MCKINSEY & CO. (PHILS.) v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL SECOND DIVISION MCKINSEY & CO. (PHILS.), CTA CASE NO. 9332 Petitioner, -versus- Members: CASTANEDA, JR., Chairperson, COMMISSIONER OF INTERNAL REVENUE, and Respondent. MANAHAN, 11. Promulgated: JAN 17 2019 / J?': - ~�; X---------------------------------- L :"_ . DECISION CASTANEDA, JR., J .: STATEMENT OF THE CASE This resolves the Petition for Review1 filed by McKinsey & Co. (Phils.) on April 14, 2016, seeking the refund or issuance of tax credit certificate (TCC) in the amounts of P36,610,118.00 and P37,547,131.00, alleged ly representing its excess and unutilized creditable withholding taxes (CWT) for calendar years (CYs) 2013 and 2014, respectively, pursuant to Section 76 of the National Internal Revenue Code (NIRC) of 1997, as amended, in relation to Sections 204 r- and 229 of the same Code. 1 Docket, val. I, pp. 10-20.

DECISION CTA CASE NO. 9332 STATEMENT OF FACTS Petitioner McKinsey & Co. (Phils.) is a corporation organized and existing under the laws of the State of Delaware, United States of America, with principal place of business at 1209 Orange Street, Wilmington, Delaware 19801 U.S.A. It is authorized to transact business in the Philippines as a branch office primarily to engage in management consultancy services pursuant to Securities and Exchange Commission (SEC) Registration No. A1998-675. The branch office is located at the 7th Floor Zuellig Building, Makati Avenue corner Paseo de Roxas, Makati City, 1226. Petitioner is a registered taxpayer at the Bureau of Internal Revenue - Revenue District Office (RDO) No. 50 (South Makati), with Taxpayer Identification Number {TIN) 005-649-679-000. 2 On the other hand, respondent is the duly appointed Commissioner of the Bureau of Internal Revenue who has the power to decide on disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the National Internal Revenue Code or other laws or portions thereof administered by the BIR. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. Petitioner filed its Annual Income Tax Return {ITR) for CY 2013 on April15, 2014, declaring a creditable withholding tax in the amount of P36,610,118.00. Petitioner indicated on the face of its Annual ITR for CY 2013 its choice to be refunded of the alleged excess and unutilized CWT for CY 2013 by marking the option "To be refunded".3 On April 15, 2015, petitioner filed its Annual ITR for CY 2014, declaring a creditable withholding tax in the amount of P37,547,131.00. Similarly, petitioner indicated on the face of its Annual ITR for CY 2014 its choice to be refunded of its alleged excess and unutilized CWT by marking the option "To be refunded".4 On April 8, 2016, petitioner filed with the BIR RDO No. 50 an administrative claim for refund or issuance of TCC for its alleged "- 2 Pars. 1 and 2, Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), docket, val. I, pp. 580- 581. 3 Exhibits "P-7-a" and "P-7-b", docket, val. I, p. 248. 4 Exhibits "P-11-a" and "P-11-b", docket, val. I, p. 262.

DECISION CTA CASE NO. 9332 excess and unutilized CWT in the amounts of P36,610,118.00 and P37,547,131.00 for CYs 2013 and 2014, respectively.5 Due to respondent's inaction on petitioner's administrative claim, petitioner filed the instant Petition for Review before this Court on April 14, 2016. Respondent filed his Answer6 on May 6, 2016, interposing the following Special and Affirmative Defenses: "SPECIAL AND AFFIRMATIVE DEFENSES 4) Respondent reiterates and repleads the preceding paragraphs of the Answer as part of the Special and Affirmative Defenses; 5) Petitioner failed to demonstrate that the tax, which is the subject of this case, was erroneously or illegally collected; 6) Taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not refundable; 7) It is incumbent upon the Petitioner to show that it has complied with the provision of Section 204 (C) in relation to Section 229 of the 1997 Tax Code, as amended; 8) Petitioner's claim for refund or issuance of tax credit certificate in the amounts of Php36,610,118.00 and Php37,547,131.00 as alleged excess and unutilized creditable withholding taxes for the years 2013 and 2014, respectively, from the income payments on services rendered was not fully substantiated by proper documents, such as sales invoices, official receipts and others; )v 5 Exhibits "P-56" and "P-57", docket, val. I, pp. 392-400. 6 Docket, val. 1, pp. 130-133.

DECISION erA CASE NO. 9332 9) In a claim for tax refund or tax credit, taxpayer must prove not only entitlement to the grant of the claim under substantive law, it must also show satisfaction of all the documentary and evidentiary requirements for an administrative claim for a refund or tax credit; 10) Claims for refund are construed strictly against the claimant, the same partake the nature of exemption from taxation and as such, they are looked upon with disfavour." (Citation omitted) Petitioner filed its Pre-trial Brief 7 on June 20, 2016; while respondent filed his Pre-trial BriefS through registered mail on June 10, 2016, and was received by the Court on June 23, 2016. The pre- trial conference was held on September 15, 2016.9 The parties filed their Joint Stipulation of Facts and Issues10 on September 30, 2016 and was approved by the Court upon issuance of the Pre-Trial Order11 on October 14, 2016. Petitioner presented Ms. Elena D. Cabahug as its lone witness. 12 Afterwards, petitioner filed its Formal Offer of Evidence (with Motion to Re-mark Exhibits and Correct Sworn Statement)13 on February 23, 2017, offering Exhibits "P-1" to "P-54", "P-56" to "P-73", "P-75" to "P- 8in1c"lu' s"iPve-8o3f"stuobm"Pa-r1ki1n5g"s'. "P-117" to "P-119"' "P-121" to "P-128-1"' The Court granted petitioner's Motion to Re-mark Exhibits and Correct Sworn Statement on September 15, 2017. 14 Hence, on October 18, 2017, petitioner's witness, Ms. Elena D. Cabahug, appeared in open court for the correction of her Sworn Statement and re-marking of exhibits. 15 7 Docket, val. I, pp. 141-152. 8 Docket, val. I, pp. 156-159. 9 Minutes of the Hearing, docket, val. I, p. 560. 10 Docket, val. I, pp. 580-589. 11 Docket, val. I, pp. 590-600. 12 Minutes of the Hearing held on February 13, 2017, docket, val. II, p. 634. 13 Docket, val. II, pp. 637-659. 14 Docket, val. II, pp. 746-747. 15 Minutes of the Hearing, docket, val. II, p. 755.

DECISION erA CASE NO. 9332 In a Resolution dated November 22, 2017, the Court admitted petitioner's documentary exhibits, except for Exhibit "P-17" for failure to present the original for comparison. 16 During the hearing on December 4, 2017, counsel for respondent manifested that she will no longer present evidence.17 The parties likewise stipulated in open court on the existence of the denied Exhibit "P-17". As a result, Exhibit "P-17" was admitted by the Court as part of petitioner's documentary evidence. The parties were given thirty (30) days from December 4, 2017 to file their respective memoranda. Respondent filed his Memorandum18 through registered mail on December 20, 2017, and was received by the Court on January 3, 2018. On the other hand, petitioner filed its Memorandum 19 on January 29, 2018, after it was granted two extensions of time by the Court to file memorandum.20 Accordingly, the Court declared the case submitted for decision on February 1, 2018.21 STATEMENT OF THE ISSUES The parties agreed that the main issue22 to be resolved by this Court is: Whether or not petitioner is entitled to its claim for refund of or issuance of TCC for excess and unutilized CWT in the amounts of P36,610,118.00 and P37,547,131.00 for CYs 2013 and 2014, respectively. This issue may be broken down into the following sub-issues: 1. Whether petitioner's excess and unutilized CWT in the amounts of P36,610,118.00 and P37,547,131.00 for CYs 2013 and 2014 are duly substantiated by documentary evidence. 1z, 16 Docket, vol. II, pp. 758-759. 17 Minutes of the Hearing, docket, vol. II, p. 760. 18 Docket, vol. II, pp. 762-766. 19 Docket, vol. II, pp. 778-796. 20 Orders dated January 5, 2018 and January 23, 2018, docket, vol. II, pp. 772 and 777, respectively. 21 Resolution, docket, vol. II, p. 798. 22 Issues, JSFI, docket, vol. I, p. 581.

DECISION CfA CASE NO. 9332 2. Whether the income from which the CWTs being claimed for refund were withheld was reported as part of the revenues declared in petitioner's Annual ITR. 3. Whether petitioner carried over its excess and unutilized CWT for CY 2013 to the succeeding taxable periods. 4. Whether petitioner carried over its excess and unutilized CWT for CY 2014 to the succeeding taxable periods. 5. Whether petitioner filed its administrative and judicial claims for refund of excess and unutilized CWT for CYs 2013 and 2014 within the two-year prescriptive period provided under Sections 204(C) and 229, Tax Code. THE COURT'S RULING Pertinent to the resolution of the present case is Section 76 of the National Internal Revenue Code of 1997, as amended, 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 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 ~

DECISION erA CASE NO. 9332 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 tax credit certificate shall be allowed therefor." Section 76 of the NIRC of 1997, as amended, prescribes two options to a taxable corporation whose total quarterly income tax payments in a given taxable year would exceed its total income tax due. The taxpayer may either file a tax refund (either in the form of cash or tax credit certificate) or carry over the excess credit. However, once the carry-over option is taken actually or constructively, it becomes irrevocable for that taxable period.23 The phrase "for that taxable period" merely identifies the excess income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer. 24 In exercising its option, 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 for a refund or claim for 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.25 A perusal of petitioner's Annual ITRs for CYs 201326 and 201427 disclosed that petitioner had Minimum Corporate Income Tax (MCIT) due in the respective amounts of P1,164,387.00 and P320,232.00, totaling P1,484,619.00. Petitioner alleges that these MCIT liabilities were paid using a portion of its reported prior year's excess credits of P80,662,196.00, thus, leaving the balance of the prior year's excess credits of P79,177,577.00 and creditable taxes withheld in 2013 and 2014 in the respective amounts of P36,610,118.00 and ,._, 23 Phi/am Asset Management, Inc. vs. Commissioner ofInternal Revenue, G.R. Nos. 156637 and 162004, December 14, 2005; Systra Philippines, Inc. vs. Commissioner ofInternal Revenue, G.R. No. 176290, September 21, 2007. 24 Commissioner ofInternal Revenue vs. Bank of the Philippine Islands, G.R. No. 178490, July 7, 2009. 25 Philippine Bank of Communications vs. Commissioner of Internal Revenue, eta!., G.R. No. 112024, January 28, 1999. 26 Exhibit "P-7", docket, val. I, pp. 248-255. 27 Exhibit "P-11", docket, val. I, pp. 262-271.

DECISION CTA CASE NO. 9332 P37,547,131.00 or a total of P153,334,826.00 unutilized as of December 31, 2014, as shown below: CY 2013 CY 2014 Total Exhibit ''P-7" Exhibit ''P-11" Net Sales/Revenues/Receipts/Fees P575.652,971.00 I p 529,303,739.00 I P1,104.956.710.00 Less: Cost of Sales of Services Gross Income from Operation 521.958,744.00 I 518,363,954.00 I 1,040,322.698.00 Add: Other Taxable Income Not Subjected to P 53.694,227.00 I P 10,939.785.00 I P 64.634.012.00 Final Tax Total Gross Income 4.525,132.00 5.071.833.00 9.596.965.00 Less: Ordinary Allowable Itemized Deductions Net Taxable Income P 58.219,359.00 I P 16.011.618.00 I P 74.230.977.00 75.483,384.00 I 128.558.804.00 I 204.042.188.00 I I P(17,264,025.00) P(112,547,186.00) P(129,811,211.00) Minimum Corporate Income Tax (MCIT) P 1,164.387.00 I P 320.232.00 I P 1.484.619.00 Less: Prior Year's Excess Credits Balance of Prior Year's Excess Credits 80.662,196.00 I 79,497.809.00 I 80.662.196.00 Add: Creditable Taxes Withheld During the Year P 79,497,809.00 I P 79,177,577.0 r~t~itt~~9;l:~:Z;S~7~oo Total Excess Tax Credits as of December 31 f 36;6td,it8.oo 31,~47,13to<i~l< .,�.~;;;~:tst,249.oo P116,107,927.00 I P 116,724,708.00 1.. tt�is3:33~:826.00 To prove the existence of its prior year's excess credits of P80,662,196.00, petitioner presented Certificates of Creditable Tax Withheld At Source (BIR Form No. 2307)28 for CYs 2004 to 2006. Upon examination of these certificates, the Court noted that there were instances when the sum of the CWTs reflected in the certificates exceeded those reported per petitioner's ITR for the same year or vice-versa. Applying Section 76 of the NIRC of 1997, as amended, which requires that the CWT be reflected on the ITR, any amount, therefore, in the supporting withholding tax certificates that exceeds the amount declared in the ITR cannot be allowed. Accordingly, petitioner's allowable tax credits for CYs 2004 to 2006 amounted only to P33,254,767.50, computed as follows: Covered Amount of CWT Amount of CWT Period Exhibit Payor's Name per Certificate per ITR Difference Allowable CWT ForCY 2004 "P-38" Jollibee Foods 01-Apr-04 to p 138 928.50 "P-39" Corporation 30-Jun-04 6 476 456.25 Ayala Corporation 01-Jul-04 to 2 433 912.00 30-Sep-04 "P-40" Jollibee Foods 01-Jul-04 to 62 912.25 "P-41" Corporation 30-Sep-04 5 671,321.88 Ayala Corporation 01-0ct-04 to 870 947.40 31-Dec-04 Subtotal p 15 654 478.28 P 15 647 735.0029 p 6 743.28 p 15 647 735.00 "" 28 Exhibits "P-38" to "P-46", docket, vol. I, pp. 353-363. 29 Exhibit "P-47", Lines 27C and 27D (the sum of P14,777,746.00 and P869,989.00), docket, vol. II, p. 708.

DECISION erA CASE NO. 9332 ForCY 2005 01-Dec-05 to 5 855 400.0030 (229 762.50) 5 625 637.50 Bank of the 31-Dec-05 p 5 625 637.50 "P-42" Philippine Islands ForCY 2006 "P-43" PLOT 01-Apr-06 to p 3 207 493.50 "P-44" Globe Telecom, 30-Jun-06 1449 870.00 "P-45" Inc. "P-46" Smart 01-0ct-06 to Communications, 31-Dec-06 Inc. Smart 01-0ct-06 to 6,602 376.00 Communications, 31-Dec-06 Inc. 01-0ct-06 to 6 602 376.00 31-Dec-06 p 17 862 115.50 P39,142,231.28 Subtotal 11 981 395.0031 5 880,720.50 11 981,395.00 P33,484,530.00 P33,254 767.50 Total After deducting the aforesaid CWTs of P33,254,767.50 from petitioner's MCIT liabilities for CYs 2004 to 2012 in the total amount of P12,355,243.47, there still remains an amount of P20,899,524.03 which is sufficient to cover petitioner's MCIT liabilities for CYs 2013 and 2014 in the total amount of P1,484,619.00, as shown below: Allowable CWTs for CYs 2004 to 2006 p 33_L25~767.50 Less: MCIT Due for CYs 2004 to 2012 Exhibit Taxable CY MCITDue "P-47" 2004 p 946,882.00 "P-48" 2005 1,614,475.00 "P-49" 2006 82,634.00 "P-50" 2007 2,721,265.00 "P-51" 2008 2,388,293.00 "P-52" 2009 926,359.00 "P-53" 2010 1,952,092.00 "P-54" 2011 614,393.14 "P-16" 2012 1,108,850.33 12,355 243.47 Excess CWTs as of December 31, 2012 p 20,899,524.03 Exhibit Taxable CY MCITDue "P-7" 2013 p 1 164,387.00 "P-11" 2014 320,232.00 1,484,619.00 Excess CWTs as of December 31, 2014 P19,414,905.03 fv 30 Exhibit "P-48", Line 28D, docket, vol. I, p. 367. 31 Exhibit "P-49", Line 28D, docket, vol. I, p. 370.

DECISION CTA CASE NO. 9332 Considering that only the prior year's excess credits were carried over to the subsequent quarters32/year33, the unutilized CWTs for CYs 2013 and 2014 in the respective amounts of P36,610,118.00 and P37,547,131.00, totaling P74,157,249.00, which petitioner marked in its ITRs as "To be refunded'134, may be the proper subject of a claim for refund under Section 76 of the NIRC of 1997, as amended. However, in addition to the requisites provided under Section 76 of the Tax Code, jurisprudence and pertinent BIR Revenue Regulations provide that the following requisites must be complied with in order that the refund claim may be granted: 1. The claim for refund must be filed within the two-year prescriptive period as provided under Sections 204(C) and 229 of the Tax Code, 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 3. The income upon which the taxes were withheld must be included in the return of the recipient.35 Anent the first requisite, the pertinent provisions are Sections 204(C) and 229 of the NIRC of 1997, as amended, which provide: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX~ 32 Exhibits "P-8", "P-9", and "P-10", Line 31A (P79,497,809.00) and "P-12", "P-13", and "P-14", Line 31A (P79,177,577.00), docket, vol. I, pp. 256, 258, 259, 272, 274, and 276. 33 Exhibits "P-11", Schedule 7, Line 1 (P79,497,809.00) and "P-15", Schedule 7, Line 1 (P79,177,577.00), docket, vol. I, p. 268 and docket, vol. II, p. 700. 34 Exhibits "P-7-a" and "P-11-a". 35 Republic of the Philippines, represented by the Commissioner of Internal Revenue vs. Team (Phils.) Energy Corporation (formerly Mirant {Phils.) Energy Corporation), G.R. No. 188016, January 14, 2015; United International Pictures AB vs. Commissioner ofInternal Revenue, G.R. No. 168331, October 11, 2012; Citibank N.A. vs. Court of Appeals, et a!., G.R. No. 107434, October 10, 1997; ACCRA Investments Corporation vs. The Honorable Court ofAppeals, eta!., G.R. No. 96322, December 20, 1991; Section 2.58, Revenue Regulations No. 2-98, as amended.

DECISION CfA CASE NO. 9332 (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." (Emphasis supplied) "SEC. 229. Recovery of Tax Erroneously or Illegally Collected - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." (Emphasis supplied) It is well-settled 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.36 Je..- 36 ACCRA Investments Corporation vs. The Honorable Court of Appeals, eta!., G.R. No. 96322, December 20, 1991; Commissioner ofInternal Revenue vs. TMX Sales, Inc. and the Court of Tax

DECISION CTA CASE NO. 9332 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. 37 Moreover, in the case of Metropolitan Bank & Trust Company vs. The Commissioner ofInternal Revenu&8, the Supreme Court held that it is only logical to reckon the two-year prescriptive period from the time the Final Adjustment Return or the Annual Income Tax Return 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. Based on the afore-cited cases, petitioner has two years from the date of filing of the Final Adjustment Return within which to file a claim for refund or issuance of TCC for its excess creditable withholding taxes both in the administrative and judicial levels. The present claim covers CYs 2013 and 2014 for which petitioner filed its ITRs on April 15, 201439 and on April 15, 201540, respectively. Counting from these dates, the administrative claim which was filed on April 8, 201641 and the Petition for Review which was filed on April 14, 2016 fell within the two-year prescriptive period. Clearly, petitioner satisfied the first requisite. With regard to the second and third requisites, Section 2.58.3(B) of Revenue Regulations (RR) No. 02-98, as amended, states: "SECTION 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 jt:- Appeals, G.R. No. 83736, January 15, 1992; Commissioneroflnternal Revenue vs. The Philippine American Life Insurance Co., eta!., G.R. No. 105208, May 29, 1995. 37 Commissioner ofInternal Revenue vs. TMX Sales Inc., eta!., G.R. No. 83736, January 15, 1992. 38 G.R. No. 182582, April 17, 2017. 39 Exhibit "P-7-b", docket, vol. I, p. 248. 40 Exhibit "P-11-b", docket, vol. I, p. 262. 41 Exhibits "P-56" and "P-57", docket, vol. I, pp. 392-400.

DECISION CTA CASE NO. 9332 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 supplied) Petitioner submitted several BIR Forms No. 2307, duly issued by its various clients for CYs 2013 and 2014, proving the withholding of creditable income taxes in the respective amounts of P36,610,118.25 and P37,547,130.50 or in the sum of P74,157,248.75, detailed as follows: Income Amount ofCWT Exhibit Pavor's Name �. Covered Period Payments �;>.. c. � ' ,�. :1 ,FOrtalenktarYear (o13 ... /' . . �. ~�. .. : ' \ �: �\ "P-18" Globe Telecom, Inc. 01-Jan-13 31-Mar-13 p 38 425 700.00 p 5 763,855.00 "P-19" Globe Telecom Inc. 01-Apr-13 30-Jun-13 45 574 300.00 6 836 145.00 "P-20" S.C. Johnson Philippines ROHQ 01-Jan-13 31-Mar-13 24 396 000.00 3 659 400.00 "P-21" Maynilad Water Services Inc. 01-Jan-13 31-Mar-13 40 000 000.00 6 000 000.00 "P-22" Maynilad Water Services, Inc. 01-Apr-13 30-Jun-13 27 000 000.00 4 050 000.00 "P-23" Ayala Corporation 01-Jul-13 30-Sep-13 25 706,940.00 3 856,041.00 "P-24" S.C. Johnson Philippines ROHQ 01-0ct-13 31-Dec-13 21 323,115.00 3 198 467.25 "P-25" S.C. Johnson Philippines ROH.Q 01-0ct-13 31-Dec-13 21 641.1_400.00 3 246 210.00 Subtotal P244,067,455.00 P36,610,118.25 01-0ct-13 31-Dec-13 p 73 000 000.00 lor CaJ~"dar Year 2014 p 10 950 000.00 4,500 000.00 "P-26" Globe Telecom Inc. 5,023 162.50 1 561 917.50 "P-27" Globe Telecom Inc. 01-Jan-14 31-Mar-14 30 000,000.00 240 295.00 7,905 712.50 "P-28" Holcim Philippines Inc. 01-Jan-14 31-Mar-14 33 487,750.00 2 673 000.00 1680 562.50 "P-29" Holcim Philippines Inc. 01-Jan-14 31-Mar-14 12,014,750.00 427 732.50 "P-30" Holcim PhiliQQines Inc. 01-0ct-13 31-Dec-13 2 176 087.50 100 660.50 "P-31" Globe Telecom Inc. 01-Apr-14 30-Jun-14 52 704 750.00 308 000.00 "P-32" Vicsal Development Corp. 01-Apr-14 30-Jun-14 17 820 000.00 P37,547,130.50 P74,157,248.75 "P-33" Holcim Philippines Inc. 01-Apr-14 30-Jun-14 11,203 750.00 "P-34" Ayala Corporation 01-Apr-14 30-Jun-14 2,851 550.00 "P-35" Ayala Corporation 01-Jul-14 31-Jul-14 14,507 250.00 "P-36" Globe Telecom Inc. 01-0ct-14 31-Dec-14 671 070.00 "P-37" Sanofi-Aventis Philippines Inc. 01-0ct-14 31-Dec-14 15 400 000.00 Subtotal P263,660,870.00 TOTAL Petitioner likewise complied with the third requisite as the income payments related to the CWTs of P74,157,248.75 were traced to petitioner's invoices, official receipts, and general ledgers (GLs) for CYs 2012, 2013, and 2014, and in turn were reported in petitioner's ITRs for the said years. p-v

DECISION CfA CASE NO. 9332 Petitioner's ITRs for CYs 2012, 2013, and 2014 reflected "Net Sales/Revenues/Receipts/Fees" in the amounts of P750,257,727.6042, P575,652,971.00 43 , and P529,303,739.00 44 , respectively. In the Audited Statements of Comprehensive Income of petitioner for the same calendar years, the said amounts were broken down as follows: CY 2012 CY 2013 CY 2014 (Exhibit ''P-58'') (Exhibit ''P-58'2 {Exhibit "P-59'2 Billing Revenue fl 486,597,60LOO , 372,198,318.00 fl 26l,S18,29c?.OO oil~ultpncv �servlces� Shared Services Center 202,333,119.00 159,737,124.00 186,544,432.00 Loaned Services 61,327,007.00 43,717,529.00 81,241,010.00 Total Revenue P750,257,727.00 P575,652,971.00 P529,303,739.00 On the other hand, the certificates45 with the related invoices and official receipts 46 as well as the Sworn Statement of petitioner's Accounting Officer, Ms. Elena D. Cabahug47, disclosed that the claimed CWfs pertain to professional fees received by petitioner in CYs 2013 and 2014 which were verified to have been booked/recorded under "Consultancy Services" in its Gls48 for CYs 2012, 2013, and 2014. The total amount of revenues from consultancy services per petitioner's GLs for CYs 2012, 2013, and 2014 were the same amounts reported by petitioner in its ITRs for the said years. In fine, the Court finds that petitioner has sufficiently proven its entitlement to a refund or issuance of TCC for its unutilized excess cwrs for calendar years 2013 and 2014 in the respective amounts of P36,610,118.00 and P37,547,131.00, or in the total amount of P74,157,249.00. WHEREFORE, premises considered, the instant Petition for Review is GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE in the amount of P74,157,249.00 in favor of petitioner, representing its excess and unutilized creditable withholding taxes for calendar years 2013 and 2014. c;t-- 42 Exhibit "P-55", Line 16C, docket, vol. I, p. 388. 43 Exhibit "P-7", Line 30. 44 Exhibit "P-11", Line 30. 45 Exhibits "P-18" to "P-37", docket, vol. I, pp. 333-352. 46 Exhibits "P-65" to "P-125", "P-126", and "P-127, docket, vol. II, pp. 711-740 and docket, vol. I, pp. 558 and 559. 47 Exhibit "P-128", docket, vol. I, pp. 172-229. 48 Exhibits "P-60" to "P-62", docket, vol. I, pp. 496-498.

DECISION CTA CASE NO. 9332 SO ORDERED. ~~ c. a..,.~ JUANITO C. CASTANEDA, JR. Associate Justice I CONCUR: c~�7~ CATHERINET.MANAHAN 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. Q--~~-P c. ~~x~ ~� JffANiT"o 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. ROMAN G. DEL ROSARIO Presiding Justice