CTA Case No. 4409 (Decision)

Republic of the Philippines COURT OF TAX APPEALS Quezon City EQUATORIAL REALTY DEVELOPMENT INC., Petitioner., - versus - C.T.A. CASE NO. 4409 COMMISSIONER OF INTERNAL REVENUE, Respondent. X - ---- ------------------------- X .- P ' I g _ This case involves a claim of petitioner for refund of alleged excess creditable expanded withh olding tax in the tota~ amouQt of P431,831.47. Petitioner is a corporation organized and existing under the laws of the Phili ppines doin g business ' as a real estate lessor. - It s income consists entirely of rentals pai d ~y its lessees of its real properties. It alleg e s that it~ .lessees, as withho lding age n ts of the go vernmen t, withhold the tt~ rental payments 5;'. ex panded withholding tax in co mpl iance with Section 1Cc) of Revenue Regulations No. 13-78, as amended. Petitioner alleges ~urther that when it paid its in co me taxes for 1987 tax year, it had a refundabl e amoun t totalling P263,031.86, co mputed \ as follows:

- . ... - DECISION - C.T.A. Case No. 4409 - 2- Taxable Income 1987 p 385, 7L~0. 52 Tax due (35'i'-) 0 135,009.18 Less: Prior Year's excess credit 169,578.24 Creditable Expanded 228 ,462.80 Withholding Tax 1987 p 263,031.86 A�ount Refundable -------------- and that when it filed its income tax return for 1988 tax yeat~, i t h ad a t~esulting t~efundable amount of P431, 831.47, co~puted as foll ows: Taxable Income 1988 p 188,710.06 Tax Due <35'i'-) 66,048.52 Le s s: Prior Year' s ~efund a bl~ 263,031 .86 Amount/Excess Credit ! Cred i table Expanded 234,848.13 Withholding Ta x 1988 A�ount Refundable --p--4-3-1-,8--3-1-.4-7- \ \ On November 23, 1989, petiti on er filed with the t~ espondent, tht~ough the Appellate Divis,ion , its claim for refuh d of the aforesaid amount of 1='431,831.47 and alleges that despite its repeated follow - up, the said claim was not ~ acted upon and that it has no other plain and ~dequate remedy except to file the instant petitio n ~onside ring that the statutory period of two <2> years withiri which to file such claim is about to prescribe. Respondent in his a nswer that petitioner's claim fo r refund "i s still being in ve stigated by t~ espondent:;" that the "ct~edit fot~ expanded witt\ hold i ng taxe s " clai med by petitio net~

- DECISION - C~T.A. Case No. 4409 "h a v e no t be en s h ow n to be in acc ordance wi t h l a w and t~eg�.tla t io n s ;" th a t th e t a xes col l e c te d are presumed to have been paid a nd c ol lected in accordance with law; the petition s t a te s no c ause o f action in that it did not all e ge the d ate when the tax sought to be refund e d or c r ed ited was pa i d and that it i s "incumbent upon t he p e ti ti on er to show compliance with the provisi ons o f S e c t i on s 243 and 245 (formerly Section s 2 9 2 a nd 295} of the Tax Code. " In its Resolution ' dated Jt.t l y 8, 1992, t he Cot.trt dismissed the petit i on for lack of int e re s t to pt~osecut e. s Petiti' onet~� � Mot ion fat~ Reconsideration, without o bjecti on of respond ent, was gt~ant ed . Subsequently , petitioner for mally � ~ffered t he following documentary evidence: Certificates of Cteditable In c o me Ta x Withheld at Source <BIR Form 1743. 1) for the year 1987 issued to peti tioner b y its various ten<.,nts. <Exhibit A to A-27>; ! Schedu l e of 5~ expanded with h oldi ng t axes withheld from the rental p ay ments t o petitioner by the withholdi n g ag ent s o f respondent for the year 1987, tota lling P228,673.70. <Exhibi~ B> '; 1987 Income Tax Return of pet i tion er. <Exhibit C>; 1048

- DECISION - C.T.A. Case No. 4409 Certi f icates of Creditable In c ome Tax Withheld at S ource <BIR For m 1743. 1) for the year 1988 issued to petitioner by its various tenants. <Exhibit D to D-23>; Schedule of 5% expanded withholding taxes withhe ld from the rental payments to petitioner by the withholding agents of respondent for the year 1988, totalling P23L~, 8.l~8. 1L~ . (Exhibit E > ; 1988 Income Tax of petitioner. <Exh. F>; and Claim for Refund dated Nove mber 2 1 , 1989. <Exh. G> After r espondent ~ has �ub~it ted his comment on ! the aforestated evidence offered by p etitioner and the latter's re pl y thereto, th e Cour~t admitted all the said Exhibits from A tc;~ G ,inclusive ; Dates \ \ for the recept .on of respondent 's eviden ce were set but ailed to pre sent his e vide nce notwithstanding several postpo nement.s' upon his rule request. Thus the Court was constrained t o "that t~espondent� s t" ight to pr�es ent!'.. h is evi d ence is deemed waived " . Both pc.'\rties waiv~d the . filing of in of the it~ con t �en t i on s � Section 8 of BI R Revenue Regulations No. 13-78 implementing the provisions of Presidentia l I ']I Dect~ee No. 1051, amending Sectio n s 30 and 53 of the National Internal Reven te Code provides: .. /

- DECISION - C~T.A. Case No. 4409 - 5- Sect ion 8 . Clai�s for tax credi t or refund. , Claims fat' tax Ct'edit ot' refund of income tax deducted � and withheld on income payments shall be given due course only when it is shown on the return that the income payment _, received was declared as part of the gross income and the fact of withholding i s established by a copy of the statement, duly issued by the payor to the payee <BIR Fot'm No. 1743-A) showing the amount paid and the amount of tax withheld therefrom. Petitioner has s hown that it declared in its income tax returns <Exh. C and F> its income from the t'entals paid � by the le\sees of its real properties and that the 'amounts withh eld by said lessees are specified in the copies of their statements \ in BIH Fot' m \ No. ~743 <Exhibits to A-�2 7 >. Pet it ionet' sea s onably filed its petition within th�? period allowed by law, ttnder� Sec.230 .,. of the Tax Code the pertinent pt'ovi,.sion is het'ein quoted to wit: SEC. 230. Recovery of t ax erroneously or illegally collected. No suit or proceeding shall be ~aintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erron eously or illegally asses s ed or collected, or of any penalty claimed ' to have been collected without authority or of any sum alleged to have been collected without authority or of any"sum alleged to h ave b e en excessive or in any manner wt' on g f u 1 i y co 1 1 e c t e d , u n t i 1 a c 1 a i m f o t' 105 1

- DECISION - C.T.A. Case No. 4409 - E, - refund or credit ha s been duly filed with t he Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no s uch s u it ~:n~ Q!.:.Q..Ceed_j..JJ.!l .?h~ll be begun after~ the expit~ at ion Qf. t"li!., year~s fr~om_ t h e date o f Q..~.YJ!l..en't!_ g_f th~- tax .2.!.:. Q_enalty r~eqardless Q.f �'..!J..Y.. s ~ r~ vJ! n_in g_ !;.~..!:!~ t hat mC!Y. ad~.�-~ ~.ft et~ Q.fi.YJlU?.Dt : Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of t he return upon which payment was made, s uch payment appears clearly to have been erroneous ly paid. Clearly , herein pet it ione~ properly filed its petition for revi~w on December 14, 1989 , well within the pet~i od pr~ovi ded for~ 'by law. Petitio ner~ \ likewise established that the income upon which the taxes were withh�ld were include d in the tax Moreso, petitioner has clearl y proven by documenta ry evidences that income tax were wit~held \ <Exhibit C and F) from th e rentats paid by the lessee of its rea l properties as ev i denc ed in the copies of t h eir statements in BIR Form No. 1743 <Exhibit A to A-27). Considering that it has co mpli ed re ligiously with the requirement of the l aw, as a wc.'\y of I proving ent i tlement to th e refund sought f or. The Court is convinced that it deserves the relief be i n g prayed ' for. 1 052

- DECISION - C~T.A. Case No. 4409 -7- Cases of this nature were properly disposed of by this Court as held in Paseo Realty and Development Corporation v s . CIR, CTA Case No. 4528 , dated April 30, 1993. In view of the Forego ing, respondent Commi s sioner of Internal Revenue is hereby ordered to refund to pe titioner the sum of P431,831.47 rep resent ing e~ ces s e ~panded withholding tax. SO ORDERED. Qu ez on City , Metro Manila, WE CONCUR: \ \ 2e ~&~~ E ESTO D. ACOSTA ,residing� As so c iate Jud CERTIFICAT ION I hereby certify that t h is Decision was ' .t rea ched after due consultation a mong the mem bers of _, the Court of Tax Appeals in accordance with Section 13, Article VIII of the Cona~itution . ~Q,~ ERNESTO D. ACOSTA Pr esiding Judge Court of Tax Appeals