MANILA—The Court of Tax Appeals (CTA) has ruled in favor of the National Home Mortgage Finance Corporation (NHMFC), ordering a refund of PHP1.6 million in erroneously paid final withholding taxes on interest income payments to bondholders for the period 2019 to 2020. The decision benefits the Bahay Bonds 2 Special Purpose Trust administered by the NHMFC, further emphasizing the tax-exempt status of certain asset-backed securities.
According to Philippines News Agency, the 14-page decision from the tax court’s Third Division on September 17 mandates that the Bureau of Internal Revenue (BIR) either refund the amount or provide a tax credit certificate as requested by the petition. The court highlighted that the statutes governing the nature and purpose of NHMFC’s bonds classify them as low-cost or housing-related asset-backed securities, thus qualifying them for tax exemption as clearly specified in relevant tax laws.
The decision aligns with previous rulings by the Supreme Court, which upheld the tax exemption status in similar cases involving refund claims by the petitioner. The CTA also stipulated that the petitioner SPT has the responsibility to pass the refunded or credited amount back to the bondholders, thereby avoiding any unjust enrichment at the expense of the principal taxpayers from whom the taxes were originally withheld.
This ruling underscores the legal obligations of trustees in handling refunds and reinforces the tax-exempt provisions applicable to specific financial instruments aimed at facilitating housing affordability.