Republic of the
Supreme Court
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BANCO FILIPINO |
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G.R. No. 155682 |
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SAVINGS and |
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MORTGAGE BANK, |
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Present: |
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Petitioner, |
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YNARES-SANTIAGO,
J., |
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- versus - |
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Chairperson, |
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AUSTRIA-MARTINEZ, |
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CALLEJO, SR., |
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COURT OF APPEALS, |
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CHICO-NAZARIO, and |
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COURT OF TAX APPEALS |
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NACHURA, JJ. |
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and COMMISSIONER OF |
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INTERNAL REVENUE, |
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Promulgated: |
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Respondents. |
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March 27,
2007 |
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D E C I S I O N
AUSTRIA-MARTINEZ,
J.:
Herein Petition for Review on Certiorari
under Rule 45 of the Rules of Court assails the May 28, 2002 Decision[1]
and October 16, 2002 Resolution[2]
of the Court of Appeals (CA) in CA-G.R. SP No. 55470[3]
which affirmed the October 5, 1999 Decision[4]
of the Court of Tax Appeals (CTA) in CTA Case No. 5611.
The facts are as stated by the CTA.[5]
In its Bureau of Internal Revenue
(BIR) Form No. 1702 or Corporation/Partnership Annual Income Tax Return[6]
for fiscal year 1995, Banco Filipino Savings and Mortgage Bank (petitioner)
declared a net operating loss of P211,476,241.00 and total tax credit of
P13,103,918.00, representing the prior year’s excess tax credit of P11,481,342.00
and creditable withholding taxes of P1,622,576.00.[7]
On P1,622,576.00.
As the CIR failed to act on its claim, petitioner
filed a Petition for Review[9]
with the CTA on P720.00 as tax withheld on rental
income paid to petitioner (Exhibit “II”);[10]
and 2) Monthly Remittance Return of Income Taxes Withheld under BIR Form No.
1743W issued by petitioner, indicating various amounts it withheld and remitted
to the BIR (Exhibits “C” through “Z”).[11]
In his Answer,[12]
respondent CIR interposed special and afirmative defenses, specifically that
petitioner’s claim is not properly documented.
The
CTA issued the
WHEREFORE,
in view of all the foregoing, Respondent is hereby ORDERED to REFUND or in the
alternative to ISSUE a Tax Credit Certificate
in the amount of EIGHTEEN THOUSAND EIGHT HUNDRED EIGHTY FOUR PESOS AND FORTY
CENTAVOS (P18,884.40) in favor of the Petitioner, representing overpaid
income tax for the year 1995.
SO ORDERED.[13]
The CTA allowed the P18,884.40-portion
of petitioner’s claim for refund as these are covered by Exhibits “AA” through
“HH”,[14]
which are all in BIR Form No. 1743-750 (Certificate of Creditable Tax Withheld
at Source) issued by various payors and reflecting taxes deducted and withheld
on petitioner-payee’s income from the rental of its real properties. On the other hand, the CTA disallowed the P1,603,691.60-portion
of petitioner’s claim for tax refund on the ground that its Exhibit “II” and
Exhibits “C” through “Z” lack probative value as these are not in BIR Form No.
1743.1,[15]
the form required under Revenue Regulations No. 6-85 (as amended by Revenue
Regulation No. 12-94), to support a claim for refund.[16]
Petitioner filed a Petition for
Review[17]
with the CA but the CA dismissed the same in the
Hence, herein Petition where the
issues may be condensed into one: whether the CA erred in affirming the
disallowance by the CTA of P1,603,691.60
of petitioner’s claim for tax refund on the ground that the latter’s Exhibit
“II” and Exhibits “C” through “Z” lack probative value.
The CA
committed no error.
There
are three conditions for the grant of a claim for refund of creditable
withholding tax: 1) the claim is filed with the CIR within the two-year period
from the date of payment of the tax;[19]
2) it is shown on the return of the recipient that the income payment received
was declared as part of the gross income;[20]
and, 3) the fact of withholding is established by a copy of a statement duly
issued by the payor to the payee showing the amount paid and the amount of the
tax withheld therefrom. The third condition is specifically imposed
under Section 10 of Revenue Regulation No. 6-85 (as amended), thus:
Sec. 10. Claim
for tax credit or refund. – (a) Claims for Tax Credit or Refund of income
tax deducted and withheld on income payments shall be given due course only
when it is shown on the return that the income payment received has been
declared as part of the gross income and the fact of withholding is established by a
copy of the Withholding Tax Statement duly issued by the payor to the payee
showing the amount paid and the amount of tax withheld therefrom
xxx. (Emphasis supplied)
There
is no doubt that petitioner complied with the first two requirements in that
the claim it filed on January 30, 1998 was well within the two-year
prescriptive period counted from the date of filing of its annual income tax
return (Exhibit “A”) on April 12, 1996; and that said return reflects the
amount of P1,622,576.00 subject of the claim.[21]
The question is whether it complied
with the third condition by presenting merely a Certificate of Income Tax
Withheld on Compensation or BIR Form No. W-2 (Exhibit “II”) and Monthly
Remittance Return of Income Taxes Withheld under BIR Form No. 1743W (Exhibits
“C” through “Z”).
Petititioner argues that its Exhibit
“II” and Exhibits “C” through “Z” should be accorded the same probative value as a BIR Form No.
1743.1, for said documents are also official BIR forms and they reflect the
fact that taxes were actually withheld and remitted. It
appeals for liberality considering that its annual return clearly shows that it
is entitled to creditable withholding tax. [22]
The Court rejected a similar plea for
liberality just recently in Far East Bank
and Trust Company v. Court of Appeals.[23] In that case, Far East Bank and Trust Company
(FEBTC), acting as the surviving entity from a merger with Cavite Development
Bank (CDB), filed a claim for refund of creditable taxes withheld by CDB from
the sale of its acquired assets. FEBTC attached to its claim: a) confirmation receipts, payment orders and
official receipts issued by the Central Bank and the BIR; b) Income Tax Returns
supported by financial statements filed by FEBTC with the BIR; and c) a
schedule prepared by FEBTC Accounting Department of the creditable withholding
taxes of CDB. FEBTC did not, however,
attach any BIR Form No. 1743.1. The CTA
and CA disallowed FEBTC’s claim for refund.
The Court affirmed the CTA and CA, thus:
As mentioned, petitioner relies heavily on the confirmation receipts with the corresponding official receipts and payment orders to support its case. Standing alone, however, these documents only establish that CDB withheld certain amounts in 1990 and 1991. It does not follow that the payments reflected in the confirmation receipts relate to the creditable withholding taxes arising from the sale of the acquired properties. The claim that CDB had excess creditable withholding taxes can only be upheld if it were clearly and positively shown that the amounts on the various confirmation receipts were the amounts withheld by virtue of the sale of the acquired assets. On this point, the CA correctly pronounced:
The
confirmation receipts alone, by themselves, will not suffice to prove that the
taxes reflected in the income tax returns are the same taxes withheld from
CDB’s income payments from the sale of its acquired assets. This
is because a cursory examination of the said Confirmation Receipts, Payment
Orders and Official Receipts will show that what are reflected therein are
merely the names of the payors and the amount of tax. The nature of the tax
paid, or at the very least, the income payments from which the taxes paid were
withheld are not reflected therein. If these are the only entries that
are found on these proferred documents, We cannot begrudge the Respondent Court
from nurturing veritable doubts on the nature and identity of the taxes
withheld, when it declared, in part, in its Decision (Annex “A” of the
Petition) that, “It can not well be said that the amounts paid and remitted
to the BIR were for CDB’s account and not for the other possible payees of
withholding taxes which CDB may also be liable to remit as a withholding agent
x x x”.[24]
(Emphasis ours)
As to what evidence would establish the nature of the
tax withheld and the income payment from which it was deducted, the Court held:
Petitioner also asserts that the confusion or difficulty in the implementation of Revenue Memorandum Circular 7-90 was the reason why CDB took upon itself the task of withholding the taxes arising from the sale, to ensure accuracy. Assuming this were true, CDB should have, nevertheless, accomplished the necessary returns to clearly identify the nature of the payments made and file the same with the BIR. Section 2 of the circular clearly provides that the amount of withholding tax paid by a corporation to the BIR during the quarter on sales or exchanges of property and which are creditable against the corporation’s tax liability are evidenced by Confirmation/Official Receipts and covered by BIR Form Nos. 1743W and 1743-B. On the other hand, Revenue Regulation 6-85 states that BIR Form No. 1743.1 establishes the fact of withholding. Since no competent evidence was adduced by petitioner, the failure to offer these returns as evidence of the amount of petitioner’s entitlement during the trial phase of this case is fatal to its cause. x x x.[25] (Emphasis supplied)
In
fine, the document which may be accepted as evidence of the third condition,
that is, the fact of withholding, must emanate from the payor itself, and not
merely from the payee, and must indicate the name of the payor, the income
payment basis of the tax withheld, the amount of the tax withheld and the
nature of the tax paid.
At the
time material to this case, the requisite information regarding withholding
taxes from the sale of acquired assets can be found in BIR Form No. 1743.1. As described in Section 6[26]
of Revenue Regulations No. 6-85,[27] BIR Form No. 1743.1 is a written statement
issued by the payor as withholding agent showing the income or other payments
made by the said withholding agent during a quarter or year and the amount of
the tax deducted and withheld therefrom.
It readily identifies the payor, the income payment and the tax
withheld. It is complete in the relevant
details which would aid the courts in the evaluation of any claim for refund of
creditable withholding taxes.
In
relation to withholding taxes from rental income, the requisite information can
be found in BIR Form No. 1743-750.
Petitioner is well aware of this for its own Exhibits “AA” through “HH” are
all in BIR Form No. 1743-750. As earlier
stated, the CTA approved petitioner’s claim for refund to the extent of P18,884.40,
which is the portion of its claim supported by its Exhibits “AA” through “HH.”
In
the present case, the disputed portions of petitioner’s claim for refund is
supported merely by Exhibits “C” through “Z”
and Exhibit “II.” Exhibits “C”
through “Z” were issued by petitioner as payee purportedly acting as
withholding agent, and not by the alleged payors in the transactions covered by
the documents. Moreover, the documents
do not identify the payors involved or the nature of their transaction. They do not indicate the amount and nature of
the income payments upon which the tax was computed or the nature of the
transactions from which the income payments were derived, specifically whether
it resulted from the sale of petitioner’s acquired assets.
As to petitioner’s Exhibit “II,” while it was issued by a payor,
the document does not state the amount and nature of the income payment. Hence,
it cannot be verified from the document if the tax withheld is correct.
Perhaps aware of the deficiencies in
its evidence, petitioner also presented Exhibit “B”[28]
which is a list of Miscellaneous Assets it sold to various persons. However, Exhibit “B” was prepared by
petitioner’s own real estate department, and is therefore of doubtful credence.[29] Furthermore, there is nothing in Exhibit “B” which would link the
the transactions described therein to the taxes reflected in Exhibit “II” and
Exhibits “C” through “Z”.
For all its deficiencies, therefore,
petitioner’s Exhibits “C” through “Z” cannot take the place of BIR Form No.
1743.1 and its Exhibit “II,” of BIR Form No. 1743-750. Petitioner cannot fault the CA and CTA for
finding said evidence insufficient to support its claim for tax refund. Such finding of both courts, obviously grounded
on evidence, will not be so lightly discarded
by this Court,[30]
not even on a plea for liberality of which petitioner, by its own negligence,
is undeserving.[31]
WHEREFORE, the petition is DENIED for lack of
merit.
No costs.
SO
ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate
Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
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ROMEO J. CALLEJO, SR. Associate Justice |
MINITA V. CHICO-NAZARIO Associate Justice |
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
[1]
Penned by Associate Justice
Cancio C. Garcia (now a member of this Court) and concurred in by Associate
Justices Marina L. Buzon and Eliezer R. De Los
[2]
[3] Entitled “Banco Filipino Savings and Mortgage Bank, Petitioner, v. Commissioner of Internal Revenue and Court of Tax Appeals, Respondents.”
[4] Records, p. 159.
[5] CTA Decision, id. at 159-166.
[6] Exhibit “A”, id. at 43.
[7] Exhibit “A-2”, id. at 44.
[8] Exhibit “LL”, id. at 6.
[9]
[10]
[11]
[12]
[13]
[14]
[15] Also known as “Certificate of Creditable Income Tax Withheld at Source.”
[16] CTA Decision, records, p. 165.
[17] CA rollo, p. 5.
[18]
[19]
Jose C. Vitug and Ernesto D.
Acosta, Tax Law and Jurisprudence, 329 (2006), citing Gibb v. Collector,
107 Phil. 230 (1960).
[20] Calamba Steel Center, Inc. v. Commissioner
on Internal Revenue, G.R. No. 151857,
[21]
CTA Decision, records, p.
139-140.
[22] Petition for Review, rollo, pp. 20-21.
[23]
GR
No. 129130,
[24]
[25]
[26] Section 6. Statement of income payments made and taxes withheld.- Every withholding agent required to deduct and withhold taxes under these Regulations shall furnish each recipient, in respect to his or its receipts, during the calendar quarter or year a written statement (BIR Form No. 1743.1) showing the income or other payments made by the withholding agent during such quarter or year, and the amount of the tax deducted and withheld therefrom. Such statement (BIR Form No. 1743.1) shall be furnished the corporate payee not later than the 20th day following the close of the quarter in which payment was made or not later than March 1 of the following year in the case of individual payee. However, upon request, the payor shall be obliged to furnish such statement to the payee simultaneous with the income payment.
The amount so withheld shall be allowed as a tax credit against the income tax liability of the payee in the taxable quarter or year in which the income was earned and received.
[27] As amended by Revenue Regulation No. 12-94.
[28] Records, p. 76.
[29]
[30] Paseo Realty and Development Corporation v. Court of Appeals, G.R. No. 119286, October 13, 2004, 440 SCRA 235, 242.
[31]
Norris v. Hon. Parentela, Jr., 446 Phil. 462, 472 (2003).