CTA Case No. 5440 (Decision)

REPUBLIC OF THE PHILIPP I NES COURT OF TAX APPEALS QUEZON CITY EQUITABLE BANK I NG CORPORATION, Petitioner, - versus C.T.A. CASE NO. 5440 COMMISSIONER OF INTERNAL REVENUE, Respo n de n t. X- - - - - - - - DECISION This case involves a claim for refund and/ot~ issuance of tax credit certificate in the amount of P1,242,252.66 allegedly representing ovet~paid t~eceipts tax fat~ the quat~tet~ ending Septembet~ 30, 1994. Petitioner is a banking corporation duly organized and existing under the laws of the Philippines. On Oct abet~ 20, 1994, petitioner filed with the Bureau of Internal Revenue its Quarterly Percentage Tax Ret1.wn fat~ the quat~tet~ ended Septembet~ 30, 1994 <Exh. B) a in the amount of P324,166,359.84 and gross receipts tax payment in the sum of P14,256,032.11 <Exh. B-1). On Januat~y 30, 1996, this Court rendered a decision in the case of Asian Banking Corporation Commissioner of Internal Revenue, CTA Case No. 4720, declaring that the 20~ final withholding tax on bank

DECIS I ON C.T.A. CASE NO. 5440 - 2- interest should not of its taxable gross receipts for purposes of computing gross receipts tax. Thus, on the stt�eng t h of said decision, petitioner� filed on September 26, 1996, an administrative claim for the refund or issuance of tax credit certificate CExh. C) in the total amount of P14, 125,699.10 from which the P1,242,252.66, subject matter of this petition, formed a par�t o f (Exh. C-1). With the two-year regle me n t ary period about to expit�e, petitio�net' pt�udently did not wait fot' the t�esult of its administrative claim. Hence, this p etition on October 19, 1996. On February 7, 1997, petitioner filed a Motion to Admit Amended Petition which this "considet�ing that the allegations sought to be in the amended petition at�e factual allegations which at�e supplementat�y and do not substantially alter or change pet itioner's cause of action" (Rec., p. 60). Petitioner then alleges that for the quarter ending September� 30, 1994 it paid to the BIR gt�oss t�eceipts tax in the sum of P27,070,042.69 and P14,256,032. 12 of which comprises the aggregate amount of gross receipts tax paid by the following:

DECISION C.T.A. CASE NO. 5440 - 3- Head Office P13,589,268.23 Exhibit A-1 Bt~anches: 19,525.87 Exhibit A-2 At~t~anque 9,568.24 Exhibit A-3 Exhibit A-4 Magdalena 27,134.28 Exhibit A-5 Ongpin 6, 1i::9.L~0 Exhibit A-6 Reina Regente So 1 et~ 604,406.10 Total P14,256,032. 12 Petitioner further claims that the amount of P324, 166,359.84 included the amounts of P5, 118,097.58 CExh. C-4, C-10) and P19,726,955.50 <Exh. C-5, C-11, D-1, SS-1) which respectively correspond to 20% portion of tax paid income and investment income subjected to final tax booked at gr~oss. The amount claimed to be refundable is arrived at by recomputing the tax base, as follows: Gross Receipts Subjected to Tax P324, 166,359.84 Less: 1) 20% Portion of Tax Paid 5,118,097.58 Income 19,726,955.50 2) Investment Income subject P299, 3i='1, 306. 76 to 20% final tax booked a t gr~oss Adjusted Gross Receipts Tax Base Computation of Adjusted Gross Receipts Tax Gt'oss Receipts Tax Rate Tax Due p 4,605,275.06 0.00 01. 34,584,305.44 11. 345,843.05 16,932,495.29 507,974.86 243,199,230.97 51. 12, 159, 961. 55 P299,321,306.76 P13,013,779.46 Gross Receipts Tax Paid P14, c:~56, 032. 12 Less: Adjusted Gross Receipts Tax 13,013,779.46 Tax Refund p 1 , 242, ~:::52. 66

DECISION C. T.A. CASE NO . 5440 - 4- Respondent, by way of Special and Affirmative Defenses, states, among others, that the petition does not state a cause of action; respondent is still investigating the claim; the burden of proof is upon the claimant to establish its right to the refund and any claim for tax refund is construed strictly against the claimant. To bolster its claim, petitioner presented the following documentary evidence, to wit: 1. Transmittal Sheet of Percentage Tax of the Head Office and Branches/Units of Large Taxpayers for the Quarter Ended September 30, 1994; 2. Quarterly Percentage Tax Return for the quarter ended September 30, 1994; 3. Written claim for refund dated September 26, 1996; 4. Income & Expense Account Sub-ledgers for the quarter ended September 30, 1994; and 5. Statement of Income and Expense Accounts of EBC for Head Office for the quarter ended September 30, 1994. Petitioner also presented a witness to testify and identify the aforecited documents.

DECISION C.T. A. CASE NO. 5440 - 5- Respondent, on the other hand, presented no evidence and submitted the case for decision based on the pleadings <CTA t~ec., p. 176). This case was submitted for decision on August 7, 1'3'38. before a decision could be rendered, petitionet~ filed a "Motion to Reopen Case and Allow EBC to Pt~ esent Additional Evidence". Said motion was filed mainly to comply the requirements of proof set forth in two cases involving the same parties, namely: Equitable Banking Corporation versus Commissioner of Revenue, CTA Case No. 5411, June 15, 1'3'38 and Equitable Banking Corporation versus Commissioner of Revenue, CTA Case No. 5146, August 8, 1'398. On January 5, 1'3'3'3, this Court denied petitioner's motion, t~uling thus: The presentation of additional evidence is allowed only when it is newly di s covered, or where it has been omitted through inadvertence at~ mistake, at~ whet~e the pm~pase of the evidence is to correct evidence previously offet~ed. In addition, the Cout~t, fat~ good reasons, in the fm~thet~ance of justice, may permit them to offer evidence upon their original case, and its ruling will not be disturbed in the appellate court where no abuse of discretion appears. I t appeat~s t h a t the t~ea son of petitionet~ fat~ wanting to t~eapen this case is based solely in out~ decision in the cases of Equitable Banking Cat~pot~at ion vs. Comm. of Intet�nal Revenue, CTA Case Nos. 5411 and 5416.

DECIS I ON C.T.A. CASE NO. 5 4 40 -6 Petitioner failed to specifically state the facts surrounding the alleged inadvertence or mistake or excusable negligence in the presentation of that alleged additional document except for the fact that it was raised in our previous decisions involving the same parties and subject matter. The Court cannot allow the presentation of piece-meal evidence, other~wise, ther~e will be no end to litigation. <Citations deleted.) Petitioner~ expectedly filed Motion for�� Reconsideration on January 28, 1999 which this Court denied for being a mere rehash of its earlier Motion for Recon s i d er~at ion in the case of Equitable Banking CTA Case No. 5521 and in other similar Cii:\ses. this Court held that petitioner was given ample time to cover all the evidence it could present to prove its case. Besides, failing to state the particular additional evidence to be presented and the purpose for which they will be offered would prejudice the rights of respondent. The issues posed for adjudication in this case are: (1) Whether or not the 20% final withholding tax on b.:mk' s i nt er~est income should of the taxable r~ece i pt s for purposes of computing the gross receipts tax; and ( 2) Whet h e r~ or~ n o t petitioner has proven its claim by substantial evidence. This is not a case of first impr~ession. In fact, this Court has already settled the legal issue in the

DECISION C.T.A. CASE NO. 5440 - 7- case of Asian Bank Corporation vers us Commissioner o f Inter nal Revenue, CTA Case No. 4720, January 30, 1996, ~-.Jhen it ruled that the 20~ final withholding tax on bank's interest income should not form part of taxable !;WOSS t~ece i pt S for purposes of computing gross receipts tax. The pertinent portions of the above case are quoted below: "We agt~ee with the petitionet~ that the 20'1. final withholding tax on its interest income should not form part of its taxable gross t~eceipts. Revenue Regulations No. 12-80 dated Nov. 7, 1980 on Taxation of Cet~tain Income Det~ived from Banking Activities provides that the rates of tax to be imposed on the gross receipts of such financial institution, shall be based on all items of income actually t~eceived, thus: SEC. 4. XXX XXX XXX (E�!) Gt~oss t�eceipts taJi" on banks~ non-bank Financial i nter�mt:�d i at~.i es, Financing companies, and other non-bank Financial intet�mr.?diat�ies not pet��For�ming quasi- banking activities. The rates of taxes to be imposed on the gross receipts of such f i nancial institutions shall be based on all items of income actuallv received. Mere accrual shall not be considered, but once payment is received on such accrual or in cases of prepayment, then the amount actually received shall be included in the tax base of s uch financial institutions, as provided hereunder. <Underscoring supplied.)

DECISION C.T.A. CASE NO. 5440 - 8- Fr~om the fot~egoing, i t is but logical to infet~ that the final tax, not having been received by the petitioner but instead went to the coffers of the government, should no longer form part of its gross receipts for the purpose of computing the GRT. This conclusion is in accord with the interpretation of the Supreme Court in the case entitled Collector of Internal Revenue vs. Manila Jockey Cl ub, 108 Phi 1. 821, as quoted by this Com~t in disposing of a similar issue in the case entitled Campania Maritima vs. Rcting Commissionet~ or Internal Revenue , CTA Case 1\lo. 1LI�26 dated November~ 14-, 1966, thus: In the second place, the highest tribunal of the land interpreted the tet~m ' gt~oss t~eceipts': to mean all receipts of a taxpayer excluding those which have been especially earmarked by law or regulation for the government or some person other than the taxpayer~. Thus, it was held: "xx xx. The Govet~nment could nat have meant to tax as gross receipt of the Manila Jockey Club the 1 /2% which it directs same Club to turn over to the Boat~d of Races. The latter being a Government institution, there would be double taxation, which should be avoided unless the statute admits of no other interpretation. In the same manner, the Government could not have intended to consider as gross receipt the portion of the funds which it directed the Club to give, at~ know the Club would give, to winning horses and Jockeys admitted 5%. It is true that the law says that out of the total wager funds 121 /e% shall be set aside as the 'commission' of the track owners but the law itself takes official notice,

DECISION C.TaA. CASE NO. 5440 - 9- approves or directs payment of the portion that goes to owners of h orses as prizes and bonuses of jockeys , which pat~tion is admittedly 5% out of the 12 1 /~% commission. As it did not at that time contemplate the application of 'gross receipts' t~ev e nue pt~inciple , the law in making a distribution of the total wager funds, took no trouble of separating one item from the other; and for convenience, grouped three items under one common denomination. "Needless to say, !;woss receipts of the proprietor o f the amusement place should not include a ny money which although delivered to the amusement place has been especially earmarked by law or regulation for some pe r son other than the pl�~opt~ietot~. " <The Commissioner of Internal Revenue vs. Manila Jockey Club, Inc., 6. R. Nos. L-13890 & L-13887, J une 30, 1960 ) It is to be noted that, unde1�~ Section 260 of the Tax Code, a race- track is subject to an amusement tax of 20% of its gross receipts and the tet~m 'gt~ass t~eceipts' embt~aces a l l the receipts of the proprietor, lessee , at~ opet~ator~ o f the amusement place." Notwithstanding the bt'oad and all-embracing definition of the ter��m "gt~oss r~eceipts" found in ou1�~ amusement t ax law, our Supreme Court did not adopt a literal interpretation of the said term in the case of the Mani la Jockey Cl ub, Inc ., supt~a. "

DECISION C.T.A. CASE NO. 5440 - 10 - The legal i s s u e having been dealt with, a detet~minat ion on whether~ Ot' not petit i onet~ has established its claim by substantial evidence is apropos. As already adverted to, petitioner in recomputing its gross receipts tax base, deducted the amounts of P5, 118,097.58 and P19,726,955.50 representing 20% portion of tax-paid income and investment income subjected to 20% final tax booked at gross, respectively. amount of P5, 118,097.58, petitioner submitted subsidiary ledgers of the following passive interest income with the exception of the interest income on Time Loan - Asahi: INTEREST 20~ INCOME FINAL (Net of FTl EXH. TAX EXH. On deposits with local banks p 11&, 717. &4 tl.H p 29,179.41 C-9 Trading gains on Gov't. Sec. On interbank loans 18, &52, 052. 11 00 4,&63,013.03 C-9 On time loan - Asahi &28,%7.98 66 157,242.00 C-9 T 0 TAL 2&81&&3.14 C-9 P5l1181 097.58 Based on the subsidiary ledgers (Exhs. M to Q, V, AA to CC, GG, HH, MM to 00) and the Income & Expense Summary (Exh. Dl, petitioner was able to show that the interest income was booked net of final withholding tax. In other~ petitioner's computation of receipts tax on this tax-paid income appears to be C-9). Nevertheless, petitioner failed to

DECISION C.T.A. CASE NO. 5440 - 11 - prove that the final tax was indeed withheld and remitted to the BIR. The subsidiary ledgers are not conclusive evidence of payment of final tax. They are insufficient to check the accuracy of the amounts so indicated. Petitione~~ should have submitted the con�~es pond i ng certificates of income tax withheld. With respect to the amount of P19,726,955.50, this represents the 20% final tax on interest income ft~om trading accounts securities which was booked at z, II inclusive of the 20'1- final tax <Exhs. G to L, W to to LL) and recorded under Provision for tax - final tax <Exh. R to U, DD to FF, PP to SS). Petitioner deducted this amount to derive its adjusted gross receipts tax base. Petitioner alleges that this amount had been withheld and therefore should not longer form part of the gross receipts for the purpose of computing the gross receipts tax CTSN, Sept. 24, 1997, pp. 34-35). Ye t , petitioner failed to support this allegation. No evidence has been presented to prove that indeed the 20% final tax on trading accounts securities has been withheld and remitted to the BIR. Once again, it cannot be over emphasized that tax refunds partake of the nature of tax exemptions and are construed in strictissimi juris against the taxpayer and in favor of the taxing authority. <Re si ns, I n c. vs.

DECISION C.T.A. CASE NO. 5440 - 12 - Auditor General , G. R. No. L-17888, c~5 SCRA 754; Commissioner of I n ternal Revenue vs. Ledesma , G. R. No. L-17509, 31 SCRA 95; Insular Lumber Co. vs. Commissioner of Internal Revenue and Court of Tax Appeals , G.R. No. L-31057, May 29, 1981; Commissioner of Internal Reven u e vs. Rio Tuba Nickel Mining Corporation , G. R. Nos. L-83583-84, March 25, 1992). WHEREFORE, in view of all the foregoing, the instant claim for refund or issuance of a tax credit certificate is hereby DENIED for insufficiency of evidence. SO ORDERED .. ~ LQ.. ~ ERNESTO D. ACOSTA Pt~esiding Judge Yc- ?i ~ I UR: / 1) RAMON 0. D~~ A Associate Jud e /' <Dissenting) / AMANCIO Q. SAGA Associate Judge ( CERTIFICATION I hereby certify that the above decision was reached after due consultation with the members of the Court of Tax Appeals in acco rdance with Section 13, Article VIII of the Constitution. c lQ ~ 0'-VV\.- ERNESTO D. ACOSTA Pt�esiding Judge

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY EQUITABLE BANKING CORPORATION, Pet ~t ionet�, - v e ;�' s u. s �- ;;tb. P �' o m;_: J g ~. t; ed �� COMMISSIONER OF INTERNAL REVENUE, JUN 25 1999 Respondent. - ~ - - - - - - - - - - - - - ------------X DISSENTING OPINION The majority opinion denied th e petition for review due to the petitioner-~ s .:=a:i.lur'e to substan"':;iate its c:a.im I humbly disagree with the reason for the denial and I believe that the c:aim for ~efu~d sbo~ld not be gra,ted ~~e to lack of legal basis. The major1ty view based its conclusion on the case entitled Asian Bank Co�~poration v s. C o mmi s s i o n e t' o f Internal Revenue, CTA Case No. 4720 dated January 30, 199C which ruled that the interest income included as part of the gross receipts should be computed minus the 20~ final tax already withheld and deducted by various withholding agents.

DISSENTING OPINION - C.T.A. CASE NO. 5440 2 I disagree with the aforecited Asian Bank case an~ find that the conclusion embodied therein is legally objectionable for two C2) reasons, to w1t: 1) Section 4Ce) of Revenu e Regul a t i ons l\lo .. L7.~�-� BO is not a c ompu.tat ion deter'minat i'-./(':) of th e am oun t of gross re c eipts as bas1s of the gross receipts tax under Section 119 of the Tax Code. Said r' evenue r'egulations mel"'ely authorize the determinat i on of the amount of gross receipts on the basis of the method of accounting being used by the taxpayer under Section 37 of the Tax Code. Such accounting methods for tax purposes comprise a set of rules for determining when and how to report income and deductions <Consolidated Mines, Inc. vs. CTA, L -18843, Au g u st 2 9 , 19 74 ).. The h.,;o principal acco u n t ing methods express ly and impliedly recognized by the Tax Code and the Income Tax Regulations are: (a) Cash r��ece i pt s a.nd disbul�'sement m�?thod or' cash b <:l sis. Income e<::wned by the taxpayer' is not included in gross income until received and expenses are not deducted until paid within the taxable year�'; a.nd (b) Acc1�'ual ba.si!:;. Income is included in gross income when earned, whether received or not, and expenses are allowed as ded uct ions when incurred a ltho u gh not y et paid within the year. 2) That the non-inclusion of the 20% final withholdin g income tax from the gross interest income f or purposes of the gross receipts tax operates as an exemption from tax. Being an exemption from tax, the same must be construed strictly not against the government but against the one who asserts ~ne clai~ of exemption. Tax exemption can only be given effect when the grant is clear and categorical inasmuch as taxation is the rule a nd e x empti on is the exc e ption, Section 2 6, Ta x Code. The holding therefore in the Asian Bank Corporation

DISSENTING OPINION - C.T.A. CASE NO. 5440 to the effect that the non-inclusion of the ~=::01. final withholding income tax from the !;p�~oss receipts can logically be inferred fr~o m t ht> wordings of said Section 4(e) of Revenue Regulations l\IO. L~-80.1 i'; mispl.::\ced .. Tax statutes are to receive a reasonable construction with a view to carrying out their purpose and intent (51 Am J ur 36 1 ). It should not be construed as to permit the taxpayer to easily evade the payment of the tax CCabon Steel Co. vs. Lewelyn , 251 U.S. 50 1).. Thu~; 5 the good faith of the taxpayer is not sufficient justification for exemption from the payment of surcharges imposed by law <Co mmi ssione r v s. Roy al In te ro ce a n L i n es and CTA, L-26506, J u ly 30, 1970 ). A tax statute should be construed to avoid the possibilities of tax evasion (Lorenzo vs. Posadas, 64 Ph ils . 353 ). The High Court's decision in the case of Commissioner of Internal F~evenue vs. The Manila Jockey Club, Inc. t08 Phils. 8i~1' June 30, 1'350, lrJh i ch was reaffirmed by the said Court in the case of Visayan - Cebu Terminal Co., Inc. vs. Commission er of Internal Revenue , 13 SCRA 357, Febr uary 27, 1965 cannot be considered as pr~ecedent cases, hence, inapplicable to the two cases decided by this Honorable Court in the cases of Campania Maritima vs. Acting Commissioner of Internal Revenue~ CTA Case No . 14i~6 dated l\lovember� Ut.; 1966 and Asian Bank Cor�por�ation v s. Co mmissioner of Internal Revenue, CTA Case i\io. 4720 dated January 30, r�'easons:

DISSENTING OPINION C.T.A. CASE NO. 5440 4 1) In the j"!1anil.c,; Jockey Club? Inc. case, the Club was authorized to operate horse races in which betting was made through the sale of tickets to the public. The total amount of b(0ts called "wager' fund" v-JeY'e clist;�~ibuted pursuant to Executive Order No. 320 and Republic Act No. 309~ as follows: 87~~ as dividends to holders of winning tickets :LE~Y2':1. as "commissions" of the i'r1anila Jockey Club, of which ~':1. was assigned to the Board on Races and 5':1. was distributed as prizes for owners of winning horses and authorized bonus for .JOC~<eys. According to the above-mentioned distribution of the "wage1�~ fund", the then Collector of Internal assessed the Club on the whole amount of its "commission" But since the Club had a lready paid the amusemen�t ta.x based on it:; 7;1. shat'e of the "commission", the amount assessable pertains only to the 5~% for the period from November 1946 to October 1950. On instances, the Club protested the proposed assessments and was sustained by the opinions of the Secretary of Justice rendered on three different occasions (Opinion l'io. 345, ser'ie~;; of 1941; Opinion No. E~4�9, ser�'ies of 1952 and Opinion No. 340, series of 1955). Notwithstanding the opinions of the Secretary of Justice to the effect that the amount corresponding to the 5~~ was held only by the Club in trust fo~�, the owner~s of winning horses and authorized bonuses of jockeys, the

DISSENTING OPINION - C.T.A. CASE NO. 5440 then Collector of Internal Revenue demanded payment of amusement taxes for the period November 1946 to October :!.':350. Said demand letter was timely appealed to the of Appeals wherein a unanimous judgment wa.s obtained reversing the Collector's stand on the m<:1.tt Pr��� .. In the High Court? the position of the Secretary of Justice was sustained thereby upholding the Court of Tax Appeals? deci�:;ion. Accordingly? gross receipts of the proprietor of the c:'lmusem1~nt place ~~hould not include any money which, although delivered to the amusement place ~.>Jas "especiallv law or legal rule or regulations for some persons other than the proprietor. Undeniably, they are money receiv e d by the racing club but they are moneys earmarked by law or regulations for winning horse owners and jockeys and never for a minute become the property of in the case of the ~1. which the law directs the club to deliver to the Board on Races. The High Court therefore agrees with the stand of the Court of Tax Appeals that such funds representing 5~% of the 1i.::=:Ya1. "commissions.;" of the t'ace tr�-acl-< do not for'm of the gross receipts, hence not subject amusement tax of 201.. The above-mentioned decision of the High Co urt was also applied in the case of Visayan Cebu Terminal Co.,

DISSENTING OPINION - C.T.A. CASE NO. 5440 - 6- ,. v::ju Commissioner of Internal Revertue, ]..3 SCRP1 :3~37, .tnC"~s Nos. L-19530 and L-19444, February 27, 1.965. The legal issue involved in this case is the interpretation of the m.::\nagement into by and between the Bureau of Customs and Visayan Cebu Terminal Co., Inc. latter as contractor was appointed the sole manager of the Arrastre Service at the Port of Cei:Ju C:Lty. In the said !Yianagement Contr~act, i t was fur~ther~ a.gr~eed and understood that in consideration of the rights and privileges granted the Contractor for the management of the Arrastre Service, the Bureau of Customs shall receive percent of the total monthly gross income derived from whatever source in connection with the operations of the Arrastre Service, payable within ten (101 days of the succeeding month. Ths� m,:~.in issue involved in this case is whether or not the gross receipts corresponding to the 28% of the total income of the Service Contractor delivered to the Bureau of Customs within ten (10) days of the following month should form part of the gross receipts subject contractor's tax under Section 191 of the Tax Code. The Court of Tax Appeals ruled in favor of the petitioner, holding the view that the said 28% payment by the Arrastre Contractor based on its monthly gross income should not form part of the gross receipts subject to 3~

DISSENTING OPINION - C.T.A. CASE NO. 5440 - 7- and that of the Management Contract can legally be construed as a l! i�-� e g u 1 <:d; i 0 n !I n As the learned trial cotwt has aptly obser~ved: "x x x the government could not ha.ve intended to consider as gross receipts the 28% that went its inst itu.t ions, the Bureau of Customs, and ther~eby collect percentage tax on it from petitioner. T!0 hold petitioner liable for the payme nt of p ercentage tax is unquestionably unjust and not contemplated by Section 191 of the Tax Code . " All the above-mentioned decisions of the High Court made specific reference to gross receipts which are especially "eat~ marked b y law 01��� legal t~ule 01�~ ~�~equlation" ,z:'~s not forming part of the taxable gross receipts for purposes of the gross receipts tax under the Tax Code. For this purpose, it is pertinent to define the word put upon a thing to distinguish it ft~om another~. Originally and literally, a mark u pon the ear, a mode of marking sheep and other animals. J. ::> said to be earmarked when it can be identified or distinguished from other property of the same nature. To ft-�om othe1�~s Law Dictionary, E.th Edition, p. ~30t3). In the case of the Manila Jockey Club, Inc. Executive Order No. 320 and Republic Act No. 309 ITJ.::?tcle thf? specific "eal�~m<::.d�<ing" fen~ clistr':i.bution of thE'

DISSENTING OPINION - C.T.A. CASE NO. 5440 - 8- total wager fund to different persons other than the proprietor. The same is true in the case of Visayan Cebu Terminal Co., Inc. where the specific earmarking of the 28% of the total monthly gross income to be deliv?red to the Bureau of Customs by the Contractor was provided in paragraph 23 of the Management Contract. Such specific earmarking of the twenty (20~) percent final income tax as not includible in the gross receipts for purposes of the gross receipts tax was not provided by any law or legal rule or regulations, hence the non-applicability of the above-cited High Court decisions to the Asian Bank Corporation case. This legal observation is also in point in the case of Campania Maritima case where the non-inclusion of the 10% reserve from the total cash collection to avoid claim for refund on freight and passengers tickets not taken is not provided by any law or legal rule or regulations. In the Asian Bank Corporation case, petitioner bank alleges that subjecting the gross receipts to the 20% final withholding income tax and later to the 5% gross receipts tax 1s not only oppressive and obnoxious but even a confiscatory form of double taxation. Double taxation has been defined ''as the taxing of the same item or piece of property twice to the same person, or taxing ~t as the property of one person and again as the

DISSENTING OPINION - C.T.A. CASE NO. 5440 �-- 9 -� property of another~ but this does not include the imposition of different taxes concurrently on the s<:lme p~~oper~ty o1�~ income (e. g. fedet~al and state income taxes), nor the taxation of the same piece different persons when they hold different interests in it or when it represents different values in their- ha.nds, as when both the mortgagor and mortgagee of property are taxed in respect to their interests in it~ or when a tax is laid upon the profits of the corporation and also upon the dividends paid to its st ockho ldet-�s" <Black's Law Di.ctionar~y~ 6th Edition~ p. '+91>. This acceptable form of double taxation i c r' e f 1 e c t e d in BIR Ruling No. �=~�::s-;- t..-f._._.; dated November~;:~, :1.989~ thus: "The 5'1. gt~oss r'eceipts tax undet~ Sect ion 120 of the Tax Code is collectible on all finance companies doing business in the f.::;hiliJ:Jpines fr~am intet"'(~sts~} discounts, ctnd a.ll other items treated as gross income under the Tax Code. Accordingly, your income derived from investing the excess funds in short-term market placements through commercial banks constitutes income hence, � subject to the 5'1. gross receipts tax under said Section. The fact that it has been subjected to the 20'1. final withholding income tax under Section 50(a) is immater��ial. Besides? th�? v-.Jithholding tax is imposed under Title II of the Tax Code while the finance tax is provided under Title V the 'r' e 0 f. II ( B I R Ru 1 in g 1\10 n ;:::23' 1\10 v em bel'~ ;:\ 1989) For as long as the basis for the claim for refund or tax credit certificate is based on the non-inclusion of

DISSENTING OPINION - C.T.A. CASE NO. 5440 - 10 - the amount representing the final withholding income ta~ under Section 50(a) as part of the gross income Sltb1er�,.t to gross receipts tax, this - �J -� dissenting opinion will stand .. The fact that petitioner-claimant is able to establish by competent document,::\"r"''y' c:\ncj testimonial evidence is of no moment. For purposes of the amusement tax under Section 260 of the Tax Code, the term t~eceipts' embt',3.ces ' a l l lessee, or operator of the amusement place. The wor�cls 'all the receipts' refer to the total amount of cash received which becomes part of the funds of the taxpayer and does not include any money which has been specially earmarked by any law or legal rule or regulation for some other� per�son othet' than pr�o pr' i et 01�', lessee or' operator of the amusement place. Receipts means actually t��ece i ved <Philippine Long Distance Telephone Co. v s. Collector�� of Internal Revenue, G. R. !\io. L..�--3;:::;:;:~;::~, ;::~ :1. ' 1. ':35~:::) for' itself and not fol"' othel�'s, fot' othet�wise they ~"'ould not be receipts <Manila Jockey Club, Inc. vs .. Collector' of Internal Revenue, CTA Case No. 205, 1958; Jai Alai Corporation of the Philippines \l s u Araneta, CTA Case No. 108, July 31? 1':356 (Annotated? NIRC by Commi~~sionET .Jose r.n-~a\~as, 1'388 Edition, p. 687) ..

D~SSENTING OPINION - C.T.A. CASE NO. 5440 �- 11 - WHEREFORE, in ~,.oie~'i of the ftn-�et:;!o:in!], I vob?. to deny the claim for refun d due to lack of legal basis instead of dismissing the same for insufficiency of evidence.