GREAT LANDHO, INC., TT&T DEVELOPMENT, INC., and TAMA PROPERTIES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC GREAT LANDHO, INC., TT&T CTA EB No. 2869 DEVELOPMENT, INC., and (CTA Case No. 10184) TAMA PROPERTIES, INC., 1 Petitioners, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. x- -------- ---------------x CTA EB No. 2870 COMMISSIONER OF (CTA Case No. 10184) INTERNAL REVENUE, Petitioner, -versus- Present: GREAT LANDHO, INC., TT&T RINGPIS-LIBAN, P.J., DEVELOPMENT, INC., AND TAMA PROPERTIES, INC., BACORRO-VILLENA, MODESTO-SAN PEDRO, Respondents. REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. Promulgated: x-----------------------------------------~---------x RESOLUTION REYES-FAJARDO, J.:

RESOLUTION CT A EB Nos. 2869 & 2870 We resolve: 1. Motion for Partial Reconsideration (Re: Resolution [sic] dated 21 July 2025)1 filed by Great Landho, Inc., (GLI), TT&T Development, Inc., (TDI), and Tama Properties, Inc., (TPI) (collectively, the Corporations)' on August 13, 2025, with the Commissioner of Internal Revenue (CIR)'s Comment and Opposition (Re: Motion for Partial Reconsideration dated 12 August 2025)2 filed on September 8, 2025; and, 2. Motion for Reconsideration (Re: Decision promulgated on 21 July 2025)3 filed by CIR on August 4, 2025, with the Corporations' Comment and Opposition (Re: Respondent's Motion for Reconsideration dated 04 August 2025)4 filed on November 26,2025. On July 21, 2025, the Court promulgated a Decision,3 affirming with modification the Decision dated August 4, 2023, and Resolution dated January 25, 2024 of the Court of Tax Appeals Special Second Division. The fallo of which reads:6 WHEREFORE, the Petitions for Review in CTA EB Nos. 2869 and 2870 are DENIED, for lack of merit. The Decision dated August 4, 2023 and Resolution dated January 25, 2024 in CTA Case No. 10184, are AFFIRMED with MODIFICATION. Accordingly, the fallo of the Decision dated August 4, 2023 in CTA Case No. 10184, shall be read as follows: WHEREFORE, premises considered, the instant Petition for Review filed by petitioners Great Landho, Inc., TT&T Development, Inc. and Tama Properties, Inc. on 10 October 2019, is hereby PARTIALLY GRANTED. Accordingly, respondent Commissioner of Internal Revenue is ORDERED to refund or issue a tax credit certificate in favor of petitioner IT&T Development, Inc. In the total amount of P12,360,422.40, representing erroneously collected CWT. Rollo, pp. 159- 168. 2 /d., pp. 171 -179. 3 /d., pp. 142- 155. 4 /d., pp. 185 - 192. 5 Id., pp. 109- 130. 6 /d., p. 128.

RESOLUTION CTA EB Nos. 2869 &2870 SO ORDERED. SO ORDERED. The Court's ruling is two-pronged: (1) denial of the Corporations' claim for refund of Documentary Stamp Tax (DST), and (2) grant of their claim for refund of Creditable Withholding Tax (CWT). As to DST, the Court held that it was validly imposed upon the execution of the Deeds of Absolute Sale, notwithstanding TDI's and GLI's subsequent mutual revocation and cancellation of the Deeds of Sale covering the parcels of land prior to the transfer of title. The later cancellation did not render the DST erroneously or illegally collected; hence, no tax refund thereof may be granted. On the other hand, the Court found that a refund of the CWT is proper. By mutual revocation and cancellation of the Deeds of Absolute Sale, the parties are restored to their original situation, thereby extinguishing their obligations to one another. As such, no withholding obligation has arisen, and the CWT withheld and remitted is an illegal or erroneous tax, subject to tax refund. Undaunted, both parties filed their respective Motions for Partial Reconsideration. The Corporations seek reversal of the denial of their DST refund claim, while the CIR assails the grant of the CWT refund. After due consideration of the parties' arguments, We find no cogent reason to disturb the assailed Decision. The denial of the DST Refund is proper. In its Motion for Partial Reconsideration (Re: Resolution [sic] dated 21 July 2025), the Corporations insist that DST should attach only upon actual conveyance of the properties, and that the subsequent mutual recission of the Deeds of Absolute Sale extinguished any DST liability, there being allegedly no subsisting conveyance to which the tax could attach. The CIR through its Comment and Opposition (Re: Motion for Partial Reconsideration dated 12 August 2025)/ counters that DST is an excise tax on the privilege, opportunity, or facility afforded by law 7 Supra at note 2.

RESOLUTION CTA EB Nos. 2869 & 2870 Page4 of6 to enter into certain transactions, and that the tax attaches upon the execution of the taxable instrument itself, regardless of the ultimate fate or legal status of the underlying contract. The Corporations' position is unavailing. We already ruled, citing Philippine Home Assurance Corporation v. Commissioner of Internal Revenue (PHAC), 8 that imposing DST is"an exercise upon the privilege, opportunity or facility offered at exchanges for the transaction of the business... [I]t is immaterial whether the transfer of the account constituted a sale." In PHAC, the Supreme Court also categorically held that DST attaches upon the issuance or execution of a specific instrument, independently, "without regard to whether the contracts which gave rise to them are rescissible, void, voidable, or unenforceable." The Corporations cannot take shelter behind the alleged absence of a perfected conveyance to evade liability for the documentary stamp tax. Once the instrument is executed, the tax immediately attaches as an excise on the privilege of entering into the transaction. Moreover, they cannot salvage their position by invoking rescission of the Deeds of Absolute Sale. DST attaches independently upon the execution of the Deeds of Absolute Sale, without regard to the contract's validity. Its purported legal status does not render the DST imposed erroneous or illegal. Thus, the DST is lawfully levied. The refund of CWT is proper. The CIR in its Motion for Reconsideration (Re: Decision promulgated on 21 July 2025), contends that the CWT was not erroneously or illegally collected taxes and that the Corporations failed to discharge the burden of proving their entitlement to a tax refund, considering that claims for tax refunds are construed strictly against the taxpayer. In contrast, the Corporations assert that the Court committed no reversible error in granting the subject tax refund. s G.R. No. 119446, January 21, 1999.

RESOLUTION CTA EB Nos. 2869 & 2870 We sustain the grant of the CWT refund. Under Section 2.57.2(J) of Revenue Regulation No. 2-98,9 the obligation to withhold arises only where there is a sale, exchange, or transfer of real property classified as ordinary asset. Here, however, the Court found that GLI and TDI subsequently executed a Revocation/ Cancellation of Deed of Absolute Sale for the subject properties, by virtue of which they mutually extinguished their obligations and restored themselves to their original situation as if no sale had been perfected. Absent any subsisting sale or transfer between GLI and TDI, no obligation to withhold CWT could validly arise. The CWT withheld and remitted by GLI was therefore an illegal or erroneous tax, being levied or collected sans statutory authority. WHEREFORE, Great Landho, Inc., TT&T Development, Inc., and Tama Properties, Inc.'s Motion for Partial Reconsideration (Re: Resolution [sic] dated 21 July 2025), and the Commissioner of Internal Revenue's Motion for Reconsideration (Re: Decision promulgated on 21 July 2025 are DENIED. The Decision promulgated on July 21, 2025 is AFFIRMED. SO ORDERED. ~ ~ r. ~ . Flff~J..to WE CONCUR: MARIAN Ivt F. RE"fES-FAlARDO Associate Justice )- MA. BELEN M. RINGPIS-LIBAN Presiding Justice 9 SUBJECT: Implementing Republic Act No. 8424, "An Act Amendmg the National Internal Revenue Code, as Amended" Relative to the Withholding on Income Subject to the Expanded Withholdmg Tax and Final Withholdmg Tax, Withholding of Income Tax on Compensation, Withholding of Creditable Value-Added Tax and Other Percentage Taxes.

RESOLUTION - CTA EB Nos. 2869 &2870 I eite te my CDO Page 6 of 6 ~~� BACORRO-VILLENA Associate Justice I reiterate my co,J*_hi-1~~[~1 t CDO of J. Manahan MARIARO STO-SAN PEDRO co~ffa~ I reiterate my J. Villena's CDO LANEE S. CUI-DAVID Associate Justice I recioti'Ae"rt~br;;fGn. 'FE~R~RE~R-sFLi~oS n Associate Justice I reiterate my vote join/lt.he CDO of Justice Villena HENRYS. ANGELES Associate Justice