The reckoning of the phrase 20 or more lenders should

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The reckoning of the phrase "20 or more lenders" should be at the time when petitioner- intervenor RCBC Capital sold the PEACe bonds to investors. Should the number of investors to whom petitioner-intervenor RCBC Capital distributed the PEACe bonds, therefore, be found to be 20 or more, the PEACe Bonds are considered deposit substitutes subject to the 20% final withholding tax. Petitioner-intervenors RCBC/CODE-NGO and RCBC Capital, as well as the final bondholders who have recourse to government upon maturity, are liable to pay the 20% final withholding tax.
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We note that although the originally intended negotiated sale of the bonds by government to CODE-NGO did not materialize, CODE-NGO, a private entity—still through the participation of petitioners-intervenors RCBC and RCBC Capital—ended up as the winning bidder for the government securities and was able to use for its projects the profit earned from the sale of the government securities to final investors. Giving unwarranted benefits, advantage, or preference to a party and causing undue injury to government expose the perpetrators or responsible parties to liability under Section 3(e) of Republic Act No. 3019. Nonetheless, this is not the proper venue to determine and settle any such liability. VI Petitioners-intervenors RCBC and RCBC Capital contend that they cannot be held liable for the 20% final withholding tax for two (2) reasons. First, at the time the required withholding should have been made, their obligation was not clear since BIR Ruling Nos. 370-2011 and DA 378- 2011 stated that the 20% final withholding tax does not apply to PEACe Bonds. 144 Second, to punish them under the circumstances ( i.e. , when they secured the PEACe Bonds from the Bureau of Treasury and sold the Bonds to the lenders/investors, they had no obligation to remit the 20% final withholding tax) would violate due process of law and the constitutional proscription on ex post facto law. 145 chanrobleslaw Petitioner-intervenor RCBC Capital further posits that it cannot be held liable for the 20% final withholding tax even as a taxpayer because it never earned interest income from the PEACe Bonds, and any income earned is deemed in the nature of an underwriting fee. 146 Petitioners- intervenors RCBC and RCBC Capital instead argue that the liability falls on the Bureau of Treasury and CODE-NGO, as withholding agent and taxpayer, respectively, considering their explicit representation that the PEACe Bonds are exempt from the final withholding tax. 147 chanrobleslaw Petitioners-intervenors RCBC and RCBC Capital add that the Bureau of Internal Revenue is barred from assessing and collecting the 20% final withholding tax, assuming it was due, on the ground of prescription. 148 They contend that the three (3)-year prescriptive period under Section 203, rather than the 10-year assessment period under Section 222, is applicable because they were compliant with the requirement of filing monthly returns that reflect the final withholding taxes due or remitted for the relevant; period. No false or fraudulent return
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