BPI Family Savings Bank, Inc. vs. Commissioner of Internal Revenue

DECISION

This is a claim £or re£und o£ overpaid creditable withholding tax in the amount o£ P95,190.53 £or the calendar year ended 1986. The record shows that petitioner BPI Family Savings Bank, Inc. is a Domestic Corporation duly organized under Philippine laws.

As such petitioner is engaged in the business o£ banking, £inancing and leasing with principal o£{ice in Makati, Metro Manila.

Petitioner in the pursuit of its operation receives rental income from leasing spaces in its head office and branch offices and £rom petitioner's lessees, withheld the sum of P95,190.53 under the expanded withholding tax regulations.

Petitioner declared the rental income as part o£ its qross income in its income tax return for the year 1986.

<Exhibit "A">

2 T ll f.~ afOl-~ementio ned income ta>< t~ettwn of petitionet~ sho\f-Jed an all eqed net loss of P10, 493, 399. 00 fat~ said Hence, accot~c:lin~~ to petitionet~ the whole amount of P95, 190.53 t~ept~esentinq . Ct~editable withholding tax should be refunded. On June 17, 19B7, petitionet~ filed a ~,-n~itten claim for refund with respondent of the said amount (Exhibit C) but the lattet~ failed to act on said claim. Hence, the pt~esent petition fo1-~ t~eview filed on Januat~y 1B, 1989 in IJl·~det~ to toll the t~unninq of the pt~esct~ipti ve pet~iod under sect ion 243 of the Tax Code. In answet~ to the instant petition, t~e spo ndent admits the incontestable fc:1cts, such as, petitionet~'s existence and t h e f i 1 i n g o f t h e c 1 a i m f 01-~ t~ e fund , but d en i e s t h e of the allegations of petit i onet~ fot~ lack of knowledge and infot~mation sufficient to fot~m a belief as to the truth of the matters alleged therein. special and aff:it~mative defenses respondent stated among others, that: a.

the petition states no cause of action as tax sought paid;

it does not allege the date when the to be refunded are credited and b.

the mere averment that petitioner suffered a net loss· of P10,493,399 for the year 1986 does not ipso facto justify a refund; c.

the amount sought to be refunded were collected in accordance with law;

3 cL it is incumbent upon petitionet~ to prove compliance with the provision of Section 243 and 246 of the Tax Code; and e.

the claim fot~ t~efund at~e con s trued against the claimant. T h e t~ e i s n o d i s put e as t o w h e t h e t~ pet i t i on e t~ f i 1 e d th!? instant petition within the two (2) year~ pet~iod of pt~esct~ iption and in suppot~t of its claim submitted in evidence among othet~ s: Exhibit "A", the annual cot~pot~ate income tax E><hibits "B-B-25", inclusive, Cet~tification of Ct~editable Income Tax Withheld at the Source, all for the said year. On the other·· hand, t~e s pondent failed to submit any evidence to controvert the correctness of the tax returns as well as other~ t~ elevant facts alleged by petitioner~ .

The t~ ecot~ ds show that t~ espondent elected to submit the case for decision on the basis ·of the pleadings and record s of the case. Both pat~ties opted not to submit their~ t~espective rn em or~ and urn.

The only issue pt~e s ented fat~ our~ detet~mination is whethe1·~ ot~ not petitioner~ is entitled to the t~efund of P95, 190. 53 as alleged overpaid creditable withholding tax at sout~ ce fot~ the calendar~ yeat~ ended December~ :.H, 1986. It i s the view of the petitioner that it is entitled to the · t~ efund of the amount of P95, 190.53 as ovet~paid , ).! ..

J..uu

- 4 - On the othet~ hand, t~espondent alleged that in an action for tax refund or tax credit it has to be shown that the petitioner and that petitioner was not able to prove that it had includec:l as pa1·~ t of its gt~oss inco me the t~ental in c ome subjected to such withholding in its inco me taxJ.

We hold that petitioner is entitled to the refund of P94,413. 13 as computed below pursuant to Section 54(b) of thf?

Tax Code in Section 10 of Revenue Regulation s N.

E,- 85, the consolidated expanded withholdin g tax regulation, which states as a require ment the presentation of documentary evidence showing that for the taxable ye c:w in question, the income from which the vc:n~ious ct~ ectitable taxe s 1--Jet~e included as pat~t of the petitionet~' s income.

(Cit yt t~u s t Finance Corpot~at ion Finance IFMCB vs.

Co mmis sioner of Revenue CTA Case No.

4046, Fat .. · the yeat~ in que stion, petitione1·~ suffet~ed a net lo s s in the amount of P10,493,399. 00 as reflected in its annu.::1l cot~pot~ ate income ta>< t~ettn~n computed as follo ws: <E ><h . "n" > ,

\ I

) .J..OD

INCOME: !Schedule 1l Interest loans - 5 - Deposits with other banks Govern1ent & other securities Co11ission and service fee Foreign gain/loss Other inco1e: !Exh. A-2) Rental inco1e Inco1e on assets acquired Profit/loss on asset sold/ p 1,675,950.27 21,375.22 95,206.95 p 233,084,715.00 16,552,061.00 316,091,686.00 47,335,790.00 9,076,827.00 exchange Miscellaneous inco1e 16,172,973.56 17,965,506.00

T 0 T A L

LESS: DEDUCTIONS

NET LOSS

TAX DUE

LESS: PRIOR YEAR'S EXCESS CREDIT

1986 CREDITABLE W/HOLDING TAX

TOTAL AMOUNT REFUNDABLE

p 24,541.41 95,190.53 p 640,106,585.00 650,599,984.00 10,493,300.00

- NIL -

119,731.94 p 119,731.94 Based on the t~ecot~ ds, petitione't~ met the ttn~ ee basic t··equit~ements set fot~ th by thi s Com~t in its pt~evious decided cases as follow s: 1.

that petit ioner filed a claim for refund within the two (2) year period as prescribed by Sec. 292 (now 230 ) of NIRC; 2.

that the w et~e withheld wet~e the recipient; a nd income upon whi ch included in the th e taxes t~et 1.wn of 3.

the fact of withholding is established by a copy of the statement duly iss ued by the payot~ to the payee <BIR Fot~ m 17'}3 . :1.)

showing the amount paid and the amount of tax withheld thet ·• eft~om.

<Sec.

10, Rev.

Regs.

No.

6-8;

see Citytt~ust Finance Corporation vs.

The Co mm issi oner of Internal Rf?Venue, CTf.~) Case No.

4143, Novembet~ 11, 1991, a nd Citytru st Finan ce Corporati on (Formerly Inve st ot~s Fi n ance Cot~pot~ ation/PNCB Finance) vs . Commissionet~ of Intet~nal Revenue, CTA Case No .

'~(lL}f., , ~5 u pt~a) • From among the exhibits presented by petitioner, Exhibit "B-17" was stricken out from the record of the case on the ground that it had been previously cancelled and the same was nowhere to be found in the records. Thus the refundable creditable withholding tax at source is computed with the éxeguetin of Exhibit ~-"B-17" as follows:

Withholding : Rental 5% With Agent Income holding tax Exh. Berliged Phil. Corp. P31, 100. BO 1,555, 04 B-i Prudential Life Plan, Inc. . 23, 925. 00 1,196.25 B-3 Suama Kusagi, Inc. 5, 337, 00 266, 85 B-4 Isetann Dept. Store Inc. 345, 000. 00 17,200. 00 B-5 The Phil. Awserican Life Ins. Co. 20, 125. 00 1,006.25 B-6 Family RTW 103, 925. 25 5, 196.28 B-7 The Insular Life Ass. Co., Ltd. 99, 000. 00 4, 950. 00 B-8 Nepusoceno Enterprises 14, 400. 00 720. 00 B-9 BPICC 96, 680. 20 4, 834.01 B-10 Maria 5S. Evangelista 5, 950. 00 297.50 B-11 Gul Plaza 35,569. 41 1,778.46 B-12 Gul Plaza 3,357. 11 167.86 B-13 Malayan Printery 38, 400. 00 1, 920. 00 B-14 Filinvest Finance and Leasing Corp. 8, 875. 60 443,75 B-15 National Bazaar 46,672.50 2, 333,65 B-16 Filinvest Finance and Leasing Corp. 13, 850. 00 692. 50 B-18 Sager Realty Co., Inc. 18,200. 00 910. 00 B-19 Charles Lee 27,617. 62 1, 380. 85 B-20 Lareina Pawnshop 4B, 300. 00 2, 415.00 B-21 Orion Radio & Electrical Supply 31,000. 00 2,950. 00 B-22 Fil. Mgt. & Leasing Services Corp. 20, 000, 00 1,000. 00) 8, 000. 00 400. 00) B-23 Fil, Mgt. & Leasing Services Corp. 4, 000. 00 200. 00 B-24 Pamana Phil,, Inc. 41,580. 00 2,079.00 B-25 TOTAL P 1,110,864. 89 P 35,943, 20 Withholding Collection 1% With- Agent Fees holding Tax Exh. FEP Credit Corp. P_3, 886, 988. 18 P_ 38, 869. 88 B-2 1806

DECISI ON -

RECAP:

- 7 - Source of Incou Rental lncoae Collecti on Fees* Total Atount p 1,110,864.89 3,BB!i,988.18 p 4,997,853.07 Exh.

A-2 A-2 A-1 Withholding Tax Paid p 55,543.25 38,869.88 p 94,413.13 * Collection fees although not originally alleged to be part of incote in the petition for review was considered because the prayer asked for the refund of creditable withholding tax at source which such fee is subject to and indeed forts part of the other inco1e stated in Exh. "A-2" Iunder tiscellaneousl.

WHEREFORE, in view of all the fDl·~egoing, respondent is het~e by o t~ de r~ ed to is s ue a Tax C t~e dit Memo in the am ount of P94, 4 13 . 1 3 in favo r~ o f th e Pet it ioner.

No c osts.

WE CONCUR:

GRUBA J ud ge lo8 ~~Q_,q~ ERNESTO D. ACOSTA P t~es id i n g Jud ge

- 8 - 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, At"ticle VIII of the Constitution.

l ~ () ~~Jb~ ERNESTO D. ACOSTA Pt"e siding Judge Court of Tax Appeals