Case Summary (G.R. No. 164246)
Facts of the Case
The petitioner executed trades in publicly listed shares through Deutsche Securities Asia Limited (DSAL) and UBS Securities Asia Limited (USAL) from September 20, 2013, to September 3, 2014. The stockbrokers, DRPI and USPI, withheld stock transaction tax from these sales. The petitioner claims an exemption from this tax due to its status and sought a refund from the Bureau of Internal Revenue (BIR) after the BIR did not act within the prescribed two-year period. The CIR contested this claim, leading to a series of proceedings where the petitioner presented evidence including testimonies from witnesses.
Ruling of the Court of Tax Appeals in Division
In a decision dated January 17, 2019, the CTA in Division ruled in favor of the petitioner, asserting its entitlement to a refund. The Court determined that the withholding of stock transaction tax was erroneous based on Section 32(B)(7)(a) of the NIRC, which stipulates exemptions for income derived from investments by foreign governments and related financial institutions. A dissenting opinion by CTA Presiding Justice Roman G. Del Rosario argued that the stock transaction tax is not classified as income tax and thus the exemption did not apply.
Ruling of the Court of Tax Appeals En Banc
The CTA En Banc, in a decision dated November 5, 2020, overturned the Division's ruling, conclusively stating that stock transaction tax represents a percentage tax rather than an income tax. The court highlighted that the exemption cited by the petitioner applies solely to the income tax sections of the NIRC, particularly under Title II, while the stock transaction tax falls under Title V, which deals with other percentage taxes. This distinction is critical, as the legislative intent during the enactment of the tax law clarified that stock transaction tax and income tax were treated separately.
Proceedings Before This Court
The petitioner subsequently filed a Petition for Review on Certiorari challenging the CTA En Banc's decision, arguing procedural issues regarding the belated raising of the tax classification by the CIR. Furthermore, the petitioner maintained that stock transaction tax fundamentally constitutes an income tax.
Ruling of the Court
The Court concluded that the petitioner's claims lacked merit and upheld the findings of the CTA En Banc. It validated the latter's authori
...continue readingCase Syllabus (G.R. No. 164246)
Overview of the Case
- This case involves a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
- The petitioner, IFC Capitalization (Equity) Fund, L.P., contests the Decision dated November 5, 2020, and the Resolution dated June 16, 2021, issued by the Court of Tax Appeals (CTA) En Banc.
- The CTA En Banc's ruling reversed the earlier decision of the CTA in Division, which had granted the petitioner a tax refund.
Facts of the Case
- The petitioner is a non-resident foreign limited partnership specializing in investments in private sector banks with systemic impact in their home markets.
- It traded shares on the Philippine Stock Exchange from September 20, 2013, to September 3, 2014, using the trading companies Deutsche Securities Asia Limited (DSAL) and UBS Securities Asia Limited (USAL).
- The stockbrokers DRPI and USPI withheld a stock transaction tax amounting to P62,444,698.37 from the proceeds of the sale of shares.
- The petitioner claimed exemption from this tax and subsequently filed for a refund after the Bureau of Internal Revenue (BIR) failed to act on its claim within the two-year filing period.
- The Commissioner of Internal Revenue (CIR) contested the claim, stating that the petitioner had correctly paid the stock transaction tax.
Ruling of the Court of Tax Appeals in Division
- On January 17, 2019, the CTA in Division ruled in favor of the petitioner, ordering the CIR to refund P62,444,697.57 based on erroneous tax collection.
- The CTA cited Section 32(B)(7)(a) of the National Inte