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Tax Case Digest: Manila Bank v. CIR (2006)

Manila Bank v. CIR (2006)
G.R. No. 168118 August 28, 2006

Lessons Applicable: 4-year grace period is based on the registration and commencement (not only for newly formed corporation), MCIT law encourages new business

Laws Applicable: MCIT

  • Manila Bank, after 12 years of being prohibited to operate due to insolvency by the Monetary Board of the BSP, is granted to operate as a thrift bank.
  • It paid its taxed for 1999. 
  • Then, it asked the BIR whether it is entitled to the 4-year grace period before it shall be subject to MCIT.
  • BIR confirmed its entitlement.
  • It filed a claim for refund erroneously paid as MCIT in 1999.
  • Due to inaction, it filed a Petition for Review with the CTA who denied it since it is not a new corporation and has continued its registration with the SEC and BIR.
ISSUE: W/N Manila Bank is entitled to a 4-year grace period.

HELD: Yes. GRANT the petition.
  • The intent of the Congress relative to the MCIT is to grant 4-year grace period so that newly formed corporate can stabilize itself in order to obtain a stronghold in the industry.  
  • Rev. Reg. No. 4-95 clearly provides that the date of commencement of the operations of a thrift bank is the date that it was registered with the SEC or the date when the certificate of authority to operate was issued by the Monetary Board of the BSP, whichever comes later.
  • Rev. Reg. No. 4-98, implementing RA 8424 imposing MCIT provides for purposes of this tax, date when business operations commence is the year which the company is registered with the BIR, thus in this case only on June 23, 1999