udge 20 b