G.R. No. 167679 July 22, 2015
ING BANK N.V., engaged in banking operations in the Philippines as ING BANK N.V. MANILA BRANCH, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

Petitioner ING Bank N.V. Manila Branch received a Final Assessment Notice dated December 3, 1999, covering various deficiency tax assessments for taxable years 1996 and 1997, including deficiency documentary stamp tax, onshore tax, and withholding tax on compensation. ING Bank protested most of these assessments and filed a Petition for Review before the Court of Tax Appeals (CTA Case No. 6187). The CTA Second Division, in its August 9, 2004 Decision, upheld the assessments for deficiency withholding tax on compensation for 1996 and 1997, deficiency onshore tax for 1996, and deficiency documentary stamp tax on special savings accounts for 1996 and 1997. The CTA En Banc affirmed this decision on April 5, 2005. While the case was pending before the Supreme Court, ING Bank availed itself of the tax amnesty program under Republic Act No. 9480 (the 2007 Tax Amnesty Act) by filing a Notice of Availment and paying the amnesty tax of ₱500,000.00 on December 14, 2007, covering its liabilities for the deficiency documentary stamp tax and onshore tax. The Commissioner of Internal Revenue opposed the availment, arguing that ING Bank was disqualified because the CTA had already ruled in favor of the BIR on those liabilities.

ISSUE

1. Whether petitioner ING Bank may validly avail itself of the tax amnesty granted by Republic Act No. 9480.
2. Whether petitioner ING Bank is liable for deficiency withholding tax on accrued bonuses for the taxable years 1996 and 1997.

RULING

1. Yes, petitioner ING Bank may validly avail itself of the tax amnesty. The Supreme Court held that qualified taxpayers with pending tax cases may still avail themselves of the tax amnesty under Republic Act No. 9480. The provision in BIR Revenue Memorandum Circular No. 19-2008, which excepted “[i]ssues and cases which were ruled by any court (even without finality) in favor of the BIR prior to amnesty availment of the taxpayer” from the benefits of the law, is illegal, invalid, and null and void. The Court emphasized that a tax amnesty is a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of tax evasion or violation of revenue or tax laws. The 2007 Tax Amnesty Act does not contain any provision disqualifying a taxpayer based on a prior court ruling that is not yet final. Since ING Bank’s availment complied with the requirements of the law and the assessments were not yet final due to the pending Supreme Court review, it is entitled to the immunities and privileges under Section 6 of Republic Act No. 9480 for its deficiency documentary stamp tax and onshore tax liabilities.
2. Yes, petitioner ING Bank is liable for deficiency withholding tax on compensation for the accrued bonuses for taxable years 1996 and 1997. The Supreme Court ruled that the duty to withhold the tax on compensation arises upon its accrual. The bonuses accrued to ING Bank’s officers and employees in 1996 and 1997, even if they were to be distributed in subsequent years. Therefore, ING Bank had the obligation to withhold the corresponding tax at the time the bonuses accrued. The Court affirmed the CTA’s finding of liability for deficiency withholding tax on compensation in the amounts of ₱167,384.97 for 1996 and ₱397,157.70 for 1997.