CTA Case No. 4219

DECISION

- 2 - personnel of the Angara Abello Concepcion Regala & Cruz Law Offices.

The Plan was registered with the Bureau of Internal Revenue under Republic Act No.

4917, as implemented by Revenue Regulations No.

1 -68 on August 31, 1973.

The trustees.

Teodoro D.

Regala.

Rogelio Vinluan and Victor Lazatin, were duly appointed as such in accordance with the Plan to ~old, manage, invest and reinvest the assets of the fund. For the calendar y ears 1985 and 1986, the trustees inves ted the assets of the fund in savi ng s and time deposits, money market placements l!nd in §i ecurities with various financial l!nd banking institutions from which it derived income of P840,331.96 and P3,168,535.18, respectively.

However, the said institutions allegedly withheld erroneously t he 15% final tax provided under Secti on 21(d ). now Section 21(c) . in relation to Section S3 (d) (1) • now Section 51(a) of the National Internal Revenue Code in the amount of J P126,049.34 and P168,926. 57, respectively, for the year s 198 5 and 1986.

Petitioner ~lleged that the withholding tax was erroneous be~ause the Plan is exempted from tax pursuant to .Republic Act No.

989

DE CISI ON

CTA CA SE NO. 4219 - 3 - 4917 am d Sectio n 56 (b) , now Sec tion 5 4(b) of t h e National Internal Rev e nue Code, as amended.

) Petition er cited the previous decision of this c o u r t i n G C L R e t i r e m e n t P 1 an v s • Co mm 1 s s 1 one r of Inte rn a 1 Revenue ( C T A Case No .

3 8 8 8 , 0 e c ember ·1 6 , 1986) holding that a trust f un d created pursua nt to a n ap proved a nd qualified e mploy e retirement o r benefit pl an i ' e~em pt from i n c ome tax . Hence, on December 29 , 19 8 7 and February 1 9 , 19 88, Peti lon r ·filed s pa rate wri tten claims for refund in th~ to el a moun t of P294,976.91.

Immedlete y. a he two - y ea~ p riod for claiming a r-efund i s about to ex p i re , Petitioner insti tuted he Pot! ion fo,.. Review on Cl ce litb r 29, 19 8 7 end a mended he a me on ebruary 26, 9 88 .

Respondent for his part a l l ged that the c lairn for refund s: hould b e d eni ed for failure of the Petitioner to state when t he tax s o u ght to be refunded was paid.

The a mount claimed to have been withheld mu st b e s h own to h ave been paid or r e mitted to the gov e rnm e nt.

There is no legc!!ll ba s i s for the tax exemption because Presld e ntic!!ll Decr ee No .

19 69 whi c h t ook effe_pt on October 16, 1984, withd rew the exemption fr~m withhol d ing tax 980

- 4 on interest from bank deposits and yield from deposit substitutes.

The decision of this court on "GCL Retirement Plan" is still pending review by the Supreme Co urt . Take not that the issue on the legality of the tax ex mpt statue of the retirement pla n previous y r ·sed by Responde n t as major objection w~ not rai s d anymore in his memor an dum dated November 26, 1992 as an issue pre s umably i n vi ew of the affirmation by the Supreme Court of the d ecision of this court in t he "GCL Retirement Plan" under G. R.

No.

95022 promulgated on March 23, 19 92.

Hence, the remaining issue s raised before thi court are c11 follows:

( 1) Whether or not Petitioner has sufficie ntly proven the p ayment and remittance of the taxes allegedly J withheld and subject of this claim; ( 2 ) Wh e her or not olaim fo r r fund of taxes allegedly w hheld during the first, secon d and th r d quarter s of 1986 is b a r ,.. e d by p r e s c r i p t i o n •. ' I 1"he pertinent lew a ppli c:ab .l!e is Section 52 (now Sec ion 5 ) of the N RC, as amonded1 991 SEC. 62. Returns and payment af taxes withheld at seurece. _ (a) Quarterly returns and payment of Canes withheld. — Taxes deducted and withheld under Section fifty-three (now 61) shall be covered by a return and paid to the Revenue Oisetrict Officer, Collection Agent, or duly authorized Treasurer of the city, or municipality where the withholding agent has his legal residence or principal place of business or where the withholding agent is a corporation, where the principal office is located. The taxes deducted and withheld by the withholding agent shall be held as a @pecial. fund in trust for the government until paid to the collecting officere. The Commissioner of Internal Revenue ay, with the approval of the Secretary of Finance, require these withholding agents to pay or deposit the taxes deducted or withheld at more frequent intervals when necessary to protect the interest of the Government. The return for final ‘Maamiabenetonnnnayrensesentrmtanneseryonenebenetntsengrests AMLLHEDDNeanay satan RecnHt HI ASAILOG suRemOS CLASP UEDSHT EONAR eee DOTANAMOGDLBECOngA TO ENEEOIE Payment made within 28 daye from the close of each calendar quarter, while the return for creditable withholding taxes shall be filed and the payment made not later than the last day of the month following the close of the quarter during which withholding was made.

(ec) Statement of Incame payments . made and taxes withheld. - Every etosenasenebesanntenitenhanasanenesnoenaeianaYtavanst Pervert itt PorcTYsToreaN fas T= din carnnCaDOSOSUTIESDITSTNNSISS ISOE DSSETCHIOOVE#E UUNSETI SSD STOCEEDOONY qvsmensintoterstnenneraisuenrerstenessaseaeontuipaanssaiesepht Vm neniadmen Myr soenapnEn vt OHPIENENOAS DeHak 44a sey Di sean eta fabevened (now $1) shall furnish each recipient, in respect to his or ite receipts during the calendar quarter or year a written statement showing the income or other payments made by the withhelding agent during euch quarter or year, and the Metedinsrnbaat tient srecewensvs enensHssebendtngnstszeseonst amount of the tax deducted ‘and withheld 992

DECISION |

sereat easter mettnentersers deseasasenenmrenttthuitosertnisnyee eats) ts fhe request of the payee, but not later than 20th day following the close 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.

For final withholding taxes the statement should be given to the payee on or before January 31 of the succeeding year.

(d) Annual returns. - Every withholding agent reguired to deduct and withhold taxes under Section fifty-three (now 61) shall submit to the Commissioner of Internal Revenue oa tees sevhenetahaonentNHHOCENHI HbR GAHEGH A gTSUR AGPREOLASAMBCCU MH Ancanetandah BbANHULNDDEL ALCORN Db bacLeAGtAs ete temene nen HAOODMAgHH te nessnasneretescen ots een aninens ALTESSa end ven eH hae AREER RRB noeocavecapr essence baboatngtoneced pratandtad breas eanewen erent teen paymente. In the case of final withholding taxes, the return shall be filed on or before January 31 of the Succeeding year, and for creditable withholding taxes, not Later than March 1 of the year following the year for which the annual report is being submitted. This return, if made and filed in accordance with regulations approved by the Secretary of Finance, shall be sufficient compliance with the requirements of Section fifty~seven (now 71) +of this Title in respect to the income payments. .

The Commissioner May, by regulations, grant to any withholding agent a reasonable extension of time to furnish and submit the return required in thie eubeeotion. (Underscoring | supplied.) :

‘ In the firet iseue of ' whether or not Petitioner has cuffictently established or proven

DECIS I ON

CTA CA SE NO. 4219 - 7 - t he claim for refund, this court believes that Petitioner failed to prove its claim as req uir ed by law.

The records show th t the evidenc e presented by Petitioner consi t mainly of s avings passbook, certifict!!l · e f p&r cipation .

oo t1t'irmat!ons of s<!'tle, bank adv ca conf rrne~ ons o'f investments and r ecnl pt how in prineip~l y the amount of investment • .l n •·e~ t ea l"n d and th e withholding tax oha od ther n p inted or ha ndwritten notes in the in trumen of nvestment it elf.

In some instances.

the O<Hnputat!ons of interest Bnd wi hholding are co ntained only in adding machine tapes.

These evidences te nd to prove that in fact thel"e were investments done by the Trustees, in t e rest s were cot"respondingly earne d a nd in the case of s avings passbooks, wih ho lding taxe s wer e charged but in case of the other co mmercial papet"s, w thholding taxes were merely shown to h av e bee n computed. No other evidences d ocumentary or te st imon ia l were presented to corroborate t he fact of withho di ng and more so, the fac of payment and remitta nce of those withholding taxes to the BIR. The testi mo ny of - 8 - Ms.

Carina R.

Fangonil merely identified the existence of the above documents but never as to t h e i r

c. o n t e n t s • Moreover, the with h oldi n g agents or their representative who issued the aforementioned instruments can very well testify as to their contents but were never presented.

Petitioner encountered difficulties in proving the fact of withholding, payment and remittance of the withholding taxes simply because it failed to observe the requirements laid down by the law itself.

The aforequoted provisions of law require the following positive action on the part of the withholding agent:

(1) The filing of a quarterly return with the BIR to contain the final withholding taxes;

(2) To furnish the recipient state ment of income payments and taxes withheld ..

simultaneously upon payment at the request of the payee, or on or before January 31 of the succeeding year; (3) The filing of an annual return with the BIR containing the re'conciliat!on of 985 DECISION CTA CASE NO. 4 2 19 ) quarterly payments, list of pay ees and income payments.

This return shall be filed on or before January 31 of the .succeedi ng year.

The above requirements are mandatory obligations on the part of the withhold~ng agent.

While it may be arg u e d that he above obliga tions pe rtai n to the . with hold ing age nt , nevertheless, the taxpayer pur s uant to Section 52(c) may dema nd that it be furni s hed a written s tatement of income payments made a nd taxes withheld. This one is a stat utory obligation of the withholding agent to the taxpaye r.

To this requirement, t he Petitione r failed to comply.

Not a si ngle statement from the withholding agent was presented during the hearing.

Furtheremore, not one return, q uarterly or final, even a ph otoc opy was either presented to suppor t the fa ct of payme nt or remittan c e. A s a clien t , Petitioner could eec u e photocopies of the returns from the withholding age nt • On the se cond i ss ue, purs uan t to Sectio n 292 (now Se c.

23 0) in relation t o · Section 295 (now S e c t 1 o n 2 0 4 ) o f t h e T a x C o d e ,1 r e c o v e r y o f t a x ' erron eously or ille g all y co lle c ted must be don e 996

DECI S ION

CTA CA SE NO .

4 2 19 - 10 - wit h in two yel'lt's from the dl'lte o f p .!!y me n t o "f t he tax in q u estion b y filing a ti mely c laim for t'efu n d wit h t h e Commi sioner of In te t'n al Re ve nue e nd i n stituti n g a s u it or pt'oc eeding i n co urt wit h in t h e s a me p riod of time.

In t he c a se o f fi n a l withho l di n g tax as in the i n s t a nt case pursuant to Sectio n S2(a) ( now Sec t i on 51) o f the National n tet'na l R~v n u e Code, th e fi lin g of t h e return a nd h ~ pa ym e n t of th cor ,...e po nd i n g taxes ;,Ji hl1eld hou.l.d m de w 111n 2 5 da ys fr om h e close of SQ 11 Cti le n dal" qu ar ter. T h e rec ord s s how t h ~t the Petit io ne r f iled its claim fo refund and h ~ !nsta nt Peti tion f o r Review on Dece mber 2 l :1987 co v er ! n 9 i ts 1 985 c l a im .

Ina s much a the pa y men of with ho l d i ng taxe s ha s to be d one o n a quarter ly b asis, o n l y the claim for refund of Petitioner for the per i od s tarting th e la s t q uarter of 1985 remains val i d and s ub s i s ting.

Hence, all c laims invol v ing withholding of tax es f rom November 1984 t o September 30, 1985 s hown in the bank pas s books and other commercial papers have alr e ady pres c ribed. The amount ne e d not be stated in vi~w of the fir s t f inding of t h is court that Petiti oner failed t o

- 11 - prov e i t s claima bl e a mo un t as re quir e d by law. As correctly ei gd by the Responde nt, the cas e o f Ban i~ of the Philippine Isla nd s, e t al.

vs.

Commissi oner of Internal Revenue, C.T.A. Case No. 4217, Oc to ber 22 , 1992 is a si milar case ver y mu c h a pplica ble to the in sta n e·se.

WH EREF OR -, in vi w o f t he foregoin g .

the he rei n claim for ~ - f un d s denied and t he ins tant SO ORDERE D.

Quezon City, Metro Manila, Se p tt! mber 23, 1993.

WE CONCUR:

GRUBA ' 986 c -:- '<, ~ ~TO D .

ACO STA

P r esi d i ng J udge me 4D ow CERTIFICATION I hereby certify that this decision was _ reached after due consultation among the members of the Court of ‘Tax Appeale in accordance with’ Section 13, Article VIII of the Conetitution.

pie, ERNESTO 0. ACOSTA Presiding Judge Court of Tax Appeale 999