One Network Bank, Inc. (A Rural Bank) v. Commissioner of Internal Revenue

EN BANC [C.T.A. EB CASE NO. 1526. July 26, 2018.] (C.T.A. Case No. 8725) ONE NETWORK BANK, INC. (A RURAL BANK) , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION MANAHAN , J p : Before the Court En Banc is a Petition for Review, 1 pursuant to Rule 8, Section 3 (b) 2 of the Revised Rules of the Court of Tax Appeals (RRCTA), seeking to set aside the Decision and Resolution, dated April 18, 2016 and September 21, 2016, respectively, of the Court in Division. The assailed Decision denied petitioner's claim for refund of allegedly erroneously paid gross receipts tax (GRT) amounting to Php61,559,597.83 for the period September to December 2011. The Facts The facts, as found by the Division, are as follows: Petitioner, One Network Bank, Inc. (A Rural Bank),is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines. It was formed through the consolidation of two (2) constituent rural banks, namely, One Network Rural Bank, Inc. and Rural Bank of New Corella (Davao del Norte),Inc. Petitioner is registered with the Bureau of Internal Revenue (BIR) as evidenced by its Certificate of Registration No. OCN8RC0000030265, with Tax Identification Number (TIN) 413-177-215-000, with office address at Km. 9, Sasa, Davao City. On the other hand, respondent, Commissioner of Internal Revenue, is sued in her official capacity, having been duly appointed and empowered to perform the duties of her office, including among others, the duty to act on and approve claims for tax refund or tax credit as provided by law. On July 14, 2011, the Securities and Exchange Commission (SEC) approved petitioner-rural banks' Plan of Consolidation dated August 15, 2009, and its Agreement and Articles of Consolidation and Supplemental to the Agreement and Articles of Consolidation executed on August 24, 2009. On the same date, petitioner's' Certificate of Incorporation was also issued by the SEC. ITAaHc Subsequently, on August 17, 2011, petitioner was issued a Certificate of Authority by the Bangko Sentral ng Pilipinas (BSP), authorizing it to operate as a rural bank, pursuant to Re public Act (RA) No. 73 53, and to Monetary Board Resolution No. 1210 dated September 2, 2010. Meanwhile, respondent issued Re venue Memorandum Circular (RMC) No. 66-201 2. For the period covering September to December 2011, petitioner filed its Monthly Percentage Tax Returns (BIR Form No. 2551M),through the Electronic Filing and Payment System (EFPS) of the Bureau of Internal Revenue (BIR),and paid on May 23, 2013, GRT in the total amount of P61, 559,597.83, broken down as follows: Month Basic Tax Surcharge Interest Compromise Total September P11,725,977.76 P2,931,494.44 P3,700,911.4 n P25,000.00 P18,383,383.54 October 10,581,359.59 2,645,339.90 3,159,912.86 25,000.00 16,411,612.35 November 8,179,566.25 2,044,891.56 2,303,724.41 25,000.00 12,553,182.22 December 9,362,703.55 2,340,675.89 2,483,040.28 25,000.00 14,211,419.72 Total P39,849,607.15 P9,962,401.79 P11,647,588.89 P100,000.00 P61,559,597.83 On July 31, 2013, petitioner filed an administrative claim for refund dated July 25, 2013 before the BIR Revenue District Office (RDO) No. 123-Cebu City, in the amount of P61,559,597.83, purportedly representing its GRT paid for the period covering September to December 2011. Thereafter, on October 9, 2013, petitioner received a letter dated August 14, 2013 from the BIR, denying the said claim for refund. Consequently, petitioner filed the instant Petition for Review on November 5, 2013 appealing the denial of its claim for refund by respondent. 3 After trial, the Court in Division rendered its assailed Decision and Resolution, denying the claim for refund, as follows: WHEREFORE, in light of all the foregoing considerations, the instant Petition for Review filed by One Network Bank, Inc. (A Rural Bank) is DENIED for lack of merit. 4 xxx xxx xxx WHEREFORE, premises considered, petitioner's Motion for Reconsideration is hereby DENIED for lack of merit. 5 The Court in Division reasoned that the assailed RMC No. 66-2012 is not contrary to RA No. 7353; that the rule against retroactivity under Section 246 of the National Internal Revenue Code of 1997, as amended (NIRC), does not apply; and, that petitioner failed to prove that its constituent corporations have not fully availed of the five-year tax exemption granted under Section 15 of RA No. 7353, as of the period of September to December 2011. On October 24, 2016, petitioner filed its Petition for Review 6 with the Court En Banc praying that the Decision and Resolution of the Court in Division be set aside, and that its claim for refund be granted. On December 7, 2016, respondent filed his Manifestation that he is adopting the Comment dated June 20, 2016 to petitioner's Motion for Reconsideration as his Comment to the Petition for Review. 7 CHTAIc On January 20, 2017 and April 5, 2017, petitioner filed its Supplemental Petition for Review 8 and Second Supplemental Petition for Review, 9 respectively. On June 6, 2017, respondent filed his Comment Re: Petitioner's Second Supplement (sic) Petition for Review. 10 On July 10, 2017, the Court granted the parties a period of thirty (30) days within which to file their respective memoranda. 11 Petitioner filed its Memorandum 12 on August 31, 2017, while respondent failed to file his memorandum, per Records Verification. 13 On October 4, 2017, the case was deemed submitted for decision. 14 Issues Petitioner raises the following assignment of errors in its Petition for Review: I. Contrary to the decision of the Honorable Court's First Division, Petitioner respectfully asserts that Republic Act (RA) No. 7353 or The Rural Bank Act of 1992 provides that all rural banks created under the provision of the Act are exempt from the payment of tax for a period of five years from the commencement of operations. II. The Rural Bank Act of 1992, the Manual of Regulations for Banks (MORB) and BSP Circulars as well as RR 16-93 are all in unison in encouraging consolidation of rural banks, consistent with the constitutionally-enshrined state's policy and commitment to further social justice. III. RMC No. 66-2012 is ultra vires as it fails to conform to the law that it seeks to implement. IV. RMC No. 66-2012 is not an administrative rule which is interpretative in nature. It partook of a legislative rule as it had created a burden to which the law it should to interpret did not provide. V. RMC No. 66-2012 has been applied retroactively to the prejudice of the petitioner. Petitioner's Arguments Petitioner argues that Section 15 of RA No. 7353 clearly and unequivocally provides that "all rural banks" created and organized under the provision of this Act shall be exempt from the payment of all taxes, fees, and charges of whatever nature and description, except the corporate income tax and local taxes, for a period of five (5) years from the date of commencement of operations." Petitioner asserts that Section 15 must be understood in its plain and ordinary sense and that the same must apply to all rural banks whether formed through consolidation or not. Petitioner also disagrees with the Court in Division's ruling that no new tax exemptions under Section 15 are given to consolidated rural banks. Petitioner is of the position that the period of tax exemption under Section 15 shall be in addition to the incentives granted under Section 18. EATCcI Petitioner argues that a consolidated corporation is a new corporation with a juridical personality separate and distinct from its constituent corporations; that the consolidated corporation does not continue the tax exemption privilege of the constituent corporations; and, that a new corporation commencing its operations after consolidation is entitled, on its own capacity, to avail of the tax exemption privilege under Section 15, notwithstanding if the two constituent rural banks have already availed of the tax exemption privilege. Petitioner further argues that the Rural Bank Act of 1992, the Manual of Regulations for Banks (MORB), BSP Circulars, as well as Revenue Regulations No. (RR) 16-93 are all in unison in encouraging consolidation of rural banks. Finally, petitioner argues that RMC No. 66-2012 is ultra vires as it fails to conform to the law it seeks to implement; that the RMC modified and limited the application of the law, such that the RMC should be considered defective insofar as it disqualified banks formed through consolidation from availing of the gross receipts tax (GRT) exemption granted under Section 15 of RA No. 7353; that RMC No. 66-2012 partakes of the nature of a legislative rule as it created an additional burden not contained in the law; and, that RMC No. 66-2012 has been applied retroactively to the prejudice of the petitioner. In its Supplemental Petition for Review, 15 petitioner argues that the tax exemption granted in Section 15 of RA No. 7353 is in favor of all rural banks, regardless of how such rural banks are created, and cannot be superseded by RMC No. 66-2012, which is a mere administrative issuance. Petitioner cites the Supreme Court cases of Fort Bonifacio Development Corporation v. CIR 16 and PAGCOR v. BIR , 17 in concluding that RMC No. 66-2012 should be struck down as invalid for restricting the expansive scope of the tax exemption in Section 15 of RA No. 7353. Petitioner further reiterates that Section 15 of RA No. 7353 does not expressly or impliedly exclude consolidated rural banks from its coverage; that the requirements for availment of the tax exemption under Section 15 are different from the requirements for the availment of the non-tax incentives under Section 18, both under RA No. 7353; and, that it is purely speculative on the part of the BIR to issue RMC No. 66-2012 "to prevent the practice of rural banks to undergo consolidation in order to extend the tax exemption privilege." In its Second Supplemental Petition for Review, 18 petitioner cites Secretary of Finance v. Lazatin 19 to support its argument that an issuance of the BIR cannot withdraw the tax exemption privilege granted by Congress. Respondent's Counter-Arguments Respondent adopted its Comment (Re: Motion for Reconsideration dated 06 May 2016) 20 as his comment for the instant petition for review. Respondent argues that the tax exemption provided under Section 15 of RA No. 7353 was not removed considering that petitioner's constituent banks, namely, One Network Rural Bank, Inc. and Rural Bank of New Corella (Davao del Norte), Inc., were able to avail of the tax exemption from payment of gross receipts; that petitioner's position of availing the tax exemption for an additional period of five (5) years through the process of consolidation is not sanctioned by RA No. 7353; that the exemption granted to rural banks under Section 15 of RA No. 7353 is definite; and, that nowhere is it stated that rural banks can avail of consolidation for it to be entitled to another five (5)-year exemption. Respondent also states that the process of consolidation involves existing and operating rural banks that already cater to the public, for this reason, the consolidation of rural banks does not significantly promote the policy enunciated in RA No. 7353, but merely prolongs the exemption beyond the period prescribed by law. Such effect deprives the government of much needed revenues. Thus, respondent states that rural banks formed through consolidation of existing rural banks shall not be entitled to the tax exemption under Section 15 of RA No. 7353 in cases where the constituent rural banks previously availed of this exemption. However, if any or both the constituent rural banks were not able to enjoy the tax exemption for the entire five (5)-year period, then the consolidated rural bank shall be entitled to the exemption for the remaining period. DHITCc Respondent further asserts that, even for the sake of argument that the law encourages consolidation and merger, Congress did not extend a tax exemption for a fresh period of five (5) years to consolidated corporations. There is nothing in the law which indicates that consolidated rural banks are granted a tax exemption for a fresh period of five (5) years. Ruling of the Court The petition lacks merit. The Court En Banc has jurisdiction over the present petition. The Court in Division issued the assailed Resolution, 21 denying petitioner's Motion for Reconsideration, on September 21, 2016, which was received by petitioner on September 23, 2016. 22 Pursuant to Rule 4, Section 2 (a) (1), 23 in relation to Rule 8, Section 3 (b) 24 of the RRCTA, petitioner had fifteen (15) days or until October 8, 2016 within which to file its petition for review. On October 7, 2016, petitioner filed its Motion for Extension of Time to File Petition for Review, praying for an additional fifteen (15) days, or until October 23, 2016 within which to file its petition for review. 25 The Court En Banc granted the extension, 26 consequently, petitioner timely filed its Petition for Review 27 on October 24, 2016, considering that October 23, 2016 fell on a Sunday. Hence, the Court En Banc has jurisdiction. There is no compelling reason to reverse or modify the Court in Division's Decision and Resolution. Records reveal that arguments raised by petitioner are substantially the same arguments raised before the Court in Division and which have already been considered and resolved therein. The petition hinges on the exemption under Section 15 of RA No. 7353 which provides: Sec. 15. All rural banks created and organized under the provisions of this Act shall be exempt from the payment of all taxes, fees and charges of whatever nature and description, except the corporation income tax and local taxes, fees and charges, for a period of five (5) years from the date of commencement of operations. All rural banks in operation as of the date of approval of this Act shall be exempt from the payment of all taxes, fees and charges of whatsoever nature and description, except the corporate income tax and local taxes, fees and charges, for a period of five (5) years from the approval of this Act. Through RMC No. 66-2012, 28 the BIR clarified the taxation of rural banks formed through consolidation, as follows: Rural banks formed through consolidation ("consolidated rural banks") of existing rural banks ("constituent rural banks") shall not be entitled to the tax exemption under Section 15 of R epublic Act No. 735 3 in cases when the constituent rural banks previously availed of this exemption. However, should any or both the constituent rural banks not be able to enjoy the tax exemption for the entire five (5)-year period, then the consolidated rural bank shall be entitled to the exemption for the remaining period. cEaSHC Petitioner insists that as a consolidated rural bank, it is entitled to a fresh five-year exemption as provided in Section 15 of R A No. 735 3. In CTA EB No. 1200, 29 involving the same parties and issues, the Court En Banc already decided against petitioner's arguments and ruled that there is no fresh five-year exemption granted to a consolidated rural bank. The pertinent portions of the discussion are quoted below: Construction to Give Harmony to Laws This Court was tasked to determine whether or not a consolidated corporation created under R A No. 735 3, comprised of two constituent corporations who have previously enjoyed the five-year exemption granted under Section 15 of R A No. 735 3, ought to have a fresh five-year exemption period from paying GRT. The rule is that a statute should be so construed not only to be consistent with itself but also to harmonize with other law on the same subject matter, as to form a complete, coherent and intelligible system. As such, in construing Section 15 of RA No. 7353, Batas Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines, cannot be ignored. The rule is expressed in the maxim, interpretare et concordare legibus est optimus interpretandi ,or every statute must be construed and harmonized with other statutes as to form a uniform system of jurisprudence. A construction of a statute which creates an inconsistency should be avoided when a reasonable interpretation can be adopted which will not do violence to the plain words of the act and will carry out the intention of Congress. In the construction of statutes, the courts start with the assumption that the legislature intended to enact an effective law, and the legislature is not to be presumed to have done a vain thing in the enactment of a statute. Hence, it is a general principle, embodied in the maxim, " ut res magis valeat quam pereat, " that the courts should, if reasonable possible to do so without violence to the spirit and language of an act, so interpret the statute to give it efficient operation and effect as a whole. An interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless, inoperative, or nugatory. CTIEac The Corporation Code defines a corporation as "an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence." In the case of petitioner which is a consolidated corporation, Section 76 of the Corporation Code is relevant, to wit: Sec. 76. Plan or merger of consolidation . Two or more corporations may merge into a single corporation which shall be one of the constituent corporations or may consolidate into a new single corporation which shall be the consolidated corporation. .." Petitioner argues that since it is a new juridical entity, it is entitled to a fresh five-year exemption under R A No. 735 3, regardless whether or not its constituent corporations have previously enjoyed the same. It further argues that the only condition set by Section 15 to be entitled to tax exemption is that the rural bank must be created and organized under the provisions of RA No. 7353. Since Section 15 thereof does not make any distinction between a rural bank created and organized as a result of consolidation and a rural bank that is not created and organized in such manner, the omission of the distinction reveals the intention of the legislature to include consolidated rural banks in the entitlement to the tax exemption. However, the Corporation Code also mandates how corporations created by special laws or charters shall be governed in Section 4 thereof, thus: Sec. 4. Corporations created by special laws or charters . Corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable. " ( Emphasis supplied ) Given that RA No. 7353 is a special law to create and organize rural banks, it is indubitable that the treatment of such to the extent that it is not tackled in the Rural Banks Act itself, will be governed by the applicable provisions of the Corporation Code. As RA No. 7353 does not explicitly mandate whether or not the five-year exemption it offers in its Section 15 shall be applicable as well to consolidated rural banks, Item 4 in Section 80 thereof which describes one of the effects of consolidation becomes relevant: Sec. 80. Effects of merger or consolidation . The merger or consolidation shall have the following effects: xxx xxx xxx 4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights, privileges, immunities and franchises of each of the constituent corporations ;and all property, real or personal, and all receivables due on whatever account, including subscriptions to shares and other choses in action, and all and every other interest of, or belonging to, or due to each constituent corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation without further act or deed; and. .." ( Emphasis supplied ) SaCIDT An exemption is an immunity or privilege: it is the freedom from a charge or burden to which others are subjected. It is the surrender of the power to tax, which when claimed, must be clearly shown by a language that will admit of no reasonable construction consistent with the reservation of power. If the intention of the legislature is open to doubt, then the intention of the legislature must be resolved in favor of the State. Included in the queue of laws to be reconciled in the matter at hand is RMC No. 66-2012, issued on October 31, 2012, which defined the taxation of rural banks formed through consolidation. It mandated: Rural banks formed through consolidation ("consolidated rural banks") of existing rural banks ("constituent rural banks") shall not be entitled to the tax exemption under Section 15 of Republic Act No. 7353 in cases when the constituent rural banks previously availed of this exemption. However, should any or both the constituent rural banks not be able to enjoy the tax exemption for the entire five (5)-year period, then the consolidated rural bank shall be entitled to the exemption for the remaining period. Provisions in an act which are omitted in another act relative to the same subject matter will be applied in a proceeding under the other act, when not inconsistent with its purpose. Prior statutes relating to the same subject matter are to be compared with the new provisions, and if possible, by reasonable construction, both to be construed that effect is given to every provision of each. Statutes in pari materia ,although in apparent conflict, are as far as reasonable possible construed to be in harmony with each other. Similarly, every new statute should be construed in connection with those already existing in relation to the same subject matter and all should be made to harmonize and stand together, if they can be done by any fair and reasonable interpretation. Interpretare et concordare leges legibus, est optimum interpretandi modus ,which means that the best method of interpretation is that which makes laws consistent with other laws. We believe that RMC No. 66-2012 correctly interprets the Rural Banking Act because a perusal thereof shows that it harmonizes existing laws on the subject matter, and, more importantly, an examination of the statute reveals that exemption privileges for rural banks were not meant to run for an unlimited period. An Indefinite Tax Exemption is Not the Plain Intent of the Statute The avowed purpose of tax exemption "is some public benefit or interest, which the lawmaking body considers sufficient to offset the monetary loss entailed in the grant of the exemption." cHECAS While the Rural Banks Act sought to "promote comprehensive rural development with the end in view of attaining equitable distribution of opportunities, income and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and in expanding productivity as a key to raising the quality of life for all, especially the underprivileged," a cursory reading of the statute shows that despite the legislature's aspirations for what the said law would accomplish, Congress did not intend rural banks created or organized under the act to have an indefinite tax exemption. First, and most glaring, is the fact that Section 15 limits the exemption of rural banks from "payment of all taxes, fees and charges of whatever nature and description, except the corporate income tax and local taxes, fees and charges" for a period of five (5) years . xxx xxx xxx From the foregoing, it can easily be ascertained that the legislature did not intend rural banks to have tax exemptions for an indefinite period; otherwise, the statute would have indicated so, or, at the very least, extended the exemption period for several more years. We cannot read in the law what is not there, or deduce therefrom what it does not necessarily imply. To read into the law something that is simply not there would be tantamount to judicial legislation. While we acknowledge that generally, tax exemptions are personal in nature and non-transferrable, the principle must be examined in the light of the statute under consideration, and the particular circumstances in this case wherein the constituent corporations comprising the consolidated corporation previously enjoyed tax exemptions conferred by the same statute. As held in Commissioner of Internal Revenue vs. Rufino, et al.,and Court of Tax Appeals ,"[w]hen it comes to tax exemptions, the basic consideration ...is the purpose of the merger, as this would determine whether the exchange of properties involved therein shall be subject or not to the capital gains tax. The criterion laid down by the law is that the merger 'must be undertaken for a bona fide ' business purpose and not solely for the purpose of escaping the burden of taxation. There is no justification for us to liberally construe the law, in a situation where the movant seeks exemption from a statutory tax. In this jurisdiction, since 1906, "it has been the constant and uniform holding that exemption from taxation is not favored and is never presumed, so that if granted, it must be strictly construed against the taxpayer. Affirmatively put, the law frowns on exemption from taxation, hence, an exemption provision should be construed strictissimi juris ." Thus, it has been oft-repeated: Laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. Taxation is the rule and exemption is the exception. The law "does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. AHDacC In claiming exemption from gross receipts tax, petitioner must discharge the burden of establishing the existence of such exemption. RMC No. 66-2012 is Consistent with the Law It Seeks to Implement. As this Court's Second Division observed in its Decision, "[t]he tax exemption provided by Section 15 of RA No. 7353 does not cover situations arising from merger or consolidation of rural banks." xxx xxx xxx The BIR's interpretation of tax laws is entitled to great weight because of its recognized expertise on matters falling within its exclusive administrative domain. It is an elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce have the force of law and are entitled to great respect. cAaDHT Executive officials are presumed to have familiarized themselves with all the considerations pertinent to the meaning and purpose of the law, and to have formed an independent, conscientious and competent expert opinion thereon. The courts give much weight to contemporaneous construction because of the respect due the government agency or officials charged with the implementation of the law, their competence, expertness, experience and informed judgment, and the fact that they frequently are the drafters of the law they interpret. As regards the silence of the Rural Banks Act on the fresh five-year exemption of consolidated rural banks under Section 15, it has been said that the formal or informal interpretation or practical construction of an ambiguous or uncertain statute or law by the executive department or other agency charged with its administration or enforcement is entitled to consideration and the highest respects from the courts, and must be accorded appropriate weight in determining the meaning of the law. While it is basic that administrative opinions, guidelines, memoranda, circulars or implementing rules and regulations cannot go beyond the ambit of the law they are supposed to implement, given our discussion above, we find the interpretation of the Commissioner of Internal Revenue in RMC No. 66-2012 to be consistent with the law it seeks to implement, RA No. 7353. No Basis for Claimed Retroactive Application of RMC No. 66-2012 xxx xxx xxx While petitioner argues that RMC No. 66-2012 was applied retroactively to it because from the time it commenced operations until the issuance of RMC 66-2012, it relied on several BIR rulings, including a ruling issued to one of the constituent rural banks involved in this case, BIR Ruling No. [DA-420-04] dated August 4, 2004, this argument is misplaced. Prior to the issuance of RMC No. 66-2012, the prevailing interpretative rule was RR No. 16-93 dated April 22, 1993 which interpreted the phrase "date of commencement of operations" to refer to the date when the rural bank was registered with the SEC, or the date when the Certificate of Authority to operate as a rural bank was issued by the Monetary Board of the Central Bank. BIR Ruling No. DA-420-04 which was issued to One Network Rural Bank, Inc., one of the constituent rural banks of petitioner, stated the following: HCaDIS Such being the case, since One Network Rural Bank, Inc. is an entity created and organized under RA No. 7353 which was issued a Certificate of Incorporation by the SEC on March 12, 2004 and a Certificate of Authority by the BSP on March 23, 2004 to operate as a rural bank, it is entitled to all the exemptions provided in Section 15 of RA No. 7353. Accordingly, One Network Rural Bank, Inc. is exempt from the payment of gross receipts tax under Section 121 of the Tax Code of 1997 and from the documentary stamp tax due on the sale, exchange or disposition of acquired property through mortgage foreclosure sale as was held in BIR Ruling No. 069-99 dated May 18, 1999 for a period of five (5) years reckoned from March 23, 2004. Petitioner argues that assuming R MC No. 66-201 2 is valid, petitioner was misled to believe that it was exempted from gross receipts tax under Section 15 of R A No. 735 3 and, hence, is not liable for the same during the period prior to the issuance of R MC No. 66-20 12. However, we agree with the discourse of the Court's Second Division in its Decision, thus: Petitioner's allegation that it relied on prior BIR Rulings declaring that the reckoning point of availing the tax exemption for a rural bank is the date of commencement of its operation is without merit. BIR Ruling No. [DA-(C-117)352-09] dated July 6, 2009 and BIR Ruling No. [DA-420-04] dated August 4, 2004, as cited by petitioner, were not addressed to petitioner, but to some other corporate entities, and that these rulings did not interpret petitioner's supposed entitlement to tax exemptions under R A No. 735 3. Petitioner cannot invoke the argument that it is a new corporate entity under the Corporation Code only when it suits its purposes, and, on the other hand, disavow the same when it does not. The general interpretative rule that petitioner claims it relied upon was a ruling for a single rural bank and its eligibility in availing the tax exemption under Section 15 of R A No. 735 3. The ruling did not involve a consolidated corporation borne out of several constituent banks. Hence, given the difference in circumstances, petitioner had no reasonable expectation that such ruling would apply in a similar manner to a consolidated corporation composed of constituent corporations that had previously availed of the exemption. 30 ( Citations omitted ) Petitioner also cites Secretary of Finance v. Philippine Tobacco Institute, Inc. (Philippine Tobacco) , 31 Secretary of Finance v. Lazatin (Lazatin) , 32 PAGCOR v. Commissioner of Internal Revenue (PAGCOR) , 33 and Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue (Fort Bonifacio) , 34 wherein the Supreme Court invalidated or nullified certain BIR issuances as having exceeded or for being contrary to the law that was sought to be implemented. However, these cases do not have the same factual milieu as the instant case and cannot be applied herein. It is reiterated that the exemption granted to rural banks is only for a period of five (5) years. The law did not provide that such period may be extended for another five (5) years merely by the expedient recourse of single rural banks to undergo a process of consolidation. The Court in Division aptly explained: Moreover, this Court does not agree with petitioner's proposition that there are differing effects of merger and consolidation on the tax-exempt status of an entity. While it recognizes that in consolidation, a "new" corporation is formed, it is the Court's considered view that it is not entitled anew to the tax exemption privileges previously and fully enjoyed by the constituent corporations under Section 15 of RA No. 7353, where it provided a limitation for such tax exemption. This is because the right (such as a tax exemption) and obligations (such as tax liabilities) of the constituent corporations merely extend to the consolidated corporation, in the same way as that of a surviving corporation (as an effect of merger), by virtue of the said Section 80 of the Corporation Code. AHCETa Thus, once the tax exemption under Section 15 of RA No. 7353 has already been fully enjoyed by the constituent corporations, it can no longer be extended to the surviving or consolidated corporation, as the case may be. To interpret otherwise would run counter to the constitutional provision that " [t]he rule of taxation shall be uniform and equitable. " Uniformity requires that all subjects or objects of taxation, similarly situated, are to be treated alike or put on equal footing both in privileges and liabilities. To rule that the consolidated rural bank via the process of consolidation enjoys a fresh period of five (5) years [of] the tax exemption under Section 15 of RA No. 7353. While the surviving rural bank through the process of merger merely continues its tax exemption under the same law, is clearly violative of such principle of uniformity. 35 In view of the foregoing, the Court En Banc finds no cogent reason to reverse or modify the findings of the Court in Division. WHEREFORE ,the instant Petition for Review is hereby DISMISSED for lack of merit. cHaCAS SO ORDERED. (SGD.) CATHERINE T. MANAHAN Associate Justice Roman G. del Rosario, P.J.,Juanito C. Castaeda, Jr.,Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Ma. Belen M. Ringpis-Liban, JJ. ,concur. Footnotes 1. Rollo ,CTA EB No. 1526, pp. 8-48. 2. Rule 8. Procedure in Civil Cases Section 3. Who may appeal; period to file petition. xxx xxx xxx (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. 3. Rollo ,Decision dated April 18, 2016, pp. 64-66. 4. Rollo ,p. 86. 5. Rollo ,p. 61. 6. Rollo ,pp. 8-48. 7. Rollo ,pp. 91-94. 8. Rollo ,pp. 115-138. 9. Rollo ,pp. 150-159. 10. Rollo ,pp. 178-181. 11. Rollo ,Resolution dated July 10, 2017, pp. 188-190. 12. Rollo ,pp. 191-232. 13. Rollo ,p. 233. 14. Rollo ,pp. 235-236. 15. Rollo ,pp. 115-140. 16. G.R. No. 175707, November 19, 2014. 17. G.R. No. 215427, December 10, 2014. 18. Rollo ,pp. 150-160. 19. G.R. No. 210588, November 29, 2016. 20. Docket, CTA Case No. 8725, Vol. II, pp. 874-881. 21. Rollo ,pp. 52-61. 22. Rollo ,p. 52. 23. Rule 4 Jurisdiction of the Court Sec. 2. Cases within the jurisdiction of the Court en banc . The Court en banc shall exercise exclusive appellate jurisdiction to review by appeal the following: (a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over: (1) Cases arising from administrative agencies Bureau of Internal Revenue, x x x 24. Rule 8. Procedure in Civil Cases Section 3. Who may appeal; period to file petition. xxx xxx xxx (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. 25. Rollo ,pp. 1-6. 26. Rollo ,p. 7. 27. Rollo ,pp. 8-48. 28. Taxation of Rural Banks Formed Through Consolidation. 29. August 14, 2015. 30. One Network Bank, Inc. (A Rural Bank) v. Commissioner of Internal Revenue , CTA EB No. 1200, August 14, 2015. 31. G.R. No. 210251, April 17, 2017. 32. G.R. No. 210588, November 29, 2016. 33. G.R. No. 215427, December 10, 2014. 34. G.R. No. 175707, November 19, 2014. 35. Rollo ,Division Decision dated April 18, 2016, pp. 81-82. n Note from the Publisher: Copied verbatim from the official copy.