REFUND prescribed as it only filed its judicial claim on September remitted interest payments from May 2001 to May
terest payments from May 2001 to May 2003.
10, 2003. It allegedly withheld final taxes from said payments based on the following rates: (a) fifteen percent (15%) for METROBANK VS. CIR ISSUE: Whether or not the CTA En Banc correctly held Fortis-Belgium, Fortis-Netherlands, and Raiffesen Bank; that Metrobank's claim for refund relative to its March and (b) twenty percent (20%) for Industrial Bank of Japan FACTS: On June 5, 1997, Solidbank Corporation 2001 final tax had already prescribed. and Mizuho Bank. (Solidbank) entered into an agreement with Luzon Hydro Corporation (LHC), whereby the former extended to the RULINGS: However, according to CBK Power, under the relevant tax latter a foreign currency denominated loan in the treaties between the Philippines and the respective principal amount of US$123,780,000.00 (Agreement). In this relation, Section 229 of the same Code provides countries in which each of the banks is a resident, the Pursuant to the Agreement, LHC is bound to shoulder all for the proper procedure in order to claim for such interest income derived by the aforementioned banks are the corresponding internal revenue taxes required by law refunds, to wit: subject only to a preferential tax rate of 10% to be deducted or withheld on the said loan, as well as the filing of tax returns and remittance of the taxes Accordingly, on April 14, 2003, CBK Power filed a claim for Section 229. Recovery of Tax Erroneously or Illegally withheld to the Bureau of Internal Revenue (BIR). On refund of its excess final withholding taxes allegedly Collected. - No suit or proceeding shall be maintained in September 1, 2000, Metrobank acquired Solidbank, and erroneously withheld and collected. any court for the recovery of any national internal consequently, assumed the latter's rights and obligations revenue tax hereafter alleged to have been erroneously under the aforesaid Agreement. Due to CIR’s inaction, CBK Power appealed to CTA or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of Division. The latter partially granted the refund. One of On March 2, 2001 and October 31, 2001, LHC paid Metro any sum alleged to have been excessively or in any the refunds was disallowed because of failure on the part bank the total amounts of US$1,538,122.17 and manner wrongfully collected, until a claim for refund or of CBK Power to obtain an ITAD ruling with respect to its US$1,333,268.31, respectively. Pursuant to the credit has been duly filed with the Commissioner; but transactions with Fortis-Netherlands. CTA Agreement, LHC withheld, and eventually paid to the BIR, such suit or proceeding may be maintained, whether or En Banc affirmed said decision. the ten percent (10%) final tax on the interest portions of not such tax, penalty, or sum has been paid under protest the aforesaid payments, on the same months that the or duress. ISSUE: Whether or not the BIR may add a requirement– respective payments were made to petitioner. In sum, prior application for an ITAD ruling – that is not found in LHC remitted a total ofUS$106,178.69, or its Philippine the income tax treaties signed by the Philippines before No such suit or proceeding shall be filed after the Peso equivalent of ₱5,296,773.05, as evidenced by LHC's a taxpayer can avail of preferential tax rates under said expiration of two (2) years from the date of payment of Schedules of Final Tax and Monthly Remittance Returns treaties. the tax or penalty regardless of any supervening cause for the said months. that may arise after payment. HELD: NO. The Court held that the obligation to comply According to Metrobank, it mistakenly remitted the with a tax treaty must take precedence over the objective Metrobank insists that the filing of its administrative and aforesaid amounts to the BIR as well when they were of RMO No. 1-2000. judicial claims on December 27, 2002 and September 10, inadvertently included in its own Monthly Remittance 2003, respectively, were well-within the two (2)-year Returns of Final Income Taxes Withheld for the months of prescriptive period. March 2001 and October 2001. Thus, on December 27, Bearing in mind the rationale of tax treaties, the period 2002, it filed a letter to the BIR requesting for the refund WHEREFORE, the petition is DENIED. The Decision of the of application for the availment of tax treaty relief as thereof. Thereafter and in view of respondent the Court of Tax Appeals En Banc in C.T.A. EB No. 340 is required by RMO No. 1-2000 should not operate to Commissioner of Internal Revenue's (CIR) inaction, hereby AFFIRMED. divest entitlement to the relief as it would constitute a Metrobank filed its judicial claim for refund via a petition violation of the duty required by good faith in complying for review filed before the CTA on September 10, 2003. with a tax treaty. The denial of the availment of tax relief for the failure of a taxpayer to apply within the prescribed In defense, the CIR averred that: Metro bank must prove period under the administrative issuance would impair CBK POWER COMPANY LIMITED, VS. COMMISSIONER OF that there was double payment of the tax sought to be the value of the tax treaty. At most, the application for a INTERNAL REVENUE, Respondent. G.R. Nos. 193383-84 refunded. tax treaty relief from the BIR should merely operate to January 14, 2015 confirm the entitlement of the taxpayer to the relief. The CTA Division also denied Metrobank's claim for TOPIC: Tax treaty, ITAD ruling, tax refund refund relative to the October 2001 tax payment for Logically, noncompliance with tax treaties has negative insufficiency of evidence. implications on international relations, and unduly FACTS: CBK Power is a limited partnership duly organized discourages foreign investors. While the consequences and existing under the laws of the Philippines, and The CTA En Banc affirmed the CTA Division's ruling. It held sought to be prevented by RMO No. 1-2000 involve an primarily engaged in the development and operation of that since Metrobank's March 2001 final tax is in the administrative procedure, these may be remedied hydro electric power generating plants in Laguna. nature of a final withholding tax, the two (2)-year through other system management processes, e.g., prescriptive period was correctly reckoned by the CTA the imposition of a fine or penalty. But we cannot totally Division from the time the same was paid on April 25, In February 2001, CBK Power borrowed money from deprive those who are entitled to the benefit of a treaty 2001. As such, Metro bank's claim for refund had already Industrial Bank of Japan, Fortis-Netherlands, Raiffesen for failure to strictly comply with an administrative Bank, Fortis-Belgium, and Mizuho Bank for which it issuance requiring prior application for tax treaty relief.