ALMUEDA, KARL ANGELO CHING

40. Republic Bank vs. CTA & CIR, G.R. No. 62554 – 55, September 29, 1992

Facts:

PETITIONER: contends that Section 249 of the Tax Code is no longer enforceable, because
Act 1459, which was allegedly the basis for the imposition of the 1% reserve deficiency tax,
was repealed the General Banking Act,

 RESPONDENT: disagree and state that Section 249 of the then Tax Code is deemed to
have ipso facto incorporated by reference the new legislations on bank reserves after
the repeal of Section 126, Act. 1459.

PETITIONER: argues then that in case of a reserve deficiency, the violating bank would be
liable at the same time for a tax of 1% a month (Section 249, NIRC) payable to the Bureau of
Internal Revenue as well as a penalty of 1/10 of 1% a day (Central Bank Act) payable to the
Central Bank.

PETITIONER: It would be wrong; therefore, to say that the imposition in Section 249 of the
Tax Code is a tax, not a penalty, because taken in the context of the referred statute, it is
really a penalty. (In other words, petitioner does not want to be liable under section 249 of
the NIRC and at the same time with the central bank act. Petitioners defense is double
taxation.)

Issue:

Whether or not there was double taxation.

Held:

No, as the law stood during the years the petitioner was assessed for taxes on reserve
deficiencies (1969 & 1970); petitioner had to pay twice — the first, a penalty, to the
Central Bank, second, a tax, to the Bureau of Internal Revenue for incurring a reserve
deficiency.

It is clear from the statutes then in force that there was no double taxation involved —
one was a penalty and the other was a tax.

The payment of 1/10 of 1% for incurring reserve deficiencies (Central Bank Act) is a
penalty as the primary purpose involved is regulation,

while the payment of 1% for the same violation (Section 249, NIRC) is a tax for the
generation of revenue which is the primary purpose in this instance
Petitioner’s case is covered by two special laws — one a banking law and the other, a
tax law. These two laws should receive such construction as to make them harmonize
with each other.