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    CIR Vs Interpublic Group of Companies Inc

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    Darlene Ganub
    The document discusses a case regarding a non-resident foreign corporation (IGC) seeking a tax refund from the Philippines for taxes paid on dividends received from its 30% ownership of a domestic corporation (McCann). IGC filed an administrative claim for refund that was not acted upon, so it filed a petition for review. The issue is whether IGC has the capacity to sue in Philippine courts. The court ruled that as IGC was not transacting business in the Philippines, it could bring an action in Philippine courts despite not having a license as a foreign corporation, as the transaction was conducted independently of its branch office in the Philippines.

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    CIR Vs Interpublic Group of Companies Inc

    Uploaded by

    Darlene Ganub
    2K views2 pages
    The document discusses a case regarding a non-resident foreign corporation (IGC) seeking a tax refund from the Philippines for taxes paid on dividends received from its 30% ownership of a domestic corporation (McCann). IGC filed an administrative claim for refund that was not acted upon, so it filed a petition for review. The issue is whether IGC has the capacity to sue in Philippine courts. The court ruled that as IGC was not transacting business in the Philippines, it could bring an action in Philippine courts despite not having a license as a foreign corporation, as the transaction was conducted independently of its branch office in the Philippines.

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    CIR vs Interpublic Group of Companies inc

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    The document discusses a case regarding a non-resident foreign corporation (IGC) seeking a tax refund from the Philippines for taxes paid on dividends received from its 30% ownership of a domestic corporation (McCann). IGC filed an administrative claim for refund that was not acted upon, so it filed a petition for review. The issue is whether IGC has the capacity to sue in Philippine courts. The court ruled that as IGC was not transacting business in the Philippines, it could bring an action in Philippine courts despite not having a license as a foreign corporation, as the transaction was conducted independently of its branch office in the Philippines.

    Copyright:

    © All Rights Reserved
    Download as ODT, PDF, TXT or read online from Scribd
    Download as odt, pdf, or txt
    2K views2 pages

    CIR Vs Interpublic Group of Companies Inc

    Uploaded by

    Darlene Ganub
    The document discusses a case regarding a non-resident foreign corporation (IGC) seeking a tax refund from the Philippines for taxes paid on dividends received from its 30% ownership of a domestic corporation (McCann). IGC filed an administrative claim for refund that was not acted upon, so it filed a petition for review. The issue is whether IGC has the capacity to sue in Philippine courts. The court ruled that as IGC was not transacting business in the Philippines, it could bring an action in Philippine courts despite not having a license as a foreign corporation, as the transaction was conducted independently of its branch office in the Philippines.

    Copyright:

    © All Rights Reserved
    Download as ODT, PDF, TXT or read online from Scribd
    Download as odt, pdf, or txt
    of 2

    38. [G.R. No. 207039. August 14, 2019.

    ]
    COMMISSIONER OF INTERNAL REVENUE vs. INTERPUBLIC GROUP OF COMPANIES, INC.
    J.C. REYES, JR., J
     
    FACTS: Interpublic Group of Companies, Inc. (IGC) is a non-resident foreign corporation duly organized and
    existing under and by virtue of the laws of the State of Delaware, United States of America.

    The IGC owns 2,999,998 shares or 30% of the total outstanding and voting capital stock of McCann Worldgroup
    Philippines, Inc. (McCann), a domestic corporation duly organized and existing under the laws of the Philippines
    engaged in the general advertising business.

    The IGC filed an administrative claim for refund or issuance of tax credit certificate (TCC), representing the
    alleged overpaid FWT on dividends paid by McCann to IGC. In the said administrative claim, the IGC averred
    that as a non-resident foreign corporation, it may avail of the preferential FWT rate of 15% on dividends received
    from a domestic corporation under Section 28 (B) (5) (b) of the Tax Code.

    The IGC submitted to CIR additional documents in support of its administrative claim for refund or issuance of
    TCC. The CIR failed to act on IGC's claim for refund or issuance of TCC. This prompted the IGC to file a petition
    for review with the CTA.

    ISSUE: Whether or not the IGC has the capacity to sue in Philippine courts. Otherwise stated, can a non-
    resident foreign corporation which collects dividends from the Philippines sue here to claim tax refund?

    RULING: We agree with the CTA that the issue is not one of first impression.

    Section 133 of the Corporation Code provides:

    SEC. 133. Doing business without a license. — No foreign corporation transacting business in the Philippines
    without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or
    proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or
    proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized
    under Philippine laws.

    The aforementioned provision bars a foreign corporation "transacting business" in the Philippines without a
    license access to our courts. Thus, in order for a foreign corporation to sue in Philippine courts, a license is
    necessary only if it is "transacting or doing business" in the country. 5 Conversely, if an unlicensed foreign
    corporation is not transacting or doing business in the Philippines, it can be permitted to bring an action even
    without such license.

    The general rule that a foreign corporation is the same juridical entity as its branch office in the Philippines
    cannot apply here. This rule is based on the premise that the business of the foreign corporation is conducted
    through its branch office, following the principal-agent relationship theory. It is understood that the branch
    becomes its agent here. So that when the foreign corporation transacts business in the Philippines
    independently of its branch, the principal-agent relationship is set aside. The transaction becomes one of the
    foreign corporation, not of the branch. Consequently, the taxpayer is the foreign corporation, not the branch or
    the resident foreign corporation.

    Corollarily, if the business transaction is conducted through the branch office, the latter becomes the taxpayer,
    and not the foreign corporation.

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