CTA Case No. 4693 (Decision)

- f~epublic uf tl��~~ Phil i pp in es COURl. OF TAX APPEALS C~uezon City PASEO REALTY and DEVELOPMENT CORPORATION, P e 1:; i t i o n e ~, , �-- v ~? l' s '-1 s ��- C.T.A. CASE NO. 4693 COMMISS IONER OF INfERNAL REV EtiUE , ){ )( DEc I I 0 N I II �[ �; 1 ll v 0 l v p ~; <::1 c l i:.\ i In f ot' t'efunL1 of ci�ocl"i.l:.-:\h.le ~�~ i t I d I Cl 1 d i. II q t a x fot' t he y P a~, end i n g Decemb!?t' 3 1, 1'389 in the �'-' ITI O '-'ld; of P ~i 't, 10 '~. 00 which ta>< acc ~'ued up to J"uly, 1 '313 �::J. i s a domestic corporation and a subsid i a"r"' Y of the Bc.�nl-< or the Philippine Islands , which is e n g c.~~.;! e d i n t t 1 e t' e a 1 e s t at e business as Its in com e consist s a n c\l"l ll'-1�31 t'entc":\l of P1,05~=i,O OO.OO from Ci.tibank , whj c h leases the .I. and of pr~t i t i a net' <t sn , Petitioner filed with the Bureau of Interna l Hevenue its Income Tax Return for 1989 showing a

I >I' I I ~~ l()f'.l � c. r . (). I : o:.\ <; (' I In " 11(:/ ::J: "�; t � c f �t n d i.\ h I c~ !":\ 111 'J Ult l; D f"" p J. 7 ;: ! /~ 7 7 � ( )I) CUt"' l ' <:> Tl \:; P54, .l.~o.uu ~nd prior yeat'' s Pl'+ E., 025.00 c t"' r~ d i \:; ,-_, IJ �1 r~ t; r.�.1>< c~ <;; w i 1:; 11h c� Lr.l , c o mp �.vt e d a s f o 1 1 ow "-� : Inco�e !Schedule 4 - p 1,855,000.00 Rentals/Leases) 1, 775,991.00 Less : Deductions p 79, 009.00 Net lnco e p 2.7, &53.00 iax Due 200 ,1 30.00 172,477.00 Less : a.l Prior year'~ excess cred it (1 9 8 8 ) b. l Otrly. payeents tade this yeat� c.) Creditable tax withheld !expanded withholding)� (Exhibit AJ 541 104.00 Total Ataunt Due/Refundable Th t_ts, of petitioner for 1'38'3 s hows income of P 1, 855,000.00, to tal deductions of P1 , 775 1 991.00 , a net in c ome o f P7 'J 1 Ucn. np, [This inco111e tax due of P 27, 653. 0 for c ale nd a r year 1989 was charged ga i ns~ petitio ner's tax credit of PB1,403. 00 for cal endar year 1987, as e xp lained in C.T.A. Case No. 4439.] Petitioner applied the P14G,026.00 pr ior ~&~r !?><C C'SS Ct"' f?d i t i t s 1 �::38'3 i:."\nd 1 ':J':J(l tax 1 :i. .:-,\t.d. I. i \:; i e s; 1 f! <:\V i THJ .:~ t' e f �..tn d �'=' b 1 e c t' e d i i; a b I. e t a x o f ti l ~ "' ltl.i 111 f ~, t'!~fund o f which is now pending with this Hon ora ble Court.

- or::c r s I uN �-- c.T .A. Case No.4693 n , I n t h �~ s a rn �> t �' r.~ t m~ n <E x h � I p e t i. t i o n e t ' s h o we d a creditable tax withheld at source o f P54, 104.00, wh ich is the amount claimed in this case. Its ten ant, Citi.bank , had withheld a 5~, or P92,750 .00 on rental of P1,855 ,000.00 CExh.B>, but pet iti oner claimed only P54, 104.00 because , as explained by witnes s Rey n aldo Acejo, that was the amount of the tax accr u ed up to July 1989 CP 92 , 750/12 = P7, 729 . 16 and there after the taxpayer s hifted to a cash basis . peti ti oner filed a claim for r f 1nd d tt ed Nov. 1 "7"' 1991 with t' espondent' s Legisla tive Ruli ng and Divi sion asking for the refu nd of P5 L~ , 10L~. 00 repr esenting alle ged excess creditable withh ol ding J tax few Janua t~ y to J"uly, 1 '::38'3. Withou t waitin g for ;, s t~espondent' decision, petit ion1:n~ filed on Decernbet~ 27 , 1991 a pet i t i o n for t~eview. Upon these facts, responden t raised as special a nd affir mative defenses lack of c a use of action as it does not allege t he dates when the taxe s to be t'e f�.tnd ed pai d. Pe t itioner's claim for refund in the amount of s til under in v esti gation by the t'espn nd ent;. Th taxes c laimed are deemed to have 785

- DECISION - C.T.A. Case No.4693 been paid and collected in accordance with law, and ) existing pertinent rules and regulations. Claims .. for refund are construed strictl y against claimant fot' the same partake of the nature of exemption ft'Onl taxation. Thet�efm�e, it is incumbent upon petitionf:?t' to sho w that i t is entitled thereto, ott1et��wi se, i t shall be fatal to its claim for t'ef�Jnd. The petit i on contains no allegation that it is entit l ed to the refund or the deductions claimed. co ntention that it has ava il able tax credit, for the current and prior year', is gt'atui;t ou s and does not ipso facto warr'ant t h e t' e f u n c.1 � ln a claim fot' t'efund, it is in c umbent upon p eti tioner to show that it has complied with pt�ov is ion of Section C:~3 0 in t'elation to Section 204 of the Tax Code. The sole issue raised in this petition is wheth er or not petitioner is enti tl e d to the refund of P54, 104.00, as excess credita ble withholding tax p a i d f o t' J C\ T'll.l cH ' y t o J 1.11 y , 1 '3 8 '3. Petitioner� presented as evidenc e the following t'e 1 event and documents to fOl"' the period , Januar'y to .Tt..ly , to wit:

�- DEClSIDN -- C.T.A. Case No.4693 - L."..:J" - Exhs. Particulars A 1383 lncoae Tax Return <BIR Fora 1702> together with its at tachaent s: 1. Audited financia l stateaents; 2. Schedule of t axes and licenses; 3. Photocopy of first page of 1988 annual incote tax return. B Certificate of Creditable lncoae TaK Withheld at source for 1989 <BI R Fora 1743. ll issued by Citibank, N.A. showing the aaount of incoae paid of P1, 855,000.00 and the aaount of tax withheld of P92,750.00. c Letter claia for refund dated Noveaber 13, 1991 fil ed with respondent on Noveaber 14, 1991. Hespondent r cis> d no o bjec tion to t h e admi ssion of the Exh ibits pre se n t ed by peti ti oner. When it was t i me for respondent to pr e sent his evid ence , his counsel waived th e presentation o f evidence due to the absence of t he BIR r ecords. Instead s he s ubmitted the case f or decision based on t he records a nd pl eadi n gs ava il a ble . The arguments raised b y respondent are not new. In fact, respondent h as repeat e dly raised th ese sa me aryumenb� in all gi milar cases involving th e sa rn e pet it� n er�. Al l that is required of pet i tioner in claiminu for of excess creditab l e withholding taxes are : 1 l. Sec. 101 Rev. Reg. 6-85; see Ci tytrust Finance Corporation vs. The Coaaissi oner " of Internal Revenue, CTA Cas@No. 41 34, Nov. 11, 1991 ; and Cityt rust Finance Corporat ion <For1erly Investor's Finance Corporat ion/FNCS Finance) v. Co11issioner of Internal Revenue, CTA Case No, 404G1 February 24, 1993.

�-- DEC IS I 01\l ���- C.T.~. Case No.4G93 -- G �- "(1) th r.d; it filPd a cl.:dm for refund within the two <2> year reriod as prescrihPd under Section ;::;�'JC.J (now ;~?.:.30) of the Niltional Tnter�nr.~l F~even�. tf! Code; ( i:?. ) �t; h r.'\t t hP i.nco m~~ upon t .-\ x P <; wf.l t � f' w1 t; h h e l d wh :i c~h the in tht~ ~-- ~~t: ur�� n o f Wf't'P. i IH ~ lllt1 r>d the <3 > the fact nf wi hho 1 ding i. o; I~ t> \; <~ b l i. �~ ll r> d h y -0 py 0f rd , i"\ t r�~ mrH d ; ( B J I{ F ot' m 17 '~ :' � 1 ) d u l y i <; o; I l!HJ h y \; h I~ f1 i'\ y ot� ( W i t h h I) l fJ i n Q �'Htr'rd; > to U1P f.E\YPf~, ~~ howin~} the ;:1 111 o�.1 n t p ;:\ i d <3 1ni t h e �~ mr.ll.t n t o f t i:A >< w i. t; h h e 1 d t h f>. t ' e f t ' o m� Nei ther is it requ ire d of petitioner to show the date of payment of the tax withheld at source. Th �::~ t�u l e is a corporate t axpayer pays on quarterly basis. The final payment is the last on tht~ l~Sth dc.'\y n �J! the ft.'ltn�t h month fo llow ing the Cl f t h tt c .t\ l. e T' d a t� or� f i s c a 1 p e t� i o d � This is the tim e when it can ba finally ascertain e d that the taxpayer eit h er made profit or suffered a loss in l.. � 5 o p t�a t :1.. o n n. 2 Tha best proof of withholding 2' Sun Insurance Office Ltd., v. Acting Co��is5ion~r of Internal Revenue, CTA Ca e No. 3205, June 23, 1989; Aten o De Manil University v, Couissioner of ,, Inte rna l Revenue, CTA C s No. 32131 July 28, 19B9i Asia Australia E11press Ltd., v. Co��is ; ioner of Internal Revinue, CTACase No, 39761 October 18, 1989.

-- DECISION - C.T.n. Case No.4693 -' �-- 7 - is t he ~n-�esentat ion of Statemen t s of Ct~editable 1-Jithholdin~~ Tax. Their presentation will be sufficient to show that indeed the withholding agent withheld and remitted to the Bureau of I n t �:' t' 11a l He v en u e t h e am o u n t l. n d i cat e d t here i n � It is significant to note that petitioner's tenant, Citibank, had withheld a 5% , or P92,750.00 on of P1,855 ,000.00 <E><h.B>, petit ioner claimed only P54, 104.00 because, as expl <:~ined by witne ss Reynaldo Acejo, that was the amount of the tax accrued up to July 1989 CP9 2 ,7 50/ 12 P54, 104. 16) = P7,7 29. 16 x 7 months - and ther eafter the taxpayer s hifted to a cash basi s : Q. This Exhibit "B", which is th e certificate of creditable in co me tax withh eld at so urce for t II P y �~ at' t '3 8 9 i s s ued by a v1it: llholding agent c,:.:\lled Citibank, N. fl . ; s h ow s t hat t h e t~ e i s t' en t a 1 income paid of P1,855 ,000.00 for Paseo Realty and a creditable tax withheld of P92 ,750.00. My question to you is, how come that the creditable tax withheld at s ource s hown in the income tax return for 1989 is only P54,104.00 while the certificate of withholding is s ued by Citibank says that they withheld P92 ,750.00? �'

) ���- Dt:~: c I ~3 I UN �-- C.T.A. Case No.~G9 3 - B �- n. When we t'e vi e wed the General Le dger of Paseo Realty and D~velopment Corporation, we noticed that in 1383 there was a change in t h e a c co u n t i n g p t' o c e d u t' e i n b o o ~< i n g of th e creditable tax. We no ted that from January to July of 1989 there was a n accr ual a mon th ly accr ua l of the withhold i ng tax. But s tarting Augu s t to Dece mber of the same year, they c hanged to cash b.:,sis. That's vJhy whc.'\t appeared in the books in 1989 was only P54, 104.00 and t he t ota l am ount of creditable t ax of P92,750 .00 was no t taken up in the books <tsn, :run~~ l 9, 1 ':1~J�:::, p p. 11 --1 ;;:~ > � ... It ] .::> no te worthy to po i nt at this that the declarations made by the taxpayer in his income tax return are for all int ent s and made in good faith and are true and correct for th e be s t of his knowledg e and belief. In fact the Treasure r and the Direct or , both representatives of the corporation s igned under oath t he in co me tax of the co �r-'por'at ion. Notice to the f i 1 e t' It"' x pay e t' is presented ju s t above the space provided for their signatures, t o wit: " We d e c l. at' e d t.m d e t ' t he penalties of perjury t hat this return h as been made in goo d faith, verified by us and to the be s t of our knowledge and belief is true, a nd correct pursuant to the provisions of the Nationa l Int e rn al Revenue Code, as amended , and th e regulati on s issued under aut hor i ty thet' eof." _, 7 '"/' J

�-- DECI~3IO N -- C.T.A. Ca s e No.4693 S e ct i on 't5 (a) and 266 of th e Nati onal In t e t' th .-d Revenue Code are clear on this matt et'. Thus, thr> law pr� ovides: "Sec. 45. Cor�por�at; ion retur�ns. <a > Requirements. Every c orporat i on s ubject to th e tax herein imposed, ex c ept fo reign c o rp ora tion not engaged in t r ade or bu s ine ss in the Philippines sha ll r ender, in duplicate, a true and acc urate quarterly inc ome tax r ~t u r n and final or a dj us t me n t 1���~ t 1.w n in a c c rH' datl c e with the pl ' 1 v i s ton !) of Ch <:~ pt H ' I X o f t hi s I i. t; l e � HH� r' e t u t' 11 s h a 1 1 b e f i 1 e d h y th t~ r-H'~?!r. id tnd; 1 , . v ic t?- president 01 � tl'i; h e t ' f.w i n c i p ,:,, 1 o r f i. c e , an d !> h <:' ll b1' s wol�' n t () by s u c h officer� .:uH I by the tt' (h:'.\ s �.n � et' en� as~d.stant l; 1 � e r.' s �.n� e t' � "Sec. 266. !Jt:.'c .l L"'t'C:d i on tmder� t '"'Ti r:.< .lt: ie s or� per�jw�� y. A11y declarati o n, return a nd other s tatements req u i r ed und er this CIJde, shall , in lifHI of a n oath, co ntain a written state ment that t 11 e y at' e ma d e '-In d e t' t h e pen a 1 t i e s uf perjury. Any per son wh o willfully files a dec laration, r��e t �..n� 11 o t ' s t at e me n t c ont a i n i n g information which is not true and c o rrect as to every material mat ter sha ll, upon c onviction, be s ubject to the penalties prescri bed for pe r jury under the Revised Pena l Code. ,, 7/'1

�-- !JF.C I c; .I Ul\l �- n . C. T. L' ""' r.; P 1\1 CJ � ' ' b 9 3 ..... l (l -- WHEREFORE., in f i'-1 v (\ t ' pf 81T101\l1t of ) , � P ITr�� ,, <; P n t i n f) ct�editab le W i l; h h I' I t1 i ll n t- '' H ~' c; f l a i d f IH' J i'\ n 1J at' y t 0 J' 1J 1. y , 1 '3 E\9 � r1n p 1 � o n P '�' n c '�? mP n I� <::~ ~:; t u c l1 s t . SO ORDERED. ( .1' I " .� (\I) c i. t y , r1r I; l ' n M"' ll i I r'\ , 29 , j 9'33. GRUBA .Judge WE CONCUR: 'I C E RT I F I C A T I . _P. ~. c n 1��1: i f' y t h f:\ I; r� t. I? o"H ' i l fl r I ,, t p t ' r I I I ~ (~ n I) ~; I I 1 t -~ t; i t) n �"' "' 0 n g t h e ITI P. 1!1 h p t' s 0 f 1..~, ()ltit � lp Vl'll nf thP Constitut ion . ~0,~ ERNESTO D. ACOSTA Pt'!? r::i.dinq .J11dqe �' Court of Tax Appeals ..,,~) ~, I l 1-.~