COMMISSIONER OF INTERNAL REVENUE v. BLOOMBERRY RESORTS CORPORATION

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNAL CTA EB No. 2933 REVENUE, (CL-\ Case o. 10193) Petitiom1 ~ - JlCJ'JI/J - BLOOMBERRY RESORTS CORPORATION, X---- --- - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X CTA EB No. 2935 (CTt\ Case N o . 10193) BLOOMBERRY RESORTS CORPORATION, P resen t: Petitioner, Ri n g p is-Li b a n , Bac o rro -Ville na, - ver.r1t.r - l\ Iodesto-San Pedro, Reyes-Fajardo , C ui- D a vid , l"erre r-Flores, and :\ ngeles,Jl COMMISSIONE R OF INTE RNAL P romulgated : REVENUE, FEB 0 J ~" Respondent. - o<~' O.s-p. ;-n,, x -------------------------- ------------------------------------------ - ---- - ------- - -- -- ----~-x RESOLUTION RINGPIS-LIBAN, P.J.: 1:or resolution o f the Co urt is the Commissio ner o f Internal Revenue (CTR)'s i\ lotion.for Ru oiiJideration Re: Decision prom11fgated A 11gust 6, 2025 ~lotio n) ,

RESOLUTION CTA EB Nos. 2933 & 2935 (CTA Case No. 10193) filed ,�ia electronic mail on \ugmr 26, 2025, seeking reconsideration of the Decision promulgated on .\ugust 6, 2025 (. \ssailed Decision). In the said \ssailed Decision, the Court E11 llmt( denied the CIR',- Petition for Review docketed a:; CT.\ I�~B '-'o. 2933 fur lack of merit while it granted the Petition for Re,�iew !!led \)1' Blomnberr\' Resorts Corporation (B\oomberry) docketed as Cl'\ LB :\o 293). In seeking reconsideration, the C:IR raises the following grounds: GROUNDS OP TI-IE MOTION FOR RECONSIDERATION I. \\Tlll \LL DU�: RESPECT, Till�: IIO"OR.\BLE COURT ES IH\C ERR!�]) \\'liEN IT C\NC:ELLlcD X'.JD SET ,\SIDE THE C:O:\!PROc\liSI�: PEN. \LTY HlR T.\X.\BLE YE.\R 2015. II. \\!Til .\l.L DLI: RI:SPI:CI'_ TilL IIOI':CJR.\BLE COLRT E\ ll 1\C. I:JZRI ]) IN Rl :n:RS!I':(;, Sl :Tnv; .\SID! �:, .\ND \ICJD!I�1T\C; Tille DECISICX\ D \TED '\L\ Y 29, 2023 .\ND RlcSOLLT!OI': D.\TED \L\Y T!, 2112-t BOTH RENDERED BY Till: SPI:c:I \L SH:OI':D DI\'ISIO!':, RULINC TI-L\T BLOO:\IBI�:RRY RESORTS CClRPOR \TION IS NOT LL\BLE FOR DUC:L'\1! 1':1\R\' SL\\IP T.\.\: HJR T.\X.\BLL YE.\R 21115. ARGUMENTS The CIR ~u�gucs that the Court L'n 13atll� en-eJ in cnncelling and setting aside the compromise penalty of 1'50,000.00 for taxable year 2015. He contends that the imposition of compromise penalt\' is justified under Section 255 of the National Internal Rc\'enue Code of 1997, as amended (1997 NIRC), and Rc,-cnuc .\ lcmorandum ( lrdcr :\ o. 7-20 I:) because BloombetT\' failed to pa1� the dc!!cienc\' documcntan� stamp ta,.; (DST) at the time rc<]Uircd b,- law. The CIR inntkes the Supreme Court's ruling in Commi.uiomr of f11tema! Revenm !!. Fi/im,e.rt Do�e!opme11! Corporatio11 1 to support the validity of compromise penalties. He maintains that while the 1997 NIRC: uses the term "compromise," the nature of such penalty i> essential\\� a fine imposed for violations of the 1997 NIRC, and not a cclnlprotni~c agn.Ttncnt rcLJUiring tnurual consent. The CIR also asserts that the C:ourt E11 Ball( erred in ruling that BloombetTI' is not liable for DST on the loan transactions with its non-resident foreign corporation ("'Rl�C) affiliates. I Ie argues that a clear nexus exists between the transactions and the Philippines because Bloomberr\', a Philippine domestic coq>oration subject to Philippine laws, extended loans to its l\Rl;C aft!liates, therclJ,. gi,�ing ri:;e to obligations arising from Philippine :;ources. The CIR maintain:; that Sections 173 and 179 of the 1997 '-JIRC: do not rcyuire the 1 G.R. Nos. 163653 & 167689, July 19, 2011 ("Aimvest').

RESOLUTION CTA EB Nos. 2933 & 2935 (CTA Case No. 10193) perfection of the contract through dcli\Tn� of the loan proceed,; a,; a prcrcqui,;itc for DST liahilit\� to attach. lie emphasizes that DST is an excise tax imposed on the privilege of c:-;ecuting specific instruments, independent of whether the contract,; materialize or the object is deLivered. The C:TR further contends that the ,;itus rules for DST should be governed lw the place where the document is made or the obligation arises, not where performance or delivery occurs. He warns that exempting transactions mcrclv because the loan proceeds arc dclin:red abroad would undermine the lcgislauve intent to plug loopholes in the DST law. TIMELINESS OF THE MOTION Section 1, Rule 15 of the Revi,;ed Rules of the Court of Tax .\ppeals (RRC:T \) provides: RLLL15 \!OT!Oi': nlR RJ :CU"-'SIDI :R \TIU"-' OR \:EW TRL\L SEC:. 1. Ir/1() /Jiu)' und ;v/Jen fojlk mofirm. - .\m aggricwd part\' may seck a reconsideration or 11C\\. trial of an~� decision, resolution or order of the C()urt 1)\� filing a n1otion for rcconsidcratir)!l or I1C\\" trial \Vithin fifteen d:l\�s fron1 the Ll:llc ld- receipt of notice of the decision, resolution or order <Jt" the Court in LJUCStion. The CIR received the .\s:;,rilcd Decision on .\ugust 11, 2025. Counting iifteen (15) davs from said date, the UR had until.\ugust 26, 2025 within which to lilc l11s \lotion for Rcconoidcration. The \lotion having been iilcd on .\ugust 26, 2(12', the 'a me was timeh� filed. THE COURT'S RULING The .\lotion for Reconsiderauon i:; denied. In S/Jcll(~li-la fllfrmafional I fold ,\lm!C(~e!llrl!!, L!d., e! a!. ''� De,,fiopm� Gro11p of Comptlllie.~�, 111(.," the Supreme Court held that a motion for reconsideration must raise matters that arc substantial~\- plausible to warrant the relief sought, thus: The hulk of the aforementioned grounds i,; a mere rehash of mm�ants pt-c,�iou:; arguments. \\'hile DC;CI is correct in stating that a n1otion for rcconsidcr:llion, b~- its \-cr:� nature, tna}� tend to d\\�cll on issues already rcsokcd in the decision sought to be reconsidered and that this ,;hould n<>r be an ob,;tacle for a reconsideration, the hard realitY is that mm�ant has failed to raise matter,; ,;ub,;tantialh- plausible or con1pcllingly pcrsuasi,-c to '\Y<It-rant the desired cause of action. ' G.R. No. 159938 (Resolut1on), January 22, 2007.

RESOLUTION CTA EB Nos. 2933 & 2935 (CTA Case No. 10193) Considering that the grounds present!~- raiscu ha\T been sufficienth- considered, if nor sc1uareh� addressed, in the subject Decision, it bchom-cs mm�ant to com�incc the Court that certain findings or conclusions in the l)ccision arc contrary to la\\'. ~\s it is, ho\\T\Tr, the Instant n1otion docs not raise any 11C\\. or substantial lcgitinlatc ground or reason to justify the reconsideration sought. SimilarlY, in T/any L Roqm, ];:, e/. al. 11. Comminio11 011 E!ediom, repreJented by I lo11. Cba/m;m1 ]o.1e ,\Jelo, et a/., 3 the Supreme Court E11 Ba11r ruled that when a motion for reconsideration fails to raise matters substantial!\� plausible or compellinglY pnsuasi\T, it must be denied, thus: Petitioner's abo\T contention, as \\Tll as the arguments, citations anu premises holding it together, is a rehash of their prc\�ious position articulated in their memorandum in support of their petition. They hm�e been considered. squareh� addressed, and found to be without merit in the l)ccision subject hereof. The Court is not inclined to cn1bark on another extended di~cu~~ion of the ~an1c i.s~uc again x x x. \\.hilc a motion for reconsideration ma1� tend to dwell on issues :dread\' resoh-cd in the decision sought to be reconsidercu - anu this should not he an obstacle for a reconsideration- the hard realitY is that petitioners hmc failed t<> raise matters substanrialh� plausible or compc llingh� persuasin� to \\�arrant the desired course of action. On the Compromise Penalty The C:lR's arguments on the compromise penalty have been thoroughly addressed in the .\ssailcd Decision. The Court h11 Ba11r ruled, and reiterates, that compromise penalt \' cannot be unilateral!\� imposed without the taxpa1�er's conformit\. This ruling ts firmly anchored on the Supreme Court's pmnouncemen t in Ja11 J lt,~iie/ Corpomtio11 1'. Commi.rJtoller o/f111emal Rerwm, 1where the Supreme Court affirmed the cancellation of compromise penalty and clarified 1hat compromise is, by nature, bilateral and consensual, thus requiring the taxpa1�er's agreement for valid imposition. The ~uprcme Court 111 Sa11 .\ h~ml went further by stating that "compromise penalt[ics[ arc amoun" suggested in the settlement of criminal tax liabilitY Since S,\!C's case docs not itwoh-e criminal tax liabilities, the compromise penaltY should not ha,�e been imposed and collected." The present case docs not itwohT criminal tax liabilities. _\ccordingly, there is no basis for the CIR to recluire pa1�ment of compromise penaltY. 1 G.R. No. 188456 (Resolution), February 10, 2010. �� G.R. Nos. 257697 & 259446, Apnl 12, 2023 ("San Miguel').

RESOLUTION CTA EB Nos. 2933 & 2935 (CTA Case No. 10193) The CIR's reliance on .h/illwr/ is misplaced. The Supreme Court in Ja11 .\/i~Jre/e:-;plicitll� re-\�isited its pre,�ious ruling in l�ilirmJ/but it nonetheless upheld the cancellation of the compromise penaltY. The more recent ruling in Sc111 M{~JJe! rcprc~cnts the prc,�ailing juri~prudcncc on thi~ tnancr. On the DST Liability The CI R's arguments regarding DST liabilitY essentiallY ask the Court to reconsider findinp,,s that were e:-;tensiveh.� discussed and resolved 111 the .\ssailcd Decision. :\o new matter or substantial argument was presented that would warrant a rc\�ersal or modification of the Court's ruling. The Court 1:11 llrn!r" cardulh� namined the statutory provisions, legislative tntent and histon�, and rcleyant jurisprudence in determining that the loan transactions between Bloombcrr\� and its :\RI;C affiliates arc not subject to DST The .\ssailed Decision e:-;tcnsiYeh.� discussed wh1.� the nationality. or residence of the contracting parties is not dcterminati\"C of situs for DST purposes, and wh\� the term "sources" in Section 173 refers to the contract itself-specifically, that the obligation arises from Philippine sources only if the contract from which it originated was perfected in the Philippines. The ClR's assertion that "ne:-;us'' e:-;ists merely. because BloombetT\.' is a Philippine domestic corporation docs not align with the plain language of Sections 173 and 179 of the 1997 \:IRC. .\s the Court E11 Bane held in the .\ssailed Decision, nothing in the statutor\' te:-;ts indicates that the nationality or residence of the contracting parties should determine situs for DST pmvoscs. The lcgiolatiYc hioton of the 1993 amendment' to the DST law confinn,; that ( :onFtTSS chan;>:ed the situs rules from the 11lacc of e:-;ecution of the document ~, <' to \\�here "the obligation or right arises from Philippine sources" or, for debt in,truments, where "the object of the contract is located or used in the Philippines" This legislati\'c change was intended to prevent tax avoidance b1 executing documcnto abroad-not to subject transac11ons to DST ba,cd solely on a party's nationalil\� or domicile. The C!R's argument that DST liability attaches from the inception of the loan agreement regardless of where the loan proceeds arc delivered misconstrues the nature of loan contracts under Philippine law..\s discussed in the "\ssailcd Decision, loan contracts arc real contracts under .\rticlc 1934 of the Civil Code, perfected only upon dcJiyen� of the object. The statutory t'Ccluircmcnt in Section 179 that "the object of the mntract is located or used in the Philippines" for debt inst rumcnts to be subject to D~T aligns with this characterization of loan as a real contract. The e\�idence on record preponderates in fa\'or of the finding that the loan proceeds were released, located, and used outside the Philippines, specifically in the Republic of Korea.

RESOLUTION CTA EB Nos. 2933 & 2935 (CTA Case No. 10193) The C:IR\ contention that e:-ocmpting transactions based on where the loan proceeds arc delivered would "undermine the purpose for which the amendments to the pro,�isions of DST under the Tax Code were introduced" is unfml!lded. The 1<)').) amendments were designed to prevent parties from a\�oiding DST h1 simph� executing documents abroad when the transaction othen1�i"~ has a connection to the Philippine:;. The amendments were not intended to suhjCCt all tratNtctiom im�oh�ing Philippine residents or citizens to [)ST regardless of where the contract is perfected or where its object is located or used. To interpret the law as the C:IR suggests would run counter ro the principle that ta:-o laws must be construed strictly against the State and liberal!\� in fa1�or of the taxpm�cr. hnalh-. the ( :J R im�okc,; the presumption of correctness of ta:-o a,;sessments. \\.bile such presumption exists, it is not conclusive. The taxpa1�er can m-crcome this presumption h1� pre,;enting sufficient evidence showing the assessment's inaccuntc\�. In this case, BloombetT\' presented testimonial evidence establishing that the loan proceeds were utili7-cd lw its "iRFC: affiliates in their operatHtns tn the Republic of korea. This e1�idence, which remmns uncontradicted.'" adcc1ctatc t<J o\Tt-come the presumption and establish that the subject transactions lack the necessary situs within the Philippines for DST purposes. ACCORDINGLY, the Commissioner of Internal Revenue's i\Iotio11 for 1\ec"OJI.,�idmilioll 1\e: De<"i,'/oJJ f'!YJI!IIII~a!ed ,li(~IJ.r! 6. 2025 is DENIED for lack of ment. SO ORDERED. ~. u_.,- MA. BELEN M. RINGPIS-LIBAN Presiding Justice 111; CH\U 'R: I ((}Jic"llr a/1(1 reile a/1 171)' Sef'amle Co11m1Till.~ Opi11ion JEAN MA . BACORRO-VILLENA .\ssociate Justicc

RESOLUTION CTA EB Nos. 2933 & 2935 (CTA Case No. 10193) IF'i;h dm mped, Ijoi!l J ~� !/( ai/CI Dinwlit(~ Opi!ILO!I off. Dm;id MARIA ROfE ESTO-SAN PEDRO .\:-;sociatc Justice ~ .9-J.W f i2..vJ..L -fcq'c+teJ.o I mlerate my Co11al!-::i~.Popi11ion�i11 f/;e A.uazied Dea~rion MARIAN IVY F. REYES-FAJARDO .\ ssocia tc Justicc Jl'~ith dm re.rped, f m(lilllillll my Colmi!TLI(i!, a11d Di.rxenlil(l!, OpiiiLOII da!ed /l!(l!,lt.r! 6. 2025 LANEE S. CUI-DAVID .\,;,;ociatc .Ju:;ticc "*'� rYII~r-~~~- If" lib dm re.1pect, I rei/era! lll)joillill,g'"11Je-Cot!i�ll .� ,1!, c7iid t.rxenltllg OptlltOII o/)ll.rtice l.�111ee Cllt�Davtd CORAZON G. FERRER-FLO .\,;,;ociatc Ju:;ticc HENRY~GELES \,;,;ociatc Ju"ticc