China Banking Corp. v. Commissioner of Internal Revenue

FOURTEENTH DIVISION [CA-G.R. SP No. 50839. November 15, 2000.] CHINA BANKING CORPORATION , petitioner-appellant , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . - appellee . D E C I S I O N RIVERA , C . , J p : In this Petition for Review, filed under Rule 43 of the 1997 Rules on Civil Procedure, Petitioner seeks the modification of the Decision , dated September 30, 1998, as well as the Resolution , dated January 15, 1999, both issued by the Court of Tax Appeals in CTA Case No. 5405. As culled from the records, the appeal at bench stemmed from the following factual backdrop On July 20, 1994, Petitioner paid the aggregate amount of P12,354,933.00 as gross receipts tax for its income derived from interest on loans investments, commissions, service and collection charges, foreign exchange profit and other operating earnings for the second quarter of 1994. In view, however, of the Court of Tax Appeals' pronouncement, on January 30, 1996, in CTA Case No. 4720, entitled " Asian Bank Corporation versus Commissioner of Internal Revenue ", that the 20% final withholding tax on a bank's interest income should not form part of its taxable gross receipts, the Petitioner, on July 19, 1996, filed a written claim for refund or tax credit with the Respondent in the amount of P1,140,623.82 representing the 5% gross receipts tax on the 20% final withholding tax. Simultaneous thereto, Petitioner also filed the instant Petition for Review with the Court of Tax Appeals, which was docketed as CTA Case No. 5405, to beat the two-year prescriptive period provided for under Section 230 of the Tax Code. In confutation to Petitioner's claim, Respondent Commissioner averred, inter alia , that the court's ruling in CTA Case No. 4720, which excluded the 20% final withholding tax from the bank's gross receipts, is erroneous because the term "gross receipts" contemplates all items of income of the Petitioner regardless of whether or not the same were allocated for a specific purpose. Respondent then posits that the term "gross receipts" means whole, entire receipts, as opposed to "net receipts". ADaECI After due proceedings, the tax court a quo , on September 30, 1998 issued the herein assailed Decision ( Annex " A " of the Petition ) the dispositive portion of which reads, to wit: "WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering the respondent to REFUND or ISSUE a tax credit certificate in the reduced amount of 123,778.73 representing overpaid GRT payments for the second quarter of 1994. The remaining amount claimed by petitioner is DENIED for insufficiency of evidence." ( Rollo , page 41 ) Both the Petitioner and the Respondent filed motions for reconsideration from the above-quoted Decision which, however, were uniformly dismissed by the Court of Tax Appeals in its Resolution dated January 15, 1999 ( Annex " B " of the Petition ). Hence, the appeal at bench. Parenthetically, the issue as to whether or not the gross receipts, for purposes of computing the gross receipts tax, shall be computed net of the 20% final withholding tax was brought before this Court by the Respondent in a Petition for Review , docketed as CA-G.R. SP No. 50790, entitled " COMMISSIONER OF INTERNAL REVENUE VS. CHINA BANKING CORPORATION ", wherein the Thirteenth Division of this Court, on October 16, 2000, through the ponencia of Justice Delilah Vidallon-Magtolis, ruled in the affirmative, thusly affirming in toto the Decision appealed from. On the other hand, the Petitioner, in the present recourse, seeks the modification of the herein assailed Decision in that it be awarded the amount of P1,140,623.82, which represents the full extent of Petitioner's claim for refund in CTA Case No. 5405. We find Petitioner's appeal to be bereft of merit. In granting a refund or tax credit certificate in the reduced amount of P123,778.73, representing overpaid GRT payments for the second quarter of 1994, the tax court a quo ratiocinated, thus: "Based on the petitioner's computation of the refundable amount, the gross receipts tax payments for the second quarter of 1994 were divided on the basis of the tax rates of 5% (short term); 3% (medium term) and 1% (long term) depending on the maturity dates of the investment pursuant to Section 119 of the 1994 Tax Code (see Exhibit "F-1"). A careful examination of the records of this case reveal that it is only the GRT payments corresponding to the medium term maturity rate of 3% that were supported by sufficient evidence. Petitioner computed its overpaid gross receipts tax on medium term investment as follows: Gross receipts tax computed at gross P204,592.17 Less: gross receipt tax Computed at net 81,313.44 Refundable amount P123,278.73 =========== The evidence offered by the petitioner however shows that the refundable GRT based on medium term investments total P208,711.50, computed as follows: 20% Rate Amount Kind of Investment Exh. Final Tax Of Refundable Paid GRT 3-yr FRIN SER 11 with TFA- P881.0M per RMIC #94-1117 H-3-a P5,925,605.61 3% P207,768.17 3-yr FRN SER 11 with TFA-P4M per RMIC #1146 h-4-a 31,444.30 3% 943.33 TOTAL P6,957,049.91 P208,711.50 =========== =========== We are inclined to grant the lesser amount of P123,278.73 as computed by the petitioner because its claim for refund corresponding to GRT on medium term investments is limited to said amount." ( Rollo, pages 40-41 ) And in its herein assailed Resolution , dated January 15, 1999 denying Petitioners' motion for reconsideration of the Tax Court's September 30, 1998, the same court sustained the herein-above award holding that: "After a careful study of the Motions for Reconsideration, as well as the respective Oppositions thereto filed by the parties, the Court finds no compelling reason to deviate from its stand that Petitioner is entitled only to the amount of P123,778.73 The question of whether or not the evidence submitted by a party is sufficient to warrant the granting of a refund lies within the sound discretion and judgment of the Court. Petitioner is reminded that this is a case of refund. It has to show clear and convincing proof of its entitlement thereto. Mere testimonial evidence, even if unrebutted by any evidence of Respondent, is not enough to grant whatever amount the Petitioner seeks to be refunded ( Rollo, page 44 ) The above-quoted portions of the Tax Court's Decision and Resolution shows that the evidence proffered by the Petitioner was carefully considered by it in arriving at the questioned Decision and Resolution . Accordingly, We must sustain the Tax Court's findings for it is a well-settled rule that the factual findings of an administrative body should be affirmed if there is substantial evidence to support them and the conclusions stated in the decision are not clearly against the law and jurisprudence similar to the instant case ( Gandara Mill Supply versus National Labor Relations Commission , G . R . No . 126703, December 29, 1998, 300 SCRA 702 ). ScTIAH IN THE LIGHT OF ALL THE FOREGOING, the Petition is hereby DENIED for lack or merit. The Decision, dated September 30, 1998, as well as the Resolution, dated January 15, 1999, both issued by the Court of Tax Appeals in CTA Case No. 5405, are hereby AFFIRMED IN TOTO. Carpio-Morales and Guevara-Salonga, JJ., concur.