Deutsche Bank AG Manila Branch v. CIR, 704 SCRA 216 (2013)

ISSUE:  Whether or not Deutsche Bank is no longer entitled to the treaty relief due to failure to comply with the application first with the BIR. 

FACTS:  Deutsche Bank applied for a tax refund by virtue of the preferential rate of 10% BPRT provided by the RP-Germany Tax Treaty as it had erroneously paid the regular 15% rate. When the matter was elevated to the Court of Tax Appeals, the tax refund was denied due to the failure of the taxpayer to file an application with the BIR prior to the availment of the preferential tax rate under the RP-Germany Tax Treaty. 

DECISION:  Deutsche bank is still entitled. 

RATIO DECIDENDI:  The Court held that the BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. Ultimately, the Supreme Court held that the failure to strictly comply with RMO 1-2000 will not deprive the taxpayer of the benefits provided under the RP-Germany Tax Treaty for as long as it possesses all the requirements stated therein. It went on to state that at most, the application for a tax treaty relief from the BIR should merely operate to confirm the entitlement of the taxpayer to the relief under the RP-Germany Tax Treaty.