CTA Case No. 5533 (Decision)

REPl BLlC U.t 1HE PHILIPPl~E~ t'O TRT Of' r ~ \PP!<:.\LS VL-EZU. - ( ITY SOI.IDfl\1\ K CORPOR\ I'IO> ., PetitiOner, \l'I"SUS- C. T.A. (A~~ ~u. 5533 Promulgated. L U.\l\HSS!Oi' tR U.t I~ I .J1.l<.\AL PF 'E.. PI<:, AUG 061999% Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X This case invoivcs a ciaim for refund in the amouni ofP3,508,078.75, allegedl) 1995. Petitioner. Solidbank Corporation, is a domestic banking institution duly organized and e:vJsting under the laws of the Philippmes \Vith principal office located at 777 Pa!';eo de Ro ':.ls 1\ �enue.. 1akati ('ity. For the calendar year 19Q5 petltioner <o;ea'~onabh tiled its Quarterly Percentage fa� Returns reflecting gross rece1pts (pertaining to "0 o (TRT rate) in the total amount of PlA74.6QJ.693.44 with cotTespondmg gross receipts ta. � pa~ments in the sum of P73. 734,58-t-.60. broken dO\\In as tallows: Period C oYered ( lross Receints Crross Recefuts Tax -+-- p 9.-t-20.303.1 0 Januatv to ~larch 1994 p 188.-t-06.061.95 18,545,691.63 AprJ to Jun.: 1994 370,913,832.70 24,075.091.95 July to September 199..1. ..J-81,501,838.98 October to December 1994 433,869,959.81 21,693,497.()~ Total P11-t741691 1693.-U D73 1'73-t 1 ~8-f.60

DECISION- C.LA~ CASE NO~ 55J.l Pag�2 Petitioner alleges that th~ total gross receipts m the amount of PL474,691,693.44, included the sum ot P350,807,875.15. representing gross receipts from passive income \Vhich \<\as a.ln.ady subjected to 20~o tinal withholding tax. Un Janual} 30, 1Y96, this Court rendered a dectsion in C. L-i. lase Nu. _,-::0 enlllied_-lszan Bank Curpuratzun \'S. Commzsszuner at jntemai Revenue \Vher~m lt \\as held that the 20�o final withhoiding tax on bank's interest mcome should not fmm pan of iis taxabic gross receipts for purposes of computing the gross receipts tax. On June 19, 1997, ou the stlength uf th._ afoi'ementiuned de~ision, petitiom:r filed \vith the Dur~au of Internal Revenue a letter-request for the refund or issuan.:e of tax cre'-lit certificate iJl the aggregate amount of P3. 508,078.75, representing allegedlyp o\.rerpaid gross receipts tax for the )~ear 1995, cotnptlted as fol!o\~./s: Gross Recetpts Su~jected to the P350,807,875.15 Finai Tax Detived from Pa-.c;;ive Invec;;tment p 70~ 161. 575~03 ?\fuliipi) by Finai Tax raie . r o ~{\ 70�'o Final Tax W1thheld at Source ~ Iultipl) by GRT rate p 3.508,078. 75 Overpaid GRI' Without wmting for an action from the respondent petitioner on the same day filed the instant petitiOn tor review m order to toll the runrung ot the two-year prescnptive period to judicially claim for the refund of overpaid intemai revenue tax pursuam to Section 230 of the Tax Code, as amended. By \\<ay of spe~.;iai and affmnaiive defenses, respomieni avers ihai, pdtiwm:r's claim for refund is still undergoing ad1ninistrative routilla(v� ii1vestigation, the alleged overpaid gross receipts taxes for the year 1995 arc not properly documented and were collected and paid pursuant to la~.; and pertinent BIR implementi..~g n1les and regtdations; petitioner's allegatton th:~t it errone0usl~/ paid gross receipts tax does not

DECISIO~- C:f.<\. ('1\SE NO ~~-B Page3 ipsn facto warrant the refund: and claims for refund are construed m stnctissimi Juris against the taxpayer as they partake the nature of an exemption from tax. In order to support its claim tor refund. petitioner presented the following evidences: 1. The Quarterly Percentage 1 ax Retums for the year 1995 (Exhs. A to D, inclusive of submarkings); 2. The adtn.inisttative claim for refund with the Bureau of Intemal Revenue (E:~'ls. E and E-1 ); 3# Th~ certified true Photocop~y of a letter from the Go"'errunent Securities Department of Bangko Sentral ng Pilipinas \~vith the attached certification of fu'1al taxes withheld and remitted to the Bureau of Internal Revenue for the years 1994 and 1995 (Exh. F); 4. Certifications from SGV and Co. siQTled h.v. Mr. R. R. Ruhio. the '-' commissioned independent CPA who conducted the examination on petitioner's documents relative to the instant claim tor refund (Exhs. G, G-1 to G-6, Hand K): 5. Certifications issued by the Revenue Accountmg Division ot the Bureau of Internal Revenue as to the bureau's receipts of gross receipts tax payments of petitioner (Exhs. I and J); and 6. The pre-markeu documents exanriueu by the independent CPA (Exhs. G-7 to G-7-c, G-8 to G-8-b, G-9 to G-9-b, II-3-a-1 to II-3-c-41-a, I to I-7, K-1 to K- 280, L-1 to L-71, M-1 to ~f-108 ""J-1 to N-17, 0-1 to 0-13, P-1 to P-9, Q-a, Q-b, 'lntl Q-�~lW"\J� ULI.'-�

DECISIOJ'\ - CTA CASi'' NO. :;i5.B Page 4 Respondent. on the other hand. elected not to submit controverting t:vidence. Eventually, this case was submitted tor decision after both parties presented their respective memoranda. The Court is now confronted with the following issues: a. \Vhether or not the 20�o fmal withholding tax on bank's intercsi incmm: &hould form patt of the taxable It:ceipts fm purpo~~;;~ uf l..lml]Juting tht: gw~~ It:M;i]Jb tax; b. \\'hether or not petitioner has pro,~cn its clalln t\-ith sufttcient evidence. i\nent the frrst tssu.e. this C'tourt finds petitioner"s cause to be meritorious. The fmal taxes deri,�ed by petitioner on 1ts passive i.11come should no longer form part of the gro~~ receipt~ tor l'''rrme~ ot cnmputing the gro~s receipts tax, as We have ah�eady mled m the ca~e entitled Ashm Rank Corporation v~. Commi~sinnPt� of IntPrnal RPvPmJP, CTA CasP No. J720, datprl .Tan11ary .30, 1996, pertinent portions of whjch read as follows� "We agree with the petitioner that the 20% fmal withholding tax on its i11.terest income should not fmm part of its taxable gross receipts. Revenue Regulations No. 12-80 dated Nov. 7. 1980 on Taxation of Ccrtai.t1 Incumc Derived from Banking Activities pro-vides that the rates of tax to be imposed on the gross receiptc;; ot such tinancial i..'1stitution; shall be based on all items of income actually received, thus: Sl:<..C. 4. XXX XXX (e) Gross receipts ta..;.~ on b{lnks, non-b,._1n.k financial intermediaries, financing companies. and other non-b.mk financial intermediaries not performing qua<;i-hanking actzvities. - The rates of taxes to be imposed on the gross receipts of such fmancial institutions shall be based on all items of income actually 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

DECISIO~- f'TA. CASE NO. 5533 Page 5 included in the tax base of such fillancial institutions. as provided hereunder. (Emphasis supplied) From the foregoing, it is but logical to infer that the fillal tax. not ltaving been receiv'ecl by~ the petitioner but instead lYent to the coffers of the government, should no longer form pa1t ot 1ts gross receipts for the purpose of computing the GRT. Tttis conclusion is i..1"'J. accord \~;ith the interpretation of the Supreme Court ill the case entitled Collector or Internal Re\renue \'S. ~1anila .Jocl{e)' Club, 108 Phil. 821~ as quoted by this Comt ill disposing of a similar issue in the case entitled Compania ~farithna ''s. ,\cting Con1n1issioner of Internal Revenue, CTA Case No. 1-'26 dated November 14, 19<>6. thus: In the second place~ the ~.ig!1est tribunal of the ianJ interpreted the term "gross receipts: to mean all receipts of n t'l'{payer exduding tho<:!e w!lich have been especially ~atmarkeci by law or regulation for the government or o;:ome per<;on other th;m the taxpayer Titus, it w..ts hdd. "-x-x x-x The Government could not have meant to tax as gross re~..eipt of the ~1anila Jockey Club the 11 2~0 which it directs same Club to tum over to the Board of Races. The latter being a Government institution. there would be double taxation, ,�vl1ich should be a\'oided urJess the statute admits of no other interpretation. In the s~me mar.ner, the Go~'errnnent could not ha''e intended to wnsider as gross receipt the portion of the funds wh!ch it directed the Club to give, or know Ihe Club wouid give, to winning horses and Tockev<; - 8dmitted ')% It is tme that the law says that uut uf the total wager funds l21 2�o shall be set as1de as the 'commission' of the track ovvners but the law itself takes official notice, and virtually approves or directs payment of the portion that goes to o\vners of horses as prizes ancl bonuses ot JOCk.evs, which pmtton ts admittedly 5�-Q out of the 121'2�b con1Irjssion. ~~sit did not at that time contemplate the application of 'gross receipts' revenue priJlciple, the law in ma�i.11g a distribution of the total wager funds, took no trouble of separating one item from the other; and fur Ltonv~ni~nt;~, gruupt;<.i ihr~~ iL~ms und~r one common denomination. "Keedles~ tu say, gto~~ receiph of the proprietor of the amusement place should not i11.clude any money whiL-h although delivered to

DECISION- C.I.A. CASE. NO. 553J Page6 the amusement place has been especially earmarked by law or regulation for some person other than the proprietor." (The Commissioner of Intemal Revenue vs. l\fanila Jockey Club, Inc., G.R. Nos. L-13890 & L- 13887, June 30, 1960) It is to be noted that, under Section 260 of the Tax Code, a race track is subject to an amusement tax of 20% of its gross receipts and the term 'gross receipts' embraces all the receipts of the proprietor, lessee, or operator of the amusement piace. H Notwithstanding the broad and all- embracing definition of the term "gross receipts" found L11 our amusement tax iaw, our Supreme Court did not adopt a iiterai interpretation of the said term in the case of the Manila Jockey C!ub, Inc., supra." The legal issue h;wi_ng heen settled; We now delve on the factual aspect of this case which is the second issue at bar. Section 230 of the Tax Code. as amended. provides that a claim for refund. both w1th the Bureau ot lntemal Revenue and with this Court, must be filed Within two years ti-om the date of payment of the tax. Furthermore, in counting for the two-year prescriptive period, the filing of the quarteriy percentage tax return shouid be considered as the ��date of payment of the tax" (Soiid Bank Corporaiion vs. Commissioner of Internai Revenue, CTA Case No. 5-i08, Aprii 1-i, 1999; and Citytrust Investment Phiiippines, Inc. vs. Commissioner of Internai Revenue, CTA Case No. 5403, .April 19, 1999). The records shmv thai petitioner filed its Quarlt:riy Pt:rl;t:niagt: Tax Rt:ium for iht: flrsl quarlt:r of 1995 on April 20, 1995, (Exhibit "A''), while the instant petition for review was filed on June 19, 1997. Clearly, it can be concluded that the portion of the clai.tll for refund of overpaid gross receipts tax for the frrst quarter of 1995 can no longer be considered due to prescription. The remaining claim for refund of petitioner for the last three quarters of 1995 is \Veil within the two-year period.

DECISION- C T 1\. C.\SE. NO. 55~U Page7 What is now left for the petitioner to prove is its compliance with the following requisites: l. that it paid the gross receipts tax; 2. that it erroneously overpaid its gross receipts tax by including the 20~ o fmai withhoiding tax on its passive income as pati of the gross receipts deciared in the quattedy pe1centage tax retums for the yt::ai 1995, and 3. that the witrJiolding agent certifies that there is 20�o fmal witrJiolding tax on such passive income. (Bank o f the Philippine Islands vs. Commissioner of Intemal Revenue, CTA C ase No. 5458, Februaij� 15, 1999; and BPI Capital vs. Commissioner of I nternal Revenue, CTA Case No. 5457, ~larch 1, 1999; d ted in Solid Bank C orporation vs. Commissioner of Internal Revenue, CTA Case No. 5408, April 14, 1999, sup1�a). A careful examination of all the evidence at hand reveals that petitioner was able to sho\\rthat it paid gross receipts ta~~ for the ~~ear 1995 as evidenced b).r the machine validations appearing on the lower portion of petitioner's quarterly percentage tax n returns (Exhs . A to inclusive of submar!:dngs). The payments of the gross reeeipts tax were certified by Ms. Cannelita S.T Pa'!cual, Chief. Revenue Accounting Division, BIR. to the effect that these have been received by the respondent's bureau (Exhs. I and J). It was also established that the 20% final withholding taxes on interest income was inducted in the gross receipts reflected in petitioner's quarterly percentage tax returns. This was attested to by the commissioned independent CPA, Mr. R. R. Rubio, and as verified by the Court (Exhs. G, H, and K). Petitioner also presented the ceitification ftorn Bangko Sentral ng Pilipinas which vouched fut the temittance of payments of 20~o fmal witrJiolding tax on treasury bills (Exh. f). However, out of the

DECISION- C.I.A. CASE NO, 55]3 PageS total alleged payment of 20�;o tmal taxes in the amount ofP70.161.575.04 only the sum of P33.986.519.06 was verified by the auditor to have been included in the quarterly percentage tax returns for the year 1995 (Exh. k). A further examination of the records of the case reveals that the fmal withholding taxes on iong tem1 commercial papers purchased by petitioner have no cetiificaiions from th~ir withholding agents. The trading utden, <ttld Witftnuatiuu of ~ales ~uppUitiug this kinu uf imestmt::nt bear no o trace of p.1ym~nt nor \Vithholdi.iig of 20� final tax (Ex.t'i.s. L-1 to L-71 and 0-1 to 0- l3 ). Consequently, the 20�o fiital tax computed by the auditor on this long tenn corrunercial papers should be disallo,�ved. It should be emphasized that oniJ~ those 20~�'0 fi.'l:~l withholding taxes which were proven to have been paid or withheld on passive income should be excluded in the computation of gross receipts tax (Philam Savings I Bank, Inc. vs. The Commissioner, Bureau of Internal Revenue, CTA Case No. 540'7, August 18, 1998). In -;urn, petitioner is only entitled to the amount of Pl, 555,749.65, computed as follows� Amount supported by evidence P229, 125.35 Pl,699,325.95 per SG\' finding 48i,Oi8.63 p 107,766 10 Less: Disallowances by the Court P7162(H,98 35,810.20 a. Prescribed (1st quarter 1995) b. Without certification of p 143.576.30 wit!-o.holding of fmal tax Pl,555, 749.65 (Long-Tetm Comm'i Papers) 2nd QtL 1995 (Exh. J-6) 3rd Qtr. 1995 (Exhs. J-21 & J-22) Tot<~l Multiply by GRT rate Total Amount Refundable

DECISIO~- C T 1\. C'I\~F NO. 5~H Pag9 \VHEREFORE. in view of the foregoing. the instant pehhon for review is hereby partiallv GRANTED. Respondent lS ORDERED to REFUl''D in favor of petitioner the urn of P1.555. 749.65, representing overpaid gross re~.:eipts tax for the vear 1995. L-lQ~ o~\.._ SO O.RLJER~U. EP~l\TESTO D. ACOSTA Presiding Judge Ac;:c;:ociate Judge (Disst;;nting) AMAl'iCTO Q. SAGA As,ociate Judge CERTIFIC' \ TION I hereby certify that the above decision was reached after due consultation with the members of the Court of Tax Appeals in accordance with Section ] ?- \rticle \'ill of the Constitution. ~\Q-~ ERNESTO D. ACO~TA Pn.:siuing J uugt:

REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY SOLIDBANK CORPORATION, Petitioner, -versus- C.T.A. CASE NO. 5533 COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. AUG 06 1999% .. X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - :::::: DISSENTING OPINION The majority opinion granted the refund of P1 ,555 ,749.65 representing alleged overpaid gross receipts tax. I beg to dissent from the conclusion ofthe majority. The majority opinion of Judge Ernesto D. Acosta and Judge Ramon 0 . de Veyra is based on the ruling embodied in the case entitled Asian Bank Corporation vs. Commissioner of Internal Revenue, CTA Case No. 4720 promulgated on January 30, 1996, where this Court declared that the interest income included as part of such gross receipts should be computed minus the 20% final tax already withheld and deducted by various withholding agents. Such conclusion in law is legally objectionable for two (2) reasons, to wit: (1) Section 4(e) of Revenue Regulations No. 12-80 is not a computation determinative of the amount of gross receipts as basis of the gross receipts tax under Section 119 of the Tax Code. Said revenue regulations merely authorize the determination 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

RESOLUTION- CTA CASE NO . 5533 PAGE2 report income and deductions (Consolidated Mines, Inc. vs. CTA, L-18843, August 29, 1974). The two principal accounting methods expressly and impliedly recognized by the Tax Code and the Income Tax Regulations are : (a) Cash receipts and disbursement method or cash basis. - Income earned by the taxpayer is not included in gross income until received and expenses are not deducted until paid within the taxable year; and (b) Accrual basis. - Income is included in gross income when earned, whether received or not, and expenses are allowed as deductions when incurred although not yet paid within the year. (2) That the non-inclusion of the 20% final withholding income tax from the gross interest income for 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 the claim of exemption. Tax exemption can only be given effect when the grant is clear and categorical inasmuch as taxation is the rule and exemption is the exception, Section 26, Tax Code. The holding therefore in the Asian Bank Corporation to the effect that the non-inclusion of the 20% final withholding income tax from the gross receipts can logically be inferred from the wordings of said Section 4(e) of Revenue Regulations No. 12-80, is misplaced. Tax statutes are to receive a reasonable construction with a view to carrying out their purpose and intent (51 Am Jur 361). It should not be construed as to permit the taxpayer to easily evade the payment of the tax (Cabon Steel Co. vs. Lewelyn, 251 U.S. 501). Thus, the good faith of the taxpayer is not sufficient justification for exemption from the payment of surcharges imposed by law (Commissioner vs. Royal Interocean Lines and CTA, L-26506, July 30, 1970). A tax statute should be construed to avoid the possibilities oftax evasion (Lorenzo vs. Posadas, 64 Phils. 353). The High Court's decision in the case of Commissioner of Internal Revenue vs. The Manila Jockey Club, Inc., 108 Phils. 821, June 30, 1960, which was reaffirmed by the said Court in the case of Visayan-Cebu Terminal Co., Inc. vs. Commissioner of Internal Revenue, 13 SCRA 357, February 27, 1965 cannot be considered as precedent

RESOLUTION - CTA CAS E NO . 5533 PAG E3 cases, hence, inapplicable to the two cases decided by this Honorable Court in the cases of Compania Maritima vs. Acting Commissioner of Internal Revenue, CTA Case No. 1426 dated November 14, 1966 and Asian Bank Corporation vs. Commissioner of Internal Revenue, CTA Case No. 4720 dated January 30, 1996, for the following reasons : In the Manila 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 bets called "wager fund" were distributed pursuant to Executive Order No. 320 and Republic Act No. 309, as follows: 87% as dividends to holders of winning tickets 12 1 2 as "commissions" of the Manila Jockey Club, of which 1h % / was assigned to the Board on Races and 5% was distributed as prizes for owners of winning horses and authorized bonus for jockeys. According to the above-mentioned distribution of the "wager fund", the then Collector of Internal Revenue assessed the Club on the whole amount of its "commission" of 1ih But since the Club had already paid the amusement tax based on its 7% share of the "commission", the amount assessable pertains only to the 5 1 2% for / the period from November 1946 to October 1950. On various instances, the Club protested the proposed assessments and was sustained by the opinions of the Secretary of Justice rendered on three different occasions (Opinion No. 345 , series of 1941 ; Opinion No. 249, series 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 1 2% was held only by the Club in trust for the owners of /

RESOLUTION- CTA CASE NO. 5533 PAGE4 winning horses and authorized bonuses ofjockeys, the then Collector of Internal Revenue demanded payment of amusement taxes for the period November 1946 to October 1950. Said demand letter was timely appealed to the Court of Appeals wherein a unanimous judgment was obtained reversing the Collector' s stand on the matter. In the High Court, the position of the Secretary of Justice was sustained thereby upholding the Court of Tax Appeals' decision. Accordingly, gross receipts of the proprietor of the amusement place should not include any money which, although delivered to the amusement place was "especially earmarked" by law or legal rule and regulations for some persons other than the proprietor. Undeniably, they are money received 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 the race track. The same is true in the case of the 1 2% / 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 51/2% of the 12' /2% "commissions" of the race track do not form part of the gross receipts, hence not subject to the amusement tax of20%. The above-mentioned decision of the High Court was also applied in the case of Visayan Cebu Terminal Co., Inc. vs. Commissioner of Internal Revenue, 13 SCRA 357, Nos. L-19530 and L-19444, February 27, 1965. The legal issue involved in this case is the interpretation of the management contract entered into by and between the Bureau of Customs and Visayan Cebu Terminal Co., Inc. whereby the latter as contractor was appointed the sole manager of the Arrastre Service at the Port of Cebu City. In the said Management Contract, it was further agreed and understood that in consideration of

RESOLUTION - CTA CASE NO . 5533 PAG ES the rights and privileges granted the Contractor for the management of the Arrastre Service, the Bureau of Customs shall receive twenty eight (28%) percent of the total monthly gross income derived from whatever source in connection with the operations of the Arrastre Service, payable within ten (10) days of the succeeding month. The main legal issue involved in this case is whether or not the gross receipts corresponding to the 28% of the total gross income of the Service Contractor delivered to the Bureau of Customs within ten (1 0) days of the following month should form part of the gross receipts subject to 3% 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% contractors tax and that paragraph 23 of the said Management Contract can legally be construed as a "regulation". As the learned trial court has aptly observed: "x x x the government could not have intended to consider as gross receipts the 28% that went to one of its institutions, the Bureau of Customs, and thereby collect percentage tax on it from petitioner. To hold petitioner liable for the payment of percentage 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 "earmarked by law or legal rule or regulation" as 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 "earmark" as a mark put upon a thing to distinguish it from another. Originally and literally, a mark upon the ear, a mode of marking sheep and other animals . Property is said to be earmarked when it can

RESOLUTION - CTA CASE NO. 5533 PAGE6 be identified or distinguished from other property of the same nature. To set apart from others (Black' s Law Dictionary, 61h Edition, p. 508). In the case of the Manila Jockey Club, Inc. Executive Order No. 320 and Republic Act No. 309 made the specific "earmarking" for distribution of the 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 delivered to the Bureau of Customs by the Contractor was provided in paragraph 23 of the Management Contract. Such specific earmarking of the twenty percent (20%) 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 is 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 it as the property of one person and again as the property of another, but this does not include the imposition of different taxes concurrently on the same property or income (e.g. federal and state income taxes), nor the taxation of the same piece of property to different persons when they hold different interests in it or when it represents different values in their hands, as when both the

RESOLUTION- CTA CASE NO. 5533 PAGE 7 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 stockholders" (Black' s Law Dictionary, 61h Edition, p. 491). This acceptable form of double taxation is reflected in BIR Ruling No. 223 dated November 2, 1989, thus: "The 5% gross receipts tax under Section 120 of the Tax Code is collectible on all finance companies doing business in the Philippines from interests, discounts, and all 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% gross receipts tax under said Section. The fact that it has been subjected to the 20% final withholding income tax under Section 50(a) is immaterial. Besides, the withholding tax is imposed under Title II of the Tax Code while the finance tax is provided under Title V thereof." (BIR Ruling No. 223 , November 2, 1989) For as long as the basis for the claim for refund or tax credit certificate is based on the non-inclusion of the amount representing the final withholding income tax under Section 50(a) as part of the gross income subject to gross receipts tax, this dissenting opinion will stand. For purposes of the amusement tax under Section 260 of the Tax Code, the term 'gross receipts' embraces ' all the receipts ' of the proprietor, lessee, or operator of the amusement place. The words ' 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 person other than the proprietor, lessee or operator of the amusement place. Receipts means actually received (Philippine Long Distance Telephone Co. vs. Collector of Internal Revenue, G.R. No. L-3222, January 21, 1952) for itself and not for others, for otherwise they would not be receipts (Manila Jockey Club, Inc. vs.

RESOLUTION - CTA CASE NO. 5533 PAGE 8 Collector of Internal Revenue, CTA Case No. 205, April 15, 1958; Jai Alai Corporation of the Philippines vs. Araneta, CTA Case No. 108, July 31, 1956 [Annotated, NIRC by Commissioner Jose Araiias, 1988 Edition, p. 687). WHEREFORE, in view of the forego ing, I hereby register my dissent and vote for the denial of the claim for refund for lack oflegal basis. SO ORDERED. ~~ IOQ.S ~ Associate Jud