PHILIPPINE BANKING CORPORATION (NOW: GLOBAL BUSINESS BANK, INC), vs.

COMMISSIONER OF INTERNAL REVENUE

J. Carpio January 30, 2009 G.R. No. 170574
Doctrine A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties on persons
otherwise guilty of violation of a tax law. It partakes of an absolute waiver by the government of its right to collect what is due it and
to give tax evaders who wish to relent a chance to start with a clean slate. A tax amnesty, much like a tax exemption, is never
favored nor presumed in law. The grant of a tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer
and liberally in favor of the taxing authority.
Facts  SSDA (Super-Savings Deposit Account). Petitioner bank offered its SSDA to its depositors. This form of account was
evidenced by a passbook and had a higher interest rate than a regular savings account which petitioner believed was not
subject to Documentary Stamp Tax (DST) under Section 1801 of the NIRC (1977).
 Final Assessment Notice. However, the CIR sent petitioner notices for DST deficiencies for the years 1996 and 1997 in
the amounts of 17M and 47M respectively. These were based on the outstanding balances of the SSDAs that were
indicated in its financial statements.
 Petitioner: They are regular savings accounts. SSDAs had common features with a regular savings account such as a
passbook, depositors could deposit or withdraw anytime without penalty and an Automatic Transfer agreement. The only
difference is that the SSDA is for depositors who have a substantial average daily balance and because of this, they are
given higher interest rates as incentive.
Time Deposits SSDA
1. The holding period is fixed beforehand. 1. The holding period floats at the option of the depositor. It can be 30,
60, 90 or 120 days or more and as an incentive for maintaining a
longer holding period, the depositor earns higher interest.
2. There is pre-termination because there is no partial 2. No pre-termination and the passbook account is simply reverted to
withdrawal of a certificate. Pre-termination results in the an ordinary savings status in case of early or partial withdrawal or if
surrender and cancellation of the certificate of deposit. the required holding period is not met.
 Petitioner: Section 180, NIRC (1977) do not include passbooks as instruments subject to DST. Petitioner insists that a
passbook is not a certificate of deposit and does not need to be renewed unlike a time deposit as mentioned in the law.
Also, even if a passbook is a certificate of deposit, no DST should be imposed because only negotiable CofDs are covered
and a passbook is not a negotiable instrument.
 Petitioner: No law subjecting SSDAs to DST prior to RA 9234. This law subjecting SSDAs to DST was non-existent in
1996 and 1997 so they should not pay.
 CIR: Passbook is a CofD, subject to DST. The law did not limit the enumeration only to negotiable instruments because
based on FEBTC v. Querimit2, a CofD may or may not be a negotiable instrument.
 CTA Ruling: Petition denied. The SSDA is the same as a time deposit and is subject to DST. A passbook is “written
acknowledgment” which is any written memorandum of the fact that the bank accepted a deposit and which constitutes a
certificate of deposit drawing interest, regardless of its ability to be negotiated. The essential features of a time deposit
exist in a SSDA.
Ratio/Issues W/N the SSDA is subject to DST under Section 180, NIRC (1977). YES (but see subsequent discussion re: tax amnesty below)
(1) Differentiation of a regular savings deposit and time deposit vis-à-vis the SSDA:
Savings Account Time Deposit SSDA
Interest rate Regular savings interest Higher interest rate Higher interest rate
Period None Fixed Term Fixed Term
Evidenced by: Passbook Certificate of Time Deposit Passbook
Pre-termination None With penalty With penalty
Holding Period None Yes Yes
Withdrawal Allowed Withdrawal amounts to pre- Allowed provided the minimum amount to earn the
termination higher interest rate is maintained, otherwise, the
regular savings interest rate will apply.
(2) The SSDA has all the distinct features of a certificate of deposit (time deposit account). The Court previously ruled 3 that a

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Sec. 180. Stamp tax on all loan agreements, promissory notes, bills of exchange, drafts, instruments and securities issued by the government or any of its instrumentalities,
certificates of deposit bearing interest and others not payable on sight or demand . — On all loan agreements signed abroad wherein the object of the contract is located or used in the
Philippines; bills of exchange (between points within the Philippines), drafts, instruments and securities issued by the Government or any of its instrumentalities or certificates of deposits
drawing interest, or orders for the payment of any sum of money otherwise than at the sight or on demand, or on all promissory notes, whether negotiable or non-negotiable, except bank notes
issued for circulation, and on each renewal of any such note, there shall be collected a documentary stamp tax of Thirty centavos (P0.30) on each Two hundred pesos, or fractional part thereof,
of the face value of any such agreement, bill of exchange, draft, certificate of deposit, or note: provided, that only one documentary stamp tax shall be imposed on either loan agreement, or
promissory note issued to secure such loan, whichever will yield a higher tax: provided, however, that loan agreements or promissory notes the aggregate of which does not exceed Two
hundred fifty thousand pesos (P250,000) executed by an individual for his purchase on installment for his personal use or that of his family and not for business, resale, barter or hire of a house,
lot, motor vehicle, appliance or furniture shall be exempt from the payment of the documentary stamp tax provided under this section.

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Defined a certificate of deposit as "a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to
the order of the depositor, or some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created.
 passbook of an interest-earning account is a certificate of deposit.
(3) A DST is an excise tax imposed on the transaction rather than on the document. The court reviewed the various features of
the SSDA and concluded that the SSDA is a certificate of deposit drawing interest subject to DST, evidenced by a
passbook regardless of w/n it is negotiable.

TAX AMNESTY
 During the pendency of the case, RA 9480 4 lapsed into law which exempted all NIR taxes for the taxable year 2005 and
prior years. The DOF issued DO 29-075 and the BIR subsequently issued Revenue Memorandum Circular Nos. 19-2008 6
and 69-20077 outlining the guidelines for its implementation.
 Metrobank later absorbed Petitioner bank’s business and filed a Tax Amnesty Return.

W/N Petitioner is now deemed immune from payment of taxes and is discharged from its tax liabilities for 2005 and prior
years including all deficiency tax assessments. (YES)
(1) See Doctrine. The DST is one of the taxes covered by RA 9480.
(2) However, Metrobank qualified for a tax amnesty so by virtue of it absorbing petitioner bank, the law mandates that “the
taxpayer shall thereafter be immune from the payment of taxes, and additions thereto, as well as the appurtenant civil,
criminal or administrative penalties under the NIRC of 1997, as amended, arising from the failure to pay any and all
internal revenue taxes for taxable year 2005 and prior years.”
(3) Note however, that the BIR’s exclusion of “issues and cases which were ruled by any court (even without finality) in
favour of the BIR prior to amnesty” is misplaced.
(4) RA 9480 clearly states that the amnesty covers “tax cases subject of final and executor judgment by the courts.” This case
was not yet final and executor when Metrobank availed of the amnesty program so it cannot be excluded.
Held Petition GRANTED solely in view of petitioner’s availment of the Tax Amnesty Program.
Prepared by: Tippy Oracion [Tax 1 | Cabreros]

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International Exchange Bank v. Commissioner of Internal Revenue,47 this Court categorically ruled that a passbook representing an interest earning deposit account issued by a bank qualifies
as a certificate of deposit drawing interest and should be subject to DST. The Court added that "a document to be deemed a certificate of deposit requires no specific form as long as there is
some written memorandum that the bank accepted a deposit of a sum of money from a depositor.
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An Act Enhancing Revenue Administration and Collection by Granting an Amnesty on All Unpaid Internal Revenue Taxes Imposed by the National Government for Taxable Year 2005 and
Prior Years.
Section 1. Coverage. There is hereby authorized and granted a tax amnesty which shall cover all national internal revenue taxes for the taxable year 2005 and prior years, with or without
assessments duly issued therefor, that have remained unpaid as of December 31, 2005: Provided, however, That the amnesty hereby authorized and granted shall not cover persons or cases
enumerated under Section 8 hereof.
Sec. 6. Immunities and Privileges. Those who availed themselves of the tax amnesty under Section 5 hereof, and have fully complied with all its conditions shall be entitled to the following
immunities and privileges:
1. The taxpayer shall be immune from the payment of taxes, as well as addition thereto, and the appurtenant civil, criminal or administrative penalties under the
National Internal Revenue Code of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years.
Sec. 8. Exceptions. The tax amnesty provided in Section 5 hereof shall not extend to the following persons or cases existing as of the effectivity of this Act:
1. Withholding agents with respect to their withholding tax liabilities;
2. Those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government;
3. Those with pending cases involving unexplained or unlawfully acquired wealth or under the Anti-Graft and Corrupt Practices Act;
4. Those with pending cases filed in court involving violation of the Anti-Money Laundering Law;
5. Those with pending criminal cases for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended, and the
felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code; and
6. Tax cases subject of final and executory judgment by the courts.
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SEC. 6. Method of Availment of Tax Amnesty. -
1. Forms/Documents to be filed. - To avail of the general tax amnesty, concerned taxpayers shall file the following documents/requirements:
a. Notice of Availment in such form as may be prescribed by the BIR;
b. Statements of Assets, Liabilities and Networth (SALN) as of December 31, 2005 in such form, as may be prescribed by the BIR;
c. Tax Amnesty Return in such form as may be prescribed by the BIR.
The Acceptance of Payment Form, the Notice of Availment, the SALN, and the Tax Amnesty Return shall be submitted to the RDO, which shall be received only after complete payment. The
completion of these requirements shall be deemed full compliance with the provisions of RA 9480.
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Who may avail of the amnesty?
Q Issues and cases which were ruled by any court (even without finality) in favor of the BIR prior to amnesty availment of the taxpayer. (e.g. Taxpayers who have failed to observe or
follow BOI and/or PEZA rules on entitlement to Income Tax Holiday Incentives and other incentives)
Q Cases involving issues ruled with finality by the Supreme Court prior to the effectivity of RA 9480 (e.g. DST on Special Savings Account)
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Q-32 May surviving or new corporations avail of the tax amnesty in behalf of the corporations absorbed or dissolved pursuant to a merger or consolidation that took effect prior to
Taxable Year 2005? Can they avail of the Tax Amnesty?
A-32 Yes, these companies can avail of the tax amnesty for purposes of obtaining tax clearances for the dissolved or absorbed corporations.