The Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to refund the Bangko Sentral ng Pilipinas (BSP) P5.67 million in erroneously paid capital gains tax (CGT) in the sale of a real property in General Santos City in 2016.

With the order on refund, the CTA’s special first division directed the BSP to pay additional filing fee of P18,092.13.

The amended decision, written by Associate Justice Catherine T. Manahan with the concurrence of Presiding Justice Roman G. Del Rosario and Associate Justice Marian Ivy F. Reyes-Fajardo, was promulgated last Feb. 19.

On May 22, 2019, the BSP filed a petition before the CTA to order BIR to refund P3,118,106.10 representing overpayment of CGT, surcharge and interest in the sale of the 9,000 square-meter land. The petition was denied on Feb. 11, 2022 with a ruling that the CTA has no jurisdiction over the dispute between the BIR and the BSP.

With the denial, the BSP elevated the issue before the CTA as a full court which ordered the court in division to resolve the claim for refund in a resolution dated Feb. 21, 2024.

In its petition, the BSP told the CTA that the BIR used the wrong fair market value (FMV) which resulted in the wrong computation for CGT. It added that the BIR made a wrong computation on surcharge and interest due. 

The BIR, on the other hand, argued that the BSP failed to exhaust administrative remedies before elevating the case to the CTA.

In its amended decision, the CTA’s special first division said the CGT paid by BSP was indeed erroneous or illegal, and the surcharge should not have been imposed. The court also said the interest collected by the BIR was excessive.

Court records showed that the BSP and RD Realty Development Corporation executed the undated Deed of Absolute Sale, which was notarized on Feb. 3, 2016, involving the sale of a parcel of land in Barangay Calumpang, General Santos City. 

The BSP then paid P1,620,000 for CGT.  When the BIR insisted that the CGT should be P5,751,000, the BSP paid P6,886,006.10 on May 23, 2017.

Due to the BIR’s alleged erroneous calculations the BSP sought a refund of P3,118,106.10.

Based on CTA’s computations, the BSP made an excess payment of interest amounting to P1,040,123.22 after considering its interest payment made under protest of P1,267,256.10. The CTA also found that the BSP made a total excess payment of P5,677,373.22.

"It is to be noted that in the present Petition for Review, petitioner prayed only for the refund of the amount of P3,118,106.10. However, this Court is not prevented to grant the said total excess payment of P5,677,373.22. This must be so because petitioner further prayed, in the same petition, 'for such other relief that may be just and equitable under the circumstances,'" the decision stated.

The CTA said it sees "no justifiable reason" not to grant the refund of P5,677,373.22 based on the evidence on record.

The dispositive portion of the CTA’s amended decision:

“Wherefore, in light of the foregoing considerations, the present Petition for Review (filed by the BSP) is granted.

“Accordingly, respondent (BIR) is ordered to refund to petitioner the amount of P5,677,373.22, representing petitioner's erroneously or illegally paid CGT, surcharge, and interest, paid for the sale of its parcel of land to RD Realty Development Corporation located in Barangay Calumpang, General Santos City.

“Petitioner is directed to pay the additional filing fee of P18,092.13 pursuant to the afore-quoted Section 2, Rule 141 of the Rules of Court. So ordered.”