I-Remit v. Revenue

HERNANDO, J.:

This Petition for Review1 assails the April 16, 2013 Decision2 and October 30, 2013 Resolution3 of the Court of Tax Appeals En Banc (CTA En Banc) in CTA EB No. 822. In its assailed Decision, the CTA En Banc dismissed the Petition for Review filed by petitioner I-Remit, Inc. (I-Remit) for refund of excess taxes from respondent Commissioner of Internal Revenue (CIR).4 In its assailed Resolution, the CTA En Banc denied petitioner's Motion for Reconsideration for lack of merit.5 This case involves the interpretation of Section 127(B) of the National Internal Revenue Code (NIRC), specifically on the computation of tax on sale of shares of stock sold or exchanged through initial public offering. Section 127(B) provides: SEC.

127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange or through Initial Public Offering. - x x x x (B) Tax on Shares of Stock Sold or Exchanged Through Initial Public Offering.

- There shall be levied, assessed and collected on every sale, barter, exchange or other disposition through initial public offering of shares of stock in closely held corporations, as defined herein, a tax at the rates provided hereunder based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed in accordance with the proportion of shares of stock sold, bartered, exchanged or otherwise disposed to the total outstanding shares of stock after the listing in the local stock exchange: Up to twenty-five percent (25%) 4% Over twenty-five percent (25%) but not over thirty-three and one third percent (33 1/3%) 2% Over thirty-three and one third percent (33 1/3%) 1% The tax herein imposed shall be paid by the issuing corporation in primary offering or by the seller in secondary offering. x x x x Petitioner argues that the tax on sale of shares of stock sold or exchanged through initial public offering should be jointly computed for both sale of shares in primary offering, where the shares are offered by the issuing corporation, and in secondary offering, where the shares are offered by the selling shareholders of the corporation.6 Respondent CIR counters that the tax should be separately computed for the sale for shares in the primary and secondary offerings.7 The antecedents.

Petitioner I-Remit is a domestic corporation listed with the Philippine Stock Exchange.8 It is principally engaged in the business of fund transfer and remittance services.9 JPSA Global Services Co. (JPSA), JTKC Equities, Inc. (JTKC), and Surewell Equities, Inc. (Surewell), all constituted under the laws of the Philippines, are shareholders of petitioner and have constituted the latter as their attorney-in-fact for their claim for refund.10 Respondent CIR is vested with the authority to decide, approve and/or grant refund of national internal revenue taxes.11 On October 17, 2007, petitioner offered to the public 140,604,000 shares by way of an initial public offering at the offer price of P4.68 each share.12 Of these shares, 107,417,000 shares were offered in primary offering by petitioner as the issuing corporation, and 33,187,000 shares were offered in secondary offering by JTKC, JPSA, and Surewell, as selling shareholders of petitioner.13 On November 19, 2007, in compliance with Section 127(B) requiring payment of tax in accordance with the "shares of stock sold, bartered, exchanged or otherwise disposed"

in proportion to the "total outstanding shares of stock after the listing," petitioner paid the tax in the amount of P26,321,069.00, computed as follows:14 Tax Base = Shares of stock sold, bartered, exchanged or otherwise disposed