GLOBAL ENERGY SUPPLY CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION GLOBALENERGYSUPPLY CTA CASE NO. 10871 CORPORATION, Petitioner, Members: -versus - MANAHAN, Chairperson, REYES-FAJARDO, and ANGELES, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. JJ IN 0 3 ?025 X--------------------------- ~- -~ -;0_ Cf_/-'_�~� ----X RESOLUTION ANGELES, J.: For this Court's resolution are: (1) The Motion for Partial Reconsideration (Re: Decision dated 20 September 2024)1 filed by respondent Commissioner of Internal Revenue (CIR) on October 09, 2024, praying for the partial reconsideration of the Decision dated September 20, 2024, and for this Court to render another decision denying the entire claim for refund of petitioner Global Energy Supply Corporation; and (2) The Motion for Partial Reconsideration (of Decision dated 20 September 2024)2 posted by petitioner Global Energy Supply Corporation on October 10, 2024, seeking also the partial reconsideration of the same Decision, and for this Court to declare petitioner entitled to a refund of the unutilized and excess creditable expanded withholding tax in the amount of P29,780,205.34 for taxable year (TY) 2019. 1 Docket- Vol. II, pp . 578-585. 2 Docket - Vol. II, pp. 591-599.

RESOLliTION CTA CASE NO. 10871 Page 2 of10 To recall, on May 30, 2022, petitioner filed a Petition for Review praying that a judgment be rendered declaring petitioner entitled to a refund in the amount of P31,924,168.oo, representing its alleged unutilized and excess creditable withholding tax (CWT) withheld by its customers for the TY 2019. On September 20, 2024, the Court rendered the Decision partially granting the Petition, the dispositive portion of which reads: WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED to issue a tax credit certificate in favor of petitioner in the total amount of P29,074,538.34, representing petitioner's unutilized CWT for the TY 2019. SO ORDERED. Respondent's Motion for Partial Reconsideration Respondent imputes error to this Court as follows: THE HONORABLE COURT ERRED IN RULING THAT PETITIONER IS ENTITLED TO THE CLAIM FOR REFUND OF ALLEGED EXCESS AND UNUTILIZED CWT FOR CY 2019.3 Respondent submits that: (a) petitioner's documentary evidence failed to sufficiently establish the direct linkage between the CWT and the income as reflected in the Annual Income Tax Return (ITR); (b) it is incumbent upon the petitioner to prove actual remittance of the alleged withheld taxes; (c) petitioner failed to comply with the checklist of requirements set forth under Revenue Memorandum Order (RMO) No. 52-984 and Revenue Regulations (RR) No. 2-2oo6;s and (d) petitioner's non-presentation of the withholding agents to verify the Certificates of Creditable Tax Withheld at Source and to prove the propriety of its claim, and failure to establish the fact of 3 Supra note 1, at 579. 4 Checklist of Documents to be Submitted by a Taxpayer upon Audit of his Tax Liabilities as well as of the Mandatory Reporting Requirements to be Prepared by a Revenue Officer, all of which comprise a Complete Tax Docket, dated June 01, 1998. s Mandatory Attachments of the Summary Alphalist of Withholding Agents of Income Payments Subjected to Tax Withheld at Source (SAWT) to Tax Returns With Claimed Tax Credits due to Creditable Tax Withheld at Source and of the Monthly Alphalist of Payees (MAP) Whose Income Received Have Been Subjected to Withholding Tax to the Withholding Tax Remittance Return Filed by the Withholding Agent/Payor of Income Payments, dated December 01, 2005.

RESOLUTION CTA CASE NO. 10871 Page 3 of10 remittance of the alleged withheld taxes by various payors to the Bureau of Internal Revenue (BIR), are fatal to its claim. In compliance with the Minute Resolution dated October 22, 2024, petitioner posted on October 28, 2024 its Comment (on Respondent's Motion for Partial Reconsideration dated October 7, 2024),6 seeking the denial of the instant Motion. In its Comment, petitioner counter-argues that respondent's Motion is frivolous and merely a repetition of his Answer dated August 26, 2022 which was already disproven during trial. The Motion is denied for lack of merit. It is important to note that a cursory reading of respondent's Motion reveals that it is a near-verbatim rehash of his Answer to the Petition for Review. The arguments raised in the Motion have been exhaustively passed upon, duly considered, and resolved by the Court in the assailed Decision. In Ortigas and Co. Ltd. Partnership v. Judge Velasco,? the Supreme Court explained the effect and disposition of a motion for reconsideration, as follows: The filing of a motion for reconsideration, authorized by Rule 52 of the Rules of Court, does not impose on the Court the obligation to deal individually and specifically with the grounds relied upon therefor, in much the same way that the Court does in its judgment or final order as regards the issues raised and submitted for decision. This would be a useless formality or ritual invariably involving merely a reiteration of the reasons already set forth in the judgment or final order for rejecting the arguments advanced by the movant; and it would be a needless act, too, with respect to issues raised for the first time, these being, as above stated, deemed waived because not asserted at the first opportunity. It suffices for the Court to deal generally and summarily with the motion for reconsideration, and merely state a legal ground for its denial (Sec. 14, Art. VIII, Constitution; i.e., the motion contains merely a reiteration or rehash of arguments already submitted to and pronounced without merit by the Court in its judgment, or the basic issues have already been passed upon, or the motion discloses no substantial argument or cogent reason to warrant reconsideration or modification of the judgment or final order; or the arguments in the motion are too unsubstantial to require consideration, etc. (Emphasis supplied) 6 Division Docket- Vol. II, pp. 625-632. ' Ortigas and Co. Ltd. Partnership v. Judge Velasco, G.R. No. 109645, March 04, 1996.

RESOLUTION CTA CASE NO. 10871 Page 4 of10 Based on the foregoing, the Court may deny a motion for reconsideration if it contains mere reiteration of arguments which were already passed upon and considered without merit. Relative thereto, it is well-settled that if the grounds relied upon are mere reiterations of the issues already passed upon, the Court need not "cut and paste" pertinent portions of the Decision or re-write the ponencia in accordance with the outline of the Motion for Reconsideration. 8 Be that as it may, the Court shall once again address the arguments raised by respondent for further clarification. First, it bears stressing that the Court has evaluated the income payments upon which the cwr were based and determined that the same were declared and reported as part of the gross income as reflected in petitioner's 2019 Annual ITR, except only for the income payments ofl'>79,500,170.23 (P78,969,618.53 plus P530,551.70), with corresponding claimed CWT of P1,556,046.34 (P1,545,958.2o plus P10,o88.14), which cannot be traced to the 2019 General Ledger (GL). Accordingly, petitioner has sufficiently established the linkage between the CWT and the income as reflected in its Annual ITR. Second, proof of actual remittance of the taxes withheld to the BIR is not indispensable in a claim for refund of excess CWT, as held in Commissioner of Internal Revenue v. Philippine National Bank,9 citing Commissioner of Internal Revenue v. Asian Transmission Corporation, 10 thus: [P]roof of actual remittance by the respondent is not needed in order to prove withholding and remittance of taxes to petitioner. Section 2.58.3 (B) of Revenue Regulations No. 2-98 clearly provides that proof of remittance is the responsibility of the withholding agent and not of the taxpayer-refund claimant. It should be borne in mind by the petitioner that payors of vvithholding taxes are by themselves constituted as withholding agents of the BIR. The taxes they 'Nithhold are held in trust for the government. In the event that the viithholding agents commit fraud against the government by not remitting the taxes so withheld, such act should not prejudice herein respondent who has been duly withheld taxes by the withholding agents acting under government authority. Moreover, pursuant to Sections 57 and 58 of the NIRC of 1997, as amended, the withholding of income tax and the remittance 8 Social Justice Society Officers v. Lim, G.R. Nos. 187836 & 187916, March 10, 2015. 9 G.R. No. 180290, September 29, 2014. w G.R. No. 179617, January 19, 2011.

RESOLUTION CTA CASE NO. 10871 thereofto the BIR is the responsibility ofthe payor and not the payee. Therefore, respondent x x x has no control over the remittance ofthe taxes withheld from its income by the withholding agent or payor who is the agent of the petitioner. The Certificates of Creditable Tax Withheld at Source issued by the withholding agents ofthe government are prima facie proof of actual payment by herein respondent-payee to the government itself through said agents. (Emphasis Supplied) Third, We must reiterate that neither RMO No. 53-98 nor RR No. 2-2006 state that non-submission of the documents provided therein shall result in a non-filed claim for refund. The case of Philippine National Bank v. Commissioner of Internal Revenue11 is instructive on this matter, to wit: Nothing in our laws and jurisprudence supports the CIR's position that the exhaustion of an administrative claim for tax refund is a condition precedent that must be completely acted upon by the BIR before a judicial claim for refund may be filed by the taxpayer concerned. The Court rejects the CIR's contention that PNB cannot be deemed to have filed its administrative claim because the latter failed to submit all of the documents mentioned in RMO No. 53-98 and RR No. 2-2006. xxx And at any rate, a cursory reading ofRMO No. 53-98 and RR No. 2-2006 reveals that neither issuance explicitly states that the failure to submit the required documents is tantamount to a non-filed claim. In fact, Section 5 of RR No. 2-2006 merely provides a penalty of fine for non-submission of these documents. Indeed, jurisprudence dictates that a taxpayer need not await the BIR's action on an administrative claim before going to the CTA. XXX In Commissioner of Internal Revenue v. Univation Motor Philippines, Inc., Univation Motor Philippines, Inc. (Univation) filed on April15, 2011 its Final Adjustment Return for 2010. On March 12, 2012, it filed an administrative claim for tax refund. Because the BIR did not act on its administrative claim, Univation filed a petition for review with the CTA on April12, 2013. The CIR excoriated Univation for not awaiting its action on the administrative claim before elevating the matter to the CTA. Finding in favor of Univation, We declared: xxx Under the circumstances, if respondent awaited for the commissioner to act on its administrative claim (before resort to the Court), chances are, the two-year prescriptive period will lapse effectively resulting to the loss of respondent's right to seek judicial u G.R. Nos. 242647 & 243814 & 242842-43, March 15, 2022.

RESOLUTION CTA CASE NO. 10871 Page 6 oflo recourse and worse, its right to recover the taxes it erroneously paid to the government. Hence, respondent's immediate resort to the Court is justified. Contrary to petitioner CIR's assertion, there was no violation of the doctrine of exhaustion of administrative remedies. xxx The law only requires that an administrative claim be priorly filed. That is, to give the BIR at the administrative level an opportunity to act on said claim. In other words, for as long as the administrative claim and the judicial claim were filed within the two- year prescriptive period, then there was exhaustion of the administrative remedies. (Emphasis Supplied) Finally, contrary to respondent's position that non-presentation of the withholding agents to verify the Certificates of Creditable Tax Withheld at Source (BIR Form No. 2307) was fatal to petitioner's claim, it is well-settled that the Certificate of Creditable Tax Withheld at Source is the competent proof to establish the fact of withholding. Thus, in Commissioner of Internal Revenue vs. Philippine National Bank,12 the Supreme Court held that: The certificate of creditable tax withheld at source is the competent proof to establish the fact that taxes are withheld. It is not necessary for the person who executed and prepared the certificate of creditable tax withheld at source to be presented and to testify personally to prove the authenticity ofthe certificates. In Banco Filipino Savings and Mortgage Bank v. Court of Appeals, this court declared that a certificate is complete in the relevant details that would aid the courts in the evaluation of any claim for refund of excess creditable v.cithholding taxes: XXX XXX XXX Moreover, as correctly held by the Court of Tax Appeals En Bane, the figures appearing in the withholding tax certificates can be taken at face value since these documents were executed under the penalties of perjury, pursuant to Section 267 of the 1997 National Internal Revenue Code, as amended, xxx XXX XXX XXX Thus, upon presentation of a withholding tax certificate complete in its relevant details and with a written statement that it was made under the penalties of perjury, the burden of evidence then shifts to the Commissioner of Internal Revenue to prove that (1) the certificate is not complete; (2) it is false; or (3) it was not issued regularly." (Emphasis added) " G.R. No. 180290, September 29, 2014-

RESOLUTION CTA CASE NO. 10871 Page 7 of1o In view of the foregoing, the Court finds no merit in respondent's Motion as the same did not raise new, cogent, or substantial ground to warrant reconsideration of this Court's Decision dated September 20, 2024. Petitioner's Motion for Partial Reconsideration Petitioner raises the ground for its Motion as follows: The disallowance of the excess and unutilized CWT amounting to PhP705,667.03 reflected on Exhibits "P-139" and "P-159" should be reconsidered because the said income payments were indisputably recorded in Petitioner's general ledger and reported by Petitioner in its 2019 Annual Income Tax Return as part of gross income in the calendar year 2019. 13 According to petitioner, the CWT amounting to 1"705,667.03, and the income payments of Taiheyo Cement Philippines, Inc. and Cathay International Resources Corp. relative thereto were traced by the duly commissioned and independent Certified Public Accountant (ICPA) to the declared annual income of petitioner for the calendar year 2019, as recorded in its General Ledger (GL) and 2019 Annual ITR. Petitioner's Motion is partly impressed with merit, and thus, must be partially granted. The details relating to the said CWT and income payments are summarized as follows: Exhibit Narne of Payor Am.ountof CWT Billing Statement No. Income I P647,01l.S1 Exhibit No. No. P-139 P.32,350,57.S ..SO s8,6SS-52 P-159 TAIHErYO CEMENT PHILIPPINES INC I 2,932,775-91 P-1.39-1 BS#AQO'J9 P705,667.03 CATHAY INTERNATIONAL RESOURCES CORP. I �'35,283,351.41 P-159-1 JV 7222 TOTAL I After a review and further verification of the pertinent exhibits, this Court finds that only the income payment of Cathay International Resources Corp. to petitioner amounting to 1"2,932,775.91 can be reasonably traced to petitioner's 2019 Annual Revenue Breakdown,'4 as well as to the Detailed Results of Examination of BIR Form 2307 and the Tracing of Income Payments to 2019 ITR.'s Exhibit "P-159-1" specifically reflects the same 'descriptions' indicated in the GL, thereby enabling the Court to verify that the income upon which the �3 Docket -Vol. II, p. 592. '4 Annex B, !CPA Report, USB. '' Annex C, !CPA Report, USB.

RESOLUfiON CTA CASE NO. 10871 tax was withheld was duly declared as part of petitioner's gross income, to wit: Code Date Customer Reference Revenue Description Amount 410203 12/30/2019 Retail Energy CIRC Accrual - CIRCIIAccrual revenue billing! I November 26 12/30/2019 Sales (Accrual) November 26 2019 to 116,537�51 2019 to December 25 2019 TED 410203 12/30/2019 =523,528.8okWh II ( FIT - A LL Ch h a 410203 12/30/2019 - CIRC December 25, 2019 750,865.86 rges)IIEXEMPT 410203 12/30/2019 495,612.55 CIRCIIAccrual revenue billingi[November 26 Retail Energy CIRC Accrual - 533.519.51 2019 to December 25 2019 TED 410203 Sales (Accrual) November 26 2019 to ='"�'28.8oiDWS VECO VATABLE Total CIRCIIAccrual revenue billing! I November 26 - C!RC December zs, 2019 2019 to December 25 2019TED = 206,8]2.78 Retail Energy CIRC Accrual - kWh Ill VATABLE (!EMOP) Sales (Accrual) CIRCIIAccrual revenue billing! I NoYembcr 26 November 26 2019 to 2019 to December 25 2019 TED = -CIRC December 2s, 2019 152.496.17kWhlll VATA B L E (TP C) Retail Energy CIRC Accrual CIRCIIAccrua\ revenue billingll November 26 Sales (Accrual) 2019 to December 25 2019 TED = I\'owmber 26 2019 to 1.14,928..12kWhlll VATA B L E (PE DC) net - CIRC December 25, 2019 Retail Energy CIRC Accrual- Sales (Accrual) I\'ovember 26 2019 to -C!RC December 25, 2019 The same, however, cannot be said for the income payment from Taiheiyo Cement Philippines, Inc. While the Court notes that no exceptions were observed by the ICPA in the Detailed Results of Examination of BIR Form 2307 and Tracing of Income Payments to 2019 ITR'6 with respect to this transaction, the said income payment cannot be traced to the Annual Revenue Breakdown,'? particularly under Billing Statement No. A0029.'s If any, the only line item bearing Billing Statement No. A0029 is the following-an entry which does not substantiate the claim that the subject transaction was in fact recorded in the petitioner's GL, and subsequently reported in its annual ITR. Code Date Customer Reference Revenue Description OR#Ao224 Amount 721001 02/28/2019 PPD Customers Taiheiyo II OR#Ao224 o2/18/2019 II COLLECTION for (GESC, (260,358�34) BS#Aoo29 revenue billing IIDecember 26 to January 2 5 2019 (power from PEDC)II TED 1 8 TED= 5,2o8,ooo.ookWhl CorpOpEx, , ) TED c 4.474,ooo.oo kWh Moreover, the Court cannot give full credence to the testimony of the ICPA in his Judicial Affidavit dated October 10, 2024, wherein he stated that "[s]ince the total of the revenues recorded in the general ledger for 2019 is equal to the revenue declared in Petitioner's 2019 Annual Income Tax Return, then, necessarily, the income payments covered by BIR Form No. 2307 marked as Exhibits "P-139" and "P-159" were declared and reported in Petitioner's 2019 Annual Income Tax Return."'9 Jurisprudence and prevailing rules are clear that, the income upon which any creditable tax is required to be withheld at source shall be included in the return of its recipient.20 Therefore, a ' 6 Id. '' Annex B. !CPA Report, USB. ' 8 Exhibit "P-139-1," !CPA Report, USB. '9 Supra note 2, at 604. '� Commissioner of Internal Revenue v. Philippine Bank of Communications, G.R. No. 211348, February 23, 2022; Republic of the Philippines, represented by the Commissioner of Internal

RESOLUTION CTA CASE NO. 10871 Page 9 of10 mere reconciliation of the total revenues in the GLand the annual ITR does not suffice. While such reconciliation may serve as the final verification step, it must be preceded by the petitioner's demonstration that each income payment comprising the aggregate revenue can be reasonably traced to entries in the GL. This tracing must be supported by specific source documents bearing unique identifiers, such as Billing Statement No. Ao029 for the payment made by Taiheiyo Cement Philippines, Inc., to convincingly establish that said income was indeed recorded in the petitioner's books of accounts. It is worth stressing that the findings of the ICPA are not conclusive upon the Court, which may, in whole or in part, adopt such findings and conclusions subject to verification.21 Accordingly, the claimed CWT amounting to P647,011.51 must still be disallowed, as its corresponding income payment in the amount of P32,350,575�50 cannot be reasonably traced to petitioner's GL. Hence, the refund of the CWT in the amount of Ps8,655-52 for the corresponding income payment made by Cathay International Resources Corp. (i.e., P2,932,775-91) should likewise be made. The disallowance made in the assailed Decision amounting to P1,556,046.34 must be reduced as follows: Disallowance per this Court's Decision: CWT, the 1'1,556,046.34 Income Payment of which cannot be traced in the GL (58,655-52) and ITR Less: P1,497,390.82 CWT- for the income payment made by Cathay International Resources Corp. Reduced disallowance of CWT (the Income Payment of which cannot be traced in the GL andiTR) Correspondingly, the computation of the amount of refund granted to petitioner must be modified as follows: ClaimedCWT I 1'1,293,583.32 r31,924,168.oo I Less: 1 cwr, outside the period of claim I Revenue us. Team (Phils.) Energy Corporation (formerly Mirant (Phils.) Energy Corporation), G.R. No. 188016, January 14, 2015; United International Pictures AB us. Commissioner of Internal Revenue, G.R. No. 168331, October 11, 2012; Citibank NA. us. Court ofAppeals, et al., G.R. No. 107434, October 10, 1997; ACCRA Investments Corporation us. The Honorable Court of Appeals, et al., G.R. No. 96322, December 20, 1991; Revenue Regulations No. 2-98, as amended, Section 2.58. " Revised Rules of the Court of Tax Appeals, Rule 13, Section 3�

RESOLUTION CTA CASE NO. 10871 Page 10 of10 CWT, income payment of which cannot be traced to the GLand ITR 1,497,390.82 2,790,974.14 P29,133,193.86 Refundable Unutilized CWf forTY 2019 WHEREFORE, in light of the foregoing considerations, respondent's Motion for Partial Reconsideration (Re: Decision dated 20 September 2024) is DENIED for lack of merit; while petitioner's Motionfor Partial Reconsideration (of Decision dated 20 September 2024) is PARTIALLY GRANTED. Accordingly, this Court's Decision dated September 20, 2024 is hereby amended to read as follows: "WHEREFORE, in light of the foregoing considerations, the present Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED to issue a tax credit certificate in favor of petitioner in the amount of P29,133,193.86, representing petitioner's unutilized CWT for the TY 2019. SO ORDERED." SO ORDERED. HENR.JtANGELES Associate Justice WE CONCUR: ~� /.4-,.J.----- CATHERINE T. MANAHAN Associate Justice (On Leave) MARIAN IVYF. REYES-FAJARDO Associate Justice