A.M. No. MTJ-98-1165 - Domingo vs. Reyes

The petitioner, Philippine Bank of Communications, filed a Petition for Review under Rule 45 of the 1997 Rules of Civil Procedure.
The petition challenged the decisions of the Court of Tax Appeals (CTA) en banc and earlier rulings, particularly regarding the refund or issuance of tax credit certificates for documentary stamp tax (DST) erroneously paid.

Pursuant to Revenue Regulations (RR) No. 7-92, the Bureau of Internal Revenue (BIR) issued Certificate No. 08-0434 on 31 July 2001 authorizing the petitioner to operate an On-line Electronic Documentary Stamp Metering Machine (DS metering machine) with Serial No. SN363 1711.
The petitioner purchased documentary stamps from the BIR and loaded them into the DS metering machine for future use in executing taxable documents.

Between 23 March 2004 and 23 December 2004, the petitioner executed several repurchase agreements with the Bangko Sentral ng Pilipinas (BSP).
Documentary stamps were imprinted on confirmation letters for these repurchase agreements through the DS metering machine.
The petitioner contended that these repurchase agreements were exempt from DST, relying on Section 9 of Republic Act (R.A.) No. 9243 which exempts certain instruments including repurchase agreements, treating them similarly to derivatives.

Believing that it had erroneously paid DST on transactions involving the BSP, the petitioner filed an administrative claim for refund or issuance of a tax credit certificate for the total erroneous payment amounting to ₱11,063,866.67 on 12 May 2006.
Alleging inaction by the BIR on the claim, the petitioner filed a Petition for Review with the CTA on 18 May 2006.
The CTA Second Division ruled that although the repurchase agreements were exempt and only ₱10,633,881.20 of DST was substantiated, a portion (₱3,072,521.60) was barred by prescription, leaving a refundable claim of ₱7,561,359.60.
Later, the CTA en banc reinterpreted the counting of the two-year prescriptive period by holding that for DS metering machine users, the DST is deemed paid on the purchase of documentary stamps (via the filing of the DST Declaration under BIR Form No. 2000). This resulted in the prescriptive period running from that filing date, thereby reducing the refundable amount to ₱5,238,495.40.

The petitioner’s key argument focuses on whether, for purposes of computing the two-year prescriptive period for filing a refund or tax credit claim under Section 229 of the NIRC, the “date of payment” should be taken as:

The date on which the documentary stamps are imprinted on the taxable document (i.e., the Confirmation Letters of the repurchase agreements), or
The date on which the documentary stamps were purchased and loaded/reloaded onto the DS metering machine (accompanied by the filing of the DST Declaration under BIR Form No. 2000).

The interpretation of “payment” in the context of a tax that is, by its nature, an excise tax on transactions rather than a direct levy on documents.
The adequacy of using the filing of the DST Declaration as the definitive trigger for the prescriptive period, given that such filing represents an advanced payment for future transactions.