Ayala Corporation vs. Commissioner of Internal Revenue

DECISION

CASTANEDA, JR., J.:

This case involves a Petition for Review filed by Ayala Corporation (petitioner) to seek the issuance of tax credit certificate (TCC) in the amount of P102,210,569.00, allegedly representing petitioner's excess or unutilized creditable withholding tax (CWT) for calendar years 2008 and 2009.

Petitioner Ayala Corporation is a domestic corporation duly organized and existing under Philippine laws, with principal place of business at 33rd Floor, Tower One Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City.

It is registered with the Bureau of Internal Revenue (BIR) as a large taxpayer with Tax Identification Number (TIN) 000-153-610-000.

As a large taxpayer, petitioner is required to file its Quarterly and Annual Income Tax Returns through the Electronic Filing and Payment System (EFPS). 1J-

Respondent is the duly appointed Commissioner of the Bureau of Internal Revenue, vested with authority to carry out all the functions, duties and responsibilities of said office, including, inter alia, the power to decide, approve, and grant refunds or tax credits of overpaid or erroneously paid or collected internal revenue taxes. She holds office at the BIR National Office Building, Diliman, Quezon City.

On April 15, 2009, petitioner filed its Annual Income Tax Return (ITR) for calendar year (CY) 2008 through the EFPS, declaring a total overpayment of P92,002,780.22, computed as follows: 2

Taxable Income

(f§>1,481,007 f 742.00)

Tax Rate

35%

Income Tax

-

MCIT

f§>8 908 985.78

Aggregate Income Tax Due

8 908 985.78

Less: Tax Credits/Payments

Prior Year's Credits

f§> 56,622 901.00 cwr 1st to 3rd Quarters 21,728 394.00 cwr 4th Quarter 22,560 471.00

Total

f§>100,911 766.00 100 911 766.00

Total Overpayment

(f§>92 002,780.22) On the same date, petitioner manually filed its Annual ITR for CY 2008 with the BIR Large Taxpayer Service reporting the same amounts.

Petitioner filed its Annual ITR for CY 2009 through the EFPS on April 13, 2010 and manually filed with the BIR Large Taxpayer Service on April 15, 2010, showing a tax overpayment of P94,329,072.30, detailed as follows: 3

Taxable Income

(f§>1175 136,741.00)

Tax Rate

30%

Income Tax

-

MCIT

f§>11,306,546. 70

Aggregate Income Tax Due

11,306 546.70

Less: Tax Credits/Payments

Prior Year's Credits

f§> 47,713 915.00 cwr 1st to 3rd Quarters 27,753 060.00 cwr 4th Quarter 30,168 644.00

Total

f§>105,635 619.00 105,635,619.00

CfA CASE NO. 8262

I Total Overpayment

(P94,329,072.30) I On February 8, 2011, petitioner filed with the BIR Large Taxpayer Division its administrative claim for issuance of TCC pertaining to its alleged unutilized cwr for calendar years 2008 and 2009 amounting to P102,210,569.00.4 In order to stop the running of the two-year prescriptive period and to preserve its judicial remedy, petitioner filed the instant Petition for Review with this Court on April 7, 2011. In her Answer5 filed on June 7, 2011, respondent interposed the following Special and Affirmative Defenses: "9. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau of Internal Revenue.

10. Petitioner miserably failed to show that the amount One hundred Two Million Two Hundred Ten

Thousand

and

Five

Hundred

Sixty

Nine

Pesos

(Php102,210,569.00) for calendar years 2008-2009, being claimed by petitioner pertains to excess or unutilized creditable withholding tax (Cwr.

11. Petitioner is not entitled to a refund because it failed to comply with the requisites for refund of cwr under Section 204 and 229 of the National Internal Revenue Code (NIRC) of 1997.

Section 229 (Recovery of Tax Erroneously or

Illegally Collected) of the NIRC states that: '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 collected, until a claim for refund or credit has been 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 event that may arise after payment: Providect however, That the Commissioner may, even without a written claim therefore, 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.'

Section 204 {Authority of the Commissioner to

Compromise/ Abate and Refund or Credit Taxes) likewise provides the following:

'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 filed in writing with the Commissioner a claim for credit or refund within two (2) years after 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.

XXX

XXX

XXX

12. There are three conditions for the grant of a claim for refund of creditable withholding tax: 1.) the~ claim is filed with the CIR within the two-year period from the date of payment of the tax; 2.) it is shown in the return of the recipient that the income payment received was declared as part of the gross income; 3.) the fact of withholding is established by a copy of statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld therefrom. (BANCO FILIPINO vs. CA, CTA and CIR, G.R. No. 155682, March 27, 2007.)

13. Petitioner stated in its petition before this Honorable Court that the subject of its claim for issuance of Tax Credit Certificate are alleged unutilized CWT of

Forty Four Million Two Hundred Eighty Eight Thousand

Eight Hundred Sixty Five Pesos (Php44,288,865.00) for the first, second, third and fourth quarters of 2008 and unutilized CWT in the amount of Fifty Seven Million Nine

Hundred Twenty One Thousand Seven Hundred Four

Pesos (Php57,921,704.00) for 2009. Corollary thereto, it filed its administrative claim for refund with respondent on February 08, 2011 covering the CY 2008 and 2009, in an aggregate amount of One hundred Two Million Two

Hundred Ten Thousand and Five Hundred Sixty Nine

Pesos (Php102,210,569.00) while the Judicial claim was filed on April 6, 2011.

14. Petitioner must show that it has fully complied with the requisites to sustain a claim for refund or tax credit of unutilized creditable tax credits as ruled by the Honorable Supreme Court in F. JACINTO GROUP, INC. VS. CIR (CTA CASE NO. 4971, APRIL 5, 1995) AND CITIBANK N.A. VS. COURT OF APPEALS, ET AL. (345 PHIL. 695. 1997) These requisites are as follows: a). That the claim for refund was filed within the two-year period;

b). 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~ erA CASE NO. 8262 c). That the income upon which the taxes were withheld in the return of the recipient.

15. Petitioner must prove that it has complied with the provisions of Section 229, in relation to Section 204, of the National Internal Revenue Code (NIRC) of 1997, as amended.

16. Section 2.58.3 (B) of Revenue Regulation provides that 'claims for refund or tax credit shall be given due course upon showing that income payment has been declared as part of gross income and the fact of withholding is established'.

17. Moreover, 'claims for refund or tax credit,' to say the least, 'are strictly construed against the claimant for the same partake the nature of exemption from taxation' (COMMISSIONER OF INTERNAL REVENUE VS. LEDESMA, 31 SCRA 95) and as such, they are looked upon with disfavor' (WESTERN MINOLCO CORP.

vs.

COMMISSIONER

OF

INTERNAL

REVENUE, 124 SCRA 121).

18. The taxpayer bears the burden of proof to establish not only that a refund is justified under the law but also that the amount that should be refunded is correct.

(CIR

vs.

ASIAN

TRANSMISSION

CORPORATION, G.R. No. 179617, January 19, 2011)

19. In an action for refund/tax credit, the onus probandi is on the taxpayer to establish its right to refund/tax credit, and failure to sustain the burden is fatal to its claim for refund/tax credit {ASIAN PETROLEUM CO. VS. LLANES, 49 PHIL. 466 cited in COLLECTOR OF INTERNAL REVENUE VS. MANILA JOCKEY CLUB, INC., 98 PHIL. 670). ~

20. Claims for refund are construct stictissimi juris against the claimant for the same partake the nature of exemption from taxation (COMMISSIONER OF INTERNAL REVENUE vs. LEDESMA, 31 SCRA 95) and as such, they are looked upon with disfavor (WESTERN MINOLCO COPR. vs. COMMISSIONER OF INTERNAL REVENUE, 124 SCRA 121)." During trial, petitioner presented and formally offered its testimonial and documentary evidence. On the other hand, respondent, through counsel, manifested that she will no longer present evidence and that she will be submitting the case for decision.

The parties' counsels were given thirty (30) days within which to file their respective Memorandum.6 On July 31, 2013, the case was submitted for decision after respondent filed her Memorandum on July 15, 2013 and petitioner filed its Memorandum on July 29, 2013.7 The following are the issues8 submitted by the parties for this Court's resolution:

"¹. Whether or not Petitioner's claim for issuance of TCC in the total amount of P102,210,569.00 is duly substantiated by sufficient evidence showing that these excess or unutilized CWTs were generated in CYs 2008 and 2009?

2. Whether or not Petitioner's claim for issuance of TCC was filed within the two-year prescriptive period?

3. Whether or not Petitioner's claim for issuance of TCC in the total amount of P102,210,569.00 was carried over to CY 2010?

4. Whether or not Petitioner is entitled to the issuance of TCC in the total amount of P102,210,569.00 Jk-

pertaining to its excess or unutilized CWTs for CYs 2008 and 2009?"

The enumerated issues can be summarized as follows: "Whether or not petitioner is entitled to the issuance of tax credit certificate in the amount of P102,210,569.00, representing its purported excess and unutilized creditable withholding tax for calendar years 2008 and 2009."

In claiming unutilized creditable withholding taxes, Section 76 of the NIRC of 1997, as amended, provides specific requirements before a refund/tax credit certificate may be issued, to wit: "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." fk- CfA CASE NO. 8262 Based on the afore-quoted provision, a corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes paid in a given taxable year has two options: (1) to carry over the excess credit; or (²) to apply for the issuance of a tax credit certificate or to claim a cash refund. If the option to carry over the excess credit is exercised, the same shall be irrevocable for that taxable period and no application for cash refund or issuance of tax credit certificate shall be allowed.9 The corporation must signify in its

Annual

Corporate

Adjustment Return (by marking the option box provided in the BIR Form) its intention, whether to request a refund or to claim an automatic tax credit for the succeeding taxable year. To ease the administration of tax collection, these remedies are in the alternative, and the choice of one precludes the other. 10 A perusal of petitioner's Annual ITRs for calendar years 200811 and 200912 shows that petitioner's Minimum Corporate Income Tax (MCIT) due in the respective amounts of P8,908,985.78 and P11,306,546.70 totaling P20,215,532.48 were offset against the reported prior year's (2007) excess credits of P56,622,901.00, leaving the balance of the prior year's (2007) excess credits of P36,407,368.3013 and creditable taxes withheld in 2008 and 2009 in the respective amounts of P44,288,865.00 and P57,921,704.00 or in the total amount of P102,210,569.00 unutilized as of December 31, 2009, as shown below:

CY 2008

CY 2009

(Exhibit "C'')

(Exhibit 'V'')

Sales/Revenues/Receipts/Fees

p 183 941 619.00 p 197 025,096.00

Less: Costs Sales/Services

161,684 707.00 161 340,370.00 Gross Income from Operation p 22,256,912.00 p 35,684,726.00

Add: Non-Operating & Taxable Other Income

423,192,377.00 529,642,609.00

Total Gross Income

p 445,449 289.00 p 565 327,335.00

Less: Deductions

1 926 457 031.00 1 740 464 076.00

Net Loss

P(1 481,007,742.00) P(1175 136 741.00)

CfA CASE NO. 8262

Prior Year's Excess Credits

Less: Minimum Corporate Income Tax (MCIT) Due

Balance of Prior Year's Excess Credits

Add: Creditable Taxes W/held Durinq The Year Creditable Taxes W/held for the First Three

Quarters

Creditable Taxes W/held for the Fourth

Quarter

Total

Total Excess Tax Credits as of December 31

p 56 622 901.00 p 47 713 915.00 8 908 985.78 11,306 546.70 p 47,713,915.22 p 36,407,368.30 p 21 728,394.00 p 27,753 060.00 22,560.471.00 30,168,644.00 p 44,288,865.00 p 57 921,704.00 p 92 002,780.22 p 94 329 072.30 Petitioner opted to be issued a tax credit certificate for its excess CWT for calendar years 2008 and 2009 by marking the box corresponding to the said choice in its Annual ITRs14 for the said years.

Since only the excess tax credits from taxable year 2007 were carried over by petitioner in its Quarterly Income Tax Returns15 and Annual Income Tax Returns16 for calendar years 2009 and 2010, the excess creditable withholding taxes for calendar years 2008 and 2009 in the respective amounts of P44,288,865.00 and P57,921,704.00 or in the sum of P102,210,569.00 may be a proper subject of a claim for issuance of tax credit certificate pursuant to Section 76 of the NIRC of 1997, as amended. In addition to the requisite provided under Section 76 of the NIRC of 1997, a taxpayer must satisfy the following requirements in order to be entitled to a refund or issuance of tax credit certificate for excess/unapplied CWT:

1. The claim for refund must be filed within the two-year prescriptive period as provided under Sections 204(C) and 229 of the NIRC of 1997, as amended;

2. The fact of withholding must be 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 r--

3. The income upon which the taxes were withheld must be included in the return of the recipient. 17 Anent the first requisite, the applicable provisions of the NIRC of 1997 are as follows:

"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 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, 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; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.r

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: Providett howeve~ That the Commissioner may, even without 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."

It is well-settled in our jurisprudence that the reckoning of the two-year prescriptive period for the filing of a claim for refund/tax credit of excess income tax paid/withheld, both in the administrative and judicial levels, commences from the date of filing of the Final Adjustment Return. 18 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. 19 The present claim covers calendar years 2008 and 2009 for which petitioner filed its Annual Income Tax Returns on April 15, 200920 and April 13, 201021, respectively. Counting two years from these dates, petitioner's administrative claim filed on February 8, 201122, and the subsequent appeal via Petition for Review filed before this Court on April 7, 2011 fell 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 Revenud-3 ruled that claims for refund involving 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: ('z

"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 furnish 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.:

Sec. 2.58. RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE. -

XXX

XXX

XXX

(B) Withholding tax statement for taxes withheld. - Every payor required to deduct and withhold taxes under these regulations shall furnish, in triplicate, each payee, whether 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 the taxable }-r--- quarter employed by the payee in filing his/its quarterly income tax return. The payor, nonetheless, should always retain a copy of duly issued BIR Form 2307. Failure to furnish the same shall be a ground for the 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 furnish 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

Court-commissioned

Independent

Certified

Public

Accountant (CPA) provided a summary of petitioner's claimed creditable withholding taxes for calendar years 2008 and 2009 in the respective amounts of P44,288,865.00 and P57,921,704.00, to wit: 24

Exhibit

Findings

CY 2008

CY 2009

Supported with original BIR Form No. 2307 in

"J"

Petitioner's name stamped "Received" by BIR's

Large Taxpayers Assistance Division

p 28 211 444.36 p 28 480,287.S8 Supported with original BIR Form No. 2307 in the

"K"

Petitioner's name stamped "Received" by BIR

ROO SO

16,147 763.46 -

Supported with BIR Form

No. 2307 in the

"L"

Petitioner's name and included in the alphalist stamped "Received" by BIR's Large Taxpayers

Assistance Division

- 28,968,469.61 Supported with original BIR Form No. 2307 not in

"M"

the Petitioner's name stamped "Received" by

BIR's Large Taxpayers Assistance Division

1S 000.00 40S 000.00 Supported with original BIR Form No. 2307 not in

"N"

the Petitioner's name stamped "Received" by

BIR's ROO SO

2SS 000.00 Supported with original BIR Form No. 2306 not in "0" the Petitioner's name stamped "Received" by

BIR's Large Taxpayers Assistance Division

33 000.00 62 2SO.OO

Supported with original SIR Form No. 2306 not in

"P"

the Petitioner's name stamped "Received" by SIR

RDO 50

"Q"

Supported with SIR Form No. 1606

"R"

Not supported with SIR Form No. 2307,2306 or 1606 Differences as explained in paragraph 5 above (not claimed in 2008 and mainly foreign exchange differentials in 2009)

TOTAL

22,500.00 902,944.08 153 788.67 966.35 (1 452,575.57) 4,730.46 P44,288,865.00 P57 ,921,704.00 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 of P101,807,965.01, broken down as follows:

Exhibit

Findings

CY 2008

CY 2009

Total

Supported with original SIR Form

"J"

No. 2307 in Petitioner's name stamped "Received" by SIR's Large

Taxpayers Assistance Division

p 28 211 444.36 p 28 480 287.58 p 56 691,731.94 Supported with original SIR Form

"K"

No. 2307 in the Petitioner's name stamped "Received" by SIR RDO so 16 147 763.46 16,147 763.46 Supported with SIR Form No.

2307 in the Petitioner's name and

"L"

included in the alphalist stamped

"Received" by SIR's Large

Taxpayers Assistance Division

28 968 469.61 28 968 469.61 Total CWT with valid SIR Forms No. 2307 p 44 359 207.82 p 57 448 757.19 p 101 807,965.01 Less: Discrepancy between the CWTs reflected per Schedule of Creditable Taxes Withheld vis-a-vis the CWTs shown per petitioner's

Annual Income Tax Return for

2008 Per Schedule (Exhibit''!")

P45,741,440.57

Per AITR (Exhibit "C')

44,288,865.00

Discrepancy

p

1452 575.57

(1 452 575.57) (1 452 575.57) Claimed CWT with valid BIR Form No. 2307 P42,906,632.25 PS7,448,757.19 P100,355,389.44 Notice that the amount of P1,452,575.57 was deducted from the CWT of P44,359,207.82 with valid BIR Form No. 2307 for CY Jz-

2008.

As found by the Independent CPA, the amount of P1,452,575.57 represents CWTs supported with BIR Form No. 2307 but were not claimed by petitioner. 25 Petitioner did not provide a detailed breakdown of the amount of P1,452,575.57; thus, it cannot be ascertained which portion thereof formed part of the CWT of P44,359,207.82.

Considering that petitioner cannot claim beyond what was declared in its Annual Income Tax Return and what was prayed for in the Petition for Review, the amount of P1,452,575.57 is a proper deduction from petitioner's claim for CY 2008. In order to comply with the third requisite of proving that the income upon which the subject taxes were withheld was included and reported in its Annual Income Tax Returns for calendar years 2008 and 2009, petitioner presented its General Ledger26, Schedules of Creditable Taxes Withheld on Sale of Services and Properties and Lease of Properties27, Summary of Rental Income28, Summary of Directors' Fees29, Summary of Other Income30, Summary of Proceeds from Sale of Land, Net of Cose1 I Summary of Proceeds from Sale - Other Assets, Net of Cost32,

Schedule of Comparison of Payor's

Name and Amount of Income Payment Between Schedule of Creditable Tax Withheld At Source and Summaries of Rental Income, Directors' Fees, Other Income, Proceeds from Sale - Land, and Proceeds from Sale - Other Assets33, Schedule of Comparison of Payors' Name and Amount of Income Payment Between Summaries of Rental Income, Directors' Fees, Other Income, Proceeds from Sale - Land and Proceeds from Sale - Other Asset, and Official Receipts, Credit Memo and Bank Statements34, Schedule of Computation of Taxable Income for CY 200835, and Schedule of Computation of Taxable Income for CY 200936.

A perusal of petitioner's Annual Income Tax Returns for calendar years 2008 and 2009 shows that petitioner reflected the following gross income: ~

CY 2008

CY 2009

Sales/Revenues/Receipts/Fees

Sale of Services

p 22 380,000.00 p 25 450 000.00

Lease of Properties

161,561,619.00 171 575 096.00

Total Sales/Revenues/Receipts/Fees

p 183 941 619.00 p 197 025 096.00

Non-Operating & Taxable Other Income

Interest Income

p 101 478,918.00 p 121 927 891.00

Gain on Sale of Assets

46 954,108.00 23 453 198.00

Other Income

274 759,351.00 384 261 520.00

Total Non-Operating & Taxable Other Income

423 192,377.00 529 642 609.00

TOTAL INCOME

P607 ,133,996.00 P726,667,705.00 Petitioner's reported gross income from sale of services, lease of properties and other income tallies with the total income reflected in the Summary of Rental Income37, Summary of Directors' Fees38, and Summary of Other Income39 for calendar years 2008 and 2009. However, there were income payments per Schedules of Creditable Taxes Withheld on Sale of Services and Properties and Lease of Properties40 that cannot be found or differ with the income amounts indicated in the Summary of Rental Income41, Summary of Directors' Fees42, and Summary of Other Income43 for calendar years 2008 and 2009.

Since petitioner failed to explain the discrepancies and this Court cannot ascertain whether the said income payments pertain to the same transactions, the related CWT in the amount of P35,384,746.22 shall be disallowed, detailed as follows:

Exhibit

Period Covered

CY 2008

J7

1st quarter

J14

1st quarter

J15

1st quarter

J16

1st quarter

J19

2nd quarter

J21

3rd quarter

J41

4thguarter

J48

4th quarter

J51

4th quarter 37 Exhibits "V" and "AA".

38 Exhibits "W" and "BB".

39 Exhibits "X" and "CC".

40 Exhibits "J", "K", and "L".

41 Exhibits "V" and "AA".

42 Exhibits "W" and "BB".

43 Exhibits "X" and "CC".

Payor

HR Mall Inc.

Isuzu Automotive Dealership, Inc. -

Isuzu Alabang

Isuzu Cebu Inc. - Isuzu Cebu

Manila Water Company

HR Mall Inc.

Honda Cars Alabang

Honda Cars Makati Incorporated

Isuzu Automotive Dealership, Inc. -

Isuzu Alabang

Isuzu Cebu Inc. - Isuzu Cebu

Income Payment

Income Tax

Withheld

p 33 819.84 p 676.40 1 281 032.59 64 051.63

1108 611.00

55 430.55 16,768 089.60 2 515 213.44 33 281.46 665.63 70 513.50 1 410.27 29,679 569.77 1 483 978.49 1 366 798.00 68 339.90 806 702.80 40 335.14

J55

4th quarter

K12

2nd quarter

K16

2nd quarter

K17

2nd quarter

K34

3rd quarter

K36

3rd quarter

K37

3rd quarter

K38

3rd quarter

K39

3rd quarter

K40

3rd quarter

TOTAL - CY 2008

CY 2009

J75

1st quarter

J89

2nd quarter

J94

2nd quarter

J95

2nd quarter

J124

3rd quarter

L5

4th quarter

L19

4th quarter

L26

4th quarter

L30

4th quarter

L36

4th quarter

TOTAL- CY 2009

Manila Water Company

Honda Makati

Isuzu Automotive Dealership, Inc. -

Isuzu Alabang

Isuzu Cebu Inc. - Isuzu Cebu

Honda Cars

Isuzu Automotive Dealership, Inc. -

Isuzu Alabang

Isuzu Automotive Dealership, Inc. -

Isuzu Alabanq

Isuzu Automotive Dealership, Inc. -

Isuzu Alabang

Isuzu Cebu Inc. - Isuzu Cebu

Manila Water Company

Honda Cars Makati Inc.

Honda Cars Makati Inc.

Isuzu Cebu Inc. - Isuzu Cebu

Manila Water Company

Manila Water Company

Asiacom Philippines Inc.

Bank of the Philippine Islands

Honda Cars Makati Inc.

Isuzu Automotive Dealership, Inc. -

Isuzu Alabang

John Clements Consultants Inc.

Grand Total - CYs 2008 and 2009

29 270 631.32 4 390 594.70 10 019 276.20 500 963.81 1 276 605.49 63 830.27 891 622.20 44 581.11 31 925 545.20 1 596 277.26 1 338 945.20 66 947.26 1 160 176.80 58 008.84 1 390 825.40 69 541.27 931 895.40 46 594.77 52 022 765.72 7 803 404.86 P181 376 707.49 P18,870 845.60 p 36 023 978.28 p 1 801198.91 33 462 593.04

1672 272.13

776 869.20 38 843.66 41 805 416.66 6 270 812.50 29 945 007.45 4 491 751.02 107 249.28 9 547.46 200 000.00 4 000.00 38 770 738.40 2 168 097.81

1135 542.60

56 777.13 30 000.00 600.00 P182 257 394.91 P16,513 900.62 P363,634,102.40 P35,384,746.22 In sum, out of the amount of P100,355,389.44, which was properly supported with BIR Form No. 2307, only the amount of P64,970,643.22 CWT shall be granted inasmuch as this is the amount that corresponds to the income payments which were verified to have been included in petitioner's taxable gross income per its Annual Income Tax Returns for calendar years 2008 and 2009, in compliance with the third requisite.

The refundable excess CWT in the amount of P64,970,643.22 is computed as follows:

CY 2008

CY 2009

Total

Claimed CWT with valid BIR Forms No. 2307 p 42 906 632.25 p 57 448 757.19 p 100 355 389.44 Less: CWT, the related income payments of which

per Schedules of Creditable Taxes Withheld on Sale of Services and Properties and Lease of Properties

18,870,845.60 16,513,900.62 35,384,746.22 differ with the income payments reflected in the Summary of Rental Income, Summary of Directors'

Fees and Summary of Other Income

Refundable Excess CWT

P24,035,786.65 P40,934,856.57 P64,970,643.22

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of P64,970,643.22, representing petitioner's unutilized and excess creditable withholding taxes for calendar years 2008 and 2009.

WE CONCUR:

CAESAR A. CASANOVA

Associate Justice

~~c, M~~'~ LJUANITO C. CASTANEDA, J·R.

Associate Justice

c:44-~~#- AMELIA R. COTANGCO-MANALASTAS

Associate Justice

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. ~~;;, c . ~~ 2 - l"UANITO c. CASTANEDA, JR.

Associate Justice

Chairperson

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.

Presiding Justice