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Commissioner of Internal Revenue vs Doosan Heavy Industries &

Construction Co. LTD. (Philippine Branch)
CTA EB Case No. 1090, August 04, 2014
Del Rosario, PJ.

Facts: Respondent is foreign a company licensed to do business in the Philippines
and has its principal office at KEPCO Power Plant, Colon, City of Naga, Cebu.
On April 14, 2010, Doosan filed with the BIR its annual Income Tax Return for the
year 2009 which shows a net loss of P387,622,107 and an overpayment of income
tax of P38,380,606. It there opted to be issued a tax credit certificate and filed a
written claim for issuance of a TCC and a petition for review before the court in
division.
On May 23, 2012, petitioner filed her Answer and raised that respondent Doosan
failed to demonstrate that the tax subject of the case at bar was erroneously or
illegally collected; that Section 76 of the National Internal Revenue Code (NIRC) of
1997, as amended, explicitly states that once a taxpayer chooses the option of
carry-over, it shall be irrevocable for the taxable period and no application for a tax
refund or TCC shall then be allowed; that taxes paid and collected are presumed to
have been made in accordance with law and regulations, hence, not refundable; and
that the burden of proof is on the taxpayer to establish its right to refund and failure
to adduce sufficient proof is fatal to the action for tax/credit.
In insisting that respondent Doosan is not entitled to its claim for refund of its
alleged unutilized creditable withholding taxes for taxable year 2009, petitioner CIR
argues that proof of actual remittance to the BIR of the withheld taxes and
testimonial evidence of the payors and withholding agents are required to prove the
withholding of said taxes. Petitioner CIR stressed that the best proof of remittance is
the certification from the Revenue Accounting Division (RAD) of the BIR. Since
respondent Doosan did not present the payor and withholding agent and
considering that it did not present a certification from BIR RAD, petitioner CIR
concludes that respondent Doosan failed to prove the fact of withholding and the
remittance made to the BIR. Respondent point out that the Certificates of Creditable
Withholding Tax at Source were identified by a person other than the one who
issued them; hence, such should not have been given probative value for being
hearsay pursuant to Section 3 6, Rule 13 0 of the Rules of Court.
Respondent Doosan posits that proof of actual remittance to the BIR and the
testimony of the withholding agent are not necessary to prove withholding of tax
under the law and settled jurisprudence. Respondent Doosan stresses that it was
able to prove that the income payments from which taxes were withheld was
included in its gross income as reflected in the income tax return as shown by the
evidence it presented in court.

but not limited to. official receipts. petitioner CIR insists that respondent Doosan's failure to present documents such as. but not limited to. On this point. sales invoices. . 2. petitioner CIR in esse questions respondent Doosan's compliance with the above-stated second and third requisites. official receipts. is instructive. is fatal to its claim. With regard to the second requisite. A scrutiny of the evidence on record shows that respondent Doosan presented documentary and testimonial evidence to prove that income from which taxes were withheld forms part of its gross income. detailed general ledger. 3. Ruling: Yes. respondent Doosan need not prove that there was an actual remittance of the taxes withheld. sales register. As pronounced by the Court in Division in the assailed Resolution. the pronouncement of the Supreme Court in CIR vs Asian Transmission Corporation. The Court En Banc concurs with the findings of the Court in Division that respondent Doosan was able to prove that the subject income payments were declared as part of its gross income for CY 2009. The claim must be filed with the CIR within the two-year period from the date of payment of the tax.Issue: Whether respondent is entitled to a tax refund. reconciliation schedules or any other documents whereby the income payments related to the claimed creditable withholding taxes may be traced and confirmed as forming part of the taxable income reflected in the Annual Income Tax Returns. It must be shown on the return that the income received was declared as part of the gross income. 2-98. the remittance of the taxes withheld to the BIR is the responsibility of the withholding agent and not the payee. detailed general ledger. sales register. In the instant petition for review.3 of RR No. the Court in Division aptly declared that aside from compliance with Section 76 of the 1997 NIRC. In the assailed Decision. The fact of withholding must be established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of tax withheld. and. Pursuant to Section 2. to wit: 1. Petitioner CIR insists that respondent Doosan's failure to present documents such as. as amended. a taxpayer must satisfy the following requisites to be entitled to a refund or issuance of a TCC representing excess CWTs.58. sales invoices. reconciliation schedules or any other documents whereby the income payments related to the claimed creditable withholding taxes may be traced and confirmed as forming part of the taxable income reflected in the Annual Income Tax Returns. is fatal to its claim. to the BIR.

406. The petitioner CIR does not dispute the First Division's factual findings.2009.71 for taxable year 2005. 2009. On December 19. Further. 1005.280. respectively for taxable year 2005.464. together with two final assessment notices. According to the latter documents. Respondent protested the assessments and submitted documents in support of its protest. Consequently. petitioner is still liable to a deficiency EWT in the reduced and aggregate amount of P6. received a formal letter of demand dated January 13.129. together with the revised final assessment notice and schedule per final assessment notice and FDDA. respondent filed the instant Petition for Review on January 15. 222 of the NIRC. 2014 Ringpis-Laban. otherwise.70. As regards the matter of prescription. It opted to stake its case on the proposition that the withholding agent's liability for expanded withholding tax (EWT) never prescribes. 2010. 2009.Commissioner of Internal Revenue vs Isuzu Philippines Corporation CTA EB No. Ruling: No. Meanwhile. alleged that petitioner miserably failed to discharge its duty to prove that respondent’s deficiency EWT assessment is illegal and invalid. in January 14. J. claiming among other things. petitioner received respondent’s final decision on disputed assessment dated December 1. Facts: Respondent Isuzu Philippines Corporation. August 04. in defense. the presumption in favor of the correctness of tax assessment stands. assessing petitioner for alleged EWT and withholding tax on compensation. . respondent alleges that the right to assess the respondent does not prescribed in accordance with Sec. that the right of the Commissioner to assess it has prescribed and that the assessment is illegal and invalid. Issue: Whether respondent is liable to pay deficiency withholding taxes for the taxable year 2005. petitioner states that it is a settled rule that the burden of proof is on the taxpayer contesting the validity or correctness of assessment to prove not only that the Commissioner of Internal Revenue (CIR) is wrong but petitioner is right. 2009. Petitioner. in aggregate amount of P20.

" . The opposite rule. Soriano Corporation as taxpayer. The Court thus cannot give credence to the unsupported theory of the petitioner that the assessment and collection of deficiency EWT under Section 203 of the NIRC are "imprescriptible. shall be construed liberally in his favor.Petitioner's invocation of CIR vs. CTA. however. the ambit of Section 203 was even extended to deficiency documentary stamp tax. The tax amnesty law categorically provided that the amnesty does not cover withholding tax at source. thus. because amnesty. Petitioner's literal and strict interpretation of Section 203 does not find support in jurisprudence. As pointed out earlier. where it has been held that the statute of limitations on assessment and collection of taxes is for the protection of the taxpayer and. In that case. the jurisprudence cited by the petitioner are off-tangent. like tax exemption. and A. the issue was the inclusion of deficiency withholding tax in the tax amnesty application of A. The jurisprudence cited by the First Division in its Decision. In another case. on the other hand. like fitting a square peg into a round hole. the Supreme Court held that any doubt in the application of the amnesty law should be resolved in favor of the taxing authority. applies in the matter of prescription under Section 203 of the NIRC. must be construed strictly against the taxpayer and liberally in favor of the taxing authority. There. Court of Appeals. Soriano Corporation is wholly misplaced. included withholding taxes and EWT in the coverage of Section 203.