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PLDT vs. CIR

GR 157264 January 31, 2008
Carpio Morales;J.:

FACTS: PLDT terminated and compensated affected

employees in compliance with labor law requirements. It
deducted from separation pay withholding taxes and remitted
the same to BIR. In 1997, it filed a claim for tax refund and
CTA contended that petitioner failed to show proof of payment
of separation pay and remittance of the alleged with held taxes.
CA dismissed the same and PLDT^ assailed the decision
arguing against the need for proof that the employees received
their separation pay and proffers actually received by
terminated employees.

ISSUE: Whether or not the withholding taxes remitted

to the BIR should be refunded for having been erroneously
withheld and paid to the latter.

RULING: Tax refunds, like tax exemptions, are

considered strictly against the taxpayer and liberally in favor of
the taxing authority, and the taxpayer bears the burden of
establishing the factual basis of his claim for a refund.
A taxpayer must do two things to be able to
successfully make a claim for tax refund: a) declare the income
payments it received as part of its gross income and b) establish
the fact of withholding.
At all events, the alleged newly discovered evidence
that PLDT seeks to offer does not suffice to established its claim
for refund as it would still have to comply with Revenue
Regulation 6-85 by proving that the redundant employees on
whose behalf it filed the claim for refund, declared the
separation pay received as part of their gross income. The same
Revenue Regulation required that the facts of withholding is
established by a copy of the statement duly issued by the payor
to the payee showing the amount paid and the amount of tax
withhold therefrom.

A taxpayer must do two (2) things to be able to be able to

successfully make a claim for the tax refund:
1. Declare the income payment it received as part of its gross
income.
2. Establish the fact of withholding.

On this score, the relevant revenue regulations provides as

follows:
Sec. 10. Claims for tax credit or refund - claims for tax credit
or refund of income tax deducted and withheld on income
payments shall be given due course only when it is shown on
the return that the income payment received was declared as
part of the gross income and the fact of withholding is
established by a copy of the statement duly issued by the payer
to the payee showing the amount paid and the amount of tax
withheld therefrom.