CTA Case No. 3889 (Decision)

., 0 �. REPUBLIC Of THI PHILIPPIMIB COURT OF TAX APPEALS QUIZ:OM CITY CHINA BANKING CORPORATION, Petitioner, 4, " - versus - C.T.A. CASE NO. 3889 COMMISSIONER OF INTERNAL REVENUE, Respondent. N- - - - ------ X DECI S I 0 N The case simply addresses the question of whether petitioner has established a valid claim to the refund of a 11 eged erroneous! y paid 5/. gross receipt tax on interest income/dividends earned and derived from placements and deposits with foreign banks and foreign-based aff i 1iate for the taxable years 1982 and 1983. The undisputed facts before Us are relevantly summari zed as follows: As it appears petitioner is a commercial banking corporation organized and existing under Phil ippine laws. I Petitioner has some placements and deposits with foreign banks and its foreign-based affiliate in Singapore, the Asean Finance Corporation (�xhs. 426

... DECISION CTA CASE NO. 3889 - 2- 1 a~d 1-1), as evidenced by the Confirmation Advices (Exhs. A to A-463). In 1982 and 1983, petitioner earned and derived (i) income from its placements/deposits with foreign banks as evidenced by the various Bank Statements CExhs. B to B-29, C to C-16, D to D-102, E to E-2, F to F-136) and Credit Entry Tickets (E .,.,:hs. G to G-2e.: .3, H to H-19 .3) and ( ii) dividends from its foreign-based affiliate in Singapore, the Asean Finance Corporation, as evidenced by the Remittance Letter dated June 30, 1983 CExh. J). For the taxable year 1982, the gross receipts tax due on interest income from petitioner's placements/deposits with foreign banks amounted to ------- P390,592.84 whi.le for the ta>:able year 1983, the gross receipts ta>: due on interest income and J dividends from petitioner's placements/deposits with foreign banks and its foreign-based affiliate in Singapore, the Asean Finance Corporation, amounted to P214,367.05 and P25,640.00, respectively, (Exh. HJ. On January 20, 1983, petitioner paid the respondent � the amount of P390, 592.84 representing the 51. gross receipts tax on interest income from placements or deposits with foreign banks earned 42 '(

----�- DECISION CTA CASE NO. 3889 - 3- and de~ived by petitione~ fo~ the taxable yea~ 1982 as evidenced by Confi~mation Receipts Nos. 0236530, 10411027~ 10251211 and 9779387 fExhs. N, N-2, N-4, and N-6.� respecti~1 ely) and Payment O~de~ No. 0025339, Revenue Tax Receipt No. 10113242, Revenue Tax Receipt No. 3609310 and Revenue Tax Receipt No. 9359015 (E .lfhs. N-1, N-3, N-5 and N-7, respecth,ely). On Janua~y 20, 1984, petitione~ paid the ~espondent the amount of (i ) P214,367.05 ~ep~esenting the 5% g~oss ~eceipts tax on inte~est income f~om placements o~ deposits with fo~eign banks ea~ned and de~ived by petitione~ fo~ the ta xable yea~ 1983 and (ii) P25,640.00 ~ep~esenting the 5% g~oss ~~ceipts tax on dividends ~eceived f~om petitione~�s fo~eign-based a f f i l i a t e (Asean Finance Co~po~ation - Singapo~e) fo~ the taxable yea~ 1983 as evidenced by Confi~mation Receipts Nos. 2075358, 0958380, 952520, 0945555 fExhs. 0, 0-2, 0 - 4, and 0-6, . respectively) and Payment O~de~ No. 2176501, 1736625~ 1315180, 0800872 fExhs. 0-1, 0-3, 0-5 and 0-7, respe c tively). The payments of the g~oss ~eceipts tax in the amounts of P390,592.84, P214,367.05 and P25,640.00 we~e all included in the payments evidenced by 423

DECISION CTA CASE NO. 3889 - 4- Exhibits "N" to "N-7" and "0" to "0-7" (Exhs. 1<, K-1, K-1-a and Exhs. L, L-1, and L-1-a). Petitioner realized that the aforesaid payments of the gross receipts tax to the respondent were erroneous considering that under Section 260 of the National Internal Revenue Code gross receipts tax shall be imposed on income derived within the Phi 1i ppines and not on income from placements, deposits and dividends from abroad or outside the Philippines. On January 11, 1985, well within the two-year period from the respective dates of the aforesaid payments of the 51. gross receipts tax for the taxable years 1982 and 1983, petitioner filed with the respondent the mandatory formal claim for refund or credit dated January 7, 1985 (E .li�h. P). On January 18, 1985, petitioner without waiting for the resolution or decision of the respondent on its . formal claim for refund and/or tax credit, as none has been issued to date, filed the instant petition for review. As thus invoked, Section 260 (now Sec. 220) of the Tax Code, insofar as pertinent, provides: 423

DECISION CTA CASE NO. 3889 - 5- SEC. 260. - Tax on Banks and Non- bank Financial Interaediaries. There shall be collected a ta>: on gross receipts derived from 2.9J::~rces___wi th.t!:L..!h~ E.b. !Jj._Q.Qines by a 11 banks and non-bank financial intermediaries >: x x (Under- scoring supplied) Pursuant to the cited provision, the imposition is directly addressed on gross receipts derived from sources within the Philippines. Brought to bear upon the circumstances obtaining in the case at bar, the record makes it clear that the interest income and dividends from money placements and deposits upon which tacked the 5'Y. tax burden were earned and derived by the petitioner from sources abroad and out of the operative ambit of the statutory proscription. Moreover, the basis for the claim is not short of specific support in terms of tractable data openly laid and fully disclosed. It needs therefore neither a~gument nor citation of authorities to establish the validity of the claimed refund as the law is clear and the language used ampLy sufficient to dispel any pall of uncertainty cast over the same. Suffice it therefore, both circumstances obtaining and relevant legal standards compel the cone lusion that petitioner has proved entitlement to a favorable determination of the desired relief. 430

DECISION CTA CASE NO. 3889 - 6- WHEREFORE, the refund of the amount sought by petitioner is hereby ordered the respondent. No pronouncement as to costs. SO ORDERED. Quezon City, Metro Manila, August 31, 1989. WE CONCUR: Judge CERTIFICATION I hereby certify that this decision was reached after due ~onsultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. ~~~J Presiding Judge Court of Tax Appeals 431