Commissioner of Internal Revenue vs. Metropolitan Bank & Trust Company

DECISION

CASANOVA, J:

This is an appeal, by way of a Petition for Review/ filed by petitioner- Commissioner of Internal Revenue (CIR) from the Decision2 (Assailed Decision) of the Court of Tax Appeals Second Division ( CTA Second Division) dated August 7, 2007 in CfA Case No. 6923 entitled, "Metropolitan Bank & Trust Company, petitioner vs. Commissioner of Internal Revenue, respondent' partially granting Respondent-Metropolitan Bank & Trust Company's (MBTC) Petition for Review therein, and ordering Petitioner-OR to refund or issue a tax credit certificate to MBTC in the amount of P/3,293,126.84 representing its erroneously withheld and paid final income taxes ror u·1e taxable year 2002, and from the Resolution~ 1 CTA En Bane Rollo, pp. 7-19. 2 Annex "A", Petition for Review, CJ A ~11 Bane Rollo, pp. 23-40. 3 Annex "B", Petition for Review, Cl A Lu Uanc !<.olio, pp. 41-42. 704 CfA EB CASE NO. 347

DEOSION

Page 2 of 19

(Ass.ai/ed Resolution) dated f\Jovernber 26, 2007 denying petitioner-CIR's Motion for Reconsideration.

The facts of the ca~e, as culled from the records, are as follows: "Petitioner (herein respondent-MBTC) is a corporation duly organized and exislinQ under and by virtue of the laws of the Philippines with principal office at Metrobank Plaza, Sen. Gil Puyat Avenue, Makati City. It is engaged in the business of expanded commercial banking and the business of a trust company which includes providing ~ervices such as deposit products, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange, trading and remittances, trust services incident to its operation as a bank. 4 Petitioner is registered with the Bureau of Internal Revenue (B1R) and was issued Tax Identification Number (TIN) 000-477-863-000-on April 6, 1962. On April 15, 2004, its status as a VAT-registered entity was converted to that of a NON-VAT taxpayer and was accordingly issued BIR Certificate of Registration No. 8RC0000016899. 5 On the other hand, respondent (herein petitioner-OR) is the duly appointed Comrnissioner of Internal Revenue, vested with authority to act as such, including inter alia, the power to decide, approve and grant refunds or tax credit of erroneously or illegally collected internal rever1ue taxes as provided by law. For calendar year 2002, petitioner filed its Montl1ly Remittance Returns of Final Income Taxes Withheld (BIR Form No. 1601-F)6, with details as follows:~ 4 Paragraphs 6 and 7, Joint Stipulatiuu ol hl.:ls ami Issues, CTA Second Divison Rollo, page I :39. 5 Par. 8, Joint Stipulation of Facts aud h:sues, CTA Second Division Rollo, page 139. 6 Exhibits "C" to "N", inclusive ol ::.ub-warkiugs, CTA Second Division Rollo. 705 CTA EB CASE NO. 347 '!

\t _) A. SUMMARY OF INFORMAIION BASED ON MONTHLY REMITTANCE RETURNS OF FINAL TAXES

WITHHELD PER BIR FORM 1601-F

Date of Filing

20% Final

10% Hnal Tax on

·10% Final Tax on

Tax on All

25% Final of Original

Interest and Other

Interest and Other

Kinds of

Tax on

Calendar

Monthly

lncoliJt; Payments

Income Payments

Royalty

Payments to

Remittance

Year 2002

Returns of

on foreign

on Foreign

Payments to

Non-Resident

Month

Final Income

CUI l't>IICY

Currency

Domestic

Alien in

Taxes

Transactions/Loan

Transactions/Loan and Resident

Trade or

Withheld

Payable lo.f-'(.;DUs

Payable to OBUs

Foreign

Business

Corporations

January

Feb. 11, 2002 1CJ,I28,:rl2.4"1 1,472,257.78 92,530,80

February

Mar. 11,2002 8,:,22,28 '1.84 88,110.68 2,236,872,00 3,908,045.03

March

Apr. 10, 2002 ·1 ll,LLti,tlotl. 77 150,314.72 29,866.09 868,356.67

April

May 10, 2002 1 o,o02,J64.4l 364,676.37

May

June 10, 2002 1~:, t2o,t.: l/.22 620,858.40 8,012,450.53

June

July 10, 2002 1 0,28b,654.89 1 ,009,031.86 927,235.22

July

Aug. 12,2002 10,601,710.64 1,308,707.51

August

Sept. 10, 2002 6,1 15,040.33 1,204,848.63 530,836.96

September

Oct. 10,2002 5,122,565.43 2,028,61029 489,025.47

October

November

December

Total

Nov. 11, 2002 6,;}~4,/tl/.83 1,285,101.61 10,917.780.65 Dec. 10,2002 6, 14-1,;}54.51 1,666,930.94 309,907.92 Jan. 10,2003 63,046,3/0.03 698,507.16 4,106,694.00 15~,326,528.43 11,897,955.95 27,560,668.84 4,868,932.50 Petitioner, via letter dated February 10, 2004, requested respondent's opinion on whether gains realized by the FCDU of Metrobank from the sale or exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years fall within the ambit of the exclusion from gross income as provided in Section 32(B)(7)(g) of the 1997 NIRC.

Total Amount

Paid/Withheld

11,694,101.05 14,555,309.55 11,274,406.25 10,967,040.84 20,758,526.15 12,232,921.97 12,110,418.15 7,850, 725.92 7,640,201.19 18,597,670.09 8,121,193.37 67,851,571.19 203,654,085.72 In response to petitioner's Request for a Ruling on the matter, the BIR ruled in BIR Ruling No. DA-124-20047 dated March~ 7 Exhibit "BB", CTA Second DivisioH Rullo. 706 CTA EB CASE NO. 347

22, 2004, that Ute 'gains realized by Metrobank on its FCDU transactions, frorn the sale, exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years shall be excluded from gross income as prescribed in Section 32(B)(7)(g) of the Tax Code of 1997 and consequently from tile final income tax of 10% imposed under Section 27(0)(3) of the same Code.' Relying on trle said Ruling, petitioner then filed on April 5, 2004 a written clairn for refund of the ten percent (10%) final income taxes withheld and paid in the amount of P79,600,076.83.8" {Assailed Decision pp. 2-4) After trial on the rnerits, the CTA Second Division promulgated the Assailed Decisiorr on August 7, 2007, the dispositive portion of which reads as follows:

"WHEREFOR~ this instant Petition for Review is hereby PARTIAL! Y GRANTED.

According!~ respondent is hereby ORDERED TO REFUND or I!:J"'S'UE A TAX CREDIT CERTTFICA TE in t!Je reduced amount of SEVENTY THREE MILLION 1WO HUNDRED NINETY

THREE THOUSAND ONE HUNDRED 1WENTY SIX AND 84/100

PESOS

(P7~293,126.84l representing petitioners erroneously withheld and paid final income taxe~ computed as follows:

Claimed Refund/Tax Credit

P 79,600,076.83

Less:

Barred by Prescription

P 234,396.58 Maturity of Jess than Five (5) years 6,072.553.41 6,306,94f2_.99

Total

P 73.293,126.84

THE

REDUCED AMOUNT OF P73 1293 1126.84 REPRESENTING

ALLEGED ERRONEOUSLY WITHHELD AND PAID FINAL INCOME

TAXES FOR CALENDAR YEAR 2002.~ 1° CTA Second Division Rollo, pp. 420-426. 11 CTA Second Division Rollo, pp. 430-436. 12 Supra, note 3.

13 CTA En Bane Rollo, p. 1-3. 14 CT A En Bane Rollo, p. 6. 15 Supra, note I.

16 Ibid, CT A En Bane Rollo, p. 13. 708 ·' ) ) CTA EB CASE NO. 347

The erA En fJanc pro1nulgated a Resolution 17 on January 30, 2008, ordering the respondent-1"11JTC to file a Comment on the said Petition for Review, within ten (10) days from receipt of the said Resolution. In compliance with the said Resolution, respondent-fVIBTC filed its Comment on Petition for Review on February 7, 2008.

After a careful and thorough evaluation and consideration of the records of the case, the Court l::n Bane tlnds no new matters which have not yet been considered and passed upon by the CTA Second Division in its assailed Decision and Resolution.

As aptly discussed by the CTA Second Division, and We quote, to wit: "This Court addresses first the issue of whether or not the administrative and judicial claims for refund or issuance of a tax credit certificate tor its alleged erroneously paid final income taxes for calendar year 2002 amounting to P79,600,076.83 had been timely filed by petilio11er, pursuant to Section 204(C) in relation to Section 229 of the NIRC of 1997, as amended, which provide that: 'SEC.

204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner rnay-

XXX

XXX

XXX

(C)

Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by tt1e purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after tht: payment of the tax or penalty: Proviclecf, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund~ 17 CT A En Bane Rollo, p. 54. 709 ,, ) CfA EB CASE NO. 347

XXX

XXX

xxx' 'SEC. :.!29. Recovery of Tax Erroneously or Illegally Collected.-

XXX

XXX

XXX

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening ce~use that may arise after payment: Provided, IJOwevet; That the Commissioner may, even without a written claim therefore, refund or credit any tax, where on tile ti:lce of the return upon which payment was made, such payment appears clearly to have been erroneously paid.' (bnp!Jasis supplied) In order to prove its timely remittance and payment of its final income taxes, petitioner presented in evidence its Monthly Remittance Returns ot final Income Taxes Withheld 18 for calendar year 2002, with the following details:

Calendar Year 2002

Date of Filing of Original

Monthly Remittance Returns of

Final Income Taxes Withheld

Amount of Withholding Taxes Remitted

on Gains Realized from the Sale or

Exchange of Investments in

Foreign

Currency-Denominated Debt Securities, Bonds, Debentures or Other Certificate of

Indebtedness with a Maturity of More

Than Five (5) Years

January

Februa1 y 1·1, 2002

February

MarCil I I, ~002

March

April 10, L002

April

lVI a y 1(), 2002

May

JUJte 10,2002

June

July 10, 2002

July

August 12,2002

August

September ·1 0, 2002

September

October I 0, 2002

October

November 1 ·1, 2002

November

December ·to, 2002 18 Exhibits "C" to "N", CTA Secoitd Divi:>iuu Kollo. 710 142,263.90 92,132.68 1,068,032.66 3,101,001.38 3,455,840.82 2,022,279.04 1,700,644.09 4,167,242.52 2,318,078.89 480,976.05 3,41 0,379.9?c- if j CTA EB CASE NO. 347

December

JdliUctty 1 U, 2003 51,641 ,204.90 79,600,076.83

TOTAL

Based on the CJiorementioned information, petitioner should have filed both its adn1inistrative and judicial claims for refund/issuance of tCJX credit certificate on February 10, 2004 for the entire claim to tall within the two (2)-year prescriptive period allowed by law; 19 otherwise, any amount not timely claimed shall be barred. In this instant case, petitioner filed its administrative claim and Petition for Review on April 5 and 6, 2004, respectively. Effectively, refund claims of its final tax payments made prior to April 6, 2002 is thus barred by prescription. In this regard, petitioner's claim of erroneous final tax remittance and payment for ·.the months of January and February 2002, which were correspondingly filed and remitted on February 11, 2002 and March 11, 2002, in the total amount of P234,396.58, has already prescribed for petitioner' failure to timely claim the same. As regards the other issues raised, this Court will discuss them together inasmuch as they are interrelated. For the year ended December 31, 2002, petitioner's FCDU realized a total gain of US$15,087,926.42, which is eq1,1ivalent to P796,000,768.28, frorn the sale of its investments in foreign currency denominated bonds with maturities of more than five years. 20 Relative to such sales, petitioner filed its Monthly Remittance Returns of Final Income Taxes Withheld (BIR Form No.1601-F)21 for withholding income taxes on February 11, 2002; March 11, 2002; April 10, 2002; May 10, 2002; June 10, 2002; Julk 19 Section 229, National Internall<.ewuu~:: Code of 1997 20 Exhibit "UU" with sub-markings, Annex III, CTA Second Division Rollo. 21 Exhibits "C" to "N", CTA Second l.Jivlsion Rollo. 711.

\I

CTA EB CASE NO. 347

10, 2002; August 12, 2002; September 10, 2002; October 10, 2002; November 11, 2002; Oe~ember 10, 2002 and January 10, 2003, respectively.'u Pursuant to Section 27(0)(3) of the National Internal Revenue Code (NIRC) of 1997, as amended, and implemented by rzevenue Regulations No. 10-98, petitioner withheld and remitted a ten percent (10%) final income tax on its gross income payments for the said debt securities. Section 27(0)(3) provides thus:

"SEC. 27. Rates of Income Tax on Donwstic Corporations.-

XXX

XXX

XXX

(D) Rates of Tax on Certain Passive Incomes.-

XXX

XXX

XXX

(3) Tax on Income Derived under the Expanded Foreign Currency Deposit System.-lncome derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions witll local commercial banks, including branches of foreign banks that rnay be authorized by the Bangko Sentral ng Pilipinas (SSP) to transact business with foreign currency depository system units and other depository banks under the expanded 1oreign currency depo.sit system, including interest income from foreign currency loans granted by such depository banks under said expanded foreign currency deposit system to residents, shall be subject to a final income tax at the rate of ten percent (1 0%) of such income.

Any income of nonresidents, whether individuals or corporations, trorn transactions with depository banks under the expanded system shall be exempt from income tax~ 22 Paragraph 11, Joint Stipulation or Facts and Issues, CTA Second Division Rollo. 712 j·, CfA EB CASE NO. 347

DEOSION

Page 10 of 19

Petitioner withheld d11d rernitted tt1e amount of 10% trorn the total amount of Pl9o,U00,768.28 gains, or an amount of P79,600,076.83.

However, on April 5, 2004, petitioner filed an administrative claim for refund/issuance of a tax credit certificate with the Office of respondent laying as basis Section 32(B)(7)(g) of the NIRC of 1997, as amended, wl ticll provides that gains realized from the sale or exchange or relirernent of bonds, debentures or other certificate of indebtedness Wllll a maturity of more than five (5) years are excluded from gross income. Section 32(B)(7)(g) of the NIRC of 1997 is hereunder quoted:

"SEC. 32. Gross Income.- (B) Exclusion from Gross Income.-The following items shall not be included in gross income and shall be exempt fron1 tdXdlH .. >n under this Title:

XXX

XXX

XXX

(7) Miscellaneous Items.-

XXX

XXX

XXX

(g) Gains from the Sale of Bonds, Debentures or other Certificate of lndebtedness.-Gains realized from the same or exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of mpre than five (5) years."

This Court finds for petitioner. The exclusion trom gross income of the gains realized from the sale or exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years, and its corresponding exemption thereof from incorne tax, has consistently been confirmed by the Office of respondent. In...a....

713 .i l CTA EB CASE NO. 347 fact, respondent Lleclared m BIR Ruling No. DA-124-2004:u dated March 22, 2004, that:

"xxx. Gains realized from the sale or exchange or retirement or bonds, debentures or other certificate of indebtedness wiLll a maturity of more than five (5) years are excluded horn gross income by clear provision of Section 32(B)(/)(g) of the Tax Code of 1997 xxx.

XXX

XXX

XXX

IN Vli::W Of THE FOREGOING, this Office holds that gains realiLed by Metrobank on its FCDU transactions, from the sale, exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity ot rnore Lhan five (5) years shall be excluded trorn gross income as prescribed in Section 32(B)(7)(g) of tile Tax Code of 19~1 and consequently from the final income tax of 10% imposed under Section 27(0)(3) of the sarne Code."

Moreover, in support of his findings, respondent held that "the exemption does not distinguish as to the type of currency the bond, debentures or other certificate of indebtedness is made nor does it discriminate as to lhe nature of the business of the taxpayer involved in the transaction. Accordingly, the exemption in Section 32(B)(7)(g) applies to t11e transaction itself regardless as to who derives the gains such that, as long as the gain is derived from the sale or exchange or retirement of bonds, debentures .or other certificate of indebtedness, it is exempt from income tax without qualification."

In this regard, this Court finds that petitioner has sufficiently proven that it had realized gains from the sale or exchange of its investments in foreign currency-denominated debt securities, bonds, debentures or other certificate of indebtedness with ..8f;k- 23 Exhibit "BB", CTA Second Divisiun Rollo. 714 '~ CTA EB CASE NO. 34/

) maturities of rnure lildn l"ive years; taking into consiueration petitioner's Sales Confirmation- Form, Fixed Income Transactions Taking Value, Self Responding Ticket and FCDU Fixed Income Daily

Gain/Loss Report2

4 • The amount of P796,000,768.28 was declared as part of pelitioner's total gross onshore income of P3,783,697,999.00 tor calendar year 2002. 25 More specincally, the amount of P796,000,/68.28 is shown as part of the line gain (loss) on securities amouming to P863,803,09526 under column D for Gross Onshore Incurne.

The total gross onshore income of P3,783,697,999.00 fonned part of the total gross income of P5,874,718,895 27 unc.Jer the Schedule of Onshore and Offshore Income and the CcHresponding Income Tax for Calendar Year Ended December 3.1, 2002.

In turn, this total gross income of P5,874,718,895 is il1cluded in the net profit before taxes of P3,367,132,943 28 under the same schedule. The net profit before taxes of P3,367,132,943 was also shown under the line Income Before Provision of Income Tax of P3,367,132,94329 in petitioner's Comparative Statements of Income and Expenses for the years ended December 31, 2002 and 2001, which were attached to its Annual Income Tax Return30• Thus, in relation to the provisions of Section 32(8)(7)(g) of the NIRC of 1997, as amended, there was indeed an erroneous withholding and payment of the final income taxes amounting to P/9,600,076.83.~ 24 Exhibits "QQI-364," Exhibits ··ss 1-Jlll," Exhibits '·RRI-219" ant! Exhibits "TTl -350, CTA Second Division Rollo.

25 Exhibit "B-1", CTA Second Division l{uJlo. 26 Exhibit "B-2", CTA Second Division !<olio. 27 Exhibit "B-3", CTA Second Uivis1011 Rollo. 28 Exhibit "B-4", CTA Second UivlsHHt Rollo. 29 Exhibit "B-5'', CTA Second Division Rollo. 30 Exhibit "A", CT A Second Division l<.ollo.

CfA EB CASE NO. 347

J

As correclly presented by the Report of lhe Court Commissioned Independent Certified Public Accountant (CPA), the following tables pertaining to petitioner's investments in bonds with maturities of more than five years provide this Court with information necessary for the evaluation of petitioner's claim, thus: A. SUMMARY OF INFORMATION BASEU ON MONTHLY REMITTANCE RETURNS OF FINAL TAXES WITHHELD PER

BIR FORM 1601-F

Date of

20% Final

Filing of

10% Final Tax on

10% Final Tax on

Tax on All

25% Final

Original

Interest and Other

Interest and Other

Kinds of

Tax on

Calendar

Monthly

Income Payments

Income Payments

Royalty

Payments

Remittance to Non-

Total Amount

Year 2002

Returns of on Foreign on Foreign

Payments to

Resident

Paid/Withheld

Month

Final

Currency

Currency

Domestic

Alien in

Income

Transactions/Loans

-1-ransactions/Loans

and Resident

Trade or

Taxes

Payable to FCDUs

Payable to OBUs

Foreign

Business

Withheld

Corporations

February

January

11,2002 10,129,31L.47 1,472,257.78 92,530.80 11 ,694, 101.05 March 11,

February

2002 8,322,2tJ l.d4 88,110.68 2,236,872.00 3,908,045.03 14,555,309.55 Apri110,

March

2002 10,225,868.77 150,314.72 29,866.09 868,356.67 11,274,406.25 May 10,

April

2002 1 0,602,3b4.4 7 364,676.37 10,967,040.84 June 10,

May

2002 12,125,217.22 620,858.40 8,012,450.53 20,758,526.15 July 10,

June

2002 10,296,654.89 1,009,031.86 927,235.22 12,232,921.97 August12,

July

2002 10,801,110.64 1,308,707.51 12,110,418.15

September

August

10,2002 6,115,040.33 1 ,204,848.63 530,836.96 -, ,850,725.92 October 10,

September

2002 5,122,565.43 2,028,610.29 489,025.47 7,640,201.19

November

October

11,2002 6,394,78J.b3 1,285,101.61 10,917,780.65 18,597,670.09

December

November

10,2002 6,144,354.51 1,666,930.94 309,907.92 8,121,193.37 January 10,

December

2003 63,046,370.03 698,507.16 4,106,694.00 67,851,571.19

Total

159,326,528.43 11,897,955.95 27,560,668.84 4,868,932.50 203,654,085.72 B. SUMMARY OF MONTHLY REMITTANCE OF 10% FINAL INCOME TAXES REMITTED

Calendar

Year 2002

Month

January

10% Final

Tax on FCDU

Income (A)

10% Final Tax on Gains

Realized from

the Sale or

Exchange of

Investment with

Maturity of Five

Yearl:i or Less

(PHP) (B)

10% Final Tax on Gains

Realized from

the Sale or

Exchange of

Investment with

Maturity of More

than Five Years

(Php) (C)

716

Total Amount of

Taxes Withheld on Gross Income on Foreign

Currency

Transactions Paid to FCDUs per

Books (D=A+B+C)

Total Amount of

Taxes Withheld on _

Gross Income on

Foreign Currency

Transactions Paid to FCDUs per BIR

Form 1601-F

Exhibit

No.

"C"

"D"

"E"

"F"

"G"

"H"

"I"

"J""

"K"

"L"

"M"

"N"

Exhibit

No.

J

l l •' ,.:~ CTA EB CASE NO. 347

9,705,482.91

February

7,551,873.33

March

8,424,421.15

April

7,250,073.56

May

8,429,684.92

June

7,885,383.55

July

8,913,042.00

August

1,828,579.36

September

2,669,442.53

October

5,759,029.75

November

2,680,257.21

December

5,386,087.85

Total

76,483,358.12 20 l,ooo.66 6/8,215.83 1'3J,414.97 261,289.54 239,691.48 3(Hl,\:192.29 188,024.54 119,218.45 105,044.01 1!:>4,/82.03 b3,!1l.40 19,077.29 3,24 3,093.49 ns 142,263.90 10,129,312.47 10,129,312.47 92,132.68 8,322,281.84 8,322,281.84

"P"

1,068,032.66 10,225,868.78 ·1 0,225,868. 78 "Qu 3,101,001.38 10,602,364.48 10,602,364.48

IIRII

3,455,840.83 12,125,217.23 12,125,217.23

"S"

2,022,279.04 10,296,654.88 10,296,654.88 "Tu 1, 700,644.09 10,801,710.63 10,801,710.63 uuu 4,167,242.52 6,115,040.33 6,115,040.33 ·v·.

2,3'18,078.89 5,122,565.43 5,122,565.43 ·w· 480,976.05 6,394, 787.83 6,394, 787.83

"X"

3,410,379.90 6,144,354.51 6,144,354.51

"Y"

57,641,204.90 63,046,370.04 63,046,370.04 ••zn 79,600,076.83 159,326,528.44 159,326,528.44 C. SUMMARY OF MONTHLY GAIN ON SALE OF. INVESTMENTS WITH MATURITIES OF MORE THAN FIVE

YEARS

Gains Realized

10% Final Tax on

10% Final Tax on

from the Sale or Gains Realized from Gains Realized tram Gains Realized from

Calendar

Exchange of

Current the Sale or the Sale or the Sale or Exchange

Month

Exchange of FCDU

Exchange of FCDU

Year 2002

FCDU with

Exchange with Maturity of with Maturity of of FCDU with Maturity

Month

Maturity of More

Rate

More than Five More than Five of More than Five than Five Years

Years (Php) (C)

Years (Php) per

Years (Php) per

(USD)

Books

Schedule

January

$ 27,784.29 51.20 p 1.422,639.00 p 142,263.90 p 142,263.90

February

17,965.89 51.28 921,326.77 92,132.68 92,132.68

March

209,024.70 51.10 10,680,326.58 1,068,032.66 1,068,032.66

April

613,027.85 50.59 31,010,013-19 3,101,001.38 3,101,001.38

May

690,698.50 50.03 34,558,408.25 3,455,840.83 3,455,840.83

June

400,126.44 50.54 20,222,790.40 2,022,279.04 2,022,279.04

July

332,189.48 51.20 17,006,440.94 1, 700,644.09 1, 700,644.09

August

804,052.35 51.83 41,672,425.20 4,167,242.52 4,167,242.52

September

442,297.06 52.41 23,180,788.91 2,318,078.89 2,318,078.89

October

90,371.66 53.22 4,809, 760.49 480,976.05 480,976.05

November

636,561.84 53.57 34,103,798.97 3,410,379.90 3,410,379.90

December

10,823,826.36 53.25 576,412,048.98 57,641,2Q4.90 57,641,204.90

Total

$ 15,087,926.42 p 796,000,768.28 p 79,600,076.83 p 79,600,076.83 The first table, or the "Summary of Information Based on Monthly Remittance Returns of Final Income Taxes Withheld per J2,a- ·; 1 7

•I

. ,j CTA EB CASE NO. 347 • t

}'' j

BIR Form 160 1-F

31 ", siJows that petilioner, in ·accordance with Revenue Regulations (RR) No. 10-98, duly withheld and remitted the total final taxes due on its onshore income in the amount of P203,654,085. 72 for calendar year 2002.

Out

of the P203,654,085.72, P 159,32~,528.43 represents the 10% final :~ ~ income taxes on foreign currency transactions payable to FCDUs, which was duly remitted to respondent. The taxes were filed and paid within ten (10) days following the end of each of the corresponding month or on the date it was due, as prescribed under Section 2.58(A)(2)(a) of RR No. 2-98, to wit: Sec.

2.~58.

RETURNS AND PAYMENT OF TAXES

WITHHELD AT SOURCE

(A)

fvlonthly return and payment of taxes withheld at source-

XXX

XXX

XXX

(2) WHEN TO FILE-

(a) The withholding tax return, whether creditable or final, shall be flied and payments should be made within ten {10) days after the end of each month except for taxes withheld for December which shall be filed on or before Janu<Jry 25 of the following year. (Emphasis supplied)

Based

on the second table, the total amount of P159,326,528.44, representing 10% final income taxes on foreign currency transactions payable to FCDUs, is composed of the 10% final tax on FCDU income, the 10% final tax on gains realized from the sale or exchange of investment with maturity of five (5) years or less, and 10% final tax on gains realized from the sale oa_ 31 Exhibits "C" to "N", CTA SeconJ Division J{ollo. 718 ...

CTA EB CASE NO. 347 exchange of investrnenl wilh maturity of more than five (S) years (P76,483,358.12 + fJ .3,243,093.49 + P79,600,076.83). The third table shows that the amount of P79,600,076.83, which is the subjt:ct claim for refund/issuance of a tax credit certificate, represents the 10% of the gains realized frorTr Llle sale or exchange of foreign currency denominated debt securities, bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years of P796,000J68.28, which, as explained above, is shown as part of petitioner's total gross onshore income of PJ,/83,697,999.00. After considet ing that petitioner is entitled to the refund claimed, this Court now examines whether or not the total amount of P79,600,076.83 is refundable. It is ascertained that out of the total claim of P79,600,076.83, the amount of P6,072,553.41 should be disallowed since Llle same represents petitioner's investment with maturity of five years and less, thus:

Current

Deal No.

Exhibits

Amount

Month

Peso Value

10% Final

Exchange

Tax

Rate

. MAY 1003775

QQ-76/ RR-53/ SS-89/TT-17

173,586.12 50.03 8,684,513.58 868,451.36 1003812 QQ-77/ RR-54/ SS-92/r r-19 8,870.38 50.03 443,/85.11 44,378.51 1003842

QQ-79/ RR-56/ SS-97/H-83

10,210.06 50.03 510,809.30 51,080.93 1003859

QQ-80/ RR-57/ S::>-9~11 I-U5

6,917.86 50.03 346,100.54 34,610.05 1003936

QQ-92/ RR-66/ SS- 11::5/ I 1-87

3,580.14 50.03 179,114.40 17,911.44 1003925

QQ-93/ RR-67 I SS-115/TT -99

6,409.76 50.03 320,680.29 32,068.03 1003649

QQ-94/ RR-68/ SS-115/IT-99

5,710.90 50.03 285,716.33 28,571.63

JUNE

QQ-99/ RR-71/ SS-127rrT-107 - 1004066 12,049.65 50.54 608,989.31 60,898.93 1004176 QQ-107/ RR-76/ SS-137ffl-115 40,241.05 50.54 2,033,782.67 203,378.27

JULY

1004222

QQ-111/ RR-80/ SS-143/1 T -119

13,109.72 51.20 671,217.66 67,121.77 1004223

QQ-112/ RR-80/ SS-143/1 T -119

13,109.72 51.20 671,217.66 67,121.7~ 719 ----- In view of the above findings, petitioner's claim for refund or issuance of tax credit certificate in the amount of Seventy Nine Million Six Hundred Thousand Seventy Six Pesos and 83/100 (P79,600,076.83) representing its erroneously paid final income taxes for the calendar year 2002 should be granted, less the prescribed and disallowed claims." (Assailed Decision/ pp. 5:..16) In sum, the Court En Bane finds no cogent justification lo disturb the findings and conclusion spelled out in the assailed August 7, 200/ Decision and November 26, 2007 Resolution of the CTA Second Division. What the instank_ 7 ·; ,·.

'-·· \) ., .

1 l CTA EB CASE NO. 347 j ) petition seeks is for tile Court tn Bane to view and appreciate the evidence in their own perspective of things, which unfortunately had already been considered and passed upon.

WHEREFORE, the instant Petition for Review is hereby DENIED DU-E COURSE and DISMISSED for lack of merit. Accordingly, the August 7, 2007 Decision and November 26, L007 Resolution of the CTA Second Divi5ion in CTA Case No. 6923 entitled, "Mdlropolitan Bank & Trust Compan;~ petitioner vs. Commissioner of Internal Revl;::HJUe/ respondent' are hereby AFFIRMED in toto.

WE CONCUR:

CAESAR A. CASANOVA

Associate Juslice

C\~-- };? • Ct-rVL ~RNESTO D. ACOSTA

Presiding Justice

~X, c .as~--~~ 2:, ~ ruANITO c. CASTANEDA, JR.

Associate Justice

' ER~.

UV

Ass~~tice

a. / .. tZ.~~ ~

~~-EN~EZ

Associate Justice

72J

j .

...

' CTA EB CASE NO. 347 )

CERTIFICATION

Pursuant to Article VHI, Section 13 of the Constitution, it is hereby certified that the conclusions in tl1e above decision were reached in consultation before the case was assig11ed to the writer of the opinion of ttle Court. }m~·D~TA

Presiding Justice

722