Philam Properties Corp. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 8635. March 15, 2016.] PHILAM PROPERTIES CORPORATION , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION BAUTISTA , J p : For resolution is respondent's "Motion for Reconsideration (of the Amended Decision dated 03 December 2015)" ("respondent's MR") filed by registered mail on December 22, 2015; without any comment/opposition from petitioner despite due notice. On July 13, 2015, the Court promulgated a Decision, disposing of the case as follows: WHEREFORE , in view of the foregoing, the Petition for Review, filed by petitioner Philam Properties Corporation, claiming for a refund or issuance of a TCC of its excess/unutilized creditable withholding taxes amounting to Fifteen Million Two Hundred Twenty-Two Thousand Eight Hundred Sixty One Pesos (Php15,222,861.00) for the period starting from January 1 to December 31, 2010, is hereby DENIED for insufficiency of evidence. SO ORDERED . The Court ruled that petitioner failed to meet the second requisite for the refund or issuance of a Tax Credit Certificate ("TCC"') of its excess Creditable Withholding Taxes ("CWT"), i.e. , the income upon which the taxes were withheld were included in the return of the recipient; that this was due to a Php26,412,281.83 difference between the amount of gross income per CWT certificates (Php95,898,116.17) vis--vis the amount declared in petitioner's 2010 Annual Income Tax Return ("ITR") (Php122,310,398.00); and that the Court was unable to determine the items which make up the gross income per 2010 ITR since petitioner failed to present sufficient proof of its components and the report of the Court-commissioned Independent Certified Public Accountant ("ICPA") did not provide any additional information thereon. On August 4, 2015, petitioner filed its "Motion for Reconsideration," ("petitioner's MR") in which it asserts that the gross income per CWT certificates for CY 2010 is Php119,394,047.81 and not Php95,898,116.17, which represents income payments with original certificates, official receipts, and was properly reported in its 2010 books; that the remaining income payments amounting to Php23,495,931.64 (Php119,394,047.81 less Php95,898,116.17) correspond to CWT in the amount of Php3,127,253.03 and were all properly accounted for; that the total gross income from which the CWT were actually withheld is Php119,567,041.00 and not Php122,310,398.00; that all income payments reflected in the Certificates of Tax Withheld at Source can be traced to the detailed general ledger where the nature of income payment, payor, date paid, Official Receipt ("OR") No. and amount of CWT are posted; that the information posted in the general ledger is consistent with the entries in the Audit Trail Listing where transactions are grouped by document type ( i.e. , official receipt); and that considering that it submitted its detailed general ledger, Audit Trail Listing, Allocation Report, Reconciliation Schedules, Certificates of Tax Withheld at Source, ORs and other supporting documents, it has proven that the income payments from which the CWT were withheld were properly reported in its declared gross income per 2010 ITR, hence, it complied with the second requisite for the refund or issuance of a TCC of its excess CWT, contrary to the findings of the Court. Finding merit in petitioner's arguments, the Court issued the assailed Amended Decision partially granting petitioner's MR, the dispositive portion thereof provides the following: In view of the foregoing, petitioner's Motion for Reconsideration is hereby PARTIALLY GRANTED . Accordingly, the dispositive portion of the Decision promulgated on July 13, 2015 is hereby modified to read as follows: WHEREFORE , premises considered, the Petition for Review, filed by petitioner Philam Properties Corporation, claiming for a refund or issuance of a TCC of its excess/unutilized creditable withholding taxes amounting to Fifteen Million Two Hundred Twenty-Two Thousand Eight Hundred Sixty One Pesos (Php15,222,861.00) for the period starting from January 1 to December 31, 2010, is hereby PARTIALLY GRANTED . Accordingly, respondent is hereby ORDERED TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of Six Hundred Twelve Thousand Two Hundred Eighty Seven and 61/100 Pesos (Php612,287.61) representing petitioner's unutilized excess creditable withholding taxes for taxable year 2010. SO ORDERED . SO ORDERED. On December 22, 2015 and in her "Motion for Reconsideration (of the Amended Decision dated 03 December 2015)" ("respondent's MR"), respondent alleges that proof of actual remittance to the Bureau of Internal Revenue ("BIR") of the withholding taxes and testimonial evidence of the payors and withholding agents are required, hence, she prays that the Amended Decision be reconsidered and set aside and a new decision be rendered denying the Petition for Review for lack of merit. On January 15, 2016, the Court ordered petitioner to file its comment on respondent's MR within ten (10) days from receipt thereof. On February 10, 2016, the Judicial Records Division issued a Records Verification Report stating that petitioner failed to file a comment/opposition as of that date. The Court finds no merit in respondent's argument. The following pertinent portions, relating to CWT, of Sections 57 and 58 of the 1997 National Internal Revenue Code ("NIRC") , as amended, provide that it is the payor-withholding agent, and not the payee-refund claimant, who is vested with the responsibility of withholding and remitting income taxes: 1 SECTION 57. Withholding of Tax at Source . xxx xxx xxx (B) Withholding of Creditable Tax at Source . The Secretary of Finance may , upon the recommendation of the Commissioner, require the withholding of a tax on the items of income payable to natural or juridical persons, residing in the Philippines, by payor-corporation/persons as provided for by law , at the rate of not less than one percent (1%) but not more than thirty-two percent (32%) thereof, which shall be credited against the income tax liability of the taxpayer for the taxable year. xxx xxx xxx SECTION 58. Returns and Payment of Taxes Withheld at Source . (A) Quarterly Returns and Payments of Taxes Withheld. Taxes deducted and withheld under Section 57 by withholding agents shall be covered by a return and paid to, except in cases where the Commissioner otherwise permits, an authorized agent bank, Revenue District Officer, Collection Agent, or duly authorized Treasurer of the city or municipality where the withholding agent has his legal residence or principal place of business, or where the withholding agent is a corporation, where the principal office is located. The taxes deducted and withheld by the withholding agent shall be held as a special fund in trust for the government until paid to the collecting officers . The return for final withholding tax shall be filed and the payment made within twenty-five (5) n days from the close of each calendar quarter, while the return for creditable withholding taxes shall be filed and the payment made not later than the last day of the month following the close of the quarter during which withholding was made : . . . xxx xxx xxx The Supreme Court's ruling in Commissioner of Internal Revenue v. Asian Transmission Corporation 2 further sheds light on this issue: 3 . . . 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 Regulations 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 Sections 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 . Applying the forgoing to the case at bar, it is evident that there is no merit in respondent's argument that proof of actual remittance is indispensable in petitioner's claim for refund or issuance of a TCC for its unutilized excess CWT for taxable year 2010. Hence, there is no reason for the Court to reconsider its Amended Decision. WHEREFORE , respondent's "Motion for Reconsideration (of the Amended Decision dated 03 December 2015)" is hereby DENIED for lack of merit. SO ORDERED . (SGD.) LOVELL R. BAUTISTA Associate Justice Esperanza R. Fabon-Victorino and Ma. Belen M. Ringpis-Liban, JJ., concur. Footnotes 1. Underscoring ours. 2. G.R. No. 179617, January 19, 2011, 640 SCRA 189, as cited in Commissioner of Internal Revenue v. Philippine National Bank , G.R. No. 180290, September 29, 2014, 736 SCRA 609. 3. Underscoring ours. n Note from the Publisher: Copied verbatim from the official copy. Discrepancy between words and figures.