MANILA, Philippines—The Court of Tax Appeals (CTA) dismissed the appeal by the Manila North Tollways Corporation that sought a P8.64-million tax refund it paid on behalf of one of its stockholders Egis Project SA (Egis), a sociedad anonima incorparted in France.
In a 30-page decision released Tuesday, the CTA, through Associate Justice Olga Palanca-Enriquez said the Manila North Tollways Corporation failed to substantiate its claim of tax refund.
The Tax Court said MNTC did not present its original monthly remittance return of final income taxes withheld. Instead, it only presented its amended monthly remittance return.
The case stemmed when MNTC, the builder and the authorized concessionaire to operate and maintain the North Luzon Expressway (NLEX) withheld and paid to the Bureau of Internal Revenue (BIR) 15 percent of the declared dividends for Egis.
Egis is one of MNTC’s stock holder which owns 2,468,640 shares or 13.9 percent of the outstanding capital stock of MNTC.
Egis, however protested by pointing that under the RP-France Tax Treaty, tax withheld should be 10 percent, not 15 percent, prompting MNTC to seek a refund of the tax it paid on behalf of Egis.
The BIR, however failed to act on the request for refund which forced the MNTC to take the case to the CTA, its second division ruled against MNTC. It then elevated the case to the CTA’s en banc (full court.)
In its ruling, the Tax Court en banc said MNTC also failed to comply with the provisions of the Revenue Memorandum Order 1-2000.
The RMO requires that to avail of the tax treaty relief, it must be filed with the International Tax Affairs Division (ITAD) before it can be availed and 15 days before the payment of tax.
But the records from BIR showed that MNTC filed the application for tax treaty relief more than one year from the payment of dividends to its stockholders.
“Clearly, petitioner failed to comply with the requirements prescribed in RMO 1-2000,” the Tax Court said.
“Considering that administrative issuances have the force and effect of law, and they benefit from the same presumption of validity and constitutionality enjoyed by statutes, we rule that petitioner’s failure to comply with the requirements prescribed by RMO 1-2000 warrants the denial of its claim for refund or credit…,” the Tax Court said.