CTA Case No. 5145 (Decision)

\ ' REPUBLIC OF THE PHILIPPINES tOURT OF TAX APPEALS QUEZON CITY PHILIPPINE GEOTHERMAL, INC., Petitioner, - versus - CTA CASE No. 6146 COMMISSIONER OF INTERNAL REVENUE, Respondent. X - - - - - - - ------------- X [.) E c s I 0N This oase involves a claim tor refund or tax oredlt In the amount of P46,058,629.40 representing alleged overpaid branch profit remittance taxes for the period ooverlng June 1992 to August 1994. Petitioner Is a resident foreign oor�porat I on, I lcensed to engage in the business of exploration, development, and exploitation of geothermal energy and resources under a service contract with the National Power Corporation (NAPOCOR) in the Phillppines. It is a branch of Union Oi I of Californla (UNOCAL>, a foreign corporation organized and existing under the laws of the United States of America, allegedly with a Central Bank registration of Its assigned capital to petitioner. The record reveals that petitioner has accumulated branch profits amounting to P2,354,107,677.26 for the period covering June 1992 to August 1994 for remittance to Its Head Office, UNOCAL, and paid the corresponding 15\ branch profits remittance taxes (BPRT) totalling

DECISION 2 - C.T.A. CASE NO. 5145 ,_ - P353,11,162.59, the deta I Is of whloh are shown hereinbelow. Particulars Tax Base Rnlttance Total Aaount Date Paid lax Paid Rnitted to --- --- Head Office (In Pesos) 119,658,292.40 17,948,743.86 09-04-92 1992 186,172,227.80 - 28,015,834.1/ 11-06-92 12-11-92 June 1992 Service Fee (SFI 63,822,034.53 9,573,300.18 12-18-92 Jlly U92 SF 182,437,444.67 21,365,616.70 August 1992 SF Septe1ber 1992 SF Total for 1992 552,689,999.40 82,903,499.91 469,786,499.49 li93 6,251,570.00 937,735.50 2- 1-93 938,736.85 2- 9-93 Coapensatory Da1ages 6,258,239.00 19,553,466. 73 2-11-93 Co1pensatory Da1ages 936,267.13 3-17-93 October 1992 Sf 130,356,4U.87 19,011,026.13 4- 2-93 Co1pensatory Daaages 2,998,216.29 6-31-93 January 1993 SF 6,241,780.87 17,538,449.47 6- 01 -93 Febrvary 1993 Sf 12,269,250.00 6-23-9! Nov/Deoeaber 1992 SF 126,740,175.73 12,266,100.00 6-25-94 llaroa/April 1993 SF 19,905,679.55 6-29-94 19,988,108.60 6,101,660.98 1-23-94 llay 1993 Sf 15,550,996.94 8-t 9-94 June 1993 SF 116,9U,996.47 14,719,991.04 9- 2-93 July 19V3 Sf 8,403,500.00 11-05-93 Augut 1993 SF 81,796,000.00 15,175,816.06 12-03-93 AugustiSepteaber 1993 Sf 22,081,471.34 12-16-93 Ootobtr/Novelber 1993 81 1 714 1 000 00 2,902,200.00 12-27-93 OtOIIbtr 1993 Sf � 132,704,623.66 40,677,739.81 103,673,312.93 98,533,273.60 42,6i0,000.00 101,172,107.09 147,249,848.93 19,348,000.00 Total tor 1993 I,262,377,121.62 189,356,569.24 1,073,020,552.38 1994 49,958,176.80 7,493,726.52 1- 5-94 Dtcnber 1993 SF 41,670,000.00 6,250,600.00 1-24-94 Juuary 1994 Sf 27,446,192.20 4,116,928.83 2- 4-94 46,970,275.73 7,046 , 64 1 .36 3- 3-94 Febrvary IQ94 Sf 61,499,791.60 9,224,968. 74 3-16-94 liarell 1994 Sf 72,267,047.67 10,840,057.15 5- 6-94 59,856,334.10 8,978,460.12 6- 9-94 Aprlllllay 1994 Sf 40,230,000.00 6,034,600.00 6-27-94 Juu 1�94 s 48,847,111.87 7,021,075.18 1� 4-94 66,165,U6.27 9,Q23,334.i4 7-15-U July 1984 r'j ' 4'/l) 1

DECISION C.T.A. CASE NO. 5145 - 3 - August 1994 SF 26,140,000.00 a,U1,000.00 Hi�U Total for 1994 63&,040,558.24 10,868,0U.44 468,184,472.80 6rud Total 2,364,107,877.26 363,118,162.69 2100019i11524.67 The foregoing BPRT payments were computed based on petitioner's reported branch profits or branch profits applled for remittance abroad. In eight letters of different dates <Exhibits "VV-1" to "VV-8"), the Central Bank of the Philippines authorized petitioner to remit, thru an authorized agent bank, the foreign exchange equivalent of Its net remittable Income (service fee) oolleoted from NAPOCOR sub j ect to compllance with the documentary requirements attesting payment of the profit remittance tax. Starting Apr i I, 1994, the Central Bank foreign exchange Ilberallzatlon took effect and the petitioner was no longer required to secure approval from the Central Bank on the remittance of Its branch profits to the Head Offloe <TSN, p. 21, August 16, 1995). On September 1, 1994, petitioner, through Its tax adviser, SGV & Co., flled with the Bureau of Internal Revenue a olalm for refund <Exhibit "RR") In the sum of P46,058,629.40 at legedly representing overpaid BPRT for the period covering June 1992 to August 1994, Invoking the rut lng of the Supreme Court In the oase of Bank of America vs. the Court of Appeals, G.R. Nos. 103092 and 4'71

DECISION C.T.A. CASE NO. 6145 -4 - 103106 dated July 2 1 , 1994 wh ic h held th at the 1 5 \ t ax on br anc h pr o fits remi tted abroa d Is Impos ed on the profit ac tu a lly remitted and n o t on t h e a moun t of profits a pplled fo r remittanc e. Hence, th e r efun dable a moun t w as b ased by the petitioner on the fo llowing c o mpu t a tlon a Total amount applled for remlttanoe P2,354,107,677.26 to Head Office Total Amount of BPRT paid to the BIR P 353,116,152.59 Lessa Correct Amount X 15\ 307,057,523.19 p 46,056,629.40 of BPRT P2,364,10777.2 1.15 Overpaid BPRT The deta lled schedule showing the abovest ated refun dable BPRT is as fo llowsa Particulars Tax Base Rnittance Should be tax 0i ffereace Date Paid Tax Paid ---- --- 1992 June 1992 Servloe Fee ISfl 119,668,292.40 17,948,743.86 15,607,603.36 2,3411140,60 09-04-92 July 1992 Sf 186,772,227.80 28,015,834.17 24,361,594.93 3,654,239.24 11-06-92 Augut 1Q92 SF 1,248,691.98 12.-17-92 Septeaber 1992 SF sa,8n,034.53 9,573,305.18 8,3l4,613.2.0 3,669,428.26 12-18-92 182,437,444.67 27,365,616. '/0 23,796,188.44 Total for 1992 652,689,999.40 82,903,499.91 72,089,999.93 10,813,499.98 1993 6.251,570.00 937,735.50 815,422..17 122,313.33 2- 1-93 Coapeftaatory Oaaages 6,258,239.00 938,735.85 816,2i2.04 122,443.81 2- 9-93 CoapeAaatory Oaaages 130,356,444.87 19,553,466.73 17,003,014.50 2,560,452.18 2-11-93 Ootober 1992 Sf 6,241, 780.87 936,267.13 814,145.33 122,121.80 3-17-93 Coapentatory Daaages 126,740,175.73 19,011,026.36 16,531,327.27 2,479,699.09 4- 2-98 Jnuary 1993 SF 19,988,108.60 2,998,216.2i 2,607,144.60 391,071.69 5-31-93 Febr1ary 1993 SF 116,922,996.47 17,538,449.47 15,250,825.63 2,287,623.84 6-01-93 Nov/Deotlber 1992 SF 81,795,000.00 12,2U,250.00 10,668,913.04 I ,600,336.96 6-23-93 ll&rot/Apri I 1993 Sf 81,774,000.00 12,266,100.00 10,666,173.91 t,59&,9a.os 6-25-94 132,704,523.66 19,906,87t.6ti 17,309,285.69 2,596,393.86 6-30-H llay 19B& SF 40,677,739.87 6,101,880.98 5,306,792.18 795,868.82 7-23-94 Jut 1993 SF 103,673,312.93 15,5&0,986.84 13,622,606.13 2,028,390.81 8-19-94 July 1993 SF 98,533,273.60 14,179,991.04 12,852,166.12 1,927,824.92 9- 2-93 4?2

DECISION C.T.A. CASE NO. 6146 - 5 - August 1993 SF 42,690,000.00 8,403,600.00 6,6et ,280.87 835,238.13 11-05-93 AugMat/Septeaber 1993 Sf 101,172,101.09 15,115,118.06 13,198,361.79 1,979,454.27 12-03-93 141,249,841.93 22,087,417.34 11,206,502.03 2,880,975.31 12�18�Q3 October/Novtaber 1991 19,348,000.00 2,802,200.00 2,528,662.17 378,541.83 12�27-93 Deoeaber 199S Sf Total tor 1993 1,262,377,121.82 1U, &56,669.24 164,867,815.50 24,t91,6U.74 Part I ou I ars Tax Base halttuce .Shou I d be tax Difference Date Paid Tax Paid 199. .9,968,176.80 7,H3,726.62 6,616,283,Q3 977,442.59 1� 6�94 Deoeaber 1993 SF .1 ,670,000.00 - 6,250,600.00 5,.35,217 .39 1-24-94 January 1994 Sf 27,446,19Z.20 3,579,938.11 815,282 . 61 2- 4-94 .6,970,275.73 4,116,928.83 6,126,557.70 3� 3-9� february 199� Sf 61,.99,791.60 7,0.5,541.36 8 1021,711.95 536,990.72 3-16-94 72,267,047.67 9,224,968.74 9,426,136.65 918,983.66 5� 5-94 llaroh 1994 SF 59,856,334.10 10,840,057.15 7,807,347.93 1,203,256.79 40,230,000.00 1,413,920.50 6- 9-94 Aprll/llay 1994 SF .6,847,171.87 8,918,450.12 5,247,391 . 30 6-27-94 66,155,566.27 6,034,500.00 1,171,102.19 7- ��97 June 1994 SF 26,140,000.00 7,027,075.78 6,110,600.68 787,108.70 7-15�9� 9,923,334.9. 8,628,986.90 8-19-94 July 199. SF 3,921,000.00 3,409,565.22 916,575.10 1,29.,348.0. August 1994 SF 511,434.78 Total for 1994 539,040,556.H 80,856,083. H 70,309,637.76 10,546,H5.68 &rand Total 2,35411071677.26 3531116,152.59 3071057,523.19 46,058,629.40 In order to preserve Its right to pursue a refund by j udicial action In aooordance with Section 230 of the Tax Code, as amended, petitioner filed the Instant petition on the same date, September' 1, 1994. On November 11, 1994, respondent answered that petitioner has no oause ot action against her since the administrative claim for refund and the Instant petition were flled on the same day, September 1, 1994, without giving her the opportunity to act on the claim, hence, violative of the dootrlne of exhaustion of administrative remedies. Respondent further averred that since the BPRT 4. I� d.

DECISION C.T.A. CASE NO. 5145 -8- Is Imposed and oolleoted at souroe, neoessarlly the tax base should be the amount aotually applled for by the branoh with the Central Bank of the Phi Ilpplnes as profit to be remitted abroad. On Deoember 5, 1994, respondent manifested that slnoe the olalm for refund of the petitioner Is stl I I being Investigated, the only BIR records aval table are the petitioner 's letter to the BIR claiming a refund of overpaid BPRT, dated August 31, 1994, and the attaohment thereto which Is Annex "A" of the present petition. { 1) The Issues to be resolved In this case area whether or not petitioner aotually remitted branch profits to its head office to make It fall within the purview of Seo. 25(a)(5) of the tax Code, as amended; (2) whether or not the administrative and j udicial claim for refund can be filed simultaneously or on the same date and (3) whether or not the BPRT shal I be oomputed based on the profits actually remitted abroad or on the total branch profits out of which the remittance Is made. In her Memorandum fl led on September 25, 1998, respondent asserted that there Is no showing that petitioner remitted branch profits to Its head office, maintaining that since petitioner Is a oorporatlon organized and existing under the laws of the State of I,

DECISION C.T.A. CASE NO. 5146 -7- California, U.S.A., petitioner's head offloe Is Philippine Geothermal, lno., U.S.A. and not UNOCAL. The oontentlon of the respondent Is untenable. Inasmuch as UNOCAL has assigned oapltal to petitioner, the former can also be regarded as the head office of the latter . Even assuming arguendo that petitioner has remitted profits to a foreign company abroad, I. e. UNOCAL, which Is not its head office and therefore there are no "branch profits" to speak of, the evidence presented are nonetheless replete proving that petitioner has paid BPRT for remittance of Its branch profits abroad, ergo with more reason that It Is entitled to olalm a refund, and for that matter, not only to the extent of the amount sought as overpaid BPRT but the whole amount It paid as BPRT because In such a case, there was Indeed an erroneous payment of the said tax. Moreover, the eight letters of the Central Bank of the Phi I lpplnes to the petitioner (Exhibits "VV-1" to "VV-8", Inclusive) authorizing the latter to remit Its net remittable Income <service fee) co I I acted from Napocor to UNOCAL In effect recognizes the right of petitioner to remit Income to said foreign company abroad. In addition, the Monthly Remittance Returns of Income Taxes Withheld (BIR Forms 1743W, Exhibits "K" to "PP", Inclusive> sufficiently establIsh payment by the '4 �!1 dr.:

DECISION C.T.A. CASE NO. 5145 -8- petitioner of branoh profits remittance taxes to the government. Notably, the respondent posed no serious objection to the admission of petitioner's documentary evidence when the same were presented before this Court and duly Identified by petitioner's witnesses. On the other hand, respondent disputed some returns of lnoome taxes withheld abovementioned on the ground that they do not show the nature of lnoome payment and the kind of tax paid, namely1 Exhibit Amount of Tax y p 6,403,500.00 z 14,779,991.04 BB 6,101,660.98 DD 12,266,100.00 FF 17,538,449.47 GG 2,998,216.29 936, 2tH.13 II 9,573,305.18 NN P70,597,490.09 TOTAL At this juncture, respondent's assertion Is not entirely devoid of merit. However, We take exception to exhibits "FF", "GG" , and "NN" because We bel leve that In spite of the objections made by respondent, the amounts corresponding to these exhibits should be Included In the final computation as said amounts are mentioned In some of the letters of authority Issued by the Central Bank to herein petitioner and presented as evldenoe (see exhibits "VV-3" , "VV-6", and "VV-8"). The other exhibits 4 �.��; c:I...J

DECISION C.T.A. CASE NO. 6145 -9- J speolf oal ty exhibits "Y", "Z" , "BB", "DD" , and " I I " as oorreotly pointed out by respondent should not be Included In the computation because these monthly remittance returns fa I I to Indicate the nature of Income payment to whloh It refers as wei I as the kind of tax It was being paid and therefore the same cannot be refunded as overpaid BPRT. This Court has no cogent reason to consider the same as pertaining to the payment of branch profit remittance taxes for remittance of profits abroad. This Court has no authority to base Its conclusions on mere presumptions of fact. With raspect to the rest of the Monthly Remittance Returns of Income Taxes Withheld <Exhibits "I<" to "PP", excluding the foregoing), the kind of tax for which the amounts Indicated on the face thereof were paid appeared at the back portion of the tax returns, contrary to the declaration In the BIR Certification <Exhs. "flO", "QQ-1", "Q Q-2" , and " Q Q - 3 " ) that "the kind of tax paid Is not Indicated In the source documents. " It Is unmistakable that one of the sources used by the Revenue Accounting Division of the BIR Is petitioner 's tax returns. Be& Ides, the respondent had the opportunity to examine the relevant exhibits offered by the petitioner and was able to compare them with the originals and found the same to be faithful reproductions thereof CTSN, March 15, 4' (-, I '

DECISION C.T.A. CASE NO. 5146 - 10 - 1995). In suoh a oase, any otoud of doubt as to the authenticity of the said returns whloh point out at the baok thereof the kind of tax <BPRT) and the oorrespondlng amount paid thereon has been removed. Furthermore, In her "Reply to Request for Admission" flled on August 1, 1995, respondent refused to admit payment of the following amounts since they allegedly do not appear from the records of the BIR's Revenue Accounting Division, to wit a Amount A I Ieged Date of Payment p 27,365,616.70 12-18-92 6,4oa,5oo.oo 11-05-93 12-16-93 22,087,4'77.34 1, 493, �r2e.52 1-05-94 6,250,500.00 1-24-94 8,978,450.12 6-09-94 9,923,334.94 7-15-94 3,921,000.00 8-19-94 The statement of the respondent is self-defeating. The aforesaid amounts were verified to have been remitted per CROC and Central Bank Credit Advice as stated In the Certification Issued and signed by Ms. Carmel Ita SJ. Pascual, Chief, Revenue Accounting Division (Exhs. "OQ- 1", "00-2", and "OQ-3"). On the second Issue, the fact that petitioner filed Its olalm for refund with the BIR on the same date that It filed a judicial aotlon with this Court is of no consequence. Petitioner's witness, Mr. Heynaldo T. Anoos, 4,.I., (t 1

DECISION C.T.A. CASE NO. 5145 - 11 - test If t_ed that prior to the month of June 1992, petitioner also remitted branch profits to Its head office and paid the corresponding BPRT, using the multlpl loatlon of the remittable amount by 16% but the same was not included in the present claim for the reason stated In his testimony given during the hearing of this case on July 19, 1995, thus1 a. In that case, Mr. Witness, why did petitioner then decide to file a claim for refund for the period covering June 1992 to August 1994? A. .because of the two year prescriptive od. a. Mr. Witness, did petitioner fl le or remit branch profit remittance tax for the month of June 19921 A. Vas, sir. XXX XXX XXX . a. And what was the amount of branch profit remittance tax paid for this period? A. Sir, the amount Is P17,948,743.86. a. And when was this tax remitted and paid to the government? A. Sir, It Is September 4, 1992." ( TSN. pp. 10-11 I J lJ I y 19 I 1995) Apparently from the foregoing, the petitioner would I Ik e to seek the recovery of overpaid BPRT corresponding to the branch profits It remitted abroad as of September 4. '?'-J

DECISION C.T.A. CASE NO. 6 146 - 12 - 4, 1992, even though It could olalm the other amounts of the same tax whloh It paid prior to said date were It not for the two-year prescriptive period. If petitioner had to wait for the action of the respondent on Its claim before It oould fl le an action with this Court, then the amount of petitioner 's refundable claim would furthermore be reduced as there would be some pay me nts made In some or several months that might not at alI be a I I owed or taken into aocount by reason of prescription. The two-year period In Section 230 of the Tax Code, as amended Is mandatory. It the Commissioner of Internal Revenue den t es the olalm for refund, t here Is no question that the t a x paye r can appeal to this Court. But If the Commissioner fai Is to act and the two-year period Is about to lapse, the taxpayer should lnstityte the appeal to this Court, without waiting for the decision of the Commissioner . This Is so because of the positive requirement of Section 230 and the doctr i ne that delay of the Commissioner In rendering the decision does not extend the peremptory period fixed by the statute (Gibbs vs. Col l eotor , l- 13453 February 29, 1960). Likewise, the Court of Appeals expounded the matter In the following wordsr "x x x The law fixed the same period two years - for fl I lng a claim for refund with the Commissioner (Seo. 204, par. 3), and for 480

DECISION C.T.A. CASE NO. 6145 - 13 - filing suit In court (Seo. 230), unlike In protests of assessment under Section 229 whloh ffxed the period (thirty days from receipt of decision> for appeallng to the Court, thus clearly Implying that the prior decision of the Commissioner Is necessary for the oourt to take cognizance of the oase. Whlle It may be true that the Court of Tax Appeals Is essentially an appellate court, and should aot only upon claims for refund that are unfavorably decided by the Commissioner, the remedy Is addressed to the legislature. "The taxpayer cannot be faulted for taking advantage of the ful I two-year period prescribed by law in fl I lng his claim for refund. The Court of Tax Appeals Itself acknowledges that the claim for refund with the Commissioner can be pending simultaneously with a suit for refund fl led with said oourta" (Commissioner of Internal Revenue vs. Bank of the Phil. Islands, et. al., CA-G.R. SP No. 34102, Sept. 19, 1994) Finally on the third Issue, the law on the matter Is very clear and unequivocal. Section 25(a)(5) of the Tax Code, as amended, provides In part: "Sec. 25. Rates of tax on foreign corporations. - (a) Rates of tax on resident foreign corporations. XXX XXX XXX (5) Tax on branch profits remittances. - Any profit remitted by a branoh to Its head office shal I be subject to a tax of 15% (except those registered with the Export Processing Zone Authorlty)a Provided, That any profit remitted by a branch to its head offloe authorized to engage In petroleum operations In the Philippines shall be subject to tax at 7\. In both oases, the tax shal I be oolleoted and paid In the j

DECISION C.T.A. CASE NO. 5145 - 14 - same manner as provided In Seotlona 51 and 52 of this Code1 and Provided, further, That Interests, dividends, rents, royalties, lnoludlng remuneration for technical services, salaries, wages, premiums, annuities, emoluments or other fixed or determinable annual, periodical or casual gains, profits, Income and capital gains received _ by a foreign corporation during each taxable year from all sources within the Philipplnes shall not be considered as branch profits unless the same are effectively connected with the conduct of Its trade or busIness In the Philippines." The Issue has been finally resolved In the decision of the High Court in the case of Bank of America NT and SA vs. The Honorable Court of Appeals and the Commissioner of Internal Revenue, 234 SCRA 302 which Is in alI fours with the present case, the pertinent portion of which Is quoted hereunder, to wit: "In the 15% remittance tax, the law specifies its own tax base to be on the "profit remitted abroad." There Is absolutely nothing equivocal or uncertain about the language of the provision. The tax Is imposed on the amount sent abroad, and the law (then In force) calIs for nothing further. The taxpayer Is a single entity, and it should be understandable If, such as In this case, It Is the local branch of the corporation, using its own local funds, whloh remits the tax to the PhiIlpplne Government. "The remittance tax was conceived in an attempt to equalize the� Income tax burden on foreign corporations maintaining, on the one hand, local branch offices and organizing, on the other hand, subsidiary domestic corporations where at least a majority of at I the latter's shares of stock are owned by such foreign corporations. Prior to the amendatory provIsIons of the Revenue Code, IooaI branches

DECISION C.T.A. CASE NO. 6146 - 15 - were made to pay only the usual corporate lnQome tax of 25%-35% on net Income <now a un i form 35%) applloable to resident foreign corporations (foreign corporations doing business In the Philippines). While Phillpplne subsidiaries of foreign corporations were sub j ect to the same rate of 25%-35% <now also a uniform 35%) on their net lnoome, dividend payments, however, were additionally sub j ected to a 15% (withholding) tax <reduced conditionally from 35%). In order to avert what would otherwise appear to be an unequal tax treatment on sucn subsidiaries vis-a-vis local branch offices, a 20%, later reduced to 15%, profit remittance tax was imposed on local branches on their remittances of profits abroad. But this Is where the tax par/passu ends between domestic branches and subsidiaries of foreign corporations. " In said decision, the Supreme Court reinstated the pronouncement of this Court in the case of Bank of America NT & SA vs. Commissioner of Internal Revenue, CTA Case No. 3799, October 29, 1986, which declares in parta "On the other ) hand, there is absolutely nothing In Section 24(b)(2)(11), supra, which Indicates that the 15% tax on branch profit remittance Is on the total amount of profit to be remitted abroad which shall be collected and paid in acoordance with the tax withholding , devloe provided in Sections 53 and 54 of the Tax Code. The statute employs 'Any profit remitted abroad by a branch to Its head office shal I be sub j ect to a tax of fifteen per cent (15%)' - without more. Nowhere Is there said of base on the total amount actually applied for by the branch with the Central Bank of the Phi Ilpplnes as profit to be remitted abroad, whloh shall be collected and paid as provided in Sections 53 and 54 of this Code. ' Where the law does not qual lfy that the tax is imposed and collected at source based on profit to be remitted abroad, that quallflcatlon should not be read Into the law. statutory oonstruotlon It Is a basic rule of that there Is no safer 48:)

DECISION C.T.A. CASE NO. 6146 - 16 - nor better oanon of Interpretation than that when the language of the law Is olear and u ri amblg u o ua, It s ho ul d be app l i ed as written. And to our ml rid, the term �any profit remitted abroad' can only mean suoh profit as is ' f or warded , sent, or transmitted abroad' as the word 'remitted' Is commonly and popularly accepted and understood. To say therefore that the tax on branch profit remittance Is Impose d and callected at source and necessarl ly the tax base should be the amount actually appl led for the branch w ith the Central Bank as profit to be remitted abroad is to ignore the unmistakable meaning or plain words. " In the I l g ht of the above considerations, It Is clear that for purposes of comp u t i ng the 15% branch profit remittance tax, the tax base should be "the profit remitted abr�oad" , i. e . , the net profit actually remitted abroad, net ot the !3PRI ltsel�t. Accordingly, as the 15% tax Is imp o se d only on the profit r� (:Hit It t ed , t ha t por�t I on o-t the profits o or r e s pond I ng to t h e pro�r I t r e 111 i t t a n o e t a x I ts e I f wh I ch Is no t r�ernltted abroad <as it rs paid to t he government> s hou I d not f o t'lll pa r� t o t t he t a x base f o r� p u ,poses of computing the b r an ch profit remittance tax (Citibank N.A. vs. Commissioner of Internal Revenue, CTA Case No. 602.3, August 3 � 1995). A careful scrutiny of the this Court evidence presented has led to conclude that the petitioner Is entitled to the tul I amo un t of P46,058,629.40. 484 I i l

DECISION C.T.A. CASE NO. 5145 - 17 - WEREFORE, In vIew of the 1 orego Ing, the petition Is hereby GRANTED. Aooordlngly, respondent Is hereby ORDERED to REFUND or Issue in favor of the petitioner a tax credit certificate In the amount of P46,058,629.40 representing overpaid branch profit remittance tax for the period covering June 1992 to August 1994. SO ORDERED. Q EHNESTO 0. ACOSTA Presiding Judge CERTIF ICATION hereby certify that this decision was reached I after due consultation among the members ot the Court of Tax Appeals In accordance with Section 13, Article VI I 1 I of the Constitution. ]l CQ. ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals