Citytrust Banking Corporation vs. Commissioner of Internal Revenue

DECISION

This is a petition seeking for the refund or issuance of a tax credit certificate amounting to P307,861.46 representing the alleged double payment of 20% finnl withholding tax on interest paid by petitioner on Agricultural Loan Fund Special Time Deposits for the mont of October 1992. The facts of the case are simple. Petitioner is a domestic corporation organized and existing under and by virtue of the laws of the Philippines. It is duly authorized .and licensed to engage in the business of commercial banking in the Philippines (Exh. "A"). On November 10, 1992, petitioner filed its Monthly Remittance Return of Income Taxes Withheld for the month of October 1992 (Exh. "N") and paid the total amount P1, 163,942.61. Attached in the said return is a Schedule of

C.T.A. CASE NO. t 0

Withholding Tax at Source (Exh. "N-2"), stating in detail the recipients of the income which has been subjected to withholding taxes and computed as follows:

SCHEDULE OF WITHHOLDING TAX AT SOURCE

Period Ending 1 1 - 1 0-92

PAYEE /SOURCE

Citytrust STD HLF Accruals Eppie's Garments S.D. Yeong - do - - do - Nat'l Steel Corporation - do - - do - - do - - do - - do - - do - - do - - do -

T O TAL

AMOUNT p 307,861.46 * 1 ,012,87 2,823.88 7,926.86 4,830.2'1 243,607.,11 236,025.67 89,410.59 6,45'1.8"/ 1 30,707.03 24,672.2?

6,750.75 44,'136.30 57 725.44 P 1 , 1 63,942.61 vwvwvvvwvv The amount of* P307 ,861.46 is reflected in this Schedule representing the 20% final withholding tax paid by herein petitioner on Agricultural Loan Fund Special Time Deposits which petitioner alleged to have been erroneously included in its remittance to the Bureau of Internal Revenue the same being due and part of a quarterly and not on a monthly remittance basis. On January 25, 1993, petitioner filed its Quarterly Return of Final Income Taxes Withheld on Interest Paid on Deposits and Yield on Deposits Substitute/Trust/etc. for the fourth quarter of ·1992 (Exh. "B") and paid the total amount of P·14,413,686.79. Attached in the said Quarterly Return is a \ -

Withholding Tax Report on Savings and Time Deposits (Exh. "8-3"), enumerating the different Citytrust branches which paid interests for the fourth quarter of ·1992 and the corresponding taxes due on these interest payments computed as follows:

CITYTRUST BANKING CORPORATION

8·.JITHHOLDING TAX REPORT FOR THE QUARTER ENDED -DEC. 31, 1992

SAVINGS DEPOSIT

TIME DEPOSIT

BRANCHES

INTERESI PAID

TAX DUE

BRANCHES

INTEREST PAID

I_AX DUE

BUENDIAIHO 7,1358,380.30 1,531,1376.06 BUENDIMIO 1,007,290.90 201,459.78 CDS 4,273,034.80 854,606.96

T S U

4,351,302.35 070,260.47 DASMARINAS 2,870,204.15 574,040.03 TLS 4,-115,033.20 8!l:J,OOG.64 - QUIAPO 929.475.85 185,895.17 DASMARINAS 3G7,14 7.JJ 71.429.47

ABAD SANTOS

863,636.15 172,727.23 QUIAPO 2GB,79G.:¢.o 57,759.26 CALOOCAN 1 ,412,490.20 282,498.04

ABAD SANTOS

442,81 B,fj£, 88,563.79 STA. ANA 877,341.70 175,468.34 CALOOCAN 7G::i.592.8G IG7,118.SG GUADALUPE 588,173.95 117,634.79 STA. At-IA 621,0/S.GJ 124,215.12 PIONEER 2,693.225.65 538,645.13 GUADALUPE 71, i9G.GS 1 5,439.33 TAYTAY 707,299.10 141,459.82 PIONEER 120,GGI.GO 24,132.32 KAMUNING 1,295,077.65 259,015.53 TAYTAY 3G4,G93.3C• 70,818.67 ERMITA 1 ,032,483.45 206,496.69 KAMUNING 289,0¤7.GJ S7,807.57 ORTIGAS 1 ,585.605.35 317,121.07 ERMITA 114,439.00 28,887.80 LEGASPI 1,478,301.55 295,660.31 ORTIGAS 128,031.00 2:;,726.20

PASONG TAMO

1,570,791.55 314,158.31 LEGASPI 220,761.50 44,156.30 AYALA 1 '149,371.00 229,874.20

PASONG TAMO

68,714.75 13.742.95 AURORA 1,211,227.30 242,245.46 AYALA 153,G00.3S 30,720.07

SHAW BOULEVARD

781,248.50 156,249.70 AURORA 3•>1 ,464. 70 68,292.94 WEST AVE.

1,113,908.25 222,781.65

SHAW BOULEVARD

113,844.90 22,768.98 LAS Pit-LAS 1,195,108.35 239,021.67 WEST AVE.

275,171.65 55,034.33

DEL MONTE

2,432,695.35 486,539.07

LAS PINAS

520,966.90 104,197.38

ALA BANG

1,345,831.05 269,166.21

DEL MONTE

180,606.90 36,121.38

NEW MANILA

946,483.25 189,296.65

ALA BANG

446,418.25 69,283.65 GREENHILLS 946,984.75 189,396.95 NE'vV MANILA (459,835.60) (91 ,967.12) BUTUAt;

433,066.25 86,613.25 GREENHILLS 555,260.55 111,052.11 CALAMBA EXT.

496,744.80 99,348.96 BUTUAt;

90.549.00 18,109.80

CEBU PLARIDEL

1,271,537.85 254,307.57 CALAM BA EXT.

21.751.50 4,350.30 DAVAO 1,035,758.05 207,151.61

CEBU PLARIDEL

232,G1 9.3G 40,503.87

I RIGA

177,345.45 35,469.09 DAVAO 252,201.95 S0.452.39 STA. CRUZ 1 ,224,068.1 0 244,813.62

I RIGA

130,335.90 26,067.1 a DARAGA 0.00 0.00 STA.CRUZ 256,528.10 51,305.62 CAGO 691,554.00 138,310.80 DARAGA 0.00 0.00

SAN PABLO

981,940.00 196,368.00 CAGO 190.266.65 36,057.33

CALAMBA MAIN

521,957.20 104,391.44

SAN PABLO

11 G,818.55 23,363.71 BATAtJGAS 583,576.55 116,715.31

CALAMBA MAIN

10,447.50 2,089.50

BAGUIO PHILEX

289.091.85 57,818.37 BATAt;GAS 70,6:>4.95 14,170.99

BAGUIO SESSION

719,962.70 143,992.54

BAGUIO PHILEX

206,15S.OO 41,231.00

CEBU LAHUG

915,017.55 183,003.51

BAGUIO SESSION

21 9,590./!:i 43 ,918.15 DIVISOR lA 516,329.75 103,265.95

CEBU LAHUG

W9,411.5G 21,882.31

MAR I KINA

411,302.20 62,260.44 DIVISOR lA 3i ,040.15 6,209.23 BUGO 205,909.40 41,161.68 MARIKit..tA 226,462.!iG 45,296.50

PASAY ROAD

640,430.45 128,066.09 BUGO 81,593.7!i 1G,313.75 SAN FERNAt;DO 309,934.05 61,986.61

PASAY ROAD

584,880.25 116,976.05 LOYOLA 125,331.15 25,066.23 SAt; FERNANDO 65,909.75 13,181.9!i SUCAT 83,151.12 16,630,23 LOYOLA HE I GifTS 4,902.0!i 980.41 STA.MESA 112,995.25 22,599.05 SUCAT G,188.7G 1,237.7!i ILOILO 561,507.00 116,301.40 STA. MESA HEIGHTS 10,039./0 2,007.94 COMMONWEALTH 35,437.40 7 087.46 ILOILO 13,423.90 2,664.76 53 322 327 35 Hl66Hil:dZ COMMONWEALTH 13 989.30 2 797.66 16...Z!i.Q.1.Q.Q.Jl,Q ;l.l.:l9.-Z_ill2 - ....

TAX DUE ON:

SAVINGS, SPECIAL SAVINGS DEPOSIT p ·t 0,664,465.47 TIME DEPOSIT, STD ALF DEPO LIAB DEPO SUBST-NON FINANCIAL, ICLP 3,749,221.32 LL4..1U..Gfi.7..fl Included in this list is the interest paid by the Trade and Loans Services (TLS) Unit of herein petitioner for the period covering October to December ·t992 in the amount of P4,415,033.20 and the corresponding 20% withholding tax due thereon amounting to P883,006.64 (Exh. "B-3"), computed as follows: Exhibit No.

Bank Debit Ticket No "CJI 15074 uou 15075 UEU 15073 Date October 30, 1992 January 18, 1993 January 18, 1993 Amount PZ07 ,861.46* qQ7,920.L15 277 214.73 P<383 006.64 On May 27, 1993, petitioner filed with the respondent, a claim for refund or issuance of tax credit certificate amounting to * P307,861.46 representing the double payment of the 20% final withholding tax on interest paid by the petitioner on Agricultural Loan Fund Special Time Deposits for the month of October 1992. Considering the inaction of the respondent on the aforementioned claim and that the two-year period mandated by law under Sections 204 and 230 of the Tax Code is about to expire, petitioner to filed the instant petition before Us on November 9, 1994.

Petitioner formally offered in evidence the following documents which were properly identified by its witnesses: 1.

Petitioner's Central Bank Certificate of Authority ( Exh. "A"); 2.

Quarterly Return of Final Income Taxes \/Vithheld on Interest Paid On -- ----

1745) (Exh. "8''), duly stamped received by the respondent (Exh. "8- 2"), showing the amount of P14,413,686.79 as the total tax withheld for the fourth quarter of ·1992 and the accompanyino \Ni]:mo!ciing Twx Report (Exh. "8-3");

3.

Bank Debit Tickets (Exhs. "C", "D", and "E") issued by the petitioner, representing the 20% Final Withholding Tax on Interest paid on Agricultural Loan Fund (ALF) for October, November and Decombor ·1992 showing the amounts of P307,86·J.46, P297,930.45 and P277,214.73 (Exhs. "C-1", "D-1", and "E-1 ") , respectively; 4.

Letter of the petitioner to the Revenue Accounting Division, Bureau of Internal Revenue, dated May 2·1, ·1993 (Exh. "F"), claiming for the refund of P307,861.46, received by the respondent on iVlJy 27, 1993 (Exh. "F-2");

5.

Letter-request of petitioner's auditor, SGV & Co. <Jddrcssed to the respondent requesting for a certification tllat the nmounts of P·1 ,·163,942.6·1 and P·14,413,686.79 appcorin] on potit:oncr's Monthly Remittance of Income Taxes Withheld an(\l Qunrtor!y Return of Final Income Taxes Withheld on Interest P;.lid on Dcpo3its ::u·;d Deposit Substitutes, respectively, were actually remiiL; to tho Burc<:!u of Internal Revenue (Exh. "G"); 6.

Certification, dated July 20, ·1995, issued by Mrs. Carmelita S.J. Pascual, Chief Revenue Accounting Division, stating that the amounts of P1 ,·163,942.6·1 and P14,4·13,686.79 appearing on petitioner's Monthly Remittance of Income Taxes VVithheld nnd Quarterly Retl:rn of Final Income Taxes Withheld on Interest Paid on Deposits nnd Deposit Substitutes, respectively, have been vcril:od nnd wero actually remitted to the Bureau of Internal Revenue (Exh. "H"); 7.

Pertinent portions of petitioner's Loan Ledger pertaining to the Agricultural Loan Funds showing the amounts of accrued interests recognized by herein petitioner and the 20% withholding tCJxes due thereon for the fourth quarter of 1992 (Exhs. "1", "J", "f<", and "L"); 8.

Certification issued by Mrs. Lilian S. Bajaboso summarizing in details the accruals or interest payables on ALF loans and the corresponding withholding taxes due thereon paid by the petitioner for the pNiod covering October to November 1992 (Exh. "M"); and 9.

Petitioner's Monthly remittance Return of Income Taxes Withheld for the month of March 1992 with the accompnnying Schedule of Withholding Tax at Source, showing the amount of P307,86·1.4G ns the tax due on Citytrust STD ALF Accruals (Exhs. "!'l", nnd "N-2").

PageS Considering the repeated absence of respondent's counsel to appear during the hearing of this case for the presentation of her evidence , the court on motion of petitioner resolved to consider respondent to have waived her right to present evidence. Respondent also failed to file her memorandum in support of her case.

The lone issue to be resolved in this case is whether or not there was dou«e payment of 20% final withholding tax on interest paid by petitioner on Agricultural Loan Fund Special Time Deposits for the month of October ·j 992. We answer in the affirmative. During the trial, petitioner was able to substantiate and xovc its claim for refund or tax credit when it presented in evidence its Monthly Remittance Return on Income Taxes Withheld for October ·1992 (Exh. "N") showing pr:ymcnt of P307,86'1.46 and its Quarterly Return ·Of Final Income Taxes \Nithhcid on Interest Paid on Deposits and Yield on Deposit Substitutes/Trusts/etc. for the period covering October to December 1992 (Exh. "B") again pnyinc; the amount of P307,861.46 as part of the withholding tax of interest paid by the Trade i:md Lo:.ms Services (TLS) unit of petitioner in the amount of P883,006.64. The fact of actual remittance of the amounts appearing on the aforesaid Returns were also properly verified and certified by the Chief of the SIR-Revenue Accounting Division (Exh. "H"), a representative of the respondent .Commissioner herself. In addition, the Schedules attached to the aforesaid Returns, Debit Tickets and Loan Ledger entries pertaining to withholding taxes on interest on Agricultural Loan Funds were also presented in Court.

After a thorough examination and evaluation of the aforementioned documentary evidences offered by the petitioner as well as the testimony of the witnesses for the petitioner, this Court finds that the disputed amount was indeed erroneously remitted and paid twice by the petitioner, hence, a refund is in order.

WHEREFORE, finding this judicial claim for refund well taken, this petition is hereby GRANTED.

Respondent is hereby ordered to refund or in the alternative issue a Tax Credit Certificate in favor of the petitioner in tho amount of P307,861 .46. representing the double payment of 20% final withho!dinD tax on interest paid by petitioner on Agricultural Loan Fund Special Time Deposits for the month of October ·1992.

I CONCU

:

 Q • OL-v-A-._ ERNESTO D. l'·.C·J'3.C/\ Prcsidin:J "· T·.;

 RAMON 0. DE Associate Ju e CERTIFICATION I hereby certify that this decision was reached after due consultation with the members of the Court of Tax Appeals in accordance v:iUh Scdion 13, Article VIII of the Constitution.

Q \$)_ ' 0 '--

ERNESTO D. ,:.coSTl·\ Presiding JudgYZ Court of T<.1x /\V:;;o<::ls