COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. SONOMA SERVICES, INC., RESPONDENT.
- G.R. Number: G.R. No. 263916
- Promulgated: 2025-08-18
Doctrine
## Facts of the Case Sonoma Services, Inc. (SSI) filed its Annual Income Tax Return (AITR) for Calendar Year (CY) 2015 and an Amended AITR indicating an overpayment of PHP 4,993,000.00, for which it opted for a refund. SSI subsequently filed an administrative claim for refund. Due to the Commissioner of Internal Revenue's (CIR) inaction, SSI filed a Petition for Review with the Court of Tax Appeals (CTA) on April 11, 2018. The CTA Third Division granted SSI's petition, ordering the CIR to refund or issue a tax credit certificate for the claimed amount. The CIR's motion for reconsideration was denied. The CIR then appealed to the CTA En Banc, arguing that SSI failed to present the Summary Alphalist of Withholding Taxes at Source (SAWT) and Monthly Alphalist of Payees (MAP), failed to present payor-withholding agents, and that BIR Forms No. 2307 were hearsay. The CTA En Banc affirmed the Third Division's ruling, stating that non-submission of SAWT and MAP is not fatal, BIR Forms No. 2307 are sufficient proof, and the CIR's objections regarding prior year's excess credits were raised too late. The CIR filed a Motion for Reconsideration, which the CTA En Banc denied. Undaunted, the CIR filed a Petition for Review on Certiorari with the Supreme Court. ## Issues 1. Whether the CTA En Banc erred in ruling that the non-submission of the SAWT and MAP is not fatal to a claim for refund of excess and unutilized creditable withholding tax. 2. Whether the CTA En Banc erred in ruling that respondent sufficiently proved its entitlement to its prior year's excess tax credits. ## Decision / Rationale **Issue 1:** The Court **disagreed** with the CIR, holding that the non-submission of the SAWT and MAP is not fatal to a claim for refund of excess and unutilized creditable withholding tax. The Court noted that **Revenue Regulation No. 2-2006 (RR No. 2-2006)** mandates the submission of SAWT by the payee-claimant and MAP by the payor-withholding agent as attachments to their respective tax returns, but nowhere in the regulation are payee-claimants required to attach these documents to their administrative or judicial claim for refund. Furthermore, **RR No. 2-2006** establishes an escalating penalty system for non-compliance with submission requirements, but it does not prescribe the outright denial of a refund claim. The Court also pointed out that the obligation to submit the MAP rests with the payor-withholding agent, not the payee-claimant, and held that punishing the payee for the omission of another party is untenable, citing **Phil. Airlines, Inc. v. Commissioner of Internal Revenue**. The Court further emphasized that requiring a payee to produce the MAPs of its payor-withholding agents raises serious data privacy concerns and that **BIR Form No. 2307** serves as sufficient verification. **Issue 2:** The Court **affirmed** the CTA En Banc's ruling that SSI sufficiently proved its entitlement to its prior year's excess tax credits. The Court identified the CIR's argument as a question of fact, which is generally beyond the scope of a Rule 45 petition. It reiterated that the findings of the CTA, a specialized court, are entitled to high respect. The CTA, with the aid of a court-commissioned Independent Certified Public Accountant (ICPA), found that SSI's prior year's excess credits, amounting to PHP 9,061,123.00, were fully substantiated and traced back to CYs 2004, 2011, and 2014. The schedules of Creditable Withholding Tax (CWT) were supported by original **BIR Forms No. 2307** for those years, which were formally offered and admitted into evidence by the CTA. The Court concluded that SSI successfully discharged its burden of proving its entitlement to the refund by preponderance of evidence. ## Doctrines - **Tax refunds based on solutio indebiti:** Claims for tax refund based on erroneous payment of tax or illegal exaction by the government are not founded on legislative grace but on the principle of **solutio indebiti**. Such claims only…