Case Digest (G.R. No. 205261)
Facts:
Philippine Veterans Bank v. Commissioner of Internal Revenue, G.R. No. 205261, April 26, 2021, the Supreme Court Third Division, Lopez, J., writing for the Court.
The petitioner, Philippine Veterans Bank (PVB), is a commercial bank organized under Republic Acts No. 3518 and 7169. In 1994–1996 PVB offered “Special Savings Accounts” (including Special Savings Account, Special Savings Deposit (Government), and Golden V (Private)) that earned interest for depositors and were evidenced by passbooks. The Special Savings Accounts had hybrid features: withdrawable on presentation of a passbook, often large minimum deposits, preferential interest rates, allowance for additional deposits and partial withdrawals, no fixed maturity, non-negotiability, and no formal pre-termination mechanism.
On December 9, 1999 the Commissioner of Internal Revenue (the respondent) served PVB a Final Notice of Assessment for deficiency documentary stamp tax (DST) for 1994–1995; subsequent Formal Letter of Demand dated December 4, 2000 assessed deficiency gross receipts tax (GRT) and DST for 1996. The respondent’s assessments treated (a) certain Special Savings Accounts as certificates of deposit drawing interest subject to DST, and (b) the bank’s final withholding tax (FWT) on gross interest income as part of the bank’s gross receipts for GRT computation. PVB protested and sought deferment; the respondent denied relief and on August 8, 2002 issued an adverse decision ordering payment of a total of P55,282,658.72 as deficiency GRT and DST for taxable years 1994–1996, plus interest.
PVB filed a Petition for Review with the Court of Tax Appeals (CTA) Division. The CTA Division, in its October 8, 2010 Decision, partially granted and partially modified relief: it cancelled certain DST assessments in view of an abatement program termination letter, but affirmed with modification DST and GRT assessments on the Special Savings Accounts and ordered specific amounts payable with statutory interest. PVB elevated the matter to the CTA En Banc, which on December 20, 2012 dismissed PVB’s petition for lack of merit, thereby affirming the CTA Division. PVB then filed th...(Subscriber-Only)
Issues:
- Are the Special Savings Accounts of Philippine Veterans Bank subject to documentary stamp tax?
- Are final withholding taxes on PVB’s gross interest income deductible from gross receipts in computing the bank’s gros...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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