CTA Case No. 3089

DECISION -

Metro Manilas Inn Manila is a domestic carporatian and existing under and by virtue of the laws of the Philippines, with same principal office as the farmer:

Fetition) ear For and 1979, branch amount of F244,866.00, Date May 24, 1978 duly 19, 1978 Qctober 16, 1978 January 22, 1979 January 22, 1979 July 19, 1979 July 19, 1979 October 17, 1979 October 19, 1979 January 17, 1980 January 18, 1980 while the ather prafits petitioners profit remittance tax b3 realized in thereon Of ficial /Confirmatioan co RBCBLPE NOs RTR SS008593 (Exh. "C") RTR 32712606 (Exh. "E") RTR Z4S08253 (Exh. "G") RTR ANBS2S96 (Exh. "I") CR A0G59424 (Exh. "U") RTR ASLEES79 (Exh. "L") CR AZ844988 (Exh. "M") RIR ALS7BNS9 (Exh. "O) CR AZ144661 (Exh. "N") RTR AB7S6263 (Exh. "a'') CR ASN66700 (Exh. R") petitioner the years duly arganized likewise engaged in hotel business and (Far.

paid the correspanding 15% in the total detailed as follows:

Amount aid P27 439.00 7,612.00 27 .O32.00 33,928.00 69 328.00 46,231.00 3,276.00 Holiday 1978 •(

- 3 - 3.

Thru letter dated April 28~ 1980 and 'filed with the respondent's bureau on April 30~ 1980 ~ petitioners reqL1ested for-· the refund of the tota 1 amount of P31 ~ 939.00 a 11 eged 1 y representing their overpaid branch profit remittance tax for the years 1978 and 1979 (E:<hs. "A"~ "A-1" to "A-4"); 4.

Petitioners' claim for refund is anchored solely ruling on their interpretation of dated January 21, 1980 [hich respondent's states that "the 15/.

branch profit remittance ta:< sha 11 be imposed on the profit actually remitted abroad and [lOt, on the total branch profit out of which ·the remittance is to be made"; 5.

Apparently wary of the 2-year .

' prescriptive period under Section 292 (now Section 243) of the Tax Code for instituting the judicial action for the recovery of the a 11 eged overpaid branch profit remittance tax, petitioners filed the instant petition with this Court on May 5, 1980. The sole issue for resolution is whether or not petitioners overpaid their 15/. branch profit rJ remittance ta:< for 1978 and 1979, hence, entitled to the refund of P31~939.00. 1) We find petitioners' claim for refund meritorious.

526

- 4 - Four square with the case at bar on this point~ by reason of the exact or close identity of the factual settings~ provisions of law as well as BIR ruling and memorandum involved~ and issue litigated, is Co••issioner of Internal Revenue versus Burroughs Li•ited and the Court of Tax Appeals ,# G.R..

No.

66653,# ,7une 19 ,# 1986 ,# 142 SCR.A ___.)

.3:24.

Because of its con tro 11 ing ef fee ts on the instant case~ we wi 11 quote at length from the decision.

I l We rule in the pertinent provision Revenue Code is Sec.

s tates:

affirmative.

The of the National 24(b) (2) (ii) which "Sec. 24. Rates of ta >: on corporations. x x x (b) Ta:-:

on foreign corporations. :-: x :-: ( 2) ( i i ) T a>:

on profits remittances.

profit remitted abroad branch to its head office branch Any by a shall be subject to a tax of fifteen per cent (15/.)

>t >t ·>t.

11 In a Bureau of Internal Revenue rul1ng dated January 21~ 1980 by then Ac ting Commissioner of Internal Revenue Hon.

Efr~n I.

Plana the aforequoted provision 1 had been interpreted to mean that "thfi ta:-:

base upon which the 151. branch profit remittance ta:-: x :-:

x shall be imposed x l·: l·:

( is ) the profit ~.!.;_1;u~j._.!.Y.. rem.J,J;j;_~g- abroad and not on the total branch profits out of which the remittance is to be made."

L

/I - 5 - App 1 y ing ther-efor-e~ the afor-equoted r·uling, the claim of pr-ivate r-espondent (petitioner-s) that it made an over-payment in the amount of P172~058.90 (P31~939.00 in this case) which is the differ-ence between the r-emittance ta:-: ac tua 11 y paid of P1,147,058.70 (P244~866.00) and the r-emittance ta:-: that should have been paid of P974~999.89 (P212~927.00), is well - taken.

As cor-r-ectly held by r-espondent Cour-t in its assailed decision - "Respondent concedes at least that in his r·uling dated Januar-y 21, 1980 he held that under- Section 24(b) (2) of the Ta:-: Code the 15% br-anch pr-ofit r-emittance tax shall be imposed on the prof i t ~.~ t I,..\. a U ..

't.._r:.~.m.i.t.t . .E'.d. ~ . .!:d.r.9.E..Q. and !J.Q_t;_ on the tot a 1 branch pr-ofit out of which the remittance is to be made.

Based on such r-uling petitioner- • • • shou 1 d have paid on 1 y the amount of P974,999.89 in , remittance ta :-:

c omputed by taking the 15% of the profits of P6, 499,999.89 in r·emi t tance tax actually remitted to its head office in the United States, ins tead of P1,147,058.70, on its net pr-ofits of P7,647~058.00.

Undoubtedly, petitioner has overpaid its branch profit r-emittance tax in the amount of P172,058.90."

Petitioner- contends that respondent is no longer entitled to a refund because ~emorandum Circular- No. 8- 82 dated March

17. 1982 had revoked and/or rg_pealed the BIR r-uling of Januar-y 21, 1980~ The said memor-andum c ir-cular- states -

- 6 - "Consider-ing that the 15/. br-anch pr-ofit r-emittance tax is imposed and collected at sour-ce, necessar- i 1 y the ta:-:

base s hoLil d be the amount actually applied for- by the br-anch with the Centr-al Bank of the Philippines as pr-ofit to be r-emitted abr-oad."

Petitioner-' afor-esaid contention is without mer-it.

What is applicable in the case at bar- is sti 11 the Revenue Ruling of Januar-y 21 ~ 1980 because pr-ivate r-espondent Bur-r-oughs Limited (petitioner-s Holiday Inn [Phils.] Inc. and Holiday Inn Manila) paid the br-anch pr-ofit r-emittance t a:·:

in question on t!.~..r~.!==.J:L_l.~_s _. __ t9..Z..~ ( f r-om May 24, 1978 to Januar-y 18~ 1980).

Memor-andum Cir-cular- No. 8-82 dated Mar-ch 17, 1982 cannot be given r-etr-oactive effect in the light of Section J327 of the National Inter-nal Revenue Code. The pr-ejudice that would r-esult to pr-ivate r-espondent Bur-r-oughs Limited (petiti oner-s Holiday Inn [Phils.]

Inc.

and Holiday Inn Manila) by a r-etr-oactive application of Memor-andum Cir-cular- No.

8 - 82 is beyond question for- it would be deprived of the substantial amount of P172,058.90 (P31,939.00). And, insofar- as the enumer-ated e:-:ceptions ar-e concer-ned~ admit ted 1 y, Bur-r-oughs Limited (petitioner-s Holiday Inn [Phils.]

Inc.

and Holiday Inn Manila) does not fall under- any of them.

WHEREFORE, respondent Commissioner of Internal Revenue is hereby ordered to grant a refund and/or tax credit to petitioners Holiday Inn (Philippines), Incorporated and Holiday Inn Manila in the amount of P31,939.00 representing overpaid 52 ~

- · 7 -- branch profit remittance tax . for profits realized in the years 1978 and 1979.

WE CONCUR:

-~ Associate Judge

AMANTE F

F'r·esidin CERTIFICATION I hereby certify that this decision was reached after due consultati6n among the members of the Court of Ta x Appeals in accordance with Section 13, Article VIII of the Constitution. AMANTE Presiding Judge Court of Tax Appeals 530