CTA Case No. 4412 (Decision)

J( --- REPUBLIC OF 7HE PHILIPPINES COURT OF TAX APPEALS QUEZON CI7Y BPI FAMILY SAVINGS BANK, INC., Petitioner, - versus - C.T.A. CASE NO. 4412 COMMISSIONER OF INTERNAl REVENUE, Respondent. X- - - - - - - -------X DEc I sI 0 N This is a simple claim for refund of alleged overpaid income tax amounting to P29,926.99 covering petitioner's income tax return for 1987. It appears from the records of the case that for taxable year 1987, petitioner allegedly received rental income from varioCJs lessees from which income the total amount of P29, 926.99 was withheld under the expanded withholding tax regulation by the said lessees. Petitioner alleged that as can be shown by its income tax return, it ha s included the rental income subject to such withholding as part of the gross income. So that when it filed its final return showing a net loss of P23,920,974, the entire amount of P29,926.99 under creditable withholding should be refunded to it. _, 585 �

DECISION CTA CASE NO. 4412 ~2- In a letter dated July 4 , 1988 duly filed with ,� the BIR on Au gust 3t 1988, petitioner filed a claim for tax c redit but as of the time of the filing of the petition for r eview remains unacted. Hence, the filing of the instant petition for review to stop the running of the (2) two - year prescriptive p er iod. Respondent for his part admits only the per Qonal cil"oumetances of the parties and denies iill l other ~ ll~gations of the petitioner. While re s pondent odmits the filing of a form~l claim for roafund, he den ies the truth and veracity of the gr ounds stated in support of the clai m. As special a11d affirmative de fenses, he alleg e d that the elaim is still under investigation; that the ineorne tax return of petitioner is not suffi cient to prove the cl aim; that petitioner has the burden of proof to prove its claim and th at taxes ere presumed to have been paid in acc ordan ce with law. The issue in this case is whether or not petitioner ha s fully complJed with the requirement of the law to entitle to a r ef und of the excessive payment of income t~x for tax~ble year 1987 . Petitioner pt-e se n ted t he following documents 586 ,�

. - - - DECISION CTA CASE NO. 4412 - 3- in support of its claim for tax credit: ( 1) Exh. "A" - Corporation Annuan l Income Tax return for calendar year ending December 31, 1987 to prove the loss, and inclusion of rent al income as part of g ro ss income declared; ( 2) Exh. "8 to 8-15" Various withholding tax certifications to prove the withholding of cre ditable tax in the to tal am ou nt of P29,296.99; (3 ) Ex h. "C" - Claim for refund dated July 4, 1988. file d with the BIR on August 3.1988 . Respon den t unfortunately failed to present evidences to disprove the case of the pet iti oner and instea d submitted th e case on the ba sis of the pleadings and t he records. On the basis above of the failure on the part of t he responden t to prove his case, t h i~ cou rt on the basis of the evidences presented by the petitioner s hould have awarde d the -� claim for tax credit. However. an examin atio n and evaluation of the evidences presented s how that petitioner likewise failed to satisfy the requirements of the law i n case s of this nature. The applicab l e provisions of law is Section 54 587

DECISION CTA CASE NO. 4412 - 4- (now Section 51) of the National Internal Revenue Code particularly subsections (c) and (f), quoted hereunder: XXX XXX XXX (c) Statement of income payments ma d e a n d t a x e s wi t h h e 1 d . -~-Y.. ~..r::.Y.. -~- ~.!. . ~.~.9...!.9...!.D.9._......~. 9.~.r.:!...~ r e q u i r e d to d e d u c t a n d wihhold taxes under Section fifty - three .~.h. ~.!.!. . . ...f..'::I..!:DJ.~.b.....~-~-g-~----��.!:...~..9...~. P...~...~.!l.!: , i n r e s p e c t to his or its receipts during the calendar quarter or year, .~..............Y..t:..~---~--~-~..':1. -~- ~--~.!. .~--~--~-r::'...!. _..... ~.h...9..~JD.9...............!:.b. ~.......~.n..9. ~.!:!!.~..........!>....r........9..!=..b. ~..r. .P.. ~.Y..~..~.IJ. ~.-~...........1!1.~2-~---��������-~--.Y........~.b..~... ...Y.!..~.b. b. ~..!.s!.~..!:!..9._........~...9..~.D...~ .9.. ~::~. r::..! .n.9.............~. ':J...2..~....... ......9..~...~. .r..~.~-..r...... ...9...r.......Y.. ~..~..r.::...L 9.. ...........~D... ......~.b. ~. .a......m.........o.....u......n......t............o.......f..............t....h......e................t....a......x.................d......e......d......u......c......t....e......d...............a.....n......d................w.........i....t....h.......h......e......l....d...... .~.h. ~. '.:.~. f...~...9...~. � simultaneously upon payment at the request of the payee, but not later than the 20th day following the c lose of the quarter in the case of corporate payee, or not later than March 1 of the following year in the case of individual payee for creditable withholding taxes, the statement should be given to the payee on or before January 31 of the succeeding year. (As amended by Batas Pambansa Blg. 41.) (Underscoring s upplied.) XXX XXX XXX (f) Income of recipient. - .! . ':~..<:?. .?..~. ~.. ..':A..P...2D........~.~-~-g_-~.........~.':l..Y. . .......9...r_~.E .! .~.~-~-!..~.....!. . ~.~.... ~.~.....r. ~..9.!::!...~...r. ~..9.. ..t....o....................b......e...................w ..........i....t....h......h.......e......l....d.....................a.......t..................t....h.......e....................s......o......u.......r....c......e.....................u......n......d......e......r.... Section 53 shall be included in the .t.:. ~..~..':J...'.:.IJ........9...:f......~..~.~.....~. ~..9.J . P....~...~..':l...~........t.>...':J.. ~........~.D.Y.....-..~...~...9.. ~..~.~.........9...f. - - ,,t_,h...,...e................a.....m........_o_.u......n......t......._...o.......f. ..........t....a......x................s- o................w....... i..t...-h.....h......e......l-.d.................o......v.....,e_,,,r...............t....h...._e,.... ..t....a.....x..............d......u......e.............o.....n.............h......s.............r.....e......t....u.......r.....n- ..........s......h........a......l.....l............b.....e.....-......r....e......f....u......n.......d......e......d..............t....o...... .h. ~.~.....~.!:!.t.>...J..~_<:?..~.. ....~.~........!=..b.~..... .P.. r::..~..Y...~.~.~-~--IJ..~.........2.f......~. ~..9...~.~...9.D. .?..~.~. ; if the income tax collected at source is less than the tax due on his return, the difference shall be paid in accordance with the provisions of Section 51. (As amended by Batas Pambansa Blg. 41.) (Underscoring supplied.) 588

DECISION CTA CASE NO. 4412 - 5- In a similar case, this court had occasioned to interpret said provisions of law. As held in t h e c a s e o f .~..!. !:.~_.!:.!:.IJ...~..!:.... . I.L!:l..~.!::.' g..~......._~--~-!.. r. F.?..9... .~.!=.! .~..~.. . . .Y...~--~-. --..I .~-~- .S.~-~-~.!. ~. ~.!:..9..D. ~..t:... _...9..! . . . . . . .!. .':1..~.~...t.:. .':I..~...~.........,...~. ~.Y..~.D. !::!...! �. CT A Ca s e No � 4134, November 11, 1991, as follows: "An analysis of the provi sions of law involved will show that the grant of tax refund when the creditable withho ld ing tax is in excess of t he amount of the tax due, depends on three f ct()l"s: (1) t hli!t th e elaim is filed with t he CQmmissioner of Internal Revenue within the two-year psrlod from the date of payment of the ta x ae required under Se otion 29S of the T~x Code (n ow Section 204); (2) i t mu $ t be shown on the return of the recipi~nt that the income payment received wa s declared as part of the gross in eo me; ahd ( 3) th e f~ct of �' with hold in9 l $ est('.lblisHed by ~ copy of t he st6tement duly i ~G ued by the payor to the payee showin9 the amount paid and the amount of tax withhel d therefrom. The f irst two l"(;)qulrcaments ar e embodied in Sectio n 54(f) of t he Tax Code while the last is a ~equirement under Section S4(c). " To the$e r~~ui~em nts, petitioner has complied with the requirement numb e r (1) one when it filed su bject claim for refund dated July 4, 1988 duly stamped "received" by the BIR RR 4- 82 - 32 - A-West Makati on August 3, 19!38, in accordance with the provision of Secti on 295 of the Tax Code (Exh. C). It likewise substa ntially complied with requirement number 3 . (three) when petitioner submitted 589

DECISION CTA CASE NO. 4412 - 6- ,' statements of tax withheld at source (BIR Form 1743). certificates of creditable income tax withh e ld at source (BIR Form 1743.1) and other certifications showing the taxes withheld from petitioner by various withholding agents. However, petitioner failed to comply with the second requirement. It failed to present documentary evidence to show that for the taxable year in question, petitioner declared in its income tax return the rental income from which the various creditable taxes were withheld. We have examined the photocopy of the annual corporate income tax return ending December 31, 1987, presented by petitioner as Exhibit "A" but it failed to show the rental income as part of the gross income declared. The said copy of the return merely showed the total gross income declared, the total deductions claimed, the resulting net loss incurred and the creditable withholding tax being applied. The same was not even covered by the testimony of Mrs. Yolanda Esmundo, Accounting Manager of petitioner in her testimony before this court on September 10, 1991. Furthermore, Revenue Regulation No. 13- 78 (as amended by �Revenue Regulation No. 6- 85) 590 _,

DECISION CTA CASE NO. 4412 - 7- particularly Section 10 thereof likewise has the same requirement, as follows: Sec. 10. Claim for tax credit or refund.- Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when i t i s shown on the return t h a t the ........."'''"'''''"'''"''''''""'"''"'"" .!..IJ. 9..9..~-~..........P. 9.. Y..'!!.~.D...!:......r. ~. 9.. ~..!.Y..~. 9......~.~.~..... .9. ~.9..!..~. r..~.9..... ~. ~. .P..~.r...t=.....?...f......!:.~..~.... 9..t .5?...~. ~.-......!. !:l. 9.. ~.'!!.~..........~.!:l..9..... ~..t!.~......f..~..~..!:.... ?....f. .~.!.. .t=..h.h.g.!.9.!.!:l.9..........!..~..... .~..~. ~-�~�-~�-~��!..~. b..~.9......!?...Y......--~-.......9..9..P.Y...........~...f. ..t=..h.~....~..t=..~. .t=.-~.~.~.IJ...t=.........9..~.!. Y..........!. ~..~..~..~..9.....~.Y.........t=..b..~.... P...~.Y.. ?..E.........!:.~. ..t=..h. ~..... .P.. ~. Y. ~...~. ( BI R F o r m No � 1 7 4 3 � ) .~..h. 9..~. !D.9. ..t=..h.~...........~.'!!.?...~.D...!:......P...~..!.9.......~D..9...... .t=..h..~.......~..'!!.~..~.D...!:..... g. f......!:.~. ~. .~.f...t=..h.h.~..!.9..:...................!:.b.~..r..~..f..r. ~.'!! � ( Un d e r s c o r i n g supplied.) Regulations issued by the implementing agency pursuant to the provisions of the law has likewise the force and effect of the law. WHEREFORE. in view of all the foregoing. petitioner's claim for refund is denied and accordingly this petition for review is hereby dismissed. SO ORDERED. Quezon City, Metro Manila, August 17, 1992. ~~Q .. Df.~'_O-as. TA ERNESTO Associate Judge I CONCUR: 591

DECISION CTA CASE NO. 4412 - 8- CE:R."..."IF"'IC.A"..."ION I hereby certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. ~Q... ~ ERNESTO D. ACOSTA Presiding Judge ,! Court of Tax Appeals 592