G.R. No. 217898 , January 15, 2020.
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. BASES CONVERSION AND DEVELOPMENT AUTHORITY, RESPONDENT.

FACTS

Respondent Bases Conversion and Development Authority (BCDA), owner of four real properties (Expanded Big Delta Lots) in Bonifacio Global City, entered into a contract to sell with the “Net Group.” The total purchase price was Php2,032,749,327.96. The Net Group agreed not to remit Php101,637,466.40 as Creditable Tax Withheld at source (CWT) to give BCDA time to present a tax exemption certification by June 9, 2008. BCDA sought this certification from petitioner Commissioner of Internal Revenue (CIR) on May 28, 2008, but received no response. On July 31, 2008, the parties executed Deeds of Absolute Sale. Due to BCDA’s failure to present the exemption certification, the Net Group deducted and remitted the CWT amount to the BIR. BCDA wrote to the BIR for a refund on March 9, 2009, but again received no response. On July 29, 2010, BCDA filed a petition for refund with the Court of Tax Appeals (CTA), claiming exemption from all taxes and fees under its charter, Republic Act (RA) No. 7227, as amended by RA No. 7917 . The CIR countered that BCDA failed to prove the CWT was erroneously withheld and did not comply with procedural requirements for a refund. The CTA First Division granted BCDA’s claim. The CTA En Banc affirmed, ruling that RA 7227, as amended, is a special law that exempts BCDA from taxes on the sale proceeds, and this was not superseded by the general provisions of the National Internal Revenue Code (NIRC). The CIR filed the present petition.

ISSUE

Is the Bases Conversion and Development Authority (BCDA) exempt from Creditable Withholding Tax (CWT) on the sale of its Global City properties?

RULING

Yes. The Supreme Court affirmed the CTA En Banc’s decision. The exemption is found in Section 8 of RA 7227, as amended by RA 7917 (the BCDA Charter), which provides that the proceeds from the sale of portions of Metro Manila military camps, after deducting expenses, “shall be deemed appropriated” for specific purposes and that “[t]he provisions of law to the contrary notwithstanding, the proceeds of the sale thereof shall not be diminished and, therefore, exempt from all forms of taxes and fees.” RA 7227, as amended, is a special law that was not expressly repealed by the later, general provisions of the NIRC. The Court applied the principle that a special law must prevail over a general law. Furthermore, the sale proceeds are considered government funds automatically appropriated for specific purposes, reinforcing their exempt status. Therefore, BCDA is exempt from CWT on the subject sale and is entitled to a refund of the amount withheld.