Case Summary (G.R. No. 216601)
Case Background
The case revolves around Aegis PeopleSupport, Inc., a domestic corporation in the Philippines, engaged in providing customer support services, which is registered with the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA). It filed a claim for a tax refund amounting to ₱66,177,830.95, asserting that its foreign exchange gains should qualify for tax exemptions under its income tax holiday (ITH) benefits due to its PEZA registration.
Procedural History
The petitioner submitted its annual income tax return and subsequently filed an amended return claiming an excess payment. The Commissioner of Internal Revenue's (CIR) inaction on the claim led to a petition for review filed by Aegis in the Court of Tax Appeals (CTA). The CTA Division denied the claim citing insufficient evidence, reasoning that the petitioner failed to establish that the foreign exchange gains came from activities eligible for ITH.
Arguments by the Petitioner
The petitioner contended that the foreign exchange gains resulting from hedging contracts with Citibank were integral to its operations as a contact center providing services to foreign clients. Therefore, they argued that these gains should be similarly exempt from taxation as they stemmed from revenues necessary to support its registered activities. They referenced relevant regulations and previous BIR rulings to substantiate their claims for tax exemption on the grounds that all income linked to their operations should be exempt.
Arguments by the Respondent
The respondent, CIR, defended the CTA's ruling, asserting that the foreign exchange gains derived from hedging were not connected to the registered activities of the company and thus were subject to normal corporate income tax. The CIR argued that taxpayers claiming refunds bear the burden of proof in establishing the legitimacy of their claims and that the gains from hedging did not meet the criteria for exemption.
Court's Determination
The Court ruled in favor of the petitioner, finding that the foreign exchange gains realized through currency conversions were indeed related
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Case Overview
- Court: Supreme Court of the Philippines
- Date: October 07, 2019
- Citation: 864 Phil. 379; 117 OG No. 5, 926 (February 1, 2021)
- Case Number: G.R. No. 216601
- Petitioner: Aegis PeopleSupport, Inc. (formerly PeopleSupport (Philippines), Inc.)
- Respondent: Commissioner of Internal Revenue (CIR)
Facts of the Case
- Aegis PeopleSupport, Inc. is a domestic corporation registered under the laws of the Philippines, primarily operating as a customer contact center.
- The corporation was registered with the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA), qualifying for various tax incentives.
- On April 15, 2008, Aegis filed its Annual Income Tax Return (ITR) for the taxable year 2007 and subsequently amended it on April 29, 2008.
- After changing its corporate name in December 2008, Aegis filed an administrative claim for refund with the BIR on April 8, 2010, seeking a refund of ₱66,177,830.95 for overpaid income tax.
- The BIR did not act on this claim, prompting Aegis to file a Petition for Review on April 15, 2010.
Procedural History
- The BIR Commissioner filed an answer to Aegis's petition, presenting several defenses, including the assertion that Aegis failed to prove the erroneous collection of taxes.
- The case was set for pre-trial and subsequently for trial, during which Aegis presented two witnesses to support its claims.
- The CTA-Division denied Aegis's claim for refund due to insufficient evidenc