CIR v. Traders Royal Bank, G.R. No.

167134, March 18, 2015

Facts:
BIR issued an assessment against Traders Royal Bank (TRB) for deficiency of Document Stamp Tax (DST) for 1996 and 1997.
The deficiency was found to be on its declaration, among others, on its Trust Indenture Agreements. TRB opines that such Trust
Indenture Agreements are not subject to documentary stamp tax for the reason that the relationship established between parties is
that of the trustor and trustee, wherein the funds and/or properties of the trustor are given to the Trustee Bank not as a deposit but
under a Common Trust Fund maintained and to be managed by the Trustee.

CIR denied the protest of TRB on the ground that the Trust Indenture Agreements were but a form of deposit, hence subject to
DST.

The CTA Division, however, concurred with TRB that the Trust Indenture Agreements were different from a certificate of
deposit. It reasoned that the basic characteristic of trust, other fiduciary and investment management relationship is the absolute
non-existence of debtor-creditor relationship.

CTA en banc affirmed the cancellation of the assessments against TRB for DST on its Trust Indenture Agreements. Hence, this
present case.

Issue: Whether or not Trust Indenture Agreements constituted a deposit thereby subject to Documentary Stamp Tax?

Ruling:
SC is of the opinion that the conduct of the banks of trusts and other fiduciary business can only be determined through a
scrutiny of the terms and conditions embodied in the said agreements.

However, TRB was not able to present a Trust Indenture Agreements. Failing to dispose of such burden is fatal to TRB as the
agreements were not only in its possession, but more importantly, because its protest against the DST assessments was entirely
grounded on the allegation that the Agreements were trusts. Without the actual Trust Indenture Agreements, there would be no
factual basis for concluding that the same were trusts, as such not subject to DST.

For failing to present Trust Indenture Agreements and present proof of error in the tax assessments of the BIR, the SC affirmed
the assessments of the BIR. It disposed of the case as to wit:

“WHEREFORE, premises considered, the instant Petition for Review on Certiorari is GRANTED. The assailed Decision dated
February 14, 2005 of the CTA e n b a n c in C.T.A. EB No. 32, arming the Decision dated April 28, 2004 and Resolution dated
September 10, 2004 of the CTA Division in C.T.A. Case No. 6392, is REVERSED and SET ASIDE. Respondent Traders Royal
Bank is ORDERED to pay the deficiency Documentary Stamp Taxes on its Trust Indenture Agreements for the taxable years
1996 and 1997, in the amounts of P1,064,064.38 and P104,595.00, respectively, plus 20% delinquency interest from February
14, 2002 until full payment thereof.”