COMMISSIONER OF INTERNAL REVENUE v. CASAS+ARCHITECTS, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF CTA EB NO. 2602 INTERNAL REVENUE, (CTA Case No . 9705) Petitioner, Present: -versus- DEL ROSARIO, P.J., RINGPIS-LIBAN, CASAS + ARCHITECTS, INC. , MANAHAN, BACORRO-VILLENA, Respondent. MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. Promulgated: FEB 2 7 2024 X ---- -------------- -- -------- --- RESOLUTION CUI-DAVID, J.: This resolves petitioner's Motion for Reconsideration1 filed through registered mail on August 31 , 2023, and received by the Court on September 11 , 2023, with respondent's Comment/ Opposition2 thereto filed through registered mail on October 16, 2023, and received by the Court on October 23, 2023. Petitioner seeks reconsideration of this Court's Decision3 promulgated on August 15, 2023 (assailed Decision) , the dispositive portion of which reads: WHEREFORE, premises considered , th e Petition for Review filed by the Commissioner of Internal Revenue is DENIED for lack of merit. The Decision dated March 9 , 2021, 1 En Bane (EB) Docket, pp. 117-124. 2 EB Docket, pp. 136-1 45. 3 EB Docket, pp. 92-11 3.

RESOLUTION CTA EB No. 2602 (CTA Case No. 9705) Commissioner of Internal Revenue v. Casas+Architects, Inc. X------------------------------------------------------------------------------------------X and the Resolution dated March 14, 2022, of the Court's Third Division in CTA Case No. 9705 are AFFIRMED. SO ORDERED. In his bid for a reconsideration, petitioner reiterates that for a write-off of alleged bad debts to be valid and legitimate, the worthlessness and uncollectibility of the alleged bad debts should be established. In the instant case, petitioner maintains that respondent failed to demonstrate its compliance with the requirements provided under Revenue Regulations (RR) No. 05-99,4 as amended by RR No. 25-2002,5 for bad debts to be allowed as a deduction to gross income. Petitioner likewise maintains that the Court erred in using the withholding tax rate of 15% as found by the Independent Certified Public Accountant (ICPA), which pertains to the maximum withholding tax on payments made to professionals. Allegedly, respondent's records disclosed that it declared in its Financial Statements that it paid salaries and wages, which include direct staff cost - the cost of services, salaries and wages - administrative expenses, and other allowances & benefits in the total amount of Php38,049,089.00 while only declaring a total amount of Php29,839,163.93 in the salaries and wages subject to withholding tax per Alphalist submitted by respondent. Thus, for petitioner, the withholding tax on salaries and wages of respondent's employees is subject to a graduated rate on withholding tax on compensation as provided under Section 2.78 ofRR No. 2-98. By way of Comment/Opposition, respondent submits that petitioner's Motion for Reconsideration should be denied for lack of merit. According to respondent, the Court in Division and the Court En Bane correctly ruled that it has complied with all the requisites to write off the uncollected accounts. Respondent further asserts that it was able to support the propriety of writing off the uncollected accounts. Hence, the reduction of the Accounts Receivable account amounting to Php24,767,415.00 should not be classified as underdeclared receipts subject to value-added tax (VAT). 4 SUBJECT: implementing Section 3-1(�) ofthe Tax Code of !997 on the Requirements for Deductibility ofBad Debts from Gross Income. 5 SUBJECT: Amending Revenue Regulations No. 5-99, Further lmplemenring Section 3-I{E) ofrhe Tax Code of1997 on the Requirements/or Deductibility ofBad Debts from Gross Income.

RESOLUTION CTA EB No. 2602 (CTA Case No. 9705) Commissioner of Internal Revenue v. Casas+Architects, Inc. x------------------------------------------------------------------------------------------x Respondent likewise asserts that the Court in Division, as well as the Court En Bane on appeal, correctly ruled that the 15% withholding tax rate for professional fees, talent fees, or any other form of remuneration for services rendered pursuant to Section 2.57.2 (A) of RR no. 2-98,6 as amended, should be used. Petitioner's Motion for Reconsideration deserves scant consideration. Petitioner did not raise new matters or issues in the instant Motion for Reconsideration that will merit a reconsideration, let alone modification of the assailed Decision of August 15, 2023. Moreover, his contentions were mere reiterations and amplifications of his previous arguments, all of which have been considered and rejected, first by the Court in Division and subsequently on appeal, by the Court En Bane. To rule on the same issues and arguments again is a waste of time and dwindling resources of the Court. WHEREFORE, premises considered, petitioner's Motion for Reconsideration posted on August 31, 2023, is DENIED for lack of merit. SO ORDERED. ~tiM 'A LANEE S. CUI-DAVID Associate Justice We Concur: Presiding Justice 0 SUBJECT: Implementing Republic Act No. 8-124. "An Act Amending the National Internal Revenue Code, as Amended" Relative to the Withholding on Income Subject to the &panded Withholding Tax and Final ~Vithholding Tax, Withholding of Income Tax on Compensation. Withholding ofCreditable Value-Added Tax and Other Percentage Taxes.

RESOLUTION CTA EB No. 2602 (CTA Case No. 9705) Commissioner of Internal Revenue v. Casas+Architects, Inc. x------------------------------------------------------------------------------------------x MA. BELEN M. RINGPIS-LIBAN Associate Justice ~7~ CATHERINE T. MANAHAN Associate Justice JEANMA ~ ~ f.~ -f~'-l..h:. MARIAN IvY~. REYES-FAJARDO Associate Justice ~W�~~~- RES CORAZON G. FERR Associate Justic HENRY S. ANGELES Associate Justice