Case Digest (G.R. No. 182722)
Facts:
Dumaguete Cathedral Credit Cooperative (DCCCO) v. Commissioner of Internal Revenue, G.R. No. 182722, January 22, 2010, Supreme Court Second Division, Del Castillo, J., writing for the Court.Petitioner DCCCO is a credit cooperative duly registered with and regulated by the Cooperative Development Authority (CDA), established in 1968 to mobilize members' savings and extend loans. On November 27, 2001, the BIR issued Letters of Authority authorizing examination of DCCCO's books for taxable years 1999 and 2000. Thereafter, DCCCO received Pre‑Assessment Notices (June and October 2002) alleging deficiency withholding taxes covering, among others, honoraria, professional fees, security/janitorial services, and interest on members' savings and time deposits.
Respondent issued assessment notices and, after protests by DCCCO, DCCCO availed itself of the BIR Voluntary Assessment and Abatement Program (VAAP) and paid withholding taxes attributable to compensation, honoraria and service fees (payments made November 29, 2002). On April 24, 2003 the BIR issued Letters of Demand with attached Transcripts of Assessment, ordering payment of alleged deficiency withholding taxes (inclusive of penalties) amounting to P1,489,065.30 (1999) and P1,462,644.90 (2000). DCCCO protested to the Commissioner on May 9, 2003; the Commissioner did not resolve the protest within 180 days, prompting DCCCO to file a Petition for Review with the Court of Tax Appeals (CTA) on December 3, 2003 (C.T.A. Case No. 6827).
The CTA First Division, in a February 6, 2007 Decision, partially granted the petition: it cancelled the assessments for withholding on honoraria, per diems, security/janitiorial services, commissions and professional fees, but affirmed assessments for deficiency withholding taxes on interest from members' deposits, and ordered DCCCO to pay P1,280,145.89 (1999) and P1,357,881.14 (2000) plus 20% delinquency interest from May 26, 2003. A motion for partial reconsideration was denied by the First Division on May 29, 2007. DCCCO filed a Petition for Review with the CTA En Banc on July 3, 2007; the En Banc denied relief and likewise affirmed that, under Section 57 of the NIRC and Revenue Regulations No. 2‑98, interest from members' deposits constitutes “similar arrangements” subject to final withholding tax. DCCCO invoked BIR Ruling No. 551‑888 (1988) and BIR Ruling [DA‑591‑2006] which had interpreted that cooperatives need not withhold tax on interest from members' deposits; the CTA panels rejected that reading and treated the cooperative as the payor‑corporation liable to withhold.
...(Subscriber-Only)Issues:
- Is petitioner liable to pay the deficiency withholding taxes on interest from savings and time deposits of its members for taxable years 1999 and 2000, and the 20% delinquency interest...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)