BANGKO SENTRAL NG PILIPINAS v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL THIRD DIVISION BANGKO SENTRAL NG PILIPINAS, CTA CASE NO. 10278 P etitioner, Mem b ers: -versus - RINGPIS-LIBAN, Chairperson, MODESTO-SAN PEDRO, and, F E R R E R - F L O R E S , J J. COMMISSIONER O F INTERNAL Promulgated: REVENUE, Respondent. J UN 1 8 202lt ? - - - ~ ��~A � ._ � X ---- ---- - ---- ------ --- -- ---- ---- ---- -- - -- -- ----- -- -- --- -- ----- - -- -- -- ----- - - - -- -- ---- -- - - ---- ~-- -- - - - - ---------- X RESOLUTION RINGPIS-LIBAN; J : Before the Court is respondent's Motion for Reconsideration (Re: Decision promulgated on 11 J anuary 2024) ftled on Febtuary 1, 2024, with petitioner's Comment/ Opposition (Re: Respondent's Motion for Reconsideration dated 25 January 2024) ftled through registered mail on March 11, 2024, and received by the Court on March 21, 2024. O n January 11, 2024, the Court promulgated a D ecision granting the petitioner's claim of refund of expanded withholding tax (E\VT) on the ground that it is a government instrumentality and no creditable withholding tax may be imposed on income payments thereto, the dispositive portion of which states as follows : "WHEREFORE, in light of the foregoing considerations, the present Petition for Review is GRANTED. Accordingly, respondent is hereby ORDE RED to REFUND to p etitioner the amount of P1,525,954.63, representing surcharge, interest, and compromise penalty, on the alleged late payment of EWT erroneously paid or collected the BIR. SO ORDERED./

RESOLUTION CTA CASE NO. 10278 In his Mo tion, petitioner moves for reconsideration of the above Decision arguing that (i) the Court erred in ruling that petitioner is exemp t from the payment of creditable withholding taxes; and (ii) the Court erred in ruling that petitioner's claim was duly substantiated. Respondent claims that the Court's reliance on the ruling in BSP v. COA, G. R 17713 1, June 7, 2011, is misplaced since the government instrumentality referred therein is Boy Scouts o f the Philippines and not p etitioner Bangko Sentral ng Pilipinas. Respondent continues that the two have their own charters and are separate and distinct from each other. G ranted that p etitioner is indeed an instrumentality of the N ational Government, respondent asserts that petitioner offered no proof that its sale of real properties is exempt from payment of EWT. Respondent maintains that the Court did not consider the fact that the real properties that petitioner sold were classified as ordinary assets which are consequently subject to EWT. He expounds that petitioner offered no evidence to prove that the sale of its properties were not ordinary assets. In fact, petitioner even admitted that said sold properties were obtained through ordinary course of its trade and business by way of dacion en pago. In any case, responden t submits that petitioner is still the one statutorily liable to pay the tax since the buyer is only an agent. Respondent stresses that petitioner as a �withholding agent merely holds in trust the amount of tax it withheld and as trustee, it is duty bound to remit to the government the proper amount o f tax withheld and this duty is imprescrip tible. As such, petitioner is ultimately liable for the late payment of EWT arising from the sale of its real p ro p er ties . Lastly, respondent points out that it is consistently held that tax exemption must be proven in clear and convincing manner with no doubt of tl1e intention of the legislature to grant such exemption. T hus, respondent maintains that petitioner failed to introduce any evidence to overthrow the validity of the Bureau of Internal Revenue (BIR)'s assessment which ultimately leads to the fact that petitioner is not entitled to refund the amount of P1,525,954.63 on its late payment o f EWT for the sale o f its real properties. O n the other hand, in its Comment, petitioner asserts that the Court correctly ruled that it was improper to impose surcharge, interest and compromise penalty on the alleged payment of EWT against petitioner as income payments made to it, being a government instrumentality, are exempt from EWT. Furthermore, petitioner insists that, assuming arguendo, petitioner's income on the subject sale is subject to EWT, it is the income payor / buyer who is liable to pay the penalties for late paym ent of EWT. Lastly, petitioner avers that its claim for refund is duly substantiated and that tax refunds based on ,-/

RESOLUTION CT.-\ CASE 0. 10278 erroneous payment should be construed strictly against the government and liberally in favor of the taxpayer. After due consideration, the Court finds respondent's Motion for Reconsideration bereft of merit. At the outset, tl1e Court is not unaware that the crux of the controversy in the case of Bqy Scouts ofthe Philippines v. Commission on Audi~ 1 was whether the Commission on Audit has jurisdiction over Boy Scouts of the Philippines. However, respondent remised the point that it was in this case that the Supreme Court defined the term "government instrumentality", to wit "The existence of public or government corporate or juridical entities or chartered institutions by legislative fiat distinct from private corporations and government owned or controlled cotporation is best exemplified by the 1987 Administrative Code cited above, which we quote in part: Sec. 2. General Terms D efined. - Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different meaning: XXX (10) 'Instrumentality' refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This tetm includes regulatory agencies, chartered institutions and government-owned or controlled corporations." (Emphasis supplied) Similar to the Bqy Scouts ofthePhilippines, such definition was applied herein to show that petitioner is a government instrumentality - an agency o f the National Government vested with special functions and enjoying operational autonomy. Being as such, petitioner is therefore exempt from creditable withholding tax pursuant to Section 2.57.5(A)2 of Revenue Regulations No. 2- 98,3 as amended. /V' ' G.R. 177131, June 7, 2011 . 2 "SECDON 2.57.5. Exemption from 117ithholding. - The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following: (,-\) N ational government and its instnunentalities, including provincial, city or municipal governments;" 3 "SUBJECT: Implementing Republic Act o. 8424, ".-\n Act Amending the ational Internal Revenue Code, as Amended" Relative to the Withholding on Income Subject to the Expanded Withholding Tax and

RESOLUTION CTA CASE NO. 10278 Moreover, the fact that petitioner is a government instrumentality was further admitted by respondent in the parties' Joint Stipulation of Facts and Issues filed on December 1, 2021,4 which was adopted in the Pre-Trial Order promulgated on February 15, 2022.5 Accordingly, the Court cannot lighdy set aside a judicial admission especially when the opposing party relied upon the same and had dispensed with further proof of the fact already admitted. An admission made by a party in the course of the proceedings does not require proof.6 Aside from the above contention of respondent, the other arguments raised in his Motion are mere rehash of the same facts and issues, which have already been thoroughly considered, weighed, and resolved in the Decision it assails. Given that respondent's arguments have already been threshed out and judiciously resolved in the Decision dated January 11 , 2024, the Court finds no compelling reason to reverse or modify the findings and conclusions reached therein. Accordingly, nothing is left for this Court but to deny the present :Niotion for Reconsideration. WHEREFORE, premises considered, respondent's Motion for Reconsideration (Re: Decision promulgated on 11 January 2024) is DENIED for lack of merit. SO ORDERED. OJu.~ v'---. MA. BELEN M. RINGPIS-LIBAN Associate Justice We Concur: MARIARO s Associate Justice Final Wid1h olding Tax, Withholding of Income Tax on Compensation, Withholding of Creditable Value- Added Tax and O ther Percenrage Taxes," dated April 17, 1998. ~ Docket (Vol. I), pp. 333 to 340. Id., pp. 345 to 354. 6 See page 13 of the Decision, Docket (Vol. I), p. 535