FCDU CBU Gross Income P13,319,068 5,348,080,630Less: Deductions 1,397,157 5,432,828,719Net Income 11,921,911 [84,748,089]Tax Rate _____35% _______35%Income Tax Due Thereon 4,172,669 NILConsolidated Tax Due for ____________________________________________Both CBU and FCDU Operations P 4,172,669Less: Quarterly Income Tax Payments CBU -1st Quarter 633,085 -2nd Quarter 11,844,333 FCDU -1st Quarter 955, 280 -2nd Quarter 1,104,942Less: Creditable Taxes 2,317,893Withheld at Source Refundable Income Tax
[P12,682,864]6
FCDU CBU Gross Income P16,531,038 7,076,497,628 Less: Deductions 1,327,549 7,086,821,354 Net Income 15,203,539 [10,423,728] Tax Rate _____35% _______35% Income Tax Due Thereon 5,321,239 NIL Consolidated Tax Due for _______________________________________ Both CBU and FCDU Operations P 5,321,239 Less: Prior year's (1994) excess income tax credit 12,682,864 Additional prior year's excess income tax credit 6,283,484 Creditable Taxes Withheld at Source 3,798,024 Refundable Income Tax [P17,443,133]8
Exhibits Nature and Description A Corporate Annual Income Tax Return covering income of respondent's CBU for the year ended December 31, 1994 together with attachments B Corporate Annual Income Tax Return covering income of respondent's FCDU for the year ended December 31, 1994 together with attachments C Corporate Annual Income Tax Return covering income of respondent's CBU for the year ended December 31, 1995 together with attachments D Corporate Annual Income Tax Return covering income of respondent's FCDU for the year ended December 31, 1995 together with attachments N to Z; Certificates of Creditable AA to UU Withholding Tax and Monthly Remittance Returns of Income Taxes Withheld issued by various withholding agents for the year ended December 31, 1994 VV Letter claim for refund dated May 8, 1996 filed with the Revenue District Office No. 33 on May 17, 19969
[Respondent] is reminded that this case was originally submitted for decision as early as September 22, 1998 (p. 497, CTA Records). In view, however, of the Urgent Motion to Admit Memorandum filed on April 27, 1999 by Atty. Louella Martinez, who entered her appearance as collaborating counsel of Atty. Manuel Salvador allegedly due to the latter counsel's absences, this Court set aside its resolution of September 22, 1998 and considered this case submitted for decision as of May 7, 1999. Nonetheless, it took [respondent] another five months after it was represented by a new counsel and after a decision unfavorable to it was rendered before [respondent] realized that an additional material documentary evidence has to be presented by way of a new trial, this time initiated by a third counsel coming from the same law firm. x x x
Furthermore, in ascertaining whether or not the income upon which the taxes were withheld were included in the returns of the [respondent], this Court based its findings on the income tax returns and their supporting schedules prepared and reviewed by the [respondent] itself and which, to Us, are enough to support the conclusion reached.
WHEREFORE, in view of the foregoing, [respondent's] Motion for New Trial is hereby DENIED for lack of merit.
SO ORDERED.10
SECTION 229. Recovery of Tax Erroneously or Illegally Collected. -- No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. (Formerly Section 230 of the old NIRC)
Section 10. Claims for tax credit or refund. -- 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 was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payer to the payee (BIR Form No. 1743.1) showing the amount paid and the amount of tax withheld therefrom.
x x x the Certificates of Creditable Tax Withheld at Source submitted by [respondent] pertain to rentals of real property while the Monthly Remittance Returns of Income Taxes Withheld refer to sales of real property. But, if we are to look at Schedules 3, 4, and 5 of the Annual Income Tax Return of [respondent] for 1994 (Exhibit "A"), there was no showing that the Rental Income and Income from Sale of Real Property were included as part of the gross income appearing in Section A of the said return. In fact, under the said schedules, the phrase "NOT APPLICABLE" was printed by [respondent]. Verily, the income of [respondent] coming from rent and sale of real property upon which the creditable taxes withheld were based were not duly reflected. As to the certifications issued by the [respondent] (Exh. UU), the same cannot be considered in the absence of the requisite Certificates of Creditable Tax Withheld at Source.
Based on the foregoing, [respondent] has failed to comply with two essential requirements for a valid claim for refund. Consequently, the same cannot be given due course. 14 (Emphasis supplied)
We disagree with x x x CTA's findings. In the case of Citibank, N.A. vs. Court of Appeals (280 SCRA 459), the Supreme Court held that:"a refund claimant is required to prove the inclusion of the income payments which were the basis of the withholding taxes and the fact of withholding. However, a detailed proof of the truthfulness of each and every item in the income tax return is not required. x x x
x x x The grant of a refund is founded on the assumption that the tax return is valid; that is, the facts stated therein are true and correct. x x x"
In the case at bench, the BIR examined [respondent] Bank's Corporate Annual Income Tax Returns for the years 1994 and 1995 when they were filed on April 10, 1995 and April 15, 1996, respectively. Presumably, the BIR found no false declaration in them because it did not allege any false declaration thereof in its Answer (to the petition for review) filed before x x x CTA. Nowhere in the Answer, did the BIR dispute the amount of tax refund being claimed by [respondent] Bank as inaccurate or erroneous. In fact, the reason given by the BIR (in its Answer to the petition for review) why the claimed tax refund should be denied was that "x x x the amount of P13,645,109.00 was not illegally or erroneously collected, hence, the petition for review has no basis" [see Record, p. 32]. The amount of P17,433,133.00 reflected as refundable income tax in [respondent] Bank's Corporate Annual Income Tax Return for the year 1995 was not disputed by the BIR to be inaccurate because there were certain income not included in the return of the [respondent]. Verily, this leads Us to a conclusion that [respondent] Bank's Corporate Annual Income Tax Returns submitted were accepted as regular and even accurate by the BIR.
Incidentally, under Sec. 16 of the NIRC, the Commissioner of the BIR is tasked to make an examination of returns and assess the correct amount of tax, to wit:"Sec. 16. Power of the Commissioner to make assessment and prescribe additional requirements for tax administration and enforcement.
(a) After a return is filed as required under the provision of this Code, the Commissioner shall examine it and assess the correct amount of tax. x x x"
which the [petitioner] Commissioner undeniably failed to do. Moreover, noteworthy is the fact that during the hearing of the petition for review before the CTA, [petitioner] Commissioner of the BIR submitted the case for decision "in view of the fact that he has no evidence to present nor records to submit relative to the case" x x x
Thus, although it is a fact that [respondent] failed to indicate said income payments under the appropriate Schedules 3, 4, and 5 of Section C of its 1994 Annual Income Tax Return (Exhibit "A"), however, We give credence to [respondent] Bank's assertion that it reported the said income payments as part of its gross income when it included the same as part of the "Other Income," "Trust Income," and "Interest Income" stated in the Schedule of Income (referred to as an attachment in Section C of Exhibit "A", x x x and in the 1994 audited Financial Statements (FS) supporting [respondent's] 1994 Annual Corporate Income Tax Return. The reason why the phrase "NOT APPLICABLE" was indicated in schedules 3, 4, and 5 of Section C of [respondent's] 1994 Annual Income Tax Return is due to the fact that [respondent] Bank already reported the subject rental income and income from sale of real property in the Schedule of Income under the headings "Other Income/Earnings," "Trust Income" and "Interest Income." Therefore, [respondent] Bank still complied with the second requirement that the income upon which the taxes were withheld are included in the return as part of the gross income.
x x x x
[Respondent] Bank's various documentary evidence showing that it had satisfied all requirements under the Tax Code vis-á -vis the Bureau of Internal Revenue's failure to adduce any evidence in support of their denial of the claim, [respondent] Bank should, therefore, be granted the present claim for refund.15 (Emphasis supplied)
Endnotes:
1 Rollo, pp. 127-139; penned by Associate Justice Edgardo F. Sundiam and concurred in by Associate Justices Martin S. Villarama, Jr. (now a Member of this Court) and Japar B. Dimaampao.
2 Id. at 142-151; penned by Associate Justice Amancio Q. Saga and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justice Ramon O. De Veyra.
3 Id. at 140-141.
4 Id. at 154-155.
5 Id. at 178.
6 Id. at 143.
7 Section 69. Final Adjustment Return. -- Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either:
(a) Pay the excess still due; or
(b) Be refunded the excess amount paid, as the case may be.
In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year. (Now Section 76 of the NIRC of 1997).
8 Rollo, p. 143.
9 Id. at 147-148.
10 Id. at 152-153.
11 Id. at 111.
12 Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R. No. 155682, March 27, 2007, 519 SCRA 93, 96.
13 Rollo, p. 149.
14 Id. at 150.
15 Id. at 136 to 138.br>
16 Id. at 155.
17 Far East Bank and Trust Company v. Court of Appeals, G.R. No. 129130, December 9, 2005, 477 SCRA 49, 54.
18 Rollo, p. 173.
19 CA rollo, pp. 17-18.
20 Philippine Long Distance Telephone Company v. Commissioner of Internal Revenue, G.R. No. 157264, January 31, 2008, 543 SCRA 329, 335.
21 Philam Asset Management, Inc. v. Commissioner of Internal Revenue, G.R. Nos. 156637 and 162004, December 14, 2005, 477 SCRA 761, 775.
22 Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 159490, February 18, 2008, 546 SCRA 150, 163.