MANILA, Philippines - The Court of Appeals has junked the Bureau of Internal Revenue’s appeal which sought the reversal of an earlier decision that upheld the exemption of Filipino employees of the Asian Development Bank from payment of income taxes.
In a decision, the appellate court said the BIR should have elevated its case to the Supreme Court as required under Rule 45 of the Rules of Civil Procedure.
The BIR appealed the ruling of the Mandaluyong City Regional Trial Court Branch 213 Judge Carlos Valenzuela which nullified BIR revenue memorandum circular 31-2013 for being issued with no legal basis and/or without due process of law.
The circular was used as basis for the BIR to run after the supposed tax deficiencies of ADB employees.
The Mandaluyong RTC ruling was in response to the case filed by ADB employees Erwin Salaveria and Portia Gonzales who were slapped with tax evasion cases by the BIR for their failure to file their 2012 income tax returns in violation of the Tax Code.
The circular states that Filipinos employed by foreign governments, embassies, diplomatic missions and several international organizations including the ADB, are not exempted from paying income taxes.
The BIR cited the agreement between the ADB and the Philippine government that only officers and staff of the regional development bank shall be exempt from Philippine income tax.