BPI Data Systems Corp. v. Commissioner of Internal Revenue

THIRD DIVISION [CA-G.R. SP No. 34578. October 24, 1997.] BPI DATA SYSTEMS CORPORATION, (formerly, Filipinas Management & Leasing Services, Inc.) , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS , respondents . D E C I S I O N TAYAO-JAGUROS , JR. , J p : Before this Court is a petition for review filed by BPI Data Systems Corporation from the decision of the respondent Court of Tax Appeals, in C.T.A Case No. 4440 entitled "BPI Data Systems Corporation (formerly, Filipinas Management & Leasing Services, Inc.) v. Commissioner of Internal Revenue" for Tax Refund. The decretal portion of said decision reads: "WHEREFORE, in view of the foregoing, the petition is hereby DENIED. Costs against the petitioner." (p. 11, Dec.; p. 42, Rollo) The respondent tax court has summarized the facts of this case as follows: "Petitioner seeks to recover by way of this petition for review alleged creditable taxes withheld for the year 1987 in the amount of P362,617.00. Petitioner, BPI Data Systems Corporation, formerly Filipinas Management & Leasing Services Corporation, is a corporation engaged in the business of rendering computer services to the affiliates of the Bank of the Philippine Islands. On April 15, 1988, petitioner filed its Corporate Annual Income Tax Return (Exh. A) for the calendar year ending December 31, 1987. The return shows a Net Loss of P156,971.00 and a "NIL" tax liability. However, there appears a refundable amount of P565,158.00, consisting of prior year's excess credit of P202,541.00 and creditable taxes withheld in 1987 of P362,617.00. Then on May 24, 1988, petitioner filed an Amended Income Tax Return (Exh. A-1) for the year 1987 showing a refundable amount of P538,582.00, computed as follows: Computer Services Fees P31,681,055.00 Miscellaneous Income P1,280,736.00 Gross Income P32,961,791.00 Less: Deductions 32,885,860.00 NET INCOME P75,931.00 =========== TAX DUE P26,576.00 LESS: a) Prior Year's Excess Credit P202,541.00 b) Quarterly Payments -202,541.00 Balance of Tax Due (P175,965.00) LESS: Tax Credit Creditable taxes withheld in 1987 362,617.00 AMOUNT OF TAX REFUNDABLE (P538,582.00) =========== On March 26, 1990, petitioner filed with the respondent a claim for refund in the amount of P362,617.00, representing excess withholding taxes for the year 1987 (Exhs. C and C-1). Without waiting for respondent's decision on the claim for refund, petitioner filed a petition for review with this court on April 16, 1990 (Monday), the next working day following April 15, 1990 (Sunday). As ruled by the Supreme Court when the last day for filing a petition for review falls on a holiday or a Sunday the petition is timely filed if done on the next working day. (Galang v. Workmen's Compensation Commission, 44 SCRA 221). In this case, the last day for filing a suit to claim for a refund falls on April 15, 1990 (a Sunday), therefore, the filing of the petition on April 16, 1990) (a Monday) was considered timely filed. Respondent raised the defense of prescription and that the petition states no cause of action for failure of petitioner to state when the taxes withheld were paid. Respondent averred that taxes withheld are deemed paid when remittance thereof becomes due at the end of the year, that is, on December 31, 1987. The petition filed on April 16, 1990 is beyond the two-year prescriptive period under Section 230 of the National Internal Revenue Code. The burden is on the petitioner to show entitlement to the refund claimed." (pp. 1-3, Dec.; pp. 32-34, id .) After hearing, the tax court rendered the above decision denying the petition. The subsequent motion for reconsideration of the petitioner was also denied. Hence, this petition for review filed before Us. This petition has no merit. The sole issue raised in this petition is whether or not petitioner is entitled to tax refund. Petitioner insists that it is entitled to tax refund considering that it has allegedly explained before the tax court the discrepancy between its income tax return and the income in its certificates of withholding tax. Unfortunately for the petitioner, the tax court has also validly explained in its appealed decision as to why said discrepancy was not cleared by petitioner before said tax court as follows: "Petitioner presented in evidence the Statements of Taxes Withheld at Source (BIR Forms 1743, 1743.1 and 1743A) showing the income received and the amount of taxes withheld therefrom. For 1987, the computer service income received by petitioner amounted to P35,311,726.64 and the tax withheld by various withholding agents namely, the Bank of the Philippine Islands, BPI Credit Corporation, BPI Family Bank and BPI Securities Corporation totalled P362,617.27, itemized as follows: Rate of Tax Amount of Exhs. Income Received Withheld Tax Withheld B P2,236,000.00 1% P22,360.00 B-1 2,236,000.00 1% 22,360.00 B-2 2,236,000.00 1% 22,360.00 B-3 2,657,500.00 1% 26,575.00 B-4 2,657,500.00 1% 26,575.00 B-5 2,657,500.00 1% 26,575.00 B-6 3,043,226.64 1% 30,432.27 B-7 3,018,900.00 1% 30,189.00 B-8 3,007,500.00 1% 30,075.00 B-9 1,957,500.00 1% 19,575.00 B-10 2,657,500.00 1% 26,575.00 B-11 550,000.00 1% 5,500.00 B-12 2,236,000.00 1% 22,360.00 B-13 1,437,000.00 1% 14,370.00 B-14 2,673,600.00 1% 26,736.00 B-15 50,000.00 20% 10,000.00 Total P35,311,726.64 P362,617.27 =========== ========= It appears from the record that petitioner declared as computer services income only the amount of P32,961,791.00 (See 1987 Statement of Income and Retained Earnings, p. 53, CTA record) instead of P35,311,726.64. Petitioner failed to include the amount of P2,349,935.64 as part of its gross income in the Amended Income Tax Return in order to reflect the actual income received in the sum of P35,311,726.64 (Exhs. B, B-1 to B-15, inclusive)." (pp. 5-6, Dec.; p. 36-37, id .) It even appears that a recomputation of petitioner's income tax for the year 1987 would show petitioner's income tax liability instead of refund, in the amount of P283,895.45 as validly computed by the tax court as follows: "Amended Return Should be Gross Income P32,961,791.00 P35,311,727.00 Less: Deductions 32,885,860.00 32,885,860.00 Net Income P75,931.00 P2,425,867.00 =========== Tax Due P26,576.00 P849,053.45 Less: a) Prior Year's Excess Credit 202,541.00 202,541.00 b) Quarterly Payments Balance of Tax Due (P175,965.00) P646,512.45 Less: Tax Credit Creditable taxes withheld in 1987 362,617.00 362,617.00 Tax Still Due (P538,582.00) P283,895.45" =========== =========== (pp. 7-8, Dec.; pp. 38-39, id.) The applicable law in this case is Sec. 51(d) in relation with Secs. 204 and 49 of the National Internal Revenue Code as follows: "Sec. 51. Returns and payment of the taxes withheld at source. (a) Quarterly returns and payment of taxes withheld. . . . xxx xxx xxx (d) Income of recipients . Income upon which any creditable tax is required to be withheld at the source under Section 50 shall be included in the return of its recipient but any excess of the amount of tax so withheld over the tax due on his return shall be refunded to him subject to the provisions of section 204; if the income tax collected at source is less than the tax due on his return, the difference shall be paid in accordance with the provisions of Section 49 . (As amended by BP Blg. 41 and PD 1959.) (see PD 1994.) [Emphasis supplied.] (e) . . . Sec. 204. Authority of the Commissioner to compromise, abate, and refund/credit taxes . The Commissioner may xxx xxx xxx (3) Credit or refund taxes erroneously or illegally received, penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two years after the payment of the tax or penalty. (As amended by PD 1773.) Sec. 49. Payment and assessment of income tax for individuals and corporations. (a) Payment of tax . (1) In general . . . (b) Assessment and payment of deficiency tax . After the return is filed, the Commissioner of Internal Revenue shall examine it and assess the correct amount of the tax. The tax or deficiency income tax so discovered shall be paid upon notice and demand from the Commissioner. As used in this Chapter, in respect of a tax imposed by this title, the term 'deficiency' means: (1) The amount by which the tax imposed by this Title exceeds the amount shown as the tax by the taxpayer upon his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amount previously abated, credited, returned, or otherwise repaid in respect of such tax; or (2) If no amount is shown as the tax by the taxpayer upon his return, or if no return is made by the taxpayer, then the amount by which the tax exceeds the amounts previously assessed (or collected without assessment) as a deficiency; but such amounts previously assessed or collected without assessment shall first be decreased by the amounts previously abated, credited, returned, or otherwise repaid in respect of such tax. (As amended by PD 1994 and EO 37)." Given the above law and the facts of this case, We agree with the tax court that with the under declaration of income received by petitioner in 1987 as shown in the above computation, petitioner is obviously not entitled to tax refund. Besides, settled is the rule that findings of fact of the Court of Tax Appeals cannot be generally disturbed on appeal (Commissioner of Int. Rev. v. Arnoldus Carpentry Shop, Inc., 159 SCRA 199; Raymundo v. De Joya, 101 SCRA 495). In the recent case of Commissioner of Internal Revenue v. Court of Tax Appeals, 204 SCRA 182, the Supreme Court reiterated the rationale for the respect accorded to the findings of the Court of Tax Appeals: "Moreover, it has been the long standing policy and practice of this Court to respect the conclusions of quasi-judicial agencies, and with more reason, those of a Court such at the Court of Tax Appeals which, by the nature of its functions, is dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject. . . ." All in all, this Court finds no error in the appealed decision of the respondent tax court. WHEREFORE, the instant petition is hereby DENIED DUE COURSE AND DISMISSED by this Court. The appealed decision of the respondent Court of Tax Appeals in C.T.A. Case No. 4440 is Affirmed. Costs against petitioner. SO ORDERED. Paras and Valdez, Jr . , JJ . , concur.