G.R. No.

167679 / July 22, 2015

International Nedelanden Bank (ING) NV Manila Branch v. Commissioner of Internal Revenue (CIR)

Facts:
ING Bank is a foreign banking corporation incorporated in the Netherlands which was authorized by the
Bangko Sentral ng Pilipinas to operate as a branch here in the Philippines. It was assessed of deficiency
taxes by the Bureau of Internal Revenue (BIR) which it paid except for the alleged deficiency in
documentary stamp tax on special savings accounts, deficiency onshore tax, and deficiency withholding
tax on compensation which it protested for 1996 and 1997. The Court of Tax Appeals, however, upheld
the tax deficiency. Meanwhile, upon appeal before the Supreme Court, ING Bank availed of the tax
amnesty making it immune to pay for tax liabilities except for the amnesty tax only. The CIR, however,
challenges its entitlement to the tax amnesty saying that a BIR memorandum circular excludes cases
which were ruled by any court in favor of the BIR prior to amnesty availment of the tax payer.

Issues:
Whether or not ING Bank is entitled to tax amnesty.
Whether or not ING Bank is liable for the documentary stamp tax on special savings accounts, deficiency
onshore income tax, and deficiency withholding tax on compensation.

Held:
Yes, ING Bank is entitled to tax amnesty. Both Republic Act (RA) 9480 and its implementing rules are
precise in declaring that tax cases subject of final and executory judgment by the courts are the ones
excepted from the benefits of the law. The present case has not become final and executory and it has
fully complied with the requirements for tax amnesty under the law. Thus, ING Bank is not disqualified
from availing itself of the tax amnesty under the law during the pendency of the appeal. By virtue of the
tax amnesty, the bank has no more liability for documentary stamp tax and the onshore income tax,
except for the deficiencies in withholding tax on compensation. Every form of compensation for
personal services is subject to income tax and, consequently, to withholding tax. And under the all-
events test, an expense is accrued and deducted for tax purposes when the obligation to pay is already
fixed, the amount can be determined with reasonable accuracy, and it has already knowable or the
taxpayer can reasonably be expected to have known at the closing of its books for the taxable year.
However, ING Bank did not withhold the bonuses it recorded as expense in the year they were accrued
and paid constructively. The employer required by law to deduct and withhold tax is liable for the
payment of withholding tax whether or not collected from the employee.