BPI Family Savings Bank. Inc.. Pe T1 T.1 on Er vs. Commi Ssioller of Internal Revenue

DECISION

T111s case invol,les petltloner·~; clatm for tile refund of credlt.a.l)le T ..... nth11olding taxes on rental inc:orne m tlw amount oi ..

year endmg December .~:. 1, 1991 allege.jly due to tl1e loss mcurred for said vear.

• Petitwner, BPI Famlly Savmgs Ban!:, Inc:., 1s a domestic corporation dulv organized and extstlng under tl1e laTv\ls of tl1e • v v Phtlippines V·lltll Head Office located at 109 Paseo de :Roxas atv:l De la .Rosa Sts., l· ... ·Ia!::.atl, Metro lvlamla. It 1s prunanly engaged 111 the q~neral banting busmess and earns otl1er mo,::.me coming frorn v w u the lease oi its real r:.n:mertles and from tl1e sale oi aC(11Jire(l ~ ~ ' 1 assets.

980 DECISIOH- C.T.A. CASE HO. 5096 - 2 - For the year 1991, petitioner receiv·ed rental income from tl1e lease of office space at its Head Office and other Bra.nches ft.nd ·:>1<"· ··· 1·1· )+"'. tl· ~ 1 ~- ~ c:~ "-1. 1. t·-· t· .:::.~ 1 p !"(· r· .· rt1· ~·~ "161"1. ~~ t::.(J 1·!. ~ l"I"l ~~ ... ,1111·1· .-. rl .:J,. .:,.l) ( J.1l ... !~ ':;'d .. _.~ r..... ...:a ..... d.

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r..} .:,}._.-... -· ~--"' asse~;. Petiticmer also earned incorne from the sale of a.cquired a:::;set.s. , The income earned from these trans:=:t.ctions v>~ere \ ::;ubjed.e(l to \Nithholding ta.x. These income V>lere included to form ~;art •)f tl1e !2"ross income of Det.itioner for the vear 1991 as ~ V ~ I reflected in its 1991 Income Tax Return. On i· ... pril 15, 1992, petitioner filed its Income T::.u~ Return for tJ1e year ending December 31, 1991 sllOVling a net loss of Since petitioner suffered a loss frorn its operations, no income tax liability \o~jTas due for said year. D~t1"ti()f"1~r t~·lt::.t"~l·r~t·t::. i,\T·~tC· tlf't ·=-tb·lt::. t" -:.r-,r·hl tll?. -~z-~tl1·t-:-tt~t··· t.3.Y"P.-.:~_., r . .,.

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-~--~..J t::' _.._ "~Nithlleld bv· its various \Nithtwldinf' aqent::; for the period in the ' .

._, ·-· ~ amount of P651, 12(i.OO. Although this amount iNas ca.rried over to the succeeding year's ( 1992) Income Tax Return as part of the prior year's excess credit, still tl1e sa.n1e \·vas not actually appliHl ..

as a deduction from its 1992 Income Tax Due t1Hre being no income tax due by reason of a loss also incurred for tl1at year. On December 23, 1992, petitioner filed ,.,;rittl the respondent a letter claiming for the issuance of a Tax Credit Memo in tile amount of P651, 12.:).33 representing overpa.id income tax on creditaNe witlliloldinf.' t3.X at source for the vear 1 qq 1. -.;,~;lit.1wut.

•..J I ~ • v1Ta.iting for tlw respondent's decision on its request fc:rr issuance oi tax credit, petitioner filed tl1is petition for review on ... Ll-... pril 15, 1994, p~ravin!Z for t.lle refund of the amount of P61) 1, 12 (=;_ ·~; ·). ' ~-· .,J' - ...... ._ DECISIOH- C.T .A. CASE HO. :)096 - 3 - Respondent admits that petitioner filed its 199 1 i~ .. nnual Income Tax Return together witll the various Certificates of Income Taxes Withheld at Source; the First and Second Quarters Income Tax Returns for 1 992; the 1992 i· .. nnual Income Tax Return; and its request for tl1e issua.nce of a Tax Credit l\.femo. t But respondent denies tl1e veracity of their contents, considering that tl1e claim for refund is still being investigated by the Bureau of Internal Revenue. Respondent averred tllat.tetitioner has the burden of proving its entitlement to the refund or tax credit claimed for.

Claims for refund are in tlN nature of a tax exemption and are therefore strictly construed a.gainst tlN claimant.

The issue presented is ~Nhether or not petitioner is entitled to claim for the refund of P651)23.33, the excess income tax paid for the year 1991 comprised of creditable withlwlding taxes. To support its claim for refund petitioner offered in evidence its 1991 and 1992 i· .. nnu.al Income Tax Returns; 1st and ~ 2nd Quarter Income Tax Returns for 1992; Certificates of Creditable Withholding Tax at Source for 1991; and letter claiming for refund filed wit.h tl1e respondent on December 23, 1992.

The following Certificates cA Credit:tble Income Tax 'lifithheld at Source (BIR Form 17 43.1) for the year 1991 issued by various ~.hlithholding agents presented tl1e following data on the taxes vv>ithheld from petitioner, to wit: 985

DECISION -

C.T.A. CASE HO. 5096 Exhs. Vithholding Agents B-1 B-2 B-3 Br4 B-5 B-6 5-7 B-8 B-9 B-10 B-11 5-12 B-13 B-14 B-15 B-16 B-17 B-18 B-19 B-20 B-21 B-22 B-23 B-24 B-25 B-26 B-27 B-28 B-29 B-30 B-31 B-32 B-33 B-34 B-35 B-36 5-3?

B-38 B-39 BPI Credit Corp.

Colby Construction & Management Corp.

BPI Family Bank Ongkiko Bucoy Dizon & Asso.

Pacer Insurance Agencies Inc.

Schering Phil.

Corp.

Virginia Fernandez Ceferino D. Sta. Maria Amityville Realty Corp. Armando Liberata Melencio 5. del Rosario jr.

Crispin M. Hidalgo Esther Domingo Estrella de la Cruz Felimon Concepcion Josephine Durmlao Leandro F. Garcia Leo Docto Leonor Dorado Lina Pajarillaga Marilyn Buenafe Ceferino D. Sta. Maria Nancy Paragas Nelson Escobar Raymundo T. Hernendo/ Celeste T. Hernando Rene Monasterial Rodrigo de Jesus, Jr.

Romulo E. Samson .

Salvador Magundayao Teodoro Barrientos Virgilio Villaseran Neptune Pawnshop, Inc. The Insular Life Assurance Co., Ltd.

Herminia Nepomuceno Phil. Info. Agency DHL Philippines Corp. Citilens Corp.

Mercury Drug Corp.

Rudy's Mami House Income Earned 142,593.30 P 249,850.00 $30,700.00 32,000.00 86,000.00 1,188,830.00 1,136,420.00 ° 576,800.00 150,870.00 372,000.00 2,046,960.00 240,000.00 124,640.00 60,160.00 124,450.00 144,936.00 26,400.00 72,000.00 85,664.60 18,000.00 47,520.00 132,000.00 986 Tax Vithheld 7,129.67 12,410.00 21,595.00 1,600.00 4,300.00 59,441 52 50,300.00 56,821.00 26,840.00 7,400.00 5,676.00 12,565.00 12,138.00 7,543.50 5,020.00 16,600.00 6,127.50 16,560.00 3,380.00 9,255.11 9,360.00 102,449.00 13,850.00 9,940.00 42,000.00 27,600.00 6,230.00 6,375.00 13,050.00 51,700.00 3,030.50 6,222.50 7,246.60 1,320.00 3,600.00 4,283.23 900.00 2,376.00 6,600.00 DECISION- C.I.A. CASE HO. :)096 - 5 - Income Tax Exhs. -Yithholding Agents Earned Yithheld B-40 The Insular Life Assurance Co., Ltd.

4"},560.00 2_178.00 B-41 f am.i1 y Mini Mart 72,000.00 1,600.00 B-42 Lee Dept. Stot·e 91500.00 4,575.00 B-41 Princesito Gemmae Snack House 74,400.00 1,720.00 B-44 Teresita R. Reyes 124,000.00 t 6,200.00 B-45 Nick L. Villatuya M.D. 42,000.00 2,100.00 TOTAL P 65L128.31 •?-..

Counsel for respondent v.Jaived his right to present any evidence, instead he opted to submit tl1e ivlemorandum Report of tlle Revenue Officer ";Nho recommended a favorable action on petitioner's claim for refund. The Memorandum Report, dated June 19, 1995, of said officer reads as follows: "Considering tlle devolution of cases from the National Office to the District Office, V·lhere normally the investigation of the 1991 tax case of the above- subject taxpayer V·JaS handled by tl1e Banl::.s Financing and Insurance Division of the Special Operation Service of the National Office, and t11e lapse of time which should have already completed the investigation of 1991 tax liabilities including tlle claimed ex6~ss/overpayment, it is therefore suggested that the subject claim be appro··led and be issued the corresponding TC1vL However, as a pre- condition to the issuance of TClvi, t11e subject taxpa;.rer must be required to execute an undertaking that the said amount shall not l)e applied against future deficiency tax for 1991." After a t1Nrough examination of the Income Tax Returns of petitioner for tl1e years 1991 and 1992, it appears that V·lhile petitioner opted to carry over tl1e excess income tax paid {by ..., ... my of tlle creditable v..rithholding tax) in 1991 as prior year's excess 987 DECISIOH- C.T .A. CASE HO. 5096 - 6 - credit to the next succeeding year ( 1992 ), still petitioner ~Nas not able to apply the amount of P651, 12 a.33 in 1992, there being no income tax liability due for that year by reason of tile loss incurred.

Like~~l!ise, petitioner llas reported the income earned frorn rent3.ls in Schedule 4 (Exh. i·~-6) of tile Income Tax Return t and the income from the sale of acquired assets in Schedule 5 (Exh. A-7) thereof. Petitioner sul)lnitted in evidence the various Certificates of Credit3.ble Income Tax Withheld at Source (Exhs. B- .-;._ 1 to B-45, inclusive, pp. 10-53, CT .. A .. records) to show the amount withheld ti1erefrom. Finally, the tnanifestation of respondent that its revenue officer has already recomr.nended a favorable action on petitioner's request and there being no serious objections to the refund sought, it is only but proper to grant tile amount claimed for by petitioner after having satisfactorily proven its claim for refund.

WHEREFORE, in view of tile foregoinK tile petition is hereby GRANTED. Accordingly, respondent is hereby ordered to ..

refund in favor of petitioner by way of a Tax Credit Memo tile amount of p651,12o.31 representing overpaid income t:m for tile year 1991. ·\~lithout special. pronouncement -s to costs.

I CONCUR:

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~ ERNESTO D. ACOSTA Presiding Judge 980 DECISIOH- C.T .A. CASE HO. :>096 - 7 - CERTIFICATION I hereby certify tt1at tt1is decision was reached after due t consultation with tt1e member of the Court of Tax Appeals in accordance with Section 13, Article VI I I of tt1e Constitution. ~tu.~ ERNESTO D. ACOSTA Presiding Judge Court of Tax ilo£ppeals 983