Univation Motor Philippines, Inc. (Formerly, Nissan Motor Philippines, Inc.,) v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY FIRST DIVISION UNIVATION MOTOR CTA CASE NO. 8637 PHILIPPINES, INC. Members: DEL ROSARIO, Chairperson (FORMERLY, NISSAN MOTOR UY, and MINDARO-GRULLA, JJ. PHILIPPINES, INC.) Promulgated: Petitioner, MAR 10 201S ; IQ�. !>3o..~. - versus- --- - -X COMMISSIONER OF INTERNAL REVENUE, R es ponde nt. DECISION DEL ROSARIO, PJ.: This is a Petition for Review filed by petitioner Univation Motor Philippines, Inc. (formerly Nissan Motor Philippines, Inc.) on April 12, 201 3 pursuant to Section 229 of the National Internal Revenue Code of 1997, as amended, and Section 11 of Republic Act (RA) No. 11 25, as amended by RA No. 92 82, seeking the refund or the issuance of a tax credit certificate in the amount of TWELVE MILLION EIGHT HUNDRED SIXTY EIGHT THOUSAND SEVEN HUNDRED FORTY-FIVE PESOS (P12,868,745.00) representing its unutilized or excess creditable withholding taxes for taxable year ending December 3 1, 2010. THE FACTS Petitioner Univation Motor Philippines, Inc., a corporation duly created and organized under Philippine laws, with principal offi ce at Nissan a\

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) Technopark, Bo. Pulong. Sta. Cruz, Sta. Rosa, Laguna 4026, is engaged in the business of manufacturing motor vehicles. 1 Respondent is the head of the Bureau of Internal Revenue (BIR), holding office at the BIR National Office, Diliman, Quezon City.2 She is authorized, among others, to refund or credit taxes pursuant to Section 204 of the National Internal Revenue Code of 1997, as amended. Petitioner filed its Quarterly Income Tax Returns (Quarterly ITR) for 2010 through the BIR's Electronic Filing and Payment System (EFPS), to wit: Return Date of Filing First Quarterly ITR 27 May 2010 Amended First Quarterly ITR 28 M~2010 Second Quarterly ITR 25 Au_gust 2010 Third Quarterly ITR 23 November 20103 On April 15, 2011 , petitioner filed its Annual Income Tax Return for taxable year 201 0 (20 10 Annual ITR).4 On July 1, 2011, petitioner filed through the EFPS its Amended Annual Income Tax Return for taxable year 2010 (20 10 Amended Annual ITR), which was manually received by the BIR on 8 July 2011 showing a total gross income of P117,084,174.00 and an overpayment of income taxes amounting to P26,1 03,898.52, broken down as follows: 2010 !!2,341,683.48 Aggregate Income Tax Due p 15,576,837.00 Less: �12,868,745.00 Prior Year's Excess Credits: (P28,445,582.00) Creditable Tax Withheld for 201 0 (26,1 03.898.52)5 Total Tax Credits Total Overpayment 1 Par. 1, Joint Stipulation of Facts and Issue (JSFI), CTA Docket, p. 280. 2 Par. 2, !d. 3 Par. 3, !d. 4 Par. 4, !d. 5 Par. 5, !d. (1'1

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) As indicated under Item 33 of its 2010 Annual ITR and 2010 Amended Annual ITR, petitioner opted to claim its overpayment of income tax through the issuance of a tax credit certificate.6 Since petitioner's administrative claim has not yet been acted upon by the BIR, in order to preserve its right and to toll the running of the prescriptive period for its judicial claim, petitioner filed the subject Petition for Review before this Court on April 12, 2013. In her Answer 7 posted on July 1, 2013 , respondent raised the following special and affirmative defenses: (a) the present claim for tax refund is tainted with procedural infirmity due to petitioner's failure to submit complete documents in support of its administrative claim for refund; (b) petitioner miserably failed to exhaust administrative remedies before elevating the case to this Court; and, (c) claims for refund are construed strictly against the taxpayer and in favor of the government. On September 10, 2013, petitioner filed an Omnibus Motion 8 to commission Ms. Ma. Milagros F. Padernal as Independent Certified Public Accountant (ICPA). Ms. Ma. Milagros F. Pademal was commissioned as ICPA on October 11,2013. After the pre-trial conference on October 11,2013, the parties filed their Joint Stipulation of Facts and Issue on November 7, 2013 . 9 On December 11, 2013, the parties submitted their Supplemental Joint Stipulation of Facts and Issues. 10 The Court in a Resolution11 dated January 2, 2014 approved the afore- mentioned Joint Stipulation of Facts and Issue and the Supplemental Joint Stipulation of Facts and Issues, and terminated the pre-trial conference. The Court issued the corresponding Pre-Trial Order12 on March 3, 2014. 6 Par. 6, Id. ; Exhibits "P-5", " P-7" and "P-8", line 33, CTA Docket, pp. 471,487 and 495, respectively. 7 Answer, CTA Docket, pp. 67-78. 8 CTA Docket, pp. 92-100. 9 CTA Docket, pp. 280-283. �1 CTA Docket, pp. 317-327. 11 CTA Docket, pp. 356-357. 12 CTA Docket, pp. 371-385. OJ\

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) During trial, petitioner presented and formall y offered 13 its testimonial and documentary evidence. Petitioner's pieces of evidence were admitted in the R eso luti ons dated May 22,2014 14 and August 1 1 , 2 0 14 15 Respondent's � counsel, on the other hand, manifested during the hearing held on May 27, 2014 that she wi ll no longer present any evidence. The case was submitted for decision on January 5, 2015 16 after noting the fi ling of petitioner's Memorandum 17 on October 1, 2014 and respondent's Memorandum 18 on October 28, 2014. Meanwhile, on September 5, 20 14, petitioner' s Board of Directors unanimously approved the change of petitioner's corporate name from "Nissan Motor Philippines, Inc." to "Univation Motor Philippines, Inc. ".19 On January 30, 2015, petitioner filed a motion requesting that the necessary substitution of petitioner' s corporate name be made with respect to all existing records of the case. In a Resolution20 dated February 12, 2015, the Court granted petitioner's motion. ISSUES The patties jointly submitted the sole issue of "whether or not petitioner is entitled to a tax credit certificate in the amount of Php 12,868,745.00 for its excess and/or unutilized creditable withholding traexsoesIutf1o.0rn the taxable year ending December 31, 2010 " for the Court's .2 1 THE COURT'S RULING Section 76 of the National Internal Revenue Code of 1997 ( 1997 NIRC), as amended, specifies the manner by which claims for refund or credit of excess income tax payments or unutilized creditable taxes withheld (CWT) may be made by a corporate taxpayer, viz.: 13 Formal Offer of Evidence, CTA Docket, pp. 403-428. 14 CTA Docket, pp. 6 18-6 19. 15 CTA Docket, p. 642. 16 CTA Docket, unpaginated. 17 CTA Docket, unpaginated. 18 CTA Docket, unpaginated. 19 CTA Docket, unpaginated. �2 CTA Docket, unpaginated. 21 JSFI, CTA Docket, p. 283. ~

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) "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 sha ll either: (A) Pay the balance oftax 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 due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor." 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 in the form of cash or tax credit certificate) or carried over and applied against the income tax liabilities of the succeeding taxable years. The carry-over option, however, once taken is irrevocable for the taxable period and no application for a tax refund or issuance of a tax credit certificate shall then be allowed. 22 The phrase "for that taxable period" refers to the taxable year when the excess income tax, subject of the option, was acquired by the taxpayer. 23 In exercising its option, a corporation must signify in its Annual Corporate Adjustment Return (by marking the option box provided in the BIR form) its intention either to carry over the excess credit or to claim a refund. To facilitate tax collection, these remedies are in the alternative and the choice of one precludes the other.24 22 Philam Asset Management, Inc. vs. Commissioner ofInternal Revenue, G.R. Nos. 156637 and 162004, December 14, 2005; Systra Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 176290, September 21, 2007. 23 Commissioner of Internal Revenue vs. Bank of the Philippine Islands, G.R. No. 178-190, July 7, 2009. N Systra Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 176290, September 21, 2007 Resolution. ~

DEC I SI O N CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) A perusal of petitioner's 2010 Annual Amended Annual ITR25 for CY 2010 shows that petitioner had income tax credits in the total amount of P28,445,582.00,26 consisting of the prior year's excess credits other than the MCIT in the amount of P 15,576,837.0027 and creditable withholding taxes accumulated during the four (4) quarters of CY 2010 in the aggregate amount ofP12,868,745.00,28 viz. : Sales/Revenues/Rece ipts/Fees p 2, 151 ,388,316.00 Less: Cost of Sales/Services Gross Income from Operation 2,093,457,153.00 Add: Non-Operating & Taxable Other Income p 57,931 , 163.00 Total Gross Income Less: Deductions 59,153,01 1.00 Taxable Income p 117,084,174.00 Tax Rate Income Tax 362,246, 120.00 p (245, 161 ,946.00) 30% p 0.00 Minimum Corporate Income Tax p 2,341 ,683.48 Tax Due p 2,341,683.48 Less: Tax Credits/Payments 15,576,837.00 Prior Year's Excess Credits other than MCIT Creditable Tax Withheld for the ... p 6,267,852.00 12,868,745.00 6,600,893.00 p 28,445,582.00 First Three Quarters Fourth Quarter Total Tax Cred its/Payments Tax Payable/(Overpayment) p (26, I03,898.52) As illustrated below, the prior year's excess credits of P15 ,576,837.00 originated from the creditable taxes withheld for the years 2007 and 2008 in the respective amounts of !>19,5 14,5 13 .00 and P16,024,71 4.00 (or in the total amount of P35 ,539,227.00), which are duly supported by various Certificates of Creditable Tax Withheld at Source (BIR Forms No. 2307):29 25 Exhibit " P-7", CTA Docket, pp. 486-487. 26 Exhibit "P-7", line 30H, CTA Docket, p. 487. 27 Exhibit "P-7", line 30A, CTA Docket, p. 486. 28 Exhibit "P-7", lines 30C and 300 , CTA Docket, p. 486. 29 Exhibits "P-39-1 " to " P-39-1 34" and " P-39-1 35" to "P-39-354" as summarized in Exhibit " P-39" . ~

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) Ex h. Year Income Prior Year's (Income Tax Still CWT Excess CWT Tax Due Excess Credits Due)/ Balance for the at the end of of Prior Year's Year Excess Credits the Year (a) (b) (c)= (b) less (a) P-2I 2005 Pl 3, I20,451.40 p - p ( 13, I20,451.40) p 32,752,987.00 p 19,632,535.60 P-22 2006 - 19,632,536.00 19,632,536.00 25,287,007.00 44,919,543.00 P-23 2007 56, 165 ,995.35 44,919,543.00 ( I I,246,452.35) 19,5 I4,5 13.00 8,268,060.65 P-24 2008 6,188,2 19.90 8,268,061.00 2,079,841.10 16,024,714.00 18,104,5 55. 10 P-3 2009 2,527,7 17.78 18, I04,555.00 15,5 76,837.22 - 15,576,83 7.22 Petitioner's MCIT due for the year 2010 in the amount of P2,34 1,683.48 was offset against the prior year's excess credits of P15,576,837.00, thus leaving the balance of the prior year's excess credits of P13,235, 153.52 and creditable taxes withheld during the year 20 10 in the amount of P12,868,745.00 (or the total amount of P26,103,898.52 30 ) unutilized as ofDecember 31,2010, as shown below: Prior Year's Excess Credits p 15,576,837.00 Less: Income Tax Due (MCIT for 2010) 2,341,683.48 Balance of Prior Year's Excess Credits Add: Creditable Taxes Withheld During the Year p 13,235,153.52 Unutilized Excess Tax Credits as of December 31,2010 12 ,868 ,745.00 p 26,103,898.52 Inasmuch as petitioner clearly indicated its intention to be issued a Tax Credit Certificate (TCC) by marking the box corresponding to the said choice in its 20 10 Annual ITR and 20 10 Amended Annual ITR31 and only the excess tax credits from taxable year 2009 in the amount of P13,235, 154.00 were carried over by petitioner in its Quarterly ITRs32 and Annual ITR33 (both original and amended) for the succeeding taxable year 2011, the amount ofP12,868,745.00 may be the proper subject of a claim for refund under Section 76 ofthe 1997 NIRC. As emphasized by this Court in a number of similar cases, however, the refund of excess CWT is dependent on the taxpayer's compliance with the fol lowing three basic requirements: 30 Exhibit " P-7", line 33, CTA Docket, p. 487. 31 Exhibits "P-5", "P-7" and "P-8", line 33, CTA Docket, pp. 471 , 487 and 495, respectively. 32 Exhibits " P-18", " P-19" and " P-20", line 31A, CTA Docket, pp. 552, 559 and 565, respectively. d\ 33 Exhibits "P- 12" and "P- 13", line 33A, CTA Docket, pp. 506 and 521 , respectively.

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) 1. 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 1997 NIRC, as amended; 2. 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. The income upon which the taxes were withheld were included in the return of the recipient, i. e., declared as part o1,.{'the gross z.ncome. 34 With regard to the first requisite, a taxpayer has two (2) years from the date of payment of the tax within which to claim a tax refund. Sections 204(C) and 229 of the 1997 NIRC, provide: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX (C) Cred it or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion , redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction . No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund." "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully co llected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty 34 Section 2.58, Revenue Regulations No. 2-98, as amended; Citibank N.A. vs. Court of Appeals and CIR, 280 SCRA 459; ACCRA Investment Corporation vs. CA, 204 SCRA 957 o1

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." In applying the foregoing provisions, the Supreme Court in ACCRA Investments Corporation vs. Court of Appeals, et al.,35 held that the two- year prescriptive period for claiming a refund of overpaid income tax/CWT 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.36 This guiding principle was reiterated in Commissioner of Internal Revenue vs. Primetown Property Group, Inc., 37 where it was held that the two-year prescriptive period is reckoned from the filing of the final adjustment return. In the case at bar, petitioner filed its 2010 Annual ITR on April 15, 2011.38 Counting from this date, petitioner had until April 15, 2013 to fi le an administrative claim for refund or issuance of a TCC, and to institute the corresponding judicial action. Considering that petitioner's administrative claim for refund or issuance of TCC of excess CWT for taxable year 2010 was filed with the BIR on March 12, 2012,39 and that the corresponding judicial claim was filed before this Court on April 12, 2013, clearly, both the administrative and judicial claims were filed within the two-year prescriptive period. With regard to the second and third requisites, Section 2.58.3 (B) of Revenue Regulations (RR) No. 02-98, as amended, states: Sec. 2.58.3. Claim for tax credit or refund. - XXX XXX XXX (B) Claims for tax credit or refund of any creditable income tax which was deducted and withheld on income payments shall be given due course only when it is shown that the incom e payment has been declared as part of the gross income and the fact of withholding is 35 G.R. No. 96322, December 20, 1991 . 36 Commissioner ofInternal Revenue vs. TMX Sales, Inc., et al., G.R. No. 83736, January 15,1992. 37 G.R. No. 162155, August 28, 2007. 38 JSFI, Stipulation of Facts, No. 4, CTA Docket, p. 281; Exhibit "P-5", CTA Docket, p. 470. ll 39 Exhibits "P-10" and "P-11", CTA Docket, pp. 502-504.

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) established by a copy of the withholding tax statement duly issued by the payor to the payee showing the amount paid and the amount of tax withheld therefrom. (Emphasis supplied) To prove its compliance with the second requisite, petitioner presented Schedule/Summary of Creditable Taxes Withheld for the year 201040 and the related Certificates of Creditable Taxes Withheld at Source (BIR Form No. 2307)41 duly issued to it by various withholding agents for the year 2010, reflecting creditable withholding taxes in the total amount of Pl2,868,745.8742 . Anent the third requisite, the Court was able to trace the income payments related to the substantiated CWT ofP12,868,745.87 (savefor the amount ofPJ39,127.97n CWT) to petitioner's General Ledger (GL) for CY 2010, 2009, 2008 and 2006, and noted that the same were reported in petitioner's Annual ITRs for the years 20 10, 2009, 2008 and 2006. Moreover, the total amounts of sale of goods and services and other income booked by petitioner in its GL for the years 20 10, 2009, 2008 and 2006 tally with the amount of sales of goods and services and other income declared in petitioner's Annual ITRs for the said years, as shown in the computation/reconciliations prepared by ICPA,44 to wit: Per General Ledger Per Schedule of Exhibit and Summary GL Exhibit Computation of Particu Iars No. Account C lassification No. Taxable Income Difference 2010 P-27-1 fl2 ,151,388,315.77 fl2 , 151 ,3 88,316.00 (P 0.23*) P-31-1 Sa les of goods and services 44,993,25 1.59 59,153 ,011.00 ~ 14, 159,759.412 Other income P-27-2 P-31-2 fl2, 196,381,567.36 P-34 fl2,21 0,541 ,327.00 ~p 14, 159,759.64) 2009 P-27-3 Pl ,709,3 63 ,914.87 P-35 P1 ,709,363,915.00 (P 0 . 13*) Sales of goods and serv ices Other income 46,599,584.88 67,603 ,905.00 ( 21 ,004,320.12) 2008 PI ,755,963 ,499.75 P-35 PI ,776,967,820.00 ~fl21 ,004,320.25) Sa les of s_oods and services P2,026, 185,814.18 P-36 P2,026, 185,8 14.00 fl 0.18* 40 Exhibits "P-25'' and " P-26". 41 Exhibits "P-26-1" to " P-26-362". 42 Rounding-off difference ofP0.87. 43 Exhibit "P-29", p. 166 of 166, total amount not traced to GL. 44 Exhibit "P-40", CTA Docket, p. 609. ~

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) Per General Ledger Per Schedule of Exhibit a nd Summary G L Exhi bit Computation of Part ic ul a r s No. Account C lassification No. Taxab le Inco me Diffe rence 2006 Othe r income: Meralco refund with termi nated contract P-3 1-3 fl 48,57 1,420.28 P-3 7 P 144,653,630.00 ~p 96,082,209 .72) *Due to rounding- off The differences in "Other Income" were accounted for as fo llows: Particu Iars Amount 2010 fl2,597 ,965.00 ( 12,878,814 .00) Nontaxable mi scellaneous inco me Taxable rea lized foreign exchange gain (3,878,909 .00) T axable interest income ( 1.64) Rou ndi ng-off diffe re nce (P 14, 159,759.642 2009 (P 13,988,3 58.00) Taxable interest income classified under a separate account in the GL (6,24 1,324.00) Taxable realized foreign exchange gai n classifi ed under a separate acco unt in the GL (788,638.00) Loss on write-off of tax refu nd offset against misce llaneous income in the G L 14,000 .00 Dividend income exempted from tax (0. 25 ) Round ing-off d ifference (fl2 1,004,320.25) 2006 fl6,5 82,5 68.00 Non-taxable reversa l of allowance for inve ntory o bsolesce nce 305,500.00 Non-taxable gain on sale of property and eq uipme nt Taxable unrealized foreign exchange gain in 2005 realized in 2006 (88,879,575. 00) Taxable realized fo reign exchange ga in - net ( 13,5 15,832. 00) Taxable interest income Roundi ng-off differe nce (5 74,872.00) 1.2 8 (fl 96,082,209.72) The foregoing reconciliations show that the Net Sales and Other Income indicated in the taxable income column of petitioner's Schedules45 of Computation of Taxable Income for the calendar years 2010, 2009, 2008 and 2006, tally with the total amounts of Sales/Revenues/Fees and Non- Operating & Other Income declared in petitioner's Annual ITRs46 fo r the same years, thus:47 45 Exhibits " P-34", "P-35", "P-3 6" and "P-37" . 46 Exhibits "P-7", " P-3", "P-24" and "P-22" . 47 Exhibit "P-40", CTA Docket, p. 610. &.

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) 2008 2010 2009 2006 P144,653 ,630 Amount reflected in the P2,2 10,541 ,327 Pl ,776,967,820 P2 ,026, 185,814 taxable income column per 144,653 ,630 Computation ofTaxable 144,653 ,630 in c o me p Amount shown in the A nnua l 2, 15 1,388,3 16 1,709 ,363 ,915 2,026, 185,814 Income Tax Return duly 59, 153,011 67,603 ,905 stamped " Received" by the - BIR: Sales/ revenue/receipts/fees Non-operating and taxable other income 2,21 0,54 1,327 1,776,967,820 2,026, 185,814 p - p- p- Truth to tell, the total taxable revenues/income per petitioner's GL were the same amounts reported by petitioner in its Annual ITRs for the years 2010, 2009, 2008 and 2006. The Court also found that the income payments related to the claimed CWT were recorded in petitioner's GL. The ICPA verified in her report that out of the income payments of P1,211,855,206.56 per Summary of Creditable Taxes Withheld on the sales of goods and services and other income, 48 she was able to trace income payments of P1 ,197,951,587.59 related to the CWT of P12,729,6 17.90 to the corresponding calendar year when these were actually recorded in the GL, summarized as follows: 49 Per Summary of Traced to General Ledger and/or Invoices/OMs/Official Receipts/CMs Creditable Tax Withheld50 Income Payments Covered by BIR Form No. 2307 Parti cula rs Amount of Amount 2006 2008 2009 2010 Total Eq uiv alen t In co me of Tax - Tax Sales of Payments Withheld goods - Withheld and services Oth er I,207,245,082.08 12,080, 167.09 - 14,855,469.84 209,602, 160.79 968,883,832.48 1,193,341,463.11 ' 1 11 ,941 ,039.1 2 income: I,174 ,235.64 58,7 11.78 - - I, 174 ,235.64 I, 174 ,235.64Sl 58,7 11.78 Rental 2, I00,000.00 3 15,000.00 income - - 2. 1oo,ooo.oon 2,100,000.00 3 15,000.00 Management fees Me ralco refund: 48 Exhibit "P-2 6". 49 Exhibit "P-40", CTA Docket, p. 605. 50 Exhibit "P-26". 51 Exhibit "P-29". 52 Exhibits "P-32-1" to "P-32-16". 53 Exhibits "P-32- 17" to "P-32-28". 9'1'

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) With I , 155,640.00 369,804.80 I' 155 ,640.00H - - - I, 155,640.00 369,804.80 terminated se rvice 180,248.84 4 5 ,062.2 0 - - - 180,248.8455 180,24 8.84 45,062 .20 contract With active se rvice contract 4,61 0, 124.48 7 8 8,5 78. 78 1, 155,640.00 . - - 3,454,484.48 4,6 10, 124.48 788,578.78 I ,2 11 ,855,206.56 12,868,745.87 I ,155,640.00 14,855,469.84 209,602,160.79 972,338,316.96 I, 197,951,587.59 12,729,6 17.90 Quoted hereunder is the !CPA's explanation for the difference : " In the normal course of business, the Petitioner's sales of goods and services to its dealers/payers are collected promptly or within the agreed credit terms ranging from 30 to 120 days. The dealers/payers issue the certificates of creditabl e taxes withheld (BIR Form No. 2307) upon payment of their accounts to the Petitioner. However, in 2008 and 2009, some dealers were unable to dispose their inventories, causing the delay in the settlement of their accounts under the normal credit terms granted by the Petiti oner. As a result, the dealers requested that their credit terms be extended, which the Petitioner approved. xxx xxx xxx We were not able to trace the remaining amount of income payments shown in Exhibit No. P-29 totalling ?1 3,903,618.97, corresponding to income tax withheld of P1 39,127.97, against the amounts in the general ledgers and/or corresponding invoices, debit and credit memos or official receipts as of the date of report due to the absence of accounting trail s, since the Petitioner's withholding agents were not able to provide the details of the specific invoices from which they withheld the taxes. The amount of ?1 39,127.97 should be deducted from the Petitioner' s claim." 56 In fine, petitioner was able to show that the income payments, from which the CWTs in the total amount ofP12,729,617.90 were withheld, were declared in its 2010 Annual Amended ITR. From all the foregoing, the Court finds that petitioner is entitled to a refund or issuance of a tax credit certificate in the reduced amount of P12,729,617.90 representing its excess and unutilized excess CWTs for taxable year 2010. WHEREFORE, in light of the foregoing, Univation Motor Philippines, Inc.'s Petition for Review is hereby PARTIALLY GRANTED. Respondent Commissioner of Internal Revenue is hereby ordered to issue a tax credit certificate in the amount of TWELVE 54 Exhibits "P-32-29". 55 Exhibits " P-32-30" to "P-3 2-37". 56 Exhibit "P-40", CTA Docket, p. 606. ~

DECISION CTA CASE No. 8637 Univation Motor Philippines, Inc. (formerly, Nissan Motor Philippines, Inc. vs. Commissioner ofInternal Revenue) MILLION SEVEN HUNDRED TWENTY NINE THOUSAND SIX HUNDRED SEVENTEEN and 90/100 (P12,729,617.90) representing petitioner's unutilized or excess creditable withholding taxes for taxable year ending December 31,2010. SO ORDERED. Presiding Justice WE CONCUR: E~P.UY Wtt N. M~~ .C~ Assoctate Justice CIELITO N. MINDARO-GRULLA Associate Justice CERTIFICATION Pursuant to Section 13 of Article VIII 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 the Court's First Division. Presiding Justice