The Court of Tax Appeals (CTA) has turned down the motion of the Bureau of Internal Revenue (BIR) to nullify the P127-million tax refund claim of Ayala Corp.

The BIR argued it denied the claim for the failure of the company to present evidence of actual remittance of the creditable withholding tax (CWT) for the years 2012 and 2013.In affirming the resolution of its Special First Division, the full court stated that "proof of actual remittance is not required to prove entitlement to a refund."

It said the certificates of creditable tax withheld at source issued by the tax withholding agents are prima facie proof of actual payment.

The en banc decision explained that under Sections 57 and 58 of the Tax Code the remittance of withheld taxes is the sole responsibility of the withholding agent.

It added that a taxpayer is not prejudice in claiming refund even if the withholding agent abscond the payment. 

The resolution, written by Jean Marie Bacorro-Villena, likened the withholding tax system to a contract between two parties and in this case the BIR and the withholding agents. It said the contract  mandates withholding agents to collect taxes to ensure payment.