COCA-COLA BOTTLERS PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COCA-COLA BOTTLERS PHILIPPINES, INC., EB No. 346 Petitioner, (CTA Case No. 6592) Present: ACOSTA, PJ. CASTANEDA JR., -versus- BAUTISTA UY, CASANOVA, and COMMISSIONER OF INTERNAL PALANCA-ENRIQUEZ, JJ: REVENUE, Respondent. Promulgated: JUN 2 5 2008 :)/ /t0t07~~:t~) . �{�-.J /''�t r - X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION CASANOVA, J: This is an appeal, by way of a Petition for Review, 1 filed by the petitioner- Coca-Cola Bottlers Philippines, Inc. (COCA-COLA) from the Decision2 (Assailed Decision) of the Court of Tax Appeals Second Division ( CTA Second Division) dated June 19, 2007 in CTA Case No. 6592 entitled, "Coca-Cola Bottler:s Philippines, Inc. (CCBPI/ petitioner vs. Commissioner of Internal Revenue, respondent' denying petitioner-COCA-COLA's Petition for Review therein, and from the Resolution3 (Assailed Resolution) dated November 20, 2007 denying COCA-COLA's Motion for Reconsideration. The facts of the case, as culled from the records, are as follows: "Petitioner is a domestic corporation organized and existing under the Philippine laws/ wtt!J principal office at San Miguel Properties Centre/ No. 7 St Francis A venue/ Ortigas Cente0 Mandaluyong City and engaged..IJ- 1 CTA En Bane Rollo, pp. 8-33. 2 Annex "A", Petition for Review, C l A En Bane Rollo, pp. 41-54. 3 Annex "B", Petition for Review, CTA bu Bane Rollo, pp. 55-60.

EB CASE NO. 346 (CTA CASE NO. 6592) DECISION in the manufactwc dl!d sale of carbonated beverages. On the other hand, respondent is ~~ested by law with the power to dectde/ approve and grant claims for refund or tax cred1t of internal revenue taxe!>-:-� and holds office at the Bureau ofInternal Revenue/ National Office Building/ Agham Road, Diliman/ Quezon City. Petitioner is one of the top five thousand {~000) corporations of the Philippines as determined by the respondent. Thus/ it is required to withhold one pe1cent (1%) creditable Expanded Withholding Tax ('EWrj on income payments to its local suppliers of goods pursuant to Section 2.57.2(/VI) of Revenue Regulations No. 2-98 ('RR 2-98'J as amended The Coca-Cola Export Corporation ('TCCEC} and San Miguel Corporation (''SMC) are among the local suppliers of the petitioner. Petitioner made several purchases of goods from TCCEC and SMC on various dates korn December 1998 to December 2000. On these purchase~ petitioner withheld and remitted to the BIR the total amount of .P7~86~561.92 on different dates representing 1% EWT on its payments to TCCEC and SMC The EWT withheld shall be referred to as the ''First Remittance" and broken down as follows: ----� ~-- EWT Remitted p 60 799,252.43 Name of Sup~ier 10 069,309.49 1. TCCEC p 70,868_[561.92 -- 2. SMC Total On January 2.S~ 2001/ petitioner filed with the respondent its Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded) for the month of December 2000 in the amount .P11~29~812.90. On January 1~ 2003/ petitioner filed a claim for tax refund or tax credit in the amount of P7~868/561.9~ representing the creditable withholding ta~ claimed as twice remitted to the BIR. Petitioner alleged therein: }It the close of December 2000 all purchases for the period that were already received but which have not undergone invoice verification were retrieved from the SAP computer accvunting system and the corresponding withholding tax amounting to P89/39~730.01 (TCCEC- P6~95~093.93 + SMC-P1~95~463.65 +Other Supp/iers- I Pll/477,172.43) was taken up unmindful of the fact that some purchases from TCCEC and SMC were paid manually l and the corresponding withholding tax thereon were.{j:l- j 1I 724

EB CASE NO. 346 (CTA CASE NO. 6592) DECISION already taken up manually and remitted to your otflce previously (since as earlier stated manual payments of invoices/ the corresponding manual take up of the withholding tax and remittance of the withholding tax to your office will not be captured by the SAP-AP Module). The said amount ol ?89,394/730.01 that was taken up as withholding tax on purchases which have not undergone invoice verification was included in the amount of ?113,29~812/90 remitted by the CCBPI to your office on January 2!J~ 2001/ which remittance is evidenced by Land Bank Official ReL-eipt No. 7060941. It is also included in CCBPTs Monthly Remittance Return ol Creditable Income Taxes Withheld (Expanded)- SIR Form No. 1601-E lor the month of DeL-ember 2000 which was filed with your office on the same date. Out ol the amount of ?89/394/730.01 that was taken up as withholding tax on purchases that have not undergone invoice verification ?7~86~5671.92 (TCCEC-?60/799/252.43 + SMC-?1~069,309.49) were for purchases that were already manually paid and the withholding tax thereon taken up and/or remitted to your office previously. Hence/ there was double remittance of withholding tax 1i1 the amount of ?7~86~561.92. But while CCBPI remitted the withholding tax on the said purchases twice/ the actual withholding of the tax was done only once since the invoices were already paid at the time of the second take up of the withholding tax. Therefore/ the amount of withholding tax that was remitted to your office for the month of December 2000 was in excess by P7~86~561/92 of the amount that is required to be/ and actual!~ withheld from local suppliers of goods and services pursuant to Sec. 2.57.2(M) of R.R. 2-98./ (Assailed Decision, pp. 2-4.) After trial on the merits, the CTA Second Division promulgated the Assailed Decisiod on June 19, 2007, the dispositive portion of which reads as follows: "WHEREFORE, premises considered, the Petition for Review is hereby DISMISSED for lack ofrn_erit. SO ORDERED.'~ 4 Supra, note 2. 725

'; EB CASE NO. 346 (CTA CASE NO. 6592) DEOSION Not satisfied with the above decision, COCA-COLA filed a "Motion for Reconsideration" 5 on July 13, 2007. Respondent filed an "Opposition (To Motion for Reconsideration'~() on August 22, 2007. In the Assailed Resolutiorl dated November 20, 2007, the CTA Second Division denied COCA-COLA's "Motion for Reconsideration" for lack of merit. On December 12, 2007, COCA-COLA filed a "Motion for Additional Time to File Petition for Review8" with the CTA En Bane. In a Resolution9 dated December 14, 2007, the Court En Bane granted the said motion thereby giving petitioner a final and non-extendible period of fifteen (15) days from December 12, 2007 or until December 27, 2007, within which to file a Petition for Review. On December 27, 2007, COCA-COLA filed the instant Petition for Review10 with the CTA En Bane, praying that the CTA tiJ Bane reverse the Decision dated June 19, 2007 of the CTA Second Division in CTA Case No. 6592 entitled, "Coca-Cola Bottlers Philippines, Inc. (CCBPJ), petitioner vs. Commissioner of Internal Revenue, respondent' and decide in favor of the petitioner. Petitioner raised the following grounds11 in support of the instant Petition for Review, to wit: A. Petitioner has proven that there was no double utilization of the withholding taxes by SMC and TCCEC. B. Petitioner has established by preponderance of evidence required in tax refund claims its entitlement to tax refundfl 5 CTA Second Division Rollo, pp. 621>-646. 6 CTA Second Division Rollo, pp. 64'J-65J. 7 Supra, note 3. 8 CTA En Bane Rollo, pp. 3-5. 9 CTA En Bane Rollo, p. 7. 10 Supra, note l. II Ibid, p. 7. ': .J

EB CASE NO. 346 (CfA CASE NO. 6592) DECISION c. The question of double utilization is not a prerequisite to petitioner's claim, as this is not even an issue in the case. The CTA En Bane promulgated a Resolution12 on January 17, 2008, ordering the CIR to file a Comment on the said Petition for Review, within ten (10) days from receipt of the said Resolution. In compliance with the said Resolution, CIR filed its Comment13 on January 30, 2008. After a careful and thorough evaluation and consideration of the records of the case, the Court En Bane finds no new matters which have not yet been considered and passed upon by the CTA Second Division in its assailed Decision and Resolution. As aptly discussed by the CTA Second Division in the assailed Decision, and We quote, to wit: "To prove its claim/ petitioner presented the following documentary evidence: 1. Monthly Remittance Return of Income Taxes Withheld (BIR Form 1601) for the months ofJanuary 1999 to December 2000/ 2. Offkial Receipts of the EWT remitted to the BIR/ 3. Schedule of total remittance/ 4. Letter from the BIR designating petitioner as withholding agent of 1% creditable withholding ta~� Waiver and Quit Claim from SM~� 5. 6. Waiver and Quit Claim from TCCEC; 7. Independent CPA Report (Partial) dated November ~ 2003/ 8. Schedule of TCCEC purchases with manual payments (December 1998 to November 2000)/ 9. Payment arrangements between CCBPI and TCCEC for the CYs 199~ 1999 and 2000/ 10. TCCEC sales invoices and debit/credit memos for the CY 1998 to 2000/~ i 12 CTA En Bane Rollo, pp. 62-63. l 13 CTA En Bane Rollo, pp. 64-6ll. ll

EB CASE NO. 346 (CTA CASE NO. 6.592) DECISION 11. Financial Accounting (FJ) documents/Purchase Order (PO) history documents evidencing goods receipt (GR) amount for the CYs 1998/ 1999 and 2000/ 12. SAP Payment Booking Schedules with Payment Request Forms/ Official Receipts and Checks evidence manual payment ofEWT for the CYs 1999 and 2000/ 13. Schedule ol EWT Balances Per General Ledger (1999-2000)/ 14. Schedule of BVT remittance for CY 1999-2000/ 15. 1999 and 2000 Details olEWT Remittance/ 16. Schedule of Withholding Tax Accruals for TCCEC for December 2000/ 17. Schedule of Wtthholding Tax Accruals for the CYs 199~ 1999 and 2000 which were remitted in December 2000; 18. Alpha/ist ofpayees subjected to EWT for December 2000; 19. Independent CPA Report (Partial) dated February 11/ 2004; 20. Schedule of SMC Purchases with Over-remitted EWT (February 1999 to November 2000) or "the Lead Schedule"tor brevity: 21. SMC Sales Invoices for the CY 2000; 22. Financial Accounting (FI) Documents/Material Documents/Purchase Order (PO) History Documents Evidencing 6oods Receipt (GR) amount for the CYs 1999 and 2000/ 23. SAP Payment Booking Schedules wtth Payment Request Forms~ Official Receipts and Checks Evidencing Manual Payment of EWT for the CYs 1999 and 2000/ 24. Delive1y Summary Accompanying Payment Documents; 25. 2000 Detatls of EWT Remittance for- SMC (excerpts)/ 26. Details of Withholding Tax Accruals for SMC for December 2000; 27. Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) for 'the month of December 2000 under the name of:.r1C/ - 28. Rna/ and Consolidated Independent CPA Report dated August 2~ 2004; 29. SMCs Statement ofAccounts for CY 2000; 30. Process Verification Flowchart for TCCEC and SM~� 31. Gene1al Process Verification Flowchart for TCCEC andSMC;~ l28 J

EB CASE NO. 346 (CTA CASE NO. 6592) DECISION 32. Certit~c;;i/e ol Creditable Tax Withheld at Source (BIR Form No. 2307) for the months of Januar~ Apri~ June/ Jul~ August Septembe~ Novembe~ December 2000 under the narne ofSMC; and 33. Cettificate of Creditable Tax Withheld at Source (BIR Form No. 2307) for the first secon~ third quarters of the year 2000 under the name of TCCEC As regards to petitioner's supplier TCCE~ the CPA reported that 1t adopted several procedures an~ subsequent!~ "verified the actual remittances of EWF lor the months of January 1999 to December 2000 by tracing each manual payment against the 1999 and 2000 Details of EWT Returns (Exhbits /I'IM and NN) checking machine validation in the returns and Oft7cial Receipts issued by the Land Bank of the Philippines." In a tabular form/ the CPA made the following findings:14 Finding EWT Remitted EWT Remittance Reference Related to Included again Traced to January 1999 EWr Return Purchases Traced to February 1999 EWT Return from In the Traced to March 1999 EWT Return TCCEC Dec-00 Traced to April 1999 EWT Return return Traced to May 1999 EWT Return Traced to June 1999 EWT Return 5,546,131.53 50,128.25 Annex K Traced to July 1999 EWT Return 4, 714,693.43 51,933.40 Annex L Traced to August 1999 EWT Return 4,753,582.23 322,197.50 Annex M Traced to September 1999 EWT Return 3,955,110.11 162,476.80 Annex N Traced to October 1999 EWT Return 5,428,294.97 Traced to November 1999 EWT Return 6,078,263.90 276,923.25 Annex 0 Traced to December EWT 1999 EWT Return 5,582,892.61 Traced to January 2000 EWT Return 1,587,365.85 238,044.60 Annex P Traced to February 2000 EWT Return 4,540,301.76 209,491.80. Annex Q Traced to March 2000 EWr Return 4,392,087.28 420,837.80 Annex R Traced to April 2000 EWT Return 4,922,836.16 332,207.65 Annex S Traced to May 2000 EWT Return 5,594,318.20 621,561.50 Annex T Traced to June 2000 EWT Return 5,698,622.50 1,594,531.10 Annex U Traced to July 2000 EWT Return 3,922,311.11 1,550,986.77 AnnexV Traced to August 2000 EWT Return 3,570,938.31 1,949,662.69 AnnexW Traced to September 2000 EWT Return 4,330,076.95 3,767,292.71 Annex X 5,690,551. 72 3,571,521.05 Annex Y 6,204,600. 73 4,481,521.75 Annex Z 5,354,375.64 5,600,215.27 AnnexAA 4,183, 784.48 6, 194,933.24 Annex 88 5,167,762.72 5,424,330.07 Annex CC 4,106,642.99 Annex DO 5,166,865.10 Annex EE 14 Please see the final and consoliJ<Hed report, Exhibit AAA, pp. 8-9. 729

4�#trt t 'ft"tw MD"!% 1%M't . t' ' . M h 1 *t ' p !Mil � � f t . !JII!M 2 �!!_!!!1Lf -... , ... 1 EB CASE NO. 346 (CfA CASE NO. 6592) DECISION 4,457,580.51 4,456,894.16 Annex FF Page 8 of 17 4,940,662.87 4,939,823.06 Annex GG 4,732,160.97 4,266,059.45 Annex HH Traced to October 2000 EWT Return 1,042,170.86 Annex II Traced to November 2000 EWT Return 115,349.306.50 Traced to December 2000 EWT Return (0.40) Not traced to Returns 60,799,252.42 Unaccounted Difference Total Of the P6~799/252.42 which petitioner claimed to be remitted twice" Pl/044170.86 were not traced to EWT returns anct thus/ leaving the amount of P59/75~081.56 as possible double remittance. To summarize the figures: Supplier I TCCEC Amount clatmed as remitted twice P 60,799,252.42 1 ,042,170.86 Less: Amount not traced to returns 59,757,081.56 Possible arnount of double remittance P For supplier S"M~ the amount being claimed is Pl0/069/309.49. The CPA reported that it adopted several procedures anct subsequent!~ "verified actual remittance of EWT withheld on manually-processed payments (outside the normal SAP process) to SMC amounting to P10_,069"309.49 for the months of March 1999 to December 2000 by tracing each manual payment against the 2000 Details of EWT Returns (Excerpts) (Exhibit XX) and checking machine validation in the returns and Official Receipts is-sued by the Land Bank of the Philippines. [It] also traced the EWT withheld on manually-processed payment (outside the normal SAP process) to check if these were again included in the amount of accrued EWT of the petitioner in December 2000 and remitted in January 25_, 2001 by tracing the document number and receipt number from the supporting document and receipt number from the supporting documents (Exhibit VV) to the Lead Schedu/e-SMC (Exhibit 55).// The CPA made the following find1i1gs~ 15 Procedure 5.2, p. 13 ofExhibii AAA. 730 ; j

-� EB CASE NO. 346 (CTA CASE NO. 6592) DECISION Finding --r ewr Remitted -. Reference Related to 1Purchases from EWT Remittance SMC Included again in The December 2000 return Traced to February 1999 Return 2,408,470.52 9,893.43 Annex XX Traced to March 1999 Return 2,830,673.21 21,77086 Annex YY Traced to April 1999 Return 4, 133,768.45 28,024.78 Annex ZZ Traced to June 1999 Return 5,287,821.99 140,477.78 AnnexAAA Traced to July 1999 Return Annex 888 Traced to September 1999 t~eturn 641,395.42 8,787.00 Annex CCC Traced to October 1999 Return 63,391.61 2,214.41 Annex DOD Traced to December 1999 Retum Annex EEE Traced to January 2000 Return 163,611.91 495.40 Annex FFF Traced to March 2000 Return 865,485.16 4,954.04 Annex GGG Traced to April 2000 Return 1,844,673.40 416,814 56 Annex HHH Traced to June 2000 Return 1,929,808.35 1,122,47888 Annex Ill Traced to August 2000 Return 1,157,084.21 1,508,174.84 Annex JJJ .Traced to September 2000 Return 2,652,728.28 1,727,032.88 Annex KKK Traced to November 2000 Return 860,720.77 898,598.34 Annex LLL Traced to December 2000 Return 1,863,536.20 1,730,070.39 Annex MMM Not traced to Returns 1,221,725.16 98,273.49 Annex NNN Unaccounted Difference 1,893,804.21 1,027,467.26 1,323,781.22 Total 29.818.662.85 (0.07) 1 0.069.30.9...4.9 Of the P1~ 069/309.49 being claimed by the petitioner as remitted twice for SM~ Pl323/781.22 were not traced to EWT returns/ leaving the amount of PB/745~528.27 as possible double remittance. To summarize the figures: Supplier SMC Amount claimed as remitted twice P 10,069,309.49 Less: Amount not traced to returns 1,323,781.22 Possible amount of double remittance P ===8=,7=45=,5=28=.2=7= After conside!ing and scrutinizing the evidence presented by the petitioner, including the final and consolidated report of the CPA/ this Court is convinced there was double remittance of EWT being claimed for refund or credit. In sum/ the amount of double remittance is computed as follows:~ 731

rl �� EB CASE NO. 346 (CTA CASE NO. 6592) DECISION Supplier SMC TCCEC TOTAL Amount claimed as remitted twice Less: Amount not traced to returns p 10,069,309.49 p 60,799,252.42 p 70,868,561.91 Amount of double remittance 1,323,781.22 1,042,170 86 2,365,952.08 p 8,745,528.27 p 59,757,081.56 p 68,502,609.83 Howeve0 this Court is not persuaded to grant petitioners prayer to refund or credit the EWT in the amount of ?6~502/609.83 twice remitted for the reasons mentioned hereunder. Pursuant to ~ectwn 58 (B) of the National Internal Revenue Code (NIRC) of 1997; as implemented by Revenue Regulations No. 2-9~ as amendect taxes withheld under the Withholding Tax System must be covered by withholding tax certificates which are to be issued by the withholding agent or payor to the income recipient or payee. Taxes withheld which are supported by the aforesaid certificates shall be allowed as tax credit agat'nst the payees/income tax liabilities. Considering the foregoing/ petitioner has the duty not only to establish the fact of double remittance but also/ to prove that there was no double utilization of the claimed creditable withholdt'ng taxes on the part ofpetitioners suppliers/ namely: TCCEC and SMC In its attempt to establish the fact that there is indeed no double utilization of the subject creditable withholding taxes/ petitioner presented as evidence the waivers and quitclaims iSsued by the respective officers of TCL"'EC and SM~ which state that they dtd not avail and utilize the excess Expanded Withholding Tax remitted by petitioner as credit against their income tax liabilities. 16 Likewise/ in the Supplemental Joint Stipulation of Facts filed on July 1 200~ the parties agreed that there was already an examination of the taxpayers original copies of the Annual Income Tax Return of TCCEC and SMC ~ 16 Exhibits AA-3 and BB-3. '732

EB CASE NO. 346 (CTA CASE NO. 6592) DECISION This Court ;ules that the abovementioned documentary evidence are insufficient to prove that there was no double utilization of the subject claimed creditable withholding taxes. As a matter of fac~ this Court observed that there were discrepancies between the parties' Supplemental Joint Stipulation of Facts and the CPA s final and consolidated report. For instance, in the Supplemental Joint Stipulation of Facts, "only the amount of P62,963,874.46 represents creditable withholding tax claimed and reported by TCCEC on the gross payments that petitioner made to it for the year ended December 31, 2000 xxx broken down as follows: " 7 Payee's Name Payor's Name Period Tax Withheld The Coca-Cola Export Corporation ("TCCEC") CCBPI 4th Quarter 1999 17,812,217.00 TCCEC CCBPI 2nd Quarter 30,445,734.63 TCCEC CCBPI 3rd Quarter 14,705,922.83 TOTAL 62,963,87 4.46 When compared with the figures in the CPA s final and consolidated report, 18 the tax withheld for the 4h and Z'd quarters did not match. Only the amount of P14,705;922.83 for the Jd quarter for the year 2000 matched. Another instance, in the Supplemental Joint Stipulation of Facts, ''only the amount ofP9,573,010.00 represents creditable withholding tax claimed and reported by ~frtC on the gross payments that Petitioner made to it for the year ended December 31, 2000 x.xx broken down as follows: " 9 Payee's Name Payor's Name Period Tax Withheld San Miguel Corporation ("SMC") Coca-Cola Bottlers 4th Quarter 1999 1,676,444.94 17 Please see paragraph 2(b) of the Supplemental Joint Stipulation of Facts; docket, p. 526. 18 Exhibit AAA, pp. 8-9. 19 Please see paragraph l(b) oflhe Supplemental Joint Stipulation of Facts; docket, pp. 525-526.~ 733

EB CASE NO. 346 Pllilippines, Inc. January to March 2000 4,086,752.82 (CfA CASE NO. 6592) ("CCBPI") April2000 1,157,084.21 DEOSION CCBPI June 2000 2,652,728.28 Page 12 of 17 CCBPI P.9,573,01 0.00 CCBPI SMC SMC SMC TOTAL VVhen compared with the figures in the CPA s final and consolicfiated report20 tile tax withheld for April 2000 in the amount of P1/15~ 084.21 and June 2000 in the amount of P2/652/728.28 tallied. Howev.e~ the tax withheld for the 417 quarter of 1999 and pt quarter of 2000 were different. In view ol the foregoing findings/ this Court cannot therefore determine with utmost c..--ertatnty whether petitioners suppliers !:i"MC and TCCEC utilized twice the creditable withholding tax certificates issued to them by petitioner. Petitioner should have presented a reconciliation repott summarizing in detail the creditable withholding tax certificates issued to its suppliers/ the suppliers' income tax returns for years 1999 and 2000 and 2001/ general ledgers/ related to invoices or receipts/ or such other evidence where the Court can trace and ascertatn that there was no double utilizarion of the creditable withholding taxes by TCCEC andSMC" (Assailed Decision, pp. 5-12.) With regard to the grounds relied by the petitioner~ in support of the instant petition, the same were resolved by the CTA Second Division in the assailed Resolution, which is quoted hereunder, to wit: "In its Motion for Reconstderation petitioner contested this Courts ruling alleging among others that double utilization was not an issue but rather double remittance which this Court found in the positive. Petitioner added that assuming arguendo that there was a need to prove double,a_ 20 Supra at p. 13. 734

EB CASE NO. 346 (CfA CASE NO. 6592) DECISION utilization the facts ol the case to support this allegation were absent. The possible amount of double remittance of P6~502,609.8~ as found by the Court, multiplied twice amounted to P137,005,218.76. This amount, compared wJtll the withholding tax credits claimed by SMC and TCCEC in its income tax returns for the year 2000 (P9,573,101.00 and P62,963,874.46, respectively or P72,536,975.46 in sum) is far beyond what was claimed negating the assertion of double utilization. Petitioner further argued that, this notwithstanding, it gave SMC and TCCEC Certificates of Creditable Tax Withheld for the year 2000 only in the amounts ol P14,U46,445.65 and P59,280,180.81, respectively, or a total of P73,326, 626.46. This permitted the two suppliers tax credit use only up to that extent, preventing further tax credit claim. Petitioner asserted that at the vety least, it be permitted to claim the difference between P137,005,218.76 and� P7~326,626.46 or the amount of P63,678,592.30. Petitioner finally concluded that given the above, it has established, by preponderance of evidence required in tax refund claims, its entitlement to tax refund. AXX XXX XXX The main issue in petitioners Motion is whether or not there is a need to prove double utilization and, if so, whether this fact exists in the case. Section 204 of the 1997 Tax Code provides for the authority of the Commissioner to refund or credit taxes erroneously collected. It specifically states that: ''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, refun~ 735

EB CASE NO. 346 (CfA CASE NO. 6592) DEOSION the value of intemal revenue stamps when they are returned in good condition by the purchase0 anct in his discretion redt::em 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 Lommissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provtdecl howeve0 That a return filed showing an overpayment shall be considered as a written claim for credit or refund. XXX By defimtion "erroneous taxN is one levied without statutory authority, or upon property not subject to taxation or by some officer having no authority to levy the ta~ or one which in some respect is illegaP. In order to be refundable/ petitioner mustprove that taxes were erroneously received within the purview of this definition or kept without legal basis. In tl7e case of excess taxes withhelct the tax collected becomes illegal if it is retained despite non-utilization. Hence/ petitioner is mistaken that its allegation is in no way related to double utilization. On the contra~ the issue of double utilization lies in the very heart of its claim. In summanzmg its claims for double remittance/ petitioner presented a schedule in its Memorandum filed on May~ 200622/ which itemized creditable withholding tax claimed by petitioner as twice remitted beginning January 1999 to December 2000 for TCCEC and February 1999 to December 2000for SMC. Howeve0 in the Supplemental Joint Stipulation of Facts/23 the annual income tax return of SMC and TCCEC examined to prove credttab/e withholding taxes claimed were on!~ 21 Black's Law Dictionary, Sixth Edition. 22 Rollo, pp. 602-603, 605. 23 Rollo, pp. 525-527. � 73G

-: ___-�-� �-�__ . ��-~~-,~~�-- ���-��-�-��-~..........�~��-----..�'""'""""--�--� ~-��_)_-,.._..,,. --~- EB CASE NO. 346 (CTA CASE NO. 6592) DEOSION for the year 2000. The 2000 returns showed creditable withholding tax utilized by SMC and TCCEC for the following periods: TCCEC SMC --� ---� 4m qtr. of 1999 41h qtr. of 1999 p '1 ,676,444.94 p 17,_~'!.2-.!_~_1_7-.0-0- 4,086,752.82 2"0_gtr. of 2000 1,157,084.21 30~]:1� !?_}_4�-.�63 Jan. to Mar. 2000 2,652,728.28 3ra qtr. of 2000 14,705,922.83 April2000 P9,573,010.00 TOTAL June 2000 ��-�-~- p 62~96~ !874.46 No other retum, schedule, or invoices were presented to prove that creditable withholding taxes for the following periods were not utilized: 1. TCCEC' January 1999 to September 1999 and p-t quarter of 2000 2. SMC February 1999 to September of1999. Neither was there ev1dence offered to reconcile these disparities and those found by the Court commissioned Independent Certified Public Accountant. Petitioners argument that it should be permitted to claim the difference between P13~00~218.76 and P7.3,32~626.46 or the amount of P6.3,67~592.30 is a point well taken. Nonetheles~ the Court cannot grant the same because a portion of the amount of P68,502,609.83 was from the earlier periods of 1999 over which no supporting documents were shown to prove non-utilization. A'naiiJj the Court does agree with petitioner that it has adequately proven by preponderance of evidence its entitlement to tax refund. The term 'preponderance of evidence'. means that the evidence as a whole adduced by one side is superior to that ofthe other.~ 24 Ricardo J. Francisco on "Evidence," Third Edition 1996, citing Municipality of Moncada vs. Cajuigan, 21 Phill84 and Nolan vs. Jalandoni, 23 Phil292. � 737

EB CASE NO. 346 (CTA CASE NO. 6592) DECISION Since Petitioner's documentary evidence is insufficient, it cannot be said to establish its cause of action. According/~ preponderance of evidence cannot be claimed to have been settled in its favor. " (Assailed Resolution, pp. 2-6.) Well-settled is� the rule that tax refunds are in the nature of tax exemptions and as such Liley are regarded as in derogation of sovereign authority and to be construed in strictissimi juris against the person or entity claiming it.25 In the present case, petitioner failed to discharge its burden of establishing its claim for a tax refund or credit. In sum, the Court En Bane finds no cogent justification to disturb the findings and conclusion spelled out in the assailed June 19, 2007 Decision and November 20, 2007 Resolution of the CTA Second Division. What the instant petition seeks is for the Court En Bane to view and appreciate the evidence in their own perspective of things, which unfortunately had already been considered and passed upon. WHEREFORE, the instant Petition for Review is hereby DENIED DUE COURSE and DISMISSED for lack of merit. Accordingly, the June 19, 2007 Decision and November 20, 2007 Resolution of the CTA Second Division in CTA Case No. 6592 entitled, "Coca-Cola Bottlers Philippines, Inc. (CCBPI), petitioner vs. Commissioner of Internal Revenuer respondent', are hereby AFFIRMED in toto. SO ORDERED. CAESAR A. CASANOVA Associate Justice 25 Commissioner of Internal Revenue vs. S.C. Johnson and Son, inc., 309 SCRA 87; Commissioner of internal Revenue vs. Tokyo Shipping L'o., Ltd, 244 SCRA 332; and Commissioner of Customs vs. Court of Tax Appeals, 328 SCRA 822.

EB CASE NO. 346 (CTA CASE NO. 6592) DECISION Page 17 of 17 � WE CONCUR: L~_CLt___ ERNESTO D. ACOSTA Presiding Justice <2~)'0 G. ~~,.,Jb. CJ'UANITO C. CASTANEDA, Jit Associate Justice AEsRs~~~iUceY tf'e_ l~~ OLGA PALANO\-E.N.RIQUEZ Associate Justice 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 t~e Court. c~OD-.tOA-Co OS~TA Presiding Justice 739