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02 Manila Banking Corporation v. CIR
02 Manila Banking Corporation v. CIR
IT CEASED ITS OPERATION IN 1978 (DUE TO A BSP Whether petitioner is entitled to a refund of its minimum
RESOLUTION) corporate income tax paid to the BIR for taxable year 1999 (YES.
On May 22, 1987, the Monetary Board of the BSP issued a 4 YEAR GRACE PERIOD COUNTED FROM June 23, 1999 when it
Resolution pursuant ]the Central Bank Act, prohibiting was authorized by the BSP to operate as a thrift bank)
petitioner from engaging in business by reason of insolvency.
Thus, petitioner ceased operations that year and its assets and RULING
liabilities were placed under the charge of a government-
appointed receiver. PROVISIONS APPLICABLE FOR MCIT (GENERAL)
MEANWHILE MCIT WAS IMPOSED IN 1997 (1) Section 27(E) of the Tax Code provides:
Meanwhile, Comprehensive Tax Reform Act of 1997. It
introduced the imposition of the minimum corporate income (E) Minimum Corporate Income Tax on
tax on domestic and resident foreign corporations. Domestic Corporations. -
Implementing this law is Revenue Regulations No. 9-98 stating
that the law allows a four (4) year period from the time the (1) Imposition of Tax. - A minimum
corporations were registered with the Bureau of Internal corporate income tax of two percent (2%) of
Revenue (BIR) during which the minimum corporate income tax the gross income as of the end of the taxable
should not be imposed. year, as defined herein, is hereby imposed on
a corporation taxable under this Title,
AFTER 12 YEARS THE BANK REOPENED AS A THRIFT BANK beginning on the fourth taxable year
On June 23, 1999, after 12 years since petitioner stopped its immediately following the year in which such
business operations, the BSP authorized it to operate as a thrift corporation commenced its business
bank. The following year, specifically on April 7, 2000, it filed operations, when the minimum corporate
with the BIR its annual corporate income tax return and paid income tax is greater than the tax computed
P33,816,164.00 for taxable year 1999. under Subsection (A) of this Section for the
taxable year.
BANK ASKS RULING WHEN THE 4 YEARS GRACE PERIOD FOR
MCIT SHALL APPLY (2) Carry Forward of Excess Minimum
Prior to the filing of its income tax return, or on December 28, Tax. - Any excess of the minimum corporate
1999, petitioner sent a letter to the BIR requesting a ruling on income tax over the normal income tax as
whether it is entitled to the four (4)-year grace period reckoned computed under Subsection (A) of this Section
from 1999. In other words, petitioners position is that since it shall be carried forward and credited against
resumed operations in 1999, it will pay its minimum corporate the normal income tax for the three (3)
income tax only after four (4) years thereafter. immediately succeeding taxable years.
In order to allow new corporations to grow and APPARENT CONFLICT WITH RR 9-98 AND RR 4-95
develop at the initial stages of their operations, the Let it be stressed that Revenue Regulations No. 9-98,
lawmaking body saw the need to provide a grace implementing R.A. No. 8424 imposing the minimum corporate
period of four years from their registration before they income tax on corporations, provides that for purposes of this
pay their minimum corporate income tax. tax, the date when business operations commence is the year
in which the domestic corporation registered with the BIR.
PROVISION APPLICABLE (SPECIFICALLY FOR THRIFT BANKS) However, under Revenue Regulations No. 4-95, the date of
(1) Significantly, on February 23, 1995, Congress enacted R.A. commencement of operations of thrift banks, such as herein
No. 7906, otherwise known as the Thrift Banks Act of 1995. petitioner, is the date the particular thrift bank was registered
It took effect on March 18, 1995. This law provides for the with the SEC or the date when the Certificate of Authority to
regulation of the organization and operations of thrift Operate was issued to it by the Monetary Board of the BSP,
banks. Under Section 3, thrift banks include savings and whichever comes later.
mortgage banks, private development banks, and stock
savings and loans associations organized under existing RR 4-95 GOVERNS THRIFT BANKS; 4 YEAR PEIORD FROM
laws. WHEN IT IS AUTHORIZED BY BSP
Clearly then, Revenue Regulations No. 4-95, not Revenue
Regulations No. 9-98, applies to petitioner, being a thrift
(2) On June 15, 1999, the BIR issued Revenue Regulation bank. It is, therefore, entitled to a grace period of four (4)
No. 4-95 implementing certain provisions of the said R.A. years counted from June 23, 1999 when it was authorized
No. 7906. Section 6 provides:’ by the BSP to operate as a thrift bank. Consequently, it
should only pay its minimum corporate income tax after
Sec. 6. Period of exemption. All thrift banks created four (4) years from 1999.
and organized under the provisions of the Act shall
be exempt from the payment of all taxes, fees, and DISPOSITIVE PORTION
charges of whatever nature and description, except
the corporate income tax imposed under Title II of WHEREFORE, we GRANT the petition. The assailed Decision of
the NIRC and as specified in Section 2(A) of these
regulations, for a period of five (5) years from the the Court of Appeals in CA-G.R. SP No. 77177 is hereby
date of commencement of operations; while for REVERSED. Respondent Commissioner of Internal Revenue is
thrift banks which are already existing and operating
as of the date of effectivity of the Act (March 18, directed to refund to petitioner bank the sum of P33,816,164.00
1995), the tax exemption shall be for a period of five prematurely paid as minimum corporate income tax.
(5) years reckoned from the date of such effectivity.