Sumisetsu Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

PALANCA-ENRIQUEZ, J.:

THE CASE

This is a Petition for Review filed by Sumisetsu Philippines, Inc. (hereafter "petitioner") praying for the refund or issuance of a tax credit certificate (TCC) in the total amount of P18,872,767.00, representing petitioner's excess and unutilized creditable income taxes withheld for calendar year 2007.

THE PARTIES

2 Petitioner is a corporation duly organized under Philippine laws and engaged in the business of providing electrical and mechanical services for electrical transmission and distribution systems, air conditioning and ventilation systems, telephone and communications systems, and other allied services, with principal office located at the 4th/Floor, Glass Tower, 115 C. Palanca St., Legaspi Village, Makati City.

Respondent, on the other hand,

3 On April 15, 2008, petitioner manually filed with the BIR its Annual Income Tax Return for taxable year 2007. On July 30, 2008, petitioner filed a written claim for issuance of a TCC with the BIR.

In order to preserve its right and to toll the runmng of the prescriptive period for its judicial claim, on April 14, 2010, petitioner filed the instant Petition for Review. In her Answer, respondent alleged by way of special and affirmative defenses:

"xxx xxx 5.

Assuming but without admitting that petitioner filed a claim for refund, the same is subject to investigation by the Bureau of Internal Revenue; 6.

Petitioner failed to demonstrate that the tax, which is the subject of this case, was erroneously or illegally collected;

7.

Taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not creditable or refundable; 8.

It is incumbent upon petitiOner to show that it has complied with the provision of Section 204(C) in relation to Section 229 of the 1997 Tax Code, as amended; 9.

In an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the said burden is fatal to the claim (Emmanuel &

Zenaida Aguilar v. Commissioner, CA-GR. No. SP 16432, March 30, 1990 cited in Aban, Law of Basic Taxation in the Philippines, 1st Edition, p. 206); 4 12.

Claims for refund are construed strictly against the claimant for the same partakes the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, G.R. No. L- 13509, January 30, 1970, 31 SCRA 95) and as such; they are looked upon with disfavor (Western Minolco Corp. vs.

Commissioner of Internal Revenue, 124 SCRA 121)." Petitioner presented Leonard Lyle M. Tabalon, Rissa R. Ornedo, Barbara Q. Bigay and Cecilia S. Magalona, as witnesses, and documentary evidence, marked as Exhibits "A" to "BBB-1 ", inclusive of their sub-markings, which were admitted by the Court in its Resolution dated November 4, 2011. On the other hand, respondent waived her right to present evidence and submitted the case for decision. Thereafter, both parties were ordered to file their simultaneous memoranda, within thirty (30) days from notice; afterwhich the case shall be deemed submitted for decision. On March 9, 2012, petitioner filed its "Memorandum".

Respondent failed to file her memorandum within the prescribed period; hence, in a Resolution dated March 20, 2012, the case was deemed submitted for decision.

ISSUES

5 As stipulated by the parties, the following are the issues for this Court's consideration:

I

WHETHER THE INCOME PAYMENTS FROM WHICH

THE TAXES WERE WITHHELD WERE INCLUDED IN

SUMISETSU'S GROSS INCOME FOR THE YEAR 2007.

II

WHETHER

SUMISETSU

HAS

EXCESS

AND

UNUTILIZED CREDITABLE WITHHOLDING TAX FOR

THE YEAR 2007 IN THE AMOUNT OF P18,872,767.00.

III

WHETHER SUMISETSU HAS CARRIED OVER TO THE

SUCCEEDING TAXABLE YEARS

THE ALLEGED

EXCESS CREDITABLE WITHHOLDING TAX FOR THE

YEAR2007.

IV

WHETHER

SUMISETSU'S

RIGHT

TO

CLAIM A

REFUND OF THE ALLEGED EXCESS/UNUTILIZED

CREDITABLE WITHHOLDING TAX FOR THE YEAR

2007 IS DULY SUBSTANTIATED. v

WHETHER SUMISETSU IS ENTITLED TO A REFUND

OR ISSUANCE OF THE TAX CREDIT CERTIFICATE IN

THE AMOUNT OF P18,872,767.00 FOR ITS EXCESS

AND/OR UNUTILIZED CREDITABLE WITHHOLDING

TAXES FOR THE YEAR 2007.

Principal Issue

6 The foregoing Issues raised by both parties boil down to the principal issue of whether or not petitioner is entitled to a refund or Issuance of a TCC in the aggregate amount of P18,872,767.00, representing petitioner's excess and unutilized creditable mcome taxes withheld for calendar year 2007.

THE COURT'S RULING

The Court finds no merit in the petition. Petitioner anchors its claim on the provisions of Section 76 of the NIRC of 1997, as amended, in relation to Sections 204 and 229 of the same Code. Section 76 of the NIRC of 1997, as amended, provides: "SEC. 76. 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 equal 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 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 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 application for cash refund or issuance of a tax credit certificate shall be allowed therefor." (Emphasis supplied) 7 Pursuant to the above provision, the corporate taxpayer's excess tax credits or overpaid income tax in a given taxable year may either be refunded 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. A perusal of petitioner's Annual Income Tax Retum 1 for taxable year 2007 shows that petitioner had total tax credits in the amount of P36,727,530.00, which consisted of the prior year's excess credits in the amount of Pl7,854,763.00 and creditable taxes withheld during the year in the amount ofP18,872,767.00, to wit:

Prior Year's Excess Credits

p 17,854,763 .002

Creditable Taxes Withheld for the First Three Quarters

p 14,990,418.00

for the Fourth Quarter

3,882,349.00 18,872,767.00

Total Tax Credits

p 36,727,530.00 The pnor year's excess credits of Pl7,854,763.00 was applied against petitioner's income tax due for the year 2007 in the amount of 1 Exhibits "A" and "8 ".

8 P6,654,501.35,3 leaving the amount ofP11,200,261.65, representing prior year's excess credits and the amount of P18,872,767.00, representing creditable taxes withheld during the year 2007 or a total tax credit of P30,073,028.654 unutilized as ofDecember 31 , 2007, as shown below:

Prior Year's Excess Credits

p 17,854,763.00

Less: I Income Tax Due

6,654,501 .35

Balance of Prior Year's Excess Credits

p II ,200,261.65

Add: I Creditable Taxes Withheld During the Year

18,872,767.00 Unutilized Excess Tax Credits as of December 31, 2007 p 30,073,028.65 Inasmuch as petitioner marked the option "To be issued a Tax Credit Certificate" in its Annual Income Tax Return for taxable year 2007 and reflected only the amount of Pll ,200,262.00 as "Prior Year's Excess Credits" in its Annual Income Tax Return5 for taxable year 2008, the unutilized creditable withholding taxes for taxable year 2007 in the amount ofP18,872,767.00 may be the subject of a claim for refund under Section 7 6 of the NIRC of 1997, as amended. Settled is the rule that a taxpayer's excess withholding tax credits for the taxable year shall automatically be allowed as a refund or tax credit for purposes of filing his income tax return for the taxable year succeeding the taxable year in which the aforesaid excess credit arose.

9 This right to refund or credit, however, is not automatic, the taxpayer must be able to prove the same by substantial evidence, in compliance with the prescribed requirements set forth in our Tax Code and related laws.

In order to be entitled to a claim for refund or issuance of a TCC, the taxpayer must satisfy the three conditions for the grant of a claim for refund of creditable withholding tax, to wit: 1) That the claim is filed with the CIR, within the two (2) year period from the date of payment of the tax; 2) That the fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the 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 (Banco Filipino Savings and Mortgage Bank vs. CA, et al., 519 SCRA 93).

First Requisite -

Claim for Refund was filed within the two-year prescriptive period.

Sections 204(C) and 229 of the NIRC of 1997, as amended, provide:

"SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may -

(A) XXX

XXX

(B) 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 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 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, 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; 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.

XXX

xxx."

10 Clearly, the two (2)-year prescriptive period for the filing of a claim for refund under Section 204 (C), in relation to Section 229 of the NIRC of 1997, as amended, commences from the date of filing of the final adjustment return (ACCRA Investments Corp. vs. Court of Appeals, 204 SCRA 957). It bears emphasis at this point that the rationale in computing the two (2)-year prescriptive period with respect to petitioner's claim for refund from the time it filed its final adjustment return is the fact that it w

11 was only then that petitioner could ascertain whether it made profits or incurred losses in its business operations. Records show that petitioner filed its ITR for calendar year ending December 31, 2007 on April 14, 2008. Counting from April 14, 2008, petitioner had until April 14, 2010, within which to file its claim for refund/TCC both administratively and judicially. Therefore, petitioner's administrative claim for refund filed on July 30, 2008 and judicial claim filed on April 14, 2010 were both filed within the two (2)-year prescriptive period allowed by law. Clearly, the first requirement has been complied with.

Second and Third Requisites -

As regards the second and third requisites, Section 10 of Revenue Regulation No. 12-94 provides: "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 of tax withheld therefrom." (Emphasis supplied) 12 Pursuant to the above provision, petitioner must be able to show that the income payments it received have been declared as part of its gross income and that the fact of withholding must be established by substantial evidence.

Second Requisite - Taxes withheld are duly supported by certificates of tax withheld.

To prove the fact of withholding of creditable taxes withheld for taxable year 2007 in the amount of P18,872,767.00, petitioner presented Certificates of Creditable Tax Withheld at Source duly issued to it by various withholding agents for the same year (Exhibits "W-1 " to "W-225 ''), which were examined by the Court-Commissioned Independent Certified Public Accountant (ICPA), Mr. Edwin F. Ramos. In his report, Mr. Ramos summarized his findings, as follows:

Findings

Reference

Taxes Witltlteld

I

Creditable withholding tax (CWT) duly supported by original Certificate of Creditable Tax Withheld at

Source (BIR Form 2307)

Annex 1-A

p 14,729,350.52 2 CWT duly supported by original BIR Form 2307 without Company's address indicated therein

Annex 1-B

882, 106.37 3 CWT duly supported by original BIR Form 2307 with different address indicated therein

Annex 1-C

2,837,342.68

Sub-total

p 18,448,799.57 Other findings 4 CWT duly supported by original BIR Form 2307 but with erasure on the date and without countersignature indicated therein

Annex 1-D

p 3,608.00 5 CWT supported by photocopy ofBIR Form 2307 stamped "received" by the B!R

Annex 1-E

204,760.40 6 CWT supported by photocopy ofBJR Form 2307 stamped "received" by the BIR, without Company's address indicated therein

Annex 1-F

37,399.42

7 CWT duly supported by original BIR Form 2307 but with different Company's name indicated therein 8 CWT duly supported by original BIR Form 2307 but with different TIN indicated therein 9 CWT duly supported by original BIR Form 2307 but without Company's TIN and address indicated therein 10 CWT supported by photocopy of BlR Form 2307 stamped "received" by the BIR and without Company's TIN and address indicated therein

II

CWT supported by photocopy ofBIR Form 2307 stamped "received" by the BIR but determined to be an over claim

Sub-total

GRAND TOTAL

Company-prepared schedule of creditable withholding taxes

Difference

13

Annex 1-G

32,000.00

Annex 1-H

88,2 18.00

Annex 1-I

9,428.00

Annex 1-J

47,171.20

Annex 1-K

1,360.00 p 423,945.02 p 18,872,744.59

Exhibit U

18,872,764.59 p (20.00) Based from the foregoing, the amount of P423,945.02 under the caption "Other Findings" must be disallowed for the reasons stated therein.

In addition, after a careful examination of petitioner's documentary evidence, the Court finds that the following certificates of creditable withholding taxes in the amount ofP435,223.366 shall likewise be disallowed since the supporting certificate bears a TIN not belonging to petitioner.7 Therefore, petitioner was able to substantiate, by proper withholding tax certificates, only the CWT in the amount of P18,013,576.21 8 for taxable year 2007. Third Requisite - The income withheld made part o{petitioner's gross income.

6 Exhibit "W-114", under Annex 1-A. 7 Indicated TIN is 000-693-400-000., while petitioner's TIN is 000-169-334-000. · (A . hJ 8 Pl8,448,799.57 less P435,223.36.

W

14 A perusal of the evidence on record shows that the revenue under the "Contract Price" account per petitioner's general ledger for 20069, 200i 0 and 2008 11 tallied with the total revenue reported in the Annual

Income Tax Returns for 2006

12, 200i 3 and 2008 14• To account for the income related to the claimed CWT, the Court- Commissioned ICPA presented two separate reports, dated May 16, 2011 15 and July 1, 2011. 16 In his report dated May 16,2011, the Court- Commissioned ICPA summarized his findings, as follows: 17

Amount

Findings

Reference

Tax Base

Tax Witltlteld

A.

Creditable withholding taxes with related income included in the Company's general ledgers and income tax returns

I

Creditable withholding tax (CWT) duly supported by original Certificate of

Creditable Tax Withheld at Source

(BIR Form 2307); the related income of which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes and contract price accounts and to sales invoice or official receipt 2 CWT duly supported by original BIR Form 2307; the related income of which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes, accrued accounts receivables, advances received and contract price 9 Exhibit "MM".

10 Exhibit "Z".

II Exhibit "WW".

12 Exhibit "NN".

13 Exhibits "A" and "B". 14 Exhibits "N" and "0 ". 15 Exhibit "T".

16 Exhibit "AAA"

Annex 2-A

17 Exhibit "T", pp. 8-11 offina11CPA report or Annex 2. p 214,683,741.26 p 4,494,249.81 B.

accounts and to sales invoice or official

Receipt

3 CWT duly supported by original BIR Form 2307 but without Company's address indicated therein; the related income of which was included in the

Company's Annual Income Tax Return

as traced to general ledgers of prepaid taxes and contract price accounts and to sales invoice or official receipt 4 CWT duly supported by original BIR Form 2307 without Company's address indicated therein; the related income of which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes, accrued accounts receivable, advances received and contract price accounts and to sales invoice 5 CWT duly supported by original BIR Form 2307 with different address indicated therein; the related income of which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes, accrued accounts receivable, advances received and contract price accounts and to sales invoice or official

Receipt

Sub-total

Other Findings

I

CWT duly supported by original BIR Form 2307 but with erasures on the date and without countersignature indicated therein; the related income of which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes and contract price accounts and to sales invoice 2 CWT duly supported by original B1R Form 2307 but with erasures on the date and without countersignature indicated therein; the related income of 15

Annex 2-B

436,483,873.39 8,667,508.76

Annex 2-C

23,526,577. 12 470,531.54

Annex 2-D

15,738,270.96 314,765.42

Annex 2-E

141 ,867, 134.00 2,837,342.68 p 832,299,596. 73 18 p 16,784,398.21 19

Annex 2-F

p 8,900.00 p 178.00 18 Erroneously summed up by ICPA in the amount ofP832,479,996.73 (Exhibit "T", p. 9 of final ICPA report and Annex 2).

19 Erroneously summed up by ICPA in the amount ofP16,788,006.21 (Exhibit "T", p. 9 offilal/lfP¹ report and Annex 2).

~ which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes, accrued accounts receivable, advances received and contract price accounts and to sales invoice 3 CWT duly supported by original BIR Form 2307; the related income of which was included in the Company's Annual Income Tax Return as partially traced to general ledgers of prepaid taxes, accrued accounts receivables, advances received and contract price accounts and to sales invoice or official

Receipts

4 CWT duly supported by original BIR Form 2307 without Company's address indicated therein; the related income of which was included in the Company's Annual Income Tax Return as partially traced to general ledgers of prepaid taxes, accrued accounts receivable, advances received and contract price accounts and to sales invoice or official

Receipt

5 CWT supported by photocopy ofBIR Form 2307; the related income of which was included in the Company's Annual Income Tax Return as traced to general ledgers of prepaid taxes and contract price accounts and to sales invoice 6 CWT supported by photocopy ofBIR Form 2307; the related income of which was included in the Company's Annual Income Tax Return as partially traced to general ledgers of prepaid taxes, accrued account receivable, advances received and contract price accounts and to sales invoice or official

Receipt

7 CWT supported by photocopy of BIR form 2307 without Company's address indicated therein; the related income of which was included in the Company's Annual Income Tax return as traced to general ledgers of prepaid taxes and contract price accounts and to sales invoice or official receipt 8 CWT supported by photocopy ofBIR 16

Annex 2-G

171 ,500.00 3,430.00

Annex 2-H

78,722,097.29 1,570,751.95

Annex 2-1

4,682,470.63 93,649.41

Annex 2-J

2,639,320.00 52,786.40

Annex 2-K

7 ,598, 700.00 151 ,974.00

Annex 2-L

1,378, 171.1 2 27,563.42 w form 2307 without Company's address indicated therein; the related income of which was included in the Company's Annual Income Tax return as traced to general ledgers of prepaid taxes, accrued accounts receivable, advances received and contract price accounts and to sales invoice 9 CWT duly supported by original BIR Form 2307 with different Company name indicated therein; the related income of which was included in the

Company's Annual Income Tax Return

as traced to general ledgers of prepaid taxes and contract price accounts and to sales invoice 10 CWT duly supported by original BIR Form 2307 but with different TIN indicated therein

II

CWT duly supported by original BIR Form 2307 but without Company's TIN and address indicated therein 12 CWT supported by photocopy ofB IR Form 2307 but without Company's TIN and address indicated therein 13 CWT supported by photocopy ofBIR Form 2307 but determined to be an over claim

Sub-total

17

Annex 2-M

491 ,800.00 9,836.00

Annex 2-N

I ,600,000.00 32,000.00

Annex 1-H

- 88,218.00

Annex 1-I

- 9,428.00

Annex 1-J

- 47,171.20

Annex 1-K

- I ,360.00 p 97,292,959.0420 p 2,088,346.38

GRAND TOTAL

p 929,592,555. 7i 1 p 18,872,7 44.59 In relation to Annexes 2-H and 2-I under "Other Findings" mentioned above, the Court-Commissioned ICP A added m his Supplemental Report dated July 1, 2011, the following findings: 22

Amount

Findings

Reference

Tax Base

Tax Withlteld

A.

Creditable withholding taxes with related income included in the Company's general ledgers and income tax returns

I

Creditable withholding tax (CWT) duly supported by original Certificate of

Creditable Tax Withheld at Source (BIR

20 Erroneously summed up by !CPA in the amount ofP907,292,959.04 (Exhibit "T", p. II). 21 Erroneously summed up by !CPA in the amount ofP935,584, I 05.77 (Exhibit "T", p. II). " Exhibit "A AA", p. 2 of supplemental I CPA ceport oc Annex I. ~ B.

Form 2307); the related income of which was included in the Company's Annual Income Tax Return (ITR) as traced to general ledgers (GL) of prepaid taxes, accrued accounts receivable, advances received and contract price accounts and to sales/billing invoice 2 CWT duly supported by original SIR Form 2307 but without Company's address indicated therein; the related income of which was included in the Company's Annual ITR as traced to GL of prepaid taxes, accrued accounts receivables, advances received and contract price accounts and to sales/billing invoice

Sub-total

Other Findings

3 CWT duly supported by original SIR Form 2307; the related income of which was included in the Company's Annual ITR as partially traced to GL of prepaid taxes, accrued accounts receivables, advances received and contract price accounts and to sales/billing invoice 18

Annex 1-A

p 67,231 ,910.50 p I ,340,948.21

Annex 1-S

4,281 ,4 70.63 85,629.41 p 71,513,381.13 p 1,426,577.62

Annex 1-C

p 11,891 , 186.79 p 237,823.74

TOTAL

p 83,404,567.92 p I ,664,401.36 Based from the foregoing tables, the creditable taxes of P18,013,576.21 23 were withheld on income payments received by petitioner amounting to P893,942,996.6524. To further support its claim, petitioner submitted its Quarterl/5 I Annual26 Income Tax Returns for the years 2007, 2008 and 2009; Audited Financial Statements27 for the years 2007 and 2008; 23 P 16,784,398.21 (letter A of the Findings in Exhibit "T", p. 9) plus PI ,664,401.36 (Exhibit "AAA", p. 2 and Annex 1) less P435,223.36 (cwt with different TIN). 24 P832,299,596.73 (letter A of the Findings in Exhibit "T", p. 9) plus P83,404,567.92 (Exhibit "AAA",

p. 2 and Annex I) less P21 , 761 , 168.00 (income of cwt with different TIN). 25 Exhibits " H", " I", "J", " EE", " FF", "GG", "K", " L", "M", "11", "JJ", and "KK". 26 Exhibits "SS" "NN" "A" "S " "N" "0 " and "HH" r~ I w 27 Exhibits " DO,', and "YY"., , , .

WV

19 General Ledger of Contract Price for 200628, 200729 and 200830; General Ledger of Prepaid Taxes for 200i 1 and 1st quarter of 200832; company prepared schedule of prepaid taxes for 200i3; General Ledger of Advances Received for 200i4; General Ledger of Accrued Accounts Receivable for 2006, 2007 and 200835 ; Schedule of Advances received before and after amortization for 200i6; Masterlist of project codes for 2006, 2007 and 200837; company prepared additional schedule38; and various official receipts and invoices39 issued by petitioner. However, a perusal of these documents and the reports of the ICPA 40 shows that petitioner was able to establish only the income payment of P243,995,418.10, upon which the corresponding creditable taxes of P4,880,451.20 were withheld, were shown hereunder:

CWT

Certificate

CREDITABLE

Per Exh. "T"

Exhibit

attached as No.

CLIENT

Annex 2-A

W-

2

ANDO PHILlPPINES CORPORATION

Annex 2-A

W-

3 28 Exhibit "MM".

29 Exhibit "Z".

30 Exhibit "WW".

31 Exhibit "X".

32 Exhibit "00".

33 Exhibit "Y".

34 Exhibit "AA''.

ANDO PHILIPPINES CORPORATION

35 Exhibits "LL", "BB" and "XX". 36 Exhibits "PP-1 " to "PP-4". 37 Exhibits "QQ-2", "QQ-1" and "ZZ". 38 Exhibit "VV".

INCOME

WITHHOLDING

VERIFIED

TAX

p 2,168,750.00 p 43,375.00 20,027,425.17 400,548.50

Annex 2-A

W-

8

CCT CONSTRUCTORS CORPORATION

Annex 2-A

W-

10 CEBU MTTSUMI INC.

Annex 2-A

W-

12 CEBU MlTSUMI INC.

Annex 2-A

W-

13 CEBU YMTECHNOLOGY, INC.

Annex 2-A

W-

14 CEBU YMTECHNOLOGY, INC.

Annex 2-A

W-

15 CEBU YMTECHNOLOGY, INC.

Annex 2-A

W-

17 CEBU YMTECHNOLOGY, INC.

Annex 2-A

W-

19 CEBU YMTECHNOLOGY, INC.

Annex 2-A

W-

20 CEBU YMTECHNOLOGY, INC.

Annex 2-A

W-

21 CEBU YUSHIN INC.

Annex 2-A

W-

21 CEBU YUSHIN INC.

Annex 2-A

W-

22 DAIKOKU ELECTRONICS (PHILS), INC.

Annex 2-A

W-

23

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

24

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

25

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

26

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

27

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

28

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

29

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

30

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

31

EAST CERAMIC PHILIPPINES CORP

Annex 2-A

W-

32 EDS MANUFACTURING INC.

Annex 2-A

W-

33 EDS MANUFACTURING INC.

Annex 2-A

W-

34 EDS MANUFACTURING INC.

Annex 2-A

W-

36 EPSON PRECISION (PHILS). INC.

Annex 2-A

W-

37 EPSON PRECISION (PHILS). INC.

Annex 2-A

W-

42 FIRST SUMIDEN CIRCUITS, INC

Annex 2-A

W-

43 FUJITA PHILS CON St. AND DEV'T INC.

Annex 2-A

W-

49 lNT'L ELECTRIC WIRES PHILS.

Annex 2-A

W-

50 INT'L ELECTRIC WIRES PHILS.

Annex 2-A

W-

51 INT'L ELECTRIC WIRES PHILS.

Annex 2-A

W-

56 LAGUNA DAI-ICHI, INC.

Annex 2-A

W-

58 LAGUNA DAl-ICHI, INC.

Annex 2-A

W-

59 MAHLE FILTER SYSTEMS PHILS, CORP

Annex 2-A

W-

60 NANBU PHILIPPINES, IN CORPORA TED

Annex 2-A

W-

61 NANBU PHILIPPINES, INCORPORATED

Annex 2-A

W-

62 NANBU PHILIPPINES, INCORPORATED

Annex 2-A

W-

63 NANBU PHILIPPINES, IN CORPORA TED

Annex 2-A

W-

64 NANBU PHILIPPINES, IN CORPORA TED

Annex 2-A

W-

65 NANBU PHILIPPINES, INCORPORATED

Annex 2-A

W-

66 NANBU PHILIPPINES, IN CORPORA TED

Annex 2-A

W-

68 NANOX PHILIPPINES, INC.

Annex 2-A

W-

69 NANOX PHILIPPINES, INC.

Annex 2-A

W-

70 NANOX PHILIPPINES, INC.

Annex 2-A

W-

70 NANOX PHILIPPINES, INC.

Annex 2-A

W-

73 NEC TOKIN ELECTRONICS (PHILS) INC.

Annex 2-A

W-

74 NEC TOKIN ELECTRONICS (PHILS) INC.

Annex 2-A

W-

75 NEC TOKIN ELECTRONICS (PHILS) INC. 20 357,142.86 7,142.86 3,966,700.00 79,334.00 12,031, I 00.00 240,622.00 61,400.00 1,228.00 680,000.00 13,600.00 597,500.00 II ,950.00 48,300.00 966.00 33,500.00 670.00 548,500.00 10,970.00 16,200.00 324.00 27,800.00 556.00 719,000.00 14,380.00 400,000.00 8,000.00 15,000.00 300.00 36,400.00 728.00 138,900.00 2,778.00 6,300.00 126.00 6,600.00 132.00 29,100.00 582.00 30,000.00 600.00 35,000.00 700.00 269,400.00 5,388.00 13,500.00 270.00 330,000.00 6,600.00 2,717,387.00 54,347.74 1,² 10,800.00 24,216.00 185,500.00 3,710.00 420,000.00 8,400.00 38,000.00 760.00 51,300.00 1,026.00 95,000.00 1,900.00 26,000.00 520.00 246,800.00 4,936.00 166,700.00 3,334.00 289,000.00 5,780.00 240,000.00 4,800.00 100,000.00 2,000.00 85,000.00 1,700.00 487,900.00 9,758.00 30,000.00 600.00 2,000,000.00 40,000.00 3,360,000.00 67,200.00 635,000.00 12,700.00 370,000.00 7,400.00 297,000.00 5,940.00 33,300.00 666.00 54,945.00 1,098.90 201,965.00 4,039.30

Annex 2-A

W-

77 N. T. PHILIPPINES, INC.

Annex 2-A

W-

80

PENT A SHIMIZU TOA JOINT VENTURE

Annex 2-A

W-

81

PENT A SHIMIZU TOA JOINT VENTURE

Annex 2-A

W-

82

PENTA SHIMIZU TOA JOINT VENTURE

Annex 2-A

W-

83

PENT A SHIMIZU TOA JOINT VENTURE

Annex 2-A

W-

85 PHILIPPINES EPSON OPTICAL, INC.

Annex 2-A

W-

86 PHILIPPINES EPSON OPTICAL, INC.

Annex 2-A

W-

86 PHILIPPINES EPSON OPTICAL, INC.

Annex 2-A

W-

88

PHILIPPINE TO NAN CORPORATION

Annex 2-A

W-

98

SANYO SEMICONDUCTOR MFTG PHILS CORP

Annex 2-A

W-

100

SANYO SEMICONDUCTOR MFTG PHILS CORP

Annex 2-A

W-

100

SANYO SEMICONDUCTOR MFTG PHILS CORP

Annex 2-A

W-

100

SANYO SEMICONDUCTOR MFTG PHILS CORP

Annex 2-A

W-

104 SHIMIZU PHIL. CONTRACTORS INC.

Annex 2-A

W-

105 SHIMIZU PHIL. CONTRACTORS INC.

Annex 2-A

W-

106 SOHBI KOHGEI (PH1LS), INC.

Annex 2-A

W-

109

T AISE1 SHIMIZU JOINT VENTURE

Annex 2-A

W-

121 TAIYO YUDEN (PHILS), INC.

Annex 2-A

W-

122 T AIYO YUDEN (PHILS), INC.

Annex 2-A

W-

124 TAKENAKA CORP. PHIL. BRANCH

Annex 2-A

W-

124 TAKENAKA CORP. PHIL. BRANCH

Annex 2-A

W-

125 TAKENAKA CORP. PHIL. BRANCH

Annex 2-A

W-

126 TAKENAKA CORP. PHIL. BRANCH

Annex 2-A

W-

127 TAKENAKA CORP. PHIL. BRANCH

Annex 2-A

W-

128 TAS PLAN, INC.

Annex 2-A

W-

131 TOBISHTMA PHILIPPINES, INC.

Annex 2-A

W-

132 TOBISHIMA PHILIPPINES, INC.

Annex 2-A

W-

7

CCT CONSTRUCTORS CORPORATION

Annex 2-A

W-

76 N. T. PHILIPPINES, INC.

Annex 2-A

W-

91 PILIPINAS KYORITSU INC.

Annex 2-A

W-

194 TOKYO STEEL PHILS. CORP.

Annex 2-B

W-

5 ATOMED CEBU, INC.

Annex 2-B

W-

6 ATOMED CEBU, INC.

Annex 2-B

W-

II

CEBU MITSUMI INC.

Annex 2-B

W-

11 CEBU MITSUMI INC.

Annex 2-B

W-

16 CEBU YMTECHNOLOGY, INC.

Annex 2-B

W-

20 CEBUYUSHIN INC.

Annex 2-B

W-

35 ENOMOTO PHILIPPINE MFG. INC

Annex 2-B

W-

39 FIRST SUMIDEN CIRCUITS, INC

Annex 2-B

W- 44

FUJITA PHILS. CONSTRUCTION &

Annex 2-B

W-

45 IBTDEN PHILIPPINES, INC.

Annex 2-B

W-

47 IBIDEN PHILIPPINES, INC.

Annex 2-B

W-

48 IBIDEN PHILIPPINES, INC.

Annex 2-B

W-

48 IBIDEN PHILIPPINES, INC.

Annex 2-B

W-

52 KAJIMA PHILIPPINES INC.

Annex 2-B

W-

57 LAGUNA DAI-ICHI, INC.

Annex 2-B

W-

67 NANOX PHILIPPINES, INC.

Annex 2-B

W-

71 NEC TOKIN ELECTRONICS (PHILS) INC. 21 79,000.00 I ,580.00 2,419,266.00 48,385.32 14,492,136.50 289,842.73 13,475,636.50 269,512.73 14,849,446.50 296,988.93 3,054,240.00 61,084.80 520,000.00 10,400.00 561 ,000.00 11 ,220.00 I, 140,000.00 22,800.00 I ,069, 100.00 21,382.00 26,000.00 520.00 23,000.00 460.00 20,000.00 400.00 1,507,708.44 30,154.16 11 ,485,329.51 229,706.59 115,000.00 2,300.00 276,785.00 5,535.70 98,400.00 I ,968.00 275,000.00 5,500.00 I ,444,076.00 28,881.52 8,683,811 .00 173,676.22 5,128,357.00 102,567.14 12,330,965.00 246,6 19.30 4,363,697.00 87,273.94 16,964.50 339.29 5,089,285.71 101 ,785.71 327,857.14 6,557.14 250,000.00 5,000.00 I ,663,200.00 33,264.00 6,491 ,000.00 129,820.00 195,000.00 3,900.00 114,100.00 2,282.00 124,600.00 2,492.00 1,261 ,500.00 25,230.00 1,298,300.00 25,966.00 120,200.00 2,404.00 76,100.00 1,522.00 59,300.00 1,186.00 485,800.00 9,716.00 3,910,000.00 78,200.00 489,2 10.00 9,784.20 I ,026,500.00 2 1,430.00 45,000.00 900.00 263,500.00 5,270.00 9,270,000.00 185,400.00 1,495,000.00 29,900.00 I 14,000.00 2,280.00 I ,724,830.00 34,496.60

Annex 2-8

W-

72 NEC TOKIN ELECTRONICS (PHILS) INC.

Annex 2-8

W-

84 PHILIPPINES EPSON OPTICAL, INC.

Annex 2-8

W-

92 SANNO PHILIPPINES MFTG. CORP.

Annex 2-8

W-

94 SANYO CAPACITOR (PHILS.) CORP.

Annex 2-8

W-

94 SANYO CAPACITOR (PHILS.) CORP.

Annex 2-8

W-

95 SANYO CAPACITOR (PHILS.) CORP.

Annex 2-8

W-

102 SHIMIZU PHIL. CONTRACTORS INC.

Annex 2-8

W-

102 SHIMIZU PHIL. CONTRACTORS INC.

Annex 2-8

W-

103 SHIMIZU PHIL. CONTRACTORS INC.

Annex 2-8

W-

103 SHIMIZU PHIL. CONTRACTORS rNC.

Annex 2-8

W-

134 TSUNEISHI HEAVY fNDUSTRIES (CEBU), INC.

Annex 2-8

W-

195 TOKYO STEEL PHILS. CORP.

Annex 2-C

W- 140

CORREA ZENITAKA, rNC.

Annex 2-C

W-141

CORREA ZEN IT AKA, rNC.

Annex 2-C

W- 142

CORREA ZENITAKA, INC.

Annex 2-C

W- 143

CORREA ZENITAKA, rNC.

Annex 2-C

W-145

CORREA ZEN IT AKA, rNC.

Annex 2-C

W- 146

CORREA ZENIT AKA, INC.

Annex 2-C

W- 148

CORREA ZEN IT AKA, INC.

Annex 2-C

W-149

CORREA ZENIT AKA, rNC.

Annex 2-C

W- 152

CORREA ZEN IT AKA, rNC.

Annex 2-C

W- 153

CORREA ZEN IT AKA, INC.

Annex 2-C

W- 155

HALSANGZ PLATrNG CE8U CORP

Annex 2-C

W- 156

HALSANGZ PLATrNG CE8U CORP

Annex 2-C

W- 157

rNT'L WIRrNG SYSTEMS (PHILS.) CORP.

Annex 2-C

W- 163

JAPANESE ASSOCIATION MANILA INC.

Annex 2-C

W- 165

JAE PHILIPPrNES, INC.

Annex 2-C

W- 167

KOHZAN CA VITE, INC.

Annex 2-C

W- 168

KOHZAN CA VITE, INC.

Annex 2-C

W-169

MACTAN PARTS TECHNOLOGY, rNC.

Annex 2-C

W- 170

MACTAN PARTS TECHNOLOGY, rNC.

Annex 2-C

W-171

MARUWA ELECTRONICS (PHILS.), rNC.

Annex 2-C

W- 175

MITSUMI PHILIPPINES, rNC.

Annex 2-C

W-176

MITSUMI PHILIPPrNES, INC.

Annex 2-C

W-177

MITSUMI PHILIPPrNES, rNC.

Annex 2-C

W-184

RIOFIL CORPORATION

Annex 2-C

W- 185

RJOFIL CORPORATION

Annex 2-C

W- 186

TAKA SAGO PHILS. INC.

Annex 2-C

W- 187

T AKASAGO PHILS. rNC.

Annex 2-C

W- 188

T AKASAGO PHILS. rNC.

Annex 2-C

W-189

T AKASAGO PHILS. rNC.

Annex 2-D

W- 136

CORREA ZENIT AKA, INC.

Annex 2-D

W- 137

CORREA ZENIT AKA, rNC.

Annex 2-D

W- 139

CORREA ZEN IT AKA, rNC.

Annex 2-D

W- !59 rNT'L WlRJNG SYSTEMS (PH ILS.) CORP.

Annex 2-D

W- 166

KOHZAN CA VITE, INC.

Annex 2-E

W- 193

TAISEI PHILIPPINE CONSTRUCTION, INC.

Annex 2-E

W- 193

TAISEI PHILIPPINE CONSTRUCTION, INC. 22 377,450.00 7,549.00 1,720,000.00 34,400.00 211,000.00 4,220.00 30,000.00 600.00 I ,700,000.00 34,000.00 500,000.00 10,000.00 I ,300,000.00 26,000.00 35,7 14.29 357.14 69,357.17 1,387.14 6,301.76 126.04 2,370,000.00 47,400.00 158,000.00 3,160.00 27,000.00 540.00 105,000.00 2,100.00 50,000.00 1,000.00 7,000.00 140.00 100,000.00 2,000.00 140,000.00 2,800.00 50,000.00 1,000.00 20,000.00 400.00 70,000.00 1,400.00 I ,025,000.00 20,500.00 726,800.00 14,536.00 63,200.00 1,264.00 2,292,000.00 45,840.00 252,000.00 5,040.00 I ,300,000.00 26,000.00 95,600.00 1,9 12.00 12,600.00 252.00 63,000.00 1,260.00 174,350.00 3,487.00 29,000.00 580.00 804,999.61 16,099.99 343,000.00 6,860.00 720,000.00 14,400.00 578,571.51 II ,571.43 64,285.50 1,285.71 169,300.00 3,386.00 64,400.00 I ,288.00 14,000.00 280.00 38, I 00.00 762.00 256,821.43 5,136.43 45,000.00 900.00 700,000.00 14,000.00 955,000.00 19,100.00 209,000.00 4,180.00 9,053,571.50 181,071.43 24,227,678.50 484,553.57

Per Exh "AAA"

attached as

Annex 1-A

W-99

SANYO SEMICON DUCTOR MFTG PHILS CORP

TOTAL

23 1,387,000.00 p 243,995,418.10 p On the other hand, the CWT ofP13,992,315.80, the related income of which amounts to P685,597,137.67, shall be disallowed since the schedules provided by the ICPA 41 show some discrepancies between the total income per schedule and per certificates. Petitioner should have presented a schedule or any other document reconciling said discrepancies.

Furthermore, there were income payments allegedly traced by the ICPA to the general ledger; however, upon a careful examination of the ledger shows that said income payments cannot be found in the general ledger. In sum, petitioner has complied with the third requisite, but only in the amount of P4,880,451.20. The Court will now proceed to determine whether the said CWT of P4,880,451.20 remains unutilized and may be the proper subject of a claim for refund or issuance of a TCC, pursuant to Section 76 of the NIRC of 1997, as amended.

A careful perusal of the 2007 ITR reveals that the prior year's excess tax credit of Pl7,854,763.00 represents the prior year's excess 41 Annex 2, Exh ibit "T" and Annex I, Exhibit "AAA". 27,740.00 4,880,451.20

24 credits reflected in the 2005 ITR amounting to P21,385,658.00 and the creditable withholding taxes of P9,114,374.00 for the same year 2005 against which the income taxes due for the years 2005 and 2006 were applied, as illustrated below: Prior Year's excess Credits as reflected in 2005 ITR42 Add: CWT for the year 200543

Total

Less: Taxes Due

For Year 2005

For Year 2006

p 1,461 ,367.0644 11,183,902.0045 Prior Year's excess Credits as reflected in 2007 ITR p 21,385,658.00 9,114,374.00 p 30,500,032.00 12,645,269.06 p 17,854,763.00 Petitioner, likewise, utilized its prior year's excess tax credit to pay its income tax liability for taxable year 2007 in the amount of P6,654,50 1.³ 5. However, petitioner must still prove the existence of its prior year's excess credits from which the tax due for year 2007 may be offset or credited.

In support thereof, petitioner presented various CWT certificates, but only for the year 2005. Out of the reported 2005 CWT of P9,114,374.00, petitioner was able to substantiate only the amount of P6,662,857.36.

46 However, the same is not sufficient to cover the tax liabilities for the years 2005 and 2006 in the aggregate amount of

25 P12,645,269.06. Thus, there were no more prior year's excess tax credits against which the tax liability ofP6,654,501.35 for the year 2007 may be offset or credited.

In effect, the tax due for the year 2007 shall be deducted from its claim. Therefore, considering that petitioner's substantiated claim of P⁴,880,451.20 is likewise not sufficient to cover its 2007 income tax due ofP6,654,501.35; petitioner's present claim must, therefore, be denied.

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

OLGA PALANCA-ENRIQUEZ

Associate Justice

~~~ AMELIA R. COTANGCO-MANALASTAS

Associate Justice

ATTESTATION

26 I attest that the conclusions in the above Dec is· on were reached in consultation before the case was assigned to the wri r of the opinion of the Court's Division.

Ass ciate Justice Chairpers n, Third Division

CERTIFICATION

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. L<--.~ ERNESTO D. ACOSTA

Presiding Justice