Cited Laws
TL;DR — Ruling
the case was submitted for decision on February 3, 2012.
Accordingly, the case was submitted for decision on February 3, 2012. [2] On July 9, 2012, the CTA-Division rendered a Decision [3] denying petitioner's claim for refund or issuance of tax credit certificate for insufficiency of evidence for petitioner's failure to present evidence in support of its allegation that the activities from which the amount of foreign exchange gain arose, were attributable to activities with income tax incentive, as it failed to establish the nature of the foreign exchange contracts entered by it with Citibank from which the subject foreign exchange gains were derived. After the CTA-Division denied its Motion for Reconsideration in a Resolution dated March 4, 2013, [4] petitioner appealed the matter before the CTA En Banc via a Petition for Review. In a Decision [5] dated August 4, 2014, the CTA En Banc denied the petition and affirmed the Decision and Resolution of the CTA-Division. In denying the petition, the CTA En Banc found the foreign exchange gains realized by the petitioner to have been derived from the foreign exchange contracts entered into by it with Citibank, and not from its registered activity as a contact center nor necessarily related to it as would entitle such income to income tax holiday and therefore, subject to a tax refund. The pertinent portion of its Decision reads: We affirm the CTA First Division's ruling in the assailed Resolution and Decision denying petitioner's Petition for Review for insufficiency of evidence. Records show that while petitioner may have shown that its earned USD as a contact center is being used to purchase Pesos, through its hedging contracts with Citibank, in order to pay for the ordinary and necessary expenses of petitioner's customer-support business, the fact still remains that the subject foreign exchange gains were derived from the foreign exchange contracts entered into by petitioner with Citibank and not from its registered activity as a contact center nor necessarily related to it. It should be recalled that petitioner's primary purpose as a contact center as stated in its Amended Articles of Incorporation is "to engage in the business of customer support services by providing information and database service on the Internet including web-based applications in the Philippines and providing or furnishing any and all forms or types of services, data and facilities relating to providing information on consumer products and services through the internet; and, otherwise, to carry on and conduct a general business relating to internet services." Likewise, its PEZA Certification shows that it is a registered Ecozone IT (Export) Enterprise engaged in the establishment of a contact center which will provide outsourced customer care services and business process outsourcing (BPO) services. On the other hand, petitioner's hedging activity involves the sale of specified amounts of dollar to the bank on pre-determined dates and at pre-determined exchange rates. Considering