G.R. No. 178797 - Metropolitan Bank and Trust Co. vs. Commissioner of Internal Revenue

Metrobank, a domestic corporation and duly licensed banking institution, offers a product called the Universal Savings Account (UNISA).
The UNISA provides depositors a higher interest rate than in a regular savings account if a minimum deposit is maintained for a specified holding period; a passbook evidences the account, although withdrawals may be made at any time.

Pursuant to Letter of Authority No. LOA 2000-00052501 (26 June 2001), the Bureau of Internal Revenue (BIR) investigated Metrobank for various tax liabilities for the taxable year 1999 including Gross Receipts Tax, Final Withholding Tax, and Documentary Stamp Tax (DST).
As a result of the investigation, on 30 September 2002, the Commissioner of Internal Revenue (CIR), through an Assistant Commissioner, issued a Pre-Assessment Notice (PAN) assessing deficiency DST for the UNISA based on Section 180 of the National Internal Revenue Code (NIRC), amounting to approximately P473 million when including surcharge and interest.

Metrobank filed a protest on 11 December 2002 against the PAN, arguing that the UNISA should not be subject to DST and the 25% surcharge should not apply.
On 7 January 2003, the CIR issued Assessment No. DST-2-99-000022 along with a Formal Letter of Demand for a total deficiency tax of approximately P477.6 million.
Metrobank filed a subsequent protest on 17 January 2003, which was denied by the CIR on 2 March 2004.

Metrobank elevated the case to the CTA by filing a Petition for Review on 21 April 2004 (C.T.A. Case No. 6955).
The CTA Second Division dismissed the petition on 1 September 2006 for lack of merit and affirmed the CIR’s decision, albeit with minor modifications (e.g., cancellation of the compromise penalty).
The Motion for Reconsideration filed by Metrobank was denied on 3 January 2007, after which Metrobank sought further review from the CTA en banc (C.T.A. E.B. No. 247), which on 21 May 2007 likewise dismissed Metrobank’s petition.

The central point concerned whether the UNISA qualifies as a certificate of deposit drawing interest subject to DST under Section 180 of the NIRC.
Despite differences in form—being evidenced by a passbook rather than a certificate—the CTA en banc and prior decisions (BDO and IEB cases) determined that the substance of UNISA is equivalent to a time deposit.
Metrobank maintained that as a special savings account with flexible withdrawal features, the UNISA should not be treated as a time deposit subject to DST.

On 17 April 2008, during the pendency of the case, Metrobank availed itself of the Tax Amnesty Program under Republic Act No. 9480, asserting that it had complied with all the requisite conditions.
Metrobank argued that the tax amnesty entitled it to immunity from the deficiency DST on the UNISA for 1999.
The CIR contended that Metrobank was acting merely as a withholding agent and that the assessment was already final and executory, thus excluding it from the tax amnesty.

The CTA en banc referenced prior decisions in the BDO and International Exchange Bank (IEB) cases to establish that special savings accounts evidenced by passbooks, despite nomenclature differences, are de facto certificates of deposit drawing interest and therefore subject to DST.
Legislative deliberations on the precursor bills to Republic Act No. 9243 reveal an acknowledgment of a loophole in Section 180 of the NIRC, which was later amended to Section 179.
Subsequent cases, such as the Philippine Banking Corporation (PBC) case, further reinforced the position that similar banking instruments regardless of form are liable for DST.

Whether the UNISA, despite being evidenced by a passbook and offering flexibility for withdrawals, constitutes a certificate of deposit drawing interest subject to DST under Section 180 of the NIRC (or its amended version under Republic Act No. 9243).

Whether Metrobank’s protest against the assessment and its contention regarding the product’s character (distinguishing a UNISA from a time deposit) are sustainable in view of established jurisprudence.

Whether the assessment for deficiency DST for taxable year 1999 had reached finality, thereby barring Metrobank from availment of the tax amnesty under Republic Act No. 9480.

Whether the availed Tax Amnesty Program, which covers all taxes for 2005 and prior years, extends to extinguish the deficiency DST liability on the UNISA.