CTA Case No. 4897 (Decision)

REPUBLIC or TIE PIIILIPPINES COURT UF TAX APPEALS UUEZON CITY BPI FAMILY SAVINGS BANK~ Petitioner�, - versus - C. 1-. A. CASE NO. 4897 COMMISSIONER OF INTERNAL Pt~omul gated : REVENUE., _..__;.AP_R_2_4 _19_95_~ Respondent. - )( - - - - - - - - - - - - - - - - - - - - )( DECISION This is a claim for a taM refund in the amount of P483,532.40 representing alleged overpaid income taM for the taMable year ending December 1990. Petitioner is a domestic banking institution duly organized and eMisting under and by virtue of the laws of the Philippines. Part of the income of petitioner is derived from the leasing of its properties and sale of its assets to various individuals and entities. F ot~ the taMable year 1990, it declat~ed in its income taM l~Ptl..n~n a total rental income of P1,983,533.00 (EMhibit "A-10") out of which the amount of P483,532.40 in creditable income taMes WPrP allegedly withheld by its withholding agent~ in accordance with EMpanded Withholding TaM Regulations. Certificates of Creditable lncome TaM withheld at source, 713

DECISION -- C.T.R. CASE No. 4897 -- 2 - Form No. 1743-1 �>vidence by petit i onPt~. The final income tax return 1990, t~ece i vPd by the BIR on April 15, 1991, also revealed that petit i onet~ a net loss amo�.mt ing to P52,480,173.00 <Exhibit "A--�9") thus negating any income tax liability of the petitioner for that year. Thus, in a by the BIRon Oct.obet~ 3, 1931 <Exhibit ''C" >' petitioner requested for a corresponding tax credit memo in the amount of P483,532.40 which represents the income tax withheld from the rental incom�' it received in that same The said lett.et~ contained a certification to the effect. that the excess withholding taxes for the calendar year ended December 31, 1990 has not been and/or will not be automatically credited/offset against any succeeding quartet~s' inco111e tax liabilities of the calendar ypar ending December 31, 1991 <Exhibit "C-1"). Petitioner attached to the said letter copies of the first two quarterly returns filed for the succeeding calendar year :1991 to show that it suffered net losses thus preventing any offsetting of the excess income taxes paid the previous taxable year. RespondPnt. failed to act on this claim for a refund which impelled the petit. i onet~ t. o file a petition for review with this Court on January 4, 1993. '714

DECISION -- C.T.A. CASE No. 4897 -� 3 - In support of its claim for a tax refund, petitioner submitted to this Court in evidence its final income tax for the calendar year 1990 <Exhibit "A"J showing a net loss of P52,4B0,173.00J, as well as certificates of income tax withheld by its payors on the rental income it received for the taxable year 1990. <Exhibits "B-1" up to "B-55''). Respondent alleged as special and affirmative defenses, that: 4. Taxes collected and paid are deemed to have been made/effected in accordance with law and pertinent BlR regulations; 5. ln an action for tax refund/credit, the burden is on the taxpayer to show that the tax paid was erroneously or illegally collected and failure to substantiate the same is fatal to the action; 6. A claim for a taM refund/credit is construed strictly against the claimant since it partakes of an exemption from taMation (Co��� of Int. Revenue vs. Ledes�a, GR No. L-17509, 31 SCRA 9=t, Januat~\-' 20, 1970; Mla. Electric Co. vs. CIR, GR No. L-29987 and L-23487, Oct. 22. 1975, b7 SCRA 391). 7. Met~e allegations that petitioner incurred losses in calendar year 1990 do not ipso facto merit a refund of the alleged creditable income taxes withheld on the pretext that petitioner had no tax liability against which to apply the same. Respondent did not offer any evidence to dispute the claim of petitioner and failed to submit his memorandum. 715

DECISION - C.T.A. CASE No. 4897 - 4- The only presented before this Court is whether petitioner is entitled to the tax refund of P483,532.40 representing excess creditable withholding taxes paid for the taxable year 1990. A close examination and evaluation of the evidence pt~esented and a subsequent re-computation of the figures included therein conclusion that petit i onet~ is entitled to a refund but is to be awarded a lesser amount than that sought in its petition. This Court has ruled in several instances that three basic requirements must be met in order to successfully claim for a refund of excess creditable withholding taxes, to wit: 1> That the claim is filed with Commissioner within the two-year pet~i od the date of payment; 2) lt must be shown in the return of the recipient that the income payment received was declared as part of the gross income; 3) The fact of withholding is established by a copy of the state~ent duly issued by the payor to the payee showing the amount paid and the amount of tax withheld therefrom. (cited i'n the cases of Citytrust Finance Corporation vs. Co��issioner of Internal Revenue, CTA Case No. 4134, Nov. 11, 1991~ Lincoln Philippine Life Insurance Corp. vs. Co��issioner of Internal Revenue, CTA Case No. 4522, Decem bet~ 1, 1992; Fi 1 i pi nas Manage�ent and Leasing Services Corp. vs. CIR, CTA Cas�> No. 414E�, Ma,~ch 11, 1934>. 716

DECISION - C.T.A. CASE No. 4897 - 5- Records show that the final income tax return of the petitioner was received by the BIR on April 15, 1991 and the letter-request for a refund was received by the sa�e office on Oct obel~ 3, 1991 subsequently followed by a petition for review filed on January 4, 1993, all falling within the two-year prescriptive period provided by law. Certificates of creditable income tax withheld at source were also presented as evidence by petitioner to show that a total amount of P483,532.40 was withheld by the various in compliance with the Expanded Withholding Tax Regulations, s�.tmmat~i zed as follows - JHCli"E ~ ~i thholdimJ.l!g!!!!. hh. RrntaJ SaJr llf~~rt~ la� Paid BPI - Credit Corp. B-1 2J7,J'R.6S 11,861.62 8erl ited Ptlil. Corp. 2\,\11.88 Berliud Pflil. (ot�p. 8-2 ~,837.60 3,\18.8\ Berlited Ptlil. Corp. l,\'M.8\ Berlited Pflil. Corp. IH 61, 'H6.8Q 3, \'18.8\ 8erlited Phil. Corp. J, \18.8\ 8erlill!d Phil. Corp. 8-\ 61, 116.8Q 3,\98.8\ 3,540.00 Colby Construction &"gt. 8-5 61,176.80 3,120.00 Pacer Insurance Agenty 8-6 6'1, 116. 8Q 6,~.00 Alfredo Benjatin Sulaytan Rtityville Realty Corp. 8-7 61, 116. 80 5,822.00 Angel De Oios 10,117.00 8-8 10,800.00 1,650.06 Anthony "� Tongos Basilio Bautista 8-1 62,ft00.01.) 7,007. so Cehrino D. Sta. ~ria Oanilo E. Mariano 8-10 128,520.00 21'� 210. 00 Efnm F. Go 6,210.00 Efren F. Go 8-11 116,\\0.00 11,200.00 Erlinda V. Garcia an,�no.oo 12,075.00 Generoso C. Baladjay, Jr. 8-12 II,JS2.00 Glenn Vincent 0. Vazon 5,658.00 Jesuslino Serranilla 8-ll 113,001.20 S,'JJ\.00 6,210.00 J. Alfonso z. C.1rpio B-1\ l\l, 150.00 1,161.50 B-lS 4,285,800.00 IH6 124,200.00 B-11 224,000.00 B-18 241,500.00 8-l'J 227,0\0.00 B-20 113, 160.00 1!-21 ll8,68'l.OO 8-22 124,200.00 8-23 155,350.00 717

DECISION - C.T.A. CASE No. 4897 6- JNCO"E ~ Withholding Rgrnt _!!h. Rrntal Salr of Assrh Ta11 Paid Josias l. Guinto 9.--1:\ 118,800.00 5,1\0.00 Juanito V. Estaris 8-1:5 88,SW.OO ft,\28.00 1,360.00 "'linda S. "'ndoza B-26 187,200.00 S,J6J.82 Oscar l. Crue I 8-27 107,276.\0 1,\00.00 Proceso T. Gonzalez 8-28 188,000.00 6,2.12.50 Salvador/Estrttllita Cabote B---21 124,650.00 ~Jl'J.\0 Sa1son P. Tor1is 8-JO 66,S68.0J 3,660.00 Tessie Do1ingo 8-Jl 7~2.00.00 6,162.1\ The Insular Life Anuranc:tt 8�-.12 IJS,l58.8S ~211.50 Burttau of lntttrnal Rttvenue 8-JJ 6\1 350.00 1,200.00 J,OOO.OO Her1inia Nepoi�JCeno 8-J\ 2\,000.00 I, 180.00 Phil. Info. Agency, R-7 8-JS 60,000.00 1,\00.00 DHl Phils. Inc. 8-J6 39,600.00 251.11 1ft. Enterprises 8-J7 28,000.00 2,376.00 Tire Manage1ent Corp. 8-.18 5,0.15.80 6,\50.00 "ercury Drug Corp. 8-39 \7,520.00 1,138.75 Rudy's Ma1i Houstt 8-\0 121,000.00 1,252.68 I, 150.00 The Insular life Assuranctt B-ftl J8, 115. 00 I, 7J7.\S Baguio Vendors Savings 8-\2 25,053.60 8'JS.8\ Per1anent Pension Plans 8-\J 31,916.66 2,051.22 Prudential liftt Plan Inc. 8-4\ J\,7\9.00 J, 100.00 J,OOO.OO Federico Fernandttz 8-\5 . 11,916.80 112.50 Sabater Realty 8-\6 \1,02\.SO ~262.00 Manuel Y. Ong 8-\7 62,000.00 6,000.00 Dlarles ltte 8-\8 60,000.00 1,361.25 Norkis Distributors 8-\9 J,850.00 120.00 120.00 Princisito T. lopttz 8-SO 65,2\0.00 80\.00 Teresita R. Reyes l Co., Inc. 8-SI 120,000.00 ~5.12.\0 Nick l. Villatuya, M.D. 8-52 27,225.00 BPI Co1puter Systtt1s Corp. 8-5J IIt, 'tOO. 00 BPI Co1puter Systtt�s Corp. 8-S\ 1\,\00.00 BPI Co1puter Syste1s Corp. 8-55 16, 080. 00 TOTAL 2,315, 701.\6 7,JSI,8S5.6J a comparison between the stated income under schedule 4 of the income tax r��etur��n of the petitioner and the income it supposedly received as evidenced by the certificates of creditable withholding taxes combined reveals that the petitioner has an 718

DECISION - C.T.R. CRSE No. 4897 - 7- undeclared income in the amount of P7,684,032.09 computed as follows: Income based on the certificates P9, 667, 56~�. 09 as computed by this Court <Exhs. "B-1" to "B-55"> 1,983,533.00 P7,684,032.0'3 Less: income declared in the return u n de t~ s c he d u 1 e 4 <Ex h. "A- 1 0" > Undeclared Income This undeclar-ed income even if added to the gt�o s s income of the petitioner will not change the fact that petitioner suffered a net loss for the taxable year 1'3'30 because of the huge amount of losses indicated in the r�eturn but we cannot allow this d i sct�epancy to go unnoticed. Section 10 of Revenue Regulations No. 6-85 provides that claims for tax credit Ol" t��e fund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the t�etut�n that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payor� to the payee showing the amount paid and the amount of tax withheld therefrom. What is clear evidence is that the petitioner indicated an amount as income received under schedule 4 of the return but for some unexplained reasons lat~gel y because it was not passed upon during the hearings nor raised by respondent in her answer, 719

DECISION - C.T.A. CASE No. 4897 - 8- portion of thP incomP indicatPd in thP cPrtificatPs of crPditablP incomP tax withhPld was not dPclarpd in thP incomP tax rPturn of thP pPtitionPr. NPVPt~thP 1 Pss, WP find that pPt it i onPt~ has substantially thP rpquirPmPnts spt forth in claiming for thP rPfund but WP arp constrainPd to dPduct thP amount of tax allocablP to thP undPclarPd incomp thus rPducing thP amount sought to bP rpfundPd in thP amount of P99,330.80, COIItpUtPd as follows: UndPclarPd lncomP P7,684,032.09 MultipliPd by tax PPrcPntagP withholding tax allocablP to 5" undeclared Income Less: Amount being claimed p 384,201.60 Total amount refundable p 483,532.40 p 99,330.80 WHEREFORE, in view of the for~egoing, r�espondent is hereby ordered to refund in favor of the petitioner the amount of P99,330.80 representing excess creditable withholding taxes paid for the calendar year 1990. SO ORDERED. ...._,.__~-~~ f AssociatP Jud~ij 720

DECISION - C.T.R. CASE No. 4897 - 9- WE CONCUR: ~Q...~ ERNEs-ro D. ACOSTA CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Ta~ Appeals in accordance with Section 13 Rule VIII of the Constitution. ~c.~ ERNESTO D. ACOSTA Pl~esiding Judge 721