Case Summary (G.R. No. 257219)
Relevant Facts
On April 14, 2014, Tullett Prebon electronically filed its annual income tax return (ITR) for 2013, reporting a corporate income tax liability of PHP 7,676,632. Upon calculation of tax credits and liabilities, Tullett Prebon indicated an overpayment of PHP 42,428,486, specifically requesting a tax credit certificate for excess CWT amounting to PHP 15,226,718.45. On April 30, 2015, Tullett Prebon filed an administrative claim for refund before the BIR-Large Taxpayers District Office. Due to inaction from the CIR, a judicial claim was subsequently filed before the Court of Tax Appeals (CTA) on March 31, 2016.
Proceedings in the CTA
The CIR opposed the claim on several grounds, including the ongoing administrative investigation, the need for taxpayers to bear the burden of proof, and the assertion that Tullett Prebon's tax documentation was insufficient. The CTA Special Third Division initially determined that Tullett Prebon’s claim was timely but only partially substantiated, ultimately allowing a lesser refund amount of PHP 1,952,059.85 due to inadequacies in the documentation presented. Following the CTA’s denial of a motion for reconsideration, Tullett Prebon escalated the matter to the CTA En Banc.
Rulings of the CTA En Banc
The CTA En Banc upheld the Special Third Division’s ruling, asserting that the court possessed the discretion to independently evaluate the evidence, which it found insufficient to establish the taxpayer's entitlement to a refund. A petition for reconsideration was also rejected, prompting Tullett Prebon to file a Petition for Review on Certiorari with the Supreme Court.
Court's Assessment of the Petition
In examining the case, the Supreme Court highlighted essential criteria for entitlement to a refund of excess CWT, which includes the timely filing of claims, substantiation of withholding through proper documentations such as the payor's withholding tax statement, and the declaration of income in the recipient's tax return.
Arguments Presented by Tullett Prebon
Tullett Prebon's arguments focus on two main points: the alleged error by the CTA in concluding insufficient proof regarding the reported income, and the assertion that sufficient prior year’s excess credits covered the 2013 tax liability. The Court noted that while it was not typically its function to reevaluate evidence, the CTA’s determination on the insufficiency of proof merited a closer examination due to potential errors in the interpretation of evidence.
Evaluation of Evidence and Rebuttal
The Supreme Court found that the refusal by the CTA to consider the overall evidence, particularly the independent certified public accountant's (ICPA) analysis, which traced declared revenues in Tullett Prebon’s documents, warranted reconsideration. It underscored that no specific evidence was mandated by law to demonstrate the link between general ledger entries and corresponding billing invoice numbers.
Conclusion on Prior Years' Excess Credits
On the matter of prior year's credits, Tullett Prebon argued that the CTA overlooked the implications
...continue readingCase Syllabus (G.R. No. 257219)
Background and Nature of Petition
- The petition challenges the Decision and Resolution of the Court of Tax Appeals (CTA) En Banc denying Tullett Prebon (Philippines), Inc.’s claim for refund of excess and unutilized creditable withholding tax (CWT) for CY 2013.
- Tullett Prebon operates as a broker market participant in financial transactions excluding securities trading.
- Tullett Prebon filed its 2013 income tax return reporting tax liability and indicating an overpayment and requesting a tax credit certificate for excess CWT.
- After administrative inaction, Tullett Prebon filed a judicial claim for refund before the CTA.
- The Commissioner of Internal Revenue (CIR) opposed based on pending investigations, strict standards for refund claims, timeliness, and inadequate documentation.
Proceedings and Decisions Below
- CTA Special Third Division ruled:
- The claim was timely filed.
- Of the claimed PHP 15,226,718.45 CWT, only PHP 12,601,680.48 was supported by BIR Forms No. 2307.
- Only PHP 5,600,533.49 of the declared income was traceable to the total gross income, reducing refund to PHP 1,952,059.85.
- Refund denied on grounds that prior year’s excess credits were insufficient to cover liability.
- Motion for reconsideration was denied by CTA Special Third Division.
- CTA En Banc affirmed denial, disregarded independent CPA’s findings, and held evidence insufficient for refund entitlement.
Issues Presented
- Whether the CTA En Banc erred in denying the refund claim.
- Whether Tullett Prebon proved the three requisites for refund of excess CWT:
- Claim filed within two-year period from payment.
- Proof of withholding by withholding statements (BIR Form No. 2307).
- Income payments corresponding to CWT included in gross income reported.
- Whether prior years’ excess credits were sufficient to cover year 2013 tax liabilities.
Legal Standards and Requisites for CWT Refund
- The claim must be filed within two years from tax payment under Section 229, NIRC of 1997.
- The fact of withholding must be established by a proper withholding tax statement issued by the payor.
- Income received must be declared in the gross income reported by the recipient on its tax return.
- Rev