Case Summary (G.R. No. 217898)
Petitioner
Commissioner of Internal Revenue, alleging lack of legal basis for refund of Creditable Withholding Tax (CWT)
Respondent
Bases Conversion and Development Authority, claiming exemption under its charter
Key Dates
– May 28, 2008: BCDA requested tax‐exemption certification
– July 31, 2008: Deeds of Absolute Sale executed; Net Group withheld and remitted ₱101,637,466.40 as CWT
– March 9, 2009: BCDA formally sought refund from BIR
– July 29, 2010: BCDA filed petition before CTA for refund
– September 13, 2013: CTA First Division granted refund
– December 16, 2014: CTA En Banc affirmed First Division
– April 15, 2015: CTA En Banc denied CIR’s motion for reconsideration
– January 15, 2020: Supreme Court decision
Applicable Law
– 1987 Philippine Constitution
– Republic Act No. 7227, as amended by RA 7917 (BCDA Charter)
– National Internal Revenue Code (NIRC), as amended (RA 8424, RA 9337, RA 10026)
– Revenue Regulation No. 2-98, Section 2.57.5 (CWT exemption for government instrumentalities)
– Revenue Regulation No. 6-85, Section 10 (requirements for refund claims)
Antecedents
BCDA contracted to sell military camp lands to an unincorporated joint venture (“Net Group”) for over ₱2 billion. The buyer withheld ₱101,637,466.40 CWT pending BCDA’s presentation of an exemption certificate. CIR did not act on BCDA’s request. After remittance of the withheld tax, BCDA pursued administrative and judicial claims for refund, invoking tax-exempt status under its charter.
CTA First Division Ruling
The CTA First Division, in a decision dated September 13, 2013, ordered CIR to refund the ₱101,637,466.40, finding BCDA entitled to exemption under its charter and procedural compliance with refund requirements.
CTA En Banc’s Ruling
On December 16, 2014, the CTA En Banc affirmed. It held that:
- RA 7227 (as amended) is a special law exempting BCDA’s sale proceeds from all taxes and fees.
- A general law (NIRC Section 27(C)) cannot impliedly repeal a special law.
- NIRC Section 32(B)(7)(b) and Revenue Regulation No. 2-98, Section 2.57.5 exclude national government instrumentalities from CWT.
- The sale proceeds are public funds appropriated by law, not BCDA income, hence not subject to withholding.
The CTA En Banc denied CIR’s motion for reconsideration on April 15, 2015.
Issues Presented
Whether BCDA is exempt from CWT on the sale of its Global City properties, and whether its procedural compliance sufficed to merit refund.
Respondent’s Arguments
– Section 8 of RA 7227, as amended by RA 7917, appropriates sale proceeds for specified public uses and expressly exempts them from “all forms of taxes and fees.”
– Administrative Order No. 236 confirmed that sale proceeds are government funds to be remitted to the National Treasury and automatically appropriated.
– As a special law, RA 7227 remains effective despite the later-enacted NIRC and its withholding provisions.
– The transaction was excluded from BCDA’s income; hence, BCDA did not declare it in its return.
Petitioner’s Arguments
– NIRC Section 27(C) supersedes any earlier tax-exempt provision under RA 7227.
– BCDA failed to comply with Section 10 of RR 6-85 by not showing inclusion of the proceeds in gross income and by not p
Case Syllabus (G.R. No. 217898)
Citation and Procedural Posture
- G.R. No. 217898, January 15, 2020; 868 Phil. 567; 117 O.G. No. 34, 8734 (August 23, 2021), First Division
- Petition for review filed by Commissioner of Internal Revenue (CIR) assailing:
- CTA En Banc Decision dated December 16, 2014 granting tax refund to BCDA
- CTA En Banc Resolution dated April 15, 2015 denying CIR’s motion for reconsideration
- Originating CTA EB Case No. 1123 (CTA Case No. 8140), “Commissioner of Internal Revenue v. Bases Conversion and Development Authority”
Antecedent Facts
- BCDA owned four real properties in Bonifacio Global City, Taguig City, known as the “Expanded Big Delta Lots” (12,036 sq. m. total)
- BCDA contracted to sell these lots to “Net Group,” an unincorporated joint venture of:
- 18-14 Property Holdings, Inc.
- 14-8b Property Holdings, Inc.
- The Net Group Project Management Corporation
- The Net Group Property Management Corporation
- Total purchase price: ₱2,032,749,327.96
- Net Group agreed to withhold ₱101,637,466.40 as Creditable Withholding Tax (CWT) pending BCDA’s presentation of tax-exemption certification by June 9, 2008
- BCDA requested certification on May 28, 2008; CIR did not respond
- Deeds of Absolute Sale executed July 31, 2008; Net Group withheld and remitted ₱101,637,466.40 to BIR RDO No. 44 and issued BIR Form 2307 to BCDA
- BCDA requested refund from BIR on March 9, 2009; no response
- BCDA filed petition for refund before CTA on July 29, 2010
CTA First Division Decision
- Decision dated September 13, 2013 granted BCDA’s refund claim
- Ordered CIR to refund ₱101,637,466.40 representing CWT on sale of Expanded Big Delta Lots
- CIR’s motion for reconsideration denied by CTA First Division Resolution dated January 30, 2014
CTA En Banc Ruling
- Decision dated December 16, 2014 affirmed First Division
- Resolution dated April 15, 2015 denied CIR’s motion for reconsideration
- Key findings:
- BCDA’s charter (RA 7227, as amended by RA 7917) specifically exempts sale of specified assets from taxes and fees
- NIRC (general law) does not impliedly repeal RA 7227 (special law) in absence of express repeal
- Section 32(B)(7)(b) NIRC and RR No. 2-98, Sec. 2.57.5 exempt national government instrumentali