CIR vs.

Solidbank Corporation
G.R. No. 148191, November 25, 1003

FACTS:
 The case involves the interpretation of whether the 20% FWT on bank’s interest income
should be included in the computation of gross receipts tax.
 The respondent-Solidbank Corp filed a letter request for refund or tax credit certificate
and a petition for review with the Court of Tax Appeals.
 Solidbank included in its computation of its total gross receipts the sum of P70mn
representing 20% FWT on bank’s interest.
 CA ruled that 20% FWT on bank’s interest should not form part of the gross receipts in
computing 5% GRT since FWT was not actually received by the bank but was directly
remitted to the government.
 The CIR filed a petition for review with the SC.
 Hence, the present petition

ISSUES:
W/N 20% FWT on interest income should form part of the gross receipts in computation of
gross receipts tax.

RULING:

NO. The Court GRANTED the petition and held that 20% FWT on banks interest should be
included in the computation of the taxable gross receipts for GRT.
The FWT, although not received by bank, is constructively received and forms part of their gross
receipts or earnings. FWT is tax on passive income, while GRT is tax on business. They are
different taxes imposed on different matters.
Hence, the petition is GRANTED.