Maunsell Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

MINDARO-GRULLA, J_., This is a Petition for Review filed on January 15, 2009 by Maunsell Philippines, Inc. against the Commissioner of Internal Revenue (CIR) as respondent, before the Court in Division, pursuant to Rule 4, Section 3

(a) (2), in relatio n to Rule 8, Section 4(a), of the Revised Rules of the Court of Tax Appeals (RRCTA) .

Petitioner prays therein that this Court render judgment ordering respondent to issue a tax credit certific ate in its fa vor in the total!

Mounse /1 Philippines, Inc. v. CIR C TA C ASE NO. 7860 amount of P3,839,671.31, allegedly representing excess/unutilized creditable withholding taxes for the fiscal year (FY) 2006.

Petitioner Maunsell

Philippines, Inc.

is a corporation duly organized and registered under the laws of the Philippines, which is primarily engaged in the general business of providing engineering Consultancy, technical, advisory, construction project management, and environmental impact analysis services as well as implementation and execution of plans, and doing any and all other businesses incidental thereto. 1 Its principal office is located at 11 /F Ayala Life-FGU Center, 6811 Ayala Avenue, Makoti City.

Petitioner

is registered with the Securities and Exchange Commission (SEC) on July 16, 1996 under SEC Registration No. A 1996- 02509.2 It is also registered with the Bureau of Internal Revenue (SIR) Revenue District Office No. 50-South Makoti as a value-added tax (VAT) entity with Tax Identification No. 004-868-770-000 on July 26, 1996.3 Respondent Commissioner of Internal Revenue is the officer vested by law with authority to decide, approve and grant refunds of erroneously paid or excessively collected taxes. She holds office at the SIR National Office Building, Diliman, Quezon City. L I Exhibit "A-2".

2 Exhibit "A".

3 Exhibit "B" .

Maunse/1 Philippines, Inc. v. CIR

During the first three (3) taxable quarters of its fiscal year ending September 30, 2006, petitioner accumulated creditable withholding taxes amounting to P2,773,482.54.

Petitioner reported the aforesaid withholding tax credits in its income tax returns filed for the first three taxable quarters of FY 2006. 4 Petitioner was not able to utilize its withholding tax credits except for the portion applied to settle its minimum corporate income tax (MCIT) liability amounting to P497,494.28, when it filed its FY 2006 Annual Income Tax Return on January 25, 20075; as its operation during FY 2006 resulted in net loss.

In its amended Annual Income Tax Return for FY 2006, petitioner indicated that its chosen option is "To be issued a Tax Credit Certificate" for its overpaid taxes of P3,839,671.30.6 On July 13, 2007, petitioner filed on administrative claim for the issuance of a tax credit certificate for its purported overpaid income tax for FY 2006 with the Bureau of Internal Revenue _? Respondent foiled to oct on petitioner's administrative claim for the issuance of a tax credit certificate, prompting petitioner to file the instant Petition for Review before this Court on January 15, 2009 .c. 4 Exhibits ''E". "G" and "I".

s Exhibit "K" .

6 Exhibit "K-5" .

7 Exhibit "C".

M o unse /1 Philippines, Inc. v. CIR

On March 9, 2009, respondent filed her Answer through registered moil, interposing the following Special and Affirmative

Defensess:

" 4) Assuming without admitting that Petitioner filed a c laim for re fund , the some is subject to investig ation by the Bureau o f Internal Revenue;

5) Petitioner foiled to demonstrate that the tax, whic h is the subject of this c ase, w as erroneously or illegally collec ted;

6) Taxes paid a nd collected ore presumed to hove been mode in accordance with the low s and reg ulations, hence, not refundable;

7) It is inc umbent upon the Pe titioner to show that it has complied with the provisions of Section 204(C) in relation to Section 229 o f the Tax Code, as amend ed , upon w hic h its c laimed for refund is premised; 8) In on a c tion for tax refund the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge said burden is fatal to the c laim (Emmanuel & Zenaida Aguilar v. Commissioner, CA- GR No. Sp . 16432, Marc h 30, 1990 c ited in Aban, La w of Basic Taxation in the Philippines, /51 edition, p. 206); 9) Claims for re funds ore construed stric tly against the c laimant, the some partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Led esma, 3 1 SCRA 95) and as such, these ore looked upo n with disfavor (Western Minolco Corp.

vs.

Commissioner of Internal Revenue, 124 SCRA 12 1) ." On April 20, 2009, petitioner filed its Pre-Trial Brief. On April 24, 2009, respondent filed a Pre-Trial Brief. On May 11 , 2009, petitioner and resp ondent filed their Joint Stipulation of Facts and Issues.[ a Docket, pp. 62-63.

Mounse/1 Philippines, Inc. v. CIR

On May 22, 2009, this Court approved the Joint Stipulation of Facts and Issues, and pre-trial was considered terminated. During trial, petitioner presented testimonial and documentary evidence in support of its claim. Petitioner's three (3) witnesses were Arnulfo 0. Reyes, Jane Tiomson and Rodelio S. Acosta. Thereafter, petitioner filed its Formal Offer of Evidence to which respondent did not file her comment, and with their admission, petitioner is deemed to hove formally rested its case.

The documentary evidence formally offered ore as follows:

Exhibits

A

A - 1

A-2

A-3

B

c

C - 1

C-2

E

E-1

E-2

E-3

E-4

F

Description

SEC Certificate of Incorporation

Articles of Incorporation of Maunsell Philipines, Inc. Primary Purpose of Maunsell Philippines, Inc. Secondary Purpose of Maunsell Philippines, Inc . BIR Certificate of Registration No. 9RC0000208032 Application for refund or issuance of a Tax Credit Certificate (TCC) on creditable withholding tax dated July 13, 2007 Date filed by the Taxpayer (July 13, 2007) BIR Stamp Received (July 13, 2007) Quarterly Income Tax Return for the First Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 9 of the Quarterly Income Tax Return for the First Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 29D of the Quarterly Income Tax Return for the First Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 30 of the Quarterly Income Tax Return for the First Quarter of Fiscal Year 2006 {BIR Form No. 1702Q) Reference Number, Date/Time Filed, and Batch Number on the upper right hand corner of the Quarterly Income Tax Return for the First Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) eFPS Proof of Filing BIR Form 1702Q for the first quarter of

Fiscal Year 2006(

Maunse/1 Philippines, Inc. v. CIR

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l l -1 l-2 l -3 Quarterly Income Tax Return for the Second Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 9 of the Quarterly Income Tax Return for the Second Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 29D of the Quarterly Income Tax Return for the Second Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 30 of the Quarterly Income Tax Return for the Second Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Reference Number, Dote/Time Filed, and Botch Number on the upper right hand corner of the Quarterly Income Tax Return for the Second Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) eFPS Proof of Filing BIR Form 1702Q for the second quarter

of Fiscal Year 2006

Quarterly Income Tax Return for the Third Quarter of Fiscal year 2006 (BIR Form No. 1702Q) Line 9 of the Quarterly Income Tax Return for the Third Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 29D of the Quarterly Income Tax Return for the Third Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Line 30 of the Quarterly Income Tax Return for the Third Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) Reference Number, Dote/Time Filed, and Botch Number on the upper right hand corner of the Quarterly Income Tax Return for the Third Quarter of Fiscal Year 2006 (BIR Form No. 1702Q) eFPS Proof of Filing BIR Form 1702Q for the third quarter

of Fiscal Year 2006

Annual Income Tax Return for the Fiscal year 2006 (BIR Form No. 1702) Line 10 of the Annual Income Tax Return for Fiscal Year 2006 (BIR Form No. 1702) Line 30D of 1he Annual Income Tax Return for the Fiscal Year 2006 (BIR Form No. 1702) Line 30 of the Annual Income Tax Return for the Fiscal Year 2006 (BIR Form No. 1702) Reference Number, Dote/Time Filed, and Botch Number on the upper right hand corner of the Annual Income Tax Return for the Fiscal Year 2006 (BIR Form No. 1702) The ticked mark of the option "To be issued a Tax Credit

Certificate"

Audited financial statement for fiscal year 2006 Dote filed by the Taxpayer (January 12, 2007) BIR Stomp Received (January 12, 2007) Signature o f Mr. Rodelio C. Acosto4 Maunse/1 Philippines, Inc. v. C/R

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u Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Sagittarius Mines, Inc. for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Hanjin Heavy Industries & Construction Co. Lld. for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Philip Morris Philippines Manufacturing Inc. for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Fort Bonifacio Development Corporation for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Leighton Contractors (Asia) Limited for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by PNOC Exploration Corporation for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Mirant Pagbilao Corportation for Oct. to Dec. 2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Mirant Sual Corporation for Oct. to Dec.

2005 Amount of tax withheld for Oct. to Dec. 2005 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by lligan Cement Corporation for Oct. to Dec.

2005 [ Mounse/1 Philippines, Inc. v. CIR

U-1

Amount of tax withheld for Oct. to Dec. 2005

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Signature of the authorized representative

Page 8 of 24

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Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Asian Terminals, Incorporated for Oct. to Dec. 2005

V-1

Amount of tax withheld for Oct. to Dec. 2005

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Signature of the authorized representative

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Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Davao Light & Power Co., Inc. for Oct. to Dec. 2005

W-1

Amount of tax withheld for Oct. to Dec. 2005

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Signature of the authorized representative

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Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by EEl Corporation for Oct. to Dec. 2005

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Amount of tax withheld for Oct. to Dec. 2005

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Signature of the authorized representative

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Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Intel Tech. Phils., Inc. for Oct. to Dec. 2005

Y -1

Amount of tax withheld for Oct. to Dec. 2005

Y -2

Signature of the authorized representative

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Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Davao Light & Power Co., Inc. for Jan.

to March 2006

Z-1

Amount of tax withheld for Jan. to March 2006

Z-2

Signature of the authorized representative

AA

Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Intel Tech. Phils., Inc. for Jan. to March 2006

AA- 1

Amount of tax withheld for Jan. to March 2006

AA-2

Signature of the authorized representative

BB

Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by CaiEnergy International Services, Inc.- Regional Operating Headquarters for Jan. to March 2006

BB-1

Amount of tax withheld for Jan. to March 2006

BB -2

Signature of the authorized representative

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Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Manila Water Company, Inc . for Jan.

to March 2006

CC-1

Amount of tax withheld for Jan. to Marc h 2006

CC-2

Signature of the authorized representative

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Certificate of Creditable Tax Withheld at Source (BIR Form ~ Mounse/1 Philippines, Inc. v. CIR

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ll ll-1 ll-2 No. 2307) issued by Hedcor, Inc. for Jan. to March 2006 Amount of tax withheld for Jan. to March 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source {BIR Form No. 2307) issued by Leighton Contractors (Asia) Limited for Jan. to March 2006 Amount of tax withheld for Jan. to March 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Fort Bonifacio Development Corporation for Jan. to March 2006 Amount of tax withheld for Jan. to March 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Mirant Sual Corporation for Jan. to

March 2006

Amount of tax withheld for Jan. to March 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Mirant Pagbilao Corporation for Jan.

to March 2006

Amount of tax withheld for Jan. to March 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Davao Light & Power Co., Inc. for April to

June 2006

Amount of tax withheld for April to June 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by HEDCOR, Inc. for April to June 2006 Amount of tax withheld for April to June 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Fort Bonifacio Development Corporation

for April to June 2006

Amount of tax withheld for April to June 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source {BIR Form No. 2307) issued by Mirant Sual Corporation for April to June 2006 Amount of tax withheld for April to June 2006 Signature of the authorized representative( M a unse /1 Philippines, Inc . v. C IR

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uu Certificate of Creditable Tax Withheld a t Source (BIR Form No. 2307) issued by Hanjin Hea vy Industries & Construc tion Co. Ltd. for April to June 2006 Amount o f tax withheld for April to June 2006 Signature o f the authorized representa tive Certificate of Creditable Tax Withheld a t Source (BIR Form No. 2307) issued b y Manila Southcoast Development

Corporation for April to June 2006

Amount of tax withheld for April to June 2006 Signature of the authorized representative Certificate o f Creditable Tax Withheld a t Source (BIR Form No. 2307) issued by Sagittarius Mines, Inc. for April to June 2006 Amount of tax withheld for April to June 2006 Signature o f the authorized representative Certific ate of Creditable Ta x Withheld a t Source (BIR Form No . 2307) issued b y Toledo Power Company for April to June 2006 Amount o f tax withheld for April to June 2006 Signa ture o f the a uthorized representative Certific ate o f Creditable Tax Withheld a t Source (BIR Form No. 2307) issued by Intel Tech. Phils., Inc. for April to June 2006 Amount of tax withheld for April to June 2006 Signature o f the authorized representative Certific ate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Essensa East Forbes Condominium

Corporation for July to September 2006

Amount o f tax withheld for July to Septemb er 2006 Signature o f the authorized representa tive Certific ate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued b y lligan Cement Corpora tion for July to

September 2006

Amount o f tax withheld for July to Septemb er 2006 Sig nature o f the authorized represen tative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Berong Nickel Corpora tion for July to

September 2006

Amount of tax withheld for July to September 2006 Signature o f the a uthorized representa tive Certific ate of Creditable Tax Withheld a t Source (BIR Form No. 2307) issued by Mira nt Sual Corpora tion for July to

September 2006(

Mounse/1 Philippines, Inc. v. CIR

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Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Miront Pogbiloo Corporation for July

to September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Manila Southcoost Development

Corporation for July to September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Sagittarius Mines, Inc. for July to

September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by ENSR International Phils., Inc. for July to

September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Leighton Contractors (Asia) Limited for

July to September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Intel Tech. Phils. Inc. for July to

September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) issued by Filipinos Investments Ltd. for July to

September 2006

Amount of tax withheld for July to September 2006 Signature of the authorized representative Letter doted July 13, 2007 to the Chief of Revenue

Accounting Division of the BIR

BIR Stomp Received (July 16, 2007) Signature o f Mr. Arnulfo 0. Reyes c Mounse/1 Philippines, Inc. v. C/R

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Judicial Affidavit of Mr. Arnulfo 0. Reyes execu ted on June 17, 2009 Signature appearing above the name "ARNULFO 0. REYES" List of Certificates of Creditable Taxes Withheld, FY Ending September 30, 2006 Signature of Mr. Arnulfo 0. Reyes Signature of Ms. Jane G. Tiamson Amount of Php 4,337, 165.58 Annual Income Tax Return of Fiscal Year Ending September 30, 2007 Line 28- Prior Year' s Excess Credits FY 2002 & 2003 in the amount of Php 11 ,205,777.00 Judicial Affidavit of MS. JANE TIAMSON executed on July 15, 2009 Signature appearing above the name "JANE TIAMSON" First Quarterly Income Tax Return for Fiscal Year Ending

September 2007

Line 29A - Prior Year's Excess Credits- Php 0.00 Second Quarterly Income Tax Return for Fiscal year Ending

September 2007

Line 29A- Prior Year's Excess Credits - Php 0.00 Third Quarterly Income Tax Return for Fiscal year Ending

September 2007

Line 29A- Prior Year' s Excess Credits- Php 0.00 Judicial Affidavit of MS. JANE TIAMSON executed on October 21 , 2009 Signature appearing above the name "JANE TIAMSON" Maunsell Philippines, Inc.'s General Ledger for the period from October 1, 2005 to September 30, 2006

Summary of Creditable Withholding Taxes Withheld by

Client Fiscal year 2006 Signature of Ms. Jane Tiamson Signature of Mr. Arnulfo 0 . Reyes Maunsell's Official Receipt No. 2804 dated November 11 , 2005 Maunsell's Official Receipt No. 2835 dated December 16, 2005 Maunsell's Official Receipt No. 3056 dated August 7, 2006 Maunse ll 's Official Receipt No. 3125 dated September 25, 2006 Maunsell' s Official Receipt No. 31 24 do ted September 25,

2006 ,

Mounse/1 Philippines, Inc. v. CIR

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Maunsell's Official Receipt No. 2903 dated February 23, 2006 Maunsell's Official Receipt No. 2769 dated October 10, 2005 Maunsell's Official Receipt No. 2925 dated March 17, 2006 Maunsell's Official Receipt No. 2984 dated May 24, 2006 Maunsell's Official Receipt No. 2772 dated October 12, 2005 Maunsell's Official Receipt No. 3088 dated August 29, 2006 Maunsell's Official Receipt No. 3033 dated July 17, 2006 Maunsell's Official Receipt No. 3070 dated August 11, 2006 Maunsell's Official Receipt No. 2767 dated October 7, 2005 Maunsell's Official Receipt No. 2897 dated February 17, 2006 Maunsell's Official Receipt No. 2981 dated May 19, 2006 Maunsell's Official Receipt No. 2806 dated November 11, 2005 Maunsell's Official Receipt No. 2947 dated April 12, 2006 Maunsell's Official Receipt No. 2888 dated October 12, 2006 Maunsell's Official Receipt No. 2999 dated June 7, 2006 Maunsell's Official Receipt No. 2814 dated November 25, 2005 Maunsell's Official Receipt No. 3091 dated August 31, 2006 Maunsell's Official Receipt No. 2768 dated October 7, 2005 Maunsell's Official Receipt No. 2786 dated October 20, 2005 Maunsell's Official Receipt No. 2793 dated October 27, 2005 Maunsell's Official Receipt No. 2827 dated December 7, 2005 Maunsell's Official Receipt No. 2851 dated January 5, 2006 Maunsell's Official Receipt No. 2873 dated January 23, 2006 Maunsell's Official Receipt No. 2898 dated February 17, 2006 Maunsell's Official Receipt No. 2921 dated March 8, 2006 Maunsell's Official Receipt No. 2937 dated March 29, 2006 Maunsell's Official Receipt No. 2963 dated May 4, 2006 Maunsell's Official Receipt No. 2973 dated May 15, 2006 Maunsell's Official Receipt No. 3009 dated June 21 , 2006 Maunsell's Official Receipt No. 3034 dated July 19, 2006 Maunsell's Official Receipt No. 3069 dated August 11 , 2006 Maunsell's Official Receipt No. 3086 dated August 23, 2006 Maunsell's Official Receipt No. 2978 dated May 17, 2006 Maunsell's Official Receipt No. 3000 dated June 7, 2006 Maunsell's Official Receipt No. 3092 dated August 31 , 2006 Maunsell's Official Receipt No. 3098 dated September 7, 2006 Maunsell's Official Receipt No. 3109 dated September 14, 2006 Maunsell's Official Receipt No. 2766 dated October 7, 2005 Maunsell's Official Receipt No. 2811 dated November 18, 2005 Maunsell's Official Receipt No. 2870 dated January 20, 2006 Maunsell' s Official Receipt No. 2871 dated January 20, 2006 Maunsell's Official Receipt No. 3080 dated August 18, 2006( Mounse/1 Philippines. Inc. v. CIR

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000 000-1 Maunsell's Official Receipt No. 3110 dated September 15. 2006 Maunsell's Official Receipt No. 2966 dated May 8, 2006 Maunsell's Official Receipt No. 3106 dated August 3, 2006 Maunsell's Official Receipt No. 2988 dated May 26, 2006 Maunsell's Official Receipt No. 2867 dated January 20, 2006 Maunsell's Official Receipt No. 2800 dated November 9, 2005 Maunsell's Official Receipt No. 2896 dated February 17, 2006 Maunsell's Official Receipt No. 3061 dated August 9, 2006 Maunsell 's Official Receipt No. 2785 do ted October 19, 2005 Maunsell 's Official Receipt No. 2790 dated October 26. 2005 Maunsell's Official Receipt No. 2822 dated December 1, 2005 Maunsell 's Official Receipt No. 2843 dated December 23, 2005 Maunsell's Official Receipt No. 2844 dated December 23, 2005 Maunsell's Official Receipt No. 2854 dated January 11, 2006 Maunsell's Official Receipt No. 2868 dated January 20, 2006 Maunsell's Official Receipt No. 2923 dated March 29, 2006 Maunsell's Official Receipt No. 2944 dated April 11. 2006 Maunsell's Official Receipt No. 3001 dated June 7, 2006 Maunsell's Official Receipt No. 3085 dated August 23, 2006 Maunsell's Official Receipt No. 3105 dated August 13, 2006 Maunsell's Official Receipt No. 3121 dated September 22. 2006 Maunsell's Official Receipt No. 3122 dated September 22, 2006 Maunsell's Official Receipt No. 2782 dated October 18, 2005 Maunsell's Official Receipt No. 2883 dated February 1, 2006 Maunsell's Official Receipt No. 2801 dated September 11, 2005 Maunsell's Official Receipt No. 2773 dated October 12, 2005 Maunsell's O fficial Receipt No. 2821 dated November 30. 2005 Maunsell's O fficial Receipt No. 2964 dated August 5, 2006 Maunsell's Official Receipt No. 3026 dated July 7, 2006 Maunsell's Official Receipt No. 3027 dated July 7, 2006 Maunsell's Official Receipt No. 2965 dated May 5. 2006 Maunsell's List of Certificates of Creditable Taxes Withheld for Fiscal Year Ending September 30, 2005 Signature of Ms. Jane Tiamson Signature of Mr. Arnulfo 0. Reyes Annual Income Tax Return for Fiscal Year Ending September 30,2005 Signature of Amelia F. Ward ( Mounse/1 Philippines, Inc. v. CIR

PPP

Judicial Affidavit of Mr. RODELIO S. A COST A executed on March l, 2010

PPP-1

Signature appearing above the name "RODELIO S.

ACOSTA"

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Maunsell's List of Certificate of Creditable Taxes Withheld for FY ending September 30, 2006 prepared by Audit

RRR

Maunsell's Inventory of CWT (Oct 05-Sept 06), as of Sept 2006 m Judicial Affidavit of MS. JANE TIAMSON executed on March 26, 2010

TTT-1

Signature appearing above the name "JANE TIAMSON"

Petitioner

and respondent stipulated on the

Iotter's

documentary exhibits so that the presentation of respondent 's witness was dispensed with. Respondent filed her Formal Offer of Evidence to which petitioner did not file its comment, and with their admission, respondent is deemed to hove formally rested her case. The documentary evidence formally offered ore as follows:

Exhibits

2 3

Description

2004 Income Tax Return of Maunsell Philippines Inc, filed through EFPS

Amended 2004 Income Tax Return of Maunsell

Philippines Inc. filed through the EFPS 2005 Income Tax Return of Maunsell Philippines Inc. filed through the EFPS Thereafter, the parties were ordered to submit their respective memorandum within thirty (30) days from receipt of the Resolution9 doted November 12, 201 0.( 9 Docket, pp. 445-446.

Mounse/1 Philippines, Inc. v. C/R

On January 19, 2011, the case was deemed submitted for decision, considering petitioner's Memorandum filed on January 17, 2011 and the report of the Court's Records Division that respondent foiled to file her Memorandum. Ia The issues 11 , as jointly stipulated by the parties, ore as follows: "a.

Whether

or not the

Petitioner

has excess/creditable withholding taxes for FY 2006; b.

Whether or not Petitioner's right to claim for issuance of tax credit certificate of the overpaid income taxes for FY 2006 is substantiated with supporting documents."

Petitioner claims that it is entitled to the issuance of a tax credit certificate in the amount of P3,839,67 1.31, representing its purported excess/unutilized creditable withholding tax for the FY 2006. Petitioner maintains that it is entitled to the issuance of a tax credit certificate since it was able to comply with the three (3) basic requirements prescribed under Section 2.58.3 of Revenue Regulations No. 2-98 and as laid down in the case of Filinvest Development Corporation vs. Commissioner of Internal Revenue and Court of Tax Appeals 12.

Petitioner contends that it filed its administrative claim before respondent and this Court within the prescriptive period pursuant to Sections 204(C) and 229 of the Notional Internal Revenue Code (NIRC) '- 10 Docket. p. 465.

11 Docket. p. 93.

12 G .R. No. 146941 , Augus t 9, 2007.

Maunse/1 Philippines, Inc. v. CIR of 1997; that it declared as port of gross income in the Annual Income Tax Return the income upon which the taxes were withheld; and that the fact of withholding was duly established. Petitioner likewise submitted the following documents:

1. Letter-claim for the issuance of a tax credit certificate on creditable withholding taxes (CWT) doted July 13, 2007; 13

2. Amended Annual Income Tax Return for the FY 2006; 14

3. Audited Financial Statement for the FY 2006; 15

4. Certificates of Creditable Tax Withheld at Source; 16

5. Annual Income Tax Return for the FY 2007;17 and

6. Quarterly Income Tax Returns for the FY 2007. 18 Petitioner asserts that it clearly indicated its intention to be issued a tax credit certificate for its FY 2006 income tax overpayment when it did not corry-over the said overpayment in the succeeding FY 2007. Under Section 2.58.3 of Revenue Regulations No. 2-98, otherwise known as the Withholding Tax Regulations, in order to be entitled to a claim for refund or issuance of a tax credit certificate for excess/unused creditable withholding tax, the following requisites must be satisfied:

1.

That the claim for refund was filed within the two- year reglementory period, prescribed under Section 204(C), in relation to Section 229 of the NIRC of 1997, as amended;

2.

That the fact of withholding is established by a copy of the statement duly issued by the poyorc 13 Exhibit "C".

14 Exhibit "K" .

1s Exhibit "L".

16 Exhibits "M" to "BBB" .

17 Exhibit "FFF".

18 Exhibits "HHH", "Ill", and "JJJ" .

Mounse/1 Philippines, Inc. v. CIR

(withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom; and 3.

That it is shown on the return of the recipient that the income payment received was declared as part of the gross income declared in the income tax return of the recipient. l9

Page 18 of 24

Anent the first requisite, petitioner maintains that it filed its claim for issuance of a tax credit certificate before respondent and this Court within the prescriptive period pursuant to Sections 204(C) and 229 of the NIRC of 1997, as amended. Sections 204(C) and 229 are quoted hereunder for ready reference, to wit: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit taxes. - The Commissioner may -

XXX

XXX

XXX

(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they ore returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund." "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any notional internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner:( 19 Citibonk N.A. vs. Court of Appeals, et of., G.R. No. 107434, O c to be r 10, 1997.

Mounse/1 Philippines, Inc. v. C/R but such suit or proceeding may be maintained, whether or not such tax. penalty, or sum has been paid under protest or duress. In any case. no such suit or proceeding shall be filed after the expiration of two (2) years from the dote of payment of the tax or penalty regardless of any supervening cause that may arise after payment; Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was mode, such payment appears clearly to hove been erroneously paid."

Furthermore, in ACCRA Investments Corporation vs. Court of Appeals, et a1. 2o, the Supreme Court declared that the tax payer has two (2) years from the filing of the Final Adjustment Return within which to file a claim for refund of excess creditable income taxes withheld, both in the administrative and judicial levels. Petitioner argues that the filing of its administrative claim for refund on July 13, 2007 as well as its Petition for Review on January 15, 2009 were both mode within the two-year prescriptive period, counting from January 25, 2007, the dote when it filed its Amended Annual Income Tax Return for FY 2006.

This Court does not agree.

In the case of Philippine Airlines, Inc. vs. Commissioner of Internal Revenue21 , this Court held:

"It is true that the reckoning of the two-year prescriptive period is at the time of filing of the final adjustment return. However, the counting should be mode from the dote of filing of the original final adjustment return and not from the dote of filing of the amended return . This was emphasized by this Court in the case of Benguetc 2o G.R. No. 96322, December 20, 1991.

21 CTA Case No. 6327, August 28, 2003.

Maunse /1 Philippines, Inc. v. C/R

Management Corporation vs.

Commissioner of Internal

Re ve nue, CTA C ase No. 5492, January 27, 1999, whe re in in d isposing o f the said issue, the court ruled in this wise : 'An analysis of the evidence submitted by p etitio ner reveals that it failed to show that the c laim for refund was timely filed within two years from the date of payment of ta x. Petitioner failed to present the original Corporate Annual Income Ta x Returns for the c alendar years 1994 and 1995 to enable Us to verify if the claim for refund w as mad e within the two-year reglementary period. Both d ocuments are needed for the purpose of d etermining whether petitioner filed the claim for refund with the resp ondent a nd the petition for review with this Court within the two-year prescriptive p eriod, reckoned from the ac tual date of filing of the origina l fina l adjustment returns (Commissioner of Internal Revenue v.

Philippine Am erican Life Insurance Co., 244 SCRA 446). The mere allegations by the Counsel of p etitioner tha t the 1994 a nd 1995 income tax returns were filed in April, 1995 and April, 1996, respectively, and that the claim for refund was filed within the two-year period have to be verified . We could not see the reason why such importa nt doc uments were not presented by the petitioner during the tria l of the case. In the a bsence of these material documents, the Court is constrained to d eny petitioner's prayer.'

Our

prono unc ement in the above case w as sig nific antly affirmed by the Court o f Appeals in the case e ntitled

Benguet

Management

Corporation

vs.

Commissio ner of Internal Re venue, CA-GR SP No. 52737, promulgated o n October 29, 1999, with entry of Judgment dated November 27, 1999, the pertinent portio n of w hic h read s as fo llow s:' 'Clearly, the time or date of actua l filing by the Petitioner of its 1994 and 199 5 Annua l Income Tax Returns with the BI R, can well be verified from its duplicate copies since a ll income tax returns filed with the BIR are stamped 'Received ' on the date they are filed w hic h also show s the date of its ac tual filing. Thus, there is no gainsaying why the Public Respondent deemed it necessary for the Petitioner to present copies of its original 1994 and 1995 Annua l Income Tax Returns for them to verify if, indeed, the claim for refund with the BIR and the 'Petition for Review(

Mounse/1 Philippines, Inc. v. CIR with them, were made within the two-year reglementary period. xxx" As borne out by the records, petitioner only submitted its FY 2006 amended Annual Income Tax Return, which was filed on January 25, 2007 but failed to offer as evidence its FY 2006 original Annual Income Tax Return.

Applying the above-cited jurisprudence, the original return is important in order for this Court to ascertain whether the filing of the administrative and judicial claims for refund or issuance of a tax credit certificate were made within the two-year reglementory period. Absent such document, this Court has no way of determining whether the claim was timely filed.

Moreover, the said original return is necessary for this Court to verify if petitioner's original option was to be issued a tax credit certificate for the unapplied creditable taxes withheld since as provided under Section 7 6 of the NIRC of 1997, once the option to corry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period. Thus, if petitioner has originally chosen the option "to be carried-over as tax credit next year/quarter", it will be precluded from claiming the issuance of a tax credit certificate for the said excess payment.' Mounse/1 Philippines, Inc. v. CIR

Section 7 6 of the NIRC of 1997 states:

"SEC. 7 6. Final Adjustment Return. - Every corporation liable to tax under Section 27 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 eq ual to the total tax due on the entire taxable income of that year, the corporation shall either:

(A)

Pay the balance of tax still due; or

(B)

Carry-over the excess credit; or

(C)

Be credited or re funded with the excess amount paid, as the case may be.

In case the corporation is entitled to a tax c redit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no applicatio n for cash refund or issua nce of a tax c redit certificate shall be a llowed there for." This Court has ruled in a long line of cases22 that once the carry- over option has been made, the same becomes irrevocable for that taxable period and the taxpayer can no longer claim for a cash refund or issuance of a tax credit certificate for overpaid inco me tax payment for the said year.( 22 Sithe Philippines Holdings, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 6274, April 4, 2003; Banco Filipino Savings & Mortgage Bonk vs. Commissioner of Internal Revenue , CTA Case No. 637 4, April 3, 2003; Philippine Airlines, Inc. vs. Commissioner of Internal Revenue , CT A Case No. 6134, May 16, 2003.

Maunse/1 Philippines, Inc. v. C/R

The Supreme Court's ruling in the case of Commissioner of Internal Revenue vs. Bank of the Philippine lslands23 corroborates the foregoing in this wise:

"Hence, the controlling foetor for the opera tion of the irrevocability rule is that the taxpayer chose on option; and once it hod already done so, it could no longer make another one. Consequently, after the taxpayer opts to corry-over its excess tax credit to the following taxable period, the question of whether or not it a ctually gets to apply said tax credit is irrelevant. Section 76 of the NIRC of 1997 is explic it in stating that once the option to corry over has been mode, 'no application for tax refund or issuance of a tax credit certifica te shall be allowed therefor'."

Thus, the failure of petitioner to present its original Annual Income Tax Return fo r the FY 2006 is fatal to its claim fo r the issuance o f a tax c redit certificate for its alleged excess/unutilized creditable withholding tax in the amount o f P3,839,67 1.31 for the FY 2006.

WHEREFORE, premises considered, the Petition for Review is hereby DISMISSED for lack of merit.

WE CONCUR:

Q~s-a..r-~~.Q JlJANITO C . CASTANEDA/ .}ft -

Associate Justice

23 G.R. No. 178490, July 7, 2009.

~ .

1\4~~ - G'~

CIELITO N. MINDARO-GRULLA

Associate Justice

CAESAR A. CASANOVA

Associate Justice

Mounse/1 Philippines, Inc. v. CIR

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

~-_J~hc.a.r~~ \L,.

CfuJ\Niro C . CASTANEDA, fRp·

CERTIFICATION

Associate Justice

Chairperson

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. \~~ .~ ERNESTO D. ACOSTA

Presiding Justice