COMPAGNIE FINANCIERE
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G.R. No. 133834
Present: PUNO,
J., Chairperson, Sandoval-Gutierrez, * AZCUNA,
and GARCIA, JJ. Promulgated: August 28, 2006 |
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D E C I S I O N
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SANDOVAL-GUTIERREZ, J.: |
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For our resolution is the instant Petition for Review on
Certiorari assailing the Decision[1] of
the Court of Appeals dated
Compagnie Financiere
Sucres et Denrees, petitioner, is a non-resident private corporation
duly organized and existing under the laws of the
On October 21, 1991, petitioner transferred its eight
percent (8%) equity interest in the Makati Shangri-La Hotel and Resort,
Incorporated to Kerry Holdings Ltd. (formerly Sligo
Holdings Ltd), as shown by a Deed of Sale and Assignment of Subscription and
Right of Subscription of the same date. Transferred
were (a) 107,929 issued shares of stock valued at P100.00 per share with
a total par value of P10,792,900.00; (b) 152,031 with a par value of P100.00
per share with a total par value of P15,203,100.00; (c) deposits on
stock subscriptions amounting to P43,147,630.28; and (d) petitioner’s
right of subscription.
On
On P107,869.00 and
overpaid documentary stamps taxes in the sum of P951,830.00 or a total
of P1,059,699.00. Petitioner
alleged that the transfer of deposits on stock subscriptions is not a
sale/assignment of shares of stock subject to documentary stamps tax and
capital gains tax.
However, respondent did not act on petitioner’s claim for
refund. Thus, on
In its Decision[2]
dated
Petitioner filed a motion for reconsideration, but in a Resolution
dated
On
Hence, petitioner’s recourse to this Court
by way of a Petition for Review on Certiorari.
The sole issue for our resolution is whether the Court of
Appeals erred in holding that the assignment of deposits on stock subscriptions
is subject to documentary stamps tax and capital gains tax.
Along with police power and eminent domain, taxation is one
of the three basic and necessary attributes of sovereignty. Thus, the State
cannot be deprived of this most essential power and attribute of sovereignty by
vague implications of law. Rather, being derogatory of sovereignty, the
governing principle is that tax exemptions are to be construed in strictissimi juris
against the taxpayer and liberally in favor of the taxing authority; and he
who claims an exemption must be able to justify his claim by the clearest grant
of statute.[3]
In the instant case, petitioner seeks a refund. Tax refunds
are a derogation of the State’s taxing power. Hence, like tax exemptions, they are
construed strictly against the taxpayer and liberally in favor of the State.[4] Consequently,
he who claims a refund or exemption from taxes has the burden of justifying the
exemption by words too plain to be mistaken and too categorical to be
misinterpreted.[5] Significantly, petitioner cannot point to
any specific provision of the National Internal Revenue Code authorizing its
claim for an exemption or refund. Rather,
Section 176 of the National Internal Revenue Code applicable to the issue
provides that the future transfer of shares of stocks is subject to documentary
stamp tax, thus:
SEC. 176. Stamp tax on sales, agreements to sell,
memoranda of sales, deliveries or transfer of due-bills, certificates of
obligation, or shares or certificates of stock. – On all sales, or
agreements to sell, or memoranda of sales, or deliveries, or transfer of due-bills,
certificates of obligation, or shares or certificates of stock in any
association, company, or corporation, or transfer of such securities by
assignment in blank, or by delivery, or by any paper or agreement, or
memorandum or other evidences of transfer or sale whether entitling the
holder in any manner to the benefit of such due bills, certificates of
obligation or stock, or to secure the future payment of money, or for
the future transfer of any due-bill, certificates of obligation or stock,
there shall be collected a documentary stamp tax of fifty centavos (P1.50)
on each two hundred pesos(P200.00), or fractional part thereof, of the par
value of such due-bill, certificates of obligation or stock: Provided,
That only one tax shall be collected on each sale or transfer of stock or
securities from one person to another, regardless of whether or not a
certificate of stock or obligation is issued, indorsed, or delivered in
pursuance of such sale or transfer; and Provided, further,
That in case of stock without par value the amount of the documentary stamp tax
herein prescribed shall be equivalent to twenty-five percentum
(25%) of the documentary stamp tax paid upon the original issue of the said
stock. (Emphasis supplied).
Clearly, under the above provision, sales to secure “the
future transfer of due-bills, certificates of obligation or certificates of stock”
are liable for documentary stamp tax. No
exemption from such payment of documentary stamp tax is specified therein.
Petitioner contends that the assignment of its “deposits on
stock subscription” is not subject to capital gains tax because there is no
gain to speak of. In the Capital Gains
Tax Return on Stock Transaction, which petitioner filed with the Bureau of
Internal Revenue, the acquisition cost of the shares it sold, including the
stock subscription is P69,143,630.28. The
transfer price to Kerry Holdings, Ltd. is P70,332,869.92.
Obviously, petitioner has a net gain in
the amount of P1,189,239.64. As the CTA aptly ruled, “ a
tax on the profit of sale on net capital gain is the very essence of the net
capital gains tax law. To hold otherwise will ineluctably deprive the
government of its due and unduly set free from tax liability persons who
profited from said transactions.”
Verily,
the Court of Appeals committed no error in affirming the CTA Decision.
We reiterate the well-established doctrine that as a matter
of practice and principle, this Court will not set aside the conclusion reached
by an agency, like the CTA, especially if affirmed by the Court of
Appeals. By the very nature of its
function, it has dedicated itself to the study and consideration of tax
problems and has necessarily developed an expertise on the subject, unless
there has been an abuse or improvident exercise of authority on its part, which
is not present here.
WHEREFORE,
we DENY the
petition. The Decision of the
Court of Appeals in CA-G.R. SP No. 39501 is AFFIRMED IN TOTO. Costs against petitioner.
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE
CONCUR:
REYNATO S. PUNO
Associate Justice Chairperson |
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(On leave) RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Associate Justice |
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CANCIO C. GARCIA Associate Justice |
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I
attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.
REYNATO S. PUNO
Associate
Justice
Chairperson, Second
Division
ARTEMIO
V. PANGANIBAN
Chief Justice
* On leave.
[1] Rollo, pp. 26-31. Penned by
Associate Justice Gloria C. Paras (deceased) with
Associate Justice
[2] Rollo, pp. 34-39.
[3] Commissioner of
Internal Revenue v. General Foods (Phils.) Inc., G.R. No.
143672,
[4] Far East Bank & Trust Company v.
Court of Appeals, G.R. No. 129130,
[5] Commissioner of Internal Revenue v.
Phil. Long Distance Telephone Company, G.R. No. 140230,