MELCO RESORTS LEISURE (PHP) CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION MELCO RESORTS LEISURE CTA Case No. 10807 (PHP) CORPORATION, Petitioner, Members: -versus- MANAHAN, Chairpe rs on, REYES-FAJARDO, and ANGELES, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, ~ ?- :--4J- '-:2'J5-~-I' --- �- � X- - - - - - - - - - - Respondent. - - - - - - - - - -X -- --- - -- - DECISION MANAHAN, J.: Before the Court is a Petition for Review filed on March 11 , 2022, 1 seeking refund of the amount of P102,337,628 .70 representing petitioner's alleged erroneously or excessively paid expanded withh olding tax ("EWT") for taxable year (TY) 2020. THE PARTIES Petitioner Melco Resorts Leisure (PHP) Corpora tion ("Melco") is a corpora tion organized and existing under the laws of the Philippines, with principal address a t Asean cor. Roxas Boulevard, Bara ngay Tambo , Para iiaque City .2 It is registered with the Bure au of Internal Revenue (BIR) under Taxpayer Identification No . 008-3 6 2-871-00000. 3 Respondent is the duly appointed Commissioner of Internal Revenue ("CIR") who holds office at th e Bureau of Internal Revenue ("BIR") National Office.4 I Docket - Vol. I. , pp. 6 -38. 2 Joint Stipulation of Facts and Issu es (JSI'l), Stipulation of Facts, par. I , Docl<f~t- Vol. II , p. 74 1; Exh ibit "P-1", Docket -� Vol. III, pp. 1068 to 1073. J Exhibit. "P-3", Docket - Vo!. III , pp. l 0 77 to 1079. 4 JSFI, Stipulation of Facts, par. 2, Docket - Vol. II , p. 74 1. a.---

DECISION CTA Case No. 10807 THE FACTS On March 8, 2022, Melco filed with the Large Taxpayers Service of the BIR a letter dated March 7, 2022,5 with Application for Tax Credits/Refunds (BIR Form No. 1914)6 and supporting documents, for the refund or issuance of tax credit certificate of its alleged erroneously or excessively paid EWT for TY 2020 in the amount ofr102,337,628.70. On March 11, 2022, Meleo filed the present Petition for Review. The CIR filed his Answer on June 6, 2022,7 and transmitted the BIR Records of the case on July 29, 2022.8 On August 18, 2022, the Pre-Trial Conference for the case was held.9 Prior thereto, both parties separately filed their pre- trial briefs on August 15, 2022. 10 The parties submitted their Joint Stipulation of Facts and Issues on September 19, 2022. 11 It was approved by the Court on October 10, 2022,12 thus, the pre-trial was deemed terminated. The Pre-Trial Order was issued on December 5, 2022.13 During trial, Melco presented: (1) Ms. Eunice Rekha P. Pobre, 14 its Tax Manager; (2) Ms. Maria Neriza C. Banaria, 15 the Chief Financial Officer of Belle Corporation; and (3) Mr. Emmanuel Y. Mendoza, 16 the Court-commissioned independent certified public accountant ("ICPA"). 17 The ICPA Report was filed on February 23, 2023. Meanwhile, counsel for the CIR manifested that he will no longer present evidence. 18 5 Exhibit "P-60", Docket- Vol. 4, pp. 1593 to 1601. ''Exhibit "P-61", Docket- Vol.~. p. 1602. 7 Docket- Vol. ll, pp. 671 to 678. "Compliance dated July 29, 2022, Docket- Vol. 11, pp. 689 to 691. " Order dated August 18, 2022, Docket- Vol. Jl, pp. 723 to 723-B. 10 Pre-Trial Brieffor Petitioner, Docket- Vol. II, 698 to 720; Pre-T1�ial Brief Docket- Vol. II, pp. 694 to 696. 11 Docket- Vol. II, pp. 741 to 754. l2 Resolution elated October 10, 2022, Docket- Vol. 11, p. 780. 13 Docket- Vol. 11, pp. 819 to 844. '"Exhibit "P-70", Docket- Vol. 1, pp. 186 to 205; Exhibit "P-70-2", Docket- Vol. Il, pp. 854 to 859; Minutes of the hearing held on, and Order dated, ~January 24, 2023, Docket- Vol. II, pp. 940, and 941 to 943, respectively. "Exhibit "P-71", Docket- Vol. 11, pp. 763 to 776; and Minutes of the hearing held on, and Order elated, January 24, 2023, Docket - Vol. II, pp. 940, and 941 to 943, respectively. "' Exhtbit "P-126", Docket- Vol. II, pp. 1004 to 1010; nne! Minutes of the hearing hclcl on, and Order dated, March 8, 2023, Docket- Vol. lll, pp. 1012 to 1013-i\. 17 Id. IR Transcript o( Stenographic Notes, March 8, 2023, p. 15. ~

DECISION CTA Case No. 10807 On March 28, 2023, Melco filed its formal offer of evidence.l9 The CIR did not file comment thereon.2o In a Resolution dated May 26, 2023,21 the Court admitted all of Melco's exhibits. On December 6, 2023, the CIR filed a Manifestation stating that he is adopting the arguments contained in his Answer in place of a memorandum. 22 Melco filed its memorandum on April 5, 2024. 23 Thus, the case was submitted for decision on April 24, 2024.24 THE ISSUES As stipulated by the parties, the issue is whether Melco is entitled to a refund or issuance of tax credit certificate in the amount ofP102,337,628.70 representing its alleged erroneous or excessively paid EWT for TY 2020 under Section 229 of the Tax Code, as amended. Petitioner's arguments Melco explains that on March 22, 2021, its total rent for 2020 was reduced. Hence, the EWTs it paid on the accrued excess rent is deemed erroneously or excessively paid, since they pertain to taxes which are not legally due. Respondent's counter-arguments The CIR contends that Melco's failure to exhaust administrative remedies before filing the present judicial claim warrants the dismissal thereof. By filing the same merely three (3) days from the date of its administrative claim, Melco prevented the CIR from verifying the documents in support of its claim. Moreover, according to the CIR, Melco failed to submit the complete documents to prove its entitlement to the claim. l'J Formal Offer of Evidence with Manifestation [On Offer of Prouisionally Marlced Toxhibit.s P�6 to P�17 and P�30 to P�35 as Originals 11nder Rule 130 oft he Revised Rules ofCour1f, Docket~ Vol. III, pp. 1018 to 1067. 20 Records Verification dated April 18, 2023, Docket~ Vol. 4, p. 1707. 21 Docket~ Vol. 4, pp. 17141o 1718. 22 Docket~ Vol. 4, pp. 1751 to 1753. 23 Dockct~Vol. 4, pp. 1761 to 1781. "'Minute Resolution dated April 24, 2024, Docket~ Vol. 4, p. 1783. ~

DECISION CTA Case No. 10807 THE COURT'S RULING The present Petition for Review is partly meritorious. Sections 204(C) and 229 of the Tax Code governs the refund of taxes erroneously or excessively paid. Said provisions read: "SEC. 204. Authority of the Commissioner to Compromise/Abate and Refund or Credit Taxes. -The Commissioner may - (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority... 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."25 "SEC. 229. RecovenJ of Tax Erroneously or fllegally Collected.- No suit or proceeding shall be maintained 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 filed with the Commissioner; 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 ."26 2s Emphasis supplied. '" Emphasis supplied.c---

DECISION CTA Case No. 10807 Page .s of 19 The foregoing provisions clearly require that within two (2) years from the date of payment of the tax, the claimant must first file an administrative claim with the CIR before filing its judicial claim with the Court. Both claims, however, must be filed within the 2-year reglementary period. Timeliness of filing the claims is mandatory and jurisdictional. It bears to stress that for the judicial claim, the Tax Code expressly provides that it be filed within the 2-year reglementary period "regardless of any supervening cause that may arise after payment."27 The foregoing provisions also require that the taxes which are the subject of the claim be erroneously or illegally collected. An "erroneous or illegal tax" is defined as one levied without statutory authority, or upon property not subject to taxation, or by some officer having no authority to levy the tax.2s Hence, for the present claim to prosper, petitioner must establish not only that it timely filed the same; it must likewise prove that the EWT covered by the claim constitutes erroneously paid or illegally collected tax. Petitioner's administrative and judicial claims for refund or issuance of tax credit certificate covering the months of February 2020 to December 2020 were timely filed. The present claim stems from petitioner's alleged overpayment or over-remittance of EWTs for TY 2020. Below are the pertinent dates relative thereto: 1~ ~----�---- I TwO-YEAR I I DATE OF PAYMENT I PRESCI~JPTIVE PERIOD ~:: ~~~~ --~~--~-;E-R~~i~~ -r~~--=~!~j{1~~~:~: PERIOD COVERED ~o::: i_ 27. 202o33 ___ -=1 1 1,, quarter 2020 I_ i 1\pr. 21. 2022 _____ n Commissioner of Internal Revenue u. San Miguel Corporation, G.R. Nos. 180740 and 180910, November 11, 2019 [Per ,J. Hernando, Second Division[. '" Commissioner of Internal Reue~ve v. Pilipinas Shell Petroleum Cmporation, G.R. No. 188497, April 25,2012 [Per J. Villarama, Jr., First Division]. 2<J Exhibits "P-39" and "P-39-1", Docket- Vol. liT, pp. 1384 to 1386. �3 February 12, 2022 fell on a 5aturday. 31 Exhibits "P-40" and "P-40-1", Docket-- Vol. II, pp. 1387 to 1389. 32 March 12, 2022 fell on a Saturdav. "'Exhibits "P-41" and "P-41-1", Docket- Vol. II, pp. 1390 to 1392. a---

DECISION CTA Case No. 10807 I Apr. 2020 May 22, 2020'" May 23, 202235 Jun. 15, 2020�"' Jun. 15, 2022 I May 2020 2nd quarter 2020 Jul. 29, 2020" Jul. 29, 2022 Jul. 2020 "��----------------- ---~---f--- Aug. 2020 -- Aug. 12, 202038 Aug. 12, 2022 3n1 Quarter 2020 --------------- � � - - - - --- Oct. 2020 Nov. 2020 I Scp. 15, 20203" Sep. 15, 2022 ------- --�-- 4"� Quarter 2020 Oct. 29, 202040 Oct. 31, 202241 ---------�-���--- -------- Nov. 12, 2020 4' Nov. 14, 2022 43 ----- -----�� Dec. 14, 202044 Dec. 14, 2022 - ------- --------- ... Jan. 28, 20214�' Jan. 30, 2023'"' ----------- -- Petitioner's administrative claim was filed on March 8, 2022, while its judicial claim was filed on March 11, 2022. Thus, the same were timely filed insofar as the months of February 2020 to December 2020 are concerned. However, with respect to the month of January 2020, petitioner's claim has prescribed since it should have been filed on February 14, 2022, within two years from the date of its payment on February 12, 2020. Petitioner argues that since the total EWT due on its final rental payment in 2020 should only be P13,949,801.89, and that such amount was already fully paid by February 2020, then it is the succeeding EWTs in excess of the actual EWT due which are erroneously or excessively paid, illustrated as follows: DATE OF BWT PAID (5%) EWT DUE ALLEGED PAYMENT OVERPAYMENT Jan. Feb. 12, 2020 1' 9,686,480.33 P 9,686,480.33 f' f-------- -- . --------- ----- Feb. Mar. 12,2020 9,686,038.66 4,263,321.56 5,422,717.10 f------ ,---- ---f---------- ------ Mar. 1\pr. 27,2020 9,685,901.16 9,685,901.16 ~-~---_-A_p_r._--l_M~y 22, 2020 L~~-S-,4-5-5-.3-~--~. -- -- 9,685,45_:S.33 1- May Jun. 15,2020 ' 9,687,351.16 9,687,351.16 ilJ t_____J_J_u_u_n_1--_-~_-l--:~:~ ~~-, ~~~~-- L. _:::;~~;~: ~: ~=~~~~=~=~[--~~-~:~:_;~:_ 34 Exhibits "P-42" and "P-42-1", Docket- Vol. II, pp. 1393 to 1395. :15 May 22, 2022 fell on a Sunday. JC> Exhibits "P-43" and "P-43-1", Docket- Vol. II, pp. 1396 to 1398. 37 Exhibits "P-44" and "P-44-1", Docket- Vol. ll, pp. 1399 to 1401. 38 Exhibits "45" and "P-45-1", Docket- Vol. ll, pp. 1402 to 1404. 39 Exhibits "P-46" and "P-46-1", Docket- Vol. II, pp. 1405 to 1408. 40 Exhibits "P-4 7'' and "P-47-1", Docket - Vol. II, pp. 1409 to 14 11 . '11 October 29, 2022 fell on Saturday. 4 ' ~~xhibits "P-48" and "P-48-1", Docket- Vol. II, pp. 1412 to 1414. 4" November 12, 2022 fell on a Saturday . .,_, ~=xhibits "P-49" and "P-49-J", Docket- Vol. II, pp. 1415 to 1417. 45 Exhibits "P-50" and "P-50-1", Docket- Vol. II, pp. 1418 to 1420. '16 January 28, 2023 fell on a Saturcla:'/. Ch"V"

DECISION CTA Case No. 10807 Aug. Sep 15, 2020 : 9,693,067.83 9,693,067 83 ..] Oct 29, 202o-fl 9.695,551\6 f----~P� 9,695,551.16~ _ OcL_ ... __ Nov 12, 2020 _1 ___'l,C)9_6_,20_~:_1_l'__ . -.-. __________'.),696,2_01_]_6__1 j _ Nov. , Dec. 14, 2020 I -~~_96,467 ~8~- _____ __ 9,696,467~:3_~ ___ Dec. __]_J~_n 28, 2021 -~()97,713_6_()_1---��� 9,697,71~.66 _j 6Cl_j L__ _ _ _ _ _ _ _ _T_O_T_A_L _116,28~,~30 13,949,801.89 _1. 102,:.l3!,_6_~_1~ The Court disagrees. In the Supplemental Agreement to Contract to Lease dated March 22, 2021,47 petitioner's total annual rent for calendar year 2020 was reduced to 1"265,046,236.00, net of withholding tax: Section 2. 2020 Monthly Rent The Parties agree that the total annual Rent for the calendar year 2020 shall be Two Hundred Sixty-Five Million Forty-Six Thousand Two Hundred Thirty-Six Pesos (Php265,046,236.00), exclusive of value added tax and net of withholding tax, covering the gaming area only and no rent will he due on the non-gaming area. An overpayment of Three Hundred Eighteen Million Six Hundred Thirty-Five Thousand Four Hundred Sixty-Two Pesos (Php318,635,462.00) will be returned and paid by the Lessor to the Lessee no later than five (5) business days from the date of this Agreement without any set-off, condition, restriction, counterclaim, deduction or withholding. Under the same agreement, said amount was to be paid monthly by petitioner: RECITALS (C) The Lessee agreed to pay to the Lessor monthly rent for the Leased Premises as provided in Section 5.01 of the Lease Agreement (the Monthly Rent). Consequently, the monthly rent for 2020 was reduced to 1"22,087,186.33 [1"265,046,236.00 divided by twelve (12) months], net ofEWT ofl"l,l62,483.49. Since petitioner should pay the rent on a monthly basis, the withholding tax thereon 47 Exhibits "P-36" and "P-36-l", Docket- Vol. liT, pp. 1356 to 1379. ~

DECISION CTA Case No. 10807 should also be recognized monthly. The alleged overpayments therefore are as follows: r-M_O_N_T_H_F_O_R1--,---D-AT_E_�o-r-.- - , - - - � � - - - � � � � - , - - - - - - - - - - - - , � - - A - L _ L _ C G - . E - � D - � - - 2020 PAYMENT EWT PAID (5%) EWT DUE OVERPAYMENT 1 f- - -J�a-n-. -f - - - -F_eb:. _1-2-, -2+02-0� - � r ' 9-,.686, 4 8 0�. 3- 3- , r 1 , 1 6 2 , 4 8 3 . 4-9- f - -r- _8:,_5_2 3: _, 9_9_6_. 8_4_ _ �- --- Feb. Mar. 12, 2020 9,686,038.66 1 , 1__6_2:_,4_8_3_.4_9_ 8,523,555.17 ~------+------~---~~--~--- 1---~--~---- Mar. Apr. 27, 2020 9,685,90 1.16 1,162,483.49 8,523,417.67 Apr. May 22, 2020 9,685,455.33 1' 162,483.49 8,522, 97 J.84 May Jun. 15. 2020 9,687,351.16 1,162,483.49 8,524,867.67 Jun. Jul. 29, 2020 9,686,77616 1 '162,483.49 8,524,292.67 Jul. Aug. 12, 2020 9,690,426.16 1 '162,483.49 8,527,942.67 Aug. Sep. 15, 2020 9,693,067.83 1 1,162,483.49 8,530,584.34_ Sep. 1,162,483.49 Oct. Oct. 29, 2020 9,695,551.16_1 8-'~33,067.67- Nov. 1,162,483.49 I 8,533,717_~~_'7"- I Nov. 12,._2__0_2_0_ __ 9,696,201.16_1 ..~ 1 Dec. 14,2020 9,696,467 83 1,16_:2,483.4fuJ918_,533,984.34 jl ,:---D-e-c-.---- Jan.28,2021 9,697,71366 1,162,48349 8,535,23017 [________________ TOTAL 116,287,430.60 ___ 13,949,801.89 102,337,62il__7_2 As discussed, both administrative and judicial claims for refund or issuance of a tax credit certificate must be made within two (2) years from the date of payment of the tax, regardless of any supervening cause that may arise after payment. Thus, the claim covering the month of January has prescribed. With regard to respondent's argument that petitioner failed to exhaust administrative remedies when it filed its judicial claim only three (3) days after filing its administrative claim, the Supreme Court already settled the same in this wise: 48 ... the CIR insists that respondent's claim for refund of the estate tax that the latter had previously paid should be denied for failure to exhaust administrative remedies. According to the CIR, the Estate's filing of its administrative claim with the BIR at 8:00 a.m. and its judicial claim before the CTA at 4:47p.m. both on .June 28, 2017 -just two days prior the lapse of the two-year period, deprived the BIR the opportunity to act on the administrative claim for refund. The CIR argues that, with less than nine hours given to him, he was not "afforded a complete chance to pass upon the matter" nor "given an opportunity to act and correct the errors committed in the administrative forum." '1H Commissioner of Internal Reuenue u. Estate o_f Mr. Charles Marvin Rom.ig, G.R. No. 262092, October 9, 2024 [Per ,J. Hernando, J'irst Division].~

DECISION CTA Case No. 10807 The contention is untenable. It is of no moment that there is only a short interval between the filing of the two claims. The law merely requires that both claims are filed within the two�year period. In Commissioner of Intemal Revenue v. Carrier Air Conditioning Philippines, Inc., ... this Court held that, "from the plain language of the law, it does not matter how far apart the administrative and judicial claims were filed, or whether the [CIR] was actually able to rule on the administrative claim, so long as both claims were filed within the two-year prescriptive period." Having established that the instant claim was timely filed except for the month of January 2020, the Court shall now look into whether petitioner sufficiently proved that the subject EWTs paid are erroneous or illegal. Petitioner erroneously paid EWTs for the months of February to December 2020 in the aggregate amount of P93,813,631.87 Petitioner leases land and building from Belle Corporation for its gaming and non-gaming operations.49 As lessee, it pays the monthly rent stipulated in the Contract of Lease. For the months of January to March 2020, petitioner paid the total amount of P583,681,791.28, inclusive of VAT and net of 5% withholding tax.so However, due to the disruptions caused by the COVID-19 pandemic in March 2020, petitioner and Belle Corporation discussed rent modification or reduction for the year 2020.51 While the negotiations were ongomg, Belle Corporation continued to bill petitioner for the rent due for April to December 2020. Having accrued said rent, petitioner remitted the corresponding EWT, despite not paying the rent in view of the pending negotiations.s2 Based on the originally filed Monthly Remittance Form (BIR Form No. 0619-E) and Quarterly Remittance Returns of �19 Contract of Lease, 1~xhibit "P-5", Docket- Vol. III, pp. 1097 to 1198. ' 11 Exhibits "P-30" to "P-35" and "P-30-1" to "P-35-1", Docket- Vol. III, pp. 1344 to 1355. 5I Petition for Review, par. 15-17, Docket- Vol. I, p. 10. 52 Jd.~

DECISION CTA Case No. 10807 Creditable Income Taxes Withheld (Expanded) (BIR Form No. 1601-EQ), petitioner remitted EWTs in the total amount of P183,860,885.34 for TY 2020, the details of which are as follows: ____ REEFXEHRIEBNITce"'-~~J--D!'_AA_T'"ME_�_O��NF_T-~--~~'E-�T__u_R~N--f--~A~M~OUNT PAID l rL- -PERIOD I .Jan. 2020 "P-39'' to "P-39-1" Feb. 12, 2020 0619E r 20,550,652.35 I �r-4o� to "P-40-1-:--M~r. 12, 202~.0-i-~0~6~1-'9~E---l----'1~g-'-~0~7_5_._,4_:0_:2~�_:3_:0~ !Feb 2020 LI Mar.~020��-+---1-"-P---4+1-"At-o'"-Pp-_4r1.-1_2" _7_.,_2_0_2~0-f--_1601_:E::_'Q:__+--~20.:_�_:1_4.::_8__:�2:_:0_::2_:.4_:5:__ ~ 1\Mpa_':, 2 0 2 0 �p. 42 � to "P-4 2 - '.. May 22, 2020 0619]';________1_4~,7~5~3_,986 75 Jun. 15,2020 'J 2 02 0 "P-43" to"P-43-1" 0619E 13,624,024.56 ~----I-.-,P--~~4" to "P-44-1" --i Jun. 2020 Jul. 29, 2020 1601EQ 11,213,373.66! 1 F ---- ~---- ~-----1-~~- I �j u 1. 2020 "P-45" to "P-45-1'' /\ug. 12, 2020 0619E __ 14,844,49D~C)_CJ__ Aug. 2020 "P-46" to"P-46-1" Sep. 15,2020 0619E 13,362,974.22 I If----~=s ep. 2020 -----~-- ---- .. �--- ----f-------�---- -�-��� "P-47'' to "_P-47-1" Oct 29,2020 1601EQ 15,465,714 1_.')_ ' Oct. 2020 "P-48" to "P-4 8-I" Nov. 12,2020 I 0619E 13,450,393.93 I Nov. 2020 'P~~l�-~~8,_202j_~~~i\~~~~~~i~j "P-49"to"P-49-l" 1 Dec 14,2020 ---0-619E I _D_-:_2_0~0 ''P-50" to 13,370,375.69J Below is the detailed summary of the withholding taxes remitted, which shows that out of the remitted EWT of P183,860,885.34, the amount ofP117,384,358.65 were related to ATC WC100 or withholding tax on rental: --~4~"~'Q~U~A~R~T~E~~R~+--;::;.:- . ---~------ ATC LI ____1_ST QUARTER I --- 2~t> QUARTER , 3"" QUARTER EX111Jl1T "P-50" I �------ -~-- --- - - EXliii"JIT "P-11" EXIll!llT "P-tJr E.\llli11T "P-17" WCOl P�1 P 2,076,"134.69 r 1,~-~1,3~7.3~ I P___r:_t~01.1 0 _ _1'~6~6_8,~~--:.~~ P4;141,15~.:~3 I---� 309.449.88 0.00 I 0.0 0 32.142.92 I 34 I .592.80 WC051" I WClQQ:i(, : 29,423,528.98 29,062,682.65 29,540,619.3 5 29,357,527.67 117,384,358.65 I I=:;Cl20" I--� _ _,_________ 2,131,219.99 3,624,258.05 2,81S,226.7 9: 3,126;190.42 11,697,195.25 ��-.. ~ ���- --- ��- --------�---- ---�- - - - - - - - - - - - - - WC140~ 1\ 92.470.61 <1<1 ,02 I 38 8 . 8 9 1. 1 3' 65.435 98 210,8 1 9 10 --i-----_:.:_.:__:~------ i wc__~-~8"'~ 5,318,540.02 G9R.54108 L. l ,674,4 16.0__]______2_,_5_I__1_._2_o_7_.ss 1n- .2- o2- .7- 0'1'l9 1 ���-��--- 51 Docket- Vol. 11l, pp. 1384 to 1420. ;,4 Professional fees for corporation ��gross income exceeded P720,000.00. :15 Management and technical consultants corporation - gross income exceeded P720,000.00. 5(, Gross rental or lease for the continued usc or possession of personal property in excess of P 10,000.00 annually anrl. real property used in business \Vhich the paym� or obligor has not taken title or is not taking title, or in Yvhich has no equity~; poles, satellites, transmission facilities and billbomds. 57 Income payments to certain c:ont ractors . .'iR Gross Commission of service fees of customs, insurance, stock, immigration and connnercial brokers, fees of agents of professional entertainers and real estate service practitioners (l~ESPs)(i.e. real estate (:onsultrtnts, real estate appraisers and real estate brokers - gross incorr1c exceeds P720,000.00. :19 Inc01nt: Payment 1nadc by top v,rithl1olcting agents to their local/resident suppliers of goods other th8n those covered by other rates of withholding tax. a....---

DECISION CTA Case No. 10807 1 w c 160''' 17,4 20 ,398.9 1 l 6, 162 ,60 1 ~_-_6_._3:3-2_,_9_4_0_5. _2--11--4_,2_5_4_,_9_5_1_0. _8+__3_4_,1_70 ,8 91 94 _-_---1~=4.=~=~=�.~=:=~=�-~=-~=- 1 ~t-_w-~ ~ ~ ~:-o-:�-:-.:~ +-, ~= -~=_-4�_-7-_0- -_.-9~6�0_-1-~- _ 6_1___2_:, ~_: �.:_ :_�-~ '-~'- 1'- 0_4. :~-�~:_:_ _ __ : _5-:,3_~.: .~� -: .:.�: ~-:. :_ -~_: j _ _ _:8_:0_:6_:, � T__A_L_ _j__5_9c_7,_7_4_,_2_5_7_._1_0__]__3_9_,_591,384. 97 43,673,179.25 40,822,064.02 183,860,885.34J Further review of the monthly alphalists64 provided by petitioner reveals that out of the t>ll7,384,358.65 EWTs on rental payments, P116,287,430.60 were for the account of Belle Corporation. A list of income payments with ATC WC 100 from the alphalist is presented below: 5'-X, p 9,686,.'180.33 , ------ ----- Jan. 2020 9,600.00 L\80.00 17,026.07 Association of KthoeolPc;h--il-s-I-n-c-~~1 ,JmGo20 --34-0,s21-.-4-0--f-5~;:,--- I Industrirs Inc -51--, Line 009-110- Planogram Jnn. 2020 ! 250,000.00 12,500.00 f 389, Docket- 822 Events I VoL III, p.l425. I Incorpornted I--,-:-':-c--+----\--~---+----1--�------l---f------- I l �� P-51 .. , Line Jan. 2020 96,700.00 4,835.00 003-058- SM Prime 451, Docket- 789 Holdings Inc Vol. lll, p. 1426. --1----+-------~----~--------~- ~--- Line -~~::~:,::ion-~''" ----26~250-00 ""P-51-1'", Line 55, Dockf't- Vol. Ill, p. 1429 P-511. 000-156- Belle Feb. 2020 193,720,773.20 5��0 9,686,038.66 1 11 oo,O ', m;,oOOO_o__ S"-;o __JI 1 24:-706 ' 114, Docket- 303 Ph1hppmcs Vol. III, p. 1430. Corp -----'---+----- t , EM dav1d -- 5%) ~-28,-51--7--.5--0 ' EIC'ctronics 570,350.00 Enterprise <1,017.80 "P-51-1--, Line 100-066- Fch 2020 129, Docket- "130 i 87,342.00 Vol. Iii, p. 1430. -��P-51-1", L-~;,-,e-_,----=2-=o-=2--~--,2=--6=----~ NandiJ:;g;,-- l-C'h. 202�0 5'% 200.89 1 1 3~o1l0.r,_Dm.o~c~-ke-~t:"-133. 661 i Steel BE'ds 1 i Entnpriscs I Feb. 2020 I P-,)1-1 , Lme 003-058- SM Primf' S'X1 11 367 10 j' 411, Docket - 789 Holdings Inc 1 I , r 7 l _j:eb V-~go-pl-.-~-I~I-I--,'~pc_c_.~--l~'~B--;4-,.~-e-+-0-0-4--E-,7-~-1_-[-W-iz-,a-n-1-o-f1\-c-ls----:�1 Oo-00 -___-_ i-----8-8-,-0-0Q__Q_ _O--(![ ___ 5''j__'_1_,"1 !_ [Vol. !11, p. 1435. 87\___ Inc 202:_L- - ''"Income Payment made by top withholding agents to their local/resident suppliers of services other than those covered by other rates of \vithholding tax. 6 1 Commissions, rebates, discounts and other similar considerations paid/granted t�o independent ancljor exclusive sales representatives and marketing agents and sub- agents of cmnpanies, incl�uding multi-level tnarketing companies - gross income is more than P3M. 02 Professional fees of individuals - gross incon1c for the current year did not exceed P3M. rJJ Professional fees of individuals- gross income is 1norc than P3M. ""Exhibits "P-51" to "P-5 J -1 J". Docket- Vol. lll, pp. 1421 to 1485. ,__-----

DECISION CTA Case No. 10801 Mar. 2020 12,500.00 5% 625.00 9,693,067.83 0~P~-\5~1~-~8l",~eL1ti_n,e_~_s_._J,2-7_96_-9.5580-~ ~~~~:;c~~ Greencarc Scp. 2020 ---4-2,-75�0-.0-0 --+--5"-;-,~~-~--;:;J:;l_:J_7_"s~o~; .. P-51-8'', Line and Si?p 2020 I 621 ,178.tJ() S'Yo I 31 ,05R.CJ2 008-94:;1 MWM ! 14 1 207, Docket- Termin::1ls Inc I I' 1 I --5~;: Vol. m, p. 1466. ~ 23~-1-14- I oMD ----\-s-;P 2020-- s,390,!0o.oo 2(J9,soS.'oo ��r-si-8'", Line 1 218, Docket- ~ r53 Phtllppmcs ] 1 ~' Inc �----~'1-;-~t~ 9,696,20-J.Jc~-- �, l-- Vol. III, p. 1466. ' "P-51-9", Line I 000-156- Bell<" ----_-------1 Oct. 2020 193,924,023.20 29, Docket- Vol. 011 Corporal JOn I 1 'I ;;~1 :~: 11 1 ..me o00387- Koolrr~-----i-o~-t-2020--1~~----681--:0-42.80 -s~z-i ��--�--:3-:i!J-:~2-~1~1~1 176, Docket- 423 I Industnes Inc Vol. Iii, p. 1473. 1 I h I P-Sl-9��, Lmc 008 .. 949- MWM Oct 20'20 1 32 000 00 S% 1 GOO 00 - - e~i. ':~~~~~~t~t"1-;3_ l:~:mals ~ _j__ ---- ~------_j ! L. 141 1 - L_____ _ a-- Tncj______

DECISION CTA Case No. 10807 �-P-51-9��, Line 202-726- Nanding~ 1 61,607.60 I I 5% 3,080.38 2,079,000.00 1 Oct. 2020 II. 218, Docket- 661 Steel be-ds 1 Vol. III, p. 1473. Enterprises 1--c:c�.p::-_ccSc-1_':::9..::,--cLc-in-e--l~2::-:3:-:6--l:-:1-c4--+O::cMc-c::D..__~[-Qct. 20 20 ,.,~+-----ccc-:-::c-c----- 5%, 103,950.00 Philippinf's I 230, Docket- 753 Vol. III, p. 1474 Inc "T-51-10��, Line 009-873- Bay City Nov. 2020 295,400.00 5% ]4,77000 28, Docket- Vol. 397 Commercial III, p. 1476. Ventures Corp I l ooo-156- - Belle ------~ Nov --2�o--2-o-l--19--3-,9-2_9_,3~56.6--o-1-cc-,,~.-,~l--9.-69--6�-!i;:;~7.~83~-- o11 Corporation "P-51-10", Line 008-9'19- MWM i~- Nov. 2020 32,000.00 5% J ,GOO.OO 206, Docket- 111 Terminals Inc Vol. lll, p. 1~78. \ 1 ~F!;;;~~i :i~-~J~. -~c00c~:1\:5-6:~~~-~:~!;~or-a-ti-on-~~I-Dce:c.-2:02~0+-_~:~:~~~~~:,:27c3-.2c0-r~c5-'-V~r-~9~-,:6:~9c7~:1-~3:~.~6�6_~1 "P-51-11��, Line 008--9t~9- MWM Df'c. 2020 32,000.00 5% 1,600.00 210, Docket- 141 Tenninnls Inc Vol. III, p. 1483. �-- 1---'~~-.:..:.C..+~~~+-~~~~1-~-~+---~-~~1--~--- "'P-51-11", Line- 236-114- OMD Dec. 2020 2,129,850.00 5% 106,<!92.50 225, Docket- 753 Philippines Vol. III, p. 148~1. Inc TOTAL 2,347,687,173.00 -~ 117,384,358.65 On March 22, 2021, petitioner and Belle Corporation finalized and signed the Supplemental Agreement to Contract of Lease65 which adjusted the total annual rent for TY 2020 to P265,046,236.00, exclusive of value added tax and net of withholding tax, covering only the gaming area and no rent will be due on the non-gaming area. The parties agreed that since petitioner already paid the amount of 1'583,681,791.28, Belle Corporation will return the overpayment to petitioner. Thus, the new gross monthly rent of petltwner 1s f'23,249,669.82, while the corresponding withholding tax 1s f'l, 162,483.49, computed below: ,----------------------------------~,-----------------, Annual Rent, net of withholding tax --�� t--1~ ' ~ 26�5-,0-4-6-,2-3-6-.0-0- ---~~--��--~------� Divided by: 95% to derive gross amount 0. 95 Gross Annual Rent 278,996,037.89 Divided by: 12__'11?_n_tl_1s__~--~----~- ----!----~-- 121 -~-~-~- ~--~23,24_!),6_69. 8 ~ ~ 50 Monthly Rent f---M-u-l-ti'p-l-ie-d-=by-: -E-W-T--R-�at-e--� Rental Pay__m____e_n_ t _J_ ___ "� Withholding Tax on New Monthly Rent I 1,162,483.49 Since the claim for the month of January 2020 has already prescribed, the EWT remitted for such month can no longer be refunded. Accordingly, only the amount of '"Exhibits "P-36" and "P-36-1", Docket- VoL Ill, pp. 1356 to 1379.~

DECISION CTA Case No. 10807 1'93,813,631.87 may be the proper subject of a claim for refund, as detailed below: I , . . - - - - - - , - - - - - - - - , . - - - - - - - ,---~----~-----,--~--------,-----� ----- - Period Original Monthly Ta'L Withheld N M n t l1 1Y R nt Shoulr\ be Tax Rcfunclablc Rent ew o e Withheld (B) -ID) (A) (B)=(A} X 5""o (C) (D) =(C) X 5'Yo ;~~6 1--~-t-~ 9.686.480.33 23,249.669.82 1,162,483.49 -" 193,729.606.60 1 1 f--;::-~-:--~-0--+--193,720,773 20 -~686,038 66 ___ --2_-3_-._2_4_-9_-.f_,-G_-9:8_-2_~+---_-_-_-_1~.-1_c-,_2~.~~8~3~.4~9~1~~~~~s-,_s~2~3~,-s-s_-s~.~~-7~ I :MPom~o 193,718,023 20[~~5,90~-~--2~1 ,249,669.82 _____1._1_62_,_4_83_._49_ ___"_,523,417.67 I 6.60 1 1, I I ------ L 2020_ --~~9~3,_7o_9_._1~~ 9 ,6~~-�4_s_s.~J3~f--2-3_,2_4"_'.r:_'6_9 82__ 1, JG2,483:~49-~-~~522,9_71_"'1_ I 2M0a2y0 193,747,023.20 9,687,351.16 23,249,669.82 1,162,'183.49 8,524,867.67 Jun. 193,735,523.20 9,686,776.16 23,249,669.82 1,162,48.3.49 i 8,524,292.67 2020 I Ir~2J-0u-2l.0--r---19-3-,8-0-8-,5-2-3.-20~-----9-,-69-0-,4-2-6~.1~6-I----2-:1-,2-1--9-,6-69-.-82~-----1-, -16-2-,-'-!8-3.+'1-9 -----8-,5-2-7-,9-4-2-.6-7 Aug. I 9,693.067.83 ' 2020 193,861,356.60 I, 162,-'!83.49 s,s3o,s84.34 23,2'19,669.82 Sf'p. -------+-- -----+---------1---------j- ----�--� 2020 I 193,911 ,023.20 9,695,551.16 23 ,249 ,669 .82 1,162,48.3.49 8,533,067.67 .. 9,696.201.16 23 ,2<19 ,669.82 Petitioner's declared rental expense for TY 2020 is only the reduced amount of ?278,996,037.89 Pursuant to the Supplemental Agreement to Contract of Lease, petitioner returned to Belle Corporation the originally issued S0As70 and 0Rs71 for the cancellation and issuance of a new SOA72 and OR73 with the reduced amount of rent. Petitioner then adjusted its records by reversing the unpaid portion of the accrued rent from April to December 2020.74 Petitioner's witness, Ms. Eunice Rekha P. Pobre, testified to prove that Belle Corporation issued a new SOA and OR 6(1 Barred by prescription. (17 Adjusted to correspond the tota1 amount. (l8 Adjusted to correspond the total amount. m Adjusted to correspond the total mnount. 70 Exhibits "P-6" to "P-17" and "P-6-1" to "P-1 7 .. 1", Docket- Vol. III, pp. 1 199 to 1282. '' Ex11itlits "P-30" to "P-35'' and "P-30-1 'to "1'<15-l ", Docket- Vol. lJI, pp. 1344 to I JSC). 72 Exhibit "P-63", Docket- Vol. 4, pp. 1604 to 1605. 73 e~xhibit "P-64", Docket- Vol. 4, p. 1606. '1 4 Exhibit "P-95", USB, marked Hs Exhibit "P-125-2." ~

DECISION CTA Case No. 10807 showing the billings and collection of the reduced rentals for the TY 2020. The relevant portion of her testimony are as follows:75 "Q-7 Why were the originals of the previously issued SOAs returned to Belle? A-7 The previously issued SOAs were returned to Belle in order to implement the negotiated reduction of rentals for the year 2020. Q-9 What happened after petitioner returned the SOAs to Belle? A-9 Belle stamped the original SOAs as 'cancelled'. Q-11 What happened, if any, after the cancellation of the previously issued SOAs, marked as Exhibits 'P- 6-1' to 'P-17-1'? A-ll Belle issued a new SOA dated December 31, 20202 in the amount of P278,996,073.89 to reflect the reduced rental for the period of January to December 2020. The new SOA is marked as Exhibit 'P-63'. Q-14 What happened, if any, after the cancellation of the previously issued ORs, marked as Exhibits 'P- 30' to 'P-35'? A-14 As previously mentioned, Belle issued a new OR dated December 29, 2020 in the net amount of P265,646,236, net of 5% withholding tax. The reduced gross rental amount of P278,996,073.89 was also indicated in the new OR. The new OR dated December 29, 2020 is marked as Exhibit 'P-64'." Furthermore, as ascertained by the ICPA, the rent paid to Belle Corporation by petitioner was declared in its Annual Income Tax Return (BIR Form No. 1702-MX) ("ITR")76 as an expense forTY 2020, included in the total cost of sales/ services 75 F;xhibit "P-95", USB, marked as !exhibit "P-125-2". 7" Exhibit "P-57'', Docket- Vol. III, pp. 1510 to 1512 . ........---

DECISION CTA Case No. 10807 amounting to r9,004,792,282.00, under Line 4 77 of Schedule 2 of the annual ITR, viz:7S ', __P_A_R_T_Ic_u_L_A_R_s__f-- ____E_XEMPT____I - ~~~~-R---- - ------,;:;;-:r;;L___ - -- � - - - - - - - - - � � ... Direct charges - 1'1,837,224,820.22 1 162,805,217.55 2,000,030,037. 77 salaries, wages, I and benefits Direct charges - 1naterials, 102,380,114.75 73,497,175.85 175,877,290.60 supplies, and facilities 1 - - - - - - - - l - - - - - - - - - - - - - - � - - - - - - - - - - - - - - - - - - - - - - - --- Direct charges - 694, 170,39 6 A ;~----2-8_7_,4__18_,_3_o_4_A_2_1-__9_s_1_5,_s_s_,~---o_o_.8_3__ depreciation Direct charges - 281,796,549.89 58,792,150.28 340,588,700.17 rental 1-----------1--------- ---------�----- -------�----�- �----- Direct charges - outside services 978,232.19 17,209,731.39 18,187,963.58 l--�------------4----------------~----------------r---------------- Direct charges - 5,441,734,299.07 46,785,289.78 5,488,519,588.85 others I---------~-----------+-----------1------------- Total cost of sales/services I 8,358,284,412.53 I 646,507,869.27 9,004,792,281.80 I -p-e-r I�T-R- - - - ' - -.- - - - - - - - - ' - - - - - - - - - - - - - _ L _ -_______- - - -J The reduced actual rent expense of:P278,996,037.89 was reported as reconciling item in line 6.1, Schedule 10 of the annual ITR. Thus, only such reduced amount was claimed by petitioner as rent expense during the TY 2020. Petitioner did not carry over the erroneous EWT payment in its subsequent filing Petitioner amended its BIR Form No. 1601-EQ returns79 for the four (4) quarters ofTY 2020, in order to reflect the over remittance amounting to ?102,337,628.70, which is the subject of the present claim. On the amended BIR Form No. 1601EQ for the 4 111 quarter ofTY 202o,so petitioner checked the option "To be refunded." In order to prove that it did not carry over the amount of claim, petitioner submitted in evidence the BIR Forms 1601-EQ for the years 2021 and 202281 and BIR Form No. 0619-E for January 2023. 82 Based on these pieces of evidence, the over-remittance of:Pl02,337,628.70 was, indeed, not carried over to the succeeding periods. 77 Exhibit "P-57-1", Docket- Vol. III, a1 p. !51 1. 78 Exhibit "P-125", Docket- Vol. II, p. 980. 7'' Exhibits "P-53" to "P-56", Docket- Vol. Jll, pp. 1502 to 1509. '"Exhibit "P-56", Docket- Vol. Jll, pp. 1508 to 1509. 81 Exhibits "P-97" to "P-104", USJ3, marked as Exhibit "P-125-2". i:\2 Exhibit "P-105", USB, 1narkecl as Exhibit "P-125-2". ~

DECISION CTA Case No. 10807 There is no double utilization on the part of the lessor Pursuant to Section 58(B) of the Tax Code as implemented by Revenue Regulations No. 2-98, as amended, taxes withheld under the withholding tax system must be covered by withholding tax certificates, which are to be issued by the withholding agent or payor to the income recipient or payee. Taxes withheld which are supported by said certificates shall be allowed as tax credit against the payee's income tax liabilities. Here, the initially issued withholding tax certificate (BIR Form No. 2307) to Belle Corporation was returned to petitioner. Petitioner replaced the same with a new BIR Form No. 2307 bearing the tax withheld in the amount off'13,949,801.89.83 To establish that the creditable withholding tax claimed for the year by Belle Corporation was based on the recent BIR Form No. 2307, petitioner presented as evidence the following documents: 1. BIR Form No. 1702-RT of Belle Corporation for TY 2020;84 2. Summary Alphalist of Withholding Tax (SAWT) for the months January to March 2020 of Belle Corporation;ss 3. SAWT for the months May to June 2020 of Belle Corporation;B6 4. SAWT for the months July to September 2020 of Belle Corporation; 87 5. SAWT for the month of October 2020 of Belle Corporation;ss 6. SAWT for the month of November 2020 of Belle Corporation;S'l and 7. SAWT for December 2020 of Belle Corporation9o Verification of Belle Corporation's SAWT for the year 2020 reveals that the total creditable withholding taxes amounts to R1 Judicial 1\ffidauit of Mw-ia Neriza C. Banaria, Exhibit "P-71 ", Docket- Vol. II, p. 770. 84 Exhibit "P-66", Docket- Vol. 4, pp. 1689 to 1695. 8c Exhibits "P-115" to "P-117", USB, marked as l0:xhibit "P-125-2". 86 Exhibits "P-119" to "P-120", USB, marked as Exhibit "P-125-2". Rt Exhibits "P-121" to "P-123", USB, marked as Exl1ibit "P- 125-2". "Exhibit "P-124", USB, marked as Exhibit "P-125-2". 80 Exhibit "P-90", USB, marked as r~xhibit "P-125-2". no Exhibit "P-94", USB, marked as Exhibit "P-125-2". ~

DECISION CTA Case No. 10807 P231,467,391.00, which tied up with the tax credits reported in Belle Corporation's ITR. Further review of the SAWTS reveals that of the total claimed tax credits of '1'231,467,391.00, the amount of !'13,949,801.89 pertains to the tax credit withheld by petitioner, which was reflected and evident on the December 2020 SAWT only. Thus, there is no double utilization of the subject claim on the part of petitioner and Belle Corporation. In view of the foregoing, the Court finds that petitioner is entitled to refund the amount ofP93,813,631.87, representing its erroneously or excessively paid withholding tax related to its rental payment to Belle Corporation forTY 2020. ACCORDINGLY, the present Petition for Review filed on March 11, 2022 is PARTIALLY GRANTED. Respondent CIR is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE for the amount of P93,813,631.87 in favor of petitioner. SO ORDERED. c~r~-~ WE CONCUR: CATHERINE T. MANAHAN Associate Justice ~ ~ r ~ - ra1a,cA-o MARIAN 1v#. REYiS-FAJARDO Associate Justice HENRY d{lANGELES Associate Justice

DECISION CTA Case No. 10807 ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ~ 7. A.w~�--~'M.t..---..... CATHERINE T. MANAHAN Associate Justice Chairperson 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 before the case was assigned to the writer of the opinion of the Court's Division. Presiding Justice