CTA Case No. 4439 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PASEO REALTY & DEVELOPnENT CORPORATION, Petitioner, - versus - C.T .A. CASE NO. 4439 COHHISSIONER OF INTERNAL REVENU E , Respondent. X- - - - - - - - - - - - - X DEC I s I 0 N This is a claim for refund in the amount of .) P81,403.00 representing overpaid creditable withholding tax of the petit ioner , Paseo Realty & Development Corporation, for the calendar year ending December 31, 1987. Petitioner is a dome8t'c c orporatio duly organized and ex'sting under he laws of the Ph i li ppines with office address at Makat �, Metro Manila. On April 5, 1988, petitioner filed its 1987 Corporation Annual Income Tax Return w' t h the Bureau of Internal Revenue <B IR > s ho wing a refundable amount of P81,403.00, computed as follo ws: <Ex h. " A-1" > 61 �

.' DECISION - C.T.A. CASE NO. 4439. -2- Income: P1,855,000.00 Rentals/Leases <Schedule 4> _!,!...~<)._3,. Ql1!_90 Less: Deductions <Section E> ~ .-.J~! '��-~~-9-~..Q-~ Net Income p 56,696.00 Tax Due <161,989.00 x 35X) --���- ~ :38, g_~~!._QQ Less: <E.... -~ 1 �-~9~.� gQ > (a) Prior Year's Excess Credit P45,349.00 (b) Quarterly Payments (c) Creditable Tax Withheld <Expanded Withholding Tax) ...~_4.r.7.2Q..!..QQ Total Amount Due/Refundable On March 22, 1990, petitioner :filed a letter - claim for refund with respondent o:f allegedly .) creditable withhold� ng taxes for the taxable year 1987 in the amount of P25 ,623.52 <Exh . "H">. Since respondent has not acted on the aforesaid letter, petitioner :filed a judicial claim :for refund with this Court on April 16, 1990. Hence, this petition for review. Respondent in his a nswer alleged , among others, the following as special and a:f:fi rmati ve def"enses: 1 . Any amount claimed to have been withheld must show payment and remitt ance to the g overnment; 2. In any action :for ta x refund, the burden of proof is upon the taxpayer to show that the t a x paid was erroneously o r illegally col lected; 62

DECISION - C.T.A. CASE NO. 4439. -3- 3. Petitioner must show that a wr'tten claim �or refund was filed within two <2> years from the time said tax was paid and instituted a suit before this Court within two (2) years �rom date of payment regardless of any supervening cause that may arise after payment: 4. The peti ion does not state a cause o� action because it merely states a period and not the part icular dates when the income taxes were allegedly withheld; and 5. Petitioner's claim is barred by prescription. The only issue raised in t his petition is whether or not petitioner is entit ed to the refund of P81,403.00 as excess creditable withholding tax paid for the year 1987. In support of its case, petitioner presented the �ollowing exhibits, to wit: Exhibit A-1 ncome Tax Return <ITR > o� petitioner for the calendar year 1987, inc uding page 1 of 1986 ITR and the audited Financial Statements for 1987; Exhibit D Certificate of Creditable Income Tax Withheld at Source <BIR Fo m 1743.1) for th year 1987 issued by Ci tibank NA s how ng n income tax wit hheld of P92, 750. 00 on rental income of Pl,855,000.00; and 6 ') ' '""'

DECISION - C.T . A. CASE NO. 4439. -4- Exhibit H Letter-claim f or refund dated March 22, 1990 received by respondent on March 26, 1990 in the amount of P25,623.52 . The case was submitted for decision by counsel for respondent on the basis of the pleadings sans presentation of his evidence. The question raised in the case at bar is not new. In many cases already decided by this Court involving claims for refund of excess creditable withholding tax, the only proofs requi red of the petitioner are the following: 1. That it filed a claim for refund tfi thin the two (2) year p eriod as prescribed under Section 243 (now 230) of the National Internal Revenue Code'-; 2. That the income upon "hich the taxes "ere withheld were included in the return of the recipient 2 ; and 3. The fact of "i thholding is established by s copy of statement duly issued by the payor to the payee <BIR Form 1743.1) sho.,ing the amount '-See Citytruat Finance Corporation v. The Commissioner of Internal Revenue, CTA Case No. 4134, November 11, 1991; and Citytruat Finance Corporation <Formerly Investors Finance Corporation/FNCB Finance) v. Commissioner of Internal Revenue, CTA Case No. 4046, February 24, 1993, Paseo Realty and Development Corporatio~ v. Commissioner of Internal Revenu~, CTA Case No. 4528, April 30, 1993 . 2 Ibid; Sec. 10, Revenue Regulation 6-85. ) 62 2

DECISI ON - C.T.A . CAS E NO. 4439. -5- paid and the amount of tax J+'ith held therefrom. 3 Herein petit ioner filed its 1987 claim for refund on March 26, 1990 well within the two-year prescriptive peri od provided unde r Secti on 243 <now 230 > of the National I nt ernal Revenue Code <that is, from April 16, 1988 to April 15, 19904 > with the BIR end filed with this Court a claim for refund on April 16, 1990. Respondent, on the oth r hand, alleged that said petition wa s barred by prescription having filed it late on Apr il 6, 1990, the last day for recepti on should a 1 -aet b made on Apr i l 1 5 , 1990. We di sagree with t h e respon den t . April 15, 1990 fal ls on a Sunday and "when the time refers to a period prescribed or allowed by t he Rul es of Cour t, by an order of the Co urt, or by any other applicable stat ute, ix the last day is a s_~_Q_c:t~.Y. or a leg al ho lida y, i t is understood that th e last day should � really be the _ n~x_:t__ _g~_y, provided said day is neither a Sunday nor a legal 3 Ibid. first day shall be "In compu ting a p r � od, th excl uded, and the la t day i nclud d.

DECISION - C.T.A. CASE NO. 4439. -6- holiday"~. Therefore, said filing is within the period allowed under Section 243 <now 230> o:f the Tax Code, which reads: "Sec. 243. Recovery of tax erroneously or illegally collected. - No suit or proceeding shall be maintained in any court for the !:.1?.9 o Y..I?..!:.Y-._.........o !.___._'!,D.Y.. D..~.:t!.9rl.!'l..J:. . . _.!.D..:t_E?XD..~!....._!:..~.Y.~!l. ~f?.___:t.~~ he rea :ft e r a 11 e g e d to have been f?.XT...Q.D..l?.Q.!J_fi\I_J.,,Y___Q_!: ! .1, J,. ~ g~J..l,y______?.E.J.!?..~..~?..gJ.Eh'Q___.. c:> .~....___qq .!J..�'g...t..~9., or of any penalty claimed to have been collected without authority, ~!:. o:f any sum alleged to have been f?..~.9�'.eJ.I?.!.Y..~ or in any manner wrongfully collected, until a claim :for refund or credit has been duly :filed with the 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 such suit or proceeding shall be begun a:fter the ex pi rat ion of :t...l.'..c:> .. ..Y~~ r.. ~... JI.:". Q~ ___t._Of:L.~-~.:t.~?.._..o.:f p a_y f.l1 e D.:t........Qf. _.t. h~ ......t .a..><:.. __..Q.r. ..... P'?.D.~..! t.Y__:r::_E;>g,?.;r_q.Jg.l?..~?.. Qf.: ......~.D. Y..........I::I!J.Pgr._y:gn.!.DR..__q.?...!J?..~.......t..J.'J. !'l.:t.___ffi!=l..Y.___C!.:r...! .l?...�' c:lf:t.~.L........P.?..Y'!I.f?..Q.t. : Provided, however, That the Commissioner may, even without a writ ten claim therefor, re:fund or credit any tax, where on the face o:f the return upon which payment was made, such payment appears clearly to have been erroneously paid." <Underscoring supplied) As borne out by the records, it is undeniable :fact that petitioner also complied with the second and third requirements when it presented in evidence the 1987 ITR <which shows that the rental income of Pl,855,000.00 on which the 5X withholding tax was deducted was declared as part its gross ~Edgardo L. Paras, Civil Code of the Ph i l i ppines Annotated, 1978 Ed., p. 52.

DECISION - C.T.A. CASE NO. 4439. -7 - income) and the BIR Form 1743.1 Con wh'ch the payor, Citibank NA, certified that the withholding tax was withheld from the payee, Paseo Realty and Development Corporation, in the amount of P92, 750. 00). Accordingly, there is no doubt that petitioner was able to prove its entitlement for a tax refund. The only point that besets this Court, at this time, is petitioner's inconsistency in the amount being claimed. Petitioner is seeking the amount of P81,403.00 by way of this petition. However, a care.ful examination of the records of the case reveals that it was only claiming some P25,623.52 with the BIR. The amount P25,623.52 was arr ' ved at by petitioner after deducting from P81,403.00 the income tax liabilities of 1988 and 1989 as follows: 1987 prior year's credit p 81,403.00 1986 income t x liabilities 1989 income tax liabilities ( 28,127.00) Balance J. .:.;!Z,_~;;>.;l.~. 99.1. p 25,623.001!1 <See Petition � for Review, C. T. A. Case No. 4528) But when the 1988 Income Tax Return <Exh . A-3) was presented, the P81, 403. 00 being applied as tax credit in two successive years, 1988 and 1989 [as 6 Figures are rounded off to the nearest peso for convenience. ()25

DECISION - C.T.A. CASE HO. 4439. -8- alleged in Petition for Review in CTA Case No. 4528, supra), was then decl ared by petitioner to be refunded. Thus, it is necessary to quote the relevant portion of our decision in C. T. A. Case No . 4528, supra, involving claim for refund of same petitioner regarding its 1988 excess creditable withholding tax as follows: "xxx KKK KKK An examination o� petitioner's 1988 Income Tax Return reveals that out of the total refundable amount of P146,026. 00 petitioner opted to claim for refund the amount o� P81, 403. 007 and to apply as a tax credit to the succeeding taxable year <1 989) the amount o� P64,623.00 ( P92, 750. 00 less P28, 127. 00), as indicated in the cross ma rked on the appropriate box shown in item 110 of Section C thereof. XXX XXX XXX By declaring that the amount of P81,403.00 is to be refunded and the amount of P64,623.00 is to be applied as tax credit to the succeedi ng taxa ble year <1989>, petitioner should not h ave applied as a tax credit the whole refundable amount o� P146, 026.00 to the succeeding year. Instead, only the amount of P64,623.00 should have been applied as credit in its 1989 Income Tax Return. XXX XXX xxx. " Based on the above:..ci ted case, the Court did not allow the application of the 1987 excess tax 7 Subject of this petition. 62

DECISION - C.T.A. CASE NO. 4439. -9- credit on the income tax liability of 1988 simply because petitioner opted to refund the same. A greater weight was given by the Court on the intention of petitioner to refund it because the document <ITR > was signed "under the penal ties of perjury" if found not true and correct. Furthermore, Sec. 2<a> of Rule 131 of the Rules of Court9 provides: "Sec. 2. Conclusive presumptions. The following are instances of conclusive presumptions: <a> Wh.E:C>Do_E:,>Y._e.r::. par::.tY ..... h a..f?, _. I?..Y........D.is_....ow~ <;1 e ql a :r:- a..t .i, o 11, ......................a..c;::J:.J.. .... ......... _._q r ___ ...... . Q,l!l.i,_~-~-:1,_() ~~-- :i. n ten :t i ()!"!a ,ll_y__ ...... _a _!l!=f........ ,_____ q_f?:l. ;i..l?_e_r_a.tE?.)._y________ _) ._eq an Q t.l1 e I.":..... t _g __ ...... b_~?.).._:i,..e. ':H?............ a. _____ P .c:l !:..t..:i,.g1,J.,.J. ~L___t_, h.!1l g t T\J e , .... ...."!.J:l q_____.t Q___,___ a.c;::J:......-...~ p q n ... --~-\J.9 h_____l? e,>,:!,_i_~-f...~-- _ hg_ ca. nn qt, __:i, n .....<:li1Y.........:l.:i.t_:i.gCi_.t__t._q _l1 ... .?X :i.f3_:i,_D.9 .....9}-l_t ......o;f_ such . l:;fe_clar_a:t,_.l,.q_r:t, ..... a.qt .........9 .X::........ c:>TTI. i.~-~:i._Qil,_ .... b~. pgrm _:i._:t t.e:>.ci.. .. :t..9... t...?,l,.~:i,::(y____:i,:t ; KY. X KY. X xxx. " .J In this case, petitioner draw this Court to believe that it was entitled to the tax refund of P81, 403.00 manifested in its 1987-1988 Income Tax Returns and in this p etition an~ not the P25,623.52 claimed with the BIR. But since the Court 's jurisdiction is exclusively appellate in na ture , we find it fit to grant only the amount of P25,623.52 and not the P81,403.00 claime d in the petition for review. eparas, Rules of Court Annotated, 1991 Ed., p. 478. , 62

DECISION - C.T.A. CASE NO. 4439. - 10 - WHEREFORE. in view o� the �oregoing. respondent is hereby ordered to � REFUND to 1 petitioner the a�ount o� P25. 623. 52. representing overpaid creditab1e vithho1ding tax �roa renta1 inco�e �or the calendar year 1987. No cos~ . SO ORDERED. Quez on City Metro Manila, July 5, 1993. ~Q.. ~ - ERNESTO D. ACOSTA Presiding Judge WE CONCUR: Judge j)Afll ~ I liON 0. DE~5 Associate Judg

DECISION - C.T.A. CASE NO. 4439. - 11 - 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, Article VIII of the Constitution. ~Q.~ ERHESTO D. ACOSTA ) Presiding Judge Court of Tax Appeals ' 6q r:.,