CTA Case No. 4727 (Decision)

R -:.PUBL IC OF �;� IE t� U LI PP INES GOU,:T F ' AX AP PEALS Q JEZON l ' �y CITYTRUST REALTY CORPORATION, C.T .A CASE NO. 47 27 Petitioner , - versus - COMMISSIONER OF '�INTERNAL REVENUE, Res pondent . X- - - - - - - - - - - - - - - - DE CISI ON This is a claim for refund or in alternative, issuance of a tax credi t certificat e :.for the amount of P410, 025. 02 representing unutilized/ unappli ed creditable withholding tax payme nts for t axa ble yea r ending December 31 , 1989. Pet itioner i s a duly registered domesti c corporation engaged in real state business particularly in the leasing of its buildings and pieces of real estate specifically to Citytrust Bank]. ng Cor por ation. In c alendar year 1989, Citytrust Banking Corporation paid rentals of real property to petitioner in the tot a l amount of P8, 200 , 520.58 from whic h it withheld the equivalent of 5% or P410,0 25 .0 2 pu rsuant to Revenue Regulati o ns No. 5 - 85 or the Expanded Withholding Tax Regulations . 88&

DECISION - C.T.A Case No. 4727 -2- A net loss of P44,346.00 wa s incurred by petitioner in the year 1989 as reflec ted in the Annual Income Heturn filed with the Bureau ot Inl e 1�n a l Nevenu e . This resulted in a refundable amount of P410, 0 2 6.02 repres enting the unutilized/unapplied 5 % creditable withh o lding tax on fees paid by C ity trust Banki.ng Corpo:o�ation. Petitioner opted to apply as ta x c redit to the succeeding taxable year <1'3'.30) t.he afol� eut e ntioned re:fundable amount as indicated by the "X" mark �on t.he box pe r-taining to s uch choice. The ta>: credit intended to be applied �t. 0 the following year however, was not allegedly credited by herein petitioner against any other internal revenue tax liability for 1990 or any period or year for that matter. Petitioner c laimed to hav e a gain in c urred a loss in ta>:able year ending De cember 3 1, 1 9'3 CJ. On December 6 , 19'.31, pe �ti.tion e r :f iJed a c laim :for refund with the Bure au of Internal Revenue :for the unutilized/unapplied creditable withholding tax as at December 3 1, 1989 in the amount of P410,0 2b.02 . Respond ent has nei th�? r g 1� an t e d nor acted upon said claim for refund. The instant petition for revie w was filed with this Co urt on t1arch 1 9 , 1'3'32 as the two ( 2 ) years from the date 88 8

DECISION - G. T .A Case No. 4727 -3- of payment of the ta:.-: is about to expire as provided u n der Section 230 of the tax Code . The iss u e to be resolved in the case at bar is whether petitioner is entitled to th e refund c laimed. In support. of, its case , petitioner pr ese nted the following e>:hibits, to wit: Exhibits "A", Written claim for refund of "A - 1" creditable withholding tax for CY 1989 in the amount of P410, 0 2 5. 0 2 stamped rec ei.ved by the SIR - App e llate Division on 1 2 - 06 -91. EJd1ibits "B" Lease ag1�eemen t between Co rp. and Citytrust Banking petitioner. Exhibits "C" Certificate o k Creditable Income "C - 1 to C-3" Tax Withh eld at S ource <BIR Form 1743. 1) s h o\d. ng �that for CY 1989 Citytrust Banking Corp paid petitioner rental fees of P 7 , 'J 4 6 , 2 4 3 . '::18 fro 111 whi c h 5% or P 38~ , 3 1 2 .1 9 was withheld. Exhibits "D " Certificate of Creditable Income "D-1 to D-3 " Ta:>: Withheld at Source < BIR Form 1743.1> showing that for CY 1989 Cit ytrust Banking Corp . paid petitioner rental fees of P4 5 4, 276 . 60 from which 5% or P22 ,713.83 was wit hheld. EJ<hibit "E" Petitioner's 198'3 Income Tax Return together with suppor -ting schedules s howing a net loss of P44, 3 46.00, refundable income tax of P410,026 .02 and declaration of rental income received from Citytrust Banking Corp. in the amount of P8,206,414.00. 880

DECISION - C.T.A Case No. 4727 - 4- The Court admitted all exhibits formally offered as evidence by petitioner inasmuch as res pond ent failed �to file his comment thereto within the time giv e n to him. Respondent waived prese ntation of evidence and did not file any memorandum. The case was submitted for decision ' with the filing of pe titioner's memorandum. The issue before Us is not of first impression. A number of cases raising the same question have already been decided by this Cour t. The basic r�e qu irements se t forth in claiming for refund of e:<cess credi �table withholding tax are the following: <1 > that it filed a c laim for ref und within the two<2> year period as prescribed under Section 230 of the National Internal Revenue Code; <2 > that the income upon which the ta::.ces were withheld were included in the return of the recipient; and <3) that the fact of withholding is established by a copy of statement <BIR Form 1743. 1) duly issued by the payer <withholding agent> �to the payee, showing the amount paid and the amount of tax withheld therefrom. L .1.. SEC . 10, Rev. Regs. No . 13 - 78 ; Citytrust Finance Corp. vs. CIH, CTA Case No. 4134, Nov . 11, 1 99 1; Citytru st Finance Corp. ( Former.ly Investors Finance Corp. /FNCB Fiance) vs. CH~, CTA C ase No . 4046, Feb. 24 , 1'3'33 ; Paseo Realty and Dev. Corp. vs. CIR, C:TA Case No. 4528, April 30, 1'3'33 ; Paseo Realty and Dev. Corp. vs. CIR, CTA Case No. 4439, J uly 5 , 1 '393 ; Filipinas Mngt. and Leasing Corp. vs. CIR, CT A Case No. 4146, March 11, 1994. ) 891

DECISION - C.T.A Case No. 4727 -5- While it is not disputed that petitioner was able to meet the foregoing requirements, it is noteworthy to point at this juncture that pet itioner declared in its income tax return that the refundable amount of P410,026 .02 "is to be applied as tax credit to the succeeding taxable year 1 '3'30. Weight i s given to said .intention of petitioner since any dec la ration , return and other statements required unde r the Nation a l Internal Revenue Code ( NIRC) is signed "under the penal ties of perjury" if not found true and correct <Section 266, NIRC >. Further more, Secti on 2 <a> of Rule 1 31 of the Rules of Court provides: "SEC. 2. Conclusive presumptions. - The following are instances of conclusive presumptions: (a) Wh e nev er a ~.!:.L has, by hi s own declaration, act, or omission intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, h e cannot~]1 any l i �tigation arising out of such declaration, act or omission~~ Qermi t ted to fal.sif y__ __!_t ;" ( Undersco:c ing supplied> XX}C XXX In this case , herei n petitioner seeks the refund of the refundable in co me tax as at December 3 1., 198 '3 of P410, 026 . 02 which it already declared in its ITR to be applied as tax credit to taxable year 1'390. There is 89 2

DECISION - C.T.A Case No. 4727 -6 - allegedly no internal revenue tax liability on which the 1989 tax credit can be cr-edited against by petitioner in 1990 since it allegedly again suffered a loss. However, petitioner failed to include in its written offer of evidence its 1990 Income Tax Return as proof of said loss and to show that the 1989 refundable income tax was not applied as tax credit in 1990. The verbal offer of evidence were at best confusing since the exhibit referred to do not correspond to the evidence on file. <T. S. N. January 4, 1993, pp. 7-9>. There is likewise no file of petitioner's 1990 ITR in the records of this case on which the foregoing can be verified. Section 34 of Rule 132 of the Rules of Court is categorically clear on this matter thus: "SEC. 34. Offer of evidence. The court shall consider no evidence which has not been formally offered. The purpose for which evidence is offered must be specified. " <Underscoring supplied.) Under this rule, evidence not formally offered in court will not be taken into consideration by the court in disposing of the issues of a case <Martin, R. G. , Rules of Court, Volume IV [19891 p. 589). Claims for refund of taxes are strictly construed against the claimant, the same being in the nature of an exemption from taxation. In an action for refund, therefore, the burden of proof is upon the claimant to 893

DECISION - C.T.A Case No. 4727 -7- establish a Fight to refund. Failing to overcome this burden, the claim for refund should be denied as in this case. WHEREFORE, the instant petition :for review is dismissed for lack o:f merit. SO ORDERED. GRUBA Judge WE CONCUR: CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court o:f / Tax Appeals in accordance with Section 13, Article VIII o:f the Constitution. f: . -;;;- o( G~ ERHESTO D. ACOSTA Presiding Judge Court o:f Tax Appeals 89 4