Engtek v. CIR PDF
Engtek v. CIR PDF
Engtek v. CIR PDF
ENBANC
Present:
Acosta, Presiding Justice/
-versus- Castaneda, Jr.,
Bautista,
Uy,
Casanova, and
Palanca-Enriquez,JJ:.
COMMISSIONER OF INTERNAL
REVENUE, Promulgated:
Respondent. /-'/1 . Jl . r
DECISION
This is an appeal from the January 26, 2005 Decision of the Second
Division of the Court of Tax Appeals (the Court in Division) in C.T.A. CASE
NO. 6644 as well as the Resolution of the Court in Division dated April 28,
Decision. The Court in Division dismissed petitioner's claim for refund for
lack of merit.
C.T.A. EB NO. 89
DECISION
Page 2 of 16
dividends. On April 10, 2001, petitioner withheld the income tax due on
the dividends amounting to P7,500,000 and remitted the same to the BIR-
requested Revenue District No. 56, Calamba, Laguna, for the offsetting the
final withholding tax of P7,500,000.00 with taxes that may become due on
March 2002. The BIR denied the request in a letter dated January 16, 2002
on the ground that taxes paid could not be offset with future liabilities.
tax credit/refund, using BIR Form No. 1914 (Exhibit "L"), in the amount of
resolved by the respondent, it filed a Petition for Review with the Court of
petitioner's claim for refund/tax credit, the dispositive portion thereof reads
as follows:
No pronouncement as to costs.
SO ORDERED ."
On April 28, 2005, the Court in Division denied petitioner's Motion for
In its present Petition for Review, the petitioner made the following
assignment of errors:
C.T.A. EB NO. 89
DECISION
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I.
II.
III.
PETITIONER'S ARGUMENTS
According to the petitioner, the purpose for this rule is to protect the
stockholders by vesting them with the right to be paid such dividends once
its Board of Directors who represent the sole owner of the petitioner,
clearly the reversal or revocation of the cash dividend is allowed under our
C.T.A. EB NO. 89
DECISION
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corporate laws and yet the Second Division of this Honorable Court would
withhold this right to petitioner and deny its rightful claim for a refund.
Honorable Court should no longer inquire as to the reason for the reversal
the Court in Division substituted its own judgment for the business
usually re-examined and refocused. If it was decided that the Eng Tek
sense to declare cash dividends and remit them outside the country.
Instead, stock dividends should be declared and the money invested in the
decision regarding the future of the Group and therefore the declaration
Finally, petitioner alleges that it has established the fact that a cash
dividend was declared, the tax thereon was paid and the dividend was
RESPONDENT'S ARGUMENTS
That petitioner is not entitled to the claim for refund/tax credit in the
payor to deduct and withhold the tax under Section 2.57 of these
comes first, the term payable refers to the date the obligation become due,
the tax withheld on April 10, 2001, the same was made pursuant to the
provisions of the Tax Code and its implementing revenue regulations, thus,
follows:
C.T.A. EB NO. 89
DECISION
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cash dividend was for reasons pertaining to the financial structure of the
aside from Exhibit "H", the Corporate Secretary's Certificate dated March
stockholders of the petitioner and that petitioner failed to prove that the
Lastly, respondent argues that tax refunds are in the nature of tax
proof to establish the factual and legal bases of its claims for refund/tax
of the cash dividends was legitimate and that such reversal is not intended
structure of the Eng Tek Group of Companies (to which petitioner belongs),
factual and legal basis. Other than the Corporate Secretary's Certificate
dated March 31, 2003, showing the resolution of the Board of Directors on
October 8, 2001 to prove that on said date the Board approved the
was presented by the petitioner to prove the financial structure of Eng Tek
Petitioner did not offer in evidence its accounting records such as its
audited financial statements for the year 2000 to prove its financial position
at the time the cash dividends were declared. Likewise, it did not present
its financial statements for the year 2001 and thereafter, to prove the
for the reversal of the cash dividend declaration. Petitioner also failed to
present the accounting records such as its journals, ledgers, and other
books that would prove that indeed, the reversal of the declaration of cash
dividends were duly recorded in its books. The reversal of the cash
dividend declaration and its effects on the stockholder's equity should have
therefore concur with the ruling of the Court in Division denying petitioner's
claim for refund for insufficiency of evidence for its failure to present in
evidence the financial documents or records that could prove that the
C.T.A. EB NO. 89
DECISION
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reversal of the cash dividends really transpired and was duly recorded in its
financial records.
inquire into the wisdom of the reversal of the cash dividend declaration but
rather the Court's ruling was based on the sufficiency of the evidence
transpired and was done in accordance with the requirements of the 1997
EXHIBIT DESCRIPTION
account. Neither was there any proof offered showing petitioner's financial
investment plans. Hence, the Court in Division correctly ruled that the
reversal of the cash dividend is flawed and without factual and legal basis,
thus:
to prove its claim for refund is fatal to its cause. After all, it is axiomatic
that a claimant has the burden of proof to establish the factual basis of his
or her claim for tax credit or refund. Tax refunds, like tax exemptions, are
1
Paseo Realty & Development Corporation vs. Court of Appeals, Court of Tax Appeals, and
Commissioner of Internal Revenue, G.R. No. 119286, October 13, 2004 (440 SCRA 235);
Commissioner of Internal Revenue vs. Tokyo Shipping Co. Ltd., represented by Soriamont
Steamship Agencies, Inc., and Court of Tax Appeals, G.R. No. 68252, May 26, 1995 (244 SCRA
332); Commissioner of Internal Revenue vs. Philippine National Bank, G.R. No. 161997, October
25, 2005 (474 SCRA 303); Phi/ex Mining Corporation vs. Commissioner of Internal Revenue,
Court of Appeals, and The Court of Tax Appeals, G.R. No. 125704, August 28, 1998 (294 SCRA
687); Citibank, N.A. vs. Court of Appeals and Commissioner of Internal Revenue, G.R. No.
107434, October 10, 1997 (280 SCRA 459)
C.T.A. EB NO. 89
DECISION
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is hereby DENIED. Accordingly, the Decision dated January 26, 2005 and
SO ORDERED.
~~a.c~/~
CJUANITO C. CASTANEDA, lft.
Associate Justice
WE CONCUR:
(on leave)
ERNESTO D. ACOSTA
Presiding Justice
ER~UY
Associate Justice Ass~~~tice
..
'
(on leave)
CAESAR A. CASANOVA OLGA PALANCA-ENRIQUEZ
Associate Justice Associate Justice
CERTIFICATION
r.:
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the above Decision has been reached in consultation with the members of
the Court En Bane before the case was assigned to the writer of the opinion of
this Court.
~.,, G-G:t:::t-~ Q
t.lUANITO c. CASTANEDAGR..
Senior Associate Justice