Particulars | Basic Tax | Interest | Compromise Penalties | Total |
Deficiency Income Tax | | | | |
1995 (ST-INC-95-0199-2000) | P252,150,988.01 | P191,496,585.96 | P25,000.00 | P443,672,573.97 |
1994 (ST-INC-94-0200-2000) | 216,478,397.90 | 207,819,261.99 | 25,000.00 | 424,322,659.89 |
Deficiency Gross Receipts Tax | | | | |
1995 (ST-GRT-95-0201-2000) | 13,697,083.68 | 12,428,696.21 | 2,819,745.52 | 28,945,525.41 |
1994 (ST-GRT-94-0202-2000) | 2,488,462.38 | 2,755,716.42 | 25,000.00 | 5,269,178.80 |
Deficiency Final Withholding Tax | | | | |
1995 (ST-EWT-95-0203-2000) | 64,365,610.12 | 58,757,866.78 | 25,000.00 | 123,148,477.15 |
1994 (ST-EWT-94-0204-2000) | 53,058,075.25 | 59,047,096.34 | 25,000.00 | 112,130,171.59 |
Deficiency Final Tax on FCDU Onshore Income | | | | |
1995 (ST-OT-95-0205-2000) | 81,508,718.20 | 61,901,963,.52 | 25,000.00 | 143,435,681.72 |
1994 (ST-OT-94-0206-2000) | 34,429,503.10 | 33,052,322.98 | 25,000.00 | 67,506,826.08 |
Deficiency Expanded Withholding Tax | | | | |
1995 (ST-EWT-95-0207-2000) | 5,051,415.22 | 4,583,640.33 | 113,000.00 | 9,748,055.55 |
1994 (ST-EWT-94-0208-2000) | 4,482,740.35 | 4,067,626.31 | 78,200.00 | 8,628,566.66 |
Deficiency Documentary Stamp Tax | | | | |
1995 (ST-DST1-95-0209-2000) | 351,900,539.39 | 315,804,946.26 | 250,000.00 | 667,955,485.65 |
1995 (ST-DST2-95-0210-2000) | 367,207,105.29 | 331,535,844.68 | 300,000.00 | 699,042,949.97 |
1994 (ST-DST3-94-0211-2000) | 460,370,640.05 | 512,193,460.02 | 300,000.00 | 972,864,100.07 |
1994 (ST-DST4-94-0212-2000) | 223,037,675.89 | 240,050,706.09 | 300,000.00 | 463,388,381.98 |
TOTALS | P2,130,226,954.83 | P2,035,495,733.89 | P4,335,945.52 | P4,170,058,634.49 |
Particulars | Basic Tax | Interest | Surcharge &/ Compromise | Total |
Deficiency Income Tax | ||||
1995 (INC-95-000003) | P374,348.45 | P346,656.92 | P721,005.37 | |
1994 (INC-94-000002) | 1,392,366.28 | 1,568,605.52 | 2,960,971.80 | |
Deficiency Gross Receipts Tax | ||||
1995 (GRT-95-000004) | 2,000,926.96 | 3,322,589.63 | P1,367,222.04 | 6,690,738.63 |
1994 (GRT-94-000003) | 138,368.61 | 161,872.32 | 300,240.93 | |
Deficiency Final Withholding Tax | ||||
1995 (FT-95-000005) | 362,203.47 | 351,287.75 | 713,491.22 | |
1994 (FT-94-000004) | 188,746.43 | 220,807.47 | 409,553.90 | |
Deficiency Final Tax on FCDU Onshore Income | ||||
1995 (OT-95-000006) | 81,508,718.20 | 79,052,291.08 | 160,561,009.28 | |
1994 (OT-94-000005) | 34,429,503.10 | 40,277,802.26 | 74,707,305.36 | |
Deficiency Expanded Withholding Tax | ||||
1995 (EWT-95-000004) | 520,869.72 | 505,171.80 | 25,000.00 | 1,051,041.03 |
1994 (EWT-94-000003) | 297,949.95 | 348,560.63 | 25,000.00 | 671,510.58 |
Deficiency Documentary Stamp Tax | ||||
1995 (DST-95-000006) | 599,890.72 | 149,972.68 | 749,863.40 | |
1995 (DST2-95-000002) | 24,953,842.46 | 6,238,460.62 | 31,192,303.08 | |
1994 (DST-94-000005) | 905,064.74 | 226,266.18 | 1,131,330.92 | |
1994 (DST2-94-000001) | 17,040,104.84 | 4,260,026.21 | 21,300,131.05 | |
TOTALS | P164,712,903.44 | P126,155,645.38 | P12,291,947.73 | P303,160,496.55 |
Particulars | 1994 | 1995 | Total |
Deficiency Income Tax | P2,965,549.44 | P722,236.11 | P3,687,785.55 |
Deficiency Gross Receipts Tax | 300,695.84 | 6,701,893.17 | 7,002,589.01 |
Deficiency Final Withholding Tax | 410,174.44 | 714,682.02 | 1,124,856.46 |
Deficiency Expanded Withholding Tax | 672,490.14 | 1,052,753.48 | 1,725,243.62 |
Deficiency Documentary Stamp Tax | 1,131,330.92 | 749,863.40 | 1,881,194.32 |
TOTALS | P5,480,240.78 | P9,941,428.18 | P15,421,668.96 |
Particulars | 1994 | 1995 | Total |
Deficiency Final Tax on FCDU Onshore Income | |||
Basic | P34,429,503.10 | P81,508,718.20 | P115,938,221.30 |
Interest | 40,277,802.26 | 79,052,291.08 | 119,330,093.34 |
Sub Total | P74,707,305.36 | P160,561,009.28 | P235,268,314.64 |
Deficiency Documentary Stamp Tax | |||
Basic | P17,040,104.84 | P24,953,842.46 | P41,993,947.30 |
Surcharge | 4,260,026.21 | 6,238,460.62 | 10,498,486.83 |
Sub Total | P21,300,131.05 | P31,192,303.08 | P52,492,434.13 |
TOTALS | P96,007,436.41 | P191,753,312.36 | P287,760,748.77 |
Particulars | 1994 | 1995 | Total |
Deficiency Final Tax on FCDU Onshore Income | |||
| P22,356,324.43 | P16,067,952.86 | P115,938, 221.30 |
| 26,153,837.08 | 15,583,713.19 | 119,330,093.34 |
| 48,510,161.51 | 31,651,666.05 | 119,330,093.34 |
Deficiency Documentary Stamp Tax (Industry Issue) | |||
| P17,040,104.84 | P24,953,842.46 | P41,993,947.30 |
| 4,260,026.21 | 6,238,460.62 | 10,498,486.83 |
| 1,300,131.05 | 31,192,303.08 | 52,492,434.13 |
TOTALS | P69,810,292.56 | P62,843,969.13 | P171,822,527.47 |
I.
Whether or not the right of the respondent to assess deficiency onshore tax and documentary stamp tax for taxable year 1994 and 1995 had already prescribed when it issued the formal letter of demand and assessment notices for the said taxable years.II.
Whether or not petitioner is liable for deficiency onshore tax for taxable year 1994 and 1995.III.
Whether or not petitioner's special savings account is subject to documentary stamp tax under then Section 180 of the 1993 Tax Code.19
Whether petitioner, by paying the other tax assessment covered by the waivers of the statute of limitations, is rendered estopped from questioning the validity of the said waivers with respect to the assessment of deficiency onshore tax.26and
Whether petitioner, as payee-bank, can be held liable for deficiency onshore tax, which is mandated by law to be collected at source in the form of a final withholding tax.27
(A) Final Withholding Tax. -- Under the final withholding tax system the amount of income tax withheld by the withholding agent is constituted as a full and final payment of the income tax due from the payee on the said income. The liability for payment of the tax rests primarily on the payor as a withholding agent. Thus, in case of his failure to withhold the tax or in case of under withholding, the deficiency tax shall be collected from the payor/withholding agent. The payee is not required to file an income tax return for the particular income. (Emphasis supplied)
In the operation of the withholding tax system, the withholding agent is the payor, a separate entity acting no more than an agent of the government for the collection of the tax in order to ensure its payments; the payer is the taxpayer - he is the person subject to tax imposed by law; and the payee is the taxing authority. In other words, the withholding agent is merely a tax collector, not a taxpayer. Under the withholding system, however, the agent-payor becomes a payee by fiction of law. His (agent) liability is direct and independent from the taxpayer, because the income tax is still imposed on and due from the latter. The agent is not liable for the tax as no wealth flowed into him - he earned no income. The Tax Code only makes the agent personally liable for the tax arising from the breach of its legal duty to withhold as distinguished from its duty to pay tax since:"the government's cause of action against the withholding agent is not for the collection of income tax, but for the enforcement of the withholding provision of Section 53 of the Tax Code, compliance with which is imposed on the withholding agent and not upon the taxpayer."35 (Emphases supplied)
Sec. 24. Rates of tax on domestic corporations.xxxx
(e) Tax on certain incomes derived by domestic corporationsxxxx
(3) Tax on income derived under the Expanded Foreign Currency Deposit System. - Income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with nonresidents, offshore banking units in the Philippines, local commercial banks including branches of foreign banks that may be authorized by the Central Bank to transact business with foreign currency depository system units and other depository banks under the expanded foreign currency deposit system shall be exempt from all taxes, except taxable income from such transactions as may be specified by the Secretary of Finance, upon recommendation of the Monetary Board to be subject to the usual income tax payable by banks: Provided, That interest income from foreign currency loans granted by such depository banks under said expanded system to residents (other than offshore banking units in the Philippines or other depository banks under the expanded system) shall be subject to a 10% tax. (Emphasis supplied)
As a final note, this Court has consistently held that findings and conclusions of the CTA shall be accorded the highest respect and shall be presumed valid, in the absence of any clear and convincing proof to the contrary.36 The CTA, as a specialized court dedicated exclusively to the study and resolution of tax problems, has developed an expertise on the subject of taxation.37 As such, its decisions shall not be lightly set aside on appeal, unless this Court finds that the questioned decision is not supported by substantial evidence or there is a showing of abuse or improvident exercise of authority on the part of the Tax Court.38
WHEREFORE, the petition is DENIED.
SO ORDERED.
Velasco, Jr., (Chairperson), Peralta, Abad, and Villarama, Jr.,* JJ., concur.
Endnotes:
* Designated as additional member in lieu of Associate Justice Maria Lourdes P.A. Sereno, per Special Order No. 1076 dated September 6, 2011.
1 Penned by Associate Justice Olga Palanca-Enriquez and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy and Caesar A. Casanova; rollo, pp. 44-66.
2 Id. at 67-68.
3 Id. at 69-70.
4 Id.
5 Id..
6 Id. at 70-71.
7 Id. at 71-72.
8 Id. at 72.
9 Id. at 73.
10 Id.
11 Id. at 100.
12 Id. at 104.
13 Id. at 69-87. Penned by Presiding Justice Ernesto D. Acosta and concurred in by Associate Justices Lovell R. Bautista and Caesar A. Casanova.
14 Id. at 86.
15 Id.
16 Id. at 89.
17 Id. at 88-94.
18 Id. at 94.
19 Id. at 50-51.
20 Id. at 55.
21 Id.
22 Id. at 59.
23 Id. at 65.
24 Id. at 218-220.
25 Id. at 233-235.
26 Id. at 15.
27 Id.
28 Id. at 173.
29 Id. at 176.
30 Tolentino, Arturo M. Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 4, p. 660.
31 Id.
32 G.R. No. 160756, March 9, 2010, 614 SCRA 605, 632-633.
33 Bank of America NT & SA v. Court of Appeals, G.R. Nos. 103092 and 103106, July 21, 1994, 234 SCRA 302, 310.
34 361 Phil. 103 (1999).
35Commissioner of Internal Revenue v. Court of Appeals, 361 Phil. 103, 117-118 (1999), citing Commissioner of Internal Revenue v. Malayan Insurance, 129 Phil. 165, 170 (1967), citing Jai Alai v. Republic, L-17462, May 29, 1967; 1967B PHILD 460.
36 Panasonic Communications Imaging Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) v. Commissioner of Internal Revenue, G.R. No. 178090, February 8, 2010, 612 SCRA 28, 38, citing Commissioner of Internal Revenue v. Cebu Toyo Corporation, 491 Phil. 625,640 (2005); Commissioner of Internal Revenue v. Court of Appeals, Atlas Consolidated Mining and Development Corporation, 312 Phil. 337 (1995), citing Luzon Stevedoring Corporation v. Court of Tax Appeals, et al., 246 Phil. 666 (1988).
37 Commissioner of Internal Revenue v. Court of Appeals, 363 Phil. 239, 246 (1999), citing Commissioner of Internal Revenue v. Wander Philippines, Inc., 243 Phil. 717 (1988).
38 Toshiba Information Equipment (Phils.), Inc. v. Commissioner of Internal Revenue, G.R. No. 157594, March 9, 2010, 614 SCRA 526, 561-562, citing Barcelon, Roxas Securities, Inc. (now known as UBP Securities, Inc.) v. Commissioner of Internal Revenue, G.R. No. 150764, August 7, 2006, 498 SCRA 126,135-136 and Commissioner of Internal Revenue v. Cebu Toyo Corporation, 491 Phil. 625,640 (2005).