More than 100 Filipino employees of the Asian Development Bank (ADB) have lost their appeal to recover P33.7 million in income tax remitted to the Bureau of Internal Revenue in 2012.
The Court of Tax Appeals (CTA) en banc reversed the decision of one of its divisions granting the refund claim.
The court's Special Third Division stated that ADB workers were entitled to get back the payment as Revenue Memorandum Circular 31-2013 imposing the tax was issued only in 2013, which cannot be applied retroactively, only prospectively like other regulations.
But the full court said the previous BIR administration committed an error for not issuing regulations collecting the tax following the ratification of the ADB charter sometime in 1966 in which the Philippine government retained its power to tax its citizens employed by the bank.
It said the mistake was corrected when BIR Commissioner Kim Jacinto-Henares issued the circular imposing the tax starting 2012 onward.
The court added the BIR can collect back accounts despite prolonged practice of non-collection of taxes due to errors by its officials.
The court said its 45-page resolution was based on many rulings of the court and Supreme Court on similar case.