Revenue v. Traders Royal Bank

LEONARDO-DE CASTRO, J.:

Before this Court is a Petition for Review on Certiorari filed by petitioner Commissioner of Internal Revenue (CIR) assailing the Decision1 dated February 14, 2005 of the Court of Tax: Appeals (CTA) en bane in C.T.A. EB No. 32, which denied the CIR's appeal of the Decision2 dated April 28, 2004 and Resolution3 dated September 10, 2004 of the CT A Division in C.T.A. Case No. 6392. The CTA Division cancelled the assessments issued by the CIR against respondent Traders Royal Bank (TRB) for deficiency documentary stamp taxes (DST) on the latter's Trust Indenture Agreements for taxable years 1996 and 1997, in the amounts of ₱10,517,740.57and1!18,349,556.33, respectively.4 TRB is a domestic corporation duly registered with the Securities and Exchange Commission and authorized by the Bangko Sentral ng Pilipinas (BSP) to engage in commercial banking.5 On the strength of the Letter of Authority (L.A.) No. 000018565 dated July 27, 1998, the Bureau of Internal Revenue (BIR) conducted an investigation concerning all national internal revenue tax liabilities of TRB for taxable years 1996-1997.

Following the investigation, the BIR issued a Pre-Assessment Notice dated November 10, 1999 against TRB. Subsequently, the BIR issued a Formal Letter of Demand and Assessment Notice Nos. ST-DST-96-0234-996 and ST-DST-97-0233-99,7 all dated December 27, 1999, against TRB for deficiency DST for 1996 and 1997, in the total amount of ₱28,867,296.90, broken down as follows: DEFICIENCY DOCUMENTARY STAMP TAX Industry Issues on: 1996 1997 Special Savings Deposit ₱5,041,882,798.03 ₱9,579,733,184.65 Trust Fund 567,500,927.00 55,783,860.92 Mega Savings Deposit 77,911.32