PHILIPPINE BANK OF COMMUNICATIONS v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PHILIPPINE BANK 0 F COMMUNICATIONS, Petitioner, C.T.A. Case No. 7915 -versus- Members: Bautista, Chairperson Palanca-Enriquez, Cotangco-Manalastas, JJ COMMISSIONER OF INTERNAL Promulgated: 2 REVENUE, JUM 6 201 x- Respondent. - ~~-~ _ ~ :_,c7/- �x- � ___________________________________ DECISION COTANGCO-MANALASTAS, J.: This is a Petition for Review filed on April 15, 2009 by Philippine Bank of Communications pursuant to the Revised Rules of the Court of Tax Appeals, Rule 8, Section 4(a), in relation to Rule 4 thereof, to review by appeal the inaction of the Commissioner of Internal Revenue over petitioner's administrative claim for the issuance of tax credit certificate in the amount of P24,716,655.00, representing alleged unutilized creditable withholding tax for taxable year 2006. THE FACTS Petitioner Philippine Bank of Communications is a domestic corporation organized and existing under the laws of the Republic of the Philippines, with principal office address at PBCOM Tower, 6795 Ayala Avenue corner V. A. Rufino

DECISION CTA CASE NO. 79I5 Page 2 of I7 Street, Makati City. It is engaged in the commercial banking business and registered as such with the Bureau of Internal Revenue (BIR), with Tax Identification Number (TIN) 000-263-340-000. 1 Respondent, on the other hand, is the duly appointed Commissioner of the Bureau of Internal Revenue duly authorized to perform the duties of said office including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. She holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. On April 16, 2007, petitioner filed with the BIR its Annual Income Tax Return (BIR Form No. 1702) for taxable year 2006, through the Electronic Filing and Payment System (EFPS)? On May 2, 2007, petitioner filed an Amended Annual Income Tax Return for the year 20063, showing a net loss of P903 ,582,307.00 and a creditable tax withheld for the fourth quarter of 2006 in the amount of P24,716,655.00. Petitioner also marked the box "To be issued a Tax Credit Certificate" in Line 31 of the above- mentioned Return, indicating its intention to apply for the issuance of tax credit certificate for its excess/unutilized creditable withholding tax (CWT) for the year 2006, in the amount ofP24,716,655.00. On April 3, 2009, petitioner filed with the BIR its letter requesting the issuance of tax credit certificate for the excess creditable tax withheld covering taxable year 2006, in the amount ofP24,716,655.44.4 1 Pars. I and 3, Stipulation of Facts, Joint Stipulation of Facts and Issues (JSFI), docket, pp. 78 and 79. 2 Exhibit "A" . 3 Exhibit "8 " . 4 Exhibit " E" ; Par. 4, Stipulation of Facts, JSFI , docket, p. 79 ; Per instant Petition for Review, amount claimed is P24,716,655 .00.

DECISION CTA CASE NO. 7915 Due to respondent's failure to render a decision on petitioner's claim for tax credit certificate, petitioner filed the instant Petition for Review on April 15, 2009, praying for the issuance of tax credit certificate for its alleged unutilized creditable withholding tax for taxable year 2006, in the amount of P24,716,655.00. In her Answer5, respondent interposed the following special and affirmative defenses : "S PECIAL AND AFFIRMAT IVE DEFENSES 4. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau . 5. The petitioner should fully comply with the provi sion s stated in Revenue Regulations 6-86 and CIR vs. PERF Realty Corp., GR No. 163345 dated July 4, 2008, which states that: ' The CTA, citing Section I0 of Revenue Regulations 6-85 and Citibank, N.A. v. Court of Appeals, determined the requi sites for a claim for refund, thu s: I) That the claim for refund was filed within th e two (2) year period as prescribed under Section 230 of the National Internal Revenue Code; 2) That the income upon which the taxes were withheld was included in the return of the recipient; 3) That the fact of withholding is established by a copy of a statement (BIR Form 1743. 1) duly iss ued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom . X X X 6. In an action for refund, the burden of proof is on the taxpayer to estab li sh its ri ght to refund , and failure to susta in the burden is fatal to the claim for refund/credit. 7. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 1211)." 5 Docket, pp. 51-54.

DECISION CTA CASE NO. 7915 During trial, petitioner presented Mr. Percival Ordejon, Head of its Financial Accounting and Tax Management Unit and Mr. Edwin F. Ramos, the duly appointed Independent Certified Public Accountant (Independent CPA) as its witnesses. Thereafter, petitioner filed its Formal Offer of Documentary Exhibits6, submitting Exhibits "A" to "N", inclusive of sub-markings; which this Court admitted in the Resolution7 dated June 3, 2011. On the other hand, respondent presented her lone witness, Ms. Cecille V. Uy. Subsequently, respondent filed her Formal Offer of Evidence 8 offering Exhibits " 1" to "4"; which were admitted in evidence in the , Resolution9 dated October 13, 2011. On December 23, 2011 , this case was submitted for decision, considering petitioner's Memorandum filed on November 16, 2011 and respondent's Memorandum filed on November 18, 2011. 10 THE ISSUES The following are the parties ' jointly stipulated issues 11 submitted for this Court's consideration: " A. Whether or not the claim for the issuance of a tax credit certificate was filed within the two-year prescriptive period prescribed under Section 204 (C), in relation to Section 229 of the NIRC of 1997 as amended ; B. Whether or not petitioner has an unutilized creditable withho lding tax in the amount of P24,7 16,655 for the ca lendar year 2006, which is a proper subject of a claim for refund/issuance of tax credit certificate pursuant to Section 76 of th eN IRC as amended ; C. Whether or not the income from which the subject creditab le taxes were withhe ld were included as part of the gross income in petitioner' s annual income tax return for the calendar year 2006; and 6 Docket, pp. 198-207. 7 Docket, pp. 212-213 . 8 Docket, pp. 233-235. 9 Docket, pp. 244-245. 10 Docket, pp. 277-278 . 11 Docket, pp. 79-80.

DECISION CTA CAS E NO. 7915 D. Whether or not the unutilized creditable withholding tax for the calendar year 2006 in the amount of P24,716,655 was carried-over and applied by petitioner against its tax liabilities in the succeeding taxable year." The foregoing issues boil down to the issue of whether or not petitioner is entitled to the issuance of tax credit certificate in the amount of P24,716,655.00, representing unutilized creditable withholding taxes for taxable year 2006. RULING OF THE COURT In order to be entitled to the issuance of tax credit certificate for excess/unutilized creditable withholding tax, petitioner must satisfy the following requisites: 1. That the claim for refund was filed within the two-year prescriptive period as provided under Section 204(C) in relation to Section 229 of the NIRC of 1997, as amended ; 2. That the fact of withholding is established by a copy of a statement duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom; and 3. That the income upon which the taxes were withheld were included in the return of the recipient. 12 Anent the first requisite, the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended , pertinent to claiming a tax refund/tax credit are Sections 204(C) and 229, which provide: " SEC. 204 . Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the valu e of internal revenue stamps w hen they are returned in good cond iti on by the purchaser, and , in his 12 Section 2.58 , Revenue Regulations No . 2-98 , as ame nded ; Citibank N. A. vs. Co urt of Appeals, et al. , G.R. No. I07434, October I0, 1997; ACCRA Investments Corporation vs. The Honorable Court of Appeals, et al. , G .R. No . 963 22 , December 20, 1991.

DECIS ION CTA CASE NO. 7915 discretion, redeem or change unused stamps that have been rendered unfit for use and refund their va lue 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 show in g an overpayment sha ll 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 sha ll be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or co ll ected, or of any penalty claimed to have been co ll ected without a uthority, or of any sum a ll eged to have been excessively or in any manner wrongfu lly col lected, 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 th e 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 c laim therefor, refund or cred it any tax, where o n the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid ." (Emphasis supplied) In ACCRA Inv estments Corporation vs. The Honorable Court of Appeals, et al. 13, the Supreme Court held that the two-year prescriptive period for claiming a refund commences to run on the date of filing of the Final Adjustment Return. 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. 14 Based on the foregoing, petitioner has two years from the date of filing of the Final Adjustment Return within which to file a claim for refund or tax credit of excess creditable withholding taxes both in the administrative and judicial levels. The present claim covers taxable year 2006 for which petitioner filed its Annual Income 13 G.R. No. 96322, December 20 , 1991. 14 Commissioner of Internal Revenue vs. TMX Sales, Inc. and the Court of Tax Appeals, G.R. No. 83736, January 15, 1992.

DEC IS ION CTA CASE NO. 79 15 Tax Return on April 16, 2007' 5 Counting from this date, the administrative claim . filed by petitioner on April 3, 2009 16 and the Petition for Review filed on April 15, 2009 fall within the two-year prescriptive period. Clearly, the first requirement has been satisfied. As regards petitioner's compliance with the second requisite, the Court of Tax Appeals En Bane in the case of Mermac, Inc. vs. Commissioner ofInternal Revenue 17 ruled that claims for refund of creditable tax withheld shall only be given due course upon submission of BIR Form No . 2307 issued by the income-payor to the recipient- payee, to wit: " On the outset, the third condition is imposed by Section 2.58.3 (B) of Revenue Regulations (RR) No . 2-98, which states: Sec. 2.58.3 . C laim for Tax C redit or Refund . - XXX XXX XXX (B) C laims for tax credit or refund of any creditable income tax which was deducted and withheld on in come pay ments 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 with ho ldin g 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 withhe ld therefrom . (Emphasis provided) Coro ll ary to th e condition set forth , th e same RR No. 2-98 establi shes the requirement on the part of th e payor to furni sh the payee the withho lding tax statement using the prescribed form (BIR Form No . 2307), which shows the income payments made and the amount of taxes withheld. Otherwise, the failure of the payor to furnish th e same shall be a ground for mandatory audit, viz .: Sec. 2.58 . RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE. - XXX XXX XXX (B) Withholding tax statement for taxes withheld. - Every payor required to deduct and withhold taxes under these regulations shall furnish, in triplicate, each payee, whether 15 Exhibit " A". 16 Exhibit " E". 17 CTA EB Case No . 699, Jul y 27,20 11 (CTA Case No . 775 8) .

DECISION CTA CASE NO. 7915 individual or corporate, with a withholding tax statement, using the prescribed form (BIR Form No. 2307) showing the income payments made and the amount of taxes withheld therefrom, for every month of the quarter, within twenty (20) days following the close of taxable quarter employed by the payee in filing his/ its quarterly income tax return . The payor, nonetheless, shou ld a lways retain a copy of duly iss ued SIR Form 2307 . Failure to furnish the same sha ll be a ground for mandatory audit of payor' s income tax li abilities (including withholding tax) upon verified comp laint of the payee. XXX XXX XXX The rules are c lear. The income-payo r, as th e withho lding agent, is required to furni sh the rec ipient- payee of the statement of withho ldin g or BIR Form No . 2307. And for purposes of claims for refund or tax credit of creditable income tax, the claim shall only be given due course when the income and withholding are established by a copy of the withholding tax statement or BIR Form No. 2307 issued by the income-payor to the recipient- payee." (Emphasis supplied) The breakdown of petitioner's total claim amounting to P24,716,655.00 IS summarized as follows: Findings Supportin g Reference Amount of BIR Creditable Annex Al-l , Withholding Returns Exhibit F-20 Tax PER ICPA REPORT Annex Al-2, Exhibit F-20 p 616,431 .56 A. Sale ofproperty 1606 & I. Creditable withho lding tax payments supported by 1706 Annex Al-3, 175 ,200.00 original BIR Return s stamped "received" by the 1606 Exhibit F-20 SIR agent and original copies of bank va lidated 600 ,000 .00 deposit slips as evidence of tax remittance 1606 Annex Al-4, II ,202,694.80 2. Creditable withholding tax payments supported by 1606 Exhibit F-20 original BIR Returns stamped "received" by the 1606 228,000.00 SIR agent and photocopies of bank validated 1606 Annex Al-l , deposit slips as evidence of tax remittance Exhibit L 210 ,000 .00 3. Creditable withholding tax payments su pported by certified true copies of BIR Return s stamped Annex Al-2, "received" by the SIR agent and photocopies of Exhibit L bank validated deposit slips as ev idence of tax remittance 4. Creditable withholding tax payments supported by original BIR Returns stamped "received" by the SIR agent 5. Creditable withholding tax payment supported by original BIR Returns stamped "received" by the SIR agent and original certification iss ued by the SIR confirming the validity of transaction 6. Creditable withholding tax payment supported by photocopy of BIR Return stamped "received" by the SIR agent but with original certification issued by the SIR confirming the validity of tran saction

DECISION CTA CASE NO. 7915 7. Creditable withholding tax payments supported by 1606 An nex A1-7, 144 ,000 .00 original BIR returns stamped "received" by the 1606 Exhibit F-20 BIR agent dated outside the period of claim and ( 13 ,53 1.56) with photocopies of bank validated deposit slips as 2307 Annex A1-8, evidence of tax remittance. 2307 Exhibit F-20 93 , 120.00 2307 Annex A1-9, P13,255,914.80 8. Underclaimed creditable withholding tax payments 2307 Exhibit F-20 23 07 9. Supporting documents not yet available for Annex A2- 1, p 5,155,697.64 verification 2307 Exhibit F-20 Sub-total 438,087.24 Annex A2-2, B. Lease ofoffice space- PBCOM Tower Exhibit F-20 1,3 78.13 I. Creditab le withholding tax payments supported by original BIR Form 2307 Annex A2-3 , 624 ,626 .60 2. Creditable withho lding tax payments supported by Exhibi t F-20 (828, 122.91) original BIR Form 2307 without the Company's 2, I02,762 .24 TIN indicated therein Annex A2-4, p 7,494,428.94 3. Creditable withholding tax payments supported by Exhibit F-20 original BIR Form 2307 with erasure in amount but with countersignature Annex A2-5, 4. Creditable withholding tax payments supported by Exhibit F-20 original BIR Form 2307 but with different Annex A2-6, Company TIN indicated therein Exhibit F-20 5. Underclaimed creditable withholding tax payments Annex A3-1 , p I,551 ,051.26 6. Supporting documents not yet ava ilable for Exhibit F-20 432 ,560.44 verification Annex A2-1 , 315 ,980.87 207 ,221.67 Sub-total Exhibit L Annex A3-2, 5,882.52 c. Interest Income on commercia/loans Exhibit F-20 3,654.42 Annex A2-2, 1,088.54 I. Creditable withholding tax payments supported by original BIR Form 2307 Exhibit L 7,941.29 2. Creditable withholding tax payments supported by 2307 Annex A3-3 , 15,247.12 original BIR Form 2307 without the Company's 2307 Exhibit F-20 77,305 .11 TIN indicated therein 2307 2307 Annex A3-6, (2.33) 3. Creditable withholding tax payments supported by 2307 Exhibit F-20 828.95 original BIR Form 2307 but not signed by the 2307 p 2,618,759.86 withholding agent Annex A2-4, 2307 Exhibit L 4. Creditable withholding tax payments supported by original BIR Form 2307 but with erasure in the Annex A3-7, amount Exhibit F-20 5. Creditable withholding tax payments supported by Annex A2-3 , original BIR Form 2307 but with different Ex hibit L withholding agent name indicated therein An nex A2-5, 6. Creditable withholding tax payments supported by Exhibit L original BIR Form 2307 but are not dated within the period of claim An nex A3-9, Ex hibit F-20 7. Creditab le withholding tax payments supported by Annex A2-6, photocopies of BIR Form 2307 Exhibit L 8. Underclaimed creditab le withholding tax payments 9. Overclaimed creditable withholding tax payments Sub-total

DECISION CTA CASE NO. 79 15 D. Lease ofoffice space- Real am/ Other Properties 2307 Annex A3- 1, 53 ,857 .2 4 Owned/Acquired (ROPOA) 2307 Exhibit L p I. Creditable withholding tax payments supported by 2307 original BIR Form 2307 23 07 Annex A4- 1, 2. Creditab le withholding tax payments supported by 23 07 Exhibit F-20 photocopies of BIR Form 2307 and are not dated within the period of claim 28, 169.3 1 3. Overclaimed creditable withholding tax payments Annex A4-3 , 813 .93 4. Creditab le withho lding tax payments supported by Exhibit F-20 photocopies of BIR Form 2307 Based on 183,773.28 5 . Creditable withholding tax payments supp011ed by Annex A3-2, original/photocopies of BIR Form 2307 not dated within the period of claim Exhibit L Sub-total Based on 72,238.04 Annex A3 -4, Exhibit L p 338,851.80 OTHER FINDINGS 23 07 Based on 62 ,786 .96 2307 Annex A3-4, A. Interest Incom e on commercia/loans 2307 Exhibit F-20 in relation to I. Creditable withholding tax payments supported by 23 07 Annex A2-2, original BIR Form 2307 but are not dated within the period of claim/without date indicated Exhibit L p therein/with erasure in the year indicated therein Based on 396,443 .03 2. Creditab le withho lding tax payments supported by Annex A3-5 , original/photocopies of BIR Form 2307 with Exhibit F-20 different/no Company TIN indicated therein in relation to Annex A2-2, 3. Creditable withholding tax payments supported by photocopies of BIR Form 2307 only. Ex hibit L 4. Supporting documents not yet avai lab le for Based on 12,733.49 verification Annex A3-8, Exhibit F-20 Sub-total in relation to B. Lease ofoffice space- Real and Other Properties Annex A2- 1, Owned/A cquired (ROPOA) Exhibit L I. Creditable withholding tax payments supported by Based on 205,3 09.44 photocopies of BIR Form 2307 only. Annex A3- I0, Exhibit F- 2. Supporting documents not yet ava il ab le for 20 in re lation verification to Annexes A2- 1 to A2-6, Exhibit L p 677,272.92 Based on Annex A4-2, Exhibit F-20 in relation to Annex A3- l, Exhibit L p 269,822 .86 Based on Annex A4 -4, Exhibit F-20 in relation to Annex A3 -l to A3 -4 , Exhibit L 61 ,604.26

DECISION p 331,427.12 CTA CASE NO. 79 15 (0.44) Page II of 17 P24, 716,655.00 Sub-total Rounding-off difference TOTAL Based on the above findings and the Court's ruling on strict compliance with the required Certificates of Creditable Tax Withheld at Source or BIR Form No. 2307 in claiming for CWT refund, petitioner was able to satisfy the second requirement in the amount ofP7,738,179.0 1, as presented below: Findings Supporting Reference Amount of BIR Returns Creditable Withholding Tax A. Lease ofoffice space- PBCOM Tower 2307 An nex A2-l , I. Cred itab le withholding tax payments supported 2307 Exhibit F-20 P5, 155,697.64 by original BIR Form 2307 Annex A2-3 , 1,378.13 2. Cred itab le withholding tax payments supported Exhibit F-20 by original BIR Form 2307 with erasure in amount but with countersignature B. Interest Income on commercia/loans 2307 Annex A3- l, I ,551,051.26 I. Creditab le withholding tax payments supported Exhibit F-20 432,560.44 by original BIR Form 2307 77,305 . 11 Annex A2- l, Exhibit L 12,733.49 53 ,857.24 2. Creditab le withho lding tax payments supported 2307 Annex A2-5, 183 ,773.28 by photocopies of BIR Form 2307 23 07 Exhibit L 269,822.86 3. Creditab le withholding tax payments supported Based on by photocopies of BIR Form 2307 on ly. Annex A3-8, Exhibit F-20 in relation to Annex A2- l to A2-6, Exhibit L c. Lease ofoffice space- Real and Oth er Properties Owned/Acquired (ROPOA) I. Creditab le withho lding tax payments supported 23 07 Annex A3- l, by original BIR Form 2307 Exhibit L 2. Cred itab le withholding tax payments supported 23 07 Based on by photocopies of BIR Form 2307 Annex A3 -2, Exhibit L 3. Creditab le withholdin g tax payments supported Based on by photocopies of BIR Form 2307 only. Annex A4-2, Exhibit F-20 in relati on to Annex A3 -l , Exhi bit L Rounding-off difference (0.44) TOTAL P7 ,7 38,179. 01

DECISION CTA CASE NO. 7915 However, out ofthe amount ofP7,738,179.01 , which was supported with BIR Form No. 2307, only the amount of P4,624,554.63 CWT shall be granted considering that this is the amount which corresponds to the income payments in the aggregate amount of Pl 00,23 1,922.69; which the Court verified to have been included in petitioner's General Ledger and Annual Income Tax Return for taxable year 2006, in compliance with the third requisite, to wit: Exhibit Received from Amount of Income Amount of Reference Payments Creditable Withholding (BIR Returns) Tax I. Creditable withlwldin~t tax payments supported by ori~tinal BIR Form 2307 p 34,896.93 34,896.92 t.A. Lease of Office Space- PBCom Tower 280,291.85 (Annex A2-l, Exhibit F-20) 141 ,345 .92 141,345 .92 F-2 . 18 BAX Global p 697 ,938.40 33 ,413 .67 33,413 .67 F-2.19 BAX Global 697 ,938.40 33,413.67 33 ,413.67 F-2 .25 Convergys 5,605 ,837.00 503 ,552 .85 503 ,311.46 F-2 .26 Convergys 2,826,918.60 1,024 ,947.78 F-2.27 Convergys 2,826,918.60 1,052 .64 101,402 . 18 F-2.28 ESS Manufacturing Inc. 668,273.40 116 ,9 02 .54 85 ,666 .68 F-2.29 ESS Manufacturing Inc. 668 ,273.60 89 ,680.01 36,266.74 F-2.30 ESS Manufacturing Inc. 668 ,273.40 36,266.74 36 ,266 .74 F-2.31 ESS Manufacturing Inc. 668,273.40 36,266.74 47,273.79 F-2.33 E-Telecare I0,071,057 .00 49,76 1.89 49,761.89 F-2 .34 E-Te lecare I0,066 ,229 .2 0 85,840.76 85 ,840.76 F-2 .36 E-Telecare 20,498 ,955 .60 85,840.76 F-2.37 Focus Media 2 1,052 .80 11 , 103 .12 11 ,103 .12 F-2.38 La Farge Cement Services Phil s. , Inc. 2,028 ,043.60 11 , 103.12 F-2.43 La Farge Ce ment Services Phil s., Inc. 2,338,050 .80 F-2.49 Maersk Logistics Filipinas 1,7 13,333.60 F-2 .55 Maersk Logistics Filipinas I,793 ,600.20 F-2.56 Manpower Outsourcing Services 725 ,334.80 F-2.57 Manpower Outsourcing Services 725,334 .80 F-2.5 8 Manpower Outsourcing Services 725 ,334.80 F-2 .59 Manpower Outsourcing Services 725 ,334.80 F-2 .65 Mitsubishi Corp. 945 ,475.80 F-2 .6 8 Mitsubishi Corp. 995 ,237.80 F-2 .72 Mitsubi shi Corp . 995 ,237.80 F-2 .94 Philam In surance Co. , Inc. I,7 16,815.00 F-2 .98 Philam Insurance Co., Inc. 1,7 16,815 .20 F-2. 105 Phi lam In surance Co., Inc. 1,716 ,815.20 F-2.112 Primary Breeders 222,062.20 F-2. 113 Primary Breeders 222 ,062 .20 F-2.114 Primary Breeders 222 ,062 .20

DEC ISION CTA CASE NO. 79 I5 F-2. 116 Prime Manpower 293 ,9 11.60 14,695.58 293 ,911 .60 14,695 .58 F-2.117 Prime Manpower 293 ,911.60 14 ,69 5 .58 293 ,911.60 14 ,695.58 F-2.118 Prime Manpower 36,46 5.20 I ,823.2 6 F-2.119 Prime Manpower 37,5 00 .00 1,875 .00 37,5 00 .00 1,87 5 .00 F-2. 147 Smart Communication s 3 8,2 88 .4 0 1,914.42 l, lll , I08.40 55 ,55 5 .4 2 F-2. 148 Smart Communications I,666 ,662.80 83,333 . 14 I,666 ,662.80 83,333. 14 F-2. 149 Smart Communications I ,66 6 ,66 2 .80 83 ,333 . 14 905,787 .20 45,289.3 6 F-2.150 Smart Communications p 83,855,174.20 p 4, 192,758.73 F-2.167 Wan Ha i Lines Phil s. , Inc. F-2. 168 Wan Hai Lines Phi ls., Inc. F-2. 170 Wan Hai Lines Phil s., Inc. F-2. 17 1 Wan Hai Lines Phil s., In c. F-2. 172 Wire less Service Asia To ta l l.B.l. Interest I nco me on Co mm e r cia l Loa ns (Annex A3-1, Ex hibit F-20) F-2.174 Abacus Capita l and Investment p 54,049.35 p 1,080 .99 F-2 . 175 Abacus Capital and In vestment 47,818 .70 956.37 F-2. 176 Abacus Capital and Investm ent 50, 162.96 1,003.26 F-2. 177 Abacus Capital and Investm ent 54 ,000 .79 1,080.02 F-2. 178 Abacus Capita l and Investm ent 49,620.78 99 2 .42 F-2. 179 Abacus Capita l and Investm ent 40,688 .85 81 3.78 F-2.180 Abacus Capita l and Investment 47,406.49 948. 13 F-2. 186 Abacus Capital and Investment 206 ,994 .75 4, 139.90 F-2 .635 Abacus Capital and Investm ent 341 ,066.52 6,82 1.3 3 F-2 .636 Abacus Capita l and Investment 178 ,049 .66 3 ,560 .99 F-2. 188 Abacus Capital and Investment 176,2 15.72 3,524 .3 1 F-2.639 Abac us Capital and Investment 170, 163 .27 3 ,40 3 .2 7 F-2.640 Abacus Capital and Investm ent 372 ,816 .0 3 7,4 56 .32 F-2. 189 Abacus Capital and Investm ent 180,757 .24 3 ,615.14 F-2. 645 Abacus Capital and In vestm ent 55 ,772 .99 1, 11 5.46 F-2. 194 Abacu s Capital and In vestm ent 38,034 .26 760 .69 F-2.2 12 Eastern Telecommunicati ons Phil s. Inc. I ,818 ,66 6 .67 36,3 73.33 F-2.2 I6 Eastern Te lecommunicati ons Phil s. Inc. 52 0 ,000 .00 10 ,400 .00 F-2.224 Granexport Manufacturing Corp . 5 19,643.05 10 ,39 2 .86 F-2.225 Granexport Manufacturing Corp . 349 ,375. 00 6,987 .5 0 F-2.227 Granexport Manufacturing Corp . 61 2,75 0.00 I2,2 55 .00 F-2. 2 4 3 Lepanto Consolidated Mining Co. 86 ,50 7 .68 1,730. 15 F-2. 2 44 Lepanto Con so lidated Mining Co. 89,39 1.27 1,7 87 .83 F-2.68 I Vista Ho lding Corporati on 167 ,3 19.48 3,346.3 9 F-2.682 Vi sta Ho lding Corporati on 27 1,8 15.53 5,436.3 I F-2.683 Vista Ho lding Corporati on 143 , 158.04 2,863. 16 F-2. 685 Vi sta Ho lding Corporati on 2 0 3 ,0 5 8 .0 7 4 ,061.16 F-2.686 Vi sta Ho ldi ng Corporation 224 ,54 8.65 4,490 .97 F-2.687 V ista Ho lding Corporation 145 ,490.33 2, 909 .81 F-2.688 Vi sta Ho lding Corporati on 135 ,325.76 2,706 .52 F- 2 .689 Vista Ho ldin g Corporat ion 23 0,926.46 4,618 .53 F-2 .690 Vista Holding Corporation 222 ,405.79 4,448.1 2

DECISION CTA CASE NO. 79I5 F-2 .691 Vista Holding Corporation 134,254.33 2,685.09 F-2.692 Vista Holding Corporation 2 13 ,956.55 4,279 . 13 F-2.693 Vista Holding Corporation 124,3 04.04 2, 486 .08 F-2.694 Vista Holdin g Corporation 23 4,947.13 4,698 .94 F-2.695 Vista Holding Corporation 140,918 .90 2,818.38 F-2 .696 Vista Holding Corporation 2 11 ,885 . 12 4,237. 70 Total p 8,864,266.21 p 177,285.34 l.B.2. Interest Income on Commercial Loans (Annex A2-l, Exhibit L) L-1.40 Abacus Securities Corporation p 268,567.50 p 5,371.35 L-1.49 Eastern Telecommunications Phil s, Inc. 1,76 0 ,000.00 35,200 .00 L-1.33 Lepanto Consolidated Mining Co. 92,274.86 I,845 .50 Total p 2,120,842.36 p 42,416.85 l.C. Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) (Annex A3-1, Exhibit L) p 926,152.80 p 46,307.64 L-1.11 2 Banco de Oro (Daiichi Properties) Total p 926,152.80 p 46,307.64 2. Creditable witltltolding tax payments supported by photocopies of BIR Form 2307 2.A.l. Interest Income on Commercial Loans (Annex A2-5, Exhibit L) L-1.76 Northern Cement p 678 , 125.00 p 13,5 62 .50 L-1.77 Northern Cement 883,208.33 17,664.17 Total p I ,561 ,333.33 p 31,226.67 2.A.2. Interest Income on Commercial Loans (Based on Annex A3-8, Exhibit F-20 in relation to Annex A2-l, Exhibit L) F-2.246 Lepanto Consolidated Mining Co. p 86,507.50 p 1,730.15 F-2 .247 Lepanto Consolidated Mining Co. 89,3 91 .27 1,787 .83 F-2.25 1 Lepanto Consolidated Minin g Co. 89,391 .27 1,787 .83 Total p 265,290.04 p 5,305.81 2.B.1. Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) (Based on Annex A3-2, Exhibit L) p 157,445.00 p 7,872 .25 L-1.107 Blue Boz L-1.108 Blue Boz 157,445 .00 7,872.25 L-1.109 Blue Boz 157,445.00 7,872.25 L-1.11 0 Blue Boz 157,445.0 0 7,872.25 L-1.111 Blue Boz 157,445.0 0 7,872.25 L-1.120 GKE Group 75,496.00 3,774.80 L- 1.116 GL Language 53,783.40 2,689.17 L-1.117 lNG Bank 91 ,2 11.24 4,560.58 L-1.121 K International Service 14 7,378. 00 7,368 .90 L-1.122 K International Service 147,378.00 7,368 .90 L-1.123 K International Service 14 7,378.00 7,3 68.90 L-1.132 SAS Institute Phil s. Inc. 120,604.00 6,030.20 L-1.102 Sodexho Pass 10 2,324.0 0 5,116.20 L-1.103 Sodexho Pass 10 2,324.0 0 5,116.20 L-1.104 Sodexho Pass 102,324.00 5, 116.20 L-1.1 05 Sodexho Pass 102,324.00 5,116.20 L-1.106 Sodexho Pass 102,324. 00 5,116.20

DEC ISION CTA CASE NO. 79 15 L-1.101 Sodexho Pass 419 ,916.00 20,995.80 Total p 2,501,989.64 p 125,099.50 2.B.2. Lease of office space- Real and Other Properties Owned/Acquired (ROPOA) (Based on Annex A4-2, Exhibit F-20 in relation to Annex A3-1, Exhibit L) F-2.596 GL Language (Daiichi Properties) p 107 ,566.80 p 2,689. 17 1,465.36 Meche! Metal Properties (Daiichi F-2 .6 10 Properties) 29 ,307 .31 Total 136,874. 11 4,154.53 Rounding off difference (0.44) GRAND TOTAL p 100,231 ,922.69 p 4,624,554.63 In sum, petitioner has sufficiently proven compliance with the three requisites for the refund of unutilized creditable withholding taxes, but only to the extent of P4,624,554.63 out of the total claimed CWT ofP24,716,655.00. The Court shall now determine whether petitioner exercised the option to carry-over its excess creditable withholding taxes to the succeeding quarters, as provided under Section 76 of the NIRC of 1997, as amended , which reads: " SEC . 76. Final Adjustment Return . - Every corporation liable to tax under Section 27 shall tile a final adjustment return coveri ng the total taxable income for the preceding ca lendar or fiscal year. If the sum of the quarterly tax payments made durin g the said taxable year is not equa l to the total tax due on the entire taxable income of that year, the corporation shal l either: (A) Pay the balance of tax sti II 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 amou nt shown on its final adjustment return may be carried over and credited aga inst the esti mated quarterly income tax li abi lities for the taxable quarters of the succeed ing taxable years. Once th e option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable yea rs has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor." (Emphasis supplied) Pursuant to the above-quoted provision, the corporate taxpayer's excess tax credits or overpaid income tax in a given taxable year may either be refunded (either

DECISION CTA CASE NO. 7915 in the form of cash or tax credit certificate) or carried over/applied to the succeeding taxable years. However, once the option to carry-over has been made, the same becomes irrevocable for that taxable period. Records reveal that in its Final Income Tax Return for taxable year 2006 18 , petitioner reflected a net loss of P903 ,582,307.00 19 and income tax overpayment of P65 ,800,469.0020, which petitioner marked as "To be Issued a Tax Credit Certificate" 2 1 . A perusal of said Return shows that the mcome tax overpayment of P65,800,469.00 consists of the following : Prior year's excess credits p 41 ,083 ,8 14.00 Creditable tax withheld during th e yea r 24,716 ,655 .00 Total p 65 ,800,469.00 Petitioner was unable to utilize the total tax credits of P65 ,800,469.00 because it had no income tax liability due to losses incurred in its operations. In petitioner's 2007 Quarterly Income Tax Returns for the first22, second23 and third24 quarters as well as in its 2007 Annual Income Tax Return25 , only the amount of P41,083 ,814.00 was reflected as "Prior Year' s Excess Credits". Clearly, the claimed CWT amounting to P24,716,655.00 for the year 2006 was not carried over to the succeeding quarters or taxable year. WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED . Accordingly, respondent is hereby ORDERED TO ISSUE A TAX CREDIT CERTIFICATE in the reduced amount of FOUR MILLION SIX 18 Exhibit " 8 " . 19 Exhibit " 8 ", Line 21 B. 20 Exhibit " 8 " , Line 28G . 21 Exhibi t " 8 ", Line 31 . 22 Exhibit " F-14". 23 Exhibit " F-15" . 24 Exhibit " F- 16" . 25 Exhibit " D" .

DECISION CTA CASE NO. 7915 HUNDRED TWENTY-FOUR THOUSAND FIVE HUNDRED FIFTY-FOUR AND 63/100 PESOS (P4,624,554.63), representing petitioner's unutilized creditable withholding tax for taxable year 2006. SO ORDERED. LO O~P~UEZ Associate Justice ATTESTATION I attest that the conclusions in the above Decision were re ched in consultation before the case was assigned to the writer of the opinion of the C urt's Division. CERTIFICATION Pursuant to Section 13 , Article VIII 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. ~.Q~ ERNESTO D. ACOSTA Presiding Justice