G.R. No. 198756 - Banco De Oro vs. Republic

October 9, 2001 – Bureau of the Treasury announced a P30 billion auction of 10-year zero-coupon bonds, limited to 19 lenders and exempt from the 20% final withholding tax.
October 16, 2001 – Competitive bidding held; Rizal Commercial Banking Corporation (RCBC), on behalf of Caucus of Development NGO Networks (CODE-NGO), won the auction.
October 18, 2001 – P35 billion of “PEACe Bonds” issued at 12.75% yield (approximate purchase price P10.17 billion, discount of P24.83 billion).
RCBC Capital Corporation underwrote and distributed the bonds to investors at a total issue price of P11,995,513,716.51.

October 7, 2011 – BIR Ruling 370-2011 declared the PEACe Bonds deposit substitutes, subject to 20% final withholding tax on imputed interest.
October 17, 2011 – BIR Ruling DA 378-2011 clarified withholding was required from all subsequent holders in secondary market.
Secretary of Finance directed the Bureau of the Treasury to withhold 20% tax upon maturity on October 18, 2011.

October 17, 2011 – Petition for Certiorari filed with urgent application for injunction; October 18, 2011 – Supreme Court issued TRO enjoining implementation of BIR Ruling 370-2011 but allowed banks to escrow withheld tax.
Motions to intervene granted for RCBC, RCBC Capital, and CODE-NGO; further Court orders to respondents to comply with the TRO.
January 13, 2015 – En Banc Decision nullified BIR Rulings 370-2011 and DA 378-2011, reprimanded the Bureau of the Treasury, and ordered release of withheld amounts to bondholders.
March 2015 – Respondents and intervenors filed separate Motions for Reconsideration and Clarification of the January 13, 2015 Decision.

Whether government debt instruments like the PEACe Bonds qualify as deposit substitutes when offered to 19 lenders but subsequently held by 20 or more investors.
Whether the phrase “at any one time” refers solely to primary market transactions or includes secondary market holdings.

Whether sellers in the secondary market can be treated as withholding agents for the 20% final tax on deposit substitutes.
When the obligation to withhold arises for zero-coupon bonds that do not pay periodic interest but mature at face value.

Whether the Republic or BIR is estopped by prior rulings and Treasury representations from imposing the 20% tax.
Whether petitioners were required to exhaust administrative remedies before filing directly with the Supreme Court.
Whether the Supreme Court’s interpretation of ambiguous tax provisions should apply retroactively or only prospectively.

Whether imposing the 20% final withholding tax violates the constitutional non-impairment of contracts or due process.
Whether petitioners are entitled to legal interest for the Bureau of the Treasury’s wrongful retention of escrowed funds.