Hawalttan-Fhiliffine Company vs. Commissioner of Internal. Revenue, et al.

DECISION

This is a claim for the refund of an amount of F7,954,28, representing allegedly overpaid with- holding tax on dividends ta non-resident stockholders, Fetitioner is a damestic corporatian with nan refidant stockholders. For the second quarter af 198%, dividends amounting to FPi37,422,.80 and.

P7,6532,80 were paid to its non-resident individual and corporate stockholders, respectively. Of the amaunt paid, petitioner withheld 20% ar the sum af P4j,226.84, of the aqgregate dividends remittable ta its non-resident individual stockholders and 25% ar F2,4671,.48 af the dividends remittable to its ..

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 petitione r 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 filing of the claim for refund with - -.:.- t he respondent's Offtc:e o n May 17, 1984 to the date ud of the ainetant petition for review mo actian had yotay th respondent, Th deers nak appear that the respondent disputes the relatively Simple material facts but for the questions on whether or nat petitioner is the proaper parky to claim the refund and as ta whether the report oof respondent’ Ss examiner is bandinme .

Respondent posite an unvarying impression that every action must he prosecuted and defended in othe mane of the real party an (Rules af Court, Pule 3, Sec. 2). And, the herein pekitioner 4G nedthe the real party in intere nar acts ina renres Nhative capacity when it filecd the action.

“He evidence wag presented by petitioner to prove thak at had the pers ality to claim the refund or thet ak VIALS author ss echoty the U.S, resident ckhia dl cers claim the refund. In other words, one hy of ach:

no (mA spondentk."

We do not reach the came conclusian.

AS aptly averred by the petitioner, "Where one per pays the t for another, Lhe persan so paying the tax may recaver the tax if it represents an averpayment (Mertens , Law oon Federal Income yy” we iitf Yaxation, 29 Ed. Vol. 10, s. S38.14)." This view is fade mare positive by ai ruling that, a "Farty aon all compen- kt alien aaricl mace too any nan-reside liable for such tax an failing ta so withhold should alien fail to pay tax, held.

(Houston Street Corporation vs. Commissioner of Internal Revente, 84 (Fitd) @eiy." (underscoring supplied). Under the circumstances We can say that a makher of law petitioner’s position as a withholding aqent campor ' with the atatutory intendment of a taxpayer, hence ai party in Moareaver, it may suffa ta aetate that the Ue now raiged was squarely met in a recent case Similar an omany or $0 in tenor and terms as the ingtank case, where as there, so here, the ruling equally applies, inter alia, thus - In any eyernt, the submission of petitioner that Wander is bet a withholding agent of the government and therefore cannot claim reimbursement of a alleged overpaid taxes, is untenable. wild he recalle that said coarporatian is first oand foremast aio wholly owned sidiary of Glaro. The fact that it me withholding agent cof the sm@entowhich was mak by choice but by mais wel - 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 insure 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 mmissi one r of In t ernal Revenue v.

Ma l a y a n In s ura n c e Co., Inc., 21 SCRA 944). In fac t , Wa nder 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.

(Commission e r of Internal Revenue v . Wa nder Philipp i nes , In c . and t he 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 renders the rE·)SO 1 u tion of the appan;m t con b~n t..iou~.; _. qui bb 1 e on the bind i.nq ef feet of su hor·d.i.nat.e' s -findinqs u n necessary it may suffice ,..., (' .

uur.:::

and r·ecnmmendc:1 tion to 1···ep<·:~a t wh i:.'\ t t h is

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 erms 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 nce of con trary ev idence .

Respondent points to no factual er rors a nd superf lu i ti es wh ich need be abridged.

And, not that the examiner 's cred e nti a l s are i.mpeccable but t o hi s fa vor mus t be conceded the 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 not been di spr .. ·ovPd 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 fi nd inqs whic h ma y not be su ff e red to petx i fy in ·f 1:1 t.i.l i t y.

( Prima Business Machines~ Inc. v. Commissioner of Internal Revenue~ CTA Case No.

2990, August 31, lCff:H).

ACCORDINGLY~ the refund of the amount sought representing overpaid withholding tax on dividends is hereby ordered the respondent. No costs.

1 CONCUR :

Quracde

AMANTE F/ALLER

Fresioaincg dudde (on official leave) CONSTANTE C. ROAQUIN a) aedate Jucddae CeERTLELeCaATION I herce by certify that this decision was reached afber duce consultation among the membera of Lhe Courk of Tax Appeals in accordance with Sectian V5, @rbicie VILT af the Conetitution.

siding Judde Courk af Tax Appeals mon :

ar Ge *