G.R. No. 180290, September 29, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. PHILIPPINE NATIONAL BANK, Respondent.
D E C I S I O N
In several transactions including but not limited to the sale of real properties, lease and commissions, [respondent] allegedly earned income and paid the corresponding income taxes due which were collected and remitted by various payors as withholding agents to the Bureau of Internal Revenue (“BIR”) during the taxable year 2000.
On April 18, 2001, [respondent] filed its tentative income tax return for taxable year 2000 which [it] subsequently amended on July 25, 2001.
. . . [Respondent] filed again an amended income tax return for taxable year 2000 on June 20, 2002, declaring no income tax liability . . . as it incurred a net loss in the amount of P11,318,957,602.00 and a gross loss of P745,713,454.00 from its Regular Banking Unit (“RBU”) transactions. However, [respondent] had a 10% final income tax liability of P210,364,280.00 on taxable income of P1,959,931,182.00 earned from its Foreign Currency Deposit Unit (“FCDU”) transactions for the same year. Likewise, in the [same] return, [respondent] reported a total amount of P245,888,507.00 final and creditable withholding taxes which was applied against the final income tax due of P210,364,280.00 leaving an overpayment of P35,524,227.00. . . .
. . . .
In its second amended return, [respondent’s] income tax overpayment of P35,524,227.00 consisted of the balance of the prior year's (1999) excess credits of P9,057,492.00 to be carried-over as tax credit to the succeeding quarter/year and excess creditable withholding taxes for taxable year 2000 in the amount of P26,466,735.00 which [respondent] opted to be refunded.
On November 11, 2002, [respondent] . . . filed a claim for refund or the issuance of a tax credit certificate in the amount of P26,466,735.40 for the taxable year 2000 with the [BIR].
Due to [BIR's] inaction on its administrative claim, [respondent] appealed before [the Court of Tax Appeals] by way of a Petition for Review on April 11, 2003.6 (Citation omitted)
WHEREFORE, premises considered, the petition is hereby GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE to petitioner in the reduced amount of Twenty Three Million Seven Hundred Sixty Two Thousand Three Hundred Forty Seven Pesos and 83/100 (P23,762,347.83) representing unutilized excess creditable withholding taxes for taxable year 2000.7 (Emphasis in the original)
A. Respondent failed to prove that the creditable withholding taxes amounting to P23,762,347.83 are duly supported by valid certificates of creditable tax withheld at source;
B. Respondent failed to prove actual remittance of the alleged withheld taxes to the Bureau of Internal Revenue (BIR); and
C. Respondent failed to discharge its burden of proving its entitlement to a refund.”10chanrobleslaw
1) The petition should be dismissed for being pro forma because it does not specify the reversible errors of either fact or law that the lower courts committed, and the arguments raised are all rehash and purely factual; 2) It complied with all the requirements for judicial claim for refund of unutilized creditable withholding taxes; 3) The fact of withholding was sufficiently established by the 622 creditable withholding tax certificates, primarily attesting the amount of taxes withheld from the income payments received by respondent. Furthermore, to present to the court all the withholding agents or payors to identify and authenticate each and every one of the 622 withholding tax certificates would be too burdensome and would unnecessarily prolong the trial of the case; and 4) Respondent need not prove the actual remittance of withheld taxes to the Bureau of Internal Revenue because the remittance is the responsibility of the payor or withholding agent and not the payee.
[O]ut of the total claimed creditable withholding taxes of P26,466,735.40, [respondent] was able to substantiate only the amount of P25,666,064.80 [sic], computed as follows:chanRoblesvirtualLawlibrary
Amount of Claimed Creditable Taxes Withheld P26,466,735.40 Less: 1.) Certificates which do not bear any date or period when the indicated creditable taxes were withheld 48,600.00 2.) Certificates dated outside the period of claim 730,151.10 3.) Certificate without indicated amount of tax withheld 8,794.50 4.) Certificates taken-up twice 9,000.00 Substantiated Creditable Taxes Withheld P25,670,189.80
. . . .
[O]ut of the claimed amount of P25,670,189.80 supported by valid certificates, only the creditable withholding taxes of P23,762,347.83, the related income of which were verified to have been recorded in [respondent’s] general ledger and reported in [respondent’s] income tax return either in the year 1999, 2000 or 2001, satisfied the third requisite, computed as follows:chanRoblesvirtualLawlibrary
Creditable Taxes Withheld With Valid Certificates P25,670,189.80 Less: Creditable Taxes Withheld, the related income of which was not verified against the general ledger 1,907,841.97 Refundable Excess Creditable Taxes Withheld P23,762,347.8320
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 of Revenue Regulations No. 6-85, 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.26 (Emphasis supplied, citations omitted)
SEC. 267. Declaration under Penalties of Perjury. – Any declaration, return and other statements required under this Code, shall, in lieu of an oath, contain a written statement that they are made under the penalties of perjury. Any person who willfully files a declaration, return or statement containing information which is not true and correct as to every material matter shall, upon conviction, be subject to the penalties prescribed for perjury under the Revised Penal Code.
. . . proof of actual remittance by the respondent is not needed in order to prove withholding and remittance of taxes to petitioner. Section 2.58.3 (B) of Revenue Regulation No. 2-98 clearly provides that proof of remittance is the responsibility of the withholding agent and not of the taxpayer-refund claimant. It should be borne in mind by the petitioner that payors of withholding taxes are by themselves constituted as withholding agents of the BIR. The taxes they withhold are held in trust for the government. In the event that the withholding agents commit fraud against the government by not remitting the taxes so withheld, such act should not prejudice herein respondent who has been duly withheld taxes by the withholding agents acting under government authority. Moreover, pursuant to Section 57 and 58 of the NIRC of 1997, as amended, the withholding of income tax and the remittance thereof to the BIR is the responsibility of the payor and not the payee. Therefore, respondent . . . has no control over the remittance of the taxes withheld from its income by the withholding agent or payor who is the agent of the petitioner. The Certificates of Creditable Tax Withheld at Source issued by the withholding agents of the government are prima facie proof of actual payment by herein respondent-payee to the government itself through said agents.28chanrobleslaw
1Rollo, pp. 12–23.
2 Id. at 29–38. The decision was penned by Associate Justice Juanito C. Castañeda, Jr., concurred in by Presiding Justice Ernesto D. Acosta and Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and Olga Palanca-Enriquez.
3 Id. at 50–51. The resolution was penned by Associate Justice Juanito C. Castañeda, Jr., concurred in by Presiding Justice Ernesto D. Acosta and Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and Olga Palanca-Enriquez.
4 Id. at 175–190. The decision was penned by Associate Justice Caesar A. Casanova, concurred in by Presiding Justice Ernesto D. Acosta (Chair) and Associate Justice Lovell R. Bautista.
5 Id. at 204–207. The resolution was penned by Associate Justice Caesar A. Casanova, concurred in by Presiding Justice Ernesto D. Acosta (Chair) and Associate Justice Lovell R. Bautista.
6 Id. at 30–31.
7 Id. at 189–190.
8 Id. at 34 and 37.
9 Id. at 39–47.
10 Id. at. 17.
11 Id. at 19–21.
12 Id. at 215–256.
13 Id. at 309–313.
14 Id. at 310.
15 Id. at 315.
16Far East Bank and Trust Company v. Court of Appeals, 513 Phil. 148, 157 (2005) [Per J. Azcuna, First Division].
17Rollo, pp. 229 and 236.
19Asian Construction and Development Corporation v. COMFAC Corporation, 535 Phil. 513, 517–518 (2006) [Per J. Quisumbing, Third Division].
20Rollo, pp. 187–189.
21Far East Bank and Trust Company v. Court of Appeals, 513 Phil. 148, 154 (2005) [Per J. Azcuna, First Division]; Philippine Refining Company v. Court of Appeals, 326 Phil. 680, 689 (1996) [Per J. Regalado, Second Division].
22 Now BIR Form No. 2307.
23 Sec. 10 of Revenue Regulation No. 6-85, as amended by Revenue Regulation No. 12-94 provides:chanRoblesvirtualLawlibrary
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. (Emphasis supplied) Far East Bank and Trust Company v. Court of Appeals, 513 Phil. 148, 155 (2005) [Per J. Azcuna, First Division].
24 CIR v. Team (Philippines) Operations Corporation, G.R. No. 179260, April 2, 2014, [Per J. Perez, Second Division]; CIR v. TeaM (Philippines) Operations Corporation, G.R. No. 185728, October 16, 2013, 707 SCRA 467, 479 [Per J. Villarama, Jr., First Division]; CIR v. Mirant (Philippines) Operations, Corporation, G.R. No. 171742, June 15, 2011, 652 SCRA 80, 98 [Per J. Mendoza, Second Division].
25 548 Phil. 32 (2007) [Per J. Austria-Martinez, Third Division].
26 Id. at 39–40.
27 G.R. No. 179617, January 19, 2011, 640 SCRA 189 [Per J. Mendoza, Second Division].
28 Id. at 201.
29Rollo, pp. 281–285.
30 Id. at 35.
31CIR v. Manila Mining Corporation, 505 Phil. 650, 664 (2005) [Per J. Carpio Morales, Third Division]; C.F. Sharp & Company, Inc. v. Commissioner of Customs, 130 Phil. 777, 782 (1968) [Per J. J.P. Bengzon, En Banc].
32 Atlas Consolidated Mining and Development Corporation v. CIR, 547 Phil. 332 (2007) [Per J. Corona, First Division]. See also Dizon v. Court of Tax Appeals, 576 Phil. 110, 128 (2008) [Per J. Nachura, Third Division].