Request for Authority to Allow Procter & Gamble Philippines Inc. to Apply its Tax Credit Certificate in Payment of Withholding Tax on Future Dividends to be Remitted by it to Procter & Gamble Co., U.S.A

June 27, 1995 BIR RULING NO. 098-95 204 000-00 098-95 A.M. Sison Jr. & Associates Suite 2002 Pacific Bank Bldg. 6776 Ayala Avenue, Makati City Attention: Atty . Antonio L . Cardino Gentlemen : This refers to your letter dated April 4, 1995 requesting authority to allow your client, Procter & Gamble Philippines Inc. to apply its Tax Credit Certificate No. SN000422 issued on February 28, 1995 in payment of withholding tax on future dividends to be remitted by it to Procter & Gamble Co.,U.S.A. aisadc It is represented that Tax Credit Certificate No. SN000422 was issued by this Office on February 28, 1995 to Procter & Gamble Philippines, Inc. in the amount Six Million Eight Hundred Thousand Pesos (6,800,000.00) as overpaid withholding tax on cash dividends remitted to Procter & Gamble, U.S.A. on June 30, 1991, November 27, 1991 and May 19, 1992; that while Tax Credit Certificate No. SN000422 is in the name of Procter & Gamble Philippines, Inc.,the beneficial owner of said tax credit is Procter & Gamble Co.,U.S.A.:that since the tax credit certificate was issued for overpaid withholding tax on dividends, there is no valid reason why the same cannot be applied against the same kind of tax on dividend remittances; and that the arrangement is more advantageous to the government because the tax credit will be applied only when dividends are declared and paid which usually happens at the end of the year only. In reply thereto, please be informed that Paragraph III(B) of RNO No. 20-91 dated June 10, 1991 provides as follows: "xxx xxx xxx "B. The TCC shall be used in the payment of internal revenue tax liabilities of a taxpayer except for the following: 1. Payment or remittance of any kind of withholding tax by taxpayers. 2. Payment of a tax reduced by way of compromise authorized under Section 204 of the Tax Code. 3. Payment of deficiency taxes arising from confidential information." In the event of the issuance of tax credit certificate, the taxpayer as the owner thereof, has the exclusive right to enjoy and dispose of the certificate according to its wishes. These powers are necessarily an attribute of the taxpayer's ownership of said certificate. The free enjoyment and disposition of said certificate can only be subject to the limitations imposed by law (Articles 427 and 428 New Civil Code of the Philippines) In view thereof, this office is of the opinion as it hereby holds that your client, Procter & Gamble Philippines, Inc. can apply its Tax Credit Certificate No. SN000422 issued on February 28, 1995 in payment of withholding tax on future dividends to be remitted by it to Procter & Gamble Co.,U.S.A. cdtech Very truly yours, RENE G. BAEZ Acting Commissioner