WINEBRENNER & I?IGO INSURANCE BROKERS, INC v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION WINEBRENNER & INIGO CTA Case No. 8277 INSURANCE BROKERS, INC., Petitioner, -versus- Members: Bautista, Chairperson Cotangco-Manalastas, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, DEC 1 9 2012 Respondent. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~~ _/_.'..f"F;e�~�x DECISION COTANGCO - MANALASTAS,~: This is a Petition for Review filed by petitioner Winebrenner & Inigo Insurance Brokers, Inc. on April 15, 2011 to seek the issuance of a tax credit certificate (TCC) in the amount of P5,646,202.00, allegedly representing its excess and unutilized creditable income taxes withheld for taxable year 2008. FACTS Petitioner is a domestic corporation duly organized and existing under Philippine laws, with principal office at 8th Floor, 88 Corporate Center, Sedefw corner Valero Streets, Salcedo Village, Makali City.! It is registered with the Bureau of Internal Revenue (SIR) and was/- 1 Exhibit " B" .

DECISION CTA CASE NO. 8277 issued Tax Identification Number (TIN) 000-151-714-000 and BIR Certificate of Registration No. 9RCOOOO 185715. 2 Respondent Commissioner of Internal Revenue ts the head of the Bureau of Internal Revenue empowered to perform the duties of said office including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. She holds office at the B!R National Office Building, Oiliman, Quezon City, Metro Manila. On April 15, 2009, petitioner filed its Annual Income Tax Return (ITR) for taxable year 2008.3 Petitioner chose to be issued a tax credit certificate for its excess and unutilized CWT. Petitioner likewise filed amended Annual Income Tax Returns for 2008 on May 15, 2009 and April 15, 2010.4 On April 14, 2011, petitioner filed with the BIR its administrative claim for refund or issuance of TCC for its alleged excess and unutilized CWT in 2008 in the amount of P5,646,202.00.5 Due to inaction of respondent on petitioner's claim for refund or issuance of TCC, petitioner filed the instant Petition for Review on April 15, 2011. In her Answer6 filed on June 3, 2011, respondent averred the following Special and Affirmative Defenses: /-- 2 Exhibit " A". 3 Exhibit "N". 4 Exhibits " M" and "0"; Par. 2, Joint Stipulation of Facts, Joint Stipulation of Facts and Issues, docket, p. 114. 5 Exhibits " EE" and " FF" . 6 Docket, pp. 86-88.

DECISION CTA CASE NO. 8277 "3. She reiterates and repleads the preceeding paragraphs of this answer as part of her Special and Affirmative Defenses; 4. Petitioner's claim for refund is still subject to the adm inistrative routinary investigation/ examination by the respondent's Bureau; 5. Taxes paid and collected are presumed to have been made in accordance with law and implementing regulations, hence, not refundable. 6. Petitioner's claim for refund/issuance of tax credit in the amount of Php5,646,202.00, as alleged excess and unutilized creditable income taxes withheld for taxable year 2008 were not fully substantiated by proper documentary evidence, such as, but not limited to certificates of income taxes withheld at source. 7. Petitioner failed to prove that the amount of Php5,646,202.00, as alleged excess and unutilized creditable income taxes withheld for taxab le year 2008 was included as part of its gross income for taxable year 2008 and the same was not utilized in payment of its income tax liability for the succeeding taxable quarters/years; 8. Petitioner has already exercised its option to carry-over to the succeeding taxable quarters/years the subject of its claim, pursuant to Section 76 of the 1997 Tax Code. 9. Petitioner failed to prove that the amount subject of its claim was remitted in full to the BTR. 10. Petitioner failed to comply with the requirements prescribed under Section 76 of the 1997 Tax Code. 11. Assuming but without admitting that pet1t1oner is entitled to tax refund, it is incumbent upon the latter to show that it has complied with the provisions under Sections 204 in relation to Section 230 (now 229) of the Tax Code. Otherwise, its failure to prove the same is fatal to its claim for refund. /-

DECISION CTA CASE NO. 8277 12. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corp vs. Commissioner of Internal Revenue, 124 SCRA 121)." A Notice of Pre-Trial Conference7 dated June 21, 2011 was sent to the parties, setting the case for pre-trial conference on July 14, 2011 and requiring both parties to be present at the pre-trial and to file with the Courl at least three (3) days before the date of the pre- trial their pre-trial briefs. In compliance with the said Notice, respondent's Pre-Trial BriefS and petitioner's Pre-Trial Brief9 were filed on July 11, 2011. On July 27, 2011, the parties filed their Joint Stipulation of Facts and Issues. 10 During trial, petitioner presented its testimonial and documentary evidence. Respondent's counsel, on the other hand, manifested that he will not present any evidence. On August 1, 2012, this Court issued a Resolution submitting the case for decision, considering petitioner's Memorandum fil ed on June 14, 2012 and respondent's Memorandum filed on July 24, 2012.j... 7 Docket, p. 90. 8 Docket, pp. I00-102 . 9 Docket, pp. 91-99 . 10 Docket, pp . I 13-1 16.

DECISION CTA CASE NO. 8277 STATEMENT OF ISSUES The parties submitted the following issues 11 for this Court's resolution: "A. WHETHER OR NOT THE INCOME PAYMENTS FROM WHICH THE 2008 CREDITABLE WITHHOLDING TAX SOUGHT TO BE REFUNDED/ISSUED TAX CREDIT CERTIFICATE WERE WITHHELD WERE INCLUDED AS PART OF' PETITIONER'S GROSS INCOME FOR TAXABLE YEAR 2008. B. WHETHER OR NOT PETITIONER HAS EXCESS AND UNUTILIZED CREDITABLE WITHHOLDING TAX FOR TAXABLE YEAR 2008 IN THE AMOUNT OF' PHP5,646,202.00. C. WHETHER OR NOT PETITIONER CARRIED-OVER TO THE SUCCEEDING TAXABLE QUARTERS OR YEARS THE CLAIMED EXCESS AND UNUTILIZED CREDITABLE WITHHOLDING TAX FOR TAXABLE YEAR 2008 AND APPLIED THE SAME IN PAYMENT OF' ITS INCOME TAX LIABILITY FOR THE SUCCEEDING TAXABLE QUARTERS OR YEARS. D. WHETHER OR NOT PETITIONER'S CLAIM FOR REFUND OF EXCESS AND UNUTILIZED CREDITABLE WITHHOLDING TAX FOR TAXABLE YEAR 2008 IN THE AMOUNT OF' PHP5,646,202.00 AS WELL AS FULL REMITTANCE THEREOF' TO THE BUREAU OF INTERNAL REVENUE WERE DULY SUBSTANTIATED BY PROPER DOCUMENTARY EVIDENCE. E. WHETHER OR NOT PETITIONER COMPLIED WITH THE REQUIREMENTS UNDER SECTION 76 OF' THE 1997 TAX CODE, IN RELATION TO SECTIONS 204 AND 229 OF THE SAME CODE, AND IS ENTITLED TO THE CLAIMED REFUND OR ISSUANCE OF' A TAX CREDIT CERTIFICATE IN THE SUM OF' t- PHP5,646,202.00 AS EXCESS CREDITABLE WITHHOLDING TAX FOR TAXABLE YEAR 2008." 11 Docket, pp . I 15-1 16.

DECISION CTA CASE NO. 8277 DISCUSSION /RULING The foregoing issues boil down to the question of whether or not petitioner is entitled to an issuance of tax credit certificate in the amount of P5,646,202.00, representing alleged excess and unutilized creditable withholding tax for taxable year 2008. Pertinent to the resolution of the tssue 1s Section 76 of the National Internal Revenue Code (NIRC) of 1997, which 1s quoted hereunder for ready reference, to wit: "SEC. 76. Final Adjustment Retum. - 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 shall either: (A) Pay the balance of tax 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 tax 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." (Emphasis supplied) Based on the afore-quoted Section 76, a corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes/--

DECISION CfA CASE NO. 8277 paid has two optio n s: (1) to carry over the excess credit or (2) to apply for the issuance of a tax credit certificate or to claim a cash refund. If the option to carry over the excess credit is exercised, the same shall be irrevocable for that taxable period.12 In exercising its option, the corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR fo r m ) its intention either to carry over the excess credit or to claim a refund; to ease the administration of tax collection, these remedies are in the a lternative and the choice of one precludes the other.13 On April 15, 2009, petitioner manual ly filed its Annual Income Tax Return for taxab le year 2008.1 4 Subsequently, it amended the said return on May 15, 200915 and April 15, 201016. Below are the amounts as shown in the returns: Date Filed with the BIR Exhibit "N" Exhibit "M" Exhibit "0 " Sales/ Revenues/ Receipts/ Fees 04/15/09 05/15/09 04/15/10 Less: Cost of Sales/ Services p 52,352,761.00 p 52,352,761.00 Gross Income from Operation p 52,352,761.00 35,597,298.00 Add: Non-Operating & Other Income 35,593,120.00 p 16,755,463.00 Total Gross Income p 16,759,641.00 35,597,298.00 6,106,065.00 Less: Deductions p 16,755,463.00 p 22,861,528.00 Taxable Income 5,653,203.00 17,809 ,561.00 p 22,412,845.00 6,106,065.00 f' 5,051,966.00 p 22 ,861,528.00 18,863,388.00 p 3,549,456.00 17,809,561.00 p 5,051,966.00 Income Tax Due (35%) p 1,242,310.00 p 1,768,188.00 f' 1,768,188.00 p 2,143,557.00 p 2,143,557.00 p 2,143,557.00 Less: Tax Credits/Payments I Prior Year's Excess Credits 12 Systra Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 176290, September 21, 2007. 13 Philippine Bank ofCommunications vs. Commissioner of!nterna/ Revenue, eta/. , G.R. No. 112024 , January 28, 1999. 14 Exhibit "N". 15 Exhib it " M" . 16 Exhibit "0".

DECISION CTA CASE NO. 8277 Tax Payments for the First Three 455,551.00 455,551.00 4 55,551.00 Quarters Creditable Tax Withheld for the 4 ,220, 104.00 5, 190,6 5 1.00 5,190,6 51.00 First 3 Quarters p 6,819,212.00 p 7,789,759.00 p 7,789,759 .00 Creditable Tax Withheld for the , (5,576 ,903.00) , (6 ,021,571.00) p (6,02 1,57 1.00) Fourth Quarter Total Tax Credits/Payments Tax Pay ablej(Ove rpay ment) A perusal of the records shows that petitioner marked the box "To be issued a Tax Credit Certificate" in its originaJ17, first amendedl 8 and second amended 19 manually filed Annual Income Tax Returns for taxable year 2008. However, petitioner did not mark any of the three option boxes in Line 31 of its electronically filed original and amended Annual Income Tax Returns. 20 Notwithstanding the failure of petitioner to make the appropriate marking in its electronically filed Annual Income Tax Return, the marking of th e option "To be issued a Tax Credit Certificate" in all its manually filed returns served as an expression of its choice to request a tax refund in the form of a TCC with respect to the income tax overpayment shown in the said returns. Anent petitioner's second amended Annual Income Tax Re turn for taxable year 200821, records indicate that petitioner had total tax credits of P7,789,759.00, which consisted of its prior year's excess credits in the amount of P2, 143,557.00 and creditable taxes withh e ld i- during the year 2008 in the amount of P5,646,202 .00. 17 Line 33 , Exhibit " N ". 18 Line 33 , Exhibit " M " . 19 Line 33 , Exhibit " 0 ". 20 Exhibits " G" and " H" . 21 Exhibit " 0 " .

DECISION CfA CASE NO. 8277 Petitioner claims that its 2008 income tax due amounting to :P1,768,188.00 was paid usmg a portion of its prior year's excess credits of P2, 143,557.00; thus, leaving the prior year's excess credits in the amount of :P375,369.00 (?2,143,557.00 Jess :P1,768,188.00) and creditable taxes withheld during the year 2008 in the amount of P5,646,202.00 totaling to P6,021,571.00 unutilized as of December 31, 2008, as shown below: Income Tax Due p 1,768,188.00 Less: Prior Year's Excess Credits 2,143,557.00 Balance of Prior Year's Excess Credits Add: Creditable Taxes Withheld- 2008 p 375,369.00 Excess Creditable Taxes Withheld as of December 31, 5,646,202.00 2008 p 6,021,571.00 Inasmuch as only the prior year's excess credit of !'>375,369.00 was carried over to the subsequent quarters/year 2009, 22 the excess creditable tax withheld in 2008 in the amount of P5,646,202.00 appears to be refundable pursuant to Section 76 of the NIRC of 1997. However, this Court cannot ascertain whether petitioner's Quarterly Income Tax Return 23 for the first quarter of 2009 is an original return. The retu rn was filed on August 28, 2009 at 12:00am, which is the same date and time when petitioner filed its Quarterly Income Tax Return for lhe second quarter24 . Moreover, petitioner did not place any tick mark to indicate whether the said return is t- amended or not. 22 Exhibits "D" " E" " F" " L" and "C" 23 Exhibit " D".' ' , , . 24 Exhibit " E".

DECISION CTA CASE NO. 8277 Petitioner should have established before this Court that the said document is its original First Quarter Income Tax Return for 2009. It must be stressed that the original First Quarter Income Tax Return would be material in determining whether petitioner exercised the irrevocable option of carry-over. In addition to the requisite provided under Section 76 of the NIRC of 1997, a taxpayer must satisfy the following requirements in order to be entitled to a refund or issuance of tax credit certificate for excess/ unapplied CWT: 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 NIRC of 1997, 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 was included in the return of the recipient (Section 2.58, Revenue Regulations No. 2-98, as amended; Citibank N.A. vs. Court of Appeals, et al. G.R. No. 107434, October 10, 1997). As regards the first requisite, the applicable prov1s1ons of the NIRC of 1997 are as follows: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX (C) Credit or refund taxes erroneous ly or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are {

DECISION CTA CASE NO. 8277 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." (Emphasis supplied) "SEC. 229. Recovery of Tax Erroneously or fllegally Collected. - No suil or proceeding sh a ll be m a intained 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 collected, until a claim for refund or credit has been duly fi led with the Commission e r; 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 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." (Emphasis supplied) Well-settled in our jurisprudence is that the reckoning of the two-year prescriptive period for the filing of a claim for refund/ tax credit of excess income tax paid/withheld commences from the date of t filing of th e Final Adjustment Return. 25 25 ACCRA lnvestmenls Corporation vs. The Honorable Court of Appeals, et a!. , G. R. N o. 96322, December 20, 1991 .

DECISION CTA CASE NO. 8277 In the case at bench, petitioner filed its Annual Income Tax Return for taxable year 2008 on April 15, 2009 26 . Counting therefrom, petitioner h ad until April 15, 2011 within which to file its claim for refund or tax credit certificate both in the administrative and judicial levels. Therefore, petitioner's administrative claim for refund filed on April 14, 201 ]27 and the Petition for Review filed on April 15, 2011 both fell within the two-year prescriptive period. To prove the fact of withholding of the subject claim in compliance with the second requisite, petitione r submitted a Schedule of Income and Creditable Tax Withheld Certificates for the year 200828, Summary of 2008 CWT Certificates29 and various Certificates of Creditable Tax Withh e ld at Source (BIR Form No. 2307)30. The Schedule of Income and Creditable Tax Withheld Certificates for the year 2008 shows tax withheld in the total amount of P5,646,202.86, while the Summary of 2008 CWT Certificate s shows P5,634,084.42. However, in the summary, the certificates reflect creditable withholding taxes of only P5,634,082.50, detailed as follows: Income Income Tax Payment Exhibit Payor/Withholding Agent Withheld f> 268,421.31 COMMISSION/ INSURANCE AGENTS/BROKERS/ADJUSTERS 439,106.90 , 276,176.30 "KK- 1" ASALUS CORPORATION 356,386.20 26,842.13 "KK-2" ASALUS CORPORATION 43,910 .69 "KK-3" ASALUS CORPORATION 27,617.63 "KK-4" ASALUS COI~PORATION 35,638.62 26 Exhibit " N ". 27 Exhibits "EE" and " FF". 28 Exhibit "CC" or " KK". 29 No. 09, Exh ibit " NN", docket, pp. 1257 -1263 . 30 Exhibits " KK-1 " to " KK-121 " .

DECISION CTA CASE NO. 8277 "KK-5" ASIA INSURANCE (PHILS.) CORP. 69,287.42 6,928.74 "KK-6" ASIA UNITED INSURANCE INC. 17,601.25 1,760.13 "KK-7" ASIA UNITED INSURANCE INC. "KK-8" ASIA UNITED INSURANCE INC. 1,332.00 133.20 "KK-9" ASIANLIFE & GENERAL ASSURANCE CORP. 1,005.00 100.50 "KK-10" BLUE CROSS INSURANCE, INC. 183,695.57 18,369.56 "KK-1 1" BLUE CROSS INSURANCE, INC. 30,115.39 3,011.54 "KK-12" BLUE CROSS INSURANCE, INC. 47,176.80 4,717.68 "KK-13" BLUE CROSS INSURANCE, INC. 119,556.82 11,955.68 "KK- 14" BPI/MS INSURANCE CORP. 63,162.27 6,316.23 "KK-15" CORPORATE GUARANTEE & INSURANCE CO. INC. 1,403,339.84 140,334.59 "KK- 16" CORPORATE GUARANTEE & INSURANCE CO. INC. 11,885.20 1,188.52 "KK- 17" CORPORATE GUARANTEE & INSURANCE CO. INC. 46,862 .10 4,686.21 "KK-18" CORPORATE GUARANTEE & INSURANCE CO. INC. 220,281.30 22,028.13 "KK- 19" FEDERAL PHOENIX ASSURANCE CO., INC. 159,028.40 15,902.84 "KK-20" FEDERAL PHOENIX ASSURANCE CO., INC. 364,229.50 36,422.95 "KK-2 1" FEDERAL PHOENIX ASSURANCE CO., INC. 565,502.80 56,550.28 "KK-22" FEDERAL PHOENIX ASSURANCE CO., INC. 464,838.70 46,483.87 "KK-23" 347,021.72 34,702 . 17 "KK-24" FIRST GUARANTEE LIFE ASSURANCE COMPANY, INC. 63,061.00 6,306. 10 "KK-25" FIRST GUARANTEE LIFE ASSURANCE COMPANY, INC. 19 , 103.10 1,910.3 1 "KK-26" FIRST GUARANTEE LIFE ASSURANCE COMPANY, INC. 88,803.80 8,880.38 "KK-27" FII~ST GUARANTEE LIFE ASSUI~NCE COMPANY, I NC. 4,311.00 431.10 "KK-28" 136,054.90 13,605.49 "KK-29" FLT Pl~IME INSURANCE CORPORATION 4,349,970.60 434,997.06 "KK-30" FORTUNE GENERAL INSURANCE CORP. 2,774.30 277.43 "KK-31" "KK-32" GENERAL! PILIPINAS LIFE ASSURANCE COMPANY INC. 2.80 0 .28 "KK-33" GENERAL! PILIPINAS LIFE ASSURANCE COMPANY INC. 3,309.80 330 .98 "KK-34" GENERAL! PILIPINAS LIFE ASSURANCE COMPANY INC. 1,172,922.91 117,336.54 "KK-35" 51,434.90 5,143.49 "KK-36" GENERALI PILIPINAS INSURANCE CO. INC. 80,180.54 8,018.06 "KK-37" INSURANCE COMPANY OF NORTH AMERICA 17,539.80 1,753.98 "KK-38" INSURANCE COMPANY OF NORTH AMERICA 211,356.62 21,135.66 "KK-39" INSURANCE COMPANY OF NORTH AMERICA 9, 069.00 906.90 "KK-40" INSURANCE COMPANY OF NOI~TH AMERICA 1,236, 797.90 123,679.79 "KK-4 1" INTRA STRATA ASSURANCE CORPORATION 355,5 11.50 35,551.15 "KK-42" MAA GENERAL ASSURANCE PHILS., INC . 259,386.10 25,938.61 "KK-43" MAA GENERAL ASSURANCE PHILS., INC . 646,054.40 64,605.44 "KK-44" MAA GENERAL ASSURANCE PHILS., INC. 821,896.90 82,189 .69 "KK-45" MAA GENERAL ASSURANCE PI-IlLS ., INC. "KK-46" MALAYAN INSURANCE CO., INC. 927.49 92.75 "KK-47" THE MANILA INSURANCE CO INC 734,270.08 73,428.20 "KK-48" MAPFRE INSULAR INSURANCE CORP. 151,767.79 15,176.77 "KK-49" METROPOLITAN INSURANCE CO. INC . "KK-50" METROPOLITAN INSURANCE CO. INC. 92,163.34 9,216.33 "KK-51" MAXICARE HEALTHCARE CORP. 27,790.38 2,779.04 "KK-52" M.AXICARE HEALTHCARE CORP. 100,863.90 10,086.39 "KK-53" MAXICARE HEALTHCARE CORP. 153,505.30 15,350.53 "KK-54" M.AXICARE HEALTHCARE CORP. 205,377.83 20,537.78 "KK-55" MbDICARD PHILIPPINES, INC. 2,163,224.78 216,322.48 MEDICARD PHILIPPINES, INC. 1,197,910.18 119,791.02 MEDICARD PHILIPPINES, INC. 1,173,762.29 117,376.23 MEDICAl~D PHILIPPINES, INC . 58,528.49 5,852.85 THE MERCANTILE INSURANCE CO INC 70,976.57 7,097.66

DECISION CfA CASE NO. 8277 "KK-56" METROPOLITAN INSURANCE CO. INC. 59,781.51 5,978.15 "KK-57" NEW HAMPSHIRE INSURANCE COMPANY 62,792.50 6,279.25 "KK-58" ORIENTAL ASSURANCE CORPORATION 2,920,340.89 292,034.09 "KK-59" PACIFIC UNION INSUI~NCE COMPANY "KK-60" PARAMOUNT LIFE & GENERAL INSURANCE CORP. 2,088.50 208.85 "KK-61 " PI-IlL. CHARTER INSURANCE CORP 529,020.40 52,902.04 "KK-62" PHILAMCARE HEALTH SYSTEMS, INC. 146,6 10.22 14 , 6 6 1 . 0 2 "KK-63" PHILAMCARE HEALTH SYSTEMS, INC. "KK-64" PHILAM INSUI~NCE COMPANY INC. 19,055.50 1,905.55 " KK -6 5" PHILAM INSURANCE COMPANY INC. 34,791.50 3 ,479.15 "KK-66" PHILAM INSUI~NCE COMPANY INC. 958,937.57 95,893.76 "KK-67" PHILAM INSUI~NCE COMPANY INC . 879,266.78 87,926.68 "KK-68" THE PI-IlL. AMERICAN LIFE & GENERAL INSURANCE CO. 1,274,983.64 127,498.36 "KK-69" THE PHIL. AM ERICAN LIFE & GENERAL INSURANCE CO. 429,817.18 42,981.72 "KK-70" THE PHIL. AMERICAN LIFE & GENERAL INSURANCE CO. 10,915.59 "KK-71" PHILIPPINE BRITISH ASSURANCE CO. , INC. 46,608.44 974.61 "KK-72" PHILIPPINE BRITISH ASSURANCE CO. , INC . 13,105.13 4,161.47 "KK-73" PHILIPPINE B1~.ITISH ASSURANCE CO., INC. 19,896.00 1,170.10 "KK-74" PHILIPPINE BRITISH ASSURANCE CO ., INC. 1,989.60 "KK-75" PHILIPPINE BRITISH ASSUI~NCE CO ., INC . 3, 172 .00 "KK-76" PHILIPPINE BRITISH ASSURANCE CO. , INC. 9,327.80 475.80 "KK-77" PHILIPPINE BRITISH ASSURANCE CO., INC. 9,415.20 932.78 "KK-78" PHILIPPINE BRITISH ASSURANCE CO ., INC. 43,177.70 1,412.28 "KK -79" PHILIPPINE BRITISH ASSURANCE CO ., INC. 18 ,2 80 .8 0 4,317.77 "KK-80" PHILIPPINE BRITISH ASSURANCE CO. , INC. 3,744.80 1,828.08 'KK -8 1" PHILIPPINE BRITISH ASSUI~NCE CO., INC . 9,221. 70 374.48 "KK-82" PHILIPPINE BRITISH ASSURANCE CO. , INC. 2,5 04.93 922.17 " KK -83" PHILIPPINE GENERAL INSURANCE CORP 8,865.40 375.74 "KK-84" PHILIPPINE GENEI~L INSURANCE CORP 61,964.10 886.54 "KK-85" PLARIDEL SURETY & INSUI~NC E COMPANY 9,994.27 6,196.41 "KK-86" PHILIPPINE PHOENIX SURETY & INSURANCE, INC. 2,656.00 1,499.14 "KK-87" PHILIPPINE PHOENIX SURETY & INSURANCE, INC. 2,442.00 265 .60 "KK-88" PHILIPPINE PHOENIX SURETY & INSURANCE, INC. 2,475.75 244.20 "KK-89" PHILIPPINE PHOENIX SURETY & INSURANCE, INC. 56,603.20 247.58 "KK-90" PHILIPPINE FIRST INSURANCE CO ., INC. 30,079.61 5,660.32 " KK-9 1" PIONEER INSURANCE & SURETY CORP. 9,380.50 3,007.97 "KK-92" PNB GENERAL INSURERS CO ., INC. 15,742. 90 938.05 "KK-93" PNB GENERAL INSURERS CO ., INC . 23,120.80 1,574.29 "KK-94" PNB GENERAL INSURERS CO ., INC . 8,474,038.97 2,312.08 "KK-95" PNB GENERAL INSUREI~S CO., INC. 49,467.60 847,403 .9 0 "KK-96" THE PREMIER INSURANCE & SURETY CORP. 6,568.00 4,946.76 "KK-97" THE PREMIER INSURANCE & SURETY CORP. 8,035.60 656.80 "KK-98" THE PREMIER INSURANCE & SURETY CORP. 2,935.20 803.56 "KK-99" PRUDENTIAL GUARANTEE AND ASSURANCE INC. 13,794.10 293.52 "KK- 100" PRUDENTIAL GUARANTEE AND ASSURANCE INC. 4,952.00 1,379.41 "KK- 10 1" PRUDENTIAL GUARANTEE AND ASSURANCE INC. 30 ,075.40 495.20 "KK- 102" PRUDENTIAL GUAI~NTEE AND ASSURANCE INC . 35,953.60 3,007.54 "KK- 103" QBE INSUI~NCE (PI-IlLS.), INC . 133,4 11.10 3,595.36 "KK-104" QBE INSURANCE (PI-IlLS .), INC. 53,53 1.9 0 13,341.11 'KK-105" QBE INSURANCf.<: (PI-IlLS .), INC. 564,176.30 5,353.19 "KK- 106" RECOVERY INSURANCE AGENCY, INC. 37,314.10 56,417.63 83,105.20 3,73 1. 41 24,902.60 8,310.52 2 ,79 3.6 0 2,490.26 279.36

DECISION CTA CASE NO. 8277 "KK-107" STANDARD INSURANCE CO ., I NC . 7,753,067.30 775,306.73 "KK-108" STRONGHOLD INSURANCE CO., INC. 270,598.30 27,059.83 "KK-109" UNITED COCONUT PLANTERS LIFE ASSURANCE CORP. 449,960.10 44,996.01 "KK-110" UNITED COCONUT PLANTEr~S LIFE ASSURANCE CORP. 99,249.96 9,925.00 "KK- 111 " UNITED COCONUT PLANTERS LIFE ASSURANCE CORP. 421,254.40 42,125.44 "KK-112" UNITED COCONUT PLANTERS LIFE ASSURANCE CORP. 934,228.00 93,422 .80 "KK-1 13" UCPB GENERAL INSURANCE CO INC. " KK- 115" SUN LIFE OF CANADA (PI-IlLS.), INC. 7,495,848.05 749,584.81 "KK- 116" SUN LIFE OF CANADA (PHILS .), INC. 12,408.10 1,240.81 "KK-117" SUN LIFE OF CANADA (PHILS.), INC. 18,523.09 1,852.31 'KK- 118" SEABOARD-EASTEf-?.N INSURANCE CO., INC. 4,664.81 466.48 "KK-119" VALUE CARE HEALTH SYSTEMS, INC. "KK- 120" VALUE CARE HEALTH SYSTEMS, INC. 417,404.20 41,740.42 "KK-120" VALUE CARE HEALTH SYSTEMS, INC. 13,567.30 1,356.73 14,246.20 1,424.62 TOTAL Commission I Insurance 2,610.53 391.58 _!!fl_ e n t s j B r o k e r s / A d j u s t e r s p 56,279,489.50 p 5 ,6 2 8 ,6 23.14 Top 10,000 Corporatio n "KK-1 14" MISYS INT'L BANKING SYSTEMS, INC. 252,878.00 5,057.56 TOTAL Top 10,000 Corporation p 252,878.00 p 5 ,057.56 Prime Contractor / Sub -cont rac to r "KK-121" DIAMOND EXPORT CORPORATION 20,090.00 401.80 TOTAL Prime Contractor I Sub-contractor 20,090.00 40 1.80 GRAND TOTAL p 56,552 ,457.50 p 5 ,6 3 4 ,082.50 However, the CWT in the amount of P5,634,082.50 shall be further reduced by P30,624.17 because there are supporting certificates wherein no year was indicated. The breakdown of the CWT of P30,624.17 is as fo llows: EXHIBIT PAYOR AMOUNT OF TAX "KK-48" MAXICARE HEALTI-ICARE CORP. INCOME WITHHELD "KK-50" MAXICARE HEALTI-ICARE CORP. TOTAL PAYMENTS p 10,086.39 p 100,863.90 20,537.78 205,377.83 p 30,624. 17 p 306,241.73 Applying the second requirement to lhe foregoing, this Court will only consider the amount of P5,603,458.33 31 out of the total claimed CWT of P5,646,202.00. {-- 31 P5,634 ,082.50 less P30 ,624. 17

DECISION CTA CASE NO. 8277 As for the third requirement, a perusal of the withholding tax certificates reveals that the CWT of P5,603,458.33 was withheld on gross income payments of P56,246,215.7732. On the other hand, in its 2008 Annual Income Tax Return and Audited Financial Statements, petitioner's gross mcome amounted to P58,458,826.0033 and P57,949,733.0 0 34 , respectively. The difference of P509,093.00 purportedly represents Interest Income, Gain on Disposal of Asset, and Other Income as shown in the 2008 Annual Income Tax Return3s. However, based solely on the 2008 Annual Income Tax Return 36, Audited Financial Statement37, and Income Statement 38 submitted by petitioner, lhe Court cannot determine whether the gross mcome payments of P56,246,215.77 related to the CWT of P5,603,458.33 formed part of the gross income of P58,458,826.00 reported by petitioner in its 2008 Annual Income Tax Return. Petitioner should have presented additional supporting documents such as official receipts, sales invoices, detailed general ledger, sales register, reconciliation schedules or any other document whereby the income payments related to the claimed CWT can be traced and confirmed as forming part of the income reflected in its 2008 Annual Income Tax Return. Thus, petitioner's non-compliance t- with the third requirement is fatal to its claim. 32 1'56,552,457 .50 less 1'306,241 .73 33 f>52,352 ,761 .00 plus f>6 , I06,065.00, lines 17C and 208, Exhibit " 0 " . 34 Exhibit " U", docket, p. 388. 35 Exhibit " 0 ", docket, p. 375. 36 Exhibits "N" " G" " M" " H" and "0" 37 Exhibit " U".' , , ' . 38 Exhibit " DD".

DECISION CTA CASE NO. 8277 Entrenched in our jurisprudence is the principle that tax refunds are in the nature of tax exemptions, which are construed strictissimi juris against the taxpayer and liberally in favor of the government. As tax refunds involve a return of revenue from the government, the claimant must show indubitably the specific provision of law from which the right arises; it cannot be allowed to exist upon a mere vague implication or inference nor can it be extended beyond the ordinary and reasonable intendment of the language actually used by the legislature in granting the refund. To repeat, strict compliance with the conditions imposed for the return of the revenue collected is a doctrine consistently app lied in this jurisdiction.39 Thus, petitioner as a claimant has the burden of proof to establish the factual basis of his claim for tax credit or refund. 40 WHEREFORE , premises cons id ered, the Petition for Review IS hereby DENIED for insufficiency of evidence. SO ORDERED. JL~-~~~~ AMELIA R. COTANGCO-MANALASTAS Associate Justice CONCURS: TA 39 Commissioner of lnt erna evenue vs. Rosemarie Acosla, G.R. No. 154068 , August 3, 2007. �4 Citibank, N.A. vs. Courl of Appeals and the Commissioner of' Int ernal Revenue, G.R. No. 1074 34, October I0, 1997.

DECISION CTA CASE NO. 8277 ATTESTATION I attest that the conclusions in the above Decision were reached m consultation before the case was assigned to the writer of the opinion of the Court's Division . CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation be fore the case was assigned to the writer of the opinion of the Court's Division. ~~C . GJ-~ot," Q . StlANITO C. CASTANEnX: 'JR. Acting Presiding Justice