Reconocimiento de campo y recolección de datos

and correct. (Commissioner of Internal Revenue v. Court of Tax Appeals, G. R. No. 106611, July 21, 1994, 234 SCRA 348) Without the tax return it would be virtually impossible to determine whether the proper taxes have been assessed and paid. After all, it is axiomatic that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund. Tax refunds, like tax exemptions, are construed strictly against the taxpayer. (Paseo Realty & Development Corporation v. Court of Appeals, et al., G. R. No. 119286, October 13, 2004)

However, in BPI-Family Savings Bank v. Court of Appeals, 386 Phil. 719; 326 SCRA 641 (2000), refund was granted, despite the failure to present the tax return, because other evidence was presented to prove that the overpaid taxes were not applied. (Ibid.)

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SUGGESTED ANSWER: There are unmistakable formal and practical differences between the two modes. Formally, a tax refund requires a physical return of the sum erroneously paid by the taxpayer, while a tax credit involves the application of the reimbursable amount against any sum that may be due and collectible from the taxpayer.

On the practical side, the taxpayer to whom the tax is refunded would have the option, among others, to invest for profit the returned sum, an option not proximately available if the taxpayer chooses instead to receive a tax credit. (Commissioner of Customs v. Philippine Phosphate Fertilizer Corporation, G. R. No. 144440, September 1, 2004)

NOTES AND COMMENTS: It may be that there is no essential difference between a tax refund and a tax credit since both are moves of recovering taxes erroneously or illegally paid to the government.

(Commissioner of Customs v. Philippine Phosphate Fertilizer Corporation, G. R. No. 144440, September 1, 2004)

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SUGGESTED ANSWER:

a. The claim is filed with the Commissioner of Internal Revenue within the two-year period from the date of the payment of the tax.

b. It is shown on the return of the recipient that the income payment received was declared as part of the gross income; and

c. The fact of withholding is established by a copy of a statement duly issued by the payee showing the amount paid and the amount of tax withheld therefrom. (Banco Filipino Savings and Mortgage Bank v. Court of Appeals, et al., G. R. No. 155682, March 27, 2007)

NOTES AND COMMENTS:

a. Proof of fact of withholding. “Sec. 10. Claim for tax credit or refund. – (a) Claims for Tax Credit or Refund of Income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received has been declared as part of the gross income and the fact of withholding is established by a copy of the Withholding Tax Statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld therefrom xxx” (Rev. Regs. No. 6-85, as amended)

The document which may be accepted as evidence of the third condition, that is, the fact of withholding, must emanate from the payor itself, and not merely from the payee, and must indicate the name of the payor, the income payment basis of the tax withheld, the amount of the tax withheld and the nature of the tax paid. . (Banco Filipino Savings and Mortgage Bank v. Court of Appeals, et al., G. R. No. 155682, March 27, 2007)

65-A. What should be established by a taxpayer for the grant of a tax refund ? Why ?

SUGGESTED ANSWER: A taxpayer needs to establish not only that the refund is justified under the law, but also the correct amount that should be refunded.

If the latter requisite cannot be ascertained with particularity, there is cause to deny the refund, or allow it only to the extent of the sum that is actually proven as due.

Tax refunds partake of the nature of tax exemptions and are thus construed strictissimi juris against the person claiming the exemption. The burden in proving the claim for refund necessarily

falls on the taxpayer. (Far East Bank Trust and Company, etc., v. Commissioner of Internal Revenue, et al., G. R. No. 138919, May 2, 2006)

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SUGGESTED ANSWER: What has to be established, as a matter of evidence, is that the amount sought to be refunded to the bank-trustee corresponds to the tax withheld on the interest income earned from the exempt employees’ trust. The need to be determinate is important, specially if the bank trustee, in the ordinary course of its banking business, earns interest income not only from its investments of employees’ trusts, but on a whole range of accounts which do not enjoy the same broad exemption as employees’ trusts. (Far East Bank Trust and Company, etc., v. Commissioner of Internal Revenue, et al., G. R. No. 138919, May 2, 2006)

NOTES AND COMMENTS:

a. Employees’ trust fund, defined. An employees’ trust fund is a trust established by an employer to provide retirement, pension, or other benefits to employees - it is a separate taxable entity established for the exclusive benefit of the employees. (Development Bank of the Philippines v. Commission on Audit, 422 SCRA 459)

b. Income of employees’ trust is tax exempt. “Any provision of law to the contrary notwithstanding, the retirement benefits received by official and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer shall be exempt from all taxes and shall not be liable to amendment, levy or seizure by or under any legal or equitable process whatsoever except to pay a debt of the official or employee concerned to the private benefit plan or that arising from liability imposed in a criminal action’ x x x “ (Sec. 1, Rep. Act 4917)

A tax-exempt employees’ trust fund is referred to under the NIRC of 1997 as a “reasonable private retirement plan, which means “a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his officials or employees, wherein contributions are made by such employer for the officials or employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials or employees.” [Sec. 32 (B) (6 ) (a), NIRC of 1997]

c. Extent of exemption. The tax exemption enjoyed by employees’ trust is absolute irrespective of the nature of the tax. It does not apply only to the tax on interest income from money market placements, bank deposits, other deposit substitute instruments and government security, because the source of the interest income does not have any effect on the exemption enjoyed by employee’s trusts. (Far East Bank Trust and Company, etc., v. Commissioner of Internal Revenue, et al., G. R. No. 138919, May 2, 2006)

67. A bank-trustee of employee trusts filed an