CTA Case No. 4810 (Decision)

-. I I REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PRODUCERS BANK OF THE PHILIPPINES, C.T.A. CASE NO. 4810 Petitioner, 7 Promulgated: - versus - APR 1 0 1997 COMMISSIONER OF INTERNAL REVENUE, Respondent. X---------------------------X DECISION This is a petition for review filed by.- the petitioner, PRODUCERS BANK OF THE PHILIPPINES, against the respondent COMMISSIONER OF INTERNAL REVENUE, for the latter's decision to assess the former the total amount of 3,033,198.58, allegedly representing the deficiency documentary stamps tax of the petitioner for the yewr 1986. The antecedent facts of the case are as follows: Petitioner is a commercial banking corporation duly registered and operating under the laws of the Republic of the Philippines. On January 18, 1990, petitioner received from respondent a letter, dated January 9, 1990, demanding payment of 3,033,198.58 representing deficiency documentary stamp tax for the year 1986, inclusive of surcharge and compromise penalty.

DECISION - C.T.A. CASE NO. 4810 -2- On February 11, 1990, petitioner wrote respondent a letter protesting the aforementioned deficiency assessment and requesting the reconsideration and withdrawal of said assessment. In the same letter, petitioner stressed that in the computation of documentary stamps purchased and affixed by the bank, only the stamps purchased and affixed by the Head Office were taken into account in the sum of P762,525.31 and that the stamps put�chased and affixed by the bank's Binondo Branch in the sum of P1,426,533.20 and that of Cebu Regional Office in the sum of P979,844.15 were not considered. by the examiners. Petitioner opined that had these items been considered, there would not have been any documentary stamp tax deficiency. On April 27, 1992, respondent issued a "Warrant of Distraint and/or Levy" on the properties of the petitioner. This was construed by the petitioner as an outright denial of its protest and request for reconsideration mentioned in the preceding paragraph. Hence, this petition. �It The revenue examiners based their questioned deficiency assessment on Sections 193 and 195 of the 1986 National Internal Revenue Code, which provides .f as ' '' follows:

DECISION -� C.T.A. CASE NO. 4810 -3 - SEC. 193. St:amp t:ax on negot:.iable prom.issory not:es,. b.ills or exchange,. drart:s,. cert:.ir.icat:es or depos.it: bear.ing .int:erest: and ot:hers not: payable on s.ight: or demand. On all bills of exchange (between points within the Philippines), drafts, or certificates of deposits drawing interests, or orders for the payment of any sum of money otherwise than at sight or on demand, or on all negotiable promissory notes, except bank notes issued for circulation, and on each renewal of any such note, there shall be collected a documentary stamp tax of twenty centavos on each two hundred pesos, or fractional part thereof, of the face value of any such bill of exchange, draft, certificate of deposit, or note. (217)(As amended by PO 1457 and PO 1959) SEC. 195. St:amp t:ax on rore.ign b.ills or exchange and 1 et:t:er or cred.it:. 0 n a11 foreign bills of exchange and letters of credit (including orders, by telegraph or otherwise, for the payment of money issued by express or steamship companies or by any person or persons) drawn in but payable out of the Philippines in a set of three or more according to the customs of merchants and bankers, there shall be collected a documentary stamp tax of thirty centavos on each two hundred pesos, or fractional part thereof, of the face value of any such bill of exchange or letter of credit, or the Philippine equivalent of such face value, if expressed in foreign currency. (As amended by PO 1457 and PO 1959) Respondent insists that the 1986 books of etitioner during their audit investigation revealed among others that petitioner issued domestic and foreign commercial papers, bills, etc. in the total amount of P1,340,519,937.71 and P1,224,376,153.73 respectively, and taking into account the above provisions of law and for failure of the petitioner to pay the documentary stamp

DECISION - C .T.A. CASE NO. 4 8 1 0 -4- tax (DST) on the same, respondent assessed the petitioner for DST, in the foll owin g manner : Domestic-Commercial Papers ?1,340,519,937.71 deposit substitutes and 200 time deposits X 0.20 ?1,340,519.94 ?1,836,564.23 Foreign-Commercial Papers, X 0.30 bills and letters of Credit ?1,224,376,153.73 200 Total Tax Due ?3,177,084.17 Less: Amount Paid 762,525.31 Balance Add: 25% surchrge ?2,414,558.86 603,639.72 Compromise 15,000.00 Total A mount Due and Collectible ?3,033,198.58 (found on page 20, BIR records) The a b ove -mentioned provisions of l aw and co mputations were not disputed by the petitioner, thus , cl early this case merely involves questions of facts, and the issue in t his case is whe t her or not petitioner has in fact paid its docu ment ary sta mp tax l ia b il ities for the year 1986. Juxtaposed to this is the . issue of jurisdiction which was raised by t he respondent in answer. He avers that since respondent has no t yet issued a decision rel ative to the pe t itioner's protest on the su bject assess ment , this C ourt should not take cog nizance of the instant pe t i t ion. The respondent mi g ht have failed to consider that it has al ready issued a Warran t of dis t raint and/or L evy on

DECISION - C.T.A. CASE NO. 4810 -5 - the properties of the petitioner when he prepared his answer to the instant petition. The Supreme Court has already resolved the same issue in Commissioner of Internal Revenue v. Algue. Inc . � 158 SCRA 9. February 17. 1 988. and we find no cogent justification for us to deviate from said decision of the Highest Court of the land, to wit: "It is true that as a rule the warrant of distraint and levy is a proof of the finality of the assessment and renders hopeless a request for reconsideration , being tantamount to an outright denial thereof and makes the said request deemed rejected." During the trial before this Court, petitioner presented evidence (Exhs. "A" to "CH") to substantiate its claim, and to prove that the Binondo and Cebu Branches have indeed paid a total amount of P2,300,000.00 for its 1986 documentary stamp tax, to which no objectiom was interposed by the respondent, except for the purposes for which they were offered. Respondent did not object to the existence of the Confirmation Receipts and BIR Payment Orders which were offered by the petitioner as proof of its payment of the alleged deficiency documentary stamp tax for 1986 but took exception to their collective purposes. Despite said reservation, up until the submission of this case for decision, respondent was not heard to complain about the

DECISION - C.T.A. CASE NO. 4810 -6- authenticity of the contents of these documents or exhibits nor has she shown any ir r eg ula r ity in the same which will taint thei r reliability or suff iciency as p r oofs of p ayment of documenta r y stamp tax desp ite the fact that it w a s well w ithin her comp etence to do so . Respondent is the r eby conside r ed to have vouched the veracity of these exhibits . It is not a miss to m ention that r esp ondent a lso adduced exhibits I II II and "I-A" , together with the testimon y of Mr. He rrnes Ribaya, as its evidence to sup p o r t its contention but the C ourt found them as but su r m ises that c a nnot st a n d ag a in st the detailed evidence of p et itione r . A ccordin g ly, the p et it ion e r's deficiency documen ta r y stamp tax fo r 1 9 8 6 should be computed as follows : Domestic-Commercia l Papers, deposit P1,340,519.94 substitutes and time deposits Foreign-Commercia l Papers, bills and 1,836,564.23 letters of credit P3,177,084.17 Tota l T ax Due P 762,525.31 3,062,525.31 Less: 2,300,000.00 p 114,558.86 Amount p a id per return 28,639.72 Amount paid by its p 143,198.58 Binondo & Cebu Branches, per evidence p resented Balance Add: 25% surcha rge Tota l Amount Due and Collectible ll C:' 3 \J \)

DECISION - C.T.A. CASE NO. 4810 -7- WHEREFORE, premises considered, judgment is hereby rendered partially GRANTING the herein petition. Petitioner is hereby ORDERED to PAY the respondent Commissioner of Internal Revenue the amount of P-143,198.58 as deficiency documentary stamp tax for the year 1986, inclusive of surcharge, plus 20% interest per annum from the date prescribed for payment until fully paid pursuant to Section 249(b) of the Tax Code, as amended. No pronouncement as to costs. SO ORDERED. (-Q ERNESTO D. ACOSTA Presiding Judge I CERTIFICATION I hereby certify that this decision was reached / I l after due consultation with the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. Q. ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals ,., {\ ..