Philippine Bank of Communications vs. Commissioner of Internal Revenue

DECISION

COTANGCO-MANALASTAS, J.: This is a Petition for Review filed on April 15, 2009 by Philippine Bank of Communications pursuant to the Revised Rules of the Court of Tax Appeals, Rule 8, Section 4(a), in relation to Rule 4 thereof, to review by appeal the inaction of the Commissioner of Internal Revenue over petitioner's administrative claim for the issuance of tax credit certificate in the amount of P24,716,655.00, representing alleged unutilized creditable withholding tax for taxable year 2006.

THE FACTS

Petitioner Philippine Bank of Communications is a domestic corporation organized and existing under the laws of the Republic of the Philippines, with principal office address at PBCOM Tower, 6795 Ayala Avenue corner V. A. Rufino

DECISION

CTA CASE NO. 79I5

Page 2 of I7

Street, Makati City.

It is engaged in the commercial banking business and registered as such with the Bureau of Internal Revenue (BIR), with Tax Identification Number (TIN) 000-263-340-000.

1 Respondent, on the other hand, is the duly appointed Commissioner of the Bureau of Internal Revenue duly authorized to perform the duties of said office including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. She holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. On April 16, 2007, petitioner filed with the BIR its Annual Income Tax Return (BIR Form No. 1702) for taxable year 2006, through the Electronic Filing and Payment System (EFPS)?

On May 2, 2007, petitioner filed an Amended Annual Income Tax Return for the year 20063, showing a net loss of P903,582,307.00 and a creditable tax withheld for the fourth quarter of 2006 in the amount of P24,716,655.00. Petitioner also marked the box "To be issued a Tax Credit Certificate" in Line 31 of the above- mentioned Return, indicating its intention to apply for the issuance of tax credit certificate for its excess/unutilized creditable withholding tax (CWT) for the year 2006, in the amount ofP24,716,655.00. On April 3, 2009, petitioner filed with the BIR its letter requesting the issuance of tax credit certificate for the excess creditable tax withheld covering taxable year 2006, in the amount ofP24,716,655.44.4

Due to respondent's failure to render a decision on petitioner's claim for tax credit certificate, petitioner filed the instant Petition for Review on April 15, 2009, praying for the issuance of tax credit certificate for its alleged unutilized creditable withholding tax for taxable year 2006, in the amount of P24, 716,655.00. In her Answer5, respondent interposed the following special and affirmative defenses:

"SPECIAL AND AFFIRMATIVE DEFENSES 4.

Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau.

5. The petitioner should fully comply with the provisions stated in Revenue Regulations 6-86 and CIR vs. PERF Realty Corp., GR No. 163345 dated July 4, 2008, which states that: 'The CT A, citing Section I 0 of Revenue Regulations 6-85 and Citibank, N.A. v. Court of Appeals, determined the requisites for a claim for refund, thus: I) That the claim for refund was filed within the two (2) year period as prescribed under Section 230 of the National Internal Revenue Code;

2) That the income upon which the taxes were withheld was included in the return of the recipient; 3) That the fact of withholding is established by a copy of a statement (BIR Form 1743. 1) duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom.

X

X

X

6.

In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/credit. 7.

Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 1211)."

During trial, petitioner presented Mr. Percival Ordejon, Head of its Financial Accounting and Tax Management Unit and Mr. Edwin F. Ramos, the duly appointed Independent Certified Public Accountant (Independent CPA) as its witnesses. Thereafter, petitioner filed its Formal Offer of Documentary Exhibits6, submitting Exhibits "A" to "N", inclusive of sub-markings; which this Court admitted in the Resolution7 dated June 3, 2011. On the other hand, respondent presented her lone witness, Ms. Cecille V. Uy. Subsequently, respondent filed her Formal Offer of Evidence8, offering Exhibits "¹" to "4"; which were admitted in evidence in the Resolution9 dated October 13, 2011. On December 23, 2011 , this case was submitted for decision, considering petitioner's Memorandum filed

on November

16, 2011 and respondent's Memorandum filed on November 18, 2011. 10

THE ISSUES

The following are the parties' jointly stipulated issues 11 submitted for this Court's consideration:

"A. Whether or not the claim for the issuance of a tax credit certificate was filed within the two-year prescriptive period prescribed under Section 204 (C), in relation to Section 229 of the NIRC of 1997 as amended; B.

Whether or not petitioner has an unutilized creditable withholding tax in the amount of P24, 7 16,655 for the calendar year 2006, which is a proper subject of a claim for refund/issuance of tax credit certificate pursuant to Section 76 of theN I RC as amended; C.

Whether or not the income from which the subject creditable taxes were withheld were included as part of the gross income in petitioner's annual income tax return for the calendar year 2006; and

D.

Whether or not the unutilized creditable withholding tax for the calendar year 2006 in the amount of P24, 716,655 was carried-over and applied by petitioner against its tax liabilities in the succeeding taxable year."

The foregoing issues boil down to the issue of whether or not petitioner is entitled to the issuance of tax credit certificate in the amount of P24,716,655.00, representing unutilized creditable withholding taxes for taxable year 2006.

RULING OF THE COURT

In order to be entitled to the issuance of tax credit certificate for excess/unutilized creditable withholding tax, petitioner must satisfy the following requisites:

1.

That the claim for refund was filed within the two-year prescriptive period as provided 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 a statement duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom; and 3.

That the income upon which the taxes were withheld were included in the return of the recipient. 12 Anent the first requisite, the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended, pertinent to claiming a tax refund/tax credit are Sections 204(C) and 229, which provide: "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 are returned in good cond ition 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." (Emphasis supplied) "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national 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 col lected, until a claim for refund or credit has been duly filed with the Commissioner; 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 date 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 made, such payment appears clearly to have been erroneously paid." (Emphasis supplied) In ACCRA Investments Corporation vs. The Honorable Court of Appeals, et al. 13, the Supreme Court held that the two-year prescriptive period for claiming a refund commences to run on the date of filing of the Final Adjustment Return. It is only when the Final Adjustment Return covering the whole year is filed that the taxpayer would know whether a tax is still due or a refund can be claimed based on the adjusted and audited figures. 14 Based on the foregoing, petitioner has two years from the date of filing of the Final Adjustment Return within which to file a claim for refund or tax credit of excess creditable withholding taxes both in the administrative and judicial levels. The present claim covers taxable year 2006 for which petitioner filed its Annual Income

CTA CASE NO. 79 15

Tax Return on April 16, 2007' 5. Counting from this date, the administrative claim filed by petitioner on April 3, 2009 16 and the Petition for Review filed on April 15, 2009 fall within the two-year prescriptive period. Clearly, the first requirement has been satisfied.

As regards petitioner's compliance with the second requisite, the Court of Tax Appeals En Bane in the case of Mermac, Inc. vs. Commissioner of Internal Revenue 17 ruled that claims for refund of creditable tax withheld shall only be given due course upon submission of BIR Form No. 2307 issued by the income-payor to the recipient- payee, to wit:

"On the outset, the third condition is imposed by Section 2.58.³ (B) of Revenue Regulations (RR) No. 2-98, which states: Sec. 2.58.3 . Claim for Tax Credit or Refund. -

XXX

XXX

XXX

(B) Claims for tax credit or refund of any creditable income tax which was deducted and withheld on income payments shall be given due course only when it is shown that the income payment 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 tax withheld therefrom. (Emphasis provided) Corollary to the condition set forth, the same RR No. 2-98 establishes the requirement on the part of the payor to furni sh the payee the withholding tax statement using the prescribed form (BIR Form No. 2307), which shows the income payments made and the amount of taxes withheld. Otherwise, the failure of the payor to furnish the same shall be a ground for mandatory audit, viz.:

individual or corporate, with a withholding tax statement, using the prescribed form (BIR Form No. 2307) showing the income payments made and the amount of taxes withheld therefrom, for every month of the quarter, within twenty (20) days following the close of taxable quarter employed by the payee in filing his/its quarterly income tax return. The payor, nonetheless, should always retain a copy of duly issued SIR Form 2307. Failure to furnish the same shall be a ground for mandatory audit of payor's income tax liabilities (including withholding tax) upon verified complaint of the payee.

XXX

XXX

XXX

The rules are clear.

The income-payor, as the withholding agent, is required to furni sh the recipient- payee of the statement of withholding or BIR Form No. 2307. And for purposes of claims for refund or tax credit of creditable income tax, the claim shall only be given due course when the income and withholding are established by a copy of the withholding tax statement or BIR Form No. 2307 issued by the income-payor to the recipient- payee." (Emphasis supplied) The breakdown of petitioner's total claim amounting to P24,716,655.00 IS summarized as follows:

Amount of

Supporting

Creditable

BIR

Withholding

Findings

Returns

Reference

Tax

PER ICPA REPORT

A.

Sale of property I.

Creditable withholding tax payments supported by original BIR Returns stamped "received" by the 1606 & Annex Al-l , SIR agent and original copies of bank validated 1706

Exhibit F-20

deposit slips as evidence of tax remittance p 616,431 .56 2.

Creditable withholding tax payments supported by original BIR Returns stamped "received" by the 1606 Annex Al-2, SIR agent and photocopies of bank validated

Exhibit F-20

deposit slips as evidence of tax remittance 175,200.00 3.

Creditable withholding tax payments supported by certified true copies of BIR Returns stamped "received" by the SIR agent and photocopies of 1606 Annex Al-3, bank validated deposit slips as evidence of tax

Exhibit F-20

remittance 600,000.00 4.

Creditable withholding tax payments supported by original BIR Returns stamped "received" by the 1606 Annex Al-4, SIR agent

Exhibit F-20

II ,202,694.80 5.

Creditable withholding tax payment supported by original BIR Returns stamped "received" by the 1606 Annex Al-l , SIR agent and original certification issued by the

Exhibit L

SIR confirming the validity of transaction 228,000.00 6.

Creditable withholding tax payment supported by photocopy of BIR Return stamped "received" by 1606 Annex Al-2, the SIR agent but with original certification issued

Exhibit L

by the SIR confirming the validity of transaction 210,000.00 B.

c.

7.

Creditable withholding tax payments supported by original BIR returns stamped "received" by the BIR agent dated outside the period of claim and with photocopies of bank validated deposit slips as evidence of tax remittance. 8.

Underclaimed creditable withholding tax payments 9.

Supporting documents not yet available for verification

Sub-total

Lease of office space- PBCOM Tower I.

Creditable withholding tax payments supported by original BIR Form 2307 2.

Creditable withholding tax payments supported by original BIR Form 2307 without the Company's TIN indicated therein 3.

Creditable withholding tax payments supported by original BIR Form 2307 with erasure in amount but with countersignature 4.

Creditable withholding tax payments supported by original BIR Form 2307 but with different Company TIN indicated therein 5.

Underclaimed creditable withholding tax payments 6.

Supporting documents not yet available for verification

Sub-total

Interest Income on commercia/loans I.

Creditable withholding tax payments supported by original BIR Form 2307 2.

Creditable withholding tax payments supported by original BIR Form 2307 without the Company's TIN indicated therein 3.

Creditable withholding tax payments supported by original BIR Form 2307 but not signed by the withholding agent 4.

Creditable withholding tax payments supported by original BIR Form 2307 but with erasure in the amount 5.

Creditable withholding tax payments supported by original BIR Form 2307 but with different withholding agent name indicated therein 6.

Creditable withholding tax payments supported by original BIR Form 2307 but are not dated within the period of claim 7.

Creditable withholding tax payments supported by photocopies of BIR Form 2307 8.

Underclaimed creditable withholding tax payments 9.

Overclaimed creditable withholding tax payments

Sub-total

Annex A1-7, 1606

Exhibit F-20

144,000.00 1606 Annex A1-8,

Exhibit F-20

( 13,53 1.56) Annex A1-9,

Exhibit F-20

93,120.00 P13,255,914.80 2307 Annex A2- 1,

Exhibit F-20

p 5,155,697.64 Annex A2-2, 2307

Exhibit F-20

438,087.24 Annex A2-3, 2307

Exhibit F-20

1,378.13 Annex A2-4, 2307

Exhibit F-20

624,626.60 2307 Annex A2-5,

Exhibit F-20

(828, 122.91) Annex A2-6,

Exhibit F-20

2, I 02,762.24 p 7,494,428.94 Annex A3-1 , 2307

Exhibit F-20

p I ,551 ,051.26 Annex A2-1 ,

Exhibit L

432,560.44 Annex A3-2, 2307

Exhibit F-20

Annex A2-2, 315,980.87

Exhibit L

207,221.67 Annex A3-3, 2307

Exhibit F-20

5,882.52 Annex A3-6,

Exhibit F-20

3,654.42 2307 Annex A2-4,

Exhibit L

1,088.54 Annex A3-7, 2307

Exhibit F-20

7,941.29 2307 Annex A2-3,

Exhibit L

15,247.12 2307 Annex A2-5,

Exhibit L

77,305.11 Annex A3-9,

Exhibit F-20

(2.33) 2307 Annex A2-6,

Exhibit L

828.95 p 2,618,759.86 D.

CTA CASE NO. 79 15

Lease of office space- Real am/ Other Properties

Owned/Acquired (ROPOA)

I.

Creditable withholding tax payments supported by original BIR Form 2307 2.

Creditable withholding tax payments supported by photocopies of BIR Form 2307 and are not dated within the period of claim 3.

Overclaimed creditable withholding tax payments 4.

Creditable withholding tax payments supported by photocopies of BIR Form 2307 5 .

Creditable withholding tax payments supp011ed by original/photocopies of BIR Form 2307 not dated within the period of claim

Sub-total

OTHER FINDINGS

A.

Interest Income on commercia/loans I.

Creditable withholding tax payments supported by original BIR Form 2307 but are not dated within the period of claim/without date indicated therein/with erasure in the year indicated therein 2.

Creditable withholding tax payments supported by original/photocopies of BIR Form 2307 with different/no Company TIN indicated therein 3.

Creditable withholding tax payments supported by photocopies of BIR Form 2307 only. 4.

Supporting documents not yet avai lable for verification

Sub-total

B.

Lease of office space- Real and Other Properties

Owned/Acquired (ROPOA)

I.

Creditable withholding tax payments supported by photocopies of BIR Form 2307 only. 2.

Supporting documents not yet available for verification Annex A3- 1, 2307

Exhibit L

p 53,857.24 Annex A⁴- 1, 2307

Exhibit F-20

28, 169.31 2307 Annex A4-3,

Exhibit F-20

813.93

Based on

2307 Annex A3-2,

Exhibit L

183,773.28

Based on

2307 Annex A3-4,

Exhibit L

72,238.04 p 338,851.80

Based on

Annex A3-4, 2307

Exhibit F-20

in relation to Annex A2-2,

Exhibit L

p 62,786.96

Based on

Annex A3-5, 2307

Exhibit F-20

in relation to Annex A2-2,

Exhibit L

396,443.03

Based on

Annex A3-8, 2307

Exhibit F-20

in relation to Annex A2- 1,

Exhibit L

12,733.49

Based on

Annex A3-

I 0, Exhibit F- 20 in relation

to Annexes

A2- 1 to A2-6,

Exhibit L

205,309.44 p 677,272.92

Based on

Annex A4-2, 2307

Exhibit F-20

in relation to Annex A3- l,

Exhibit L

p 269,822.86

Based on

Annex A4-4,

Exhibit F-20

in relation to Annex A3-l to A3-4,

Exhibit L

61 ,604.26 A.

B.

c.

DECISION

CTA CASE NO. 79 15

Page II of 17

Sub-total

Rounding-off difference

TOTAL

p 331,427.12 (0.44) P24, 716,655.00 Based on the above findings and the Court's ruling on strict compliance with the required Certificates of Creditable Tax Withheld at Source or BIR Form No. 2307 in claiming for CWT refund, petitioner was able to satisfy the second requirement in the amount ofP7,738, 179.01, as presented below:

Amount of

Creditable

Supporting

Withholding

Findings

BIR Returns

Reference

Tax

Lease of office space- PBCOM Tower I.

Creditable withholding tax payments supported 2307 Annex A2-l , by original BIR Form 2307

Exhibit F-20

P⁵, 155,697.64 2.

Creditable withholding tax payments supported by original BIR Form 2307 with erasure in 2307 Annex A2-3, amount but with countersignature

Exhibit F-20

1,378.13 Interest Income on commercia/loans I.

Creditable withholding tax payments supported Annex A3- l, by original BIR Form 2307

Exhibit F-20

I ,551,051.26 2307 Annex A2- l,

Exhibit L

432,560.44 2.

Creditable withholding tax payments supported 2307 Annex A2-5, by photocopies of BIR Form 2307

Exhibit L

77,305.11 3.

Creditable withholding tax payments supported

Based on

by photocopies of BIR Form 2307 on ly. Annex A3-8,

Exhibit F-20

2307 in relation to Annex A2- l to A2-6,

Exhibit L

12,733.49 Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) I.

Creditable withholding tax payments supported 2307 Annex A3- l, by original BIR Form 2307

Exhibit L

53,857.24 2.

Creditable withholding tax payments supported

Based on

by photocopies of BIR Form 2307 2307 Annex A3-2,

Exhibit L

183,773.28 3.

Creditable withholding tax payments supported

Based on

by photocopies of BIR Form 2307 only. Annex A4-2,

Exhibit F-20

in relation to Annex A3-l ,

Exhibit L

269,822.86 Rounding-off difference (0.44)

TOTAL

P7,738,179.01

However, out ofthe amount ofP7,738,179.01 , which was supported with BIR Form No. 2307, only the amount of P4,624,554.63 CWT shall be granted considering that this is the amount which corresponds to the income payments in the aggregate amount of Pl 00,23 1 ,922.69; which the Court verified to have been included in petitioner's General Ledger and Annual Income Tax Return for taxable year 2006, in compliance with the third requisite, to wit:

Exhibit

Amount of

Reference

Creditable

(BIR

Amount of Income

Withholding

Returns)

Received from

Payments

Tax

I. Creditable withlwldin~t tax payments supported by ori~tinal BIR Form 2307 t.A. Lease of Office Space- PBCom Tower (Annex A2-l, Exhibit F-20) F-2.18

BAX Global

p 697,938.40 p 34,896.93 F-2.19

BAX Global

697,938.40 34,896.92 F-2.25

Convergys

5,605,837.00 280,291.85 F-2.26

Convergys

2,826,918.60 141 ,345.92 F-2.27

Convergys

2,826,918.60 141,345.92 F-2.28 ESS Manufacturing Inc.

668,273.40 33,413.67 F-2.29 ESS Manufacturing Inc.

668,273.60 33,413.67 F-2.30 ESS Manufacturing Inc.

668,273.40 33,413.67 F-2.31 ESS Manufacturing Inc.

668,273.40 33,413.67 F-2.33

E-Telecare

I 0,071,057.00 503,552.85 F-2.34

E-Telecare

I 0,066,229.20 503,311.46 F-2.36

E-Telecare

20,498,955.60 1,024,947.78 F-2.37

Focus Media

2 1,052.80 1,052.64 F-2.38 La Farge Cement Services Phils., Inc. 2,028,043.60 101,402.18 F-2.43 La Farge Cement Services Phils., Inc. 2,338,050.80 116,902.54 F-2.49

Maersk Logistics Filipinas

1,713,333.60 85,666.68 F-2.55

Maersk Logistics Filipinas

I ,793 ,600.20 89,680.01 F-2.56

Manpower Outsourcing Services

725,334.80 36,266.74 F-2.57

Manpower Outsourcing Services

725,334.80 36,266.74 F-2.58

Manpower Outsourcing Services

725,334.80 36,266.74 F-2.59

Manpower Outsourcing Services

725,334.80 36,266.74 F-2.65 Mitsubishi Corp.

945,475.80 47,273.79 F-2.68 Mitsubishi Corp.

995,237.80 49,76 1.89 F-2.72 Mitsubishi Corp.

995,237.80 49,761.89 F-2.94 Philam Insurance Co., Inc. I ,7 16,815.00 85,840.76 F-2.98 Philam Insurance Co., Inc. 1,7 16,815.20 85,840.76 F-2.1 05 Phi lam Insurance Co., Inc. 1,716,815.20 85,840.76 F-2.112

Primary Breeders

222,062.20 11 ,103.12 F-2.113

Primary Breeders

222,062.20 11 ,103.12 F-2.114

Primary Breeders

222,062.20 11 ,103.12

CTA CASE NO. 79 I5

F-2.116

Prime Manpower

F-2.117

Prime Manpower

F-2.118

Prime Manpower

F-2.119

Prime Manpower

F-2. 147

Smart Communications

F-2.148

Smart Communications

F-2.149

Smart Communications

F-2.150

Smart Communications

F-2.167 Wan Hai Lines Phils., Inc. F-2.168 Wan Hai Lines Phi ls., Inc. F-2.170 Wan Hai Lines Phils., Inc. F-2.17 1 Wan Hai Lines Phils., Inc. F-2.172

Wireless Service Asia

Total

l.B.l. Interest Income on Commercia l Loans (Annex A3-1, Exhibit F-20) F-2.174

Abacus Capital and Investment

F-2.175

Abacus Capital and Investment

F-2.176

Abacus Capital and Investment

F-2.177

Abacus Capital and Investment

F-2.178

Abacus Capital and Investment

F-2.179

Abacus Capital and Investment

F-2.180

Abacus Capital and Investment

F-2. 186

Abacus Capital and Investment

F-2.635

Abacus Capital and Investment

F-2.636

Abacus Capital and Investment

F-2. 188

Abacus Capital and Investment

F-2.639

Abacus Capital and Investment

F-2.640

Abacus Capital and Investment

F-2.189

Abacus Capital and Investment

F-2.645

Abacus Capital and Investment

F-2.194

Abacus Capital and Investment

F-2.2 12 Eastern Telecommunications Phils. Inc. F-2.2 I⁶ Eastern Telecommunications Phils. Inc. F-2.224 Granexport Manufacturing Corp. F-2.225 Granexport Manufacturing Corp. F-2.227 Granexport Manufacturing Corp. F-2.243 Lepanto Consolidated Mining Co. F-2.244 Lepanto Consolidated Mining Co. F-2.68 I

Vista Holding Corporation

F-2.682

Vista Holding Corporation

F-2.683

Vista Holding Corporation

F-2.685

Vista Holding Corporation

F-2.686

Vista Holding Corporation

F-2.687

Vista Holding Corporation

F-2.688

Vista Holding Corporation

F-2.689

Vista Holding Corporation

F-2.690

Vista Holding Corporation

p p 293,9 11.60 14,695.58 293,911 .60 14,695.58 293,911.60 14,695.58 293 ,911.60 14,695.58 36,465.20 I ,823.26 37,500.00 1,875.00 37,500.00 1,875.00 38,288.40 1,914.42 l,lll , I08.40 55,555.42 I ,666,662.80 83,333.14 I ,666,662.80 83,333.14 I ,666,662.80 83,333.14 905,787.20 45,289.36 83,855,17 4.20 p 4,192,758.73 54,049.35 p 1,080.99 47,818.70 956.37 50,162.96 1,003.26 54,000.79 1,080.02 49,620.78 992.42 40,688.85 81 3.78 47,406.49 948.13 206,994.75 4,139.90 341 ,066.52 6,82 1.33 178,049.66 3,560.99 176,2 15.72 3,524.3 1 170,163.27 3,403.27 372,816.03 7,456.32 180,757.24 3,615.14 55,772.99 1,11 5.46 38,034.26 760.69 I ,818,666.67 36,373.33 520,000.00 10,400.00 5 19,643.05 10,392.86 349,375.00 6,987.50 61 2,750.00 I2,255.00 86,507.68 1,730.15 89,39 1.27 1,787.83 167,3 19.48 3,346.39 27 1,8 15.53 5,436.3 I 143,158.04 2,863.16 203,058.07 4,061.16 224,548.65 4,490.97 145,490.33 2,909.81 135,325.76 2,706.52 230,926.46 4,618.53 222,405.79 4,448.1 2

CTA CASE NO. 79I5

F-2.691

Vista Holding Corporation

F-2.692

Vista Holding Corporation

F-2.693

Vista Holding Corporation

F-2.694

Vista Holding Corporation

F-2.695

Vista Holding Corporation

F-2.696

Vista Holding Corporation

Total

l.B.2. Interest Income on Commercial Loans (Annex A2-l, Exhibit L) L-1.40

Abacus Securities Corporation

L-1.49 Eastern Telecommunications Phils, Inc. L-1.33 Lepanto Consolidated Mining Co.

Total

134,254.33 2 13,956.55 124,304.04 234,947.13 140,918.90 2 11 ,885.12 p 8,864,266.21 p 268,567.50 1,760,000.00 92,274.86 p 2,120,842.36 l.C. Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) (Annex A3-1, Exhibit L) L-1.11 2

Banco de Oro (Daiichi Properties)

p 926,152.80

Total

p 926,152.80

2. Creditable witltltolding tax payments supported by photocopies of BIR Form 2307 2.A.l. Interest Income on Commercial Loans (Annex A2-5, Exhibit L) L-1.76

Northern Cement

p 678,125.00 L-1.77

Northern Cement

883,208.33

Total

p I ,561 ,333.33 2.A.2. Interest Income on Commercial Loans (Based on Annex A3-8, Exhibit F-20 in relation to Annex A2-l, Exhibit L) F-2.246 Lepanto Consolidated Mining Co. p 86,507.50 F-2.247 Lepanto Consolidated Mining Co. 89,391 .27 F-2.25 1 Lepanto Consolidated Mining Co. 89,391 .27

Total

p 265,290.04 p p p p p p p p p 2.B.1. Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) (Based on Annex A3-2, Exhibit L) L-1.107

Blue Boz

p 157,445.00 p L-1.108

Blue Boz

157,445.00 L-1.109

Blue Boz

157,445.00 L-1.11 0

Blue Boz

157,445.00 L-1.111

Blue Boz

157,445.00 L-1.120

GKE Group

75,496.00 L-1.116

GL Language

53,783.40 L-1.117 lNG Bank 91 ,2 11.24 L-1.121

K International Service

147,378.00 L-1.122

K International Service

147,378.00 L-1.123

K International Service

147,378.00 L-1.132 SAS Institute Phils. Inc. 120,604.00 L-1.102

Sodexho Pass

102,324.00 L-1.103

Sodexho Pass

102,324.00 L-1.104

Sodexho Pass

102,324.00 L-1.1 05

Sodexho Pass

102,324.00 L-1.106

Sodexho Pass

102,324.00 2,685.09 4,279.13 2,486.08 4,698.94 2,818.38 4,237.70 177,285.34 5,371.35 35,200.00 I ,845.50 42,416.85 46,307.64 46,307.64 13,562.50 17,664.17 31,226.67 1,730.15 1,787.83 1,787.83 5,305.81 7,872.25 7,872.25 7,872.25 7,872.25 7,872.25 3,774.80 2,689.17 4,560.58 7,368.90 7,368.90 7,368.90 6,030.20 5,116.20 5,116.20 5,116.20 5,116.20 5,116.20

CTA CASE NO. 79 15

L-1.101

Sodexho Pass

419,916.00 20,995.80

Total

p 2,501,989.64 p 125,099.50 2.B.2. Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) (Based on Annex A4-2, Exhibit F-20 in relation to Annex A3-1, Exhibit L) F-2.596

GL Language (Daiichi Properties)

p 107,566.80 p 2,689.17 Meche! Metal Properties (Daiichi F-2.6 10

Properties)

29,307.31 1,465.36

Total

136,874.11 4,154.53 Rounding off difference (0.44)

GRAND TOTAL

p 100,231 ,922.69 p 4,624,554.63 In sum, petitioner has sufficiently proven compliance with the three requisites for the refund of unutilized creditable withholding taxes, but only to the extent of P4,624,554.63 out of the total claimed CWT ofP24,716,655.00. The Court shall now determine whether petitioner exercised the option to carry-over its excess creditable withholding taxes to the succeeding quarters, as provided under Section 76 of the NIRC of 1997, as amended, which reads: "SEC. 76. Final Adjustment Return. - Every corporation liable to tax under Section 27 shall tile 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 income of that year, the corporation shall either: (A) Pay the balance of tax sti II due; or (B) Carry-over the excess credit; or (C) Be credited or refunded with the excess amount paid, as the case may be.

In case the corporation is entitled to a tax credit 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 liabi lities 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 application for cash refund or issuance of a tax credit certificate shall be allowed therefor." (Emphasis supplied) Pursuant to the above-quoted provision, the corporate taxpayer's excess tax credits or overpaid income tax in a given taxable year may either be refunded (either in the form of cash or tax credit certificate) or carried over/applied to the succeeding taxable years.

However, once the option to carry-over has been made, the same becomes irrevocable for that taxable period. Records reveal that in its Final Income Tax Return for taxable year 2006 18, petitioner reflected a net loss of P903,582,307.00 19 and income tax overpayment of P65,800,469.0020, which petitioner marked as "To be Issued a Tax Credit Certificate"21.

A perusal of said Return shows that the mcome tax overpayment of P65,800,469.00 consists of the following: Prior year's excess credits p 41 ,083 ,8 14.00 Creditable tax withheld during the year 24,716,655 .00

Total

p 65,800,469.00 Petitioner was unable to utilize the total tax credits of P65,800,469.00 because it had no income tax liability due to losses incurred in its operations. In petitioner's 2007 Quarterly Income Tax Returns for the first22, second23 and third24 quarters as well as in its 2007 Annual Income Tax Return25 , only the amount of P41,083,814.00 was reflected as "Prior Year's Excess Credits". Clearly, the claimed CWT amounting to P24,716,655.00 for the year 2006 was not carried over to the succeeding quarters or taxable year.

WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO ISSUE A TAX CREDIT CERTIFICATE in the reduced amount of FOUR MILLION SIX

HUNDRED TWENTY-FOUR THOUSAND FIVE HUNDRED FIFTY-FOUR

AND 63/100 PESOS (P4,624,554.63), representing petitioner's unutilized creditable withholding tax for taxable year 2006.

LO

O~P~UEZ

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were re ched in consultation before the case was assigned to the writer of the opinion of the C urt's Division.

CERTIFICATION

Pursuant to Section 13, Article VIII 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. ~.Q~ ERNESTO D. ACOSTA

Presiding Justice