Case Digest (G.R. No. 188550) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Deutsche Bank AG Manila Branch v. Commissioner of Internal Revenue, G.R. No. 188550, decided May 5, 2014, the petitioner, Deutsche Bank AG Manila Branch, a Philippine branch of a German bank, withheld and remitted PHP 67,688,553.51 on October 21, 2003 as fifteen percent (15%) branch profit remittance tax (BPRT) under Section 28(A)(5) of the 1997 National Internal Revenue Code (NIRC) on its 2002 and prior years’ net income remitted to its head office in Germany. Believing it overpaid, it filed on October 4, 2005 an administrative claim for refund of PHP 22,562,851.17 and sought confirmation from the BIR’s International Tax Affairs Division (ITAD) on its entitlement to the preferential ten percent (10%) rate under the RP–Germany Tax Treaty. After BIR inaction, petitioner filed a petition with the Court of Tax Appeals (CTA) Second Division on October 18, 2005. The CTA Second Division denied the refund for failure to comply with the fifteen‐day prior application rule under Revenu... Case Digest (G.R. No. 188550) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Tax Assessment
- Deutsche Bank AG Manila Branch (petitioner) is a branch of Deutsche Bank AG, Germany, subject to Philippine tax laws.
- The Commissioner of Internal Revenue (respondent) is the BIR official responsible for tax collection.
- Branch Profits Remittance Tax (BPRT) Payment and Claim
- On October 21, 2003, petitioner withheld and remitted PHP 67,688,553.51 to respondent as 15% BPRT on its 2002 and prior years’ Regular Banking Unit (RBU) net income of PHP 451,257,023.29, per Section 28(A)(5) of the 1997 NIRC.
- Believing the 15% rate excessive under the RP-Germany Tax Treaty (10% preferential rate), petitioner on October 4, 2005:
- Filed an administrative claim for refund or tax credit certificate in the amount of PHP 22,562,851.17.
- Requested a confirmation from the BIR’s International Tax Affairs Division (ITAD) on entitlement to the 10% treaty rate.
- Proceedings Before the Court of Tax Appeals
- Petitioner filed a Petition for Review with the CTA Second Division on October 18, 2005, reiterating its refund claim of PHP 22,562,851.17.
- CTA Second Division Decision (August 29, 2008):
- Acknowledged payment of the PHP 67,688,553.51 BPRT and subsequent remittance of net profits to Germany.
- Denied refund for failure to secure an ITAD ruling at least 15 days prior to the remittance transaction, in violation of Revenue Memorandum Order No. 1-2000 and precedent in Mirant (CTA EB No. 40).
- CTA En Banc Resolution (January 14, 2009; affirmed May 29, 2009):
- Affirmed Second Division, invoking stare decisis and the binding nature of prior minute resolutions in Mirant.
- Rejected petitioner’s reliance on CBK Power relaxation of the 15-day requirement.
- Petition for Review in the Supreme Court
- Petitioner invoked Rule 45 to challenge CTA En Banc’s denial of its refund claim.
- Main contention: RMO No. 1-2000’s 15-day prior-application rule is not a condition precedent to treaty benefits and cannot override the treaty’s plain language.
Issues:
- Whether strict compliance with RMO No. 1-2000’s 15-day prior-application requirement is a mandatory condition precedent that, if not met, deprives a taxpayer of the benefit of a lower branch profits remittance tax rate under an applicable tax treaty.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)