CTA denies MNTC's P8.64-million tax refund plea

Posted at 11/06/12 4:25 PM

MANILA, Philippines - The Court of Tax Appeals (CTA) has dismissed a plea by the Manila North Tollways Corp. (MNTC) that sought an P8.64 million tax refund it paid on behalf of one of its stockholders, France-based Egis Project SA (Egis).

In a 30-page decision penned by Associate Justice Olga Palanca-Enriquez released to the public on Tuesday, the CTA ruled that MNTC failed to substantiate its claim of tax refund.

The Tax Court also pointed out that  MNTC also failed to comply with the provisions of Revenue Memorandum Order (RMO) 1-2000 which requires that the tax treaty relief must be filed with the International Tax Affairs Division (ITAD) 15 days before the payment of tax before it can be availed of.

The CTA said that MNTC only presented its amended monthly remittance return but did not present its original monthly remittance return of Final Income Taxes Withheld.

MNTC, the builder and 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 which is one of its stock holders owning 2,468,640 shares or 13.9 percent of the outstanding capital stock of MNTC.

Egis pointed out that under the RP-France Tax Treaty, tax withheld should be 10-percent, not 15-percent. MNTC subsequently sought a refund of the tax it paid on behalf of Egis.

The BIR, however, failed to act on the request for refund, thus MNTC elevated the case before the tax court.

The case was brought up to the tax court en banc after its Second Division ruled against MNTC.

In ruling that MNTC also failed to comply with the RMO, the CTA said that the firm filed its application more than a year from payment of dividends to its stockholders.

“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 decision read