BIR Ruling No. 315-82

October 20, 1982 BIR RULING NO. 315-82 53-e 000-00 315-82 Proton Chemical Industries, Inc. Suite 702 Golden Rock Bldg. 168 Salcedo St., Legaspi Village Makati, Metro Manila Attention: Mr . Mariano E . Castro VP-Treasurer Gentlemen : This refers to your letters both dated October 19, 1982 stating that your company is an export oriented manufacturer of methyl ester, glycerine and alkanolamide and a BOI registered corporation under Republic Act No. 6135 and Presidential Decree No. 1789; that in view of certain tax incentives your company does not have tax liabilities except withholding taxes; that you have a pending claim for tax credit of alleged overpaid withholding-tax-at-source on royalties and dividends remitted to your foreign partners in Japan; and that you were granted a tax credit of P161,829.93 as erroneously paid 2% miller's tax on crude coconut oil purchased from various suppliers during the period from July to December, 1979 and from January to June, 1980, covered by Tax Credit Memo (Taxpayer's Record No. 67-81) dated September 14, 1981. You now request for a ruling on the following: 1. Whether or not you can use the Tax Credit Memo in payment of your company's withholding tax liabilities; and 2. Whether a certification from this Office is necessary in order that the Central Bank will allow you to remit the deficiencies in the royalties and dividends to your foreign partners in Japan. In reply thereto, please be informed that pursuant to Section 53(e) of the Tax Code as amended, the corresponding taxes prescribed under the RP-Japan Tax Treaty on dividends and royalties shall be withheld by the payor-corporation and paid in the same manner and subject to the same conditions as provided in Section 54 of the Tax Code. In the instant case, therefore, as the payor-corporation, you are the party liable for the payment of the aforesaid taxes. In the case of the Commissioner of Internal Revenue vs. Malayan Insurance Co., Inc., G.R. No. L-21913, November 18, 1967, it was ruled that the withholding agent is personally liable for the payment of the withholding tax. The responsibility for the collection of the tax as well as the payment thereof is concentrated upon the person over whom the Government has jurisdiction. Thus, the withholding agent is constituted as the agent of the government and the taxpayer. With respect to the collection and/or withholding of the tax, he is the government's agent. In regards to the filing of the necessary income tax return and the payment of the tax, he is the agent of the taxpayer. (Philippine Guaranty Co. vs. CIR, 13 SCRA 775) Since in the payment and collection of the withholding tax under Section 53(e) of the Tax Code, the official receipt issued is in the name of the withholding agent, any overpayment determined by the Bureau to be refundable or creditable should be given to such withholding agent who can then use or apply the same in payment of its withholding tax liabilities. In this connection, the Tax Credit Memo (T.R. No. 67-81) issued to you on September 14, 1981 covering the erroneous payment of miller's tax may be applied against your withholding tax liabilities by presenting the original thereof to the Chief, Receivable Accounts Division, this Bureau, together with the return showing the withholding tax due in order that the corresponding Tax Debit Memo confirming such application may be issued accordingly. cdtech Moreover, in order that you can get a Central Bank approval on your remittance of additional royalties and dividends to your foreign partners in Japan, a certification from this Office should be secured as to the correct tax withheld at source and paid thereon. Very truly yours, RUBEN B. ANCHETA Acting Commissioner