Case Digest (G.R. No. 168118)
Facts:
The Manila Banking Corporation v. Commissioner of Internal Revenue, G.R. No. 168118, August 28, 2006, Supreme Court Second Division, Sandoval-Gutierrez, J., writing for the Court (Puno, Azcuna and Garcia, JJ., concurring; Corona, J., on leave).
The Manila Banking Corporation (petitioner) was incorporated in 1961 and engaged in commercial banking until the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) issued Resolution No. 505 on May 22, 1987 prohibiting it from doing business because of insolvency; petitioner therefore ceased operations and its assets and liabilities were placed under a government-appointed receiver pursuant to Section 29 of R.A. No. 265.
After twelve years out of operation, petitioner sought to resume banking activity: it registered with the Bureau of Internal Revenue (BIR) on January 21, 1999, filed amended Articles with the Securities and Exchange Commission (SEC) (approved June 22, 1999), and obtained from the BSP a Certificate of Authority to operate as a thrift bank on June 23, 1999. Petitioner filed its corporate income tax return for taxable year 1999 on April 7, 2000 and paid P33,816,164 as Minimum Corporate Income Tax (MCIT).
Before filing its return, petitioner on December 28, 1999 asked the BIR whether it was entitled to the four-year grace period before MCIT applies. The BIR issued BIR Ruling No. 007-2001 (Feb. 22, 2001) concluding that, as a practical matter and in the interest of equity, petitioner’s reopening in 1999 made it akin to a commencement of business and that MCIT could not be imposed earlier than 2002. Relying on that ruling, petitioner filed a claim for refund of the P33,816,164 paid as MCIT; inaction by the BIR led petitioner to petition the Court of Tax Appeals (CTA).
On April 21, 2003 the CTA denied the petition, holding petitioner was not entitled to the four-year grace because it remained the same corporation registered with the SEC and BIR despite receivership; receivership did not dissolve corporate existence. Petitioner appealed to the Court of Appeals, which on May 11, 2005 (CA-G.R. SP No. 77177) affirmed the CTA decision. Petitioner then filed a petition for review on certiorari under Rule 45 asking the Supreme Court to reverse and order refund of the MCIT. The question presented concerned entitlement to ...(Pro-only)
Issues:
- Is petitioner entitled to a refund of P33,816,164.00 paid as Minimum Corporate Income Tax (MCIT) for taxable year 1999?
- For purposes of imposing the MCIT under Section 27(E) of the Tax Code as amended by R.A. No. 8424, should a thrift bank like petitioner be considered to have "commenced business operations" in the year it registered with the BIR (per Revenue Regulation No. 9-98) or in the year it obtained SEC registration or a BSP Certificate of Authority (per Revenue Regulation No. 4-95...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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