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MDLC, a wholly owned subsidiary of the Bank of the Philippine Islands, a domestic
corporation, does not fall among any of the corporations exempted from payment of
IAET. The same conclusion was ruled by the Supreme Court in the case of Cyanamid
Philippines, Inc. vs CA, [G.R. No. 108067. January 20, 2000], involving the petitioner, a
corporation organized under Philippine laws and a wholly owned subsidiary of
another corporation, which was also assessed by the CIR of a surtax due to its
undue accumulation of earnings. The Court, not exempting Cyanamid Philippines
from paying IAET, held that, petitioner does not fall among those exempt classes.
Besides, the rule on enumeration is that the express mention of one person, thing,
act, or consequence is construed to exclude all others. Laws granting exemption
from tax are construed strictissimi juris against the taxpayer and liberally in favor of
the taxing power. Taxation is the rule and exemption is the exception. The burden of
proof rests upon the party claiming exemption to prove that it is, in fact, covered by
the exemption so claimed, a burden which petitioner here has failed to discharge.
Lastly, MLDC argues that under the Tax Code, its declaration of dividend to BPI is in
the nature of intercorporate dividend which under the Tax Code is not subject to
tax. However, RR No. 2-2001 provides that, Notwithstanding the imposition of the
IAET, profits which have been subjected to IAET, when finally declared as dividends,
shall nevertheless be subject to tax on dividends imposed under the Tax Code of
1997 except in those instances where the recipient is not subject thereto. Hence,
the dividends declared by MLDC to BPI is still liable to dividend tax.