Case Digest (G.R. No. 230112)
Facts:
Global Medical Center of Laguna, Inc. (GMCLI) engaged Ross Systems International, Inc. (RSII) on March 1, 2012 for the construction of a hospital in Cabuyao, Laguna, under a P248,500,000.00 contract calling for a 15 % down payment and monthly progress payments based on work accomplished. Section 9 of the contract made all service taxes RSII’s responsibility, and an arbitration clause provided CIAC jurisdiction. On April 12, 2015, RSII submitted Progress Billing No. 15 for 79.31 % completion (P9,228,286.77). GMCLI’s evaluation placed work at 78.84 % (P7,043,260.00). Discovering its failure to withhold the 2 % Creditable Withholding Tax (CWT) on Progress Billings Nos. 1–14, GMCLI on April 29, 2015 withheld 2 % CWT on the CUMULATIVE amount of Billings Nos. 1–15 (totaling P197,088,497.00), remitting P3,941,769.00 and paying only P3,101,491.00 for Billing No. 15. RSII claimed a remaining P4,884,778.92 and filed CIAC arbitration on August 6, 2015. On May 10, 2016, CIAC rendered its FiCase Digest (G.R. No. 230112)
Facts:
- Contract and Progress Billings
- Global Medical Center of Laguna, Inc. (GMCLI) engaged Ross Systems International, Inc. (RSII) for P248,500,000 hospital construction, with 15% down payment and monthly progress billings; RSII responsible for taxes; contract contains arbitration clause.
- On April 12, 2015, RSII’s Progress Billing No. 15 claimed 79.31% completion (P9,228,286.77 incl. VAT); GMCLI evaluated at 78.84% (P7,043,260.00).
- Withholding Dispute and CIAC Proceedings
- GMCLI discovered failure to withhold 2% CWT on Billings 1–14; on April 29, 2015 it withheld 2% on cumulative Billings 1–15 (P197,088,497.00) = P3,941,769.00, paying RSII only P3,101,491.00 for Billing 15.
- RSII demanded P4,884,778.92 balance, alleging improper withholding; filed CIAC complaint on August 6, 2015. Preliminary and case management conferences, evidence, and Terms of Reference prepared.
- CIAC Final Award (May 10, 2016): CIAC has jurisdiction; GMCLI acted without authority in belatedly withholding CWT; RSII not entitled to release of P4,884,778.92 (RSII hadn’t paid income tax at remittance); RSII entitled to P1,088,214.33; denied moral damages and attorneys’ fees; costs shared proportionally.
- CA Proceedings and Rule 45 Petitions
- RSII petitioned the CA under Rule 43; CA Decision (Oct 28, 2016) affirmed CIAC award with modification, awarding RSII P1,088,214.83; denied both parties’ motions for reconsideration (Feb 21, 2017).
- GMCLI and RSII filed separate Rule 45 petitions, consolidated before the Supreme Court.
Issues:
- Consolidated Issues for the Supreme Court
- Is RSII entitled to release of P3,815,996.50 (2% CWT on Progress Billings 1–14) in addition to the awarded P1,088,214.83?
- Must GMCLI be ordered to issue to RSII the BIR Form 2307 (Certificate of Creditable Tax Withheld at Source) for the withheld CWT?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)