Western International Hotels Company Philippine Branch vs. The Acting Commissioner of Internal Revenue

DECISION

- 2 - Based on this correct computation of the branch profit remittance tax, petitioner should have only paid the total amount of P1,002~641.08, instead of the amount of P1,153~307.49 actually paid, resulting in an overpayment in the total amount of P150~666.41. On April 1~ 1980, petitioner filed with respondent a claim for refund or tax credit in the total amount of . P150,666.41, representing its overpaid branch profit remittance tax liability. The only issue in this case is whether or not petitioner is entitled to the refund or tax credit in the amount of P150~666.41. We hold in the affirmative and we hold that this case is similar to the case of Exxon Chemical Eastern, Inc., vs.

The Acting Commissioner of Internal Revenue~ CTA Case No.

3137~ September 30~ 1986, wherein we held that "the 15/. branch profit remittance tax shall be · imposed on the profit actually remitted and DQi in the total branch profit out of which the remittance is to be made." On January 21, 1980 the Acting Commissioner of Internal Revenue issued a ruling where he held as follows: relative to your query as to the tax base upon which the 15/.

branch profit remittance tax provided for 118

DECISION —

CTA CASE NO. 2081 under Tax please be branch shall he actually nok on cuk of mace, | Code Section insatar as acre That hy a mother ta tax (L5% with any Hewed Sectian the aforesaid petitioner paid the Pele, 726.09 PLA, SAS. GL ec tual preafik L?77 and consequance it remittance P79 ,O48,45, Net Profit Date Paid 1977 Profit Tax computed and paid 13% of P41, 630,900.00 Should be 13% of PL,418,174,948 Section advice profit remittance UH on the proafik exis prapik is imposed remithed the which St (hb) C2) af pertinent profit hranch campany of (except Vee ue eek ys close ta

RACH) C2)

remittances:

1978, overpaid tavern computed aa 2t(bj) C2) of chall ties that tho abroad branch romitthance total khe provides, Preavided remitted affirce to shall be fifteen those per tt .

thie BUPA as that ait prafit hax for reepactively.

thirs tkoakeal follows:

dri thies Branch Remit~ tance Tax (BRT) Correct BRT P244 635.00 P2712, 726.09 the Tas ZA ote Lo should af arly PRAAEGS2.990 ard brane h hie imposed, pes Conde Further, abreac pts subject cent registered the Export Pracessing Zone Authority) cantert of construed hy Ruling of January claims branch instead of instoad era L7ao, have of FIGL,2E9.,15 thie of its VCR Os Fal pro Fik amount of Qverpayaent P31,908,94 ,

Tax computed and paid Should be 15% of P2,409,201.00 15% of - 4 - P361,380.1S P2,049,457.39t P314,243.61 P.Jz,n~.~~ P79,045 .4S Amount claimed for refund or credit t(ReMitted aMount) On August 26~ 1980 petitioner· filed with the respondent's Of fice a c l aim for the refund or tax credit of the amount of P79~045.45 representing its alleged overpaid bt-anch pr·of it ta:: 1 iabi 1 i ties. On Sept.embet- toll the two-year 1 i nH taticlft . had this 2!' 198c) in st.atutot-y petition ot-·del- to per· iod of filed ~<Jit.h Respondent takes no issue as to the clear and unambiquous language of the n .tling o·f Januat-y :?.1.~ 1980~ ?.L.U,11::- !~ ~ th a t the 15% branch profit remittance tax sha 11 be imposed on thE' pl"'of it 0C:..:~u<:\],]y r·emtt . .:t.!?d ..... §'.l::l.r:.9.a9 and n.Pt on ttH~~ br·anc h pl"'ofit out of which the remittance is to be made.

Rather~ he invokes the right to r-ec ti·fy any erTor commi tted in the .i.rnplernentat.ion of thf?

ta:-:

l a ··IS and r·egul ,:;, tions on the g ,~oun d th,::\ t the <::JOVel"'nment is not bound by th E? mistakes o f its agents ( Pineda v. CFI Tayabas~ 52 Phil. 803)~ and accol"'dingly cites Revenue Memol"'andum Cil"'culal"' No. 8 - 82 dated Mal"'c h 17~ 19~2~ providing~ inter a li a~ "Considel"' ing that the 15% bl"'anc h pl"'of it l"'emittance ta:.:

is imposed and collected at souJ"'c e ~ necessar· .i 1 y the ta ::

base should be the amount actually applied fol"' by the bl"'anch vlith t he Centl"'al Bank of the · Philippines as p l"'ofit to be r·emi t ted."

S u ·ff ice it al"'gument agitated s qual"'ely met and to state that the by the respondent \·Jas rejected in a case 120

- 5 - similar in many or so in t e nor- Clnd be necessc:u,- y to CDut~t s;;;,id r.:md the pPt.i. tiDner- circumstances.

It m.:.\y t'··epea t 11-1ha t t he St_\premc?

\!Jhat so plainly .:-\pply to in the case at bar~ that "F'et i tion er-' s afores aid contention is without merit.

l!-Jhat is applic.::~ble in the c.:il!:::,f:?

at bar is sti ll the Revenue Ru 1 ing of January 2.1 ~ .t 980 hecause private respondent Burroughs Limi t e d paid the branch profit remittance tax in question on March 14~ .1 9 7 9.

Me morandum Circular No.

8 - 82 cia ted March .1 7 ~ 1 982 cannot b e gi ven retroactive effect in the l:i.ght of Section 327 <t:·f.qo ~:::

r.:r:?.t.r.9§1.~ . t _iy.J...t.Y ..... _ .. 9f. ... J~ q .lJ n .g .. ~) of the Nation a l Internal Revenue Code xxx.

(Underscoring su pplied) "The pr-ejudice that \.'JDU 1 d result to private respondent Burroughs Limited by a retroactive app lication of Me mora ndum Circular No. 8 - 82 is beyond quest ion for it would be deprived o ·f the substantic.d amount of Pl7 2~058.90.

And ~ insofar as the enumerated e:-:ceptions admitte d ly~ doe~::;

not are conc erned~ Bur-roughs Limited fall un d er any of ( Commissioner of them . "

Inter-n a l Limited Rf:?venue v.

Bu rn::Jug hs and CTA .

G.R.

No.

L- June 23 ~ 1 986 ) Going by the said p ronouncement~ there can be no occasion to s pecu l ate upon where to bas e the 15% branch profit remitta nce irnpositon before March 1 7~ 1.982 or- the issuance o·f the question ed Rev enue Circ ular.

Oth e rwise~ there would be a random qu irk in the equal t ax treatment of cases s imilarly c .i rcumstanced.

l!-Jf.·? therefore hesi t;:?. te to futher fashion an issue into a satisfactori l y sett led leg a l situa t i on. 121 .·

- 6 - Accordingly~ we view with ease petitioner's righteous indignation in prying l oose from the legal constraint of retrospective application of the subject Circular~ having stretched too far the effective range of expediency.

Petitioner has proved entitlement to a favorable determination as a matter of fact and law.

WHEREFORE~ finding the petition to be well taken~ the same is granted and the refund/cred it of the amount sought is hereby ordered.

No pronouncement as to costs.

This decision in the case of Exxon Chemical Eastern, Inc .

case finds strengt h in the decision in the case of Ma r ube ni Corpo rat i on v s .

Commis s i oner of Inter n a l Reven ue~ 177 SCRA 500 and also the case of Commissioner of In t ernal Revenue vs. Burroughs Li mited , 142 SCRA 324 .

WHEREFORE, find i ng t he petiti on to be well taken, t he same i s granted and the r e fund /cr edi t i n the amount of P1 50,666.41 sought is hereby ordered . No pronounceme nt as to c o s t s .

I CONCUR:

~~\Q~~ ERNESTO D. ACOS TA Presiding Judge 122 ?-J 1 Lj "-- ANTE/C. ROAQUI N Judge .·

DECISION —

CTA CASE NO. 2081 Led oe a Oe en ee ed = Tee ae Se eee aed | I hereby certify that this decisican Wes reached after due consultation hetween the mombers of the Court of Tax Appeals in accordance with Sactiaon 12, Article VITIT of the Constitution.

unk QO. G2 ERNESTO D. ACOSTA Presiding Judqe Court of Tax fppeals