PHILIPPINE BANKING CORPORATION vs CIR

G.R. No. 170574

January 30 !00"
#IR$T %I&I$ION
Petitioner is a domestic corporation duly licensed as a banking institution.
3
For the taxable years
1996 and 1997, petitioner offered its !" to its depositors. #he !" is a form of a sa$ings
deposit e$idenced by a passbook and earning a higher interest rate than a regular sa$ings
account. Petitioner belie$es that the !" is not sub%ect to !ocumentary tamp #ax &!#' under
ection 1() of the 1977 *ational +nternal ,e$enue -ode &*+,-', as amended.
.
/n 1) 0anuary 1))), the -ommissioner of +nternal ,e$enue &respondent' sent petitioner a Final
"ssessment *otice assessing deficiency !# based on the outstanding balances of its !",
including increments. #hese assessments 2ere based on the outstanding balances of the !"
appearing in the schedule attached to petitioner3s audited financial statements for the taxable
years 1996 and 1997.
4
Petitioner claims that the !" is in the nature of a regular sa$ings account hence not sub%ect to
!#. Petitioner alleges that the only difference bet2een the regular sa$ings account and the
!" is that the !" is for depositors 2ho maintain sa$ings deposits 2ith a substantial
a$erage daily balance, and as an incenti$e, they are gi$en higher interest rates than regular
sa$ings accounts. #hese deposits are classified separately in petitioner3s financial statements in
order to maintain a separate record for sa$ings deposits 2ith substantial balances entitled to
higher interest rates.
7
,espondent, contends that the !" is substantially the same and identical to that of a time
deposit account because in order to a$ail of the !", one has to deposit a minimum of P4),)))
and this amount must be maintained for a re5uired period of time to earn higher interest rates.
1(
+n
a time deposit account, the minimum deposit re5uirement is P1),))) and this amount must be
maintained for the agreed period to earn the agreed interest rate.
/n 13 *o$ember 1))4, the -ourt of #ax "ppeals En Banc &-#"' affirmed the !ecision and
,esolution of the -#"3s econd !i$ision
/n 11 eptember 1))7, 6etropolitan 7ank and #rust -ompany &6etrobank', the sur$i$ing entity
that absorbed petitioner3s banking business, filed a #ax "mnesty ,eturn,
6)
paid the amnesty tax
and fully complied 2ith all the re5uirements
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of the #ax "mnesty Program under ," 9.().
Petitioner alleges that by $irtue of this a$ailment, petitioner is no2 deemed 8immune from the
payment of taxes as 2ell as additions thereto,8 and is statutorily discharged from paying all
internal re$enue tax liabilities for the taxable year 1))4 and prior years. Petitioner contends that
the a$ailment includes all deficiency tax assessments of the 7+, sub%ect of this petition.
I$$'E$(
1. 2hether petitioner3s !"s are 8certificates of deposits dra2ing interest8 as used in
ection 1() of the 1977 *+,-. +f they are, then the !"s are sub%ect to !#. +f not,
then they are merely regular sa$ings account 2hich concededly are not sub%ect to !#.
1. 9hehter petitioner, as an absorbed corporation, a$ail of the tax amnesty.
R'LING(
1. ection 1() of the 1977 *+,- imposes a !# of P).3) on each P1)) of the face $alue of
any certificate of deposit dra2ing interest. "s correctly obser$ed by the -#", a
certificate of deposit is a 2ritten ackno2ledgment by a bank of the receipt of a sum of
money on deposit 2hich the bank promises to pay to the depositor, to the order of the
depositor, or to some other person or his order, 2hereby the relation of debtor or
creditor bet2een the bank and the depositor is created.
41
Petitioner3s !" has the follo2ing features:
1. "lthough the money placed in the !" can be 2ithdra2n anytime, the
money is sub%ect to a holding period in order to earn a higher interest rate.
1. +n order to 5ualify for an !", the depositor must place a substantial amount
of money of not less thanP4),))).
3. /n the issue of penalty, in an !", if the depositor 2ithdra2s the money and
the balance falls belo2 the 8minimum balance8 of P4),))), the interest is
reduced. maturity.
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7ased on these features, it is clear that the !" is a certificate of deposit dra2ing
interest sub%ect to !# e$en if it is e$idenced by a passbook and non;negotiable in
character.
1. #he !# is one of the taxes co$ered by the #ax "mnesty Program under ," 9.().
63
"s
discussed abo$e, petitioner is clearly liable to pay the !# on its !" for the years
1996 and 1997. <o2e$er, petitioner, as the absorbed corporation, can a$ail of the tax
amnesty benefits granted to 6etrobank.
,ecords sho2 that 6etrobank, a 5ualified tax amnesty applicant,
6.
has duly complied 2ith the
re5uirements enumerated in ," 9.(), as implemented by !/ 19;)7 and ,6- 19;
1))(.
64
-onsidering that the completion of these re5uirements shall be deemed full
compliance 2ith the tax amnesty program,
66
the la2 mandates that the taxpayer shall
thereafter be immune from the payment of taxes, and additions thereto, as 2ell as the
appurtenant ci$il, criminal or administrati$e penalties under the *+,- of 1997, as
amended, arising from the failure to pay any and all internal re$enue taxes for taxable
year 1))4 and prior years.
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PER$ONAL EN% NOTE$
!ocumentary stamp tax is a tax on documents, instruments, loan agreements, and papers
e$idencing the acceptance, assignment, sale or transfer of an obligation, right or property
incident thereto. " !# is actually an excise tax because it is imposed on the transaction rather
than on the document.
4)
" !# is also le$ied on the exercise by persons of certain pri$ileges
conferred by la2 for the creation, re$ision, or termination of specific legal relationships through
the execution of specific instruments.
41
<ence, in imposing the !#, the -ourt considers not
only the document but also the nature and character of the transaction.
" tax amnesty is a general pardon or the intentional o$erlooking by the tate of its authority to
impose penalties on persons other2ise guilty of $iolation of a tax la2. +t partakes of an absolute
2ai$er by the go$ernment of its right to collect 2hat is due it and to gi$e tax e$aders 2ho 2ish
to relent a chance to start 2ith a clean slate. " tax amnesty, much like a tax exemption, is ne$er
fa$ored nor presumed in la2. #he grant of a tax amnesty, similar to a tax exemption, must be
construed strictly against the taxpayer and liberally in fa$or of the taxing authority.
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ur$i$ing or ne2 corporations can a$ail of the tax amnesty in behalf of the corporations
absorbed or dissol$ed pursuant to a merger or consolidation that took effect prior taxable year
1))4 for purposes of obtaining tax clearances for the dissol$ed or absorbed corporations.