ING escapes $5.1m tax burden
The Supreme Court has allowed ING Bank NV Manila Branch to be relieved of a PHP 238.5m ($5.1m) tax burden, dating back to the 1990's, stating that the bank was covered by a 2007 tax amnesty law.
MANILA - The Supreme Court has cleared ING Bank of a P240 million tax liability dating to the 1990s, saying the bank could avail of a 2007 tax amnesty even if lower courts had already ruled on the case.

The case stems from a December 1999 final assessment by the BIR that ING owed P672.6 million in documentary stamp taxes and other taxes and penalties dating from 1996 and 1997.

ING took this to the Court of Tax Appeals Second Division, which ruled in 2004 that the bank owed P240.1 million plus 20 percent interest per year. Most of that was for documentary stamp tax deficiencies. The Court of Tax appeals en banc dismissed ING's motion for reconsideration in 2005.

ING took the case to the Supreme Court. Then, in 2007, it told the court it had availed of the amnesty.

The BIR said ING couldn't avail of the 2007 tax amnesty because the Court of Tax Appeals had already ruled.

In a 26-page ruling written by Justice Marvic Leonen, the Supreme Court said ING complied with all the conditions of Republic Act 9480, the 2007 tax amnesty law.

The court said the law gave the Bureau of Internal Revenue little or no discretion in deciding who could avail of the amnesty or not, as long as they complied with certain conditions. The ruling, first reported by BusinessWorld, was promulgated on July 22.

The Supreme Court said: "Contrary to respondent Commissioner of Internal Revenue's stance, R.A. 9480 confers no discretion on respondent Commissioner of Internal Revenue. The provisions of the law are plain and simple. xxx There is nothing in R.A. 9480 which can be construed as authority of the respondent Commissioner of Internal Revenue to introduce exceptions and/or conditions to the coverage of the law nor to disregard its provisions and substitute his own personal judgment."

Minor victory for BIR

The BIR scored a small win, however. The Supreme Court said ING needed to pay P564,542 in withholding taxes it didn't withhold in 1996 and 1997 from bonuses it recorded that year but paid in later years.

ING said it wasn't liable for not withholding the taxes in 1996 and 1997 because it only paid the bonuses in later years.

The Supreme Court said ING was liable because while it didn't pay the bonuses in 1996 and 1997, it deducted them from its own expenses for those years.

"Petitioner ING Bank accrued or recorded the bonuses in its books," the Supreme Court said. "Therefore its obligation to withhold the related withholding tax due from the deductions from accrued bonuses arose at the time of accrual and not at the time of actual payment."

The BIR will appeal the main ruling.

"Our position has always been to appeal up to the last remedy," BIR Commissioner Kim Henares, who happened to be an ING lawyer in 1998, said.

ING did not immediately reply to a request for their comment.