Citytrust Banking Corp. v. Commissioner of Internal Revenue

[C.T.A. CASE NO. 5170. January 23, 1997.] CITYTRUST BANKING CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N 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% final withholding tax on interest paid by petitioner on Agricultural Loan Fund Special Time Deposits for the month 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"). LexLib 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 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 11-10-92 PAYEE/SOURCE AMOUNT Citytrust STD HLF Accruals P 307,861.46 * Eppie's Garments 1,012.87 S.D. Yeong 2,823.88 - do - 7,926.86 - do - 4,830.21 Nat'l Steel Corporation 243,607.41 - do - 236,025.67 - do - 89,410.59 - do - 6,451.87 - do - 130,707.03 - do - 24,672.27 - do - 6,750.75 - do - 44,136.30 - do - 57,725.44 T O T A L P1,163,942.61 =========== 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 P14,413,686.79. Attached in the said Quarterly Return is a Withholding Tax Report on Savings and Time Deposits (Exh. "B-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 WITHHOLDING TAX REPORT FOR THE QUARTER ENDED DECEMBER 31, 1992 SAVINGS DEPOSIT TIME DEPOSIT BRANCHES INTEREST PAID TAX DUE BRANCHES INTEREST PAID TAX DUE BUENDIA/HO 7,658,380.30 1,531,676.06 BUENDIA/HO 1,007,290.99 201,459.78 CDS 4,273,034.80 854,606.96 T S U 4,351,302.35 870,260.47 DASMARIAS 2,870,204.15 574,040.83 T L S 4,415,033.20 883,006.64 QUIAPO 929,475.85 185,895.17 DASMARIAS 357,147.85 71,429.47 ABAD SANTOS 863,636.15 172,727.23 QUIAPO 288,796.80 57,759.26 CALOOCAN 1,412,490.20 282,498.04 ABAD SANTOS 442,818.95 88,563.79 STA. ANA 877,341.70 175,468.34 CALOOCAN 785,592.60 157,118.56 GUADALUPE 588,173.95 117,634.79 STA. ANA 621,075.6O 124,215.12 PIONEER 2,693,225.65 538,645.13 GUADALUPE 77,196.65 15,439.33 TAYTAY 707,299.10 141,459.82 PIONEER 20,661.60 24,132.32 KAMUNING 1,295,077.65 259,015.53 TAYTAY 354,093.95 70,818.67 ERMITA 1,032,483.45 206,496.69 KAMUNING 289,037.85 57,807.57 ORTIGAS 1,585,605.35 317,121.07 ERMITA 114,439.00 28,887.80 LEGASPI 1,478,301.55 295,660.31 ORTIGAS 128,831.00 25,728.20 PASONG TAMO 1,570,791.55 314,158.31 LEGASPI 220,781.50 44,156.80 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 153,600.85 30,720.07 SHAW BOULEVARD 781,246.50 156,249.70 AURORA 341,464.70 68,292.94 WEST AVE. 1,113,908.25 222,781.65 SHAW BOULEVARD 113,644.90 22,768.98 LAS PIAS 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 PIAS 520,986.90 104,197.38 ALABANG 1,345,831.05 269,166.21 DEL MONTE 180,606.90 30,121.38 NEW MANILA 946,483.25 189,296.65 ALABANG 446,418.25 89,283.65 GREENHILLS 946,984.75 189,396.95 NEW MANILA (459,835.60) (91,967.12) BUTUAN 433,066.25 86,613.25 GREENHILLS 555,260.55 111,052.11 CALAMBA EXT. 496,744.80 99,348.96 BUTUAN 90,549.00 18,109.80 CEBU PLARIDEL 1,271,537.85 254,307.57 CALAMBA EXT. 21,751.50 4,350.30 DAVAO 1,035,758.05 207,151.61 CEBU PLARIDEL 232,519.35 46,503.87 IRIGA 177,345.45 35,469.09 DAVAO 252,261.95 50,452.39 STA. CRUZ 1,224,068.10 244,813.62 IRIGA 130,335.90 26,087.18 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 981,940.00 196,388.00 CAGO 190,286.65 38,057.33 CALAMBA MAIN 521,957.20 104,391.44 SAN PABLO 116,818.55 23,363.71 BATANGAS 583,576.55 116,715.31 CALAMBA MAIN 10,447.50 2,089.50 BAGUIO PHILEX 289.091.85 57,818.37 BATANGAS 70,854.95 14,170.99 BAGUIO SESSION 719,962.70 143,992.54 BAGUIO PHILEX 206,155.00 41,231.00 CEBU LAHUG 915,017.55 183,003.51 BAGUIO SESSION 219,590.75 48,918.15 DIVISORIA 516,329.75 103,265.95 CEBU LAHUG 109,411.55 21,882.31 MARIKINA 411,302.20 82,260.44 DIVISORIA 31,040.15 6,209.23 BUGO 205,909.40 41,181.88 MARIKINA 226,482.50 45,296.50 PASAY ROAD 640,430.45 128,086.09 BUGO 81,593.75 18,318.75 SAN FERNANDO 309,934.05 61,986.81 PASAY ROAD 584,880.25 116,976.05 LOYOLA 125,331.15 25,066.23 SAN FERNANDO 65,909.75 13,181.95 SUCAT 83,151.12 16,630.23 LOYOLA HEIGHTS 4,902.05 980.41 STA. MESA 112,995.25 22,599.05 SUCAT 6,188.75 1,237.75 ILOILO 581,507.00 116,301.40 STA. MESA HEIGHTS 10,039.70 2,007.94 COMMONWEALTH 35,437.40 7,087.48 ILOILO 13,428.90 2,684.79 53,322,327.35 10,664,465.47 COMMONWEALTH 13,989.30 2,797.86 18,746,100.00 8,749,221.32 TAX DUE ON: SAVINGS, SPECIAL SAVINGS DEPOSIT P10,664,465.47 TIME DEPOSIT, STD ALF DEPO LIAB DEPO SUBST-NON FINANCIAL, ICLP 3,749,221.32 P 14,413,686.79 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 1992 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 Date Amount Ticket No. "C" 15074 October 3, 1992 P307,861.46 "D" 15075 January 18, 1993 297,920.45 "E" 15073 January 18, 1993 77,214.73 P883,006.64 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 1, 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 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 Withheld (Exh. "B"), duly stamped received by the respondent (Exh. "B-2"), showing the amount of P14,413,686.79 as the total tax withheld for the fourth quarter of 1992 and the accompanying Withholding Tax Report (Exh. "B-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 December 1992 showing the amounts of P307,861.46, 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 21, 1993 (Exh. "F"), claiming for the refund of P307,861.46, received by the respondent on May 27, 1993 (Exh. "F-2"); 5. Letter-request of petitioner's auditor, SGV & Co. addressed to the respondent requesting for a certification that the amounts of P1,163,942.61 and P14,413,686.79 appearing on petitioner's Monthly Remittance of Income Taxes Withheld and Quarterly Return of Final Income Taxes Withheld on Interest Paid on Deposits and Deposit Substitutes, respectively, were actually remitted to the Bureau 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 P1,163,942.61 and P14,413,686.79 appearing on petitioner's Monthly Remittance of Income Taxes Withheld and Quarterly Return of Final Income Taxes Withheld on Interest Paid on Deposits and Deposit Substitutes, respectively, have been verified and were 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 d interests recognized by herein petitioner and the 20% withholding taxes due thereon for the fourth quarter of 1992 (Exhs. "I", "J", "K", 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 period 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 accompanying Schedule of Withholding Tax at Source, showing the amount of P307,861.46 as the tax due on Citytrust STD ALF Accruals (Exhs. "N", and "N-2"). 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 double payment of 20% final withholding tax on interest paid by petitioner on Agricultural Loan Fund Special Time Deposits for the month of October 1992. We answer in the affirmative. During the trial, petitioner was able to substantiate and prove 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 payment of P307,861.46 and its Quarterly Return of Final Income Taxes Withheld on Interest Paid on Deposits and Yield on Deposit Substitutes/Trusts/etc. for the period covering October to December 1992 (Exh. "B") again paying the amount of P307,861.46 as part of the withholding tax of interest paid by the Trade and Loans 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 BIR-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 the amount of P307,861.46. representing the double payment of 20% final withholding tax on interest paid by petitioner on Agricultural Loan Fund Special Time Deposits for the month of October 1992. SO ORDERED. ERNESTO D. ACOSTA Presiding Judge I CONCUR: RAMON O. DE VEYRA Associate Judge