Republic of The Philippines Court of Tax Appeals Quezon City
Republic of The Philippines Court of Tax Appeals Quezon City
Republic of The Philippines Court of Tax Appeals Quezon City
ENBANC
Present:
Acosta, P.J.
Castaneda, Jr.,
Bautista,
-versus- Uy,
Casanova,
Palanca-Enriquez,
Fabon-Victorino,
Mindaro-Grulla, and
INTERPUBLIC GROUP OF Cotangco-Manalastas, JJ.
COMPANIES, INC.,
Respondent. Promulgated:
(''CIR" for brevity; respondent in the division case) of the February 21, 2011
Decision 1 and May 31, 2011 Resolution 2 of the Third Division of the Court of
Tax Appeals (CTA Third Division, for brevity) in CTA Case No. 7796 3 , entitled
Revenue/; which granted the claim for refund or issuance of tax credit
representing overpaid fi nal wit hholding tax (FWT) on cash dividends for
taxable year 2006. CIR prays that the assailed decision and resolution be set
aside and another one be rendered denying IGC's claim for refund for lack of
merit.
SO ORDERED.
SO ORDERED .
THE FACTS
The following are the facts of this case, as found by the CTA Third
Division: 7
4
Refers to Commissioner of Internal Revenue in the division case, petitioner in this en bane case.
5
Refers to Interpublic Group of Companies, Inc., in the division case, respondent in this en bane case.
6
Supra., Note 4.
7
Division Docket, pp. 520-523; Citations Omitted; " Petitioner" pertains to IGC, "respondent" refers to
CIR.
DEC ISION
CTA EB No. 79 1 (CT A Case No. 7796)
Page 3 of 18
Percentage
Shareholder Amount of Dividend
of Shares
Fintec Holdings, Inc. 70% P143,954,079.51
Interpublic Group of
Companies 30% 61,694,605.51
TOTAL P205,648,685.02
On February 21, 2011, the CTA Third Division granted IGC's petition for
review. Accordingly, CIR was ordered to refund or issue a tax credit certificate
Decision promulgated 21 February 2011). Said motion was denied for lack of
On June 22, 2011, CIR filed a "Motion for Extension of Time to File
On July 21, 2011 Resolution, the Court en bane directed IGC to file
comment within ten (10) days from receipt of the said resolution. Thereafter,
IGC filed a "Motion for Additional Time to File Comment" which the Court en
bane granted. On August 15, 2011, IGC filed its Comment (to the Petition for
Review) .
of thirty (30) days from notice, within which to file their memoranda. On
October 7, 2011, IGC filed a "Motion for Additional Time to File Memorandum '~
DECISION
CTA EB No. 79 I (CTA Case No. 7796)
Page 5 of IS
which the Court en bane granted. Within the period given, IGC filed its
ISSUE
on cash dividends for taxable year 2006 and the arguments raised by CIR
have already been considered and exhaustively discussed by the CTA Third
without the requisite license citing Sec. 133, Title XV of the Corporation
Code of the Philippines. On the other hand, IGC submits that it does not
business. IGC pointed out that a foreign corporation not doing business in
Industries, Inc. 8 , the Supreme Court categorically stated that Section 133
8
G.R. No. 147905, May 28, 2007, 523 SCRA 233.
9
Eriks pte., Ltd. vs. Court of Appeals, eta!., G.R. No. 118843, February 6, 1997, 267 SCRA 567.
DECISION
CTA EB No. 79 1 (CTA Case No. 7796)
Page 7 of 18
Act No. 7042 (as amended by Republic Act No. 8179) as well as in Section
10
"Foreign Investments Act of 1991", as amended by RA 8179.
DEC ISION
CT A EB No . 79 1 (CTA Case No. 7796)
Page 8 of 18
RULE I
Definitions
Philippines may sue even without a license, as correctly ruled by the CTA
CIR also argues that the proper claimant in this case should have
been the Regional Operating Headquarters (ROHQ) and not IGC. CIR
reasoned out that IGC posits that its Regional Headquarters (RHQ) was
converted into ROHQ on April 30, 2008. However, the subject of the claim
for refund was filed on March 5, 2008. Thus, ROHQ should be the proper
claimant.
IGC and not its ROHQ, thus, IGC should be considered as a separate
12
G.R. No. 76573, September 14, 1989, 177 SCRA 501.
DEC ISION
CT A EB No . 79 1 (CT A Case No. 7796)
Page 10 of 18
set aside. The transaction becomes one of the foreign corporation, not of
investments in McCann was made directly by IGC, it is just proper that the
claimant is IGC.
CIR argues that IGC failed to follow the requisites for filing an
administrative claim for refund. CIR asserts that IGC invokes the RP-US
Treaty as basis for the reduced rate of tax for dividends resulting in
overpayment of FWT. CIR alleges that IGC failed to adduce evidence to the r
13 Id.
DECISION
CTA EB No. 79 I (CTA Case No. 7796)
Page II of I8
effect that it filed a tax treaty relief application with the International Tax
IGC commented that contrary to the allegations of CIR, its claim for
refund is not anchored on a tax treaty provision or relief, thus, RMO No. 1-
2000 is irrelevant.
IGC is correct.
based its administrative and judicial claims for refund or issuance of tax credit
under Section 28 (B) (5) (b) of the National Internal Revenue Code of 1997
(1997 NIRC), as amended by Republic Act (R.A.) No. 9337, which provides
that:
subject to 15% final withholding tax, subject to the condition that the country
credit against the tax due from the non-resident foreign corporation taxes
15
Division Docket, pp. 531-532.
16
G.R. No. 66838, December 2, 1991, 204 SCRA 377.
DECIS ION
CTA EB No. 791 (CTA Case No. 7796)
Page 13 of 18
We, thus, agree with the decision of the CTA Third Division 17 , as
follows:
and complied with all the statutory and jurisprudential requirements entitling
it to a refund. In addition, since CIR failed to act on the claim for refund, her
inaction was appealed to the CTA pursuant to Section 229 of the 1997 Tax
Code. IGC concludes that there is no basis to insist that the refund is subject
17
Division Docket, p. 534.
DEC ISION
CTA EB No. 79 I (CT A Case No. 7796)
Page I4 of I8
law creating such right, must also be able to establish the fact of payment of
the tax sought to be refunded as well as the filing of the claim for refund
Decision 19 provides:
Based on the foregoing, it was proven that the fact of payment of FWT
respectively, for refund of erroneously paid tax, these claims must be filed
within two (2) years from the date the tax was paid pursuant to Sections 204
(C) and 229 of the 1997 National Internal Revenue Code, as amended, as
follow:
credit any tax, where on the face of the return upon which payment
was made, such payment appears clearly to have been erroneously
paid." (Emphasis Supplied).
25
IGC filed its administrative claim for refund/TCC on March 5, 2008
and its judicial claim for refund/TCC on June 16, 2008 26 (June 15, 2008, falls
on a Sunday). Clearly, the claim for refund/TCC was filed within the 2-year
prescriptive period from June 15, 2006, the date of payment of FWT.
the CTA en bane ruled that when the two-year period is already about to
prescribe and the claim for refund with the Commissioner has not yet been
acted upon, the taxpayer should file a petition for review with the CTA in
quoted, as follows:
"It is clear that the aforequoted Sections 204 and 229 govern
all kinds of refund or credit of internal revenue taxes - imposed and
collected erroneously or illegally, pursuant to the NIRC (CIR vs. Central
Azucarera Don Pedro, 49 SCRA 474; CIR vs. Insular Lumber Co., 21 SCRA
1237). Section 204 applies to administrative claims filed with the BIR,
while Section 229 refers to judicial actions for the recovery of the tax.
However, the settled rule is that both the claim for refund with
the BIR and the subsequent appeal to the Court of Tax
Appeals must be filed within the two-year period. These two
requirements are mandatory and non-compliance therewith
would be fatal to the action for refund or tax credit (Johnston
Lumber Co., Inc. vs. CTA, 101 Phil 151; Guagua Elec. Light Co., Inc. vs. Coli.,
1 SCRA 1221}. The two-year period is a limitation of action not only in
submitting the written claim for refund to the Commissioner, but
likewise in instituting an action with the Court of Tax Appeals (Tax Law
and Jurisprudence, 2nd ed., Justice Jose Vitug and Presiding Justice Ernesto
D. Acosta, p. 306). Hence, the taxpayer must file its administrative
claim for refund with the Commissioner, within two (2) years after the
payment of the tax; however, if the Commissioner takes time in
deciding the claim and the period of two (2) years is about to end, the y-
25
Exhibits "I" and 'T'.
26
Division Docket, p.l.
27
erA EB No. 499 (Case No. 7203), November 26, 2009 with Entry of Judgment on October 11, 2010.
In G.R. No. 191530 (The Commissioner of Internal Revenue vs. Philippine National Bank) this case was
closed and terminated in August 25, 2010 Minute Resolution of SC First Division.
DECISION
CTA EB No. 791 (CTA Case No. 7796)
Page 17 of 18
Based on the foregoing, there is no reason to set aside the find ings
and conclusions of the CTA Third Division in the assailed Decision and
Resolution.
DENIED for lack of merit. Accordingly, the February 21, 2011 Decision and
the May 31, 2011 Resolution of the Third Division of the Court of Tax Appeals
are AFFIRMED.
SO ORDERED.
WE CONCUR:
r - v. . Q ..._J.,.__
E1m£STO D. ACOSTA
Presiding Justice
(On Leave)
ERLINDA P. UY
Associate Justice
DEC ISION
CTA EB No. 79 1 (CTA Case No. 7796)
Page 18 of 18
~ ,tL~~
CAESAR~NOVA
Associate Justice
OLGi~NCA-ENRIQUEZ
Associate Justice
(On Leave)
AMELIA R. COTANGCO-MANALASTAS
Associate Justice
CERTIFICATION
~~ .~
ERNESTO D. ACOSTA
Presiding Justice