Case Digest (G.R. No. 164155)
Facts:
Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue, G.R. Nos. 164155 & 175543, February 25, 2013, Supreme Court Third Division, Abad, J., writing for the Court.
In 1992 Congress enacted Republic Act No. 7227 creating the Bases Conversion Development Authority (BCDA) to raise funds through the sale of certain military camps. To implement that program, BCDA incorporated Fort Bonifacio Development Corporation (FBDC) on February 3, 1995 as a wholly-owned subsidiary to develop Fort Bonifacio. On February 7, 1995 the Republic issued Special Patent No. 3596 transferring 214 hectares of Fort Bonifacio to FBDC; FBDC executed a negotiable promissory note for approximately P71.2 billion in favor of the Republic, which the Republic assigned to BCDA and which BCDA used to pay its subscription to FBDC’s capital stock.
On February 8, 1995 the Republic also executed a Deed of Absolute Sale with Quitclaim covering the same 214-hectare parcel for the same price. An Original Certificate of Title was issued in FBDC’s name on February 19, 1995. On February 24, 1995 Congress enacted R.A. 7917, declaring the proceeds of the Government sale of the Fort Bonifacio land exempt from all forms of taxes. BCDA later sold 55% of FBDC’s shares to private investors, retaining 45%.
On September 15, 1998 the Commissioner of Internal Revenue issued a Letter of Authority to examine FBDC’s 1995 tax liabilities; on December 10, 1999 he issued Final Assessment Notice ST-DST-95-0131-99 assessing FBDC with documentary stamp tax (DST) of P1,068,412,560.00 allegedly due on the Republic’s 1995 sale. FBDC protested invoking R.A. 7917; when the Commissioner failed to act within 180 days, FBDC filed a petition for review with the Court of Tax Appeals (CTA) (docketed CTA Case No. 6149).
On March 5, 2003 the CTA denied FBDC’s petition and upheld the Commissioner’s DST assessment, treating the Special Patent as exempt but the Deed of Absolute Sale as a separate, taxable instrument. The Commissioner sought an increased penalty; on August 14, 2003 the CTA modified its decision to impose a 20% delinquency interest from January 26, 2000 until full payment. FBDC filed two petitions for review with the Court of Appeals (CA) (CA-G.R. SP 76017 and CA-G.R. SP 79010) challenging the CTA decision and the interest resolution. The CA affirmed both CTA rulings.
While the CA petitions were pending, on December 17, 2004 FBDC manifested that BCDA had paid the disputed assessment through a Special Allotment Re...(Pro-only)
Issues:
- Whether the Court of Appeals erred in holding that FBDC was liable for documentary stamp tax and a 20% delinquency interest on the Deed of Absolute Sale covering the 214-hectare Fort Bonifacio land.
- Whether the controversy is moot and academic by virtue of BCDA’s payment of...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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