GOLDEN ARCHES DEVELOPMENT CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Coon of Tax Appeals QUEZON CITY SECOND DIVISION GOLDEN ARCHES C.T.A. CASE NO. 6659 DEVELOPMENT CORPORATION, Petitioner, Members: -versus- CASTANEDA, JR., Chairperson UY, and PALANCA-ENRIQUEZ, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, MAR 1 6 2007/ Respondent. ~ X- - -- - - -- -- - - - - - - - --- -- -- -- -- - -- - - --- - - - - - - - -- - - - -X DECISION CASTANEDA, JR.,~.: This case involves a claim for refund or issuance of a tax credit certificate in the amount of Forty Eight Million Nine Hundred Fourteen Thousand Four Hundred Thirty Four Pesos (P48,914,434.00) allegedly representing excess creditable withholding taxes for the taxable year ended December 31 , 2000 . Golden Arches Development Corporation ("petitioner"), a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, is engaged in the business of leasing real property with

DEC IS ION C.T.A. CASE NO. 6659 Page2of l 6 principal address located at the 1ih Floor, Citibank Centre, Paseo De Roxas, Makati City.1 The Commissioner of Internal Revenue ("respondent"), on the other hand , is vested by law with authority, among others, to approve and grant claims for credit or refund of overpaid or erroneously paid taxes pursuant to the provisions of the National Internal Revenue Code ("NIRC"), with office address at the 41h Floor BIR National Office Building, Agham Road , Diliman , Quezon City.2 For the period of January 1, 2000 to December 31 , 2000, various lessees allegedly withheld income taxes accruing from rentals paid for the lease of petitioner's real properties and remitted the same to the Bureau of Internal Revenue ("BIR"). On April 18, 2001 , petitioner filed its annual income tax return for the taxable year 2000 declaring the following :3 Sales/ Revenues / Receipts/ Fees P1 ,170,559,624.00 Less: Cost of Sales/Services Gross Income from Operation 767.216,485 .00 Add : Non-operating & other income Total Gross Income p 403,343,139.00 Less : Deductions Taxable Income 2,648.912 .00 Tax Rate Income Tax p 405,992 ,051 .00 Minimum Corporate Income Tax Less: Tax Credits/Payments 1.053,737 .706 .00 Creditable Tax Withheld for the Fi rst Three Quarters Creditable Tax Withheld for the Fourth Quarter P(647,745,655.00) Total Tax Credits/Pa yments Tax Overpayment 32 % 1 Par. 1, Facts Admitted, Rollo, p. 67. p NIL 2 Par. 2, Facts Admitted, Rollo, p. 67. 3 Exhibit A. p 8,119,841 .00 p 39,822 ,098.00 16 915 676 .00 p 56 737 774.00 p 148 617 933 00\

DEC IS IO N C.T.A. CASE NO. 66 59 On December 4, 2001, petitioner filed an amended income tax return for the taxable year 2000 reflecting the following :4 Sales/Revenues/Receipts/ Fees P1 ,170,559,624 .00 Less: Cost of Sales/Services 767,216,485 .00 Gross Income from Operation Add : Non-operating & other income p 403 ,343 ,139.00 Total Gross Income 2,648 ,912 .00 Less: Deductions Taxable Income p 405 ,992,051 .00 Tax Rate 678 737 706. 00 Income Tax Minimum Corporate Income Tax P(272 ,745,655 .00 ) Less : Ta x Credits/Payments 32 % Creditable Tax Withheld for the First Three Quarters Creditable Tax Withheld for the Fourth Quarter p 8,119,841 .00 Total Tax Credits/Payments Tax Overpayment p 39, 822 ,098 .00 17 2 12 177. 00 p 57 ,034,275.00 p 148 914 434 00) Petitioner likewise indicated therein its option to have said tax overpayment refunded . On February 12, 2003, petitioner filed an application for tax credit or refund of the amount of P48,914,434.00 representing excess creditable taxes withheld for taxable year 2000 before the Large Taxpayers District, BIR Revenue Region No. 8 of Makati City.5 Respondent's inaction on its claim prompted petitioner to appeal by way of a Petition for Review before this Court on April 14, 2003. In his Answer, respondent interposed the following Special and Affirmative Defenses: 4 Exhibit B. s Exhibit D; Par. 7, Admitted Facts, Rollo, p. 68.

DEC ISION C.T.A. CASE NO. 6659 "3. Assuming without admitting that petitioner filed a claim for refund , the same is subject to investigation by the Bureau of Internal Revenue; 4. Petitioner failed to demonstrate that the subject of the case at bar was erroneously or illegally collected ; 5. Taxes paid and collected are presumed to have been made inaccordance with law and regulations , hence , not refundable ; 6. In an action for tax refund/credit, the burden of proof is on the taxpayer to establish its right to refund and failure to adduce sufficient proof is fatal to the action for tax refund/credit; 7. It is incumbent upon the petitioner to show that it has compl ied with the provisions of Section 204 in relation to Section 229 of the Tax Code, as amended ; and 8. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation and as such , they are looked upon with disfavor. "6 During trial , both parties proffered numerous documents. As its witness , petitioner's Accountant Cornelia Naguit attested that the petitioner incurred excess creditable taxes for taxable year 2000; while respondent presented Ms . Josa C. Gomez who testified to inspecting petitioner's books of account by virtue of a letter of authority issued by the Large Taxpayer's Division . In a resolution dated September 1, 2006, this Court deemed the case submitted for decision without any memorandum filed by the respondent. The issues in this case as stipulated by the parties are as follows : " 1. Whether or not petitioner has unutilized excess creditable withhold ing taxes as of December 31 , 2000 in the amount of P48,914,434.00 arising from its rental income for the 6 Rollo, pp. 32- 33, citations omitted.

DECIS ION C.T.A. CASE NO . 6659 taxable year 2000 which is a proper subject of a claim for refund pursuant to Section 76 of the National Internal Revenue Code of 1997, as amended ; 2. Whether or not the said creditable withholding taxes of petitioner for the taxable year 2000 are substantiated by documentary evidence; 3. Whether or not the rental income of petitioner upon which the taxes were withheld were declared part of petitioner's gross revenue in its 2000 income tax return ; 4. Whether or not said excess/unutilized creditable withholding taxes as of December 31 , 2000 were not applied as tax credit against petitioner's tax liability for the respective succeeding year/s ; and 5. Whether or not petitioner has shown compliance with the provisions of Section 204(C) and 229 of the Tax Code". 7 Section 76 of the National Internal Revenue Code (NI RC) of 1997 provides : SEC . 76. Final Adjustment Return . - Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year, the corporation shall either: (A) Pay the balance of tax still due : or (B) Carry-over the excess credit; or (C) Be credited or refunded with the excess amount paid , as the case may be. In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid , the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years . Once the option to carry-over and apply the excess quarterly income tax against income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that 7 Rollo, pp . 68-69.

DECISION C.T.A. CASE NO. 6659 taxable period and no application for cash refund or issuance of a tax credit shall be allowed therefor. From the foregoing , the corporate taxpayer's excess tax credits or overpaid income tax in a given taxable year may either be refunded (either 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 . In the present case , a closer look at petitioner's amended 2000 income tax return shows that it had excess creditable withholding taxes for taxable year 2000 in the amount of P48 ,914,434.00 which petitioner marked as "To be refunded" (Exhibit B) . Further, in its 2001 income tax return , petitioner reported no amount of prior year's excess credits (Exhibit C-1) . In which case , petitioner's excess creditable taxes withheld for the year 2000 in the amount of P48,914,434.00 may be the proper subject of a cla im for refund under Section 76 of the NIRC of 1997. Nonetheless, petitioner must prove compliance with the following basic requirements in order to be entitled to the refund claim of P48 ,914,434.00: 1. That the claim for refund was filed within the two- year prescriptive period provided under Section 204 (C) in relation to Section 229 of the National Internal Revenue Code of 1997; 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 [Section 2.58.3(8) of Revenue Regulations No. 2-98; Citibank, N.A. vs. Court of

DEC ISION C.T.A. CASE NO. 6659 Page7of 16 Appeals and CIR, 280 SCRA 459; ACCRA Investments Corporation vs. Court of Appeals, 204 SCRA 957]. Based on the records of this case , petitioner complied with the first requirement. The reckoning of the two-year prescriptive period for the fil ing of a claim for refund or tax credit certificate of excess creditable withholding tax/quarterly tax payment starts from the date of filing of the annual income tax return . [ACCRA Investments Corporation vs. Court of Appeals, 204 SCRA 957 (1991); Commissioner of Internal Revenue vs. TMX Sales, Inc., 205 SCRA 184 (1992)]. Petitioner originally filed its income tax return for taxable year 2000 on April 18, 2001 (Exhibit A) . However, the last day required by law to file the said return was on April 16, 2001 .8 Hence, the two- year prescriptive period started to run on the earlier date of April 16, 2001 and petitioner had until April 16, 2003 within which to file its claim both in the administrative and judicial levels . Therefore, petitioner's administrative claim filed on February 12, 2003 (Exhibits 0 & 0-1) and the Petition for Review filed on April 14, 2003 are well within the two-year prescriptive period . In compliance with the second requisite , petitioner presented Certificates of Creditable Tax Withheld at Source issued to it by various withholding agents (Exhibits F-1 to F-9; H-1 to H-57; J-1 to J-41 ; K-1 to K-41 and L-1 to L-16) which showed creditable withholding taxes in the total amount of P57 ,094,877.33, detailed as follows : s AprillS, 2001 being a Su nday.

DECISION C.T.A. CASE NO . 6659 INCOM E INCOM E TAX EXHIBIT PAYOR/WITHHOLDING AGENT PAYMEN T WITHH ELD I. Lease of Real Property F-1 Blue Dairy Corporation p 499 ,999.98 p 24 ,999 .99 F-2 Davao City Food Industries 1' 144,644.17 57 ,232.22 F-3 Giant Arches Food Corporation 858 ,400.63 42 ,920.03 F-4 Golden City Food Industries Inc. 370,749 .65 18,537.48 F-5 Golden SouthFoods, Inc. 1,436,479 .88 71 ,824.01 F-6 Havi Food Services Phils., Inc. 7,881 ,220.00 394,061 .00 F-7 Johnarches Foods 1,2 18,138.20 60,906 .91 F-8 Me George Food Industries Inc. 231 ,557 ,823.70 11 ,577 ,891 .19 F-9 Retiro Golden Foods , Inc. 494 ,553.60 24 ,727 .68 H-1 An-Cel "A" Corporation 1,078 ,885.23 53,944 .26 H-2 An-Cel "A" Corporation 1' 190,329.40 59,416.47 H-3 An-Cel "A" Corporation 878 ,875 .62 43 ,953.78 H-4 An -Cel "A" Corporation 950,425 .13 47 ,521.25 H-5 Blue Dairy Corporation 499 ,999 .98 25 ,000.00 H-6 Cebu Golden Food Industries Inc. 1,057 ,218 .26 52 ,860.92 H-7 Cebu Golden Food Industries Inc. 1,026 ,639.58 51 ,331 .97 H-8 Cebu Golden Food Industries Inc. 1' 167,726.82 58 ,386.34 H-9 Davao City Food Industries 1,084 ,960.40 54 ,269.87 H-10 Edsa Food Industries Inc. 1,214,078 .38 60,703 .92 H- 11 Giant Arches Food Corporation 1,969,659 .92 98,483 .00 H- 12 Giant Arches Food Corporation 931 ,013.04 46,550 .65 H-13 Golden City Food Industries Inc. 361 ,366 .75 18,068.33 H-14 Golden SouthFoods, Inc. 2,702 ,946 .62 135,147.32 H-15 Havi Food Services Phils ., Inc. 8,098 ,484 .80 404,924 .24 H-16 Lim Gollayan , Jessica Tan 749 ,642 .30 37 ,482 .11 H-17 Lim Gollayan , Jessica Tan 795 ,093.17 39,754.65 H-18 Johnarches Foods 1,246,302 .93 62 ,315 .14 H-19 Mariel Food Corporation 455 ,6 41.41 22 ,585 .80 H-20 Mariel Food Corporation 1,061 ,131 .97 53 ,056 .59 H-21 Gocheco, Edward Chan 628 ,027.47 31,401.38 H-22 Gocheco, Edward Chan 415 ,523.48 20 ,776.17 H-23 McColby's Inc. 651 ,624 .39 32,581 .22 H-24 McColby's Inc. 706 ,254.55 35 ,312.73 H-25 McColby's Inc. 609 ,397.44 30,469.87 H-26 McColby's Inc. 660,486.36 33,024 .32 H-27 McColby's Inc. 210,000 .00 10,500 .00 H-28 McColby's Inc. 210,000 .00 10,500 .00 H-29 McColby's Inc. 396 ,866 .21 19,843 .31 H-30 McColby's Inc. 346 ,729 .32 17,336.46 H-31 Me DLC Foods , Inc. 508 ,110.23 25,405 .51 H-32 Me DLC Foods , Inc. 446,469 .28 22 ,323.46 H-33 Me DLC Foods , Inc. 1,648 ,686 .62 82 ,434.34 H-34 Me DLC Foods , Inc. 1,777 ,832 .91 88 ,891 .65 H-35 Me George Food Industries Inc. 230 ,772 ,062 .08 11 ,538,603.10 H-36 Me Gill Food Industries Inc. 703 ,131 .68 35 ,156.60 H-37 Me Gill Food Industries Inc. 685,426 .77 34 ,271 .36

DEC IS IO N C.T.A. CASE NO. 6659 Page 9 of I6 H-39 Me Philip Food Industries, Inc. 1'124 ,347 .08 56 ,217 .35 H-40 Me Philip Food Industries, Inc. 956 ,316 .04 47 ,815 .77 H-41 Me Phi lip Food Industries, Inc. 71 ,802 .89 H-42 Golden Arches Development Corporation 1,436,057 .72 58,826 .14 H-43 Golden Arches Development Corporation 1' 178,522 .82 65,502 .59 H-44 Nestor S. Dela Merced 1,310,051 .76 25,875 .00 � H-45 Nestor S. Dela Merced 23 ,575.00 H-46 Nestor S. Dela Merced 517 ,500 .00 47 ,672.86 H-47 Nestor S. Dela Merced 471 ,500.00 40 ,552.88 H-48 Nestor S. Dela Merced 953,457 .15 H-49 Nestor S. Dela Merced 811 ,057 .54 4,131 .74 H-50 Nestor S. Dela Merced 3,713 .71 H-51 Nestor S. De la Merced 82 ,634.71 11 ,005.76 H-52 Cabuay Noemi Bernardo 74 ,274.18 11,478.54 H-53 Cabuay Noemi Bernardo 220 ,115.13 30 ,141 .54 H-54 SPF Food Service 229 ,570.92 27 ,261 .26 H-55 SPF Food Service 602 ,830.57 78 ,179.93 H-56 VZG Food Industries Inc. 545 ,225 .30 74,701 .11 H-57 VZG Food Industries Inc. 1,563 ,598.60 25 ,534 .35 J-1 An-Cel "A" Corporation 1,494,022 .13 25 ,094.88 J-2 An-Cel "A" Corporation 510 ,686 .98 52 ,285.90 J-3 Blue Dairy Corporation 501 ,897.37 41 ,045.16 J-4 Cebu Golden Food Industries Inc. 1,045 ,717 .92 25 ,000 .00 J-5 Davao City Food Industries 820 ,903.23 49,741 .07 J-6 Edsa Food Industries Inc. 499 ,999.98 56 ,053 .39 J-7 Edsa Food Industries Inc. 994 ,821 .35 61 ,570 .32 J-8 Edsa Food Industries Inc. 1' 121 ,067 .90 61 ,016 .92 J-9 Geneva Food, Inc. 1,231,406 .29 45,929 .08 J-10 Geneva Food , Inc. 1,220 ,338.44 36,318 .39 J-11 Geneva Food , Inc. 918 ,581 .57 34,520 .09 J- 12 Giant Arches Food Corporation 726 ,367.65 32,435.69 J-13 Giant Arches Food Corporation 690,401.67 87 ,607.38 J-14 Golden City Food Industries Inc. 648 ,713 .89 39,733.50 J-15 Havi Food Services Phils., Inc. 1,752 ,147.57 16,480.15 J-16 Golden Arches Development Corporation 794 ,670.07 396 ,667 .58 J-17 Golden Arches Development Corporation 329 ,603 .14 57 ,353 .27 J-18 KSL Food Services 7,933,351 .60 51 ,831 .97 J-19 KSL Food Services 1' 147,065.40 39, 013.65 J-20 Gocheco, Edward Chan 1,036 ,639.40 30,928 .98 J-21 Gocheco, Edward Chan 780 ,273 .08 30 ,169.84 J-22 McColby's Inc. 618 ,579.57 20,402 .56 J-23 McColby's Inc. 603 ,396 .83 5,200 .35 J-24 McColby's Inc. 408,051 .16 5,200 .35 J-25 McColby's Inc. 104,007 .27 5 ,200 .35 J-26 McColby's Inc. 104,007 .27 21 ,885.37 J-27 McColby's Inc. 104,007 .27 8,645 .58 J-28 McColby's Inc. 437 ,707 .56 8 ,990 .82 J-29 McColby's Inc. 172,911 .57 8,990 .82 J-30 McColby's Inc. 179,816.49 30 ,234 .38 J-31 McColby's Inc. 179,816.49 10,500 .00 J-32 Me George Food Industries Inc. 604,687.60 17,137.34 J-34 Me Philip Food Industries, Inc. 210,000.00 11 ,568,724 .39 342,746 .83 26,081 .11 231 ,374,487.80 521 ,622 .10

DECISION C.T.A. CASE NO. 6659 J-35 Me Philip Food Industries, Inc. 504 ,686.95 25,234.35 J-36 Me Philip Food Industries, Inc. 1,141,352.58 57 ,067 .63 J-37 Me Philip Food Industries, Inc. 1,104,533.49 55 ,226.67 J-38 Me Philip Food Industries, Inc. 43 ,387 .08 J-39 Me Philip Food Industries, Inc. 867,741.55 58 ,027 .14 J-40 Retire Golden Foods, Inc. 1' 160,542. 79 36,006 .38 J-41 VZG Food Industries Inc. 26 ,261.10 K- 1 Ng Alfonso Lee 720,127 .60 16,989.96 K-2 Ng Alfonso Lee 525 ,221 .66 16 ,989 .96 K-3 Ng Alfonso Lee 339 ,799.02 18,688.95 K-4 Ng Alfonso Lee 339 ,799 .02 18,688 .95 K-5 Ng Alfonso Lee 373 ,778.91 23 ,567.40 K-6 Ng Alfonso Lee 373 ,778 .91 22,758 .65 K-7 Ng Alfonso Lee 471,347 .88 21 ,295.27 K-8 Ng Alfonso Lee 455 ,172.89 21 ,416.63 K-9 Ng Alfonso Lee 425 ,905.42 32 ,642 .91 K-10 Ng Alfonso Lee 428 ,332 .67 30 ,212 .80 K-11 Ng Alfonso Lee 652 ,858 .25 32 ,829.52 K-12 Ng Alfonso Lee 604,256 .17 33 ,332 .58 K-13 Ng Alfonso Lee 656 ,590.40 20 ,372.83 K-14 Ng Alfonso Lee 666 ,651.68 18,470 .13 K-15 Ng Alfonso Lee 407 ,456 .63 21 ,875 .00 K-16 Ng Alfonso Lee 369,402.83 21 ,245.72 K-17 An-Cel "A" Corporation 437 ,500.11 56 ,882.44 K-18 An-Cel "A" Corporation 424 ,914.47 33 ,155.98 K-19 Blue Dairy Corporation 1,137,648 .80 25 ,000.00 K-20 Cebu Golden Food Industries Inc. 663 ,119.64 50 ,875.76 K-21 Cebu Golden Food Industries Inc. 500 ,000 .01 44 ,573.45 K-22 Cebu Golden Food Industries Inc. 1,017 ,515 .26 56 ,605.10 K-23 Cebu Golden Food Industries Inc. 891 ,519 .00 57 ,561 .88 K-24 Edsa Food Industries Inc. 1,132,102.00 69,623 .82 K-25 Geneva Food , Inc. 1,151 ,237 .60 33 , 177.28 K-26 Giant Arches Food Corporation 1,392,476 .20 93,013.53 K-27 Giant Arches Food Corporation 663 ,545.79 88,080 .76 K-28 Giant Arches Food Corporation 1,860 ,270 .52 38 ,387.42 K-29 Me Glenn Foods 1,761 ,615 .39 112, 160.11 K-30 Me Glenn Foods 767 ,748.44 107,409.56 K-31 Me Glenn Foods 2,243 ,202 .09 135,846 .92 K-32 Me Glenn Foods 2,148,191 .14 98,678 .65 K-33 Golden City Food Industries Inc. 2,716 ,938.50 17,881 .24 K-34 Golden SouthFoods, Inc. 1,973 ,573.24 171 ,814.27 K-35 Golden SouthFoods, Inc. 357 ,625.11 129,518.10 K-36 Havi Food Services Phils ., Inc. 3,436 ,285.19 444 ,504 .16 K-37 Lim Gollayan , Jessica Tan 2,590 ,362 .24 40 ,025 .00 K-38 Dy , Jessica Lim Gollayan 8,890,083 .20 40 ,646 .08 K-39 Golden Arches Development Corporation 800 ,500 .20 58 ,557 .70 K-40 Golden Arches Development Corporation 812 ,922 .11 42 ,566.57 K-41 KSL Food Services 1,171 ,154.10 32 ,689.20 K-42 KSL Food Services 851 ,331.53 21 ,245.36 K-43 KSL Food Services 653 ,783 .82 24 , 100. 11 K-44 KSL Food Services 424 ,907 .20 14,142.83 K-45 Marie! Food Corporation 482 ,002 .24 24 ,373.22 282 ,856 .60 487,464 .50

DECISION C.T.A. CAS E NO. 6659 Pag e i i o f i 6 K-46 Marie! Food Corporation 487,468.48 24 ,373.43 K-47 Marie! Food Corporation 506 ,641 .32 25,332 .07 K-48 Marie! Food Corporation 920,478 .13 46 ,023.90 K-49 Marie! Food Corporation 780 ,571 .55 39 ,028.57 K-50 Marie! Food Corporation 820,495.30 41 ,024.77 K-51 Gocheco, Edward Chan 608,101.92 30 ,405.10 K-52 Gocheco, Edward Chan 560,413 .27 28 ,020 .66 K-53 Gocheco, Edward Chan 423 ,076.01 21 ' 153.80 K-54 Gocheco, Edward Chan 424,276.45 21 ,213.82 K-55 McColby's Inc. 104,007.27 K-56 McColby's Inc. 495 ,126 .36 5,200 .35 K-57 McColby's Inc. 179,816.49 24 ,756.32 K-58 McColby's Inc. 666 ,996 .56 K-59 McColby's Inc. 210 ,000.00 8,990 .82 K-60 McColby's Inc. 328,499 .54 33 ,349 .83 K-61 Me Daniel's Food Corporation 688,828 .15 10,500 .00 K-62 Me DLC Foods , Inc. 429 ,133.61 16,424.98 K-63 Me DLC Foods , Inc. 388,440.00 34,441.41 K-64 DLC Foods Inc. 1,211,683.81 21,456 .68 K-65 DLC Foods Inc. 388,440 .00 19,422.00 K-66 Me George Food Industries Inc. 238 ,210 ,199.80 60 ,584.19 K-67 Me Gill Food Industries Inc. 709,410 .20 19,422 .00 K-68 Me Gill Food Industries Inc. 680,547 .96 11 ,910,509.99 K-69 Me Jola, Inc. 1,980,834 .20 35,470 .51 K-70 Me Jola, Inc. 1,698 ,290 .20 34 ,027.40 K-71 Me Jola, Inc. 1,445,500.20 99 ,041 .71 K-72 Me Jola, Inc. 1,280 ,352.80 84 ,914.51 K-73 Lopez Eusebio Soriano 1,220,81 0.40 72 ,275.01 K-74 Lopez Eusebio Soriano 1,326,776.40 64,017 .64 K-75 Lopez Eusebio Soriano 605 ,914.40 61 ,040.52 K-76 Lopez Eusebio Soriano 917 ,303 .60 66 ,338.82 K-78 Me Philip Food Industries , Inc. 547 ,573 .97 30 ,295.72 K-79 Me Philip Food Industries, Inc. 1,049 ,571.49 45 ,865.18 K-80 Me Philip Food Industries, Inc. 1,004 ,31103 27 ,378 .70 K-81 Retire Golden Foods, Inc. 436 ,041 .60 52,478.57 K-82 Retire Golden Foods, Inc. 618 ,059.00 50,215 .55 K-83 Nee Mee Fooeds Corporation 1,231 ,332 .19 21 ,802 .08 K-84 Nee Mee Fooeds Corporation 1,311 ,875 .38 30 ,902 .95 K-85 Nestor S. Dela Merced 517 ,500 .00 61 ,566.61 K-86 Nestor S. Dela Merced 517 ,500 .00 65 ,593.78 K-87 Nestor S. Dela Merced 702 ,577 .56 25 ,875.00 K-88 Nestor S. Dela Merced 797 ,307 .36 25 ,875.00 K-89 Nestor S. Dela Merced 35 , 128 .88 K-90 Nestor S. DeJa Merced 81 ,220.31 39,865 .37 K-91 Nestor S. Dela Merced 71,487.43 K-92 Nestor S. Dela Merced 234,012 .29 4,061 .02 K-93 RSA Food Service 220,485 .12 3,574 .37 K-94 RSA Food Service 820,449 .80 11 ,700 .61 K-95 RSA Food Service 388 ,800.40 11 ,024.26 K-96 RSA Food Service 976,638 .20 41 ,022.49 K-97 RSA Food Service 1,611 ,102.60 19,440.02 K-98 SPF Food Service 1,605 ,945.80 48 ,831 .91 1,482 ,171.46 80 ,555.13 80,297 .29 74 ,108.57

DEC ISION C.T.A. CASE NO. 6659 K-99 SPF Food Service 1,036 ,3 12.12 51 ,815 .61 K-100 TGY & Kids, Inc. 1,406 ,6 11 .20 70,330 .56 K-101 TGY & Kids , Inc. 1,423 ,409.40 71 ' 170.47 K- 102 TGY & Kids , Inc. 1,388 ,155 .20 69 ,407 .76 K-103 TGY & Kids , Inc. 1,395 ,819.40 69 ,790 .97 K- 104 VZG Food Industries Inc. 24 ,758.42 L-3 Davao City Food Industries 495,168.42 58 ,336 .36 L-4 Golden Laoag Foods Corporation 1' 166,727 .56 26 ,924.41 L-5 Golden Laoag Foods Corporation 27 ,066 .29 L-6 Golden Laoag Foods Corporation 538,488 .20 41 ,692 .36 L-7 Golden Laoag Foods Corporation 541 ,325.79 31 ,075.85 L-8 Me Daniel's Food Corporation 833 ,847 .27 34,492 .98 L-9 Me Dan iel's Food Corporation 621 ,516.90 33 ,087 .85 L-10 Me Dan iel's Food Corporation 689 ,859.62 34 ,218.84 L-11 Cabuay Noemi Bernardo 661 ,756 .98 28 ,013.94 L-12 Cabuay Noemi Bernardo 684 ,376.89 30 ,852 .18 L-13 Jessica F. Fernandez 560,278 .63 L- 14 Fernandez Jessica F. QSCV Enterprises 617 ,043 .51 8,625.00 L-15 Fernandez Jessica F. QSCV Enterprises 172,500 .00 12 ,93 7 .50 L-16 Fernandez Jessica F. QSCV Enterprises 258 ,750 .00 18,560.65 371 ,21 3.00 20 029.77 Subtotal 400 595.40 p 56 ,924,759 .40 p 1,138,502,528.67 II. Sale of Services (Payment to Contractors and Professionai!Talent Fees H-38 Me Mighty Foods Corporation P 401 ,105.82 p 20,055 .29 J-33 Me Mighty Foods Corporation 421 ,253 .12 21 ,062 .66 K-77 Me Mighty Foods Corporation 389 ,020 .78 19,451 .04 L- 1 Double Rise Foods Inc. 1,499 ,600.40 74 ,980.02 L-2 Double Rise Foods Inc. 691 ,378.40 34,568 .92 Subtotal p 3,402,358.52 p 170,117.93 TOTAL p 1.141.904 887 19 p 57 094 877 33 The creditable withholding taxes reflected per certificates in the amount of P57 ,094 ,877.33 is higher than the creditable withhold ing taxes of P57,034,275.00 reported per petitioner's amended 2000 income tax return . The discrepancy of P60,602.33 was due to : 1) the creditable tax of P60,703.92 withheld by Edsa Food Industries for the period January to March 2000 with covering certificate marked as Exhibit H-10 but which was not reported by petitioner in its amended 2000 in come tax return and 2) transposition errors made by petitioner in the amount of P1 01 .59 per its Summaries of Creditable Withholding Tax Certificates (Exhibits F, H, J & K)

DEC ISION C.T.A . CASE NO. 6659 Page I3of i 6 and Summary of Rental Income per W ithhold ing Tax Certificate fo r the year 2000 (Exhibit M) , as shown below: Creditable Taxes Withheld per Certificates p 57 ,094,877.33 Less : 1.) Creditable withh olding taxes with certificate p (60 ,703.92) but not reported in the 2000 income ta x return 101 .59 2.) transposi tion errors made by petitioner per p (60,602.33) p 57 034 275 00 Summaries of Certificates of Cred itable Withholding Ta x (Exhibits F, H, J & K ) and Summary of Renta l Income per Withholding Tax Certificate for the year 2000 (Exhibit M) Creditable Ta xes Withheld per petitioner's 2000 income tax return Moreover, W e note that the two certificates marked as Exhibits L-15 and L-16 with the related cred itable withholding taxes of P38,590.42 were dated outside the subject period of cla im, hence, must be denied . Consequently, petitioner was able to substantiate by proper certificates only the cred itable withhold ing taxes of P56,995 ,684 .58, computed as fo ll ows: Income Payment Income Ta x Withh eld Creditable withholding taxes with certificates p 1' 138,502,528.67 p 56 ,924 ,759.40 I. Lease of Real Property 3,402,358 .52 170 117.93 II. Sale of Services p 1 141 904 887 .19 p 57,094 ,877 .33 Total Creditalbe with hold ing taxes with certificates Less: 1.) Creditable withholding ta x w/ covering p 1,214,078.38 p 60 ,703 .92 certificate but was not reported in the 371 ,213 .00 18 ,560 .65 amended 2000 income ta x return 400 ,595.40 20 ,029 .77 1. Lease of Real Property Exhibit H-10 (1 01 .59) 2.) Creditable withhold ing ta xes for which p 1,985,886.78 '-P----"-'99::.......:...:19=2."-7'"""5 the covering certificates were dated outside the subject period of claim p 1' 136,516,641 .89 p 56,825,566.65 I. Lease of Real Property 3,402,358 .52 170 117.93 Exhibit L-15 Exhibit L-16 P 1 139 919 000.41 P56 995 684 58 3.) Transposition errors made by petitioner Creditable withholding ta xes w/ valid certificates I. Lease of Real Property II. Sa le of Services Total Creditable withholding taxes w/ valid certificates

DEC ISION C.T.A. CASE NO. 6659 We now proceed to the third requirement. In its amended 2000 income tax return , petitioner's declared gross income from lease of real properties amounted to P1 ,166,309,624.00 (Exhibit B-4) which is higher when compared with the gross rental income of P1 ,136,516 ,641 .89 reflected in the certificates. As clearly explained by petitioner's Accountant, Ms. Cornelia Naguit, such discrepancy was due to the : 1) rental income payments received and reported by petitioner in 2000 but it failed to secure the corresponding certificates and 2) rental income payments collected in prior year but recognized/reported only in 2000 (pages 12 & 13, TSN, February 18, 2004). Evidently, the gross rental income payment of P1 ,136,516,641 .89 from which the creditable taxes of P56,825,566.65 were withheld formed part of the gross rental income of P1 ,166,309 ,624 .00 declared by petitioner in its amended 2000 income tax return . On the same vein, petitioner's gross income from sales of services amounting to P3,402,358.52 from which the creditable taxes of P170,117.93 were withheld , formed part of the gross income from sales of services amounting to P4,250,000.00 reflected in Schedule A(1) of its amended 2000 income tax return (Exhibit B) . In fine , We find petitioner to have sufficiently complied with the requisites for the refund or issuance of a tax credit certificate representing unutilized excess creditable withholding taxes for taxable year 2000 in the reduced amount of P48,875,843.58 , computed as follows : Minimum Corporate Income Tax Due p 8,119,841.00 Less : Substantiated Creditable Taxes Withheld Excess Creditable Taxes Withheld 56 ,995 ,684 .58 p 48 875 843 58

DEC IS ION C.T.A. CAS E NO. 6659 Page i 5of 16 IN VIEW OF THE FOREGOING , the Petition for Review is hereby PART/ALLY GRANTED. Accordingly , respondent is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE to petitioner in the reduced amount of P48 ,875 ,843 .58 representing unutilized or excess creditable withholding taxes for the taxable year ended December 31 , 2000 . SO ORDERED. ?CJlu-A-N- -if-o~cc. .cA~sT~AN~E.DA\, Y2R?.'" � Associate Justice WE CONCUR: ~ ~ ~:7; AEsRs~~~-cye OLGJ PALANCA-ENRIQUEZ Associate Justice ATTESTATION attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division . ~ Q~~\2_ JUANITO C. CASTANEDA, jf( , Associate Justice Chairperson

DEC IS ION C.T.A. CASE NO. 6659 CERTIFICATION Pursuant to Article VIII , Section 13 of the Constitution , and the Division Chairperson 's Attestation , it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. t~~. o~ ERNESTO D. ACOSTA Presiding Justice