Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 109976 April 26, 2005 PHILIPPINE NATIONAL OIL COMPANY, Petitioner, vs. THE HON. COURT OF APPEALS, THE COMMISSIONER OF INTERNAL REVENUE and TIRSO SAVELLANO,Respondents. x--------------------x G.R. No. 112800 April 26, 2005 PHILIPPINE NATIONAL BANK, Petitioner, vs. THE HON. COURT OF APPEALS, COURT OF TAX APPEALS, TIRSO B. SAVELLANO and COMMISSIONER OF INTERNAL REVENUE, Respondents. D E C I S I O N CHICO-NAZARIO, J.: This is a consolidation of two Petitions for Review on Certiorari filed by the Philippine National Oil Company (PNOC) 1 and the Philippine National Bank (PNB),< 2 assailing the decisions of the Court of Appeals in CA-G.R. SP No. 29583 3 and CA-G.R. SP No. 29526, 4 respectively, which both affirmed the decision of the Court of Tax Appeals (CTA) in CTA Case No. 4249. 5 The Petitions before this Court originated from a sworn statement submitted by private respondent Tirso B. Savellano (Savellano) to the Bureau of Internal Revenue (BIR) on 24 June 1986. Through his sworn statement, private respondent Savellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings and/or yields from the money placements of PNOC with the said bank, in violation of Presidential Decree (P.D.) No. 1931. P.D. No. 1931, which took effect on 11 June 1984, withdrew all tax exemptions of government-owned and controlled corporations. In a letter, dated 08 August 1986, the BIR requested PNOC to settle its liability for taxes on the interests earned by its money placements with PNB and which PNB did not withhold. 6 PNOC wrote the BIR on 25 September 1986, and made an offer to compromise its tax liability, which it estimated to be in the sum of P 304,419,396.83, excluding interest and surcharges, as of 31 July 1986. PNOC proposed to set-off its tax liability against a claim for tax refund/credit of the National Power Corporation (NAPOCOR), then pending with the BIR, in the amount ofP 335,259,450.21. The amount of the claim for tax refund/credit was supposedly a receivable account of PNOC from NAPOCOR. 7 On 08 October 1986, the BIR sent a demand letter to PNB, as withholding agent, for the payment of the final tax on the interest earnings and/or yields from PNOC's money placements with the bank, from 15 October 1984 to 15 October 1986, in the total amount of P 376,301,133.33. 8 On the same date, the BIR also mailed a letter to PNOC informing it of the demand letter sent to PNB. 9 1
Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No.
109976 April 26, 2005PHILIPPINE NATIONAL OIL
COMPANY,Petitioner,vs.THE HON. COURT OF APPEALS, THE COMMISSIONER
OF INTERNAL REVENUE and TIRSO
SAVELLANO,Respondents.x--------------------xG.R. No. 112800 April
26, 2005PHILIPPINE NATIONAL BANK,Petitioner,vs.THE HON. COURT OF
APPEALS, COURT OF TAX APPEALS, TIRSO B. SAVELLANO and COMMISSIONER
OF INTERNAL REVENUE,Respondents.D E C I S I O
NCHICO-NAZARIO,J.:This is a consolidation of two Petitions for
Review on Certiorari filed by the Philippine National Oil Company
(PNOC)1and the Philippine National Bank (PNB),
