PHILIPPINE NATIONAL BANK v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY EN BANC PHILIPPINE NATIONAL BANK, CTA EB CASE NO. 762 Petitioner, (CTA Case No s. 7355 & 7588) Present: -versus- Acosta, P.J . Castaneda, Jr. Bautista, Uy, Casanova, Palanca-Enriquez, Fa bon-Vi cto ri no, Mindaro-Grulla, and Cotangco-Manalastas, JJ. COMMISSIONER OF INTERNAL Promul gated: REVENUE, fltc4~e~t-1~~2 Respondent. SEP 12 2012 1: .zo / ?' 7h- . X-----------------------------------------------------------------------------------------------------X DECISION COTANGCO- MANALASTAS, J.: On app ea l befor e th e Co urt En Bane by way of a Petition for Review 7 filed on May 11, 2011 by petitioner Philippine National Bank (PNBL pursuant to Sect ion 18 of Republic Act No . 1125, as amended by Republic Act No. 9282 and Republic Act No . 9503, 2 are the April 5, 2011 Resolution3 and July 12, 2010 Decision 4 promul ga t ed by�-- 1 Rollo, pp. 10-37. 2 OLherw ise known ilS "/\n /\cl Expilnding Lh e Juri sdi cLion of Lhe Co urL of Tilx /\ppeills (CT/\), Elevilling ils Rvnk Lo Lhe Leve l o f il Co ll egiille CourL wilh Speciil l JurisdicLion vnd Enlvrging ils Membership, /\mending for Lh e Purpose Cerlvin SecL ion s of Republic /\cl No. 112S, ilS vmended, OLherwise Known ilS Lhe Lilw CreiJ Ling Lhe Co urL of Tilx /\ppevls, vnd for OLher Purposes ...

DECISION PJ gc 2 of 16 CTA EB Case No. 7G2 (CTA Case No s. 7355 & 7588) Philippine Notional aonk vs . Commissioner of In lerna/ Revenue the Special First Division of thi s Court in CTA Ca se No s. 7355 & 75 88 entitled "Philippin e National Bank vs. Commiss ion er of Internal 1-? even ue". The di spo sitive portion s of th e assai led Resolution and Decision read: Reso lution dat ed April 5, 2011 : " WHEREFORE, premises considered, petition er's Motion for Partial Reconsideration {With Prayer to Admit Attached Income Tax Return) is hereby DENIED for lack of merit . SO ORDERED. " Decision dated July 12, 2010 : " WHEREFORE, in view of the forego ing, th e Petition for Review in CTA Case No . 735 5 is hereby DENIED for in suffi ciency of ev id ence, whil e CTA Ca se No . 7588 is hereby GRANTED . Acco rdin gly, res pond ent is ORDERED to refund petitioner the amo unt of P77,172,555 .28, represent ing its claim for refund of interests, surcharges and pena lties o n Capita l Gains Tax and Docum entary Stamp Tax for th e yea r 2003 . SO ORDERED. " Pe tition er pr ays of thi s Co urt to r eve rse and se t as id e the ass ailed Resolution dated April 5, 2011 and to amend the July 12, 2010 Decision in CTA Case No. 7355 and order the re spondent Commissioner of the Burea u of Internal Rev enue (BIR} to refund in favor of p et ition er PNB th e additional amount of P12,400,004 .70, repre se ntin g the excess creditable taxe s withheld and paid for the year 2003. ~ 3 Rollo, pp . 38 42. 4 Rollo, pp . 43 60 .

DECISION P<J gc 3 of 16 CTA EB Case No. 762 (CTA Ca se Nos. 73 55 & 75RR) Philippin e Notional [Jonk vs. Comm iss io n er oj Int ern al Reven ue THE FACTS The fact s, as succinctly narrated by the Special First Division are reproduc ed hereunder: " fhe instant Petitions for Review are consolidated cases claiming for refund of excess withholding tax in the amount of P12,400,004 .70 and surcharges, interests, and penalties in the amount of P77, 172,555.28, both claim ed to be erroneously paid by th e petitioner. Petitioner is a domestic corporation organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal business address at the PNB Finan cial Center, Pres id ent Diosdado Macapagal Boulevard, Pasay City. Respondent, on the other hand, is the duly appointed Commissioner of Interna l Revenue who is vested with authority to administer and enfo rce national internal revenue laws, includin g, inter alia , th e power to grant claims for refund of any internal revenue taxe s erroneou sly or excessive ly paid, assessed or co ll ected . CTA CASE NO . 7355 On Apri l 7, 1995, Gotesco Tyan Ming Developm ent, Inc . (GOTESCO) entered into a loan agree m ent 3 with several bank s, i.e. , herein petition er, Metropolitan Bank and Tru st Company, United Coconut Planters Bank, and Citytrust (now Bank of the Philippine Islands}, for th e amount of P800,000,000.00. The loan was secured by a Mortgage Trust Indenture Agreement (M TI A} in favor of petitioner through its Trust Bankin g Group as Trustee . The property used as se curity is a six -hectare commercial center known as Ever Orti gas Commercial Complex located in Ortigas Avenue, Pasig City and co vered by Certificate of Title No. PT-97306. Alleged ly, GOTESCO defaulted on its loan obligation s that on July 30, 1999 petitioner for eclos ed th e mortgaged property throu gh a notarial foreclosure sa le. On August 4, 1999, a Certificate of Sale was issued in favor of petitioner subj ect to the right of GOTESCO to redeem the mortgaged property within one year from the date of inscription of th e Certificate of Sale with the Register of Deeds of Pasig City or on November 9, 1999 . ~

DECISION Page 4 of 16 CTA EB Casf' No. 762 (CTA CaSf' No s. 7355 & 75RR) Philippin e Nolionol Gonk vs. Commissioner oj lntemol Reven ue On October 20, 2000, prior to the expiration of the one-year redemption period, GOTESCO filed a civil case against petitioner at the Reg ional Trial Court of Pasig City, Branch 168 (RTC) docketed as Civil Case No. 68139, for the annu lment of forec losure proceedings, specific performance and damages with prayer for Temporary Restraining Order (TRO) and/or Preliminary Injunction . On November 9, 7000, the RTC iss ued a TRO preventing the co nso lidation of ow nership of th e mortgaged pro perty . On December 21, 2000, the RTC issued a Writ of Preliminary Injunction. Petitioner filed a Motion for Reconsideration dated December 21, 2000 which was subsequently denied by the RTC. On July 6, 2001, petitioner went to the Court of Appeals via a Petition for Certiorari . The Court of Appeals ruled in favor of petitioner by issuing an order, reversing and setting aside the Writ of Preliminary Injunction issu ed by the RTC. On Au gust 27, 2003 , GOTESCO filed a Motion for Reco nsideration which the Court of Appeals denied in its Reso lution dated Dece mb er 22, 2003 . In preparation for the consolidation of its ownership over the Mortgaged Property, petitioner paid the Documentary Stamp Taxes in the amount of P18,615,000.00 on October 31, 2003. It also withheld and remitted to th e BIR, on October 31, 2003 and Novembe r 11, 2003, th e creditable withholdin g tax equivalent to six percent (6%) of the bid pri ce of P1,240,000,469 .82, or P74,400,028 .49 pursuant to Section 2.57.2 (J) (C) of Revenue Regulations No . 2-98 as amended by Revenue Regulations No . 6- 01. 10 Nonetheless, of th e amount remitted to th e BIR, petitioner now claims that it erroneous ly withheld 6% when the rate applicab le should have been 5% for the sa le of real property classified as ordinary assets, where the transferors are habitually engage d in real es tat e leasin g pursuant to Section 2.57. 2 (J) (B) of Revenu e Regulation s No. 2-98 as ame nded by Revenue Reg ulations No . 6-01. Con sidering this incid ent, th e excess payment of the tax to the BIR amounted to P12,400,004 .70 . CTA CASE NO . 7588 Petitioner allege s that, pursuant to co nsolidatin g its ownersh ip over the mortgaged property and processing of the Certificate Authorizing Registration (CAR), it filed the Withholding Tax Return s and Documentary ~

DECISION Page 5 ol 16 CTA EB Case No . 752 {CTA Case Nos. 7355 & 7588) Philippine National Dank vs. Commissioner of Int ernal Revenue Stamp Tax Return s with the respo nd ent on October 31, 2003 and No ve mber 12, 200 3. On eve n dates, petitioner paid th e taxes due on sa id returns. However, pendin g th e issuance of th e CAR, the BIR informed petitioner that it is imposing interests, penalties and surcharges of P61,678,490 .28 on Capital Gains Tax and P15,494,065.00 on Documentary Stamp Tax. In orde r to fac ilitate the release of the CAR, petitioner paid all the surcharges, interests, and penaltie s against it in th e total amo unt of P77,172,555.28 on April1, 2005. On October 27, 2005, petitioner filed its administrative clai m for t he refund of excess creditable withho lding tax. On October 28, 2005, it filed its Petition for Review before thi s Court docket ed as CTA Case No . 7355 . Pre -trial ensued and after th e submission of Joint Stipulation of Facts and Iss ues, th e Court adm itted th e sa me and terminated th e Pre -tri al pro cee din gs on March 10, 2006. After several heari ngs, on November 30, 2006, co unsel for th e petit ioner manifested that it will fil e its Formal Offer of Evid ence within thirty (30) days from December 14, 2006 or until January 13, 2007 . However, on December 28, 2006, petiti o ner fi led an "Urge nt Motion to (1) Defer filin g of Formal Offer of Exh ibits, (2) Set case for hea rin g for prese ntation of testimony of witn esses, and (3) Iss ue Subpoena Duces Tec um and Ad Testificandum" which was granted o n January 29, 200 7. Upon presentation of addition al ev id ence, petitioner co mmitted to fil e its Formal Offer of Ev idence within thirty (30) days from March 13, 2007 . On March 22, 2007, petition er filed with th e respondent a claim for refund cla imin g erro neous assessment and payment of the surcharges, penalti es and interests. Petitioner fi led its corresponding Petition for Review on March 30, 2007, docket ed as CTA Case No . 7588. On April 11, 2007, petitioner filed an Urgent M otio n to Co nso lid ate Cases (CTA Case Nos. 7355 and 7588) which was granted on May 9, 2007 vi<J a Resolution. Th e co nso lidated cases were set for pre -trial co nference. However, despite several resetting, respo nd ent failed to make an v app ea ran ce. Thu s, on September 21, 2007, respo nd ent was declared to be in defa ult.

DECISION Pvgc 6 of 16 CTA EB Case No. 762 (CTA Case Nos. 7355 & 75RR) Philippine Notional Gonk vs. Commissioner of Internal Revenue On October 17, 2007, respondent filed a Motion for Reconsideration on the declaration of default. On October 26, 2007, petitioner filed its Opposition (To the Motion for Reconsideration of Resolution dated 28 September 2007). Respondent filed its Reply (To Petitioner's Opposition dated October 24, 2007) on November 7, 2007. Respondent's Motion for Reconsideration was denied on December 18, 2007. After several hearings, petitioner liled its Formal Offer of Evidence on August 15, 2008 for the consolidated cases. Respondent filed a Comment (To Petitioner's Formal Offer of Evidence) on August 29, 2008. Th e Court resolved petitioner's Formal Offer of Evidence on September 29, 2008 . On September 23, 2008, pet ition er filed an "Urgent Motion to Reopen Trial To Allow Petitioner to Present Additional Evidence with Omnibus Motion to 1) Defer Resolution on Petitioner's Forma l Offer of Evidence and 2) To al low Petitioner to file Amended Formal Offer of Evidence after comp letion of additional trial. Considering the reso lut ion of petition er's Formal Offer of Evidence, on October 15, 2008, the Court granted petitioner's prayer to reopen trial and submit supplementa l FOE. Respondent filed a Motion for Reconsideration on October 20, 2008 on the Resolution dated September 29, 2008 all eging that the admitted documents shou ld have been denied by the Court. Petitioner opposed said Motion on November 10, 2008 via an Opposition to Respondent's Motion for Reconsideration. On February 17, 2009, the Court issued a Resolution denying the Motion for Reconsideration considering that respondent was already declared in default. On June 4, 2009, petitioner filed a Supplement to Forma l Offer of Evidence which this Court resolved on June 22, 2009 by admitting additional documentary exhib it s. Upon submission of the petitioner's M emo randum on August 25, 2009, the consolidated cases were submitted for decision on August 27, 2009. In CTA Case No . 7355, the jointly admitted issues of the parties are V as fo ll ows:

DECIS ION Pvgc 7 o l 16 CTA EB Case N o. 762 (CTA CilsP N os. 7355 & 75RR) Philippine Notional Oonk vs . Commissioner of Internal Revenue 1. Whether or not th e administrative and judicial claims for tax refund of petitioner w ere filed within the two -year statutory period; 2. Wh et her or not petitioner remitted to th e BIR th e alleged 6% creditable withholdin g tax on Octob er 31, 2003 and November 12, 2003 in th e total amou nt of P74,400,028.19; 3. Assuming lhe sa m e amount was rem itted to th e BIR, wheth er or not the sa m e wa s made pursuant to the provision of existing laws and reg ulations; 4. Wheth er or not th e alleged real prop erti es subj ecte d to the withholding ta x are considered ord inary assets of the seller/transferor; 5. Whether th e seller or transferor is habitually engaged in th e real estate busine ss; 6. Wh eth er or not th e prop er withholding ta x rate is 5% as alleged by petition er; 7. Assuming that the proper withholdin g tax rate is only 5%, whether petitioner is th e proper party that may ask for a refund ; 8. Wh eth er o r not th e ruling in the case of Procter and Gamble (Proctor (sic) and Gamb le Philippin es v. Commiss ioner of Internal Revenue , G.R. No . 66838 dated 02 Dece mber 199 1) as all eged by the petition er is applicable in th e instant case; 9. Wh eth er or not petitioner is entitl ed to a refund in th e amount of P12,400,004 .70 all ege dly representing year 2003 erron eo usly paid ta xes; 10. Wh eth er the fact of withholding is es tablished by copies of statements duly issued show ing the amount paid of ta x wit hh eld th erefrom; 11. Whether or not the app lication of the six percent (6%) rate of w ithholdin g on th e transfer or conveya nce of th e rea l properti es co nsid ered as ordi nary assets of th e se ller considered as habitual ly engage d in bu sine ss is erroneous . /,.-

DECISION PJgc 8 of 16 CTA EB C-Jsf' No. 7G2 (CTA CasE' No s. 7355 & 75 RR) Philippine National f3ank vs. Commissioner oj Internal Revenue In CTA Case No . 7588, petitioner presented the following iss ues in its Pre -Trial Brief: 1. Wh eth er or not petitioner was lega lly prevented from paying the taxes by virtue or the Writ of Preliminary Injunction iss ued by the Regional Trial Court in the Annulment of Fore clo sure case; and 2. Wheth er or not petitioner was delayed in the payment of creditable withholdin g tax and documentary stamp tax, which delay may warrant the imposition of charges, interests and penaltie s in the amount of P77,172,555.28 ." The Special First Divi sion , in its Decision ' dated July 12, 2010, denied for in sufficiency of evidence the Petition for Rev iew in CTA Case No . 7355 see kin g th e refund in the amount of P12,400,004. 70 allegedly repre se ntin g petitioner' s excess creditable withholding tax claimed to have been erroneously paid by the petitioner. On the oth er hand , the Special First Divi sion gra nted CTA Case No . 7588 and ordered the respondent to refund petitioner the amount of P77,172,555 .28, representin g its claim for refund of interests , surcharges and penaltie s on Capital Gains Tax and Documentary Stamp Tax for the year 2003. The Motion for Partial Reconsideration (With Prayer to Admit Attached Income Tax Return) filed by petitioner was deni ed for la ck of m erit in a Resolution 6 dated April 5, 2011 . Aggrieved, petitioner filed the subject Petition for f-?eview 7. Without nece ssa rily givin g due course to th e in stant Petition, the res pondent i- was ordered to file her comm ent within t en (10) days from receipt of the Resolution s Supra, NOL C 4. 6 Supra, Nolc 3. 7 Supra, NOL C 1.

DECISION Page 9 of 16 CTA EB CasE' No. 7G 2 (CTA CasE' No s. 7355 & 75RR) Philippine Notion al Bonk vs. Commissioner oj Internal Revenue dat ed June 1, 2011. Hecord shows th at re spond ent f ail ed to fil e her comment within the period gra nted, thu s, considerin g th e iss ues rai se d in th e subject Petition for Re vie w8, thi s Court re solved to give du e course to th e Petition and ordered the partie s to submit th ei r respectiv e memoranda 9. Petitioner fil ed its M e morandum 10 on October 21, 20 11, whil e respondent failed to file her memorandum within th e period presc rib ed; hence, the above- ca ptioned case wa s submitted for deci sion on November 15, 2011. THE ISSUE/S WHETHER OR NOT PETITIONER HAS PRESENTED SUFFICIENT EVIDENCE TO PROVE THAT IT IS ENTITLED TO THE REFUND OF THE EXCESS PAYMENT OF THE PHP 12,400,004.71, WHICH FORMS PART OF THE PHP 74,400,028.49 WITHHOLDING TAXES ERRONEOUSLY PAID. Arguments of Petitione?1 Petition er submits that th e Court in Divi sion er red when it deni ed petition er's Motion for Partial Reconsideration , anchorin g its position on th e following main argumen t s, viz: A. that GOTE SCO' s Php6,014,433.00 worth of ta x cre dits (i .e., creditable taxe s withh eld), as report ed and claimed in its year 2003 incom e ta x return did not includ e the am ount of Php74,400,028.49 equival ent to 6% creditabl e tax withheld by petition er. {- 8 Supra, No l c 1. ~ Rollo , pp . 69 70 . 10 Rollo , pp. 77 104 . 11 Rollo , pp. 91 101.

DECISION Page 10 of 16 CTA EB Case No. 7G2 (CTA Case No s. 7355 & 751\R) Philippine National Gank vs. Commissioner of lnLernal Revenue B. th at the 12 July 2010 Oecisio n 1 expressly provided that th e 2003 ; income tax return of GOTESCO is th e only evidence needed to show that th e excess withholding ta xes paid and remitted to th e BIR were not utilized . In support of th e first main argument, petitioner points out th at [i] GOTESCO continues to recogni ze the foreclosed prop erty as its own asset as shown in its Audited Financial Statements for the year 2003, marked as Exhibit " H". Thu s, it does not reco gn ize the foreclosure sale conducted by petition er, and ha s not claimed the cor re spondin g Php74,400,028.49 creditable withholdin g taxes withheld by petition er on the foreclosure sale; [ii] GOTESCO testified that th e Php6,01tl-,113 3.00 tax credits claimed by GOTESCO in the year 2003 doe s not include the Php74,400,028.49 withholdin g taxes withheld and paid by petitioner in the year 2003; and [iii] Petitioner presented BIR Form No. 1606, th e withholdin g ta x remittance return fil ed by petitioner as withholdin g agent, whi ch clearly shows that th e amount of Php 74,400,0 28.49 wa s withh eld and paid upon petition er's foreclo sure of GOTESCO's asset. Anent th e seco nd m ain argum ent, petition er is of th e view that th e insufficiency of evidence, as declared in the di spositive portion of the 12 July 2010 Decision, relates to the finding by the Special First Division that GOTESCO's 2003 income tax return {ITR) was not submitted; and that it wa s preci se ly becau se of thi s that petitioner presented among other s, GOTESCO's 2003 tentative and amended t- ITR, with full reliance on the 12 July 2010 Decision that doing so would already 12 Supra, Note 4.

DECIS ION P<Jgc 11 of 16 CTA EB Case No. 762 (CTA Case Nos. 7355 & 7588) Philippine Notional Dank vs. Commissioner oj Internal Revenue convince t his Court t hat indeed , the excess withholding tax payments were not use d by Got esco. THE RULING OF THE COURT EN BANC After a fastid ious examina ti on of th e iss ue, argum ents of petitioner, ru les and juri sprudence app licable t o thi s case, We are convinced that the rul ing of the Court a quo denying t he Pet it ion for Revie w in CTA Case No. 7355 for insuffic iency of evidence - effective ly di sallowin g petition er PNB's claim refund of the additional amount of P12,400,004 .70, al leged ly representing the excess creditable taxes wit hh eld and paid for t he year 2003- is fu ll y justified in law and in rea son. The discussion in the challenged Resolution13 wa s concise, but it wa s no less fu lly satiated with a clear-cut explanation of the rationa le be hind the denial of the claim, viz : "A ft er a ca reful study of th e argumen t s proffered by th e petitioner in its Motion for Partial Reconsideration, as w ell as a thorough exa mination of the docum entary and te stamentary evidence that it submitted, thi s Court finds that th e petitioner st ill was not able to clearly es tab li sh its right to the refund of the excess creditab le tax w ithh eld on beha lf of GOTESCO. In the case of Far East Asia Bank and Trust Company vs. Court of Appea ls, Court of Tax Appeals and Commissio ner of Internal Revenue, the Supreme Court held that in order to successfull y process a claim for t ax refund, a tax paye r mu st declare th e payments, from wh ich taxes were withhe ld, as part of hi s gross in co me and clearly estab li sh th e fact of withho lding of the taxes sought to be refund ed . The Supreme Court furth er held that th ere are requisites for th e gra nt of a claim for refund of creditab le withho ldin g tax. In the case of Banco Filipino Sav in gs and Mortgage Bank vs. Court of Appeals, Court of Tax V App eals and Commission er of Internal Revenu e, th e Court held that: 13 Supra, Nolc 3.

DECI SION Page 12 o l 16 CTA EB Cil se N o. 762 (CTA Cils e N os. 7355 & 75RR) Philippin e No tio nal Da nk vs. Co mm issioner of Internal Reven ue "There are th ree condition s fo r th e grant of a claim for refund of creditab le withho lding ta x: 1) th e claim is fil ed with th e CIR within th e two -year period from th e date of paym ent of th e t ax; 2) it is shown o n th e return o f th e rec ipi ent t hat t he in come pay ment rece ived was dec lared as part of th e gro ss in co me; and , 3) th e fact o f withh o ldin g is es tab lished by a copy of a statem ent duly iss ued by th e payo r to th e payee showin g th e amount paid and t he amo unt o f th e tax w ithh eld therefrom . Th e third co ndi tio n is spec ifi cally impose d und er Sec ti o n 10 o f Revenu e Reg ulation No . 6-85 (a s amend ed), thus : Sec. 10. Cl aim fo r t ax credit or refund . - (a) Cl aim s fo r Tax Credit o r Refund of in co me t ax dedu cted and w ithh eld on in com e paym ents sha ll be given du e course o nly w hen it is shown on th e return that th e inco me paym ent rece ived ha s bee n dec lared as part of th e gross in com e and th e fact o f wi thh o ldin g is es t abli shed by a co py o f th e Withholdin g Tax Sta teme nt duly iss ued by th e payo r to t he payee showing th e amo unt paid and th e amount o f tax w ithh eld th erefro m .. .. (Emp hasis suppli ed )" In o ur dec isio n dat ed Jul y 12., 2.010, t hi s Co ur t held that pe titi o ner w as able to suffic iently est ablish th e fac t of w ithholding and t he paym ent of with ho lding tax . However, since petitioner is claiming th e refund of th e excess cre ditab le t axes it withh eld f ro m GOTESCO , it is necessa ry t o prove th at GOTESCO did not use th e sa id excess t ax for its liabilities. In th e aforem entio ned dec isio n, it w as no t ed th at petiti o ner failed to prese nt evid ence to pro ve th at GOTESCO did not uti li ze t he t axes withh eld to se t t le its ta x liabilities, thu s petition er's claim fo r refund wa s deni ed for in sufficiency of ev ide nce. Pe t iti o ner att ac hed to its M ot io n, inco m e tax returns o f GOTESCO for th e ta xab le year 200 3, to prove th at t he latter did not uti lize th e t axes withh eld by petitioner. The returns were submitted without any attachment regarding its creditable t axe s withheld . Except for GOTESCO's Unadju sted Schedule of Prepaid Tax fo r t he ta xable ye ar 2003, there were ~

DECISION P()gC 1 3 of 16 CTA EB Case No . 762 (CTA Case Nos. 7355 & 75RR) Philippine Nolionol [Jonk vs. Commissioner oj lnlernol Revenue no other documents or schedules presented before this Court to support the figures reported in the tax returns of GOTESCO for the same year under Lines 27 {C), {D) and {G) or the Creditable Taxes Withheld. We note that the amounts repor ted by GOTESCO as creditable taxes withheld for the year 2003 were ju st P6,014,433.00 in total, which is less than P74,400,028.49, the creditable taxes withheld from it by the petitioner. In fact, it is less than the Pl 2,400,004.70 excess creditable taxes withheld being claimed by petitioner in its present motion. However, this Court deemed that such observation alone, without any supporting document or schedule, is not enough to convince us that no part of the creditable in th e total tax credits reported by GOTESCO in its tax returns for the taxable year 2003 which was used, in part, for the settlement of its tax li abilities for the same year. To sufficient! rove that GOTESCO did not utili ze the creditab le taxes it withheld, petitioner should have likewise presented the BIR Forms No. 2307 issued to GOTESCO in relation to the creditable taxes withheld reported in its 2003 tax returns . Doin g so wil l d ispel any doubt as to the com position of GOTESCO' s creditable taxes withheld for 2003. Thi s will sett le once and for all that the amount being claimed by petitioner was not utilized by GOTESCO, and thus the claim shou ld be granted . Until then, this Court will stand by its decision and deny the cla im ." (Emphasis supplied) Verily, no substantia l matters or issues have been raised in the subject Petition for Review14, a careful reading of the cha ll enged Resolution 1'' reveal s that the argu m ents relied upon by petitioner in the instant Petition have been satisfacto rily and justifiably di scussed and passed upon in the aforesaid Resolution sought to be reconsidered. In this case, petition er is counting on th e Income Tax Returns of GOTESCO for the t axable year 2003 and on a certain Unadjusted Schedule of Prepaid Tax for(;- 14 Supra, Note 1. lS Supra, Note 3.

DECISION P<J ge 14 o l1 6 CTA EB Ca se No. 7G2 (CTA Case Nos. 7355 & 75 /lil) Philippin e Notional Oonk vs. Commiss io ner oj Int ernal Revenue the same year to support it s argument that GOTESCO did not utilize the taxes withheld by petitioner; however, We are not persuaded . To reiterate, since the claim for refund involves creditable taxe s withheld from GOTESCO, it is necessary to prove that the se creditable taxes were not utili zed by GOTESCO to pay for its liabilities. Th e income ta x return s alone are not enough to fully support petitioner' s contention that no part of the creditable withholding tax sought to be refunded by petitioner was utilized by GOTESCO; first, there were no other relevant supporting documents or schedule s presented to delineate the figure s constituting the creditable taxes withheld that wa s reported in GOTESCO' s 2003 tax returns; and second, this Court cannot give credence to the Unadjusted Schedule of Prepaid Tax for the taxabl e year 2003 bein g referred to by petitioner as the same pertains merely to a li st of GOTESCO'S creditable tax withheld for taxable year 2003 and wa s not accompanied by any attachment to support its content s; also it is manifest from the records that petitioner failed to have thi s Schedule of Prepaid Tax offered in e vi dence 16 and thus, was not admitted as part of the records of this , ca se17 It bears to stress that "tax refunds are in the nature of tax exemptions . Laws granting exemption s are construed strictissimi juris against th e taxpayer and liberally in favor of the ta xing authority. Where the taxpayer claim s a refund, the CTA as a court of record is required to conduct a formal trial (trial de novo) to prove every minute aspect of the claim ." 18 ~ 16 Divisio n Docke t, pp . 840 843. 17 Division Do cket, pp . 864 86'J . 18 Kepco Ph il. Co rp . vs . Co mmiss io ner oj In tern al Revenue, G.R. No. 1793'J6, Dece mb er 14, 2009 citin g Philip pin e Ph os ph<Jle Fe rtili zer v. Com mi ssioner of ln l ern <J I Reve nue, G.R . No . 141973, Jun e 28, 200'J ,

DECISION Page 15 of 16 CTA EB Case No. 762 (CTA Case Nos. 7355 & 7588 ) Philippine Notional Oonk vs. Commissioner of Internal Revenue In view of th e foregoing, the Court ha s no option but to deny petitioner PNB' s claim for refund of th e additi ona l amo unt of P1 2, 400,004 .70, all eged ly repre se nting th e excess creditable ta xes withh eld and paid for th e year 2003. WHEREFORE , premi ses considered , th e Petition for Review is hereby DISMISSED for lack of merit. Accordingly, the ass ai led April 5, 2011 Reso lution 19 and July 12, 2010 Decision 20 promul gate d by the Specia l Firsl Divi sion of thi s Co urt in CTA Case Nos. 7355 & 7588 are hereby AFFIRMED . SO ORDERED . P-/-~~- AMELIA R. COTANGCO-MANALASTAS Ass ociate Ju stice WE CONCUR: L ~-~ ERNESTO D. ACOSTA Presid in g Ju sti ce Q.<UU~C.~~~\:J., ~ !tfANITO C. CASTANEDA,~-~ CAESAR A. CASANOVA Ass ociate Ju stice Ass ociate Ju stice � 461 SCR/\ 369, 38 1. Commissioner of Internal Revenue v. Manila Mining Corporation, G.R. No. 153204, /\ugusL31, 2005, 468 SCR/\ 571, 588 589. 19 Rollo, pp . 38 42 . 20 Rollo, pp . 43 60 .

DECISION Page 16 of 16 CTA EB Ciise No. 762 (CTA Ciise Nos. 7355 & 75RR) Philippine Notional Gonk vs. Commissioner of Internal Revenue ~pj~~R~ Ass ociate Ju sti ce ~ Nt tv1,).;c..., ~~ CIELITO N. MINDARO-GRULLA Assoc iate Justice CERTIFICATION Pursuant to Section 13, Art icle VI II of th e Constitution, it is hereby certified that th e conclus ion s in th e above Decision w ere reached in cons ult ation with th e memb ers of the Co urt En Bane befo re the case wa s assigned to t he writer of the op ini on of the Cou rt. ~ ll- Cc-L- ERNEsro D. ACOSTA Presid in g Ju st ice