Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83157:57120&catid=1584&Itemid=566
Timestamp: 2019-04-25 02:05:25+00:00

Document:
G.R. No. 181459, June 09, 2014 - COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. MANILA ELECTRIC COMPANY (MERALCO), Respondent.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. MANILA ELECTRIC COMPANY (MERALCO), Respondent.
Before the Court is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks to annul and set aside the Decision1 of the Court of Tax Appeals, dated October 15, 2007, and its Resolution2 dated January 9, 2008 denying petitioner’s Motion for Reconsideration in the case entitled Commissioner of Internal Revenue v. Manila Electric Company (MERALCO), docketed as C.T.A EB No. 262.
The facts of this case are uncontroverted.
IN VIEW OF THE FOREGOING, petitioner’s claim in the amount of TWO HUNDRED TWENTY-FOUR MILLION SEVEN HUNDRED SIXTY THOUSAND NINE HUNDRED TWENTY-SIX PESOS & SIXTY-FIVE CENTAVOS (P224,760,926.65) representing erroneously paid and remitted final income taxes for the period January 1999 to July 2002 is hereby DENIED on the ground of prescription. However, petitioner’s claim in the amount of THIRTY-NINE MILLION THREE HUNDRED FIFTY NINE THOUSAND TWO HUNDRED FIFTY-FOUR PESOS & SEVENTY-NINE CENTAVOS (P39,359,254.79) is hereby GRANTED.
Accordingly, respondent is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE to petitioner in the amount of THIRTY-NINE MILLION THREE HUNDRED FIFTY-NINE THOUSAND TWO HUNDRED FIFTY-FOUR PESOS & SEVENTY-NINE CENTAVOS (P39,359,254.79) representing the final withholding taxes erroneously paid and remitted for the period December 2002 to September 2003.
In the light of the laws and jurisprudence on the matter, We see no reason to reverse the assailed Decision dated October 16, 2006 and Resolution dated January 11, 2007 of the First Division.
WHEREFORE, premises considered, both petitions are hereby DISMISSED.
In the same vein, the motions for reconsideration filed by the respective parties were also denied in a Resolution21 dated January 9, 2008.
The sole issue presented before us is whether or not respondent MERALCO is entitled to a tax refund/credit relative to its payment of final withholding taxes on interest payments made to NORD/LB from January 1999 to September 2003.
Petitioner’s argument fails to persuade.
After a careful scrutiny of the records and evidence presented before us, we find that respondent MERALCO has discharged the requisite burden of proof in establishing the factual basis for its claim for tax refund.
NORD/LB is owned by the State (Land) of Lower Saxony to the extent of 40%, by the States of [Saxony-]Anhalt and Mecklenburg-Western Pomerania to the extent of 10% each. The Lower Saxony Savings Bank and Central Savings Bank Association have a share of [26.66%]. The Savings Bank Association Saxony-Anhalt and the Savings Bank Association Mecklenburg-Western Pomerania have a share of [6.66%] each.
As the regional bank for Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania, NORD/LB offers support in public sector financing. It fulfills as Girozentrale the function of a central bank for the savings bank in these three states (Lander).
Given that the same was issued by the Embassy of the Federal Republic of Germany in the regular performance of their official functions, and the due execution and authenticity thereof was not disputed when it was presented in trial, the same may be admitted as proof of the facts stated therein. Further, it is worthy to note that the Embassy of the Federal Republic of Germany was in the best position to confirm such information, being the representative of the Federal Republic of Germany here in the Philippines.
Similarly, in BIR Ruling [UN-450-95], Citytrust wrote the BIR to request for a ruling exempting it from the payment of withholding tax on the sale of the land by various BIR-approved trustees and tax-exempt private employees' retirement benefit trust funds represented by Citytrust. The BIR ruled that the private employees’ benefit trust funds, which included petitioner, have met the requirements of the law and the regulations and, therefore, qualify as reasonable retirement benefit plans within the contemplation of Republic Act No. 4917 (now Sec. 28 [b] 7 [A], Tax Code). The income from the trust fund investments is, therefore, exempt from the payment of income tax and, consequently, from the payment of the creditable withholding tax on the sale of their real property.
Thus, the documents issued and certified by Citytrust showing that money from the Employees' Trust Fund was invested in the MBP lot cannot simply be brushed aside by the BIR as self-serving, in the light of previous cases holding that Citytrust was indeed handling the money of the Employees' Trust Fund. These documents, together with the notarized Memorandum of Agreement, clearly establish that petitioner, on behalf of the Employees' Trust Fund, indeed invested in the purchase of the MBP lot. Thus, the Employees' Trust Fund owns 49.59% of the MBP lot.
x x x. A judicial admission is an admission, verbal or written, made by a party in the course of the proceedings in the same case, which dispenses with the need for proof with respect to the matter or fact admitted. It may be contradicted only by a showing that it was made through palpable mistake or that no such admission was made.
(a) Income Derived by Foreign Government. - Income derived from investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments, (ii) financing institutions owned, controlled, or enjoying refinancing from foreign governments, and (iii) international or regional financial institutions established by foreign governments.
Section 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
As can be gleaned from the foregoing, the prescriptive period provided is mandatory regardless of any supervening cause that may arise after payment. It should be pointed out further that while the prescriptive period of two (2) years commences to run from the time that the refund is ascertained, the propriety thereof is determined by law (in this case, from the date of payment of tax), and not upon the discovery by the taxpayer of the erroneous or excessive payment of taxes. The issuance by the BIR of the Ruling declaring the tax-exempt status of NORD/LB, if at all, is merely confirmatory in nature. As aptly held by the CTA-First Division, there is no basis that the subject exemption was provided and ascertained only through BIR Ruling No. DA-342-2003, since said ruling is not the operative act from which an entitlement of refund is determined.34 In other words, the BIR is tasked only to confirm what is provided under the Tax Code on the matter of tax exemptions as well as the period within which to file a claim for refund.
In this regard, petitioner is misguided when it relied upon the six (6)-year prescriptive period for initiating an action on the ground of quasi-contract or solutio indebiti under Article 1145 of the New Civil Code. There is solutio indebiti where: (1) payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause.35 Here, there is a binding relation between petitioner as the taxing authority in this jurisdiction and respondent MERALCO which is bound under the law to act as a withholding agent of NORD/LB Singapore Branch, the taxpayer. Hence, the first element of solutio indebiti is lacking. Moreover, such legal precept is inapplicable to the present case since the Tax Code, a special law, explicitly provides for a mandatory period for claiming a refund for taxes erroneously paid.
In the case at bar, respondent MERALCO had ample opportunity to verify on the tax-exempt status of NORD/LB for purposes of claiming tax refund. Even assuming that respondent MERALCO could not have emphatically known the status of NORD/LB, its supposition of the same was already confirmed by the BIR Ruling which was issued on October 7, 2003. Nevertheless, it only filed its claim for tax refund on July 13, 2004, or ten (10) months from the issuance of the aforesaid Ruling. We agree with the CTA-First Division, therefore, that respondent MERALCO’s claim for refund in the amount of Two Hundred Twenty-Four Million Seven Hundred Sixty Thousand Nine Hundred Twenty-Six Pesos and Sixty-Five Centavos (P224,760,926.65) representing erroneously paid and remitted final income taxes for the period January 1999 to July 2002 should be denied on the ground of prescription.
WHEREFORE, the petition is DENIED. The October 15, 2007 Decision and January 9, 2008 Resolution of the Court of Tax Appeals in C.T.A. EB No. 262 are hereby AFFIRMED.
1 Penned by Associate Justice Olga Palanca-Enriquez; Annex "A" to Petition, rollo, pp. 30-48.
2 Annex "B" to Petition, id. at 49-50.
23 Comment to Petition, id. at 69.
25 Id. at 41. (Emphasis supplied).
27 G.R. No. 162175, June 28, 2010, 621 SCRA 606.
28Miguel J. Ossorio Pension Foundation, Incorporated v. Court of Appeals, supra, at 634-635.
29Heirs of Miguel Franco v. Court of Appeals, 463 Phil. 417, 428 (2003).
30 574 Phil. 672 (2008).
31 Id. at 681-684. (Emphasis supplied).
35Genova v. De Castro, 454 Phil. 662, 676 (2003).
36Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010, 632 SCRA 422, 425.
37 Commissioner of Internal Revenue v. Asian Transmission Corporation, G.R. No. 179617, January 19, 2011, 640 SCRA 189, 200, citing Barcelon, Roxas Securities, Inc. (now known as UBP Securities, Inc.) v. CIR, 529 Phil. 785, 794-795 (2006).
40United Airlines, Inc. v. Commissioner of Internal Revenue, G.R. No. 178788, September 29, 2010, 631 SCRA 567, 582.

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