Court of Tax Appeals
0CTA Case No. 4117
REPUBLIC OF THE PHILIPPINES
COURT OF TAX APPEALS
QUEZON CITY
PISO BANE,
Fetitioner ,
C.T.A. CASE NO. 4117
THE COMMISSIONER OF INTERNAL
REVENUE ,
This is ery appea ] from the ree conden t
Commissianer af Internal Fevenue’s decision denying
petitioner’s protest against the assessment of
FP2S68, 1835.29 issued as deficiency Aixed percentage
tax for 1974 ag a lendang ianveebor,
Fetitioner 38 aA domestic carporatiorn and
incorporated in 1974 as an investment house. Tt is
pravided with ai privilege tax receipt as (1)
cantractar (2 dealer ain gecwrities and (2) as
quagiv-banking institution authorized by the Central
Bank .
During the period from May up to December 1974
it was ascertained and verified upon investigation
that petitioner placed th fea eondity ct its
stockhoiders in money market toivestments whieh
243
DECISION ~
CTA CASE NG 4117
earned intereat amounting ta FR,866,129.95, far
which respandent agses¢ed petitioner on February
14, (980 and demanded the payment af the tatal
amount of PRS? Tes. 29 as fixed and percentage taxes
for 1974,
Peatitbioner, thru oa letber chated Warchs 12,
1980, protestecl the tax
In a faneal dec
Jj, 1984,
respondent Commigeiaoner af Toternal Revenue denied
the protest. Hence, petibioner aopeated.
The only issue presented far determination its
whether or not curing the year 1974, petitioner was
actually engaged ain the husine
as oa lemcdinmeg
investor subject to fixed and percentage taves
¢
presoerikbeacd bry chron Jeet) Creag See hionm TA7y ly)
of the Tax Goce).
Then Section 194 CU) (now LS7(U)) of
the Tax Code define a lendindg inv as follows:
“Leanchiry tavess bey! pre
persons who make «@ practice
MON Ey Far themsel ve cor
interest."
For the entire period of the year 1974, that
is for the three (3) quarters thereof, ait made
short-term money market placements for which at
244
DECISION -
earned gross inceme for the ‘&@nd, Grd and 4th quarters, af F&Q1L 174.39, Feeg, Se, 10 and Fil,326,054.06, respectively. Febitioner ain fact admitted that on several occasion it placed in money market transactions torres equity of its stackholders as shown in its letter proatest dated March 13, 1980, However, it denied that it is rece engaged in the business as ai lending investor in 1974 as it “me realy anvested ihe funds for a short period of time in the money market in arder to Maximize the return of its idle funds. There was no ‘business’ of lending maney with interest when the money market placements were made. There was no habituality and cantinuity ar ai practice of lending money at interest." (p. OS, Fetitioner’s Meme. } We believe that petitioner had been habitually and cantinuously lending moaney for interest in 1974 and hence, could be cansidered and taxed as a lending investor. For practically the entire period of 1974, it did habitually engage itself in the business as ai lJanding investor considering the number of market placements it made in 1974 oaf which was "for the entire period beginning the 249
DECISION —
CTA CASE ND. 4117 second cquarter through the fourth quarter of 1974, grossing therefrom Me y8b66,129.95 an interest incame." (po. 4, Respondent’ s Meme. } Indeed, the lending achivitacs af petitioner are "“charactericed as conolincus and habitual rather
A
sdonadl." {Po 4 Reaepondent 's than merely occa Memo. )
The cas of Hola vs. Yateoou, Vi Fhil, 468, which held thus "Where AF appears thea on LANs «a persgan accented martgage guarantee loans to be made ta different persons abo oan interest of AY and such Person do nok prove that SLC M4 transactions were made accidentally or because cif mer hein pec] Lar Carciime tareces Lk oshestd bree pp esscamenct bhiet yes ormor de oa pravzhice of Jessel iret Money tbs Lecenm dmg & lending rivers t Larrcd eee the law, (Underscoring supp) ied) is applicable, ancl) Siao Tiago Hang vs. CIR, et al., CTA Mo, LPS, Maren 2A, AV7o, as in points "From the above transactions, it is apparent that petitioner continuously and habitually engaged in the business of lending money with interest ko several entities and persans. These landing transactions were not isalat cases bust they represent a series of loans shawing habituality. "Habituality" in the practice of commerce presupposes the rapetition and continuation of commercial acts, in such oomanne@re that they are related to each obher be reason of the camme Galopurgoeste @r eel which they theanc ta have.
’ aut t
WHEREFORE , the decision of the Commissioner of Internal Revenue assessing against petitioner the sum of P258,183.29 as deficiency fixed and percentage tax, plus interest, as a lending investor is hereby affirmed.
With costs against petitioner.
SQ QRDEPED.
Quezon City, Metro Manila, June 6, 19a, "ANTE hk ROAQUIN
BSOCIATE JUDGE
WE CONCUR:
S —7- f acsdo Le) /
AMANTE LURE
PREBIDI JUDGE
os Al Z. REYES
ASBOCIATE JUDGE
DECISION ~
CEHREERTAIPFTCA TEI GON
I hereby certify that bLhais decieion wag reached after due consultation among the members of the Caurt af Tax Appeals in accardance with Section 13, Article VITT of the Conmehitutiacon.
(¢ Shee et mes 2