Facts:
Citibank N.A. Philippine Branch (CITIBANK) is a foreign corporation doing business in the Philippines. In 1979 and 1980, its tenants withheld and paid to the Bureau of Internal Revenue the taxeson rents due to Citibank, pursuant to Section 1(c) of the Expanded Withholding Tax Regulations. On April 15, 1980, Citibank field its corporate income tax returns for the year and ended December 31,1979 showing a net loss of P74,854,916.00 and its tax credits totaled P6,257,780.00, even without including the amounts withheld on rental income under the Expanded Withholding Tax System, the same not having been utilized or applied for the reason that the year‘s operation resulted in a loss. The taxes thus withheld by the tenants from rentals paid to Citibank in 1979 were not included as tax creditsalthough a rental income amounting to P7,796,811.00 was included in its income declared for the year ended December 31, 1979.
For the year ended December 31, 1980, Citibank‘s corporate income tax returns, filed on April 15, 1981,showed a net loss P77,071,790.00 for income tax purposes. Its available tax credit at the end of 1980amounting to P11,532,855.00 was not utilized or applied. The said available tax credits did not includethe amounts withheld by Citibank‘s tenants from rental payment sin 1980 but the rental payments forthat year were declared as part of its gross income included in its annual income tax returns. On October 31, 1981, Citibank submitted its claim for refund of the aforesaid amounts of P270,160.56and P298,829.29, respectively or a total of P568,989.85; and on October 12, 1981 filed a petition forreview with the Court of Tax Appeals concerning subject claim for tax refund. On August 30, 1981, the CTA adjudged Citibank‘s entitlement to thetax refund sought for, representing the 5% tax withheld and paid on Citibank‘s rental income for 1979 and 1980. The Court of Tax Appeals,rejected Respondent CIR‘s argument that the claim was not seasonably filed. Not satisfied the Commissioner appealed to the Court of Appeals, CA ruled that Citibank N.A. Philippine branch, entitled to a tax refund/credit in the amount of P569,989.85, representing the 5% withheld tax in Citibank‘s rental income for the years 1979 and 1980 is REVERSED. Motion for Reconsideration of the petitioner bank was denied.
Issue:
Whether or not income taxes remitted partially on a periodic or quarterly basis should be credited or refunded to the taxpayer on the basis of the taxpayer‘s final adjusted returns.
Ruling:
In several cases, we have already ruled that income taxesremitted partially on a periodic or quarterly basis should be credited or refunded to the taxpayer on the basis of the taxpayer‘s final adjusted returns, not on such periodic or quarterly basis. When applied to taxpayers filing income taxreturns on a quarterly basis, the date ofpayment mentioned in Sec. 230 must be deemed to be qualifiedby Sec. 68 and 69 of the present. Tax Code. It may be observed that although quarterly taxes due arerequired to be paid within 60 days from the close of each quarter, the fact that the amount shall bededucted from the tax due for the succeeding quarter shows that until a final adjustment return shallhave been filed, the taxes paid in the preceding quarters are merely partial taxes due from a corporation.Neither amount can serve as the final figure to quantify what is due the government nor what should berefunded to be corporation. This interpretation may be gleaned from the last paragraph of Sec. 69 of theTax Code which provides that the refundable amount, in case arefund is due a corporation, is thatamount which is shown on its finaladjustment return and not on its quarterly returns.
Citibank N.A. Philippine Branch (CITIBANK) is a foreign corporation doing business in the Philippines. In 1979 and 1980, its tenants withheld and paid to the Bureau of Internal Revenue the taxeson rents due to Citibank, pursuant to Section 1(c) of the Expanded Withholding Tax Regulations. On April 15, 1980, Citibank field its corporate income tax returns for the year and ended December 31,1979 showing a net loss of P74,854,916.00 and its tax credits totaled P6,257,780.00, even without including the amounts withheld on rental income under the Expanded Withholding Tax System, the same not having been utilized or applied for the reason that the year‘s operation resulted in a loss. The taxes thus withheld by the tenants from rentals paid to Citibank in 1979 were not included as tax creditsalthough a rental income amounting to P7,796,811.00 was included in its income declared for the year ended December 31, 1979.
For the year ended December 31, 1980, Citibank‘s corporate income tax returns, filed on April 15, 1981,showed a net loss P77,071,790.00 for income tax purposes. Its available tax credit at the end of 1980amounting to P11,532,855.00 was not utilized or applied. The said available tax credits did not includethe amounts withheld by Citibank‘s tenants from rental payment sin 1980 but the rental payments forthat year were declared as part of its gross income included in its annual income tax returns. On October 31, 1981, Citibank submitted its claim for refund of the aforesaid amounts of P270,160.56and P298,829.29, respectively or a total of P568,989.85; and on October 12, 1981 filed a petition forreview with the Court of Tax Appeals concerning subject claim for tax refund. On August 30, 1981, the CTA adjudged Citibank‘s entitlement to thetax refund sought for, representing the 5% tax withheld and paid on Citibank‘s rental income for 1979 and 1980. The Court of Tax Appeals,rejected Respondent CIR‘s argument that the claim was not seasonably filed. Not satisfied the Commissioner appealed to the Court of Appeals, CA ruled that Citibank N.A. Philippine branch, entitled to a tax refund/credit in the amount of P569,989.85, representing the 5% withheld tax in Citibank‘s rental income for the years 1979 and 1980 is REVERSED. Motion for Reconsideration of the petitioner bank was denied.
Issue:
Whether or not income taxes remitted partially on a periodic or quarterly basis should be credited or refunded to the taxpayer on the basis of the taxpayer‘s final adjusted returns.
Ruling:
In several cases, we have already ruled that income taxesremitted partially on a periodic or quarterly basis should be credited or refunded to the taxpayer on the basis of the taxpayer‘s final adjusted returns, not on such periodic or quarterly basis. When applied to taxpayers filing income taxreturns on a quarterly basis, the date ofpayment mentioned in Sec. 230 must be deemed to be qualifiedby Sec. 68 and 69 of the present. Tax Code. It may be observed that although quarterly taxes due arerequired to be paid within 60 days from the close of each quarter, the fact that the amount shall bededucted from the tax due for the succeeding quarter shows that until a final adjustment return shallhave been filed, the taxes paid in the preceding quarters are merely partial taxes due from a corporation.Neither amount can serve as the final figure to quantify what is due the government nor what should berefunded to be corporation. This interpretation may be gleaned from the last paragraph of Sec. 69 of theTax Code which provides that the refundable amount, in case arefund is due a corporation, is thatamount which is shown on its finaladjustment return and not on its quarterly returns.
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