TAXATION LAW – CASES petition, the CTA dismissed the petition for insufficiency of evidence.

On
Jann Claudine M. Amago 3 –A appeal, the CA dismissed the petition. Hence this case.

1. Commissioner of Internal Revenue vs. Solidbank Issue: Whether or not the 20% FWT on banks interest income form part
Facts: of the gross receipts in computing 5% GRT
For the calendar year of 1995, the respondent filed its quarterly
percentage tax returns reflecting gross receipts in the total amount of Ruling: YES.
1,474,691,693.44 with corresponding gross receipts tax payments in the The SC ruled in long line of cases that gross receipts comprise
sum of 73, 734, 584.60. the total gross receipts included the sum of entire receipts without any deduction. Clearly, then, the 20% FWT should
350,807,875 representing gross receipts from its passive income. form part of the petitioner’s total gross receipts for purposes of
On January 1996, the CTA rendered a decision in the case of computing the GRT.
Asian Bank Corporation vs. CIR wherein it was held that the 20% FWT on Revenue Regulations No. 12-80, issued on November 7, 1980,
banks interest income should NOT form part of it taxable gross receipts had been superseded by Revenue Regulations No. 17-84 issued on
for the purpose of computing gross receipts tax. On the strength of said October 12, 1984. Section 4 (e) of Revenue Regulations No. 12-80
decision, the respondent filed a claim for refund before the BIR. Without provides that only items of income actually received shall be included in
awaiting action of the petitioner, on the same day it filed a petition for the tax base for computing the GRT. On the other hand, Section 7 (c) of
review with the CTA. Revenue Regulations No. 17-84 includes all interest income in computing
The CTA rendered its decision in favor of the petitioner to the GRT. Revenue Regulations No. 17-84 categorically states that if the
refund a reduced amount of 1,555,749.65. Hence this case. recipient of the above-mentioned items of income are financial
institutions, the same shall be included as part of the tax base upon
Issue: Whether or not the 20% FWT on banks interest income form part which the gross receipts tax is imposed.
of the gross receipts in computing 5% GRT All told, petitioner failed to point to any specific provision of
law allowing the deduction, exemption or exclusion from its taxable gross
Ruling: YES, the amount on interest income withheld in payment of 20% receipts, of the amount withheld as final tax. Besides, the exclusion
FWT forms part of the gross receipts in computing for the GRT on banks. sought by petitioner of the 20% final tax on its passive income from the
FWT and GRT are two different taxes. As a bank, the petitioner taxpayer’s tax base constitutes a tax exemption, which is highly
is covered by both taxes. A percentage tax is a national tax measured by disfavored.
a certain percentage of the gross selling price or gross value in money of
goods or of gross receipts or earnings derived by any person in the sale of
services. An income tax, on the other hand, is a national tax imposed on 3. Commissioner of Internal Revenue vs. Philippine National Bank
the net or gross income realized in a taxable year. Facts:
The respondents claim that the20% FWT should not form part On March 2000, the petitioner issued Letter Authority
in computing GRT because there is no actual receipt by the bank of the authorizing the examination of PNB’s books of account and other
amount withheld. The SC ruled that the rules on actual or constructive accounting records in relation to its internal revenue taxes for the taxable
receipt of income should be applied by analogy.in our withholding tax year of 1997. PNB received the PAN with details of discrepancies, which
system, possession is acquired by the payor as the withholding agent of indicated that PNB had deficiency payments of documentary stamp taxes,
the government, because the taxpayer ratifies the very act of possession withholding taxes on compensation, and expanded withholding taxes.
for the government. There is thus constructive receipt. The process of The petitioner then issued a FAN together with a formal letter of demand.
bookkeeping and accounting for interest on deposits are indeed – for legal PNB paid under protest. The petitioner denied PNB’s protest.
purpose – tantamount to delivery, receipt and remittance. There being On appeal, the CTA partially granted the petition. Accordingly, the
constructive receipt, RR 17-84 applies, and that income is included as part assessment deficiency of documentary stamp taxes on petitioner’s
of the tax base upon which GRT is imposed. interbank call loans for the taxable year was cancelled. However, the
Petition GRANTED. assessment for deficiency documentary stamp tax on petitioner’s Special
Savings Account was affirmed. Hence this case.

2. China Banking Corporation vs. Commissioner of Internal Revenue Issue: Whether or not PNB’s interbank call loans is subject to
Facts: documentary stamp taxes
For four quarters of 1996, petitioner paid 93, 119, 433.50 as Ruling: NO.
gross receipts tax. The petitioner included the 20% FWT on its passive The CIR contends that the PNB’s interbank call loans were
interest income. On January 1996, the CTA rendered a decision in the case included in the concept of loan agreements, hence, the interbank call
of Asian Bank Corporation vs. CIR wherein it was held that the 20% FWT loans were subject to DST under Sec 3(b) of Revenue Regulations No. 9-
on banks interest income should NOT form part of it taxable gross receipts 94, but the CTA held that this argument lacks merit. The maturity of PNB’s
for the purpose of computing gross receipts tax. On the strength of said interbank loans was irrelevant in determining its DST liability for taxable
decision, petitioner filed with the respondent a claim for refund of the year 1997. The applicable law was the National Internal Revenue Code of
alleged overpaid GRT for four quarters. 1997, as amended by P.D. 1959 and RA No. 7660. It states that”xxx debt
On even date, petitioner filed it petition for review with the instruments issued for interbank call loans with maturity of not more than
CTA. The CTA rendered a decision agreeing with the petitioner but for five (5) days to cover deficiency in reserves against deposit liabilities,
failure to present proof that it paid the claimed excess GRT subject of this
1
including those between or among banks and quasi-banks, shall not be
considered as deposit substitute debt instruments.” Issue: Whether or not the date of imprinting the documentary stamps on
The provisions of the NIRC cannot be given retroactive effect to the document or the date of purchase of documentary stamps for loading
the prejudice of PNB. This is because tax laws are prospective in and reloading on the DS metering machine should be deemed as payment
application, it means from the moment they are in effect, it cannot apply of the DST contemplated under Section 200 (D) of the NIRC for the
to past occurrences. purpose of counting the two-year prescriptive period for filing a claim for
The CTA further held that an interbank call loan is considered as a deposit a refund or tax credit?
substitute transaction by a bank performing quasi-banking functions to
cover reserve deficiencies. It does not fall under the definition of a loan Ruling: NEGATIVE.
agreement, contrary to the contention of CIR. Even if it does, the DST In Gibbs v. Commissioner of Internal Revenue, this Court ruled
liability of PNB will only attach if the loan agreement was signed abroad that "Payment is a mode of extinguishing obligations (Art. 1231, Civil
but the object of the contract is located or used in the Philippines, which Code) and it means not only the delivery of money but also the
was not the case in regard to PNB’s interbank call loans. performance, in any other manner, of an obligation. A taxpayer, resident
In accordance with Sec 180 of the 1997 NIRC, as amended by or non-resident, does so not really to deposit an amount to the
RA 7660, it can be readily discerned that the DST of P0.30 on each P200.00 Commissioner of Internal Revenue, but, in truth, to perform and
or fractional part thereof can only be imposed on the face value of: extinguish his tax obligation for the year concerned. In other words, he is
a. Loan agreements paying his tax liabilities for that year. Consequently, a taxpayer whose
b. Bills of exchange income is withheld at source will be deemed to have paid his tax liability
c. Drafts when the same falls due at the end of the tax year. It is from this latter
d. Instruments and securities issued by the Government and any date then, or when the tax liability falls due, that the two-year prescriptive
of its instrumentalities period under Section 306 (now part of Section 230) of the Revenue Code
e. Certificates of deposits drawing interest starts to run with respect to payments effected through the withholding
f. Orders for the payment of any sum of money otherwise than at tax system." The aforequoted ruling presents two alternative reckoning
sight or on demand, and dates: (1) the end of the tax year; and (2) the date when the tax liability
g. Promissory notes whether negotiable or non-negotiable, falls due
except bank notes issued for circulation, and on each renewal Applying the same rationale to this case, the payment of the
of such note. DST and the filing of the DST Declaration Return upon loading/reloading
It may be noticed that interbank call loans are not expressly of the DS metering machine must not be considered as the "date of
included among the taxable instruments listed in Section 180, which is the payment" when the prescriptive period to file a claim for a refund/credit
applicable law, hence they may not be held taxable. What the law does must commence. For DS metering machine users, the payment of the DST
not include, it automatically excludes. The principle of law is that a tax upon loading/reloading is merely an advance payment for future
cannot be imposed without clear and express words. application. The liability for the payment of the DST falls due only upon
The cancellation of the Assessment is upheld, PNB is not liable. The the occurrence of a taxable transaction. Therefore, it is only then that
petition is hereby DENIED. payment may be considered for the purpose of filing a claim for a refund
or tax credit. Since actual payment was already made upon
loading/reloading of the DS metering machine and the filing of the DST
4. Philippine Bank of Communications vs. Commissioner of Internal Declaration Return, the date of imprinting the documentary stamp on the
Revenue taxable document must be considered as the date of payment
Facts: contemplated under Section 229 of the NIRC.
BIR issued a certificate authorizing petitioner to operate and In the case at bar, the DST fell due when petitioner entered into
use the On-line Electronic Documentary Stamp Metering Machine. repurchase agreements with the BSP and the corresponding documentary
Petitioner purchased documentary stamps from the BIR and loaded them stamps were imprinted on the Confirmation Letters. Considering,
to its DS metering machine. During the period 23 March 2004 to 23 however, that this transaction is exempt from tax, petitioner is entitled to
December 2004, petitioner executed several repurchase agreements with a refund. The prescriptive period for the filing of a claim for a refund or
the Bangko Sentral ng Pilipinas (BSP). The documentary stamps were tax credit under Section 229 must be reckoned from the date when the
imprinted on the Confirmation Letters corresponding to those repurchase documentary stamps were imprinted on the Confirmation Letters.
agreements through petitioner's DS metering machine.
Petitioner claimed that the repurchase agreements were not
subject to the documentary stamp tax (DST). Thus, on 12 May 2006, it
filed with the BIR an administrative claim for the issuance of tax credit
certificates for the alleged erroneous payment of the DST. Alleging the
inaction of the BIR on the administrative claim of petitioner, the latter
filed a Petition for Review with the CTA.
CTA Second Division disallowed the claim due to prescription.
However, the CTA en banc ruled that the 2-year prescriptive period will
run from the date of filing of DST declaration and not on the date
imprinted. The refundable amount was further reduced representing the
erroneously paid DST that had not yet been barred by prescription.
2