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Taxation; Tax Refund; Section 229 of the Tax Code states that
judicial claims for refund must be filed within two (2) years from the
date of payment of the tax or penalty.·Section 229 of the Tax Code
states that judicial claims for refund must be filed within two (2)
years from the date of payment of the tax or penalty, providing
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* FIRST DIVISION.
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further that the same may not be maintained until a claim for
refund or credit has been duly filed with the Commissioner of
Internal Revenue (CIR).
Same; Same; The primary purpose of filing an administrative
claim was to serve as a notice of warning to the Commissioner of
Internal Revenue (CIR) that court action would follow unless the tax
or penalty alleged to have been collected erroneously or illegally is
refunded.·The primary purpose of filing an administrative claim
was to serve as a notice of warning to the CIR that court action
would follow unless the tax or penalty alleged to have been collected
erroneously or illegally is refunded. To clarify, Section 229 of the
Tax Code · [then Section 306 of the old Tax Code] · however does
not mean that the taxpayer must await the final resolution of its
administrative claim for refund, since doing so would be
tantamount to the taxpayerÊs forfeiture of its right to seek judicial
recourse should the two (2)-year prescriptive period expire without
the appropriate judicial claim being filed.
RP-US Tax Treaty; Under Article 11(5) of the Republic of the
Philippines-United States of America (RP-US) Tax Treaty, the term
„dividends‰ should be understood according to the taxation law of
the State in which the corporation making the distribution is a
resident.·Under Article 11(5) of the RP-US Tax Treaty, the term
„dividends‰ should be understood according to the taxation law of
the State in which the corporation making the distribution is a
resident, which, in this case, pertains to respondent, a resident of
the Philippines. Accordingly, attention should be drawn to the
statutory definition of what constitutes „dividends,‰ pursuant to
Section 73(A) of the Tax Code which provides that „[t]he term
ÂdividendsÊ x x x means any distribution made by a
corporation to its shareholders out of its earnings or profits
and payable to its shareholders, whether in money or in other
property.‰
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PERLAS-BERNABE, J.:
The Facts
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7 Id., at p. 64.
8 Id., at pp. 64-65.
9 Entitled „CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF
THE PHILIPPINES AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA WITH
RESPECT TO TAXES ON INCOME,‰ which entered into force on October 16,
1982.
10 Rollo, p. 65.
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of the Tax Code. Citing the RP-US Tax Treaty, the CTA
Division noted that dividend income shall be determined by
the law of the state in which the distributing corporation is
a resident,23 which in the PhilippinesÊ case, would be
Section 73(A)24 of the Tax Code, defining dividends for
income tax purposes as distributions to shareholders
arising out of its earnings or profits. Accordingly, the CTA
Division held that the net capital gain of GTRC could not
be regarded as „dividends,‰ considering that it did not come
from respondentÊs unrestricted earnings or profits, as the
records would show that it did not have any unrestricted
earnings from the years 2003-2009 to cover any dividend
payouts.25 Finally, the CTA Division explained that there is
only one instance in the Tax
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thirteen (13)
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I.
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36 G.R. Nos. 193383-84 & 193407-08, January 14, 2015, 746 SCRA
93.
37 Id., at pp. 110-111; citation omitted.
38 Date of payment was November 3, 2008, while the administrative
and judicial claims were respectively filed on October 21, 2010 and
November 3, 2010. Rollo, pp. 27-28.
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II.
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(B) Tax on Nonresident Foreign Corporation.·
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502
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40 Deutsche Bank AG Manila Branch v. CIR, 716 Phil. 676, 686; 704
SCRA 216, 227 (2013).
41 Article 11(5) of the RP-US Tax Treaty reads:
Article 11
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Dividends
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5. The term „dividends‰ as used in this Convention means
income from shares, mining shares, foundersÊ shares or other
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44 See Crucillo v. Office of the Ombudsman, 552 Phil. 699, 624; 525
SCRA 636, 665 (2007); and Republic Planters Bank v. Agana, Sr., 336
Phil. 1, 9-11; 269 SCRA 1, 10 (1997).
45 Batas Pambansa Bilang 68 (May 1, 1980).
46 See Wise & Co., Inc. v. Meer, 78 Phil. 655 (1947).
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··o0o··
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