CTA Case No. 4325 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY BPI FAMILY SAVINGS BANK, INC., Petitioner, - versus - C.T.A. CASE NO. 4325 COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - X DECISION This is a claim �or re�und o� overpaid creditable withholding tax in the amount o� P95,190.53 �or the calendar year ended 1986. The record shows that petitioner BPI Family Savings Bank, Inc. is a Domestic Corporation duly organized under Philippine laws. As such petitioner is engaged in the business o� banking, �inancing and leasing with principal o�{ice in Makati, Metro Manila. Petitioner in the pursuit of its operation receives rental income from leasing spaces in its head office and branch offices and �rom petitioner's lessees, withheld the sum of P95,190.53 under the expanded withholding tax regulations. Petitioner declared the rental income as part o� its qross income in its income tax return for the year 1986. <Exhibit "A">

DECISION - C.T.A. Case No. 4325 2 T ll f.~ afOl-~ementio ned income ta>< t~ettwn of petitionet~ sho\f-Jed an all eqed net loss of P10, 493, 399. 00 fat~ said Hence, accot~c:lin~~ to petitionet~ the whole amount of P95, 190.53 t~ept~esentinq . Ct~editable withholding tax should be refunded. On June 17, 19B7, petitionet~ filed a ~,-n~itten claim for refund with respondent of the said amount (Exhibit C) but the lattet~ failed to act on said claim. Hence, the pt~esent petition fo1-~ t~eview f i l e d on Januat~y 1B, 1989 in IJl�~det~ to t o l l the t~unninq of t h e pt~esct~ipti ve pet~iod under sect ion 243 of the Tax Code. In answet~ to the instant petition, t~e spo ndent admits the incontestable fc:1cts, such as, petitionet~'s existence and t h e f i 1 i n g o f t h e c 1 a i m f 01-~ t~ e fund , but d en i e s t h e of the allegations of petit i onet~ fot~ lack of knowledge and infot~mation sufficient to fot~m a belief as to the truth of the matters alleged therein. special and aff:it~mative defenses respondent stated among others, that: a. the petition states no cause of the action as it does not allege the date when and tax sought to be refunded are credited paid; b. the mere averment that petitioner suffered a net loss� of P10,493,399 for the year 1986 does not ipso facto justify a refund; c. the amount sought to be refunded were collected in accordance with law;

DECISION C.T.A. Case No. 4325 3 cL i t is incumbent upon petitionet~ to prove compliance with the provision of Section 243 and 246 of the Tax Code; and e. the claim fot~ t~efund at~e con s trued against the claimant. T h e t~ e i s n o d i s put e as t o wh e t h e t~ pet i t i on e t~ f i 1 e d th!? instant petition within the two (2) year~ pet~iod of pt~esct~ iption and in suppot~t of i t s claim submitted in evidence among othet~ s: Exhibit "A", the annual cot~pot~ate income tax E><hibits "B-B-25", inclusive, Cet~tification of Ct~editable Income Tax Withheld at the Source, all for the said year. On the other�� hand, t~e s pondent failed to submit any evidence to controvert the correctness of the tax returns as well as other~ t~ elevant facts alleged by petitioner~ . The t~ ecot~ ds show that t~ espondent elected to submit the case for decision on the basis �of the pleadings and record s of the case. Both pat~ties opted not to submit their~ t~espective rn em or~ and urn. The only issue pt~e s ented fat~ our~ detet~mination i s whethe1�~ ot~ not petitioner~ i s e n t i t l e d to the t~efund of P95, 190. 53 as alleged overpaid creditable withholding tax :.H, at sout~ ce fot~ the calendar~ yeat~ ended December~ 1986. It i s the view of the petitioner that it is entitled to the � t~ efund of the amount of P95, 190.53 as ovet~paid , ).! . . J..uu

DECISION - C.T.A. Case No. 4325 - 4- On the othet~ hand, t~espondent alleged that in an action for tax refund or tax credit it has to be shown that the petitioner and that petitioner was not able to prove that it had includec:l as pa1�~ t of i t s gt~oss inco me the t~ental in c ome subjected to such withholding in its inco me taxJ. We hold that petitioner is entitled to the refund of P94,413. 13 as computed below pursuant to Section 54(b) of thf? Tax Code in Section 10 of Revenue Regulation s N. E, - 85, the consolidated expanded withholdin g tax regulation, which states as a require ment the presentation of documentary evidence showing that for the taxable ye c:w in question, the income from which the vc:n~ious ct~ ectitable taxe s 1--Jet~e included as pat~t of the petitionet~' s income. (Cit yt t~u s t Finance Corpot~at ion Finance IFMCB vs. Co mmis sioner of Revenue CTA Case No. 4046, Fat.� the yeat~ in que stio n, petitione1�~ suffet~ed a net lo s s in the amount of P10,493,399. 00 as reflected in its annu.::1l cot~pot~ ate income ta>< t~ettn~n computed as follo ws: <E ><h . "n" > , \I ) .J..OD

DECISION - C.T.A. Case No. 4325 - 5- INCOME: !Schedule 1l p 233,084,715.00 Interest loans 16,552,061.00 Deposits with other banks 316,091,686.00 47,335,790.00 Govern1ent &other securities 9,076,827.00 Co11ission and service fee p 1,675,950.27 Foreign gain/loss 21,375.22 Other inco1e: !Exh. A-2) 95,206.95 Rental inco1e Inco1e on assets acquired 16,172,973.56 17,965,506.00 Profit/loss on asset sold/ p 640,106,585.00 exchange Miscellaneous inco1e 650,599,984.00 T 0 T AL 10,493,300.00 LESS: DEDUCTIONS NET LOSS - NIL - TAX DUE LESS: PRIOR YEAR'S EXCESS CREDIT p 24,541.41 1986 CREDITABLE W/HOLDING TAX 95,190.53 119,731.94 TOTAL AMOUNT REFUNDABLE p 119,731.94 Based on the t~ecot~ ds, petitione't~ met the ttn~ ee basic t��equit~ements s e t fot~ th by t h i s Com~t in i t s pt~evious decided cases as follow s: 1. that pe tit ioner filed a claim for refund within the two (2) year period as prescribed by Sec. 292 (now 230 ) of NIRC; 2. that the income upon whi ch th e taxes w et~e withheld wet~e included in the t~et 1.wn of the recipie nt; a nd 3. the fact of withholding is established by a copy of the statement duly iss ued by the payot~ to the payee <BIR Fot~ m 17'}3 . :1.) showing the amount paid and the amount of tax withheld thet�� eft~om. <Sec. 10, Rev. Regs. No. 6-8; see Citytt~ust Finance Corporation vs. The Co mm issi oner of Internal Rf?Venue, CTf.~) Case No. 414 3, Novembet~ 11, 1991, a nd Citytru st Finan ce Corporati on (For merly Inve st ot~s Fi n ance Cot~pot~ ation/PNCB Finance) vs . Commissionet~ of Intet~nal Revenue, CTA Case No . � '~(lL}f., , ~5 u pt~a)

DECISION - C.T.A. Case No. 4325 - 6- F r om among the exhibits pre s ented by petitioner, Exhibit "B -- 17" wa s stt~ ic~<en out ft~ om the t~ecot~d of the c a s e on the groun~ that it had been previously cancelled and the Si:\m e wa s nowhet~ e to be found in the t~ ecot~ds. Thu s th e re fund ab le creditable withholding tax at source is comput e d with the exception of Exhibit - "B- 17" as follow s: Withholding Rental 5:< With Agent Inco1e holding tax Ex h. Berli1ed Phil. Corp. p 31,100.80 1, 555.04 B-1 Prudential Life Plan, Inc. 23,925.00 1,196.25 B-3 Su11a Ku1agi 1 Inc. 5,337.00 266.85 B-4 Isetann Dept. Store Inc. 345,000.00 17,250.00 B-5 The Phil. A1erican Life Ins. Co. 20,125.00 1,006.25 B-6 Fa1ily RTW 103,925.25 5,196.28 B-7 The Insular Life Ass. Co., Ltd. 93,000.00 4,950.00 B-8 Nepu1oceno Enterprises 14,400.00 720.00 B-9 BPICC 96,680.20 . 4,834. 01 B-10 Maria S. Evangelista 5,950.00 297.50 B-11 Gul Plaza 35,563.41 1, 778.46 B-12 Gul Plaza 3,357.11 167.86 B-13 Malayan Pl'intery 38,400.00 1, 920.00 B-14 Filinvest Finance and Leasing Corp. 8,875.00 443. 75 B- 15 National Bazaar 46,672.50 2,333.65 B-16 Filinvest Finance and Leasing Corp. 13,850.00 632.50 B-18 Sager Realty Co., Inc. 18,200.00 910.00 B- 19 Charles Lee 27,617.62 1,380.85 B-20 Lareina Pawnshop 48,300.00 2,415.00 B-21 Orion Radio &Electrical Supply 51,000.00 2,550.00 B-22 Fil. Mgt. &Leasing Services Corp. 20,000.00 1,000.00) 8,000.00 400.00) B-23 Fil. Mgt. &Leasing Services Corp. 4,000.00 200.00 B-24 Pa1ana Phil., Inc. 41,580.00 2,079.00 B-25 TOTAL p 1, 110,864.89 p 55,543.25 Withholding Collection 1:< With- Agent Fees holding Tax Ex h. FCP Credit Corp. p 3,886,988.18 p 38,869.88 B-2

DECISI ON - C.T.A. Case No. 4325 - 7- RECAP: Source of Withholding Incou Atount Exh. Tax Paid Rental lncoae p 1,110, 864.89 A-2 p 55,543.25 38,869.88 Collecti on Fees* 3,BB!i,988.18 A-2 p 94,413.13 Total p 4,997,853.07 A-1 * Collect ion fees although not originally alleged to be part of incote in the petition for review was considered because the prayer asked for the refund of creditable withholding tax at source which such fee is subject to and indeed fo rt s part of the other inco1e stated in Exh. "A-2" Iunder tiscellaneousl. WHEREFORE, in view of all the fDl�~egoing, respondent is het~e by o t~ de r~ ed to is s ue a Tax C t~e dit Memo in the am ount of P94, 4 1 3 . 1 3 in favo r~ o f th e Pet it ioner. No c osts. SO ORDERED. Que z on City, IYi e tr~ o Ma nil a, IYi a t~c h 17, 1994 . ~~Q_,q~ ERNESTO D. ACOSTA P t~es id i n g Jud ge WE CONCUR: GRUBA J ud ge lo8

DECISION - C.T.A. Case No. 4325 - 8- CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, At"ticle VIII of the Constitution. ~~Jb~ ERNESTO D. ACOSTA Pt"e siding Judge Court of Tax Appeals l ~ ()