TULLETT PREBON (PHILIPPINES) INC. v. COMMISSIONER OF INTERNAL REVENUE

CTA Form No. 8 111111111111 111111111111111111111111111111 111111111111111 11111 1111111111 11111111 20-000118-0060 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CASE N0. 10273 TULLETTPREBON (PHILIPPINES) INC., Petitioner, -versus- NOTICE OF DECISION COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Village Mak:ati City ATTY. MARVEEN B. DE LA PAZ Bureau of Internal Revenue Room 703, Litigation Division, BIR National Office Bu ilding Sen. Miriam P. Defensor-Santiago Avenue Diliman, Quezon City SALVADOR LLANTLLO & BERNARDO 8th Floor, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue 1226 Mak:ati City GREETINGS: You are hereby notified by these presents that on January 30~ 2024~ a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, February 1, 2024. ..- AttyE. xMeacruitai~ ~~f F. Chan-Te Court II

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION TULLET PREBON CTA Case No. 10273 (PHILIPPINES) INC., Petitioner, Members: -versus- DEL ROSARIO, P.J. , Chairperson, MANAHAN, and REYES-FAJARDO, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. )(- - - - - - - - - - - - - - - - - - - - - - - - - - MANAHAN, J.: Before the Court is a Petition for Review, praying that judgment be rendered ordering respondent to refund petitioner the amount of P8 ,574,699.00, a llegedly representing petitioner's e)(cess and unutilized creditable withholding ta)(es (CWTs) for calendar year (CY) ended December 31 , 2017. 1 THE FACTS Pet itioner Tullett Pre bon (Philippines) Inc. is a domestic corporation duly organized and existing under Philippine laws,2 with registered address at 14th Floor, 26th Street, RCBC Savings Bank Building, Bonifacio Global City, Taguig.3 It is registered with the Bureau of Internal Revenue (BIR) under Ta)( Identification Number 004-653-622-000.4 Respondent is the duly a ppointed Commissioner of Internal Revenue vested under the la ws with the authority to carry out the functions of their office , including the power to 1 Prayer , Petitionfor Review, Docket - Vol. I, p. 2 1. 2 Exhibit "P- 1", Docket - Vol. I, pp. 464 to 474; a n d Dock et- Vol. II , pp. 673 to 682. 3 Exhibit "P- 12", Doc ket- Vol. II , p. 6 0 3. 4 Jd. ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. u. Commissioner of Internal Revenue decide claims for refund and/ or tax credit of overpaid or erroneously paid or collected internal revenue taxes.s On September 30, 2019, petitioner filed with the BIR Regular Large Taxpayers Audit Division II an Application for Tax Credits I Refunds (BIR Form No. 1914)6 with the letter dated August 7, 2019,7 requesting for the issuance of a tax credit certificate in the amount of P8,574,699.00 representing unutilized CWTs for CY 20 17. On April 8, 2020 , petitioner filed the p resent Petition for Review.8 The Pre-Trial Conference was initially set on November 12 , 2 020 .9 It was reset to Ma rch 11 , 2021, 10 then further reset to and finally held on May 20, 2 021. 11Prior thereto, respondent filed its Pre-Trial Brief on November 6, 2020, 12 while petitioner filed its Pre-Trial Brief on November 9 , 2020.13 The parties submitted their Joint Stipulation of Facts and Issues on June 9, 2021. 14 The same was approved by the Court in a Resolution dated June 30, 2021, a nd Pre-Trial was deemed terminated.15 The Court issued the Pre-Trial Order dated July 7 , 2021. 16 On December 1, 2 02 1, respondent transmitted to this Court the BIR Records for this case, consisting of 672 pages in two (2) folders .17 Trial ensued, with both parties presenting and offering their respective documentary and testimonial evidence . Petitioner presented the following witnesses: (1) Mr. Philip G . Arabia,l8 petitioner's Finance Manager; and (2 ) Ms . Maria 5 Par. 1, Stipulated Facts, Joint Stipulation of Facts and Issues (JSFI), Docket- Vol. I, p . 281. 6 Exhibit "P-7-a", Docket- Vol. II , p. 569. 7 Exhibit "P- 7", Docket - Vol. II , pp. 566 to 568. 8 Docket- Vol. I, pp . 14 to 22. 9 Notice ofPre-Trial Conference dated Septem be r 14, 2020, Docket- Vol. I, pp. 83 to 85 . 10 Order dated November 18, 2020, Docket- Vol. I, p. 25 1. I I Orde r dated March 9, 202 1, Docket- Vo l. I, p. 263; Minutes of the hearing held on, and Orde r dated, May 20, 202 1, Docket- Vol. I, pp. 265 to 266-A. 12 Docket- Vol. I, pp. 89 to 9 1. 13 Docket- Vol. I, pp. 235 to 25. 14 Docket- Vol. I, pp. 28 1 to 286. 15 Docket- Vol. I, p. 296. 16 Docket- Vol. I, p p. 299 to 309. 17 Compliance dated December 1, 2021, Docket - Vol. I, pp. 445 to 447. 18 Exhibit "P-13" , Docket- Vol. I, pp. 96 to 106; Order dated July 8, 2021 , Vol. I, pp . 318-319, a nd Minutes of the Hearing held on July 18, 2021, Docket- Vol. I, pp. 310 to316. ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue Gracia L. Morfe, 19 the Court-commissioned Independent Certified Public Accountant (ICPA).20 The ICPA submitted her Amended Report on November 29, 2021.21 On December 14, 2021, petitioner filed its Formal Offer of Evidence.22 Respondent submitted his Comment (On Petitioner)s Formal Offer of Evidence) on December 20, 2021. 23 In a R esolution dated March 21, 2022,24 the Court admitted petitioner's exhibits, except for: (1) Exhibit "P-1 ," for failure of the document offered and identified to correspond w34it7h'"t"hPe-1d3o4c2u'm" "ePn-t18m7a1r'k"eadn�'d(2")P Exhibits "P-25 b' "e i"nPg- 3f2o8u'n"d"Pi n- -2050'" for not the records of the case; and (3) Exhibits "P-751 to P-753 ," for not being found in the records of the case. Upon petitioner's Motion for Partial Reconsideration (Re: Resolution dated March 21 1 2022) filed on April 18, 202225 without respondent's comment or opposition26 the Court admitted Exhibits "P-1 ," "P- 25," "P-278- 1," "P-1342," and "P-1871."27 For his part, respondent presented Revenue Officer Cheryl G. Arbues as his lon e witn ess .28 Respondent filed his Formal Offer of Evidence on September 30, 2022 .29 Petitioner filed its Comment (Re: Respondent's Formal Offer of Evidence) on October 13, 2022. 30 In a Resolution dated November 2 1, 2022, the Court admitted all of respondent's offered exhibits. 31 19 Exhibit "P-14", Docket- Vo l. I, pp. 390 to 402; Order dated November 23, 2021, Doc ket- Vol. I, pp. 4 17 to 419 . 2o Oath of Commission dated July 8, 2021, Docket- Vol. I, p. 314; Order dated J uly 8, 2021, Docket- Vol. I, pp. 3 15 to 316. .l1 Exhibit "P-2146 ", Docket - Vol. I, pp. 42 7 to 444. Although n ot mar ked, t he submission thereof was a llowed by the Cou rt, and the ident ification the reof was stipulated by the parties. See Transcript of Stenographic Notes for hearing held on November 23, 2021 , pp. 13 to 16. 22 Docket- Vol. I, pp. 448 to 463. 23 Docket - Vol. II , pp. 605 to 607. 24 Doc ket - Vol. II , pp. 617 to 62 0 . 25 Doc ke t - Vol. II , pp. 629 to 640. 26 Records Ve rification dated May 24, 2022 issu ed by the Judicial Records Division o f this Court, Docket - Vol. II , p . 656. 27 Resolution dated August 9, 2022, Docket- Vol. II, pp. 684 to 692. 28 Exhibit "R-4", Docket - Vol. I, pp. 258 to 262; Order dated September 20, 20 22, Doc ket - Vol. II, pp. 696 to 697. 29 Docket - Vol. II, p p. 7 00 to 704. 30 Docket - Vol. II, pp. 7 0 7 to 7 10. 3 1 Doc ke t - Vol. II , pp. 7 12 to 713. ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissio ner of Internal Revenue Petitioner filed its Memorandum on December 28, 2022. 32 Respondent failed to file a memorandum. 33 The case was submitted for decision on January 30, 2023. 34 THE ISSUES The sole issue for resolution of the Court in this case, as stipulated by the parties, is the following: Whether or not petitioner is entitled to its claim of refund of or issuance of a TCC for P8,574,699.00, representing petitioner's alleged excess and unutilized creditable withholding taxes (CWT) for calendar year (CY) 2017. 35 Petitioner's arguments Petitioner argues that it filed its administrative and judicial claims for the refund or tax credit of excess and unutilized CWTs for CY 20 17 within the two-year prescriptive period provided under Sections 204(C) and 229 of the Tax Code. It avers that its claim of P8,574,699.00 is duly substantiated, that the income upon which the same were withh eld is reported as part of the revenues declared in its annual income tax return, and that it did not exercise the option to carry over the same to the succeeding taxable period. Hence, petitioner asserts that it is entitled to its claim for refund or tax credit of P8,574,699.00 representing its excess and unutilized CWTs for CY 2017. Respondent's counter-arguments Respondent counters that petitioner failed to submit documents in support of its claim and that its application for refund or tax credit is pro forma. Consequently, there is no proper compliance with the requirement of the law that an administrative claim should have been made before instituting a judicial claim. Respondent insists that petitioner has th e 32 Docket- Vol. II, pp. 714 to 731. 33 Records Verification dated J anuary 13, 2023 issued by the Judicial Records Division of this Court, Doc ket - Vol. II , p. 732. 34 Minute Resolution dated January 30 , 2023 , Doc ket- Vol. II. , p . 733. 35 Issue, JSFI, Doc ke t - Vol. I, p. 282 ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue burden to establish its claim for refund or tax credit, and that su ch claim should be construed strictly against petitioner for th e same partake the nature of a tax exemption. THE COURT'S RULING The present Petition for Review is partly meritorious. Aside from compliance with Section 76 of the National Internal Revenue Code of 1997, as a mended (NIRC), jurisprudence and pertinent BIR Revenue Regulations outline the followin g requisites for a valid claim of refund or tax credit of excess unutilized CWTs: 1. The claim must be filed within the two-year prescriptive period under Sections 204(C) and 229 of the NIRC ; 2. The fact of withholding must be established by a copy of a statement duly issued by the payor (withh olding agent) to t he 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 retu rn of the payee or recipient. 36 For the orderly disposition of this case, the Court shall first discuss petitioner's compliance with Section 76 before delving into each of the above enumer ated requ isites. Petitioner complied with Section 76 of the NIRC and has not carried over the CWTs claimedfor refund. Section 76 of the NIRC 1s quoted h ereunder for r eady reference: "SEC. 76. Final Adjustment Return. - Every corporation liable to tax under Section 27 shall file a final adjustm ent return covering the total taxable incom e for the preceding calendar or fiscal year. If the sum of the quarterly tax payments m ade during 36 Citibank N.A. vs. Court of Appeals, et al., G.R. No. 107434, Oct . 10, 1997; ACCRA Investments Corporation vs. The Honorable Court of Appeals, et al., G.R. No. 96322, Dec. 20, 1991; United International Pictures AB vs. Commissioner of Internal Revenue, G.R. No. 16833 1, Oct. 11, 20 12; Section 2.58, Revenue Regulations No. 2-98, as amended.~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue 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 b a lance of tax s till due; or (B) Carry-over the excess credit; or (C) Be credited or refunded with the excess amount pa id, 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 h as been m ade, such option s h a ll be consider ed irrevocable for that taxable p eriod a nd no a pplication for cash refund or issuance of a tax credit certificate sh a ll be a llowed therefor." Said provision grants two options to a taxable corporation whose total quarterly income tax payments in a given taxable year exceed its tota l incom e tax due: 1.) carry-over the excess amount to the succeeding taxable quarters or years until it is fully utilized; or 2.) file a claim for refund (either in the form of cash or tax credit certificate). However, once the carry-over option is made , it becomes irrevocable for that taxable period.37 The phrase "for that taxable p eriod" qualifies the taxes paid during the taxable year to which the option to carry over was applied; it does not su ggest that the option to carry- over can still be changed in the next taxable period.38 A p erusal of p etitioner's Annua l Income Tax Return (ITR) for CY 2 01739 shows that it h a d income tax credits in the total amount of P28, 146,553.00, consisting of the following: (i) Prior year's excess tax credits in the amount of P19,57 1,854.00; and , 37 Rhombus Ene rgy, Inc. vs . Commissioner of Internal Re ve nue, G .R . No. 20636 2 , Aug. 1, 2 01 8. 38 Commissioner of Inte rnal Revenue v. Ba nk of the Philippine Is la nds, G.R. No. 178490 , Jul. 7 , 2009 . 39 Exhibit "P-2" , Docket - Vol. I , pp . 475 to 482 . ~

DECISION CTA Ca se No. 102 73 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Re venue (ii) CWTs accumulated during the four (4) quarters of CY 2017 in the total amount of P8 ,574,699.00.40 Petitioner claims that it paid its minimum corporate income tax (MCIT) due for CY 2017 amounting to P898,826.00 using a portion of its prior year's excess credits. This leaves a total ofP27,247,727.00 unutilized as of December 31 , 2017, as shown below: Prior Year's Excess Credits other than MCIT p 19,571,854.00 Les s: Tax Due (M CIT) 898,826 .00 Balance of Prior Yea r's Excess Credits Add: Creditable Taxes Withheld - CY 201 7 p 18,673,028 .00 Excess Creditable Taxes Withheld as of 8,574,699.00 December 31, 2017 p 27,247,727.00 Under Section 2 .58. 3 of Revenue Re gulations (RR) No. 2 - 98, the submission of petitioner 's Annua l ITR for CY 2016 is sufficient to prove its "Prior Year's Excess Credits other tha n MCIT" in the amount ofP19 ,571 ,854.00. Said provision states: "Sec. 2.58.3. Claim fo r tax credit or refund. - X XX (C) Excess Credits . - An individua l or corporate taxpayer's excess expanded withholding tax credits for the taxable qua rter /year s h all automatically be allowed as a credit again st his income tax due for the t axable qua rter s/year s immediately su cceeding the taxable qua rter s/years in which the exces s credit arose, provided he submits with his income tax return, a copy of the first page of his income tax return for the previous taxable period showing the amount of his excess withholding tax credits, and on which return he h as not opted for a cash refund or tax credit certificate. " [Emphasis supplied] Here , petitioner pres ented its Annual ITR for CY 2016 showing excess t ax credits am ounting to P30,847 ,724.00,41 which con s isted of p rior year's excess credits in the a m ount of P19,57 1,854 .00 a nd CWTs during CY 2 01 6 in the a mount of P11,275,870 .00 . Petition er opted to b e issu ed a t ax credit certificate only for the CWTs during CY 2 01 6.42 Thus, the prior 40 Exhibit "P-2" , Schedu le 7, Docket - Vol. I, p . 480 . 4 1 Exh ibit "P-20 ", Pa r t II-Lin e 20 a nd Sched u le 7 o f Ann ual ITRJJ.SB. 42 Exhibit "P-20" , Pa rt II -Lin e 2 1 of Ann ual ITR, U S B. ~

DECISION CTA Case No. 10273 Tullet Prebon {Philippines) Inc. v. Co mm issioner of Internal Revenue year's excess credits ofP19,571 ,854 .00 was carried over to CY 20 17 . The latter was automatically allowed as credits to be applied against its MCIT due for CY 2017 in the amount of P898,826.00,43 while its CWTs during CY 20 17 in the amount ofP8,574,699.00 remained unutilized as of the end of the same period. In its Annual ITR for CY 20 17, petitioner indicated its option to be issued a tax credit certificate for its excess and unutilized CWTs for CY 2017.44 That such CWTs were not carried over in the succeeding taxable periods is reflected in petitioner's Quarterly ITRs and Annual ITR for CY 2018, which reflects only the amount of f>18,673,028.00 and excludes the amount off>8 ,574,699.00 representing the CWTs for CY 2017. Considering the foregoing, the excess and unutilized CWTs during CY 2017 in the amount of f>8,574,699 .00 may therefore be the subject of a claim for refund or issuance of a tax credit certificate under Section 76 of the NIRC. We now proceed to discuss petitioner's compliance with the three requisites for entitlement to refund or tax credit of excess unutilized CWTs. Petitioner filed its claim for refund within the two-year prescriptive period Section 204(C) of the NIRC provides that "[n]o 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." Relative thereto, Section 229 states that "[n]o 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 x x x 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." The same provision further states that "no such suit or proceeding shall be filed after the 43 Exhibit "P-2", Line 16, Docket- Vol. I , p. 475 . 44 Exhibit "P-2", Line 21 , Docket - Vol. I, p. 475. ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue 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 x x x." In other words, at the time petitioner's claims were filed, the rule is that an administrative claim must precede the judicial claim, and both claims must be filed within the two- year prescriptive period. It is settled in jurisprudence that the two-year prescriptive period for claiming a refund or tax credit of overpaid income tax or CWTs commences to run on the date of the filing of the Final Adjustment Return45 (or Annual ITR). This is so because only then would the taxpayer know whether a tax is still due or a r efund can be claimed based on the adjusted and audited figures. It is only upon the filing of the Final Adjustment Return can it be determined whether the taxpayer paid an amount exceeding its annual income tax liability.46 Here, p etitioner filed its Annua l ITR47 on April 13, 2 018 via the electronic filing a nd payment system (or eFPS) of the BIR, and manually filed the same with the BIR on April 24, 2018.48 Counting two years from April 13, 2018, which is considered the date of the filing of the final adjustment return ,49 p etitioner h ad until April 13, 2 020 within which to file its adminis tra tive a nd judicia l claims. Petitioner file d its adminis trative claim on Sept emb er 30, 2019,50 while the present judicial claim was filed on April 8, 2020. 51 Thus , both a dminis tra tive a nd judicial claims were seasonably filed within the two-year prescriptive period. 45 ACCRA Investments Corporation v. The Honorable Court of Appeals, et al., G.R. No. 96322, Dec. 20, 1991; Commissioner of Inte rnal Revenue v. TMX Sales, Inc. and the Court of Tax Appeals, G.R. No. 83736, J an. 15, 1992; Commissioner of Internal Revenue v. The Philippine American Life Insurance Co., et al., G.R. No. 105208, May 29, 1995. 4 6 Metropolitan Bank & Trust Company v. The Commissioner of Internal Revenue, G.R. No.l82582,Apr. l 7,2017. 47 Exh ib it "P-2", Dock et - Vol. I, pp. 47 5 to 482. 48 Exhibit "P-3", Doc ket- Vol. I, p p. 483 to 49 1. 49 Per Reven u e Memorandum Circ ular No . 24-2018 [SUBJECT: Guidel ines in the Filing, Rece ivin g a n d Processing of 20 17 Income Tax Returns Including Its Attach ments], Taxpayers w h o are mandated to u se the e FPS under exis ting issuan ces s h a ll file a n d pay directly u s ing t he eFPS facil ity. However, taxpaye rs wh o elect ronically filed s h a ll a lso s ubmit a copy of t he electronically filed lTR with Filing Reference Numbe r (FRN) thr u eFPS facility, toget h er with th e required a ttac h ments, within fifteen (1 5 ) days from t h e deadlin e of filing or d a te of e lect ronic filing of t h e r eturn, whic h ever comes la t er. Hence, the coun ting of the two-year prescriptive period is reckoned from th e date of the filing of t he fina l adjustm ent return via eFPS. so Exhibits "P-7" and "P-7 -a", Docket - Vol. II, pp. 566 to 569. 5 1 Docket - Vol. I, pp. 14 to 22. ~

DECIS ION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue Petitioner has proven the fact of withholding of its CWTsfor CY 2017 but only to the ex tent ofP7, 115,784.67 The second requisite m andates petitioner to prove the fact of withholding of the claimed CWTs through a copy of the statement duly issued by the payor (withholding agent) showing the n ames of the payor and the payee, the income payment, and the amount of tax withheld therefrom .s2 In Commissioner ofInte rnal Revenue v. Philippine National Bank, 53 the Supreme Court held that the Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307), complete in relevant details, is the competent proof to establish the fact that taxes are withheld. In this case, to prove the fact of withholding of th e claimed CWTs, petitioner presented the p ertinent BIR Forms No. 230754 issued by its clients and its Schedule of CWTs Subject for Refund55 for CY 20 17. These were examined by the ICPA. Based on the findings of the ICPA, the following CWTs in the a mount of P876,356.67 were not properly supported with BIR Forms No. 2307: CWT certi ficate s refl ecting an amount lower Reference to CWT Amount than the amount of claims !CPA Re port p 16 1,262.55 541 ,927.07 CWT certificates that are scanned or Annex 2 173,167.05 photocopies only Annex 3 f' 8 76 ,356.67 CWT without certificates Annex 4 Tota l As to the amount ofP161,262.55 p ertaining to petition er's overclaimed CWTs, th ere shall be an adjustment in the amount of P749.98 as detailed below, due to the !CPA's incorrect appreciation or determination of the amounts of CWTs per BIR Form No. 2307 in Annex 2 of its !CPA Report: 52 Section 2.58.3 (B), RR No. 2-98. 53 G.R. No. 180290, September 29, 2 014. 54 Exhibits "P-21" to "P-455", USB . 55 Exhibit "P-2146," Annex 1 of !CPA Report. ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner ofInternal Revenue Page 1 1 of 16 P H I LIPPI N E P6,604.42 !'6 ,064. 38 P540.04 P 6 ,604.38 P0.04 t> 5 4 0 .0 0 BUSINESS 43,210.24 200.03 43 ,410.24 9.98 8,332.26 BANK 8,322.26 MAYBANK PHILIPPI N E S 43,41 0.27 0.03 200.00 INC CHINATRUST (PHILIPPINES) 8,332.24 (0.02) 9.9857 COMMERCIAL BANK CORP Total Adjustment 1"749.98 Consequently, based on the findings of the ICPA, the CWTs amounting to P875,606.69, i.e. P876,356 .67- P749.98, shall be disallowed for being unsupported by valid BIR Forms No. 2307 . In addition to the above disallowances, CWTs in the amount of P583 ,307.57 shall likewise be disallowed due to the grounds stated hereunder: Exhibit No. Client Name CWT Amount CWTs supported by BIR Forms No. 2307 dated outside the period p 7 ,221.59 of claim 6,216.9 1 " P-52" DEUTSCHE BANK AG 137.19 2 ,034.00 "P- 107" STERLING BANK 1,420.38 14,759.84 CWTs supported by BIR Forms No. 2307 but the CWT amounts 6,423.37 per BIR Forms No. 2307 are lower than the CWT amounts per 28,567.90 claim 459.33 " P-66" JP MORGAN CHASE BANK NA (1>30,738 .07 per claim less 1'30,600.88 per 2307) " P-70" LAND BANK OF TH E PHILIPPINES (t'6, I 02 .00 per c lai m les s 1'4,068.00 per 2307) " P-58" DEVELOPMENT BANK OF TH E PHILIPPINE " P-1 02" (P4 ,261 . 15 per cla im less t>2 ,840.77 per 2307) " P- 132" SECURITY BANK CORP (P29,603.68 per claim less Pl4,843.84 per 2307) AUSTRALIA & NEW ZEALAND BANKING GROUP LTD (tl82,991.85 per claim less 1'76,568.48 per 2307) "P-209" SECURITY BANK CORP "P-433" (P48,397.23 per claim less P19,829 .33 per 2307) SECURITY BANK CORP (P33,903.29 per claim less P33,443.96 per 2307) 56 Exh ib its " P-193 ", "P- 286" , and "P-377", USB. r 57 The amo unt of adjustment was limited only to th e P9 .98 overclaim included in Annex 2 of the !CPA Report.

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner ofInternal Revenue "P-433" SECURITY BANK CORP 239.17 (1"35,126.56 per claim less P34,887.39 per 2307) 6,969.86 The exhibit reference for the purported supporting BIR Form No. 2307 does not pertain to the client p er the schedule of claim 38,393.61 6,906.95 "P-61" FIRST METRO INVESTMENT CORP 36,755.80 30,959.31 The exhibit references for the purported supporting BIR Forms 34,4 19.85 No. 2307 already pertaine d to oth e r p e riod and/o r income 22,220.25 payment and CWT amounts 800.00 "P- 100" SECURITY BANK CORP 22,129.94 "P-1 66" DEVELOPMENT BANK OF THE PHI LIPPINES 61,622.52 57,183.37 " P-100" SECURITY BANK CORP 73,790.73 5,077.97 " P-169" INTERNATIONAL NEDERLAND BANK 5,400.00 14,429. 31 "P-207" RIZAL COMMERCIAL BANKING CORP 33,465.79 16,041.9 1 " P-207" RIZAL COMMERCIAL BANKING CORP 8,005.72 41 ,255.00 CWT with exh ibit reference but the same was withdrawn as offer P583,307.57 by petitioner in its Motion for Partial Reconsideration (Re: Resolution dated March 2 1 , 2 0 22)58 "P-328" STERLING BANK CWTs without s upporting BIR Forms No. 2307 CITIBANK NA METROPOLITAN BANK & TRUST COMPANY METROPOLITAN BANK & TRUST COMPANY METROPOLITAN BANK & TRUST COMPANY CHINA BANKING CORPORATION SECURITY BANK CORP SECURITY BANK CORP RIZAL COMMERCIAL BANKING CORP AUSTRALIA & NEW ZEALAND BANKING GROUP LTD AUSTRA LIA & NEW ZEALAND BANKING GROUP LTD RIZAL COMMERCIAL BANKING COR P Total Thus, insofar as its compliance with the second requisite is concerned, petitioner has proven the fact of withholding of its CWTs for CY 2 017 to the extent ofP7,115,784 .67, computed as follows: ss Docket - Vol. II , p. 634, par. 21.

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) I nc. v. Commissioner of Interna l Revenue CWT per s chedule of claim CWT Amount Less : Disallowances p 8,574 ,698.93 Per IC PA findings p 8 75,606.69 Per C ourt' s furthe r verification 58 3,307 .57 Total p 1 ,458,9 14 .26 Net Am ount p 7 ,115,784.67 Petitioner has proven that it decZared the income upon which the substantiated CWTs were withheld as part of its gross income but only with respect to CWTs amounting to P 6 , 978, 758.87 In complia n ce with the third requisite, i.e. the in come p ayment upon which the t axes wer e withheld must b e included in the r eturn of the p ayee or r ecipient,59 petitioner pres ented its Annual Audite d Financial Statements (AFS) for year ended December 3 1, 2 0 17 ,6o Billing Invoices ,6 1 Official Receipts,62 and Genera l Ledger s (GLs ) for CYs 2 0 16 and 2 01 7.63 As a ptly found by the ICPA, the r evenue (brokerage fees - n et of discounts) re ported per p etitioner 's Annua l ITR a nd AFS for CYs 2 01 6 and 2 01 7 in the r esp ective a mounts of P l21,000,6 76.0064 and P96, 0 28,8 80.0065 ta llies with the a m ounts r eported as Net Broker a ge p er the Summa ry of Revenue Led ger [Annexes 7 (for CY 2 01 7) & 9 (for CY 2 01 6 ) of I CPA Rep ort] for the s am e p eriod as derived from p etitioner 's GLs . However , a verification of the Summa ry of Revenue Ledger a nd the Sch edule of CWT subj ect for r efund (Annex 1 of I CPA Report) r eveals tha t out of the in come p aym ents upon wh ich the subs t a ntia t ed CWTs of P7 ,1 15 ,784 .6 7 wer e withheld , the amount of P l ,4 90 ,053.23, as deta iled below, with the corresponding CWTs of Pl 37,025.8 0 were not traced in the 59 Sect ion 2.58 .3 (8), RR No. 2 -98. 60 Exh ib it "P-3 -a", Dock e t - Vol. II , pp . 492-54 3. 6t Exhibits "P-456" to "P- 1396" a n d "P-2 11 7 to "P- 2 144", USB. 62 Exhibits "P 139 7" t o "P-2 1 12" and "P-2 145", US B. 63 Exh ibits "P-2 148" a nd "P-2 149", US B. 64 Exh ib it "P-3-a", Docket - Vol. II , p. 530, Ite m 14; Exh ibit "P-20" (Line 30) , Page 2 of An nua l ITR, USB. 65 Exhibit "P-3 -a ", Docket - Vol. II , p. 530 , Item 14; Exhibit "P-2" (Line 30), Doc ket - Vol. I, p . 4 76. ~

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner ofInternal Revenue revenues per GLs. Hence, such amount was not established as forming part of the gross income declared by petitioner in its Annual ITRs for CYs 2016 and 2017: Income payment per BIR Form Per Annex 7 or 9 of ICPA Re port No. 2307 or per CWT claim Client Name Am ount not (the lesser of the two amo unts) trace d to INTERNATIONAL NEDERLAND Exhibit Invoic e GL/I nvoice CWTAmount BANK No. / Exhibit JP MORGAN Amount Invo ice Net Brokera ge CHASE BANK NA Referenc e No . No. LAND BANK OF' THE PHILIPPINES "P-65" p 252.795.41 "P-537" 105504 I' 156,734.55 I' 96,060.86 p 9,606.09 220.654.95 22,065.50 BANCO DE ORO "P-66" 306,008.80 "P-484" 105449 85,353.85 40,680.00 4,068.00 RIZAL "P-70" 40,680.00 �p.767" 105736 586,703.17 COMMERCIAL Annex 1 of 830,405.80 �p. 780" 105750 10,500.00 BANKING CORP !CPA Report (see also "P- I' 597,203. 17 233,202 .63 23,320.26 STANDARD 11 3,458.63 CHARTERED 146") 406,421.90 "P-826" 105683 124,000.00 BANK LIMITED "P-866 " 105835 28,000.00 "P-207" "P-878B" 105747 64,960.00 UNION BANK OF' "P-121 3" 105524 THE PHILIPPINES "P-214 " I' 330,418.63 105775 180,139.00 76,003.27 7,600.33 AUSTRALIA & "P- 2 3 5 " 105786 23,533.84 NEW ZEALAND 456,319.70 "P-805" 1058 11 152,268 .66 BANKING GROUP An nex 1 of "P-816" 105855 56,000 .00 LTD !CPA Report "P-842" BANK OF' THE (see also � P- "P- 8 8 6 " I' 411,941.50 PHILIPPINE 149,330.78 ISLANDS 238") 106,736.2 1 44,378.20 4,437.82 An nex 1 of 56,000.00 BANCO DE ORO !CPA Report 327,691.68 " P-689" 105660 (see also "P- ��P-715" 105687 I' 312,066.99 C1TIBANK NA "P-745" 105717 89,200.00 247") 45,404. 10 STERLING BANK Annex 1 of 15.624.69 1,562.47 !CPA Report I' 134,604.10 BANK OF' TOKYO- (see also " P- 263,549 .70 "P-9 4 6 " 105915 32, 161.24 MITSUBISH I UF'J "P-968" 105937 LTD 2 5 3 ") 136,500.00 Annex 1 of 128 ,945.60 12 ,894.56 UNION BANK OF' !CPA Report I' 168,66/.24 THE PHILIPPINES (see also "P- 318,405.50 "P-942" 105911 "P-943 " 105912 585,864.21 ASIA UN ITED 2 6 3 ") 48 ,5 15.45 BANK Annex I of 149,744 .26 2,994.89 CORPORATION !CPA Report I' 634,379.66 Tota l (see also �p. 872,396.35 "P-937" 105906 213,777 .83 "P-978" 105947 222,138.08 331") 112,000.00 238,016.69 23,801.67 I' 54 7, 915.91 548,676.60 "P-923" 105892 "P- 1001" 105970 "P-1028" 105997 85,503.50 760 .69 76.07 85,503.50 8,550.35 "P-340" 71 .712 .80 "P- I 004" 105973 70,702.80 1.010.00 101.00 Annex 1 of 347,942.30 " P-956" 105925 190,070 .08 !CPA Report "P-981" 105950 2,404.00 (see also "P- 106286 I' 192,474.08 155,468.22 15,546.82 343") 79,770.40 "P- 1304" 75,770 .7 3 3,999 .67 399.97 Annex 1 of 1'5,20 8,280.44 !CPA Report 1'3,7 18 ,227.2 1 (see also �p. 35 1") 1'1,49 0,053.23 1'137,025. 80

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue Thu s, ou t of the substantiated CWTs in th e amount of P7, 115,784.67, only P6,978,758.87 satisfied the third requ isit e as shown b elow: Properly substantia ted CWTs f> 7 , 115,78 4 .67 137,0 25.80 Less: CWTs, the incom e payments of which were not p 6 ,978 ,758.87 traced to G Ls Valid CWTs Verily, petitioner sufficiently proved its entitlement to the refund of or issuance of a tax credit certificate for its excess and unutilized CWTs for CY 20 17 but only to the extent of P6,978,758.87. WHEREFORE, in ligh t of th e for egoing consideration s, the presen t Petition for Review is PARTIALLY GRANTED . Respondent is hereby ordered to refund petitioner the amount of P6,978,758.87 representing the latter's excess and unutilized CWTs for the CY ended December 31 , 2017 . SO ORDERED. ~'7--~ CATHERINE T . MANAHAN Associate Justice WE CONCUR: ROMAN G. DEL ROSARIO Presiding Justice ~ I ~ . FRE~YJ{kS~A.. J1::~,RD~O MARIAN viJF Associate Justice

DECISION CTA Case No. 10273 Tullet Prebon (Philippines) Inc. v. Commissioner of Internal Revenue CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division . Presiding Justice