RENOIR IMPLEMENTATION SERVICES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS Quezon City

Special Second Division

RENOIR IMPLEMENTATION SERVICES, INC.. Petitioner, Members: CTA CASE NO.11130

versus - MODESTO-SAN PEDRO,and RINGPIS-LIBAN, P.J., Chairperson,

FERRER-FLORES, J

REVENUE, COMMISSIONER OF INTERNAL Respondent. Promulgated: OCT 0 2 2026 4!a4

DECISION

RINGPIS-LIBAN, J.:

The Case

The Petition for Review filed on April 17, 2023, prays for the refund in the amount of Php23,749,510.31, allegedly representing petitioner's accumulated excess creditable withholding taxes (CWTs) for calendar year (CY) 2020.1

The Facts

Petitioner Renoir Implementation Services, Inc. is a corporation organized and existing under the laws of the Philippines, registered with the Securities and Exchange Commission.2 It is also registered with the Bureau of Internal Revenue (BIR) under Taxpayer Identification No. 212-335-168-00000, with principal place of business at 28/F, Tower II, The Enterprise Center, 6766 Ayala

Summary of the Case, Pre-Trial Order dated May 22, 2024, Docket -- Vol. II, p. 605. Exhibit "P-2", Docket -- Vol. II, pp. 704 to 715.

CTA CASE NO. 11130 DECISION Page 2 of 21

District Philippines.3 Avenue corner Paseo de Roxas, San Lorenzo, 1223 City of Makati NCR, Fourth

Respondent is the head of the Bureau of Internal Revenue ("BIR") and is vested by law with the power to decide, approve, and grant claims for refund or Division of Revenue Region 8A-Makati City, located at the 36th Floor, Export City. tax credit of internal revenue taxes. Respondent is represented by the Legal Bank Plaza Building, Chino Roces Ave. corner Sen. Gil Puyat Avenue, Makati

and November 17, 2021, respectively. RT)(Annual ITR), and amended Annual ITR, for CY 2020 on April 15,2021, Petitioner filed its original Annual Income Tax Return (BIR Form No. 1702

Credits/Refunds (BIR Form No. 1914, and the letter dated March 8, 2023 Subsequently, on March 8,2023, petitioner filed its Application for Tax

requesting for the refund of its excess CWTs for CY 2020, in the amount of Php23,749,510.31.

On April 17, 2023, petitioner filed the present Petition for Review.

In the Resolution dated May 9, 2023,1 the Court required petitioner to submit within five (5) days from notice the authority of Atty. Joseph Shelner N.

filed its Submission and Compliance On May 25, 2023,11 attaching therewith the notarized Secretary's Certificate dated April 12, 2023,12 which states that based on Songco to sign the Verification and Certification of Non-Forum Shopping. Petitioner petitioner's Board Resolution No. 03-2023, its Board of Directors appointed Atty. Songco as its authorized signatory in connection with its application for a refund with this Court. In the Minute Resolution dated June 14, 2023,13 the Court noted petitioner's Submission and Compliance.

Exhibit "p-3", USB (submitted on October 8, 2024, not marked but offered as Exhibit "P-25- Summary of Admitted Facts, par. 2, Respondent's Pre-Trial Brief dated March 12, 2024, Docket Exhibit "p-6", USB (submitted on October 8, 2024, not marked but offered as Exhibit "P-25- Exhibit "P-6-1", USB (submitted on October 8, 2024, not marked but offered as Exhibit "P-25- 1 1 Vol.I,p.362

10 Exhibit "Pp-4", BIR Records, pp. 150 to 153. Docket - Vol. I, pp. 302 to 304 Exhibit "P-5, BIR Records, p. 147 Docket - Vol. I, pp. 1 to 20 1

11 12 Docket - Vol. I, pp. 309 to 310. Docket -- Vol. I, pp. 305 to 308.

13 Docket - Vol. I, p. 312.

CTA CASE NO.11130 Page 3 of 21 DECISION

interposing the following special and affirmative defenses, to wit: (1) this Court has no jurisdiction over the instant case; (2) Atty. Joseph Shelner N. Songco has pre-trial conference on March 21, 2024. no authority to sign the Verification and Certification of Non-Forum Shopping; (3) denied respondent's Motion to Dismiss for lack of merit; and (2) set the case for 2006; and (4) claim for refund is strictly construed against the taxpayer for the same partakes the nature of tax exemption. Petitioner filed its Comment on September 26, 2023.15 In the Resolution dated February 2, 2024,1 the Court: (1) petitioner failed to observe the mandates of Revenue Regulations (RR) No. 2- On August 17, 2023, respondent filed his Answer with Motion to Dismiss,14

Records of this case, consisting of one (1) folder with 166 pages.17 In the meantime, on August 17, 2023, respondent transmitted the BIR

Respondent's Motion for Temporary Withdrawal of BIR Records on January 29, 2024.19 In the Resolution dated April 17, 2024,20 the Court denied respondent's Motion on December 22, 2023.18 Petitioner submitted its Comment/Opposition to Respondent then posted his Motion for Temporary Withdrawal of BIR Records

for Temporary Withdrawal of BIR Records.

Respondent's Pre-Trial Brief was filed via accredited courier on March 13, 2024,22 while petitioner's Compliance (Re: Notice of Pre-Trial Conference dated 17 January 2024),23 with attached Pre-Trial Brief (of Renoir Implementation Services, Inc.),24 was submitted on March 18, 2024. The Pre-Trial Conference was held on March 21, 2024.21 Prior thereto,

2024,2 thereby deeming the termination of the Pre-Trial. The Pre-Trial Order dated May 22, 2024 was then issued.27 Issues25 which was admitted and approved in the Resolution dated May 14 On April 22, 2024, the parties submitted their Joint Stipulation of Facts and

14Docket -Vol. I, pp. 324 to 332. 15 16 Docket - Vol. I, pp. 334 to 343. Docket -Vol. I, pp. 354 to 361. 17 Respondent's Compliance dated August 17, 2023, Docket -- Vol. I, pp. 321 to 322 18 Docket -- Vol. I, pp. 344 to 346. 10 Docket -- Vol. I, pp. 350 to 352. 20 Docket -Vol. I, pp. 390 to 391. 21 Minutes of the meeting held on, and Order dated, March 21, 2024, Docket -- Vol. I, pp. 381 to

22 23 Docket -- Vol. I, pp. 369 to 370. Docket -Vol.I, pp.362 to 364. 382, and 384 to 386, respectively.

25 Docket -Vol. I, pp. 371 to 380. Docket -Vol.I,pp.568 to 573. 26 Docket Vol. II, p. 602 27 Docket Vol. II, pp. 605 to 609.

Page 4 of 21 DECISION CTA CASE NO. 11130

Absolor,29 Manager in Isla Lipana & Company handling the bookkeeping services of petitioner; and (3) Mr. Ephraim T. Tugano,30 the Court- Harold S. Ocampo,28 petitioner's Corporate Secretary; (2) Ms. Bernadette F. evidence. It offered the testimonies of the following individuals, namely: (1) Atty As trial ensued, petitioner presented its testimonial and documentary

commissioned Independent Certified Public Accountant (ICPA).31

Amended Report of the ICPA was submitted on October 8, 2024.33 The Report of the ICPA was submitted on July 1, 2024.32 Thereafter, the

Offer of Evidence with Manifestation) via accredited courier on March 17, 2025,35 (With Manifestation),34 to which respondent filed his Comment (on Petitioner's Formal wherein respondent manifested that he will no longer present any witness in the On March 6, 2025, petitioner filed its Formal Offer of Evidence Ad Cautelam

instant case

On April 15,2025,petitioner filed its Supplemental Formal Offer of Evidence3 while respondent failed to file his comment thereto.3

In the Resolution dated September 17, 2025,38 the Court admitted petitioner's offered exhibits, except Exhibits "P-23-18" and "P-23-18.c, for not being found in the records.

in all the pleadings he filed in relation to this case; while petitioner submitted its Submission of Memorandum),39 stating that he would be adopting all his arguments Memorandum on November 3, 2025.40 On October 22, 2025, respondent posted his Manifestation In Lieu o1

28Docket -- Vol. I, pp. 100 to 106; Minutes of the hearing held on, and Order dated, October 3, 19 Docket -- Vol. I, pp. 399 to 409; Minutes of the hearing held on, and Order dated, February 4, 2024,Docket -Vol.II,pp.664 to 666.

3 Docket -- Vol. II, pp. 619 to 636; Minutes of the hearing held on, and Order dated, October 3, 2025,Docket-Vol.II,pp.673 to 673-B

31 2024, Docket -- Vol. II, pp. 664 to 666. Oath of Commission dated May 30, 2024, Docket -- Vol. II, p. 611; Minutes of the hearing held

3 3 On a separate binder Exhibit "p-25" (not marked; on a separate binder). on, and Order dated, May 30, 2024, Docket -- Vol. II, pp. 610, and 612 to 613, respectively.

35 Docket -Vol.II, pp.767 to 773. Docket -- Vol. II, pp. 686 to 693.

Docket -Vol. II,pp.700 to 722. Docket -Vol.II,pp.790 to 793. Docket -Vol.II,Pp.795 to 796. Docket - Vol. II, pp. 782 to 784. Records Verification dated May 28, 2025 issued by the Judicial Records Division of this Court, Docket-Vol.II,p.788.

CTA CASE NO. 11130 DECISION Page 5 of 21

The case was considered submitted for decision on December 1, 2025.4

The Issue

As stipulated by the parties, the issue for this Court's resolution is as follows:

taxable year 2020 in the amount of Twenty Three Million Seven & 31/100 (P23,749,510.31).742 Hundred Forty Nine Thousand and Five Hundred Ten Pesos of its excess and unutilized creditable withholding taxes (CWTs) for "Whether or not Petitioner is entitled to its claim for refund

Petitioner's arguments:

CWTs should be granted as it complies with the following requisites: (a) its claim for refund was filed within the two (2)-year prescriptive period as required under Petitioner argues that its claim for refund or credit of its unutilized excess

Sections 204(C) and 229 of the Tax Code, as amended, (b) it established the fact of withholding the unutilized excess CWTs for CY 2020 which it seeks to refund and that the income payment has been declared as part of its gross income, and (c) it expressly manifested its intention to exercise the refund option in its Annual ITR under Section 76 of the Tax Code, as amended; and that the erroneously paid tax should be refunded to petitioner following the principle of solutio indebiti"

Respondent's counter-arguments:

over the instant case; that Atty. Joseph Shelner N. Songco has no authority to Respondent, in his Answer, contends that the Court has no jurisdiction

sign the Verification and Certification of Non-Forum Shopping; that petitioner failed to observe the mandates of RR No. 2-2006; and that claim for refund is strictly construed against the taxpayer for the same partakes the nature of tax exemption

Discussion/Ruling

The present Petition for Review is meritorious.

41 Minute Resolution dated December 1, 2025. Docket -- Vol. I, Stipulation of Issue, JSFI, p. 568.

CTA CASE NO. 11130 Page 6 of 21 DECISION

Resolution dated February 2, 2024 Respondent's arguments that were already resolved in the Court's

jurisdiction over the instant case; (2) Atty. Joseph Shelner N. Songco lacked for refund are construed strictissimi juris against the taxpayer as they partake of the nature of a tax exemption, the Court notes that these issues have already been authority to sign the Verification and Certification against Non-Forum Shopping; (3) petitioner failed to observe the requirements of RR No. 2-2006; and (4) claims With respect to respondent's contentions that: (1) this Court has no

extensively addressed and resolved in its Resolution dated February 2, 2024.43 Hence, a re-discussion thereof would be unnecessary.

over the excess CWTs being Petitioner complied with Section 76 of the National Internal Revenue Code of 1997, and has not carried claimed for refund

Pertinent to the resolution of the present case is Section 76 of the National Internal Revenue Code (NIRC) of 1997, which is quoted hereunder for ready reference:

"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

taxable income of that year, the corporation shall either: 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

(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

and credited against the estimated quarterly income tax liabilities of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over

43 Docket -Vol. I, pp. 354 to 361.

CTA CASE NO. 11130 Page 7 of 21 DECISION

for the taxable quarters of the succeeding taxable years. Once the

against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered option to carry-over and apply the excess quarterly income tax

irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor."

whose total quarterly income tax payments in a given taxable year exceed its total income tax due. The taxpayer may either: (1) carry-over the excess amount to the succeeding taxable quarters/years until it is fully utilized, or (2) file a claim for refund in the form of cash or tax credit certificate. However, once the carry-over The above provision discusses the two (2) options of a taxable corporation

option is taken actually or constructively, it becomes irrevocable for that taxable

excess income tax, subject of the option, was acquired by the taxpayer.4s period.44 The phrase "for that taxable period" refers to the taxable year when the

intention, either to carry over the excess credit or to claim a refund. To facilitate corporate adjustment return (by marking the option box provided in the BIR form) its tax collection, these remedies are in the alternative and the choice of one In exercising its option, the corporation must signify in its annual

precludes the other.46

Petitioner's amended Annual ITR for taxable year 2020 shows the following:4

Sales/Revenues/Receipts/Fees Php 100,509,725.00 Less: Sales Returns, Allowances and Discounts Net Sales/Revenues/Receipts/Fees Less: Cost of Sales/Services Gross Income from Operation Add: Other Taxable Income not subjected to Php Php 100,509,725.00 61,345,466.00 39,164,259.00

Final Tax 13,795,340.00

45 A Rhombus Energy, Inc. vs. Commissioner of Internal Revenue, G.R. No. 206362, August 1, Republic of the Philippines, represented by the Commissioner of Internal Revenue vs. Team Corporation), G.R. No. 188016, January 14, 2015; Philam Asset Management, Inc. vs. 2018, citing the case of Republic of the Philippines, represented by the Commissioner of Internal Revenue vs. Team (Phils.) Eneray Corporation (formerly Mirant (Phils.) Energy Commissioner of Internal Revenue, G.R. Nos. 156637 & 162004, December 14, 2005; Systra Philippines,Inc.vs.Commissioner of Internal Revenue,G.R.No.176290,September 21,2007.

46 Refer to Philippine Bank of Communications vs. Commissioner of Internal Revenue, et al., G.R. 4 No. 112024, January 28, 1999. Part IV -- Computation of Tax, Exhibit "P-6-1", USB (submitted on October 8, 2024, not marked of Internal Revenue vs. Bank of the Philippine Islands, G.R. No. 178490, July 7, 2009. (Phils.)Energy Corporation(formerly Mirant (Phils.) Energy Corporation), supra;Commissioner

but offered as Exhibit "P-25-1".

Page 8 of 21 DECISION CTA CASE NO. 11130

Total Taxable Income Less: Deductions Allowable under Existing Law Ordinary Allowable Itemized Deductions Special Allowable Itemized Deductions Php Php 75,140,806.00 46,789,846.00

Total Itemized Deductions OR NOLCO Php 46,789,846.00

Income Tax Due other than MCIT Net Taxable Income/(Loss) Optional Standard Deduction (OSD) MCIT Due Applicable Income Tax Rate Php Php Php 28,350,960.00 7,796,514.00 1,502,816.00 27.50%

Total Income Tax Due/(Overpayment) Php 7,796,514.00

Prior Year's Excess Credits Other than MCIT Less: Tax Credits/Payments Php 20,532,405.00 Income Tax payments under MCIT from Previous Quarter/s Income Tax payments under Regular Rate from Previous Quarter/s

Creditable Tax Withheld from Previous Foreign Tax Credits, if applicable Excess MCIT Applied this Current Taxable Year for the 4th Quarter Tax Paid in Return Previously Filed, if this is an Creditable Tax Withheld per BIR Form No. 2307 Quarter/s per BIR Form No. 2307 23,749,510.00

Amended Return

Total Tax Credits/Payments Special Tax Credits Net Tax Payable/(Overpayment) Php44,281,915.00 Php (36,485,401.00)

the option "To be refunded"for its overpayment.48 On the same return and in the originally filed return, petitioner marked

from the CWTs for the taxable year 2020 only, to wit:49 The present claim for refund in the amount of Php23,749,510.31 comes

Exhibit No.50 Quarter Amount

"P-12 "P-13 "P-14" Second Third First Php 16,980,192.28 6,012,062.37 757,255.65

48Line 21, Part II - Total Tax Payable, Exhibits "P-6" and "P-6-1", USB (submitted on October 8, 49 Par. 7, petitioner's Memorandum, Docket -- Vol. II, p. 702. 2024, not marked but offered as Exhibit "P-25-1".

50 USB (submitted on October 8, 2024, not marked but offered as Exhibit "P-25-1").

CTA CASE NO. 11130 Page 9 of 21 DECISION

"P-6-1 Fourth 0.00

Total Php23,749,510.3151

On the other hand, the income tax due for the taxable year 2020 of Php7,796,514.00 is offset against petitioner's prior year's excess credits as reported by the ICPA,52 viz:

"The Petitioner's prior years excess credits of Php20,532,405 as reported in the Income Tax Return as of Calendar Year Ended December 31, 2019 (Exhibit P-10-1 after deducting therefrom

below: the income tax due for the Calendar year 2019 is summarized

Table 8:

Taxable Year 2018 2019 2020 Number Exhibit P-10-1 P-9-1 P-6-1 Income Tax Php6,839,837|Php54,930,108|Php8,250,884 35,808,750 7,796,514 Due (A Prior Year's Excess Credits 20,532,405] 56,341,155 B CWT for the 23,749,510|23,749,510* 33,047,404|33,047,404* Year (C) for Refund Claimed Php |Php56,341,155 E=B+C-A-D) Excess CWT End of Year 20,532,405 12,735,891

petition for review amounted to Php33,047,404 and Php23,749,510, respectively *Claimed for refund under CTA Case No. 10840 and 11130 (actual amount claimed per

Based on Table 8, the excess CWT carried forward from prior years (2018 and 2019) in net amount of Php20,532,405 is sufficient to cover the income tax due for the Calendar Year Ended December 31, 2020.

2. In the Petitioner's amended annual income tax return for the

carried over to the succeeding periods as presented in line 31A under Line 21, it elected to refund the overpayment and marked the box "To be refunded." We also noted that the CWT being Calendar Year 2020 amounting to Php23,749,510 was not prior year's excess credits -- taxes withheld in the quarterly and amended annual income tax returns for the Calendar Year Calendar Year Ended December 31, 2020 (Exhibit P-6- claimed by the Petitioner for the 1st, 2nd, 3rd, and 4th quarters of

Ended December 31, 2021 (Exhibits P-24-1, P-24-2, P-24-3 and P-11-. Thus, no amount of CWT was utilized or applied

52 1 Actual total is Php23,749,510.30. Par. 37, petitioner's Memorandum, Docket -Vol. II, pp.715 to 717, and Amended Report of

the ICPA (not marked but offered as Exhibit "P-25"), pp. 10 to 12.

Page 10 of 21 CTA CASE NO. 11130 DECISION

against income tax liabilities on the succeeding periods. Details are presented in Table 9.

a Net Tax Overpayment of Php36,485,401.00.53 Petitioner reported, as Prior and amended Annual ITR for CY 2021, respectively,54 which excludes petitioner's claim of excess CWTs. Year's Excess Credits Other Than MCIT the amounts of Php12,735,891.00 (Php36,485,401.00 less Php23,749,510.00) and Php12,735,893.00 in its original Verification by the Court reveals that petitioner's 2020 Annual ITR shows

Thus, petitioner has complied with Section 76 of the NIRC of 1997, and has not carried over the excess CWTs being claimed for refund.

refund of excess and unutilized Requisites to claim a tax credit or

CWTs

In addition to the requisites provided under Section 76 of the NIRC of 1997, jurisprudence and pertinent provisions of RR No. 2-98 provide that in order for a taxpayer to be entitled to a refund or an issuance of tax credit certificate for unutilized and excess CWTs, the following three (3) requisites must be further complied with:

1. The claim for refund must be filed within the two (2)-year

prescriptive period as provided under Sections 204(C) and 229 of the NIRC of 1997;

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

3. The income upon which the taxes were withheld must be included in the return of the recipient.55

53 Line 56, Part IV -- Computation of Tax, Exhibit "P-6-1", USB (submitted on October 8, 2024, 55 Line 44, Part IV - Computation of Tax, Exhibits "p-11" and "p-11-1", USB (submitted on Republic of the Philippines, represented by the Commissioner of Internal Revenue vs. Team International Pictures AB vs. Commissioner of Internal Revenue, G.R. No. 168331, October 11 2012; Citibank N.A. vs. Court of Appeals, et al., G.R. No. 107434, October 10, 1997; ACCRA Investments Corporation vs. The Honorable Court of Appeals, et al., G.R. No. 96322, December not marked but offered as Exhibit "p-25-1" October 8, 2024, not marked but offered as Exhibit "P-25-1". 20, 1991; Section 2.58, Revenue Regulations No. 2-98, as amended. (Phils.) Energy Corporation (formerly Mirant (Phils.) Energy Corporation, supra; United

CTA CASE NO. 11130 Page 11 of 21 DECISION

Thus, it behooves petitioner to establish the foregoing requisites

Petitioner's administrative and judicial claims for refund were timely filed

For the first requisite, the pertinent provisions are Sections 204(C) and 229 of the NIRC of 1997, which provide 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

that have been rendered unfit for use and refund their value upon purchaser, and, in his discretion, redeem or change unused stamps

proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the

after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a Commissioner a claim for credit or refund within two (2) years

written claim for credit Or refund. Emphasis added)

of any national internal revenue tax hereafter alleged to have been suit or proceeding shall be maintained in any court for the recovery "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. -No

erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have beer aY0 ssivelv r 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

of the tax or penalty regardless of any supervening cause that after the expiration of two (2) years from the date of payment

may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax,

CTA CASE NO. 11130 DECISION Page 12 of 21

where on the face of the return upon which payment was made such payment appears clearly to have been erroneously paid. (Emphasis added)

The above-stated provisions mandate that the administrative and judicial remedy of filing a claim for refund of erroneously or excessively paid tax must be done within two (2) years from the date of payment of the tax.

of the Final Adjustment Return (FAR), also known as the Annual ITR.56 This is refund of overpaid income tax/CWTs commences to run on the date of filing It is well settled that the two (2)-year prescriptive period for claiming a

so because it is only when the FAR 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.57 In other words, it is only logical to reckon the two (2)-year prescriptive period from the time the FAR or the Annual ITR was filed, since it is only at that time that it would be possible to determine whether the corporate taxpayer paid an amount exceeding its annual income tax liability.58

Following Section 204(c), in relation to Section 209, of the NIRC of 1997, the two (2) year prescriptive period for which to file a claim for refund will be until In this case, petitioner filed its original Annual ITR on April 15, 2021.59

April 15, 2023. Considering that April 15, 2023 falls on a Saturday, petitioner had until the next working day, April 17,2023,to file both its administrative and judicial claims for refund. Thus, the filing of petitioner's Application for Tax Credits/Refunds (BIR Form No.1914),60 and the letter dated March 8,2023,1 with respondent on March 8, 2023, and the Petition for Review before this Court on April 17, 2023,2 were well within the two (2)-year prescriptive period.

56 ACCRA Investments Corporation vs.The Honorable Court of Appeals, et al., supra;

57 Commissioner of Internal Revenue vs. TMX Sales Inc., et al., supra. al., G.R. No. 105208, May 29, 1995. Commissioner of Internai Revenue vs. TMX Sales, Inc., et al., G.R. No. 83736, January 15 1992; Commissioner of Internal Revenue vs.The Philippine American Life Insurance Co. et

58 Metropolitan Bank & Trust Company vs. The Commissioner of Internal Revenue, G.R. No. Exhibit "p-6", USB (submitted on October 8, 2024, not marked but offered as Exhibit "P-25 Exhibit "P-5", BIR Records, p. 147 Exhibit "p-4", BIR Records, pp. 150 to 153. Docket -Vol. I, pp. 1 to 20. 182582, April 17, 2017. 1

Page 13 of 21 CTA CASE NO. 11130 DECISION

Petitioner established the fact of withholding

to a refund or an issuance of tax credit certificate for unutilized and excess With regard to the second and third requisites for a taxpayer to be entitled

CWTs, Section 2.58.3(B) of RR No. 2-98 states:

"Sec. 2.58.3. Claim for tax credit or refund.

XXX XXX XXX

income tax which was deducted and withheld on income payments shall be given due course only when it is shown that the income (BClaims for tax credit or refund of any creditable

withheld therefrom. payment has been declared as part of the gross income and withholding tax statement duly issued by the payor to the payee showing the amount paid and the amount of tax the fact of withholding is established by a copy of the

agent." (Emphases added) Proof of remittance is the responsibility of the withholding

the withholding agent, to the payee, showing the names of the payor and payee the claimed CWTs by a copy of the statement duly issued by the payor, acting as the income payment, the amount of tax withheld, and the nature of the tax paid The second requisite mandates petitioner to prove the fact of withholding of

Relative thereto, the certificate of creditable tax withheld at source is the

No. 2-98. the amount of tax withheld therefrom, as described in Section 2.58.3(B) of RR competent proof to establish the fact that taxes are withheld.13 It is a withholding statement duly issued by the payor to the payee showing the amount paid and

Source (BIR Form No. 2307) to establish the fact of withholding of the claimed ICPA,65 broken down as follows: excess and unutilized CWTs of Php23,749,510.31,64 which were examined by the In this case, petitioner submitted the Certificates of Creditable Tax Withheld at

63 Commissioner of Internal Revenue vs. Philippine National Bank, G.R. No. 180290, September

64 Exhibits "P-15-1" to "P-15-49", USB (submitted on October 8, 2024, not marked but offered as 29, 2014.

Ge Exhibit "p-25-1"). Annexes A-1 to B-2, Amended Report of the ICPA (not marked but offered as Exhibit "P-25',

USB (submitted on October 8, 2024, not marked but offered as Exhibit "P-25-1").

Page 14 of 21 DECISION CTA CASE NO. 11130

Philippine Span Asia Philippine Span Asia Philippine Span Asia Carrier Corp. Philippine Span Asia Philippine Span Asia RAFI Micro Victory Liner Inc. Victory Liner Inc. Victory Liner Inc. Victory Liner Inc. Carrier Corp. Carrier Corp Philippine Span Asia Carrier Corp. Philippine Span Asia Carrier Corp Philippine Span Asia Philippine Span Asia Carrier Corp. Philippine Span Asia Carrier Corp Carrier Corp. Carrier Corp. Carrier Corp. RAFI Micro RAFI Micro Finance Inc. Victory Liner Inc. Victory Liner Inc. Victory Liner Inc. Philippine Span Asia Carrier Corp Carrier Corp Philippine Span Asia Finance Inc Finance Inc. CUSTOMER "p-15-10 "P-15-11" "p-15-12 "P-15-13 "p-15-14 "P-15-15 "P-15-16 "P-15-19" "p-15-4" "p-15-6 "P-15-17" "p-15-18" "p-15-21 "p-15-9" "P-15-20 "P-15-22 "P-15-1 "P-15-2 "P-15-3 "P-15-5 "P-15-7 "p-15-8 Exhibit No. 30 Apr. 20 31 Jan. 20 31 July 20 31 Jan. 20 31 Jan. 20 31 Jan. 20 31 Jan. 20 1 Feb. 20 1 Feb. 20 1 Feb. 20 1 Mar. 20 31 Jan. 20 1 Feb.20 1 Mar. 20 1 Mar.20 1 Mar. 20 1 Apr. 20 31 Jan. 20 31 Jan. 20 1 Jan. 20 1 Jan. 20 1 Jan. 20 From 31 Mar. 20 31 Mar. 20 31 Mar. 20 31 Mar. 20 31 Mar. 20 30 Sep. 20 31 Mar. 20 31 Mar. 20 30 Jun. 20 31 Jan. 20 29 Feb. 20 29 Feb. 20 29 Feb. 20 31 Mar. 20 31 Mar. 20 30 Apr. 20 31 Mar. 20 31 Mar. 20 31 Mar. 20 31 Jan. 20 29 Feb. 20 31 Jan. 20 To Php1,045,500.00 Tax Base 11,303,700.00 (in Php) 3,040,800.00 5,048,371.00 2,359,875.00 1,047,550.00 1,263,148.32 1,052,675.00 1,894,722.48 867,555.90 870,804.53 865,675.12 868,923.75 869,094.73 869,094.73 867,213.94 870,633.53 863,965.33 867,213.94 867,213.94 872,001.40 944,193.00 Tax Withheld Php156,825.00 (in Php) 1,695,555.00 353,981.25 130,364.21 130,082.09 456,120.00 757,255.65 130,133.38 130,620.68 189,472.25 157,901.25 157,132.50 129,851.27 130,338.56 130,364.21 129,594.80 130,082.09 130,082.09 130,800.21 284,208.37 130,595.03 18,883.86

RAFI Micrc Finance Inc. "P-15-23" 31 Jan. 20 31 Mar. 20 1,265,640.72 189,846.11

PLDT, Inc. RAFI Micro Finance Inc. Finance Inc. RAFI Micro Finance Inc. RAFI Micro Finance Inc. RAFI Micrc "P-15-28 "P-15-24" "P-15-25 "P-15-27 "P-15-26 30 Apr. 20 30 Apr. 20 30 Apr. 20 31 Jan. 20 31 Jan. 20 31 Mar. 20 31 Mar. 20 30 June 20 30 June 20 30 June 20 64,577,367.03 1,265,640.72 944,193.00 396,090.00 389,642.00 9,686,605.05 189,846.11 18,883.86 7,921.80 7,792.84

Page 15 of 21 DECISION CTA CASE NO. 11130

PLDT, Inc. "Pp-15-29 30 Apr. 20 30 June 20 12,864,412.67 1,929,661.90 PRG Prince PRG Prince PRG Prince PRG Prince PRG Prince Management Corporation Management Corporation Corporation Management Services Corporation Services Services Management Services "p-15-31 "p-15-30 "p-15-33 "P-15-32 1 Jan. 20 1 Jan. 20 1 Jan. 20 1 Jan. 20 31 Jan. 20 31 Jan. 20 31 Jan. 20 31 Jan. 20 1,654,139.85 1,654,139.85 1,654,139.85 1,654,139.85 248,120.98 248,120.98 248,120.98 248,120.98

PRG Prince Corporation Services Management Services Management Corporation "P-15-34 "P-15-35 1 Jan. 20 1 Jan. 20 31 Jan. 20 31 Jan. 20 1,650,905.95 1,654,139.85 248,120.98 247,635.89

PRG Prince PRG Prince Management Corporation Management Services Services Corporation "p-15-36 P-15-37 1 Feb. 20 1 Jan. 20 31 Jan. 20 29 Feb. 20 1,650,905.95 1,642,821.20 247,635.89 246,423.18

PRG Prince

PRG Prince PRG Prince Corporation Management Corporation Services Management Services P-15-38 P-15-39 1 Feb.20 1 Feb.20 29 Feb. 20 29 Feb.20 1,642,821.20 1,618,566.95 246,423.18 242,785.04

Corporation PRG Prince PRG Prince Services Services Management Services Corporation Management Corporation Management "P-15-40 P-15-42 P-15-41 1 Mar. 20 1 Mar. 20 1 Mar.20 31 Mar. 20 31 Mar. 20 31 Mar.20 1,641,204.25 1,618,566.95 1,641,204.25 242,785.04 246,180.64 246,180.64

CTA CASE NO. 11130 DECISION Page 16 of 21

PRG Prince PRG Prince Management Management Services Corporation Services "p-15-44 "P-15-43 1 Mar. 20 1 Mar. 20 31 Mar. 20 31 Mar. 20 1,668,692.40 1,668,692.40 250.303.86 250,303.86

PRG Prince PRG Prince PRG Prince PRG Prince Management Corporation Management Corporation Management Services Services Management Services Corporation Corporation Services "p-15-47 "P-15-46 "p-15-45 "P-15-48 1 May 20 1 May 20 1 May 20 1 Jun. 20 31 May 20 31 May 20 30 Jun. 20 31 May 20 3,295,344.10 3,275,940.70 3,275,940.70 3,337,384.80 500,607.72 491,391.11 494,301.62 491,391.11

PRG Prince Management Corporation Services "p-15-49" 1 Jun. 20 30 Jun. 20 1,625,034.75 243,755.21

Corporation TOTALPhp160,647,637.58 Php23,749,510.31

issued by its clients, the second requisite has been complied with. claim of Php23,749,510.31 is properly supported by certificates of withholding The Court finds the foregoing to be in order. Considering that petitioner's

The income upon which the taxes were withheld was declared as part of petitioner's gross income in its Annual ITRs

The third requisite demands that the income upon which the claimed taxes. were withheld must be included in the return of the recipient. In this case petitioner must prove that the corresponding income payments of Php160,647,637.58 is included in its Annual ITR.

declared in its Annual ITR for taxable year 2020 with the amount of revenue In verifying petitioner's revenues, the ICPA compared the amount

CTA CASE NO. 11130 Page 17 of 21 DECISION

reported in its Audited Financial Statements (AFS) for the same period, and reports the following finding:*0

"Table 4: Exhibit Amount

Difference Revenue per Amended Annual Income Tax Return for CY 2020 Revenue per Audited Financial Statements P-6-1 P-7 Php100,509,725 (Php12,281,803) 112,791,528

The difference of Php12,281,803 pertains to deferred revenue which arises from advance payments received by RISI from several

as contract liabilities in the audited financial statement as of customers in 2019. These advance payments were initially recorded

December 31, 2019 (Refer to Note 11 of audited financial statements -

the related services were performed and billed. Exhibit P-7 and subsequently adjusted to revenue in 2020 when

payments) were already reported as revenue in the annual income For income tax purposes, these deferred revenues (or advance

tax return and subjected to income tax for the taxable year ending December 31,2019 (Refer to Annex C for details of Php12,281,803).

The breakdown of the 2019 deferred revenue is as follows:

PLDT - BTS Span Asia (Onshore) Prince Retail Project Deferred Revenue Php 4,481,500.48 4,585,406.24 3,214,896.28 TOTAL Php12,281,803.00

revenue per AFS and found a discrepancy of Php45,538,541:8 withholding tax per Summary Alphalist of Withholding Tax (SAWT) against the The ICPA then proceeded to compare the revenue subjected to

Table 6.1: Exhibit Amount

Revenue Subjected to Withholding Tax per SAWT Revenue per Audited Financial Statements / General Ledge P-7/P-21 P-19-4 Php112,791,528 158,330,069

66 17 8 Amended Report of the ICPA (not marked but offered as Exhibit "P-25"), p. 5. Annex C, Amended Report of the ICPA (not marked but offered as Exhibit "P-25", USB Amended Report of the ICPA (not marked but offered as Exhibit "P-25", p. 6 (submitted on October 8, 2024, not marked but offered as Exhibit "P-25-1"3.

Page 18 of 21 CTA CASE NO. 11130 DECISION

Difference (Php45,538,541)

The foregoing difference is reconciled by the ICPA in this wise:09

Revenue per Audited Financial Statements /General Ledger Add (Deduct) reconciling items: a Table 6.2: Revenue reported in the 2020 Audited Description Exhibit P-7 Annex/Table Exhibit/ P-21 Php112,791,528 Amount

income tax return for Calendar Year 2019 withholding tax and reported as revenue in Financial Statements but already subjected to Annex C Table 4 (12,281,803) b. Revenue reported in the Audited Financial

c. Difference in the receipt reported by petitioner's client (Rafi-Micro Finance) per Statements and Income Tax Return for subjected to withholding tax only in Calendar BIR Form 2307 and the receipt recorded in the petitioner's SAWT Calendar Year 2019 but collected and Year 2020 Annex D Annex E (2,317,569) 60,347,806

Revenue and collections per Audited d. Netforeignexchange Subtotal reconciling items Petitioner's books and CWT Certificates difference per Annex F 45,538,54070 (209,893)

Difference Revenue Subjected to Withholding Tax per subjected to CWT SAWT Financial Statements / General Ledger We were able to trace the revenues recognized in 2019 (but collected and subjected to withholding tax only in 2020) against the General Ledger and these were reported in 2019 income tax return P-19-4 Php158,330,069 Php158,330,069

(Please refer to Annex D and Exhibit P-22)

the foregoing reconciling items. Petitioner's General Ledger for the year 2019,7 The Court examined the documents submitted by petitioner to support

19 Amended Report of the ICPA (not marked but offered as Exhibit "P-25"), p. 6. 70 Should be Php45,538,541.00. 71 Exhibit "p-21", USB (submitted on October 8, 2024, not marked but offered as Exhibit "p-25-

1

Page 19 of 21 CTA CASE NO. 11130 DECISION

Billing Invoices dated in 2019,72 and Official Receipts dated in 202073 show that revenue in the amount of Php60,347,806.00 was reported as revenue for the taxable year 2019, but was subjected to CWT in the year 2020.

total income payments per BIR Form No. 2307 and SAWT, the ICPA explains that the same pertains to an error by one of its clients Rafi-Micro Finance,74 to Anent the amount Php2,317,569.00, which is the discrepancy between the

Wit:

"We noted that the revenue reported in the SAWT was the grossed- revenue by dividing the amount of tax actually withheld by the withholding tax rate of 15%. However, per BIR form 2307 prepared by its customers, some withholding taxes were withheld the tax base by Php2,317,569 as reported in the SAWT. Upon reviewing the related billing statements, official receipts and journal using a rate of 2%. This discrepancy led to an understatement of up value of the withholding tax. The Petitioner computed the vouchers, we found that the actual revenues collected differed from

the amount reported in the SAWT, although the amount of tax withheld remain the same (see Annex E).

Relative thereto, an examination by the Court shows the following:

CWT per BIR Form 2307 Divided by CWT rate Php 53,482.36 Php 0.02 53,482.36 0.15 Grossed-up Income Payment Php 2,674,118.00 Php 356,549.07 Difference Php2,317,568.93

petitioner's clients issued the CWT certificates, summarized as follows:75 arising from the time petitioner recorded its foreign currency billings and when Finally, the ICPA found that there is a net foreign exchange difference

Client Net Foreign Exchange Difference Victory Liner Inc. Philippine Span Asia Carrier Corp. Php (124,818.88) 3,709.11

73 V Exhibits "p-16-36", "P-16-42" to "P-16-45", (submitted on October 8, 2024, not marked but offered as Exhibit "p-25-1". Exhibits "p-17-36", "p-17-42" to "p-17-45", and "P-17-49" to "p-17-52", USB (submitted on "p-16-49" to "p-16-51", and "p-16-67", USB

a October 8, 2024, not marked but offered as Exhibit "p-25-1". Amended Reportof the ICPA (not marked but offered as Exhibit "P-25", p. 7. 75 Annex F, Amended Report of the ICPA (not marked but offered as Exhibit "p-25"), USB

(submitted on October 8, 2024, not marked but offered as Exhibit "P-25-1").

CTA CASE NO. 11130 Page 20 of 21 DECISION

Total PRG Prince Management Services Corp. RAFI Micro Finance Inc. PLDT, Inc. Php (209,893.50) (240,076.96) 151,766.93 (473.70)

examined by the ICPA. The foregoing is supported by Billing Invoices? and Sales Journal" which are

In sum, the Court finds that the foregoing is in order, and that petitioner has complied with the third requisite.

taxpayer to be entitled to a refund of unutilized excess CWTs, petitioner's claim Considering that petitioner complied with all the requisites in order for a

should perforce be granted.

in the amount of Php23,749,510.31, representing its unutilized CWTs for CY 2020,pursuant to Section 76 in relation to Sections 204(C) and 229 of the NIRC In sum, petitioner has sufficiently proven that it is entitled to the refund

of1997.

Petition for Revrew is GRANTED ACCORDINGLY, in light of the foregoing considerations, the present

total amount of Php23,749,510.31, representing petitioner's excess and unutilized CWTs for CY 2020 Respondent is ORDERED TO REFUND in favor of petitioner the

SO ORDERED

MA. BELEN M. RINGPIS-LIBAN

Presiding Justice

76Exhibits "P-16-1" to "P-16-66", USB (submitted on October 8, 2024, not marked but offered as 77 Exhibits "P-23-1" to "P-23-31", USB (submitted on October 8, 2024, not marked but offered as Exhibit "p-25-1".

Exhibit "P-25-1").

CTA CASE NO. 11130 DECISION Page 21 of 21

WE CONCUR:

MARIA ROWENA MODESTO-SAN PEDRO Associate stice

CORAZON G. FERRER-FLORES Vm xY.

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby

before the case was assigned to the writer of the opinion of the Court. certified that the conclusions in the above Decision were reached in consultation

a.l1 MA. BELEN M. RINGPIS-LIBAN Presiding Justice