MILLENNIUM BUSINESS SERVICES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION MILLENNIUM BUSINESS C.T.A. CASE NO. 7441 SERVICES, INC., Petitioner, - versus - M e m b e r s: Acosta, PJ, Bautista, and Casanova, JJ THE COMMISSIONER Promulgated : OF INTERNAL REVENUE, o ~ro� ~ Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION ACOSTA, PJ: Th e Case Before Us is a Petition fo r Rev iew seeking fo r a refund or iss uance of tax credit certifi cate in the amount of PI ,34 1,623 .00 a llegedl y representing an unutilized creditable w ithh olding tax fo r taxable year ended December 3 1, 2003 . Th e Facts Petitioner is a domestic corporati on duly organized and existing un de r th e laws of the Republic of the Philippines and dul y registered with the Bureau of Intern al

DECISION C.T.A. Case No. 7441 Revenue. It is principally engaged m the business of providing accounting and bookkeeping services. 1 Respondent is the duly appointed Commissioner of Internal Revenue, vested with authority to act as such, including, among others, the power to decide, approve and grant refunds and/or the issuance of tax credit certificates for excess creditable withholding taxes.2 On April 15 , 2004, petitioner filed its annual income tax return3 for the calendar year ended December 31, 2003, declaring, among others, the following: Sales/Revenues/Receipts/Fees 15,240 , 176.00 Less: Cost of Sales/Services 14,026,08 1.00 Gross Income from Operation Add: Non-Operati ng & Other Income 1,2 14,095.00 Total Gross Income 62,960 .00 Less: Deductions Taxable Income 1,277 ,055.00 Tax Rate 649,327 .00 Tax Due 627 ,728.00 Less: Tax Credits/Payments 32% Prior Year's Excess Credits 200,873.00 Creditable Tax Withheld for the First Three Quarters Creditable Tax Withheld for the Fourth Quarter 1,438, 185.00 Total Tax Cred its/Payments 1,057 ,3 16.00 Total Amount Payable/(Overpayment) 284,307.00 (Underlines supplied) 2,779,808 .00 (2.578.935 .00) In a letter dated April 7, 2006 and received by the BIR on the same date, petitioner requested for a refund or issuance of tax credit certificate in the amount of P2,5 78,935.00 representing its overpaid creditable withholding tax for the calendar year ended December 3 I , 2003 pursuant to the provisions of Sections 204 and 229 of the Tax Code, as amended.4 1 Paragraph I, Joint Stipulation of Facts and Simplifi cation oflssues; Rollo, p. 73. 2 Paragraph 3, Joint Stipulation of Facts and Simpl ification of Issues; Rollo, p . 74. 3 Exhibi t A. 4 Exhibit MMMMM-2.

DECISION C.T.A. Case No . 7441 Alleging inaction5 on the part of the BIR, petitioner filed a Petition for Review with this Court on April I2, 2006. The respondent filed her Answer on July I4, 2006, and prayed for the dismissal of the Petition for lack of merit. She alleged therein the following Special and Affirmative Defenses: "5. Assuming but without admitting that Petitioner filed a claim for a tax credit certificate, the same is still subject to investigation by the Bureau of Intern al Revenue; 6. Petitioner failed to demonstrate that the tax, which is the subj ect of this case, was erroneously or illegally collected; 7. Taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not creditable or refundable; 8. It is incumbent upon the Petitioner to show that its (sic) has complied with the provisions of Section 204(C) in relation to Section 223 of the Tax Code, as amended; 9 . In an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge said burden is fatal to the claim (Emmanuel & Zenaida Aguilar v. Comm issioner, CA-GR No. Sp. 16432, March 30, 1990 cited in Aban, Law of Basic Taxation in the Philippines, 1st Edition, p. 206); I 0. Claims for refund are construed strictly against the claimant the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 3 I SCRA 95) and as such, they are looked upon with disfavor. (Western Minolco Corp. vs. Commissioner of Internal Revenue, I24 SCRA 121)." After trial, this case was submitted for decision on October 27, 2008 taking into consideration petitioner's Memorandum posted on October 13, 2008, sans respondent's Memorandum . The Issues The parties jointly stipulated on the following issues6 for consideration and resolution of the Court: 5 Paragraph 9, Petiti on for Review, Rollo, p 5. 6 Issues, Joint Stipulation of Facts and Simplification of Issues; Rollo, pp 75 to 76.

DECISION C.T.A. Case No . 7441 I. Whether the inco me payments from which the taxes were withheld were inc luded in Petitioner's gross income for the year 2003. 2. Whether Petitioner has excess and unutilized creditabl e w ithho lding tax for the year 2003. 3. Whether Petitioner has carried-over to the succeeding taxable years the alleged excess and unutilized withholding tax for the year 2003. 4. Whether Petitioner's right to claim a refund of the alleged excess and unutilized w ithho lding tax fo r the year 2003 is duly substantiated. 5. Whether Petitio ner's aggregate income tax due fo r calendar year ended December 3 1, 2003 is less than its total tax credits, and, thus, the creditable taxes withhe ld for 2003 in the total amount of Php I,341 ,623.00 remain unutilized. 6. Whether Petitioner is entitled to a refund or issuance of tax credi t certificate in the amount of Php I,341 ,623 .00 representing alleged excess and unutilized withho lding tax for the year 2003. The Court's Ruling The basic requirements7 before a refund or issuance of tax credit certificate of excess creditable withholding taxes may be granted are as foll ows: I. The c laim for refund must be fil ed w ithin the two-yea r prescripti ve period provided under Section 204(C ) in re lation to Section 229 of the NIRC of 1997, as amended; 2. The fac t of w ithho lding is establi shed by a copy of a statement issued by th e payor (withho lding agent) to the payee, showing the amount pa id and the amount of tax w ithheld therefrom; and 3. The income upon which the taxes were w ithh eld were included in the return ofth e rec ipient. Equally important, aside from the above-quoted requirements, is th at petitioner must prove that it did not carry-over its excess creditable withholding taxes to the succeeding taxable year.8 Considering that the jointly stipulated 1ssues are intertwined w ith th e above mentioned important requirements before a refund or issuance of tax credit certifi cate 7 Citibank N.A. vs. Court of Appeals and Commi ss ioner of Internal Revenue, 280 SCRA 459 and Section 2.58.3(8 ) of Revenue Regulations No. 2-98 cited in Golden Arches Realty Corporation vs. Commissioner ofInternal Revenue, CTA Case No. 72 01, May 17, 2007. 8 Golden Arches Realty Corporati on vs. Comm issioner of Internal Revenue, CTA (First Divi sion) Case No. 720 1, May 17, 2007.

DECISION C.T.A. Case No . 7441 may be granted, a detailed discussion of the latter will at the same time serve as the resolution ofthe former. We shall now determine petitioner's compliance with the requirements. Going to the very first requirement, Section 204(C) of the Tax Code in relation to Section 229 of the same Code provide that the claim for refund both in the administrative and judicial levels must be filed within two (2) years from the date of payment of the tax. For reference, the said provisions of the Tax Code are hereunder reproduced : " Sec. 204. Authority of the Commissioner to compromise, abate and refund/credit taxes. - The Commissioner may - (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 or taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for tax credit or refund within 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 refund. " XXX XXX XXX " Sec. 229. Recovery ofTax 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 any penalty c laimed 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 sha ll 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 therefore, 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 ." It is already settled that the reckoning point of the two-year prescriptive period for the filing of a claim for refund or tax credit certificate of excess creditable

DECISION C.T.A. Case No . 7441 withholding tax is from the date of filing of the annual income tax return9 because it is only from this time that the refund is ascertained .10 In the case at bar, petitioner' s claim with the BIR on April 7, 2006 and its Petition for Review before this Court on April 12, 2006, were both filed within the two (2) year period prescribed by the Tax Code reckoned from April 15, 2004, the date the 2003 Annuallncome Tax Return was filed . Thus, petitioner has complied with the first requirement. In order to prove compliance of the second requirement concerning the fact of withholding of creditable taxes by the withholding agents on income subject to withholding tax, petitioner offered in evidence its Certificates of Creditable Tax Withheld at Source 11 issued by various withholding agents. Judicious scrutiny of the Certificates reveals that except for the P2,315 .3 8 taxes withheld relating to the total income payments ofP36,335.61 , which is a proper support of petitioner' s creditable taxes withheld on its income for taxable year 2002,12 the creditable taxes in the sum of P1 ,350,447.47 relating to the total income payments of Pl3 ,478, 144.67, were withheld from petitioner's service income for taxable year 2003 , detailed as follows: Exhibits Withho lding Agent (Payor) Income Payments Tax D Nacap Nederl and B.V. 36 ,000 .0 0 Withhe ld E Lemoon Philippines Inc. 104 ,926 .90 F M ayne (Pharma) Philippines, Inc. 24,000 .00 3,600.00 G Penpower Philippines Inc. 97,546 .80 10 ,492 .69 H BMW Philippines Corporation 180,393.45 2,400 .00 Carpal Holdings , B.Y. 57 ,000 .00 9,754 .68 K Carpet Raya Philippines, Inc. 50 ,000 .00 18 ,039 .35 L CSA Holdings , Inc. 16,000.00 5,700 .00 M Conveni ence Food Sys tem (Thai) Ltd. 13,433 .00 5 ,000 .00 N CK Holdings , Inc. 16,000 .00 Philips Electronics and Lighting, Inc. 58 ,636 .50 I ,600 .00 I,343 .30 1,600 .00 1, 172.73 9 ACCRA Investment Corporation vs. Court of Appeals, 204 SC RA 957 ; Commi ssioner of Intern al Revenue vs . TMX Sales, Inc., 205 SCRA 184; and The Commi ssioner of Intern al Revenue vs. Asia Australia Express, Ltd. , represented by Sov iamont Steamship Agenci es, Inc. and the Court of Tax Appeals, GR No. 85956, April 10, 1989. �1 Commi ssioner of Internal Re venue vs. The American Life Insurance Co. , 244 SC RA 446. 11 Exhibits D to JJJ , LLL to NNN, PPP to XXX, ZZZ to JJJJ , MMMM to KKKKK, 00000 to Q7 , S7 to 8 L8 J , and to C9 . ~ 12 Exhibits K9, L9, M9 and N9 .

DECISION C.T.A . Case No. 7441 0 A nglo-Oriental Consulting Limited 22 ,500 .00 2,250 .00 EDS Electroni c Data Systems (Phil. ), Inc 16,000 .00 1,600.00 p Export Consultant, Inc. 2 1,000.00 2, 100.00 FAG Southeast As ia Pte. Ltd . 2 1,00000 2 , 100 .00 Q X YST Corporation 2 1,000 .00 2, 100 .00 Sumitomo (S HI) Cyclo Drive As ia Pacific Pte. Ltd. 22,500 .00 2,250 .00 R St. Agen Holdings, Inc. 23 ,000 .00 2,300 .00 Reach Networks Philipp ines, Inc. 29,09 1.00 2,909 . 10 s Santi ago Cruz & Marayag Law Offi ces 20,000 .00 2 ,000 .00 SCS Channels, Inc. 30 ,000 .00 3,000 .00 T Pul se Philippines, Inc. 93 ,000 .00 9 ,300 .00 Nacap Philipp ines Inc. 36 ,000 .00 3,600 .00 u Ecolochem H oldings, Inc. 152 ,500 .00 15 ,250 .00 v Glaxos mithkline Phil s Inc. 6 1, 153 .50 I,223 .07 w Franke Contract Group Philippines, In c. 37,938 .60 3,793 .86 W MGS Philippines, Inc. 48 ,560 .70 4 ,856 .07 X Sumi setsu Philippines, Inc. 36,400 .00 3,640.00 Oshkosh 8 'Gos h, Inc. 30,000 .00 3,000 .00 y Nav itaire International, LLC 342,007 .10 34,200.7 1 lnt' l. Wave Co mmuni cati ons Networks, Inc. 14 1,715.20 14, 171.52 z Institutional Shareholder Services, In c. 7 1,583 .60 7, 158 .36 AstraZeneca Pharmace uti cals (Phil s) 33 ,000 .00 3,300 .00 AA Penpower Philippines Inc. 94,859.40 9,485 .94 Carpal Holdings , 8 .V. 9,500 .00 88 Carpet Raya Philippines, Inc. 20,000 .00 950 .00 CSA Holdings, Inc. 40,000 .00 2,000 .00 cc Conveni ence Food Sys tem (Thai) Ltd. 53 ,978.90 4,000 .00 CK Hold ings , In c. 40,000 .00 5,397 .89 DO EDS Electroni c Data Sys tems (Phils), Inc 24,000 .00 4,000 .00 Ecolochem Holdings , Inc. 58,500.00 2,400 .00 EE WMGS Philippines, Inc. 32,396 .70 5,850 .00 FF Sumitomo (S HI ) Cyclo Drive Asia Pacific Pte.Ltd. 22 , 500 .00 3,239 .67 St. Agen Holdings , In c. 23,666 .70 2,250 .00 GG St. Agen Et Fil s, Ltd . 24,000 .00 2,366 .67 HH Pulse Philippines, Inc. 93 ,000 .00 2,400 .00 II Os hkosh 8 'Gos h, Inc. 15,000 .00 9,300 .00 Navitaire International, LLC 228,3 13.30 1,500 .00 JJ Harris Corp oration 24 ,000 .00 22,83 1.33 Appl e Philippines, Inc. 69 ,300 .00 2,400 .00 KK Singapore Press Holdings (Overseas) Limited 32, 161.20 6,930 .00 B MW Philippines Corporation 87,039 .56 3,2 16. 12 LL Int ' l. Wave Communicati ons Networks, Inc. 138,332 .60 8,703 .96 Institutional Shareholder Servi ces, Inc. 80 ,000 .00 13,833 .26 MM XYST Corporati on 22 , 666 .67 8,000 .00 NN T he Lincoln Nat'! Life Insurance Comp any 7,000 .00 2,266 .67 FAG Southeast As ia Pte. Ltd. 27 ,000 .00 00 Glaxosmithkline Phil s Inc. 49,09 1. 00 700 .00 As traZeneca Pharmaceuti cals (Phil s) 88,000.00 2,700 .00 pp H arris Corporation 24 ,000 .00 S ingapore Press Holdings (Overseas) Limited 32,373 .80 98 1. 82 QQ Apple Philippines, Inc. 17,325 .00 8,800 .00 Int' l. Wave Communi cati ons Networks, Inc. 142 ,479 .04 2 ,400 .00 RR Harris Corp oration 45 ,250 .00 3 ,237 .38 Penpower Philippines Inc. 98, 179 .20 I ,732 .50 ss Sumitomo Electri c Industries ,Ltd.-Manila Branch 14,247 .90 Nacap Philippines Inc. 4,525 .00 TT 9,8 17.92 uu 328 .20 16,4 10.00 24 ,000 .00 2,400 .00 vv ww XX yy zz AAA 888 CCC ODD EEE FFF GGG HHH lll JJ] L LL MMM NNN ppp QQQ RRR sss TTT ~~

DECISION C.T.A. Case No. 7441 uuu EDS Electroni c Data Sys te ms (P hil s.), Inc 25 ,600.00 2 ,5 6 0 .00 vvv Nacap Nederl and B.V. 24 ,000 .00 2 ,400 .00 www Pul se Philippines, Inc. 147,882 .00 14 ,7 8 8 .20 SCS C harmels, Inc. 70 ,000 .00 7 ,000 .00 XXX Mayne (Pharma) Philippines , Inc. 2 4 ,000 .00 2 ,400 .00 Export Consultants, Inc. 33, 166.70 3,3 16.67 zzz Corus As ia Ltd. 177,229.6 1 17 ,7 2 2 .9 6 Corus As ia Ltd. 13 1,568 .55 13, 156.85 AAAA Export Consultants, Inc . 2 1,000 .00 2, I00.00 Mayne Pharma (Philippines) , Inc. 24,000 .00 2 ,400 .00 BBBB Frigorex Philippines Inc. 10 6 ,7 7 8 .75 I 0,677.88 Anglo-Oriental Consulting Li mited 22,500 .00 2 ,250 .00 ecce Nacap Nederl and B .V . 36,000 .00 3 ,6 0 0 .00 Nacap Philippines Inc. 36,000 .00 3 ,6 0 0 .00 DODD Corus As ia Ltd. 132,323 .00 13,232 .30 Dek As ia P acifi c Pte. Ltd 79,356 .59 7,935 .66 EEEE Dek Asia Pacific Pte. Ltd 75 ,78 1. 02 7,578 . 10 Sanofi-Synthelabo Philippines In c. 472,53 1.60 47,253 . 16 FFFF Sano fi -Synthelabo Philippines In c. 464 ,977.07 46 ,497 .70 S in gapore Press Holdings (Overseas) Li mited 32,345 .80 3 ,234 .58 GGGG CK Holdi ngs, Inc. 24 ,000 .00 2 ,400 .00 CSA Holdings, Inc. 24 ,000 .00 2 ,400 .00 HHHH Convenie nce Food Sys te m (Thai) Ltd. 53 , 689 .30 5 ,3 6 8 .93 Carpal Holdings, B.V. 4 7,500 .00 4 ,7 5 0 .00 Illl Sano fi- Synthelabo Philippines In c. 2 2 6 ,6 9 2 .8 9 22,669 .29 Baxter Healthcare Philippines , In c. 19 6 ,0 6 0 . 4 0 19,606 .00 JJJJ MM TI Marketing Philippines, In c. 30,000 .00 3 ,0 0 0 .0 0 MMTI M arketing Philippines, Inc. 45 ,000 .00 4 ,500 .00 MMMM Brand Rex, Inc 30,000 .00 3 ,0 0 0 .0 0 Brand Rex, Inc 30,000 .00 3 ,000 .00 NNNN Brand Rex, Inc 3 0 ,0 0 0 .00 3,000.00 Sumi setsu Philippines, Inc. 76 ,600 .00 7 ,6 6 0 .00 0000 Virbac Philippines, Inc. 16 ,0 0 0 .0 0 I ,600 .00 pppp Virbac Philippines, Inc. 12,0 0 0 .0 0 I ,200 .00 Virbac Philippines, Inc. 16 ,0 0 0 .0 0 1,6 0 0 .00 QQQQ New Food Coatings (Phil s .) Inc. 19,209 .20 1,9 2 0 .92 Institutional Share holde r Services, In c. 78,000 .00 7 ,8 0 0 .00 RRRR St. Agen Ho ldings , Inc. 22,000 .00 2 ,200 .00 Sumito mo (S HI) Cyclo Drive Asia Pacific Pte. Ltd. 30,000 .00 3 ,000 .00 ssss FAG So utheast As ia Pte. Ltd. 27,000 .00 2 ,7 0 0 .00 Parker Hanni fin Singapore Pte. Ltd. 4 1,592 .90 4, 159.29 TTTT ING R Philippines , Inc. 40,000 .00 4 ,000 .00 ING R Philippines , Inc. 40,000 .00 4 ,000 .00 uuuu Lemcon (P hilippines) , Inc. 11 7,722 .35 II ,772.24 vvvv St. Agen Et Fil s, Ltd . 27,000 .00 2,700 .00 wwww XYST Corporatio n 2 1,000 .00 2, 100.00 ING R Philippines , Inc. 80,000 .00 8 ,000 .00 xxxx Lemco n (P hilippines), Inc. 11 4,000 .00 11 ,400.00 Parker Hannifin Singapore Pte. Ltd . 3 1,331.30 3, 133 . 13 yyyy Parker Hmmifin Singapore Pte. Ltd. 3 1,958 .78 3, 195 .88 Fri gorex Philippines Inc. 41 ,222.00 4, 122 .2 1 zzzz Dek As ia Pac ifi c Pte. Ltd 77,573 .68 7,757 .37 A-Z Direct Marketing, Inc. 423 , 500 .00 42 ,3 5 0 .0 0 AAAAA Reach Networks Philippines, Inc. 20 ,000 .00 2 ,0 0 0 .0 0 Reach Networks Phili pp ines, In c. 30,000 .00 3 ,000 .00 BB BB B A rysta Agro Phils. , Inc. 90 ,000 .00 9 ,000 .00 ccccc DDDDD EEEEE FFFFF GGGGG HHHHH IIIII JJJJJ KKKKK 00000 ppppp QQQQQ RRRRR sssss TTTTT uuuuu vvvvv wwwww XXX XX yyyyy zzzzz AAAAAA BBBBBB cccccc DDDDDD f~

DECISION C.T.A. Case No. 7441 EEEEEE Appl e Philippines, Inc. 69,300 .00 6,930 .00 FFFFFF Oshkosh B'Gosh, Inc. 75 ,000 .00 7 ,500 .00 GGGGGG Burkert Contromatic Philippines, Inc. 2 13,2 15.50 2 1,32 1. 55 HHHHHH Burkert Contromati c Philippines, In c. 104,080 .50 10,408 .05 II !III Burkert Contromati c Philippines, Inc. 2 13,064 .00 2 1,306.40 JJJJJJ Alphasem As ia Ltd. 25 ,2 19.25 2,52 1. 93 KKKKK K Alphasem As ia Ltd. 23 ,463 .20 2,346.32 LLLLLL Alph asem As ia Ltd . 24,485 .50 2,448 .55 MMMMMM Hi stori cal & Nauti cal Archeology Foundation Inc. 36,000 .00 3,600 .00 NNNNNN Hi stori cal & Nautical Archeology Foundation Inc. 36,000 .00 3,600 .00 000000 Hi stori cal & Nautical Archeology Foundation Inc. 36,000 .00 3,600 .00 pppppp Universal Electroni c Assembly Phils. Corp. 60,000 .00 6,000 .00 U niversal Electronic Assembly Phils. Co rp . 60,000 .00 6,000 .00 QQQQQQ Universal Electronic Assembly Phils. Corp . 60,000 .00 6 ,000 .00 RRRRRR Reach Networks Philippines, In c. 20,000 .00 2,000 .00 ssssss Reach Web Holdings , Inc. 15,500 .00 I ,550 .00 TTTTTT Reach Web Holdings , Inc. 10,000 00 1,000 .00 Reach Web Holdings , Inc. 20,000 .00 2 ,000 .00 uuuuuu Parker Hanni fi n Singapore Pte. Ltd. 31 ,630 .00 3, 163 .00 Lemcon (Philippines), Inc. 132,444 .3 5 13,244.44 vvvvvv BMW Ph ilippines Corporation 137,046 .90 13,704 .69 BMW Philippines Corporation 6 1,4 14.80 6, 14 1. 48 wwwwww EDS Electronic Data Systems (P hil s.), Inc 35 ,200 .00 3 ,520 .00 XXX XXX Mayne Pharma (Philippines), Inc. 24,000 .00 2,400 .00 yyyyyy Franke Contract Group Philippines, Inc. 55 ,847 . 10 5,584 .7 1 WM GS Philippines, Inc. 65 ,002 .20 6 ,500 .22 zzzzzz Anglo-Oriental Consulting Limited 22,500 .00 2,250 .00 AAAAAAA A nglo-Oriental Consul ting Limited 22,500 .00 2,250 .00 BBBBBBB Brand Rex, Inc 20,000 .00 2,000 .00 ccccccc XYST Corporation 2 1,000 00 2, 100.00 DDDDDDD Promark Strategies, In c. 80,000 .00 8,000 .00 EEEEEEE Regus Centres, Inc. 16 1,838.90 16, ! 83 .89 FFFFFFF Regus Centers, Inc. 52, 128 .60 5,2 12.86 GGGGGGG Regus Centres , Inc. 152,765 .80 15 ,276 .58 HHHHHHH Regus Ce nters, Inc. 128,3 16.70 12,83 1. 67 II!IIll Penpower Philippines Inc. 99,220 .80 9,922 .08 JJJJJJJ Apple Philippines, Inc. 5 1,975 .00 5, 197.50 KKKKKKK Uni versal Electroni c Assembl y Phil s. Corp . 60,000 .00 6,000 .00 LLLLLLL Arys ta Agro Agra Philippines Inc. 45 ,000.00 4,500.00 MMMMMMM Appl e Philippines, Inc. 38,7 ! 2.90 3,87 1.29 N7 Nav itaire International, LLC 122,042 . 13 12,204.2 1 07 Sanofi-Synthelabo Phil ippines In c. 452,920. 10 45 ,2920 1 p7 CK Holdings, Inc. 24 ,000 .0 0 2,400.00 Q7 CSA Holdin gs , Inc. 24,000 .00 2 ,400 .00 s7 Franke Contract Group Philippines , Inc. 65 ,006.40 6 ,500 .64 T7 Bank of New York, Manil a Representaive Office 45,000 .00 4 ,500 .00 u7 Bank of New York, Manil a Representaive Office 15,000 .00 I ,500.00 y7 Pulse Philippines, Inc. 93 ,000 .00 9 ,300 .00 A lphasem As ia Ltd. 25 ,7 12.90 2,57 1.29 w7 Carpal Holdings, B.V ! 9,000 .00 1,900 .00 x7 Singapore Press Holdings (Overseas) Limited 33 ,032 .00 3,303 .20 y7 Conveni ence Foo d Sys tem (Thai) Ltd . 4 1,290 . 10 4, 129.0 ! Export Consultants, Inc. 2 1,00000 2, 100.00 z7 Corus As ia Ltd. 135 ,762 .60 13 ,576 .26 As Harri s Corporation 48,000 .00 4 ,800 .00 B8 Institutional Shareholder Services, Inc. 79,000 .00 7,900 .00 cs 08 (t4- E7 Fs Gs Hs ,s

DECISION C.T.A. Case No. 7441 J8 A-Z Direct Marketing, Inc. 247,441.30 24,744. I3 Ls Burkert Contromati c Philippines, Inc. 163, 165 .80 16,3 I6.58 Ms Carpal Holdings, B.V. Ns Ecolochem Holdings, Inc. 9,500 .00 I,425 .00 08 Ecolochem Holdings, Inc. 58,500 .00 5,850 .00 p8 Oshkosh B'Gosh, Inc. 58,500 .00 5,850 .00 Nav itaire Internati onal, LLC 30,000 .00 3,000 .00 Q8 Nacap Nederl and B.V. 76,9 18.10 7,69 1. 8 1 Rs Carpet Raya Philippines, Inc. 36,000 .00 3,600.00 ss Carpet Raya Philippines, Inc. 40,000 .00 4,000 .00 Ts WMGS Philippines, Inc. 30,000 .00 3,000.00 us Histori cal & Nautical Archeology Foundation Inc. 49 ,779 .60 4,977.96 y8 Int' L Wave Communicati ons Networks, Inc. 36 ,000 .00 3,600.00 Dek As ia Pac ific Pte. Ltd 144 ,360 .84 14 ,436 .08 ws Touch Solutions, Inc. 79, 125 .99 7,9 12.60 xs To uch Solutions, Inc. 24 ,000 .00 2 ,400 .00 ys Touch Solutions, Inc. 24 ,000 .00 2 ,400 .00 Touch Solutions, Inc. 24 ,000 .00 2,400 .00 zs Nacap Philippines Inc. 16,000 .00 1,600 .00 A9 Frigorex Philippines Inc. 36 ,000 .00 3,600 .00 89 FAG Southeast As ia Pte. Ltd. 4 1,592 .50 4, 159.25 Sumitomo (S HJ) Cyclo Drive Asia Pacific Pte.ltd. 2 1,000 00 2, I00.00 c9 INGR Philippines, Inc. 22,500 .00 2,250 .00 Franke Contract Group Philippi nes, Inc. 40,000 .00 4 ,000 .00 09 KPM G Consulting (As ia Pac ific), Inc. 95 ,942 .70 9,594 .27 E9 Sumitomo Electric Industries,Ltd .-Manila Branch 35 , 500 .00 3,550 .00 F9 Nacap Nederl and B.Y. 8,858 .50 G9 36 000.00 177. 17 H9 ~13,418,144 G:Z 3 600.00 19 ~1,350,441 47 ]9 09 TOTAL Indubitably, petitioner was able to comply with the second requirement. It should be pointed out, however, that this Court will only consider the total creditable withholding taxes of P 1,341 ,623.00 as reflected in the income tax return for taxable year 2003 , which is lesser than the actua l taxes withheld ofP1 ,350,447.47 as shown in the Certificates, since the said lesser amount of creditable withho lding taxes was the one declared in the income tax return and which became the basis of thi s instant claim for refund. As regards the third requirement, this Court ascertained that petiti oner' s income from services amounting to Pl3 ,478,144.67, upon which the creditable taxes of Pl ,341 ,623.00 is withheld, were included as part of the gross income declared in its income tax return 13 . 13 Exhibit A.

DECISION C.T.A. Case No. 7441 Page II of 12 As to the other requirement, petitioner was able to establish that it did not carry- over as a tax credit the claimed unutilized creditable withholding taxes of P1 ,341 ,623.00 to the succeeding taxable year as shown in its 2004 income tax return .14 Lastly, to be entitled to the full amount of its claim, it must be shown that the creditable taxes withheld were indeed unutilized . It should be noted that petitioner is claiming refund or issuance of tax credit certificate of unutilized creditable taxes withheld for 2003 , thus, it must be proved that it is already cleared of income tax due for the year by substantiating its prior year' s excess credit even only up to the extent of the tax due for the same year in order to convince thi s Court that indeed the creditable withholding taxes being claimed of remained unutilized. In Goodyear Philippines, Inc. vs. Commissioner of Internal Revenue, 15 it was unanimously ruled that " although the substantiation of petitioner' s prior year' s excess credit was an additional requirement set forth by the Court relative to petitioner's claim for refund of excess creditable taxes withheld, this was undoubtedly, was within the prerogative and power of the Court to do so, to enable it to decide this case with certainty. Otherwise, the Court will lack valid and justifiable reason in granting the unutilized or excess creditable income tax of the petitioner for the taxable year 2000." Here, petitioner is not entitled to the full amount of its claim since it failed to prove that the tax due for the taxable year 2003 had been squarely settled by prior year' s excess credit absent proofs of the existence of such prior year' s excess credit. However, as earlier noted regarding the result of Our examination of Certificates of Creditable Tax Withheld at Source is that the amount of P2,315 .38 creditable withholding taxes pertains to taxable year 2002, thus, the same can be taken as a partial support of petitioner's prior year's excess credit. Hence, petitioner is entitled to a refund or issuance of tax credit certificate in a reduced amount of Pl ,143,065.38, computed as follows: Creditable Withholding Tax for 2003 p 1,3 41 ,623 .00 Less: Unsubstantiated Tax Payment: P200,873 .00 Income Tax Due for 2003 2,3 15 .3 8 Less : Substantiated Prior Year's Excess Credit Refund able Amount of Unutilized CWT 14 Exhibit B. 15 CTA EB No. 104, Janu ary 16, 2006.

DECISION C.T.A. Case No . 744 1 WHEREFORE, the instant Petition for Rev iew is hereby GRANTED. Respondent is hereby ORDERED to refund or issue tax credit ce rtifi cate in a reduced amount of P1 ,143,065 .3 8 in favor ofthe petiti oner. SO ORDERED. L js1. ~ ERNESTO D. ACOSTA Pres iding Ju sti ce CAESAR A. CASANOVA Assoc iate Justice CERTIFICATION I hereby certi fy that the above decision was reached afte r due consultation with the members of the Co urt of Tax Appeals in accord ance w ith Secti on 13, Arti cle VIII of the Constituti on. L-t.. QJ_ ERNESTO D. ACOSTA Presiding Justice