The Supreme Court ordered the government to return the P4.86-billion tax it withheld from the interest earnings of eight banks that bought the 10-year zero-coupon government bonds that matured in 2011.
Metropolitan Bank and Trust Co. said in a disclosure to the stock exchange the high tribunal granted the petition of eight banks to recover the 20-percent tax withheld by the Bureau of Treasury and Bureau of Internal Revenue on the P24.3-billion interest earned from the Poverty Eradication and Alleviation Certificates, or PEACe bonds.
Metrobank said it received a copy of the Supreme Court decision dated Jan. 23, which granted the banks’ petition to nullify BIR Ruling No. 37-2011 that collected the 20-percent tax on interest earned from PEACe bonds.
Metrobank said the high tribunal also reprimanded the Bureau of Treasury for its continued retention of the amount corresponding to the 20-percent final withholding tax despite the court’s earlier temporary restraining order.
It also ordered the Treasury to immediately release and pay to the banks the amount corresponding to the 20-percent final withholding tax that was withheld on Oct. 18, 2011.
The court’s decision is not yet final.
Aside from Metrobank, other petitioners were BDO Unibank Inc., Bank of Commerce, China Banking Corp., Philippine Bank of Communications, Philippine National Bank, Philippine Veterans Bank and Planters Development Bank.
Rizal Commercial Banking Corp., RCBC Capital Corp. and Caucus of Development NGO Networks were also petitioner-intervenors.
The banks filed the case against the government, the BIR commissioner, the secretary of Finance, the National Treasurer and the Bureau of Treasury.
A consortium of eight banks on Oct. 17, 2011 filed a petition for certiorari, prohibition and/or mandamus (with urgent application for a temporary restraining order and/or writ of preliminary Injunction) with the Supreme Court to annul BIR Ruling No. 370-2011 which imposed the 20-percent final withholding tax on the 10-year zero-coupon government bonds.
The petitioners also asked the respondents to pay the full amount of the face value of the PEACe bonds.
Metrobank said on Oct. 18, 2011, the Supreme Court issued the TRO enjoining the implementation of the BIR ruling on the condition that the 20-percent final withholding tax be withheld by the petitioner banks and placed in escrow pending resolution of the petition.
“Despite the TRO, the BIR still withheld the 20-percent final tax corresponding to the interest earned on the PEACe bonds,” Metrobank said.