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G.R. No. 188550 August 19, 2013 DEUTSCHE BANK AG MANILA BRANCH, PETITIONER, vs. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. D E C I S I O N SERENO, CJ.: This is a Petition for Review 1 filed by Deutsche Bank AG Manila Branch (petitioner) under Rule 45 of the 1997 Rules of Civil Procedure assailing the Court of Tax Appeals En Banc (CTA En Banc) Decision 2 dated 29 May 2009 and Resolution 3 dated 1 July 2009 in C.T.A. EB No. 456. THE FACTS In accordance with Section 28(A)(5) 4 of the National Internal Revenue Code (NIRC) of 1997, petitioner withheld and remitted to respondent on 21 October 2003 the amount of PHP 67,688,553.51, which represented the fifteen percent (15%) branch profit remittance tax (BPRT) on its regular banking unit (RBU) net income remitted to Deutsche Bank Germany (DB Germany) for 2002 and prior taxable years. 5 Believing that it made an overpayment of the BPRT, petitioner filed with the BIR Large Taxpayers Assessment and Investigation Division on 4 October 2005 an administrative claim for refund or issuance of its tax credit certificate in the total amount of PHP 22,562,851.17. On the same date, petitioner requested from the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax Treaty. 6 Alleging the inaction of the BIR on its administrative claim, petitioner filed a Petition for Review 7 with the CTA on 18 October 2005. Petitioner reiterated its claim for the refund or issuance of its tax credit certificate for the amount of PHP 22,562,851.17 representing the alleged excess BPRT paid on branch profits remittance to DB Germany. THE CTA SECOND DIVISION RULING 8 After trial on the merits, the CTA Second Division found that petitioner indeed paid the total amount of PHP 67,688,553.51 representing the 15% BPRT on its RBU profits amounting to PHP 451,257,023.29 for 2002 and prior taxable years. Records also disclose that for the year 2003, petitioner remitted to DB Germany the amount of EURO 5,174,847.38 (or PHP 330,175,961.88 at the exchange rate of PHP 63.804:1 EURO), which is net of the 15% BPRT. However, the claim of petitioner for a refund was denied on the ground that the application for a tax treaty relief was not filed with ITAD prior to the payment by the former of its BPRT and actual remittance of its branch profits to DB Germany, or prior to its availment of the preferential rate of ten percent (10%) under the RP- Germany Tax Treaty provision. The court a quo held that petitioner violated the fifteen (15) day period mandated under Section III paragraph (2) of Revenue Memorandum Order (RMO) No. 1-2000. Further, the CTA Second Division relied on Mirant (Philippines) Operations Corporation (formerly Southern Energy Asia-Pacific Operations [Phils.], Inc.) v. Commissioner of Internal Revenue 9 (Mirant) where the CTA En Banc ruled that before the benefits of the tax treaty may be extended to a foreign corporation wishing to avail itself thereof, the latter should first invoke the provisions of the tax treaty and prove that they indeed apply to the corporation. THE CTA EN BANC RULING 10 The CTA En Banc affirmed the CTA Second Division’s Decision dated 29 August 2008 and Resolution dated 14 January 2009. Citing Mirant, the CTA En Banc held that a ruling from the ITAD of the BIR must be secured prior to the availment of a preferential tax rate under a tax treaty. Applying the principle of stare decisis et non quieta movere, the CTA En Banc took into consideration that this Court had denied the Petition in G.R. No. 168531 filed by Mirant for failure to sufficiently show any reversible error in the assailed judgment. 11 The CTA En Banc ruled that once a case has been decided in one way, any other case involving exactly the same point at issue should be decided in the same manner. The court likewise ruled that the 15-day rule for tax treaty relief application under RMO No. 1-2000 cannot be relaxed for petitioner, unlike in CBK Power Company Limited v. Commissioner of Internal Revenue. 12 In that case, the rule was relaxed and the claim for refund of excess final withholding taxes was partially granted. While it issued a ruling to CBK Power Company Limited after the payment of withholding taxes, the ITAD did not issue any ruling to petitioner even if it filed a request for confirmation on 4 October 2005 that the remittance of branch profits to DB Germany is subject to a preferential tax rate of 10% pursuant to Article 10 of the RP-Germany Tax Treaty. ISSUE

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G.R. No. 188550 August 19, 2013DEUTSCHE BANK AG MANILA BRANCH, PETITIONER, vs.CMMISSINER ! INTERNAL RE"ENUE, RESPONDENT.D E C I S I O NSEREN, CJ.:This is a Petition for Review1 fled by Dets!he "an# $% &anila "ran!h '(etitioner) nder Rle *+ of the 1,,- Rles of Civil Pro!edre assailin. the Cort of Ta/ $((eals En "an! 'CT$ En "an!) De!ision0 dated 0, &ay 011, and Resoltion2 dated 1 3ly 011, in C.T.$. E" No. *+4.T5E 6$CTSIn a!!ordan!e with Se!tion 07'$)'+)* of the National Internal Revene Code 'NIRC) of 1,,-, (etitioner withheld and re8itted to res(ondent on 01 O!tober 0112 the a8ont of P5P 4-,477,++2.+1, whi!h re(resented the ffteen (er!ent '1+9) bran!h (roft re8ittan!e ta/ '"PRT) on its re.lar ban#in. nit 'R":) net in!o8e re8itted to Dets!he "an# %er8any 'D" %er8any) for 0110 and (rior ta/able years.+"elievin. that it 8ade an over(ay8ent of the "PRT, (etitioner fled with the "IR ;ar.e Ta/(ayers $ssess8ent and Investi.ation Division on * O!tober 011+ an ad8inistrative !lai8 for refnd or issan!e of its ta/ !redit !ertif!ate in the total a8ont of P5P 00,+40,7+1.1-. On the sa8e date, (etitioner re0111 !annot be rela/ed for (etitioner, nli#e in C"F Power Co8(any ;i8ited v. Co88issioner of Internal Revene.10 In that !ase, the rle was rela/ed and the !lai8 for refnd of e/!ess fnal withholdin. ta/es was (artially .ranted. Ghile it issed a rlin. to C"F Power Co8(any ;i8ited after the (ay8ent of withholdin. ta/es, the IT$D did not isse any rlin. to (etitioner even if it fled a re0111, whi!h reNi!#el involvin. the sa8e (arties and the sa8e isses, was (reviosly dis(osed of by the Cort thr a 8inte resoltion dated 6ebrary 1-, 0112 sstainin. the rlin. of the C$. Nonetheless, the Cort rled that the (revios !ase Jha'd) no bearin.J on the latter !ase be!ase the two !ases involved di=erent sbEe!t 8atters as they were !on!erned with the ta/able in!o8e of di=erent ta/able years."esides, there are sbstantial, not si8(ly for8al, distin!tions between a 8inte resoltion and a de!ision. The !onstittional rehonored international (rin!i(le of (a!ta snt servanda de8ands the (erfor8an!e in .ood faith of treaty obli.ations on the (art of the states that enter into the a.ree8ent. Every treaty in for!e is bindin. (on the (arties, and obli.ations nder the treaty 8st be (erfor8ed by the8 in .ood faith.14 &ore i8(ortantly, treaties have the for!e and e=e!t of law in this Erisdi!tion.1-Ta/ treaties are entered into Jto re!on!ile the national fs!al le.islations of the !ontra!tin. (arties and, in trn, hel( the ta/(ayer avoid si8ltaneos ta/ations intwo di=erent Erisdi!tions.J17 CIR v. S.C. 3ohnson and Son, In!. frther !larifes that Jta/ !onventions are drafted with a view towards the eli8ination of international Eridi!al doble ta/ation, whi!h is defned as the i8(osition of !o8(arable ta/es intwo or 8ore states on the sa8e ta/(ayer in res(e!t of the sa8e sbEe!t 8atter and for identi!al (eriods. The a((arent rationale for doin. away with doble ta/ation is to en!ora.e the free Low of .oods and servi!es and the 8ove8ent of !a(ital, te!hnolo.y and (ersons between !ontries, !onditions dee8ed vital in !reatin. robst and dyna8i! e!ono8ies. 6orei.n invest8ents will only thrive in a fairly (redi!table and reasonable international invest8ent !li8ate and the (rote!tion a.ainst doble ta/ation is !r!ial in !reatin. s!h a !li8ate.J1,Si8(ly (t, ta/ treaties are entered into to 8ini8iMe, if not eli8inate the harshness of international Eridi!al doble ta/ation, whi!h is why they are also #nown as doble ta/ treaty or doble ta/ a.ree8ents.J$ st%t* t/%t /%s #o+t,%#t*- 5%$&- &+t*,+%t&o+%$ o3$&g%t&o+s &s 3ou+- to '%0111 whi!h wold indi!ate a de(rivation of entitle8ent to a ta/ treaty relief for failre to !o8(ly withthe 1+>day (eriod. Ge re!o.niMe the !lear intention of the "IR in i8(le8entin. R&O No. 1>0111, bt the CT$Ds otri.ht denial of a ta/ treaty relief for failre to stri!tly !o8(ly with the (res!ribed (eriod is not in har8ony with the obEe!tives of the !ontra!tin. state to ensre that the benefts .ranted nder ta/ treaties are enEoyed by dly entitled (ersons or !or(orations."earin. in 8ind the rationale of ta/ treaties, the (eriod of a((li!ation for the avail8ent of ta/ treaty relief as re0111 shold not o(erate todivest entitle8ent to the relief as it wold !onstitte a violation of the dty re%er8any Ta/ Treaty.Petitioner is liable to (ay only the a8ont of P5P *+,10+,-10.2* on its R": net in!o8e a8ontin. to P5P *+1,0+-,102.0, for 0110 and (rior ta/able years, a((lyin. the 119 "PRT. Ths, it is (ro(er to .rant (etitioner a refnd ofthe di=eren!e between the P5P 4-,477,++2.+1 '1+9 "PRT) and P5P *+,10+,-10.2* '119 "PRT) or a total of P5P 00,+40,7+1.1-.G5ERE6ORE, (re8ises !onsidered, the instant Petition is %R$NTED. $!!ordin.ly, the Cort of Ta/ $((eals En "an! De!ision dated 0, &ay 011, and Resoltion dated 1 3ly 011, are RE?ERSED and SET $SIDE. $ new one is hereby entered orderin. res(ondent Co88issioner of Internal Revene to refnd or isse a ta/ !redit !ertif!ate in favor of (etitioner Dets!he "an# $% &anila "ran!h the a8ont of TGENTO TGO &I;;ION 6I?E 5:NDRED SIPTO TGO T5O:S$ND EI%5T 5:NDRED 6I6TO ONE PESOS $ND SE?ENTEEN CENT$?OS 'P5P 00,+40,7+1.1-), Phili((ine !rren!y, re(resentin. the erroneosly (aid "PRT for 0110 and (rior ta/able years.SO ORDERED.


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