CTA Case No. 5082 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ORANBO REALTY CORPORATION, Petitionet, vel�sus C.T.A. CASE NO. 5082 COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. l6J9 JAN ---= x - - �- - - �- - - - - - -- - -�� -- -- - .... �- �- ){ DECISION This appeal involves petitioner's claim for refund :.:n tax ctedit of the sum of P922,311.00, overpaid creditable withholding tax for calondar year ended December 31, 19'31. Petitioner Oranbo Realty Corporation is 3, domestic corporation duly organized and existing under the laws of the Philippines with business address at 4th Floor, Sycip Law All Asia Bldg. , Paseo de Roxas, Makati, Mtro Manila. During the calendar year 1991, petitioner leases its p�ropetties to Atis Philippines, Inc. Inc. from which it realized a total rental income in the amount of P19,761,612.00 broken down as follows:

DECISION - C.T.A. CASE NO. 5082 LEf.:lSEE AMCH..Ji'.!T Al�is Philippines F�l':J, Lfb:l., SL:::. 00 SehvJan i, Inc. Totc::d 300 000.00 f';;�l'J, 7b1, i.:.:. :tz::. 90 Petitioner alleged that out of the income payments of Aris Philippines, Inc., a 5 expanded withholding tax was deducted by the latter in the sum of (P19,4b1,612.00 X 5). 15, l'::Y:J�::, petitionet filed it:; income ta>< return for the calendar year ending December 317 l'YJ 1 reflecting a net taxable income of P145,058.00 with a income t a>< liability of <P145,058.00 x 35%) but with a refundable income tax in the amount of P922,311.00 arising from the unutilized portion of the 5% expanded withholding tax from Aris Philippines, Inc., detailed as follows: I NCOIYIE: Inc. P1';3, L1C:l, GJ.;:. 00 ?-'kis Philippines, :.:�;oo, ooo. oo t:Jehwani, Ir\c. l.f. r\FI(:. . 00 JYiiscellaneous Total P l'J, 1 G h 1 i1�'J fl .. 00 LESS: DEDUCTIONS l'J. c.;::� :L 1,1,0 ., (l(l NET TAXABLE INCOME ::� t-L- n . (I TAX DUE P 50, T/0. 00 �J1�::. on:t. on LESS: 5% CREDITABLE WITHHOLDING TAX '::); :�..::.;:_1 2 � (!() AMOUNT REFUNDABLE P This overpaid income tax for 1991 was not utilized by petitioner in the succeeding taxable year 1992. Instead,

DECISION - C.T.A. CASE NO. 5082 3 it opted to file a written claim for refund with the Bureau of Internal Revenue on 1'-)pti 1 �::�CI L. \.J. '1 Howevet, the inaction of respondent on its claim for refund/tax credit compelled petitioner to file the instant petition for review on March 28, in ordet to preserve its right to judicially claim for the tefund of excess payment of creditable withholding tax pursuant to Section 230 of the National Internal Code, as amended. While the case was CC:\USe the immediate investigation of petitioner ' s request by virtue of a Referral Letter No. G447/4b1 , dated November 14, 1'394, issued to Revenue Enforcement Officer Roberto Baquitan <Exh. 1 of tespondent, p. i'i�O, CTr-:1 tcccncls). On November 21, 1'3'34, m?mot;,:ndum of investigation was served by said revenue officer finding the petitione�r� lible for deficiency income tt:.\H in the total amount of P10, 442,959. 84� <Exh. 3 of tespondent, pp. 142-144, CTA records). The issues posed before Us are as follows: 1. Whether or not the revenue examiner's report of investigation can negate petitioner's entitlement for the refund; and if not, . .-. Whether' or' not petitione1� ha; p�r�o v <'n its .:.: entitlement thereto.

DECISION - C.T.A. CASE NO. 5082 -4 - Anent the fil�st issue. petitioner is not entitled to the refund or' t a>< c1�ed it centering her position of investigation conducted by the revenue examiner on petitioner's income Pertinent portion of quoted as follows: "FINDINGS: We disallow the interest expense claimed for the following reasons: 1. Item A: Loan from BPI was incurred on July 1r:3, 1989 and the P'-wpose of th!} lo.::n was to finance the acquisition by UFJII�lUD (taxpayer) of all outstanding shares of stock of NOIYiA Devt. Cotp. (see Tel�m Loan nu��cewc:nt; dated July 19, 1989 page 116). rinancil statements from 1990-1991 however, du not teflect these tre:�nsaction!; (ptn�chc:st.' of !:illci ll !!; of stock and its disposition, the proceeds of disposition, gain/loss ftom disposition, 12tc.) This indicates that the loan is not only inexistent but also fictitious 01� siJ.J:.tl.::d;L'cl. The taxpayet should be lequjyed to submit pl'oof of the transations above. Furthermore, the loans obtained greatly exceeds the stock/equity of ORANBO and should have been treated as investment in stock y the creditor bank. In our jurisdiction we folluw the thin incorporation rule, whereby loan obtained in excess of capit c:ll i z < t i on !>1< 11 .. l:i:. e treated as equity contribution (capital investments on the part of the lender) nd not as liabilities. Item B. Loan from UCPD, for P27,ooo,ooo.oo, was incurred on August 15, 1990 for working capital requirements. Finncial statement for 1990 <Statement of Changes in

DECISION - C.T.A. CASE NO. 5082 -5 - Financial Position> showed that the txpayer acquired land in the amount of P25,821,745.00. Since the proceeds of the loan was used in the purchase of real estate above the correct treatment should be to capitalize the interest expense attributable to the purchase pri ce . It is a settled rule that the cost of money (interest expense) and all other expenses attending the acquisition of capital a s s e t s is a capital expenditure. Rationale behind this rule is that land do not depreciate, save only on some exceptionl cases, in fact in most instancs it appreciates. It is thet'efot'e pt'OP(i-' tt�,;.:\;\: tli<:: expenses incurred for the acquisition of said property should be capitalized as part of the cost and not charged to operation as current expenses. C. Due to Aris Philippines was series of advances way bad< in 1'384. (.:.h-is Phi l. U:Hn:; for short) is a 40% stockholder of ORANDO. n11 of this advances were used in the purchased land and in meeting working capital requirements. The records show t hat dvnccs taken are sometimes settled in kind. (dcion en pago) real estate. ORANBO leases all its land and building to ) s can b r s c: en A Fn S. < See Notes to 1 '3 '31 r.:.� IS > � above, financial profile, the company declared a taxable net� income of P1'5, OSB. 00 f�r-om f,Jl'D!'>S income of 1'3,884,420.00 or measly .00729 or seventh of one-percent. The land and building leased is valued at P95,744,856.00. The records do not show any lease contract between the parties neither is there a way to establish ot' standat'ds to be used to det e l�'min e INhc:t hti�' the amount of t'ental being paid by 1!dS i; based on commercial rates. ORANBO and ARIS are related taxpayers if not commonly owned by one or group of stockholder. While the taxpayer admits being 40 owned by ARIS the document however show otherwise. In various loan document entered into by ORANBO with third party <BPI & UCPB), it is being J�'ept'esented by l'k. Huu::- H.

DECISION - C.T.A. CASE NO. 5082 6- SCHROEDER as Chairman of ORANBO REALTY CORP. But in ORANBOs transaction with ARIS, this time ORANBO is represented by Mr. BENILDO G. HERNANDEZ as President, while ARIS is represented by Mr. ROLF H. SHRDEDER, as Pesident. It is a settled rule in this jurisdiction that payment of interest between related taxpayers are not deductible because of <possible) connivance. Taking all the above circumstances, we are left with no option but to recommend for the disallowance of the entire interest expenses claimed as deduction. In view thereof, we most respectfully ecommend that all the interest expenses claimed as deduction be disallowed and assessment based on adjusted taxable income be appoved. " We shall tackle each item one by one. Item ll. Loan with BPI. Respondent's revenue examiner is of the opinion that l' ro => not deductible. The financial statements for the 1'3'30-1'391 do not reflect the pt.ll�chase of i:lll the outstanding shares of stock of Development Thus, reaching to a conclusion thi::'lt such loan is fictitious and inexistent. In an earlier case of Oranbo Realty Corporat i on vs. CIR, CTA Case No. 4820, January 23, 19'35, this Court had the occasion to rule in this wise:

DECISION - C.T.A. CASE NO. 5082 -7 - "(P)etitioner CORANBOJ is a corporation duly organized and existing under the laws of the Philippines. It who l l v owns Noma Development Corporation, a domestic cornnration whose term of existence \.'Jas :;hort<nc;d to December 31, 1988 by an amendment of the Articles of Incorporation duly approved by the Securities and Exchange Commission on September 28, 198'3 <Exh. C). A Deed of Conveyance was executed by Noma Development Corporation <Assignor) and Oranbo Realty Corporation <Assignee) on June 2, 1990 with respect to the transfer of real properties together with its buildings and improvements without any consideration but by way of 1 iquidating dividends in p twsuanc e t o tIie dissolution of Noma Development Corporation (Exh. A) � (Undetlining supp 1 i ed) " Clearly, the acquisition of shates of stocl�< of' NCW!f:.) Development cannot in any way reflect in th< financi.::d statements of petitioner for the calendar years 1990-1991 because NOIYIA Development ear 1 i e1 dissolved on December 31, 1'388. As a matter of fact, the shates of stock acquired by petitioner were replaced by estate of NOMA Development by h'<:y of liquidating dividends due to its dissolution. Item B. Loan with UCPB. Respondent cantends that the e><pense to the loan from UCPB which was used to putchase land should be capitalized. behind such statement \.'Jas that "land do not derwec:i.c:"d;:e, only [ i J n some exceptional cases, in fact in most

DECISION - C. T.A. CASE NO. 5082 -8 - instances it appreciates. It is therefore proper that the expenses incut't'ed for the acquisition of said property should be capitalized as part of the cost and not chat'ged to operation as cUt't'ent expen;: es. " We do not agt'f?e. In t'efut.:\tion, opinion that the case of PAPER INDUSTRIES CORP. OF THE PHILS. <PICOP> vs. COURT OF APPEALS, COMMR. OF INTERNAL REVENUE AND COURT OF TAX APPEALS, G. R. Nos. 105'34'3-50; and COMMR. OF INTERNAL REVENUE vs. PICOP, THE COURT OF APPEALS AND THE COURT OF TAX APPEALS, G.R. Nos. 105'384- 85, � December 1, 1995, decided by the Supreme Court En Bane is applicable to the case at nlthough it involves the allowance of interest on l o c\ n s f , o 1.. thG purchase of machinery and equipment as a deduction from income, it nevertheless may apply to expense paid on loan contracted by herein petitioner from UCPB since it inv6lves the purchase of capital asset out of a loan obtained from a bank. Said the High Court; "<1> Whether Picop is entitled to deduct against current income interest payments on loans for the purchase of machinery and equipment. In 1'35'3, 1':372 and 1'3Tl, Picop oiTl:;.:i:\ nr"d loans from foreign creditors in order to finance the purchase of machinery and quipmnt needed for its operations. In its 1977 Income Tax Return, Picop claimed i nt er es t poyments made in 1'377, amounting to P42,840, 131.00, on

DECISION - C.T.A. CASE NO. 5082 -9 - these loans as a deduction from its 1977 gross income. The CIR disallowed this deduction upon the ground that, because the loans had bn incurred for the purchase of machinery and equipment, the interest payments on those loans should have been capitalized instead and claimed as a depreciation deduction taking into account the adjusted basis of the machinery and equipment (original acquisition cost plus interest charges) over the useful life of such assets. Both the CTA and the Court of Appeals sustained the position of Picop and held that the interest deduction claimed by Picop w0s proper and allowable. In the instant Pelition, the CIR insists on its original position. We begin by noting that interest payments on loans incurred by a taxpayer (whether DOl registered or not) are allowed by the NIHC as deductions against the taxpayer's gross income. Section 30 of the 1977 Tax Code provided as follows: 'Section 30. Deduction from Gross Income. The following may be deducted from gross income: (a) Expenses: XXX (b) Interest: (1) In general. The amount of interest paid within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations the interest upon which is exempt frum taxation as income under this Title: x x x' (Underscoring supplied) Thus, the general rule is that interest expenses are deductible against gross income and this certainly includes interest paid under loans incurred in connection with the carrying

DECISION - C.T.A. CASE NO. 5082 - 10 - on of the business of the taxpayer. In the instant case, the CIR does not di s pute that the interest payments were made by Pic o p on loans incurred in connection with the carrying on of the tegisteted opetations of Picop, i. f!. , �UHc financing of the purchase of machinery and equipment actually used in the reistered operations of Picop. Neither does the CIR deny that such intel�est payments wel�e lf?q.:dlv d�.t< and demandable under the terms of such loans, and in fact paid by Picop during the tax year 1977. The CIR has been unable to point to any provision of the 1977 Tax Code or any 0 t h c: )�' statute that requires the disallowance of the intet'est payments made by Picop. Til<: CIR invokes Section 79 of Revenue Regulations l\lo. ;:;. as amended which reads as follows: 'Section 79. Interest on Capital. Intel�'est calculated fol' cos-keeping or other purposes on account of capital surplus invested in the business, which does not represent a charge arisinq under an interest-beating obliration, is nnt allowable deduction from gross income.' <Emphases supplied) We read the above provision of Revenue Regulations No. 2 as referring to so called "theotetical intelest," thr.:\t J.!?> tn s.:y, intet'est "calc�.llated" ot computed L:\ncl not incut't'ed or pi::\id) fot' the put'po.;e of detet'mining the "oppot'tunity� cost" of investing funds in a given business. Such "throt'<t ic.d :: " ot' imputed intet'est does not ati s e f i' CHtl a legally demandable interest-bearing obligation incurt'ed by the taxpaye1�' who howeve1��� .oJisl;<!s to find out, e.g., whether he would have been better off by lending out his funds and earning intet'est t'athet' than investing such f�Jncls :i.n his business. One thing that Section 79 quoted above makes clear is that interest which does constitute a charge arising under an interest beat'ing obligation .i2_ an allovJable decluct:i.on from gross income.

DECISION - C.T.A. CASE NO. 5082 11 - It is claimed by the CIR that Section 79 of Revenue Regulations 1\io. 2 was "p<.ltt<l-ncd after" parar;waph 1.255-:L (b), entitled "l<-)He: and Carrying Charges Chargeable to Capital Account and Treated as Capital ltlms" of the U� S� I ncome Tax Regu 1 ation s, which fhH <.\ l 1� " '- ph reads as follows: �(B) Ta><es and Carrying Charqe!i. the items thus chargeable to capital accounts are ( 11) In the case of J�e.::ll p�roperty, whether improvrcJ Ul' unimproved and whether productive or nonproductive. (a) Interest on a loan (but not theoretical interest of a taxpayer using his own funds).' The tr�Jncated excerpt of the U.S. Incomr::> Tax Regulations quoted by the CIR needs to be related to the relevant provisions of the U.S. Internal Revenue Code, which provisions deal with the general topic of adjusted bais or determining allowable gain oi� loss on \;,,_dc:s o1 exchange of property and allowable depriation and depletion of capital a;;ct; oi .. tl1e ta><payer: 'Present Rule. The Internal Revenue Code and the Regulations promulgated thereunder provide that "No deduction shall be allol.oJed "fn�r"� amounts paid or accrued for such taxes and carrying charqcs as.1 undci regulations prescribed by the Sec1�et aty or his delegate, are chaJ�geable to capital account with y�espect to property, if th� t;.?IXP''-'ic-:l� elects, in accotd.omce with \;w:h regulations to treat such taxes or charges as so chargeablP." At the same time, under the adjustment of basis pl�ovisions v-Jhich have just been discussed, it is provided that adjustment shall be made for all 'expenditures, receipts,

DECISION - C.T.A. CASE NO. 5082 - 12 losses, or other items' properly chargeable to a capital account, thus including taxes and carrying charges; however, an exception exists, in 1-'lhich event such adjustment to tht capital account is not made with respect to taxes and carrying charges which the taxpayer has not e l ecte d tn capitalize but fot which a ded�tct:inn! instead has been <Underscoring supplied) The 'carrying charges' which may be capitalized undet the above quoted ptovisions of th!? LJ. H. Intetnal Fevenue Code include, <3s the LJI hi::1s not pointed out, intetest on a loan .� (but theoretical interest of a taxpayer usin his own funds)'. What the CIR failed to point out is that such 'cattying chatqes' mc.\y, ei-l;he�r he (a) capitalized in which case the cost b0sis of the capital assets, e.g., machinery and equipment, will be adjusted by i:dcl:inJ tiH amount of such interest payment or, alte)� ...natively, be (b) deduct<:d fy'om q,�... oc.s income of the taxpayer. Should the taxp0yer elect to deduct the interest payments auainst its gtoss incom fJ, the tax payei� cr.: THl o t .:�d; t: I i - same time capitalize the interest paym e n t s . In other words, the taxpayer is not entitlecl to both the deduction from gross income nrl th0 adiusted (increased) basis for determinin g0in or loss and the allowable depreciation chare. The U.S. Intetnal Revenue Coclt? clnu; not prohibit the�deduction of interest on a lo0n obtained for purchasing machinery and equipment against gtoss income, unless the ta><payey� ha.s also or previously cap i ta l i z ed the same interest payments and thereby adjustd the cost basis of such assets. We have already noted that out 1977 NIRC does not prohibit the deduction of interest on a loan incutted for acqui1�ing m.::1chine�r"�y <:HHJ equipment. Neither does our 1977 NIHC compel the capitalization of interest payments on such a loan. The 1977 Tax Code is simply silent on a taxpayet's tight to e 1 ect one ol th Q o \.; i l 2 l tax treatment of such interest pyments. Accotdingly, the genetal j�ule thi.: d; ir,tr:l-�est

- DECISION - C.T.A. CASE NO. 5082 - 13 payments on C.\' legally demandable loan are deductible fr-om gross income must be applied. The CIR argues finally that to allow Picop to deduct its interest paymnts agains its gross income would be to encourage fraudulent claims to double deductions from gross income: ' [t] 0 allow a deduction incidental expense/cost incun�-ed in the purchase of fixed C."\sset in the: year it was incurred would invite taK e v asion th1�'ough f Y' ;:\ 'J d u l c n \; ap lication of double deductions frum gross income.' <Emphases supplied) The Court is not persuaded. So far as the records of the instant cases show, Picop has not claimed to be entitled to double ciocl�Jcl;:i.nn of its 1'377 intelest payments. TI�H? CJII li<;,:.:; neither' alleged not' pr-oved that Picop hD.d previously ad j usted its cost basis or t he machinery and equipment purchased and cla1m, e. g. , incr-eased deductions fol�' depl�-�ecic:\tion. We conclude that the CTA and th e Court of Appeals did not err in allowing the deductions of Picop's 1977 interest payments on its loans for capital equipment against its gross income fol�' 1'977. " Item C. Due to f:lri s Phi 1 i ppi nes. Hespondent alleges petition ei��� Philippines are related taxpayers. In which, i r found true would disallow the deduction of the subject interest expense pur-suant to Section 29(b) (2) (ii) of the TaH Code, as amended. Section 29(b) (2) (ii) in r'elation to Section 30(b) of the Tax Code, as amended, provide as follows:

- DECISION - C.T.A. CASE NO. 5082 - 14 - "SEC. 29. Deductions from gross income. xxx. (a) E><pE� n5 es : XXX XXX <2) No deduction shall be allo\IE�d in !; ucce i)d in I] respect of interest under the sub-patagtaphs: (i) X X >< the (ii) If both the taxpa)l!0i .:.md petson to whom the p;c,� 't'liltenl: h<:.\s been made ot is to 1:-Je 111�':\Cit:� i.:n'e Soctinn persons specified under 30 (b) � II "SEC. 30. Items not deductible. (a) Gener-al r'ul ;�. deduction shall In computing taxable income no respect of in any c::-ase be in XXX XXX X X >< (b) Losses tJ�om sal L'5 OJ-' I"'Hchanges of no proper-t y. In computing net incom :i.n of deduction shll in any case be allowed tespect of losses from sales or exchancs ptopetty, directly or indirectly - (1) Between members of a family. For the purposes of this paragraph, the family of an individual shall include only his brothers and sistets <whether by the whole or half blood), spouse, ancestors, and lineal descendants; (2) Except in the case of distributions in liquidation, between an individu a l and a corporation more than fifty per centum in value of the outstanding stock of which is uwncJ, directly or indirectly, by or f or such individual;

- DECISION - C.T.A. CASE NO. 5082 - 15 (3) Except in the case of distributions in liquidation, between two corporations more than fifty per centum in value n th0 out s tanding s toc f< of e ,: c h o f w h :i. c h i '' ,., n < r.l.._: _ :;;,�.rr.(> ditectly ot indirectly, by en f<n tiF individual, if either one of such corporaions, with respect to the taxable ye;:n ci' �\;h< corporation preceding the date of the sale or exchange was, undet the la1-J applici:'\:ble to :;uch taxable year, a personal holding company or a foreign personal holding company; (It) Between a grantor and a fiduciary of any trust; (5) Between the fiduciary of a trust and the f:iduciaty of anothet ttust, if the Sic\lliE? person is a grantor with respect to each trust; ot (6) Between a fiduciary of a trust and a beneficiaty of such ttust. " (LJndetscotinq oui�s) This Colwt noted, based on that Atis Philippines, Inc. only 0\-'JnS nf 'l; hE? outstanding stock of petitioner-Oranbo. ;:i. nee Philippines, Inc. does not own of the outstanding stock of petitionet then it is not cove1�ed under the items not deductible as a business expense. Ro 1 f H. beinl] the Chaitman of petitioner-Oranbo and at time Ptesident of Aris Philippines, Inc. doe; not mean that the cotpotations he t i�:\ H puye1� �;. Respondent should have vital evidence to I,\ p p 0 t t:; contention.

- DECISION - C.T.A. CASE NO. 5082 - 16 - As regards the second issue, petitioneY' must its entitlement to the refund sought. I t the r e f ol e , m u s t comply with the following three basic requisites, to wit: " 1. That it fi 1 ed a c li::\ im f m� 1�<0 fund within the two ( 2) year period from ci t::t t {:.' () �r-� payment of the tax as prescribed under Ucction V<cvc�nuf? 299 (now 230) of the National Internal Code, as amended; 2. That the income upon which the taxes were withheld at sotwce undel�' EJect i Dn i:: wel�'e included as part of the income decl.:u:ecl in the income tax return of the recipient; and 3. The fact of withholdinn is established by a copy of statement (L\lH l�tH.'Iil 17 43 1) du 1 y issued by the payor' ( \ J .i. t h h u 1 eli n !:! � i:\gent) to the payee, showinl the .::1mnunt JE.\:t.cJ and the amount of tax withhe 1 d t h e r' c r �r"' u m � " [Sec. 10, Rev. Regs. 6-85; see Cityrust Finance Corporation vs. The CommissiDr;::!r of Internal Revenue, CTA Case No. 4134, NGvmbEr 11, 1991; affirmed by the Court of Appels in Citytrust Finance Corporation vs. Coult of' -L1H Appeals and the Commissioner of I;l:;C?rnal Revenue, CA-G.R. SP No. 28239, March 14, 0; and Citytrust Finance Corpo rat i o n c:.ol>T.elly Investor's Finance Corporation/FNCD Finance) vs. Commissioner of Internal Revenue, CTi-1 Ci:1se No. 4046, February 24, 1993; affirmed by the Court of Appeals in Commissioner of In�:;lin,-:11 Revenue vs. Citytrust Finance Corporation <Formerly Investors Finance C O l p O a l t i on/FI'!CD Finance) and the Court of Tax Appeel s, C>1-G. H. SP No. 31104, April 18, 1994J. A perusal of the evidence p f t i t: i o n < 1�' t'evealed that it has satisfactorily proven its claim fo�r' refund or tax credit. Petitioner has filed :i.ts cld:i.m fo�r' refund/tax credit within the two-year pe r i od with the BIR

- DECISION - C.T.A. CASE NO. 5082 - 17 - and with this Court. The letter-claim for refund/tax ctedit w.::1s fi 1 ed with t he B IF< on Aptil c: 13, l'YJ 3 ( Ex h � E of petitionel�; pp. 10:1.-102, CTA l�ecot'ds) e:1nd the p1tition for review was filed on March 28, 1994. The petiod, in the instant case, commences to 15, 199=.::, the actual date of fi 1 ing pet i t i o net' ' ; l 9'::l l Annual Income Tax Return which is also t he time required by law for a taxpayer to file the final income tax return <Commissioner of Internal Revenue v. TMX sales, Inc. et al., G.R. No. 837736, January 15, 1992). The ceY'tifici::te of creditable withholding tax at SOU'r'Ce F o �r'm 1743.1>, evidence by petitione petitionet', p. 7'C, CTA l�'ecot'ds>, sufficiently e<:;t.od:Jl:i.sh!::d the amount of creditable withholding tax fDl'' the 19'31. Furthermore, as testified b y p etiti o n e i�"� 1 s vJ i t n !? s <:; , Ms. Zaida Agutaya, the income upon which th e s e creditable withholding taxes ere paid were includt?cl in pet:i.tion<:-1�'' s income tax t'eturn <TSN, Heal�'ing of Octobel�' :.:; , l'J�J.t.i, pp. 8-'3). Thus, petitioner has satisfactorily pl�'ovtn :i. t s claim for refund or tax credit. Therefore there 1s no reason why We should not grant petitioner's prayer. WHEREFORE, in view of the all t h t f o1��'e J;:J o i. n !] , .,.espondent is hereby OliDERED to REFUND o: in the alternative to ISSUE A TAX CREDIT CERTIFICATE in fi: Vo1�' of ')Q

DECISION - C.T.A. CASE NO. 5082 - 18 - petitionei� the sum of P922,31l.OO, representing overpaid income tax for the year 1991. SO ORDERED. 9lQ. Q ERNESTO D. ACOGTn r::�]�e s i cl :i. n I] Juc:l ] ( I CONCUR: C::ERT IF I CAT I Dl'-1 I hereby certify that this decision was re ached after due consultation with the members of th Court of Ta>< Appeals in accordance with Section 13, Article VIII of the Constitution. Q.;\.-,_ ERNESTO D. ACOSTA Pl�esidinl Juduc Court of Tax App0als