G.R. No. 206019, March 18, 2015
PHILIPPINE NATIONAL BANK, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.
FACTS
Petitioner Philippine National Bank (PNB) was part of a syndicate of banks that entered into a loan agreement with Gotesco Tyan Ming Development, Inc. (Gotesco). Upon Gotesco’s default, PNB foreclosed the mortgaged property. PNB paid documentary stamp tax and withheld and remitted to the BIR creditable withholding taxes at the rate of 6% of the bid price. PNB later claimed it erroneously applied the 6% rate and should have applied the 5% rate applicable to the sale of ordinary assets by a real estate business, pursuant to Revenue Regulations. PNB filed an administrative claim and subsequently a petition before the Court of Tax Appeals (CTA) for a refund of the alleged excess withholding tax. The CTA First Division denied the claim, holding that while PNB proved the fact of withholding and remittance, it failed to present evidence, specifically Gotesco’s 2003 Income Tax Return (ITR), to prove that Gotesco did not utilize the withheld taxes to settle its own tax liabilities. PNB filed a Motion for Reconsideration attaching Gotesco’s 2003 ITR, but the First Division denied it, stating the ITR was insufficient without supporting documents like BIR Form No. 2307 to confirm the claimed amount was not utilized. The CTA En Banc affirmed the denial. PNB elevated the case to the Supreme Court via a Petition for Review on Certiorari.
ISSUE
Whether the Court of Tax Appeals erred in denying PNB’s claim for refund of excess creditable withholding tax.
RULING
Yes. The Supreme Court reversed the CTA En Banc and granted PNB’s claim for refund. The Court held that PNB satisfactorily discharged its burden of proof. It established: (1) the applicable withholding tax rate was 5%, not 6%, making the withholding and remittance erroneous; (2) it withheld and remitted the tax to the BIR; and (3) the claimed excess was not used by Gotesco to settle its tax liabilities. The Court found that Gotesco’s 2003 ITR, which PNB submitted, showed that the total creditable taxes withheld reported by Gotesco (P6,014,433.00) was less than the amount withheld by PNB (P74,400,028.49) and even less than the amount being claimed as refund (P12,400,004.71). This, coupled with the testimony of Gotesco’s former accountant affirming that the amount subject of the claim was not included in Gotesco’s 2003 ITR, and the Withholding Tax Remittance Returns (BIR Form 1606) proving the withholding, constituted sufficient evidence. The Supreme Court directed the Commissioner of Internal Revenue to refund the amount of Php 12,400,004.71 to PNB.