5.

IN THE MATTER OF DECLARATORY RELIEF ON THE VALIDITY OF BIR REVENUE

MEMORANDUM CIRCULAR NO. 65-2012 "CLARIFYING THE TAXABILITY OF ASSOCIATION
DUES, MEMBERSHIP FEES AND OTHER ASSESSMENTS/CHARGES COLLECTED BY
CONDOMINIUM CORPORATIONS" BUREAU OF INTERNAL REVENUE (BIR), as herein
represented by its COMMISSIONER KIM S. JACINTO-HENARES and REVENUE DISTRICT
OFFICER (RDO) RICARDO B. ESPIRITU vs. FIRST E-BANK TOWER CONDOMINIUM CORP.
G.R. No. 215801

IN THE MATTER OF DECLARATORY RELIEF ON THE VALIDITY OF BIR REVENUE

MEMORANDUM CIRCULAR NO. 65-2012 "CLARIFYING THE TAXABILITY OF ASSOCIATION
DUES, MEMBERSHIP FEES AND OTHER ASSESSMENTS/CHARGES COLLECTED BY
CONDOMINIUM CORPORATIONS" FIRST E-BANK TOWER CONDOMINIUM CORP., vs. BUREAU
OF INTERNAL REVENUE (BIR), as herein represented by its COMMISSIONER KIM S.
JACINTO-HENARES
G.R. No. 218924 January 25, 2020
LAZARO-JAVIER, J.:

Facts:
The First E-Bank filed the petition below for declaratory relief seeking to declare as invalid
Revenue Memorandum Circular No. 65-2012 (RMC No. 65-2012) dated October 31, 2012. The
case was raffled to the Regional Trial Court, Branch 146, Makati City.

RMC No. 65-2012 entitled "Clarifying the Taxability of Association Dues, Membership Fees and
Other Assessments/ Charges Collected by Condominium Corporations" relevantly reads:
XXX
CLARIFICATION
The taxability of association dues, membership fees, and other assessments/charges collected by a
condominium corporation from its members, tenants and other entities are discussed hereunder.

I. Income Tax -- The amounts paid in as dues or fees by members and tenants of a condominium
corporation form part of the gross income of the latter subject to income tax. This is because a
condominium corporation furnishes its members and tenants with benefits, advantages, and
privileges in return for such payments. For tax purposes, the association dues, membership fees, and
other assessments/charges collected by a condominium corporation constitute income payments or
compensation for beneficial services it provides to its members and tenants. The previous
interpretation that the assessment dues are funds which are merely held in trust by a condominium
corporation lacks legal basis and is hereby abandoned.

Moreover, since a condominium corporation is subject to income tax, income payments made to it
are subject to applicable withholding taxes under existing regulations.

II. Value-Added Tax (VAT) - Association dues, membership fees, and other assessments/charges
collected by a condominium corporation are subject to VAT since they constitute income payment or
compensation for the beneficial services it provides to its members and tenants. Section 105 of the
National Internal Revenue Code of 1997, as amended, provides:
"SECTION 105. Persons Liable. -Any person who, in the course of trade or business, sells, barters,
exchanges, leases goods or properties, renders services, and any person who imports goods shall
be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code.
 XXX
The phrase 'in the course of trade or business' means the regular conduct or pursuit of a
commercial or an economic activity, including transactions incidental thereto, by any person
regardless of whether or not the person engaged therein is a nonstock, nonprofit
private organization (irrespective of the disposition of its net income and whether or
not it sells exclusively to members or their guests), or government entity."

The above provision is clear -- even a non-stock, non-profit organization or government entity is
liable to pay VAT on the sale of goods or services. xxx

Accordingly, the gross receipts of condominium corporations including association dues,

membership fees, and other assessments/charges are subject to VAT, income tax and income
payments made to it are subject to applicable withholding taxes under existing regulations.
xxx
The First E-Bank's Allegations
In its Petition dated December 20, 2012, the First E-Bank essentially alleged: It was a non-stock
non-profit condominium corporation. It owned and possessed, through its members, a
condominium office building. RMC No. 65-2012 imposed on it two (2) tax liabilities: 1) value-
added tax (VAT) of P118,971.53 to be paid on December 2012 and every month thereafter; and
b) income tax of P665,904.12 to be paid on or before April 15, 2013 and every year thereafter.

RMC No. 65-2012 burdened the owners of the condominium units with income tax and VAT on
their own money which they exclusively used for the maintenance and preservation of the
building and its premises. RMC No. 65-2012 was oppressive and confiscatory because it
required condominium unit owners to produce additional amounts for the thirty-two percent
(32%) income tax and twelve percent (12%) VAT.

The BIR et al. 's Comments

The BIR's Litigation Division argued that the petition should be dismissed for violation of the
principle of primary jurisdiction. Several condominium corporations had already referred the
issue
to the BIR Law Division for further clarification. Ultimately, only the Secretary of Finance had
primary jurisdiction over the issue raised here. Too, a petition for declaratory relief will not
prosper if the questioned statute had already been breached, as in this case. RMC No. 65-2012
was only a clarificatory issuance on pertinent laws, specifically the National Internal Revenue
Code (NIRC). It was merely a restatement of the BIR' s prevailing position on the issue of
taxation.

RTC: The trial court declared as invalid RMC No. 65-2012 for it purportedly expanded the law,
created an additional tax burden on condominium corporations, and was issued without the
requisite notice and hearing.

CA: On June 26, 2014, the Court of Appeals dismissed the appeals of both parties for lack of
jurisdiction. It emphasized that jurisdiction over the case was exclusively vested in the Court of
Tax Appeals since the trial court's impugned resolution involved a tax matter. The motion for
reconsideration was also denied on November 27, 2014.

Issues:
1. Did the Court of Appeals validly dismiss the twin appeals on ground of lack of
jurisdiction?
2. Is RMC No. 65-2012 valid?
a) Is a condominium corporation engaged in trade or business?
b) Are association dues, membership fees, and other assessments/charges subject
to income tax, value-added tax, and withholding tax?

Held:
1. The parties' resort to the Court of Appeals
was proper in light of the then prevailing jurisprudence

On August 30, 2008, the Court en bane decreed in British American Tobacco v. Camacho, et al.
that the Court of Tax Appeals did not have jurisdiction to pass upon the constitutionality or
validity of a law or rule. xxx

The prevailing dictum then was only regular courts had jurisdiction to pass upon the
constitutionality or validity of tax laws and regulations.

On August 16, 2016, in Banco de Oro v. Republic of the Phils., et al., the Court en banc
pronounced in no uncertain terms that the Court of Tax Appeals had jurisdiction to rule on the
constitutionality or validity of a tax law or regulation or administrative issuance, viz.:
The Court of Tax Appeals has undoubted jurisdiction to pass upon the constitutionality or
validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or
contesting an assessment or claiming a refund. It is only in the lawful exercise of its power
to pass upon all maters brought before it, as sanctioned by Section 7 of Republic Act No.
1125, as amended.

This Court, however, declares that the Court of Tax Appeals may likewise take cognizance
of cases directly challenging the constitutionality or validity of a tax law or regulation or
administrative issuance (revenue orders, revenue memorandum circulars, rulings).
xxx
In other words, within the judicial system, the law intends the Court of Tax
Appeals to have exclusive jurisdiction to resolve all tax problems. Petitions for
writs of certiorari against the acts and omissions of the said quasi-judicial
agencies should, thus, be filed before the Court of Tax Appeals.

Republic Act No. 9282, a special and later law than Batas Pambansa Big. 129
provides an exception to the original jurisdiction of the Regional Trial Courts
over actions questioning the constitutionality or validity of tax laws or
regulations. Except for local tax cases, actions directly challenging the
 constitutionality or validity of a tax law or regulation or administrative issuance
may be filed directly before the Court of Tax Appeals.

Banco de Oro further stressed that such undoubted jurisdiction is exclusively vested in the Court
of Tax Appeals whether it is raised by the taxpayer directly or as a defense.

Here, following the trial court's denial of their respective motions for reconsideration, the parties
appealed to the Court of Appeals. On June 26, 2014, the Court of Appeals dismissed the
appeals, and on November 27, 2014, denied the parties' motions for reconsideration.

Based on this sequence of events, the whole time the case was ongoing below, the prevailing
doctrine had been British American Tobacco ordaining that the Court of Tax Appeals did not
have jurisdiction to decide the validity or constitutionality of laws or rules. Consequently, the
parties correctly elevated the trial comi's resolution to the Court of Appeals, which should have
taken cognizance of, and resolved, the appeals on the merits.

2. RMC No. 65-2012 is invalid

a) A condominium corporation is not engaged in trade or business

Yamane v. BA Lepanto Condominium Corp. positively resolved it, viz.:

Obviously, none of these stated corporate purposes are geared towards maintaining a
livelihood or the obtention of profit. Even though the Corporation is empowered to levy
assessments or dues from the unit owners, these amounts collected are not intended for
the incurrence of profit by the Corporation or its members, but to shoulder the multitude of
necessary expenses that arise from the maintenance of the Condominium Project. xxx

Yamane did emphasize that a corporation condominium is not designed to engage in activities
that generate income or profit. xxx
Sections 10 and 22 of RA 4726 focus on the non-profit purpose of a condominium
corporation. Under Section 10, the corporate purposes of a condominium corporation are
limited to holding the common areas, either in ownership or any other interest in real
property recognized by law; management of the project; and to such other purposes
necessary, incidental, or convenient to the accomplishment of these purposes. xxx

Further, Section 9 allows a condominium corporation to provide for the means by which it
should be managed. xxx

As held in Yamane, "[t} he profit motive in such cases is hardly the driving factor behind such
improvements, if it were contemplated at all. Any profit that would be derived under such
circumstances would merely be incidental, if not accidental." More, a condominium corporation
is especially formed for the purpose of holding title to the common area and exists only for the
benefit of the condominium owners. Nothing more.
RMC No. 65-2012, sharply departs from Yamane and the law on condominium corporations. It
invalidly declares that the amounts paid as dues or fees by members and tenants of a
condominium corporation form part of the gross income of the latter, thus, subject to income
tax, value-added tax, and withholding tax. xxx

b) Association dues, membership fees, and other assessments/charges are not

subject to income tax, value-added tax and withholding tax

First. Capital is a fund or property existing at one distinct point in time while income denotes a
flow of wealth during a definite period of time. Income is gain derived and severed from capital.
Republic Act No. 8424 (RA 8424) or the Tax Reform Act of 1997 was in effect when RMC No.
65-2012 was issued on October 31, 2012. In defining taxable income, Section 31 of RA 8424
states:
Section 31. Taxable Income Defined. - The term taxable income means the pertinent items
of gross income specified in this Code, less the deductions and/or personal and additional
exemptions, if any, authorized for such types of income by this Code or other special laws.

On December 19, 2017, Section 31 was amended by Republic Act No. 10963 (RA 10963) (The
TRAIN Law). The provision now reads:
Sec. 31. Taxable Income Defined. - The term "taxable income" means the pertinent items of
gross income specified in this Code, less deductions if any, authorized for such types of
income by this Code or other special laws.

There is no substantial difference between the original definition under RA 8424 and the
subsequent definition under the TRAIN Law. The only difference is that the phrase "and/or
personal and additional exemptions" was deleted. Still, both the former and current definitions
are consistent --- 'taxable income' refers to "the pertinent items of gross income specified in
this Code." A comparison of RA 8424 and the TRAIN Law shows the items under gross income
insofar as they are relevant to the present case, viz.:

RA 8424 RA 10963
(the law in effect when RMC No. 65-2012 (signed into law on December 19, 2017 and
was issued on October 31, 2012) took effect on January 11 2018)
Section 32. Gross Income. - Section 32. Gross Income. -
(A) General Definition. - Except when (A) General Definition. - Except when
otherwise provided in this Title, gross income otherwise provided in this Title, gross income
means all income derived from whatever means all income derived from whatever
source, including (but not limited to) the source, including (but not limited to) the
following items: following items:
(1) Compensation for services in whatever (1) Compensation for services in whatever
form paid, including, but not limited to fees, form paid, including, but not limited to fees,
salaries, wages, commissions, and similar salaries, wages, commissions, and similar
items; items;
(2) Gross income derived from the conduct of (2) Gross income derived from the conduct of
trade or business or the exercise of a trade or business or the exercise of a
profession; profession;
 XXX XXX

Section 32 of RA 8424 does not include association dues, membership fees, and other
assessments/charges collected by condominium corporations as sources of gross income. The
subsequent amendment under the TRAIN Law substantially replicates the old Section 32.

Clearly, RMC No. 65-2012 expanded, if not altered, the list of taxable items in the
law. RMC No. 65-2012, therefore, is void. Besides, where the basic law and a rule or regulation
are in conflict, the basic law prevails.

In the very recent case of ANPC v. BIR (2019), the Court pronounced that membership fees,
assessment dues, and other fees collected by recreational clubs are not subject to income tax,
thus:
Membership fees, assessment dues, and other fees of similar nature only constitute
contributions to and/or replenishment of the funds for the maintenance and operations of
the facilities offered by recreational clubs to their exclusive members. They represent funds
"held in trust" by these clubs to defray their operating and general costs and hence, only
constitute infusion of capital.
xxx

Similarly, therefore, association dues, membership fees, and other assessments/charges are not
subject to income tax because they do not constitute profit or gain. To repeat, they are
collected purely for the benefit of the condominium owners and are the incidental consequence
of a condominium corporation's responsibility to effectively oversee, maintain, or even improve
the common areas of the condominium as well as its governance.

Second. Association dues, membership fees, and other assessments/charges do not arise from
transactions involving the sale, barter, or exchange of goods or property. Nor are they
generated by the performance of services. As such, they are not subject to value-added tax per
Section 105 of RA 8424, viz.:
xxx
The phrase "in the course of trade or business" means the regular conduct or pursuit of a
commercial or an economic activity including transactions incidental thereto, by any person
regardless of whether or not the person engaged therein is a non-stock, non-profit private
organization (irrespective of the disposition of its net income and whether or not it sells
exclusively to members or their guests), or government entity.
xxx

The value-added tax is a burden on transactions imposed at every stage of the distribution
process on the sale, barter, exchange of goods or property, and on the performance of
services, even in the absence of profit attributable thereto, so much so that even a non-stock,
non-profit organization or government entity, is liable to pay value-added tax on the sale of
goods or services.
Section 106 of RA 8424 imposes value-added tax on the sale of goods and properties. The term
'goods' or 'properties' shall mean all tangible and intangible objects which are capable of
pecuniary estimation. These 'goods' or 'properties' include real property, intellectual property,
equipment, and rights over motion picture films. Section 106 of RA 8424 likewise imposes
value-added tax on transactions such as transfer of goods, properties, profits, or inventories.

Section 108 of RA 8424 further imposes value-added tax on sale of services and use or lease of
properties. xxx

Both under RA 8424 (Sections 106, 107, and 108) and the TRAIN Law, there, too, is no
mention of association dues, membership fees, and other assessments/charges collected by
condominium corporations being subject to VAT. And rightly so. For when a condominium
corporation manages, maintains, and preserves the common areas in the building, it does so
only for the benefit of the condominium owners. It cannot be said to be engaged in trade or
business, thus, the collection of association dues, membership fees, and other
assessments/charges is not a result of the regular conduct or pursuit of a commercial or an
economic activity, or any transactions incidental thereto.

Neither can it be said that a condominium corporation is rendering services to the unit owners
for a fee, remuneration or consideration. Association dues, membership fees, and other
assessments/charges form part of a pool from which a condominium corporation must draw
funds in order to bear the costs for maintenance, repair, improvement, reconstruction expenses
and other administrative expenses.

Too, ANPC held that membership fees, assessment dues, and the like collected by recreational
clubs are not subject to value-added tax "because in collecting such fees, the club is not selling
its service to the members. Conversely, the members are not buying services from the club
when dues are paid; hence, there is no economic or commercial activity to speak of as these
dues are devoted for the operations/maintenance of the facilities of the organization. As such,
there could be no 'sale, barter or exchange of goods or properties, or sale of a service' to speak
of, which would then be subject to VAT under the 1997 NIRC."

This principle equally applies to condominium corporations which are similarly situated with
recreational clubs insofar as membership fees, assessment dues, and other fees of similar
nature collected from condominium owners are devoted to the operations and maintenance of
the facilities of the condominium. In sum, RMC No. 65-2012 illegally imposes value-added tax
on association dues, membership fees, and other assessments/charges collected and received
by condominium corporations.

Third. The withholding tax system was devised for three (3) primary reasons, i.e. --- (1) to
provide taxpayers a convenient manner to meet their probable income tax liability; (2) to
ensure the collection of income tax which can otherwise be lost or substantially reduced
through failure to file the corresponding returns; and (3) to improve the government's cash
flow. This results in administrative savings, prompt and efficient collection of taxes, prevention
of delinquencies and reduction of governmental effort to collect taxes through more
complicated means and remedies. Succinctly put, withholding tax is intended to facilitate the
collection of income tax. And if there is no income tax, withholding tax cannot be
collected.

Section 57 of RA 8424 directs that only income, be it active or passive, earned by a payor-
corporation can be subject to withholding tax. xxx

Although Section 57 (B) was later amended by the TRAIN Law, it still decrees that the
withholding of tax covers only the income payable to natural or juridical persons. xxx

Fourth. Section 4 of RA 8424 empowers the BIR Commissioner to interpret tax laws and to
decide tax cases:
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases - The power to
interpret the provisions of this Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the Secretary of Finance.

The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or
portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner,
subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.

But the BIR Commissioner cannot, in the exercise of such power, issue administrative rulings or
circulars inconsistent with the law to be implemented. Administrative issuances must not
override, supplant, or modify the law, they must remain consistent with the law intended to
carry out. Surely, courts will not countenance administrative issuances that override, instead of
remaining consistent and in harmony with the law they seek to apply and implement.

As shown, the BIR Commissioner expanded or modified the law when she declared that
association dues, membership fees, and other assessments/charges are subject to income tax,
value-added tax, and withholding tax. In doing so, she committed grave abuse of discretion
amounting to lack or excess of jurisdiction. xxx

In sum, the BIR Commissioner is empowered to interpret our tax laws but not expand or alter
them. In the case of RMC No. 65-2012, however, the BIR Commissioner went beyond, if not,
gravely abused such authority.

A final word
RMC No. 65-2012 is invalid for ordaining that "gross receipts of condominium corporations
including association dues, membership fees, and other assessments/charges are subject to
VAT, income tax and income payments made to it are subject to applicable withholding taxes."
A law will not be construed as imposing a tax unless it does so clearly and expressly. In case of
doubt, tax laws must be construed strictly against the government and in favor of the taxpayer.
Taxes, as burdens that must be endured by the taxpayer, should not be presumed to go
beyond what the law expressly and clearly declares.
6. COMMISSIONER OF INTERNAL REVENUE vs. BASES CONVERSION AND
DEVELOPMENT AUTHORITY
G.R. No. 217898 January 15, 2020
LAZARO-JAVIER, J.:

Facts:
Respondent BCDA was the owner of four (4) real properties in Bonifacio Global City, Taguig City
which had a total area of 12,036 sq. m. The lots were collectively referred to as the "Expanded
Big Delta Lots." It entered into a contract to sell with the "Net Group," an unincorporated joint
venture composed of four (4) corporations: (1) 18-14 Property Holdings, Incorporated; (2) 14-
86 Property Holdings, Inc.; (3) The Net Group Project Management Corporation; and (4) The
Net Group Property Management Corporation. The total purchase price was
Php2,032,749,327.96. The "Net Group" committed not to remit to the Bureau of Internal
Revenue (BIR) the total amount of Php 101,637,466.40 as Creditable Tax Withheld at source
(CWT) to give time to respondent to present a certification of tax exemption on or before June
9, 2008.

On May 28, 2008, respondent sought from petitioner the aforesaid certification but the CIR did
not respond.

On July 31 2008, respondent and the "Net Group" executed the corresponding Deeds of
Absolute Sale. In view of respondent's failure to present a certification of tax exemption, the
"Net Group" deducted the amount of Php 101,637,466.40 as CWT and issued to respondent the
corresponding certificates of creditable tax withheld at source. The "Net Group" remitted the
amount to the BIR Regional District Office No. 44.

On March 9, 2009, respondent wrote the BIR for refund of the amount but, again, petitioner did
not respond.

On July 29, 2010, respondent sought affirmative relief from the CTA, specifically for refund of
the amount in question. Respondent claimed that it was exempt from all taxes and fees arising
from or in relation to the sale, as provided under its charter, RA 7227 (Bases Conversion and
Development Act of 1992), as amended by RA 7917.

Petitioner countered that respondent failed to support its claim for tax refund. In particular,
respondent allegedly failed to show, by competent evidence, that the CWT was erroneously or
illegally withheld.

The CTA First Division ruled in respondent's favor. The CTA En Banc affirmed; it ruled that while
respondent is, indeed, not among the exempt corporations listed under Section 27 (C) of the
1997 NIRC or RA 8424, as amended, nevertheless, insofar as the sale of the "Expanded Big
Delta
Lots" is concerned, RA 7227, as amended by RA 7917 specifically exempts respondent from
taxes. While the NIRC and its amending statutes were only promulgated after respondent was
established, RA 7227, as amended is a special law. The NIRC, being a general law, is not
deemed to have amended or superseded the special law in the absence of an express repeal
thereof in the NIRC itself.

Issue: Is the BCDA exempt from Creditable Withholding Tax (CWT) on the sale of its Global
City properties?

Held:
The affirmative answer is found in Section 8 of RA 7227, as amended by RA 7917, otherwise
known as the Bases Conversion and Development Act of 1992, viz.:

SECTION 8. Funding Scheme. - The capital of the Conversion Authority shall come from the sales proceeds
and/or transfers of certain Metro Manila military camps, including all lands covered by Proclamation No. 423,
series of 1957, commonly known as Fort Bonifacio and Villamar (Nicholas) Air Base, namely:
Camp Area in has. (more or less)
XXX XXX XXX

The President is hereby authorized to sell the above lands, in whole or in part, which are hereby declared
alienable and disposable, pursuant to the provisions of existing laws and regulations governing sales of
government properties: Provided, That no sale or disposition of such lands will be undertaken until a
development plan embodying projects for conversion shall be approved by the President in accordance with
paragraph (b), Section 4, of this Act. However, six (6) months after approval of this Act, the President shall
authorize the Conversion Authority to dispose of certain areas in Fort Bonifacio and Villamor as the latter so
determines.

The Conversion Authority shall provide the President a report on any such disposition or plan for disposition
within one (1) month from such disposition or preparation of such plan. The proceeds from any sale, after
deducting all expenses related to the sale, of portions of Metro Manila military camps as authorized
under this Act, shall be deemed appropriated for the purposes herein provided for the following
purposes with their corresponding percent shares of proceeds:

(1) Thirty-five percent (35%) - To primarily finance the self-reliance and modernization program of the AFP, the
transfer of the AFP military camps and the construction of new camps and the rehabilitation and expansion of
the AFP's medical facilities, and the modernization of the government arsenal;
(2) Twenty-seven and a half percent (27.5%) -To finance the construction and upgrading of infrastructure such
as highways, railways and other transport facilities to make Subic, Clark and other former bases accessible:
Provided, That other public works, utilities and irrigation projects not specified herein shall be included:
Provided, further, That the conversion into commercial uses of the former military baselands proper and their
extensions shall be undertaken as much as practicable through the Build-Operate-Transfer (BOT) scheme or
financed by locator enterprises: Provided, finally, That this appropriation shall be retained by the Conversion
Authority as part of its paid-up capital, pursuant to Section 6 of this Act;
(3) Twelve Percent (12%) - To finance the National Shelter Program: Provided, That fifty percent (50%) thereof,
shall be used to finance mass social housing project for the underprivileged and homeless citizens of the country
and the other fifty percent (50%) to concessional and long-term housing loan assistance for the homeless of
Metro Manila, Olongapo City, Angeles City and other affected municipalities contiguous to the base areas;
(4) Three percent (3%) - To finance the National Health Insurance Program;
(5) Five percent (5%) - To finance critical infrastructure projects not covered by the Build-Operate-Transfer
(BOT) program in areas surrounding the former base lands;
(6) Two percent (2%) - To finance the benefits/claims of Military War Veterans and their dependents under
Republic Act No. 7696;
(7) One percent (1 %) - As contribution for the Higher Education Development Fund under Section 10 of
Republic Act No. 7722, otherwise known as the Higher Education Act of 1994, the amount of Five hundred
million pesos (P500,000,000) or so much thereof, and the balance to finance [students'] scholarship, faculty
 development and the improvement of physical plants of colleges and universities under the Commission on
Higher Education (CHED);
(8) Two percent (2%) - To finance the science and technology scholarships and training of thousands of young
Filipino scientists and students in selected countries to be identified by the Department of Science and
Technology; and the Study Now Pay Later Program for poor but deserving youths who shall enrol or are enrolled
in science and technology (S&T) courses
which will propel the country to achieve modernization and competitive excellence in the 21st century: Provided,
That at least one (1) scholar/trainee shall be selected from each municipality/city of the country: Provided,
further, That they shall render service to the Government for at least three (3) years or shall engage in S&T
entrepreneurial activities within the country;
(9) One percent (1 %) -To finance the multi-year program of the prosecution service;
(10) Two percent (2%), but in no case exceeding Two billion pesos (P2,000,000,000) - To finance a multi-year
modernization program of the National Bureau of Investigation (NBI), the Philippine National Police (PNP) and
improvement of prison facilities. Provided, That seventy percent (70%) of this appropriations shall be used for
capital outlay and thirty percent (30%) for training programs and early retirement schemes for their officers and
personnel.
(11) One percent (1 %), but in no case to exceed One billion pesos (P1,000,000,000) - To finance a multi-year
judicial reform program;
(12) Two percent (2%) to finance the establishment of preschool and daycare centers nationwide;
(13) One-half percent (1/2%) but not to exceed Five hundred million pesos (P500,000,000) for the summer
program for the education of students (SPES) in accordance with Republic Act No. 7323;
(14) One percent (1 %) for the construction of Senior Citizens Centers as provided under Republic Act No. 7876;
(15) Three percent (3%) to the emergency and contingent needs of the areas devastated by the Mount Pinatubo
eruptions;
(16) Two percent (2%) for infrastructure development of future special economic zones to be created;
Approximately forty hectares (40 has.) of land in Fort Bonifacio, Phase I, shall be retained as a national
government and local government centers, sports facilities and parks: Provided, That, in the case of Fort
Bonifacio, two and five-tenths percent (2.5%) of the proceeds thereof in equal shares shall each go to the
Municipalities of Makati, Taguig and Pateros: Provided, further, That in no case shall farmers affected be denied
due compensation.

The 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.

Section 8 is two (2) pronged. The first commands that the sale proceeds of certain properties in
Fort Bonifacio and Villamor (Nicholas) Air Base are deemed appropriated by Congress to each of
the aforenamed recipients and for the respective purposes specified therein. Consequently, the
sale proceeds are not BCDA income but public funds subject to the distribution scheme and
purposes provided in the law itself. Book VI, Chapter 5, Section 32 of the Administrative Code of
1987 directs that "[a]ll monies appropriated for functions, activities, projects and programs shall
be available solely for the specific purposes for which these are appropriated." The second
expressly enjoins that the proceeds of the sale shall not be diminished by any item or
circumstance, including all forms of taxes and fees.

The Court has invariably ruled that when the law speaks in clear and categorical language,
there is no occasion for interpretation; there is only room for application. xxx

The CIR, nonetheless, argues against the application of Section 8 here because the same had
been purportedly repealed by Section 27 of the NIRC, as amended:
SECTION 27. Rates of lncome Tax on Domestic Corporations.
XXX XXX XXX
 C) Government-owned or Controlled Corporations, Agencies or Instrumentalities. - The
provisions of existing special or general laws to the contrary notwithstanding, all
corporations, agencies, or instrumentalities owned or controlled by the Government, except
the Government Service Insurance System (GSIS), the Social Security System (SSS), the
Philippine Health Insurance Corporation (PHIC), the local water districts (LWDs), and the
Philippine Charity Sweepstakes Office (PCSO), shall pay such rate of tax upon their taxable
income as are imposed by this Section upon corporations or associations engaged in a
similar business, industry, or activity.

The argument does not persuade. We agree with the CTA-En Banc that Section 27 is a general
law while Section 8 of RA 7227, as amended by RA 7917 is a special law. As a rule, a general
law cannot impliedly repeal a special law. xxx

Another Section 27 governs all corporations, agencies, or instrumentalities owned or controlled

by the Government (GOCCs), with the exception of a few. It directs these GOCCs to "pay such
rate of tax upon their taxable income as are imposed by this Section upon corporations or
associations engaged in a similar business, industry, or activity." The directive presupposes
that the funds are income, hence, taxable.

On the other hand, Section 8 of RA 7227, as amended by RA 7917, specifically governs BCDA' s
disposition of the properties enumerated therein and their sale proceeds. The law exempts
these sale proceeds from all kinds of fees and taxes as the same law has already appropriated
them for
specific purposes and for designated beneficiaries.

It is settled that between a general law and a special law, the latter prevails. For a special law
reveals the legislative intent more clearly than a general law does. Verily, the special law should
be deemed an exception to the general law.

In light of the foregoing considerations, therefore, the standard procedural and documentary
requirements for tax refund applicable to GOCCs in general do not apply to BCDA vis-a-vis the
properties and the sale proceeds specified under Section 8 of RA 7227, as amended. To repeat,
there is no income to speak of here; only the sale proceeds of specific properties which the
legislature itself exempts from all taxes and fees.

ACCORDINGLY, the petition is DENIED. The Decision dated December 16, 2014 and
Resolution dated April 15, 2015 of Court of Tax Appeals (CTA) En Banc in CTA EB Case No.
1123 (CTA Case No. 8140) are AFFIRMED.