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1.What is the case all about? background and facts of the case?

An appeal filed by petitioner Commissioner of Internal Revenue (CIR) on March 9,


2012, seeking to reverse the (1) Resolution dated December 21, 2011, which granted
respondent JP Morgan chase Bank, N.A. - Philippine Customer Care Center's claim for
refund in the amount of Php2,845,654.02; as well as the (2) Resolution dated February
17, 2012, which denied her Motion for Reconsideration, both rendered by the Court in
Division in CTA Case No. 7962.
FACTS:
1.Petitioner is the head of the Bureau of Internal Revenue (BIR) with office address at
the BIR National Office Building, Agham Road, Diliman, Quezon City
2.Respondent JP Morgan Chase Bank, N.A. - Philippine Customer Care Center, on the
other hand, is the Philippine Branch of JP Morgan Chase Bank, N.A., an American
corporation with offices at the 12th, 14th, 27th, and 31th Floors, Philamlife Tower, 8767
Paseo de Roxas St., Makati City.
a. registered with the Securities and Exchange Commission (SEC) to engage in call
center and business process services, information technology, information
technology enabled services, call-center services, customer care and other
customer care services.
b. registered with the BIR with Certificate of Registration No. 9RC0000158857,
dated August 10, 2005 and Taxpayer Identification No. 239-952-660-000.
3.In the pursuit of its business, respondent entered into a Master Service Provider
Agreement, Task Order #2 with PeopleSupport (Philippines), Inc. (PPI) with head office
at Asiatown I.T. Park, PeopleSupport Center, 6780 Ayala, Makati City. PPI is a
Philippine Economic Zone Authority (PEZA) registered Ecozone IT (Export) Enterprise
enjoying Tax Holiday (ITH) during the period May to July 2007.
4.Under the Agreement, PPI would provide and lease transmission facilities to
respondent for a fee.
5.For the period May to July 2007, respondent paid PPI Php56,913,080.40 or
US$1,255,251.00 detailed as follows: US$1,192,488 .. 45 on July 26, 2007 and
US$62,762.55 on August 16, 2007, and withheld tax there from in the amount of
Php2,845,654.02.
6.On August 10, 2007, respondent filed its Monthly Remittance Return of Creditable
Income Taxes Withheld for the month of July and paid the amount of
Php3,705,125.61,inclusive of the amount of Php2,845,654.02 withheld from PPI.
7.On August 7, 2008, respondent filed with the BIR's Revenue District Office No. 50
(South Makati) an application for refund of the amount of Php2,845,654.02, it allegedly
erroneously withheld and remitted to the BIR on August 10, 2007.
8.On September 23, 2011, the Court in Division denied respondent's Petition for
Review, for lack of merit. While it ruled that respondent is the proper party to file the
instant claim for refund, it found the lease of transmission facilities subject of the
Agreement outside the registered activities of PPI, hence, the income arising from such
lease is subject to the regular corporate income tax and Creditable Withholding Tax.
9.On motion for reconsideration filed by respondent on October 14, 2011, the Court in
Division reversed itself in the assailed Resolution of December 21, 2011,considered
respondent's contention that the lease of transmission facilities is included in the PEZA-
registered activities of PPI, thus enjoying the exemption from withholding taxes in
accord with the ITH granted to it.
10.Unconvinced, petitioner sought a reconsideration 4 of the foregoing Resolution, but
the same was denied for lack of merit in the assailed Resolution of February 17, 2012.

2. Who are the parties in this case? what is their points of contention?
Petitioner is the head of the Bureau of Internal Revenue (BIR)
points of contention:
Petition for Review must be dismissed on the ground that respondent, being a
mere withholding agent, is not the proper party to ask for refund. Even assuming
that respondent is allowed to file a claim for refund, it should be in the name of
PPI and with its express authority.
the lease of transmission facilities was an activity not necessarily related to the
registered activities of PPI. She claims that the lease of transmission facilities
was essentially a contract of lease of facility and not one of the registered
activities of PPI - the establishment of a contact center or outsourced customer
care services and business outsourcing services considering that the leased
facility was not manned by PPI personnel but by those of respondent who
performed the inbound telemarketing activities themselves.

Respondent JP Morgan Chase Bank, N.A. - Philippine Customer Care Center, on the
other hand, is the Philippine Branch of JP Morgan Chase Bank, N.A., an American
corporation
points of contention:
respondent filed with the BIR's Revenue District Office No. 50 (South Makati) an
application for refund of the amount of Php2,845,654.02 On August 7, 2008 it
allegedly erroneously withheld and remitted to the BIR on August 10, 2007.

3. How was the case decided? What tax laws were referred and discussed here?
In a decision promulgated on July 15, the CTA, in full court session, ruled in favor of the
2.846-million refund claim of J.P. Morgan Chase Bank, N.A.-Philippine Customer Care
Center, comprising taxes withheld from the payment for services of The People Support
(Philippines), Inc. (PPI), which was hired to provide transmission facilities in May to July
200. In view of the recent administrative rulings issued interpreting the provisions of the
Implementing Rules and Regulations of Republic Act (RA) No. 7916 and Revenue
Regulations (RR) No. 20-02, as well as RR No. 2-98, as amended by RR No. 14-02, the
Court in Division declared that the lease of the transmission facilities is an activity
necessarily related to the registered activities of PPI. Hence, the rental income from
lease of transmission facilities is exempt from withholding tax.
tax laws were referred and discussed here
Under Republic Act No. 7916 or the Special Economic Zone Act of 1995 (PEZA law),
establishments operating within ecozones enjoy fiscal incentives under Presidential
Decree No. 66, the law that created the Export Processing Zone Authority.



4. Was the CTA correct in the decision? Why or why not?
1.was the claims for refund filed on time?
Petitioner filed its Monthly Remittance Return of Creditable Income Taxes
Withheld (Expanded) (BIR Form No. 1601-E) for the month of July 2007 and paid
the taxes reflected thereon on August 10, 2007.16 It filed its administrative claim
for refund on August 7, 200817 and its subsequent appeal via Petition for Review
before this Court on August 10, 2009. Thus, both its administrative and judicial
claims for refund were filed within the two year prescriptive period provided under
the law.
2.we shall now determine whether the creditable withholding tax of Php2,845,654.02,
which is the subject of the present claim for refund, was erroneously withheld and
remitted
3.Does the lease of the transmission facilities is an activity necessarily related to the
registered activities of
Based on the PEZA law and its implementing rules and regulations, only transactions
that are related to its registered activities are covered by tax incentives, in my opinion
PPIs services to J.P. Morgan Chase Bank are covered by the formers registration with
PEZA as an enterprise engaged in providing outsourced customer care services and
business process outsourcing services.