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    Citibank vs. CA, 280 SCRA 459

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    SURITA, FLOR DE MAE P
    The Citibank NA Philippine Branch filed a petition for review claiming a refund of taxes withheld from rental income paid by tenants. The Court of Tax Appeals ruled in favor of Citibank granting the refund. The Commissioner of Internal Revenue appealed arguing the taxes were properly withheld. The Supreme Court agreed with the Court of Tax Appeals, finding that withholding taxes are deposits subject to adjustment when final tax liability is determined. As Citibank had net losses, it had no tax liability so the withheld taxes were considered erroneously collected and subject to refund.

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    Citibank vs. CA, 280 SCRA 459

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    SURITA, FLOR DE MAE P
    68 views1 page
    The Citibank NA Philippine Branch filed a petition for review claiming a refund of taxes withheld from rental income paid by tenants. The Court of Tax Appeals ruled in favor of Citibank granting the refund. The Commissioner of Internal Revenue appealed arguing the taxes were properly withheld. The Supreme Court agreed with the Court of Tax Appeals, finding that withholding taxes are deposits subject to adjustment when final tax liability is determined. As Citibank had net losses, it had no tax liability so the withheld taxes were considered erroneously collected and subject to refund.

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    This case is about taxation.

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    The Citibank NA Philippine Branch filed a petition for review claiming a refund of taxes withheld from rental income paid by tenants. The Court of Tax Appeals ruled in favor of Citibank granting the refund. The Commissioner of Internal Revenue appealed arguing the taxes were properly withheld. The Supreme Court agreed with the Court of Tax Appeals, finding that withholding taxes are deposits subject to adjustment when final tax liability is determined. As Citibank had net losses, it had no tax liability so the withheld taxes were considered erroneously collected and subject to refund.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    68 views1 page

    Citibank vs. CA, 280 SCRA 459

    Uploaded by

    SURITA, FLOR DE MAE P
    The Citibank NA Philippine Branch filed a petition for review claiming a refund of taxes withheld from rental income paid by tenants. The Court of Tax Appeals ruled in favor of Citibank granting the refund. The Commissioner of Internal Revenue appealed arguing the taxes were properly withheld. The Supreme Court agreed with the Court of Tax Appeals, finding that withholding taxes are deposits subject to adjustment when final tax liability is determined. As Citibank had net losses, it had no tax liability so the withheld taxes were considered erroneously collected and subject to refund.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    Name: Surita, Flor De Mae P.

    G.R. No. 107434 October 10, 1997

    CITIBANK, N.A., petitioner,


    vs.
    COURT OF APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.

    FACTS:
    The Citibank N.A. Philippine Branch (CITIBANK) is a foreign corporation doing business in the
    Philippines. CITIBANK's tenants withheld and paid to the BIR certain taxes on rents due to
    CITIBANK, as per the Expanded Withholding Tax Regulations. CITIBANK then filed its
    corporate income tax returns for 1979 and 1980, showing net losses and tax credits but did not
    include the withheld rental income taxes as tax credits. Subsequently, it claimed a refund of the
    withheld taxes in 1981 and filed a petition for review with the Court of Tax Appeals against the
    Respondent CIR. The CTA ruled in favor of CITIBANK, granting the tax refund sought for
    representing the 5% tax withheld and paid on Citibank's rental income. Not satisfied with the
    decision, the Respondent CIR appealed to the Court of Appeals ruling that the said 5% tax withheld
    by tenants from the rental income was in accordance with Section 1(c) of the Expanded
    Withholding Tax Regulations and did not involve illegally or erroneously collected
    taxes. Aggrieved, the CITIBANK then filed a petition for review under Rule 45 with the Supreme
    Court.

    ISSUES:
    Whether or not the withheld taxes were illegally or erroneously collected. (YES)

    RULING:
    The Court agreed with the Court of Tax Appeals. In several cases, it has already ruled that 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, nor on such periodic or quarterly
    basis.

    In this case, the withheld amounts equivalent to five percent of the gross rental are remitted to the
    BIR and are considered creditable withholding taxes under Section 53-f, i.e., creditable against
    income tax liability for that year. The taxes thus withheld and remitted are provisional in nature.
    Accordingly, the Court ruled that the payments of quarterly income taxes (per Section 68, NIRC)
    should be considered mere installments of the annual tax due. These quarterly tax payments, which
    are computed based on the cumulative figures of gross receipts and deductions in order to arrive
    at a net taxable income, should be treated as advances or portions of the annual income tax
    due, to be adjusted at the end of the calendar or fiscal year.

    The same holds true in the case of the withholding of creditable tax at source. Withholding taxes
    are "deposits" which are subject to adjustments at the proper time when the complete tax liability
    is determined. In this case, the payments of the withholding taxes were creditable to the income
    tax liability, if any, of petitioner-bank, determined after the filing of the corporate income tax
    returns. As petitioner posted net losses in its returns, it was not liable for any income taxes.

    Consequently and clearly, the taxes withheld during the course of the taxable year, while collected
    legally under the aforesaid revenue regulation, became untenable and took on the nature of
    erroneously collected taxes at the end of the taxable year.

    Section 69, NIRC:


    Sec. 69. Final Adjustment Return. — Every corporation liable to tax under Section 24 shall file a final adjustment return covering
    the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said
    taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either:
    (a) Pay the excess tax still due; or
    (b) Be refunded the excess amount paid, as the case may be.
    In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on
    its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the
    succeeding taxable year.

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