PROJECT CASE

DIGEST​ ​IN
BUSINESS AND
TRANSFER
TAXATION

SUBMITTED BY:
EVANGELISTA, DANIEL T.
BSA-4A

SUBMITTED TO:
MR. BERNARD SALONGA, ​CPA
INSTRUCTOR
 BPI-Family Savings Bank, Inc. vs. Court of Appeals, 330 SCRA 507,
G.R. No. 122480, April 12, 2000

FACTS:

BPI-Family Savings Bank was entitled to a refund amounting to P122,491

because it had an excess withholding taxes paid for the year 1989. The
petitioner stated in its Income Tax Return for 1989 that it would apply the
excess withholding taxes paid as a tax credit for the following year, which
was 1990. However, the petitioner failed to apply the amount as a tax
credit, seeking for a tax refund. The petitioner then filed its claim with the
Court of Tax Appeals because there had been no action responsive from the
Bureau of Internal Revenue. The Court of Tax Appeals denied the claim of
the petitioner for tax refund. The CTA argued that it is presumed that the
petitioner would apply the excess withholding taxes paid as a tax credit for
the following year since it was the petitioner who declared in its 1989
Income Tax Return that it would do so. The petitioner failed to present its
1990 Income Tax Return which would be a proof that the said excess tax
paid was not applied as a tax credit.

ISSUE:

Whether BPI can claim a tax refund from excess withholding taxes paid or
not.

RULING:

YES. Since the petitioner failed to present its 1990 Income Tax Return, it
was not determined that the petitioner suffered a net loss in 1990. According
to our tax rules, if a company suffered a net loss during the year, there
would be no tax liability, where the tax credit which was stated in the 1989
ITR could be applied. Therefore, there is no way for the Bureau of Internal
Revenue to deny the tax refund which legally pertains to the petitioner.

Moreover, the respondents assert that tax refunds are in the nature of tax
exemptions and are to be illustrated strictissimi juris against the petitioner.
Based on the facts in this case, it is presumed that the petitioner has
established its claim. There may have been negligence on the part of the
petitioner, or it may have failed to follow strictly the rules of procedures of
the BIR, but still, the Court cannot deny the fact that the petitioner suffered
a net loss in 1990, and it was unable for the petitioner to apply the excess
taxes paid as tax credits.

The laws and procedures of BIR Tax Rules should not be used as an edge by
the government in order to steal money not belonging to it, and unjustly
enrich at the expense of its law-abiding citizens. The government is
expected to be a role model in the observation of fairness, equity and
justice, and it should not abuse the powers inherent to it.