CTA Case No. 3887 (Decision)

REP UBLI C OF THE PH I LI PP IN ES COURT OF TA X AP PEAL S QUEZ ON CITY HAWAIIAN-P HILIP P IN E C OM P ANY~ C. T . A. CASE NO . 3 887 F'r." t. i t :i. u n F' J"' ~ ����� v r::.� I' s;. u <;:.; -��� COMMI SS IO NER OF INT ERNAL REVE NU E~ ��� w ���� � ���- -w� >~ D- E:~ C I S I 0 N lh1 s is a claim f ur the ref und o f a n a muunt uf P 7 ~554.38~ representing a ll eged l y uverpai d with- ho 1 c:l inu eli v :i. cl c:�n cl ~; to non ��... ,. . r:~~=.. icl e nt. <:;; t .o c k ho 1 dE~ r��<::; . Petitioner 1s a domes tic corporation wit h n o n - r esident stoc khulcl e r s. the second quarter of c:l .i ,,... .i.dPncl~; ,31!\ DU I"l 1:: i nq t .o F' J :::;7, .<J. ?:,~. BO <:1 nd paid to its nun - r esident indi v idu a l a nd cor p orate stock h o ld ers, respectiv e l y. Uf the:> DtfiL\1..\fl t p<::t i cl ~ pr.et i t. :i. o1..1(�? r.. vJ i t h h E~ 1 cl ::::;oz. o r"� t 1�1<=.> su m o 'f the aggregate d.i. v iclencl s r e mittabl e t o i t s n on- r esi dent in~iv.i.dual stockholders a nd 35% or P 2 , 67 1 .48 of th e di vi dend s remittab l e to it. ~5

.. DEC I S ION CTA CASE NO . 3 887 -- 2 - non-resident corporate stockholders~ or a total of Unclt:.=>r�� f3ec tion Z?(b) in to Section the 1977 Tax Code, non -resident aliens are taxed at 30% o n gross dividends received from a domestic corporation~ for which reason P41~226.84 was withheld by petitioner from t he total dividends Under Section 24(b)(1) in relation to ~)ection 5 :3 ( e) (2) of the same T a:~ Code~ non-�� resident corporate stockholders are taxed at 35% o n gross divide Is received from domestic corporation~ for which reason the amount of P2,671.48 was withheld by petitioner. Under the RP-US lax Treaty, however, the tax c:ollE'ct:i.bl(:�~ em such dividends re mitted to U .S. corporations is fixed at the rate of Petitioner n ow c l aims ,,�e�fund of P7,554.38 representing the difference between the amount actually withheld and paid to the Bureau of Internal Revenue (Payment Order No. B-0815226 dated (..) p ,,. i 1 l .1. , 1983 a n d CB Confirmation Receipt No. Pl-::s7!':i6~il cia ted 1983) and the amount due and payable under the said Tre~ty. Since the f i l i-n g of the claim for refund with -.:.- t h e respondent's Offtc:e o n May 17, 1984 to the date

- DECISION CTA CASE NO. 3887 3 .in~:;t,::1nt p r? t ..:i.t.ion no c:lc t .:i. on h <:l. d been taken by the r es pond e nt. I t d OF'"3 nut. r.:lppc r.,\r that eli r,:; pt.t tr::?�::; t. h E' rel a ti ve ly si mpl e mat er i a l f ac t s but qu es t:.iun s on whether or not petitioner .is t h P p I'"O p r:>r- t p ,�,;1. I'" y t 0 cl.::1i.m thr-::~ r.. e �fund icl. n d to whE�)ther. t.h E�? o'f' r�espun dr:?nt: ' s e :�: c:\ min r-0 r� i s I::JincJJ.nq . Res pondent does posits a n unvarying i mpressi on '"'c t.ion rnus t h e prosecuted a nd defended in the name of the real party in interes t (Rules of And, t he he rein petitioner i s neither the r ea l party in interes t nor a c t s in a r e presentative c a pac:1t y wh e n i t�. filed th e action. ''1\ICl E~V:i. c:I E~nc: �-~ by petiti one r t o prove t l li:1 t�. .it. h a d the per so nality to claim the r e fund o r tha t. it C::IU t. ho r�i ;~e el b y u . f.3. <:s t:. oc k h o 1 cl<;? I'"S t:. o claim the r ef und. � p e t i t. :i.cmer h <:1s c:ausF.:�) : of Elc:tiun i:':I CJC::I.i n~:; t th e We do not rea c h th e sa me conclusion. A ~; apt 1 y <:lver.. r. <�::? c:f by the p et.i tionet��, "When? one p erso n p.:~ys thE�) t. ,:;\ :-: the so payi ng the tax may recover the tax if i t represents ;:~n ov �-~ I'" P �'=' y rnE'n t l... C::IW on Income

.. DECISION CTA CASE NO. 3887 - 4- ... Th.i.�:.; view is po s it:. ive by n ..1l: ing that~� L:.f:'!.<=J..1.,\.:~.-..r::.q .<J... ..:t .q......~~.:.L.t.I:!.I:J.9...J.<::I........J:::.?:':.!:~.......J. t:r.l.f.?..q_~Q..r;L or�1 all cornpE�n -- ~;:"t. :i.on p <:~ id t o an y .:1li<:o~ n ,;~nc:l rnadr2 l :i.<:\bJ.e �for.. <,;.uch t:.a:-~ in �fe~:i.J. ing to s;o w.i.t:.hholc:l ~;hould o::1l .:i..Pn fai. J. to ( Hou ston Str-eet. Corpore~tion vs. Commissioner of Internal Revenue , F.3Ll� ( F:?d) . " rr:,~l) ( un dE�~ r-� ~;c: or.. .i r..,g ~;uppl.i.F! c:l) . Under t h e circumstances We can say that t fl'l i:':\ tf:?I'' 0 f c: (Jfll po ,,. t c.:; position as \��J i t h ho 1 cl :i. n g aq<"!!nt thP s t.,::-1 tu tor-�y in t. E�ndrn<�:~ n t <:1 P<:.\l'.. t y in t�1ot..'PO \ If.-'.� o' _. .i. t. to r:o.t ..::\ tE' that the raised wa s squarely met in a recent case <;:; i.m:i 1 ,:-,,r-� .i..n many c:n- t.enot�.. e:md in<:; t ,:J.nt. c:: ;;,,~; c:~, there, so here, the ruling equally applies~ inter alia, thus - In any event, the submission of petitioner that Wander is but a 1-'J.i t.hho 1 cl.i..nq e:1qc.:>n t of the qovf2n1mE~n t and therefore cannot claim reimbursement of the a lleged overpaid taxes, is untenable. It will be recalled that s aid corporation is fir s t and foremo s t a wholly owned s ubsidiary of Gl are. The fact that it became ~ wit hholding agent of the government which was not by choice but. by 381 ..

DECISION CTA CASE NO. 3887 - 5- compulsion under Section 53(b) of the Tax Code, cannot by any stretch of the imagination be considered as an abdication of its responsibility to its mother company. Thus, thi s Court construing Section 53(b) of the I nternal Revenue Code held that 'ob l igation imposed the reunder upon the withholding agent is compulsory'. It is a device to in sure the co l lection by the Philippine Government of tax on incomes, derived from sources in the Philippines, by a1iens who are outside the taxing jurisdiction of this Court ( Co mm issi on e r of In t ernal Revenue v. Ma l a y a n In s ur a n c e Co., Inc., 21 SCRA 944). In fac t , Wa n der may be assessed for dPficiE~I ::: y wit. h ho l dinq ta:-: at sour-er~, plus; penalties consisting of surcharge and interest (Section 54 , NIRC). Therefore, as the Philippine counterpart, Wander is the proper entity who s hould claim for the re fund or credit of overpaid withholding tax on dividends paid or remitted by Glare. ( Comm issio n e r of Internal Revenue v . Wa nd er Philipp i n es , In c . and t h e Court o f Tax Appea l s , G.R. No. 68375, April 15, .1. 9fll~1) be less than respecting the full and compelling import of the sa id holdinq ~:; hou 1 d lJ.Je pose a narrow and unvaryinq application an d meaning p ,,, ,.- t. y :i.n i.ntPI'�est ,:\nd thus foreclosE' and stultify altoqether the intended scope. Alt:hour,Jh the::?.� r-pac h of t.hP issue u.pon which We rest our decision render s the rE�)SO 1u tion of the appan;m t co n b~n t..iou~.; _. qui bb 1e on the bind i.nq ef feet of su hor�d.i.nat.e' s -findinqs and r�ecnmmendc:1 tion u n nece ssary i t may suffice to 1���ep<�:~a t wh i:.'\ t t h is u,...,u(r'.:::.

DECISION CTA CASE NO. 3 887 6- Court said and what so plainly apply to the case at The report itse lf furnishes the bes t mean s of its own exposition. The factu a l findings are not short of spec ifi c s upport in t er ms of tractab l e data and re l evant records openly l aid and fully disc l osed by petitioner . As s uch, the report deserves the cred ence that shou l d normall y be accorded in the a bse n ce of con trary ev idence . Respondent points to no factual er ror s a nd superf lu i ti es wh ich n ee d be abridged. And, not that the examiner 's cred e nti a l s are i.mpeccable but t o hi s fa v or mu s t be conceded th e presumption of regularit y in the per f ormance of official duti es ( Section m - 5~ Rule 131~ Revised Rules of Court ; U.S. v. Escalante , 36 Phil. 7 43; C.J.S. 799) which has n ot been di spr..�ovP d by .�:~ n y a�f fir�-m.:,,tiv~;;~ ev:i.denc:e of irregularity or unlawful conduct . Accordingly, We feel compelled t o affirm the import and force of the report of fy fi nd inqs whic h ma y not be su ff e red to petx i in �f 1:1 t.i.l i t y. ( Prima Business Machines~ Inc. v. Commissioner of Internal Revenue~ CTA Case No. 2990, Augu st 31, lCff:H). ACCORDINGLY~ the refund of the amount sought representing overpaid withholding tax on dividends is hereby ordered the respondent. No costs. SO ORDERED. Que zon City, Metro Manila, May 31, 1988. Associa te .:Judge

DEC I S I Dhl -�- CTA CA SE NO . 3 887 -- 7 - I CONCUR : AMAN r E n F' t���f.�~~; .i. o: , in q ,J ucl g E' (on officia l l eav e) CONSTANTE C. ROAQI.JIN A �::osoci;::~tr-,~ ~J uclqr,~ G ~ R l l E I c A T I fJ N I he i'" E~ by certify that t h is decision was reached afte r due c o nsu l tation amonq the members of the Court of Tax Appeals i n accordance with Section .t::'~ , r:\r � t.ic l E~ ~/III . o �f th~c.o Constitut.:i.on . AMANTE FILLER F'r"E�~ ~;::..idinq ,:Ju cl cJr:::o Cou r t of Tax Appea l s