Case Summary (G.R. No. 226592)
Factual Background
In 2009, Carrier Air Conditioning Philippines, Inc. (Carrier) declared cash dividends amounting to P871,084,418.00 to its non-resident foreign parent company, Carrier HVACR Investments B.V. (Carrier B.V.). The dividends were paid on November 24, 2009, and December 22, 2009, after deducting a 10% final withholding tax that was subsequently remitted to the Bureau of Internal Revenue (BIR).
Following an independent audit for the year 2009, it was determined that Carrier's unrestricted retained earnings were insufficient to support P113,955,742.00 of the declared dividends. Consequently, Carrier recorded these overpaid dividends as receivables in its financial statements.
In late 2011, after announcing further cash dividend declarations, Carrier filed an administrative claim with the BIR on November 29, 2011, for a refund or tax credit certificate in the amount of P11,395,574.20, corresponding to the final withholding taxes on the overpaid dividends. Ten days later, Carrier filed a judicial claim before the Court of Tax Appeals without awaiting the BIR's action on its administrative claim.
Procedural History
The petitioner's arguments against the judicial claim focused on the assertion that Carrier's filing was premature and violated the principle of exhaustion of administrative remedies because it was filed only ten days after the administrative claim. The Commissioner contended that the administrative claim must be resolved before pursuing judicial recourse.
Despite these claims, the Court of Tax Appeals granted the refund based on findings that both claims were filed within the two-year prescriptive period outlined in the National Internal Revenue Code. The decision was subsequently upheld by the Court of Tax Appeals En Banc. The petitioner then sought a review on certiorari, asserting that the lower court's decisions were erroneous.
Legal Issues Involved
The core issue revolves around whether Carrier's judicial claim was prematurely filed and whether it violated the doctrine of exhaustion of administrative remedies. Additionally, the case requires an interpretation of Sections 204 and 229 of the National Internal Revenue Code regarding the claim for refund of erroneously paid taxes.
Key Legal Provisions
- Section 204: Requires a taxpayer to file a written claim for refund or credit within two years after payment of the tax.
- Section 229: Stipulates that no suit may be maintained for recovery of erroneously paid taxes unless there has been a prior administrative claim filed and requires such suits to be initiated within two years of payment.
Court's Rationale
The Supreme Court affirmed that the claims filed by Carrier were timely, as both the administrative and judicial claims were made within the prescribed two-year period following tax payment. It clarified that while it is mandatory to file an administrative claim before pursuing judicial action, there is no explicit requirement for the Commissioner to act on the claim or any stipulated period within which he must do so. Thus, timely filing within the two-year limit sufficed, allowing judicial action to proceed without undue delay attributed to the administrative process.
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...continue readingCase Syllabus (G.R. No. 226592)
Case Background
- This case involves a Petition for Review on Certiorari filed by the Commissioner of Internal Revenue (CIR) against Carrier Air Conditioning Philippines, Inc. (Carrier).
- The Petition contests the Decision and Resolution of the Court of Tax Appeals (CTA) En Banc, which upheld a ruling from the Second Division granting Carrier's claim for a refund or tax credit amounting to P11,395,574.20.
- The amount relates to the final withholding tax on excess cash dividends paid by Carrier to its non-resident foreign parent company, Carrier HVACR Investments B.V. (Carrier B.V.) in 2009.
Factual Background
- On November 23, 2009, during a special meeting, Carrier’s Board of Directors declared cash dividends totaling P871,084,418 out of unrestricted retained earnings as of October 31, 2009.
- Cash dividends were paid to Carrier B.V. on November 24, 2009, and December 22, 2009, net of 10% final withholding tax.
- An independent audit later revealed that the unrestricted retained earnings were insufficient to support the declared dividends, leading to an overdeclared amount of P113,955,742.00.
- Carrier accounted for the overpaid dividends as receivables from Carrier B.V. in its financial statements.
Legal Proceedings
- On November 29, 2011, Carrier filed an administrative claim for refund and, ten days later, a judicial claim before the CTA without waiting for a decision on the administrative claim.
- The CIR moved to dismiss the judicial claim, argu