Case Digest (G.R. No. 181459)
Facts:
Commissioner of Internal Revenue v. Manila Electric Company (MERALCO), G.R. No. 181459, June 09, 2014, Supreme Court Third Division, Peralta, J., writing for the Court. The petition for review on certiorari under Rule 45 sought to annul the Court of Tax Appeals (CTA) En Banc Decision dated October 15, 2007 and its Resolution of January 9, 2008 in C.T.A. EB No. 262.MERALCO obtained two dollar-denominated loan facilities from Norddeutsche Landesbank Girozentrale (NORD/LB) Singapore Branch (USD120,000,000 on July 6, 1998, and USD100,000,000 on September 4, 2000). Under the loan agreements, MERALCO withheld ten percent (10%) final withholding tax on interest payments and remitted the tax to the Bureau of Internal Revenue (BIR) for the period January 1999 to September 2003, aggregating P264,120,181.44.
Sometime in 2001 MERALCO discovered that NORD/LB Singapore Branch was a financing institution owned and controlled by several German states. MERALCO requested a BIR ruling on December 20, 2001. On October 7, 2003 the BIR issued Ruling No. DA-342-2003 declaring that interest payments to NORD/LB Singapore Branch were exempt from the 10% final withholding tax under the Tax Code. Relying on that ruling, MERALCO filed a claim for refund or tax credit on July 13, 2004 for the full amount remitted; the CIR denied the claim on November 5, 2004, asserting prescription under the Tax Code.
MERALCO filed a Petition for Review with the CTA-First Division on December 6, 2004 (C.T.A. No. 262). After trial, the CTA-First Division held that MERALCO proved NORD/LB’s tax-exempt status but denied refund claims for the period January 1999 to July 2002 (P224,760,926.65) as prescribed; it granted refund/credit in the amount of P39,359,254.79 covering December 2002 to September 2003. Motions for reconsideration before the First Division were denied on January 11, 2007.
Both parties elevated their cases to the CTA En Banc (C.T.A. EB Nos. 264 and 262); the En Banc consolidated the cases and, in its October 1...(Subscriber-Only)
Issues:
- Did MERALCO's administrative/judicial claim for refund with respect to interest paid to NORD/LB for the period January 1999 to July 2002 prescribe under the Tax Code?
- Did MERALCO establish that NORD/LB is a financing institution owned, controlled or enjoying refinancing from a foreign government and therefore entitled to a refund/credit for erroneously paid final withholding taxe...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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