Court favors 2 Filipino ADB employees in BIR case

MANILA, Philippines – The Mandaluyong Regional Trial Court Branch 213 has ruled in favor of two employees of the Asian Development Bank after it voided a section of a Bureau of Internal Revenue (BIR) memorandum that exempts only ADB’s foreign officers and staff from paying Philippine income taxes.

A 31-page decision dated September 30, the Mandaluyong Regional Trial Court Branch 213 deemed Section 2 (d) (1) of  BIR Revenue Memorandum Circular 31-2013 as void “for being issued without legal basis, in excess of authority and/or without due process of law.”

The decision, penned by Judge Carlos Valenzuela, also said the section of the memorandum was not backed by legislation or regulation.

The decision favors two Filipino ADB employees, Erwin Salaveria and Portia Gonzales, who filed a case against BIR Commissioner Kim Henares and sought to declare “invalid” the section of the BIR memorandum.

The BIR will file a motion for reconsideration.

The ADB said in a statement on October 1 that its management has been informed of the court decision, which is being close studied by its legal department.

The ADB said it has provided appropriate support to its Filipino staff regarding tax matters and will continue to do so, and that it respects the tax laws and policies of all of its 67 member-countries, including the Philippines, the host of its regional headquarters.

“Taxes have a significant impact on staff, and must be administered clearly and consistently. ADB management cares about the welfare of staff and expects that the relevant authorities in the Philippines will provide fair treatment to ADB Filipino staff and resolve this issue expeditiously,” the ADB said.  

On September 25, the BIR filed separate criminal complaints with the Department of Justice against 6 other Filipino ADB employees for willful failure to pay taxes in 2013.

In early September, the BIR filed tax evasion charges against 5 ADB Filipino employees.

The BIR upholds the agreement between the ADB and the government which states that only officers and staff of the ADB who are not Philippine nationals shall be exempted from paying Philippine income taxes. – Rappler.com