BIR Ruling No. 234-82

August 11, 1982 BIR RULING NO. 234-82 295-(3) 000-00 234-82 The HongKong and Shanghai Banking Corporation 6780 Ayala Avenue Makati, Metro Manila Attention: Mr . I . B . Dawson Vice President-Operations S i r : This refers to your letter dated March 2, 1982 requesting permission from this Bureau to deduct from your subsequent remittance of withholding taxes and from the corresponding money value of documentary stamps to be affixed to your next remittance documents the respective amounts of P164,380.12 and P305.40, representing withholding tax on dividends allegedly paid erroneously and documentary stamp tax on remittance documents. cdta It is represented that the International Finance Corporation (IFC) is one of the major investors in the 8-% Debenture Bonds of the Philippine Long Distance Telephone Company (PLDT) floated in the U.S.A.; that purchasers of said debentures were issued stock subscription warrants evidencing the right to purchase a specific number of shares of common stock of PLDT; that on September 8, 1981, IFC exercised its subscription warrant and was issued 375,726 common shares by the Marine Midland Bank, N.A., PLDT's transfer agent in New York; that on October 15, 1981, a cash dividend of P1.25 per share was declared and paid by PLDT to IFC; and that as withholding agent for PLDT dividend payments, you deducted and remitted to this Bureau the amount of P164,380.12, as 35% withholding tax on said dividends. In reply thereto, please be informed that IFC is exempt from all taxes pursuant to Article VI, Section 9, of its Articles of Agreement ratified by the Philippine Government, in August, 1957, which reads as follows: "Section 9. Immunities from Taxation "(a) The Corporation, its assets, property, income and its operations and transactions authorized by this Agreement, shall be immune from all taxation and from all customs duties. The Corporation shall also be immune from liability for the collection or payment of any tax or duty." Accordingly, you are exempt from the withholding tax on the dividend payments to IFC. However, you cannot apply the withholding tax allegedly paid erroneously against succeeding withholding tax due from you. For this purpose, you may file a written claim for refund with this Office, Attention: Chief, Appellate Division, within two years from date of payment, pursuant to Section 295 of the Tax Code. As regards the refund of documentary stamp tax on the value of said stamps affixed to the remittance documents, the same cannot be granted. Under Section 222 of the Tax Code, documentary stamp taxes are payable by the person making, signing, accepting, or transferring the same, and at the time such act is done or transaction had . Since documentary stamp tax is also collectible from the party remitting the dividend (i.e. PLDT) which enjoys no immunity from taxation, there is no legal basis to refund the amount of P305.40. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner