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FIRST
DIVISION
CS
GARMENT,
INC.,*
G.R.
No.
182399
Petitioner,
-
versus
-
Present:
SERENO,
CJ,
LEONARDO-DE
CASTRO,
BERSAMIN,
VILLARAMA,
JR.,
and
REYES,JJ
COMMISSIONER
OF
INTERNAL
Promulgated:
REVENUE,
Respondent.
MAR
1
2
x.
------------------------------
--
-------
-----
x.
DECISION
SERENO,
CJ:
Before
the
Court
is
a
Rule
45
pet1t1on
for
review
on
certiorari,
assailing
the
respective
Decision
1
and
Resolution
2
of
the
Court
of
Tax.
Appeals
(CTA)
en
bane
in
EB
Case
No.
287.
These
judgments
in
tum
affirmed
the
Decision
3
and
the
Resolution
4
of
the
CTA
Second
Division,
•
The
case
title
indicated
in
the
petition
filed
with
this
Court
was
followed.
According
to
petitioner,
its
corporate
name
under
its
Articles
of
Incorporation
is
"CS
Garment,
Inc."
and
not
"CS
Garments,
Inc.,"
as
previously
referred
to
in
the
proceedings
before
the
Court
of
Tax
Appeals.
See
Petition
for
Review
at
1,
f.n.
1
(filed
on
23
May
2008),
rollo
at
10.
1
CS
Garments,
Inc.
v.
Commissioner
of
Internal
Revenue,
EB
Case
No.
287
(CTA
en
bane,
14
January
2008),
slip
op.,
rollo
at
40-62
(hereinafter
CT
A
en
bane
Decision).
2
CS
Garments,
Inc.
v.
Commissioner
of
Internal
Revenue,
EB
Case
No.
287
(CT
A
en
bane,
2
April
2008),
slip
op.,
rollo
at
37-39
(hereinafter
CTA
en
bane
Resolution).
Both
the
Decision
and
the
Resolution
of
the
CTA
en
bane
were
penned by
CTA
Associate
Justice
Caesar
A.
Casanova
and
concurred
in
by
Justices
Ernesto
D.
Acosta,
Juanito
C.
Castaneda,
Jr.,
Lovell
R.
Bautista,
Erlinda
P.
Uy,
and
Olga
Palanca-Enriquez.
3
CS
Garments,
Inc.
v.
Commissioner
of
Internal
Revenue,
CT
A
Case
No.
6520
(CT
A
2nd
Div.,
4
January
2007),
slip
op.,
rollo
at
63-94
(hereinafter
CT
A
2nd
Div.
Decision).
4
CS
Garments,
Inc.
v.
Commissioner
of
Internal
Revenue,
CT
A
Case
No.
6520
(CT
A
2"d
Div.,
25
May
2007),
slip
op.,
rollo
at
95-97
(hereinafter
CT
A
Sec.2nd
Div.
Resolution).
Both
the
Decision
and
the
Resolution
of
the
CTA
Second
Division
were
penned
by
CTA
Associate
Justice
Juanito
C.
Castaneda,
Jr.
and
concurred
in
by
Justices
Erlinda
P.
Uy
and
Olga
Palanca-Enriquez.
(
Decision 2 G.R. No. 182399
which ordered the cancellation
of certain items in the 1998 tax
assessments
against petitioner CS Garment, Inc. (CS Garment or petitioner).
Accordingly, petitioner was direct
ed to pay the Bureau of Inter
nal Revenue
(BIR) the remaining portion of the tax assessments. This portio
n was
comprised of the outstanding def
iciency value-added tax (VAT) o
n CS
Garment’s undeclared local sales and on the incidental sale of
a motor
vehicle; deficiency documentary stamp tax (DST) on a lease
agre
ement; and
deficiency income tax as a result of the disallowed expenses an
d undeclared
local sales. However, while the
present case was pending before
this Court,
CS Garment filed a Manifestation and Motion stating that the la
tter had
availed itself of the government’s tax amnesty program under
Re
public Act
No. (R.A.) 9480, or the 2007 Tax Amnesty Law.
F
ACTS
We reproduce the narration of facts culled by the CTA
en banc
5
as
follows:
Petitioner [CS Garment] is a domestic corporation duly organize
d
and existing under and by virtue of the laws of the Philippines
with
principal office at Road A, Cav
ite Ecozone, Rosario, Cavite. On
the other
hand, respondent is the duly appointed Commissioner of Internal
Revenue
of the Philippines authorized under law to perform the duties o
f said
office, including,
inter alia
, the power to assess ta
xpayers for [alleged]
deficiency internal revenue tax
liabilities and to act upon adm
inistrative
protests or requests for reconsid
eration/reinvestigation of suc
h
assessments.
Petitioner is registered with
the Philippine Economic Zone
Authority (PEZA) under Certific
ate of Registration No. 89-064,
duly
approved on December 18, 1989. As such, it is engaged in the bu
siness of
manufacturing garments for sale abroad.
On November 24, 1999, petitioner [CS Garment] received from
respondent [CIR] Letter of Authority No. 00012641 dated Novembe
r 10,
1999, authorizing the examination of petitioner’s books of acco
unts and
other accounting records for all
internal revenue taxes coverin
g the period
January 1, 1998 to December 31, 1998.
On October 23, 2001, petitioner received five (5) formal demand
letters with accompanying Assessment Notices from respondent, t
hrough
the Office of the Revenue Director of Revenue Region No. 9, San
Pablo
City, requiring it to pay the alleged deficiency VAT, Income, D
ST and
withholding tax assessments for taxable year 1998 in the aggreg
ate
amount of ₱2,046,580.10 broken down as follows:
5
CTA
en banc
Decision, supra note 1, at
2-5,
rollo
at 41-44.
Decision 3 G.R. No. 182399
Deficiency VAT
Basic tax due ₱ 314,194.00
Add: Surcharge 157,097.00
Interest 188,516.00
Total Amount Payable
₱ 659,807.00
Deficiency Income Tax (at Normal Rate of 34%)
Basic tax due ₱ 78,639.00
Add: Surcharge 39,320.00
Interest 43,251.00
Total Amount Payable
₱ 161,210.00
Deficiency Income Tax (at
Special Rate of 5%)
Basic tax due ₱ 742,574.10
Add: Surcharge -
Interest 408,416.00
Compromise Penalty 25,000.00
Total Amount Payable
₱ 1,175,990.10
Deficiency DST
Basic tax due ₱ 806.00
Add: Surcharge 403.00
Interest 484.00
Total Amount Payable
₱ 1,693.00
Deficiency EWT
Basic tax due ₱ 22,800.00
Add: Surcharge 11,400.00
Interest 13,680.00
Total Amount Payable
₱ 47,880.00
GRAND TOTAL
₱ 2,046,580.10
On November 20, 2001, or within the 30-day period prescribed
under Section 228 of the Tax Code,
as amended, petitioner filed
a formal
written protest with the res
pondent assailing the above assessm
ents.
On January 11, 2002, or within the s
ixty-day period after the f
iling
of the protest, petitioner submitted to the Assessment Division
of Revenue
Region No. 9, San Pablo City, additional documents in support o
f its
protest.
Respondent failed to act with finality on the protest filed by
petitioner within the period of one hundred eighty (180) days f
rom
January 11, 2002 or until July 10, 2002. Hence, petitioner appe
aled before
[the CTA] via a Petition for Re
view filed on August 6, 2002 or
within
thirty (30) days from the last
day of the aforesaid 180-day per
iod.
The case was raffled to the
Second Division
of [the CTA] for
decision. After trial on the merits, the
Second Division
rendered the
Assailed Decision on January
4, 2007 upon which the Second Divi
sion
cancelled respondent’s assessment against CS Garments for defic
iency
expanded withholding taxes for CY 1998 amounting to ₱47,880.00,
and
partially cancelled the defici
ency DST assessment amounting to
₱1,963.00. However, the
Second Division
upheld the validity of the
Decision 4 G.R. No. 182399
deficiency income tax assessments by subjecting the disallowed
expenses
in the amount of ₱14,851,478.83 and a portion of the undeclared
local
sales ₱1,541,936.60 (amounting to ₱l,500,000.00) to income tax
at the
special rate of 5%. The remainder of undeclared local sales of
₱1,541,936.06 (amounting to ₱41,936.60) was subjected to income
tax at
the rate of 34%. The
Second Division
found that total tax liability of CS
Garments amounted to ₱2,029,570.12, plus 20% delinquency intere
st
pursuant to Section 249(C)(3), and c
omputed the same as follows
:
Deficiency Tax VAT DST
Income Tax
TOTAL
at 5% at 34%
Basic Tax Due ₱ 314,194.00 ₱ 145
.00 ₱ 817,573.94 ₱ 1,789.44
25% Surcharge 78,548.50 36.25 204,393.49 447.36
20% Interest 188,516.00 102.02 422,898.52 925.6
₱
581,258.50
₱
283.27
₱
1,444,865.95
₱
3,162.40
₱
2,029,570.12
On January 29, 2007, CS Garments filed its “Motion for Partial
Reconsideration” of the said d
ecision. On May 25, 2007, in a re
solution,
the Second Division denied CS Garments’ motion for lack of meri
t.
(Citations omitted)
Petitioner appealed the case to the CTA
en banc
and alleged the
following: (1) the Formal Assessment Notices (FAN) issued by
th
e
Commissioner of Internal Revenue (CIR) did not comply with
the
requirements of the law; (2) the income generated by CS
Garment
from its
participation in the Cavite Expor
t Processing Zone’s trade fair
s and from its
sales to employees were not subject to 10% VAT; (3) the sale of
the
company vehicle to its general manager was not subject to 10%
V
AT; (4) it
had no undeclared local sales in
the amount of ₱1,541,936.60; a
nd (5) Rule
XX, Section 2 of the PEZA Rules
and Regulations allowed deducti
ons from
the expenses it had incurred in
connection with advertising and
representation; clinic and office supplies; commissions and pro
fessional
fees; transportation, freight and handling, and export fees; an
d licenses and
other taxes.
The CTA
en banc
affirmed the Decision and Resolution of the CTA
Second Division. As regards the first issue, the
banc
ruled that the CIR had
duly apprised CS Garment of the f
actual and legal bases for ass
essing the
latter’s liability for deficiency
income tax, as shown in the a
ttached Schedule
of Discrepancies provided to petitioner; and in the subsequent
reference of
the CIR to Rule XX, Section 2 of the Rules and Regulations of
R
.A. 7916.
With respect to the second issue, the CTA pronounced that the i
ncome
generated by CS Garment from the trade fairs was subject to int
ernal
revenue taxes, as those transact
ions were considered “domestic
sales” under
R.A. 7916, otherwise known as the Special Economic Zone
Act. Wi
th
respect to the third issue, the CTA
en banc
declared that the sale of the
Decision 5 G.R. No. 182399
motor vehicle by CS Garment to the latter’s general manager in
the amount
of ₱1.6 million was subject to VAT, since the sale was consider
ed an
incidental transaction within t
he meaning of Section 105 of the
NIRC. On
the fourth issue, the CTA found
that CS Garment had failed to d
eclare the
latter’s total local sales in the amount of ₱1,541,936.60 in it
s 1998 income
tax return. The tax court then calculated the income tax liabil
ity of petitioner
by subjecting ₱1.5 million of that liability to the preferentia
l income tax rate
of 5%. This amount represented the extent of the authority of C
S Garment,
as a PEZA-registered enterprise, to sell in the local market. T
he normal
income tax rate of 34% was then charged for the excess amount
o
f
₱41,936.60. Finally, as regards t
he fifth issue, the CTA ruled
that Section 2,
Rule XX of the PEZA Rules – which enumerates the specific
deduc
tions for
ECOZONE Export Enterprises – does not mention certain
claims of
petitioner as allowable deductions.
Aggrieved, CS Garment filed th
e present Petition for Review ass
ailing
the Decision of the CTA
en banc
. However, on 26 September 2008, while
the instant case was pending before this Court, petitioner file
da
Manifestation and Motion stating
that it had availed itself of
the
government’s tax amnesty program under the 2007 Tax
Amnesty Law
. It
thus prays that we take note of its availment of the tax amnest
y and confirm
that it is entitled to all the immunities and privileges under
the law. It has
submitted to this Court the foll
owing documents, which have all
egedly been
filed with Equitable PCI Bank–Cavite EPZA Branch, a
supposed au
thorized
agent-bank of the BIR:
6
1.
Notice of Availment of Ta
x Amnesty under R.A. 9480
2.
Statement of Assets, Liab
ilities, and Net worth (SALN)
3.
Tax Amnesty Return (BIR Form No. 2116)
4.
Tax Amnesty Payment Form (Acceptance of Payment Form or
BIR Form No. 0617)
5.
Equitable PCI Bank’s BIR Payment Form indicating that CS
Garment deposited the amount of ₱250,000 to the account of
the Bureau of Treasury–BIR
On 26 January 2009, the Office of
the Solicitor General (OSG) f
iled
its Comment objecting to the Man
ifestation and Motion of CS Gar
ment.
7
6
Annexes A to E of CS Garment’s Manifestation and Motion dated
25 September 2008,
rollo
at 171-175.
7
Comment (on Petitioner’s Manifestation and Motion dated Septem
ber 25, 2008) of the OSG (filed on 26
January 2009),
rollo
at 212-220.
Decision 6 G.R. No. 182399
The OSG asserts that the filing of an application for tax amnes
ty does not by
itself entitle petitioner to the benefits of the law, as the BI
R must still assess
whether petitioner was eligible f
or these benefits and whether
all the
conditions for the availment of tax amnesty had been satisfied.
Next, the
OSG claims that the BIR is given
a one-year period to contest t
he
correctness of the SALN filed by CS Garment, thus making
petiti
oner’s
motion premature. Finally, the OSG contends that pursuant to
BI
R Revenue
Memorandum Circular No. (RMC)
19-2008, petitioner is disqualifi
ed from
enjoying the benefits of the Tax Amnesty Law, since a
judgment
was
already rendered in favor of the BIR prior to the tax amnesty a
vailment. The
OSG points out that CS Garment submitted its application for ta
x amnesty
only on 6 March 2008, which was almost two months after the
CTA
en banc
issued its 14 January 2008 Decision and more than one year afte
r the CTA
Second Division issued its 4
January 2007 Decision.
On 8 February 2010, the Court re
quired both parties to prepare
and
file their respective memoranda within 30 days from notice.
8
After this
Court granted the motions for extension filed by the parties, t
he OSG
eventually filed its Memorandum on 18 May 2010, and CS
Garment
on 7
June 2010. It is worthy to note that in its Memorandum, the
OSG
did not
raise any argument with respect to petitioner’s availment of th
e tax amnesty
program. Neither did the OSG deny the authenticity of the
docum
ents
submitted by CS Garments or mention that a case had been filed
against the
latter for availing itself of the
tax amnesty program, taking i
nto account the
considerable lapse of time from the moment petitioner filed its
Tax Amnesty
Return and Statement of Assets
, Liabilities, and Net Worth in 2
008.
On 17 July 2013, the parties were ordered
9
to “move in the
premises”
10
by informing the Court of the status of the tax amnesty
availment of petitioner CS Garmen
t, including any supervening e
vent that
may be of help to the Court in its immediate disposition of the
present case.
Furthermore, the parties were directed to indicate
inter alia
(a) whether CS
Garment had complied with the re
quirements of the 2007 Tax Amne
sty
Law, taking note of the aforementioned documents submitted;
(b)
whether a
case had been initiated against petitioner, with respect to its
availment of the
tax amnesty program; and (c) wh
ether respondent CIR was still i
nterested in
pursuing the case. Petitioner eventually filed its Compliance
11
on 27 August
2013, and the OSG on 29 November 2013.
12
8
Order dated 8 February 2010,
rollo
at 229-230.
9
Order dated 17 July 2013,
rollo
at 321-323.
10
To clarify, an order to “move in the premises,” which is a ter
m of art employed in this Court, simply
means that the parties are obliged to inform the Court of perti
nent developments that may help in the
immediate disposition of the case. See
Oliveras v. Lopez,
G.R. No. L-29727, 14 December 1988,
168 SCRA 431.
11
Rollo
at 324-352.
12
Id. at 366-374.
Decision 7 G.R. No. 182399
According to the OSG,
13
CS Garment had already complied with all
documentary requirements of the
2007 Tax Amnesty Law. It also s
tated that
the BIR Litigation Division had not initiated any case against
petitioner
relative to the latter’s tax amnesty application. However, the
OSG reiterated
that the CIR was still intere
sted in pursuing the case.
I
SSUE
The threshold question before this Court is whether or not CS
Garment is already immune from paying the deficiency taxes
stat
ed in the
1998 tax assessments of the CIR,
as modified by the CTA.
D
ISCUSSION
Tax amnesty refers to the articulation of the absolute waiver b
ya
sovereign of its right to collect taxes and power to impose pen
alties on
persons or entities guilty of violating a tax law.
14
Tax amnesty aims to grant
a general reprieve to tax evader
s who wish to come clean by giv
ing them an
opportunity to straighten out their records.
15
In 2007, Congress enacted R.A.
9480, which granted a tax amnesty covering “all national intern
al revenue
taxes for the taxable year 2005 and prior years, with or withou
t assessments
duly issued therefor, that have
remained unpaid as of December
31, 2005.”
16
These national internal revenue taxes include (a) income tax; (
b) VAT; (c)
estate tax; (d) excise tax; (e
) donor’s tax; (f) documentary st
amp tax; (g)
capital gains tax; and (h) other percentage taxes.
17
Pursuant to Section 6 of
the 2007 Tax Amnesty Law, those w
ho availed themselves of the b
enefits of
the law became “immune from the
payment of taxes, as well as ad
ditions
thereto, and the appurtenant civil, criminal or administrative
penalties under
the National Internal Revenue C
ode of 1997, as amended, arising
from the
failure to pay any and all intern
al revenue taxes for taxable y
ear 2005 and
prior years.”
Amnesty taxpayers may immediately enjoy
the privileges and immunities under the
2007 Tax Amnesty Law, as soon as they
fulfill the suspensive conditions imposed
therein
A careful scrutiny of the 2007 Tax Amnesty Law would tell us
th
at
the law contains two types of conditions – one suspensive, the
other
13
Compliance (filed on 29 November 2013) at 2,
rollo
at 367.
14
Metropolitan Bank and Trust Co. v. Commissioner of Internal Revenue
, G.R. No. 178797, 4 August
2009, 595 SCRA 234; and
Philippine Banking Corporation (Now: Global Business Bank, Inc.) v.
Commissioner of Internal Revenue
, G.R. No. 170574, 30 January 2009, 577 SCRA 366.
15
Id.
16
R.A. 9480, Sec. 1.
17
BIR Revenue Memorandum Circular (RMC) No. 19-2008, 22 February
2008.
Decision 8 G.R. No. 182399
resolutory. Borrowing from the concepts under our Civil Code,
a
condition
may be classified as
suspensive
when the fulfillment of the condition results
in the acquisition of rights. On the other hand, a condition ma
y be
considered
resolutory
when the fulfillment of the condition results in the
extinguishment of rights. In the context of tax amnesty, the ri
ghts referred to
are those arising out of the privileges and immunities granted
under the
applicable tax amnesty law.
The imposition of a suspensive condition under the 2007 Tax
Amnesty Law is evident from the
following provisions of the law
:
2007 Tax Amnesty Law – Republic Act No. 9480
SECTION 2.
Availment of the Amnesty
.—
Any person, natural
or juridical, who wishes to avail himself of the tax amnesty
authorized
and granted under this Act
shall file
with the Bureau of Internal Revenue
(BIR)
a notice and Tax Amnesty Return accompanied by a Statement
of Assets, Liabilities and Networth
(SALN) as of December 31, 2005, in
such form as may be prescribed in the implementing rules and re
gulations
(IRR) of this Act,
and pay the applicable amnesty tax
within six months
from the effectivity of the IRR.
SECTION 4.
Presumption of Correctness of the SALN
. — The
SALN as of December 31, 2005 shall
be considered as true and co
rrect
except where the amount of declared networth is understated
to the
extent of thirty percent (30%) or more
as may be established in
proceedings initiated by, or at the instance of, parties other
than the
BIR or its agents
:
Provided
, That such proceedings must be initiated
within one year following the date of the filing of the tax amn
esty return
and the SALN. Findings of or adm
ission in congressional hearing
s, other
administrative agencies of govern
ment, and/or courts shall be a
dmissible
to prove a thirty percent (
30%) under-declaration.
SECTION 6.
Immunities and Privileges
.—
Those who availed
themselves of the tax amnesty under Section 5 hereof
, and have fully
complied with all its conditions shall be entitled to the follo
wing
immunities and privileges:
(a)
The
taxpayer shall be immune from the payment of
taxes, as well as additions thereto
, and the appurtenant
civil, criminal or administrative penalties under the
National Internal Revenue Code of 1997, as amended,
arising from the failure to pay
any and all internal revenue
taxes for taxable year 2005 and prior years.
(b)
The
taxpayer’s Tax Amnesty Return and the SALN as
of December 31, 2005 shall not be admissible as
evidence
in all proceedings that pertain to taxable year
2005 and prior years, insofar as such proceedings relate to
internal revenue taxes, befo
re judicial, quasi-judicial or
administrative bodies in which he is a defendant or
respondent, and except for the purpose of ascertaining the
networth beginning January 1, 2006,
the same shall not be
Decision 9 G.R. No. 182399
examined, inquired or looked into by any person or
government office. However, the taxpayer may use this
as a defense, whenever appropriate, in cases brought
against him.
(c)
The books of accounts and other records of the
taxpayer for the years covered by the tax amnesty
availed of shall not be examined
:
Provided
, That the
Commissioner of Internal Revenue may authorize in
writing the examination of the said books of accounts and
other records to verify the vali
dity or correctness of a claim
for any tax refund, tax credit (o
ther than refund or credit of
taxes withheld on wages)
, tax incentives, and/or
exemptions under existing laws.
All these immunities and privileges shall not apply where the
person failed to file a SALN and the Tax Amnesty Return, or whe
re
the amount of networth as of December 31, 2005 is proven to be
understated
to the extent of thirty percent (30%) or more, in accordance
with the provisions
of Section 3 hereof.
SECTION 7.
When and Where to File and Pay
. — The filing of
the Tax Amnesty Return and the payment of the amnesty tax for t
hose
availing themselves of the tax amnesty shall be made within six
months
starting from the effectivity of the IRR. It shall be filed at
the office of the
Revenue District Officer which has jurisdiction over the legal
residence or
principal place of business of the filer.
The Revenue District Officer
shall issue an acceptance of payment form authorizing an author
ized
agent bank, or in the absence thereof, the collection agent or
municipal treasurer concerned, to accept the amnesty tax paymen
t
.
Department of Finance Order No. 29-07: Rules and Regulations to
Implement R.A. 9480
SECTION 6.
Method of Availment of Tax Amnesty.
—
xxxx
3.
Payment of Amnesty Tax and Full Compliance
.—
Upon
filing of the Tax Amnesty Return
in accordance with Sec. 6 (2) hereof,
the
taxpayer shall pay the amnesty tax
to the authorized agent bank or
in the absence thereof, the
Collection Agent
or
duly authorized
Treasurer
of the city or municipality in which such person has his legal
residence or princip
al place of business.
The RDO shall issue sufficient Acceptance of Payment Forms
,
as may be prescribed by the BIR
for the use of
—
or to be accomplished
by
— the
bank
, the
collection agent
or the
Treasurer
,
showing the
acceptance of the amnesty tax payment.
In case of the authorized agent
bank, the branch manager or the
assistant branch manager shall
sign the
acceptance of payment form.
The Acceptance of Payment Form,
the Notice of Availment, the
SALN, and the Tax Amnesty Return shall be submitted to the RDO,
which shall be received only after complete payment. The comple
tion
Decision 10 G.R. No. 182399
of these requirements shall be d
eemed full compliance with the
provisions of R.A. 9480.
(Emphases supplied)
In availing themselves of the bene
fits of the tax amnesty progr
am,
taxpayers must first accomplish the following forms and
prepare
them for
submission: (1) Notice of Availment of Tax Amnesty Form; (2)
Ta
x
Amnesty Return Form (BIR Form No. 2116); (3) Statement of
Asset
s,
Liabilities and Net worth (SALN) as of December 31, 2005;
and (
4) Tax
Amnesty Payment Form (Acceptance of Payment Form or BIR
Form No
.
0617).
18
The taxpayers must then compute the amnesty tax due in
accordan
ce
with the rates provided in Section 5 of the law,
19
using as tax base their net
worth as of 31 December 2005 as declared in their SALNs. At
the
ir option,
the revenue district office (RDO) of the BIR may assist them in
accomplishing the forms and computing the taxable base and
the
amnesty
tax due.
20
The RDO, however, is disallowed from looking into,
questioning
or examining the veracity of the entries contained in the Tax A
mnesty
Return, SALN, and other documents they have submitted.
21
Using the Tax
Amnesty Payment Form, the taxpaye
rs must make a complete paymen
t of
the computed amount to an authorized agent bank, a collection
a
gent, or a
duly authorized treasurer o
f the city or municipality.
22
Thereafter, the taxpayers must file with the RDO or an authoriz
ed
agent bank the (1) Notice of Availment of Tax Amnesty Form;
(2)
Tax
Amnesty Return Form (BIR Form No. 2116); (3) SALN; and
(4) Tax
Amnesty Payment Form.
23
The RDO shall only receive these documents
after complete payment is made, as shown in the Tax Amnesty
Pay
ment
Form.
24
It must be noted that the completion of these requirements “sh
all be
deemed full compliance with the provisions of R.A. 9480.”
25
In our
considered view, this rule means
that amnesty taxpayers may imm
ediately
enjoy the privileges and immunities under the 2007 Tax
Amnesty
Law as
soon as the aforementioned do
cuments are duly received.
18
See
R.A. 9480, Sec. 2; Department of Finance Department Order No.
(DOF D.O.) 29-07, Rule II, Sec.
6(1) (Implementing Rules and Regulations of R.A. 9480); BIR RMC
No. 19-2008, 22 February 2008; and
BIR RMC NO. 69-2007, 5 November 2007.
19
R.A. 9480, Sec. 5 provides:
Grant of Tax Amnesty
. — Except for the persons or cases covered in Section
8 hereof, any person, whether natural or juridical,
may avail himself of the benefits of tax amnesty under
this Act, and pay the amnesty ta
x due thereon, based on his net
worth as of December 31, 2005 as
declared in the SALN
as of said period,
in accordance with the following
schedule of amnesty tax rates
and minimum amnesty tax payments
required: x x x x
20
DOF D.O. 29-07, Rule II, Sec. 6(2)(c); BIR RMC No. 19-2008, 22
February 2008.
21
DOF D.O. 29-07, Rule II, Sec. 6(2)(c).
See
R.A. 9480, Sec. 6.
22
DOF D.O. 29-07, Rule II, Sec. 6(3); R.A. 9480, Secs. 2 & 7; an
d BIR RMC NO. 69-2007, 5 November
2007.
23
See
R.A. 9480, Sec. 2; DOF D.O. 29-07, Rule II, Sec. 6(1); BIR RMC
No. 19-2008, 22 February 2008;
and BIR RMC NO. 69-2007, 5 November 2007.
24
DOF D.O. 29-07, Rule II, Sec. 6(3).
25
DOF D.O. 29-07, Rule II, Sec. 6(3);
Philippine Banking Corporation v. Commissioner of Internal
Revenue
, supra note 14.
See
R.A. 9480, Sec. 2 in relation to Sec. 6.
Decision 11 G.R. No. 182399
The OSG has already confirmed
26
to this Court that CS Garment has
complied with all of the documen
tary requirements of the law.
Consequently, and contrary to th
e assertion of the OSG, no furt
her
assessment by the BIR is necessary. CS Garment is now entitled
to invoke
the immunities and privileges
under Section 6 of the law.
Similarly, we reject the contention of OSG that the BIR was giv
en a
one-year period to contest the
correctness of the SALN filed by
CS Garment,
thus making petitioner’s motion pr
emature. Neither the 2007 Tax
Amnesty
Law nor Department of Finance (DO
F) Order No. 29-07 (Tax Amnest
y Law
IRR) imposes a waiting period of
one year before the applicant
can enjoy the
benefits of the Tax Amnesty Law.
It can be surmised from the ci
ted
provisions that the law intended the immediate enjoyment of the
immunities
and privileges of tax amnesty upon fulfilment of the requiremen
ts. Further, a
reading of Sections 4 and 6 of the
2007 Tax Amnesty Law shows t
hat
Congress has adopted a “no questions asked” policy, so long as
all the
requirements of the law and the rules are satisfied. The one-ye
ar period
referred to in the law should thus be considered only as a pres
criptive period
within which
third parties
, meaning “parties other than the BIR or its
agents,” can question the SALN – not as a waiting period
during
which the
BIR may contest the SALN and the taxpayer prevented from
enjoyi
ng the
immunities and privileges under the law.
This clarification, however, does not mean that the amnesty tax
payers
would go scot-free in case they substantially understate the am
ounts of their
net worth in their SALN. The 2007 Tax Amnesty Law imposes
a res
olutory
condition insofar as the enjoyme
nt of immunities and privileges
under the
law is concerned. Pursuant to Section 4 of the law, third parti
es may initiate
proceedings contesting the declared amount of net worth of the
amnesty
taxpayer within one year following the date of the filing of th
e tax amnesty
return and the SALN. Section 6 then states that “All these immu
nities and
privileges shall not apply x x x where the amount of networth a
s of
December 31, 2005 is proven to be understated to the extent of
thirty percent
(30%) or more, in accordance with the provisions of Section 3 h
ereof.”
Accordingly, Section 10 provides that amnesty taxpayers who
wil
lfully
understate their net worth shall be (a) liable for perjury unde
r the Revised
Penal Code; and (b) subject to
immediate tax fraud investigatio
n in order to
collect all taxes due and to criminally prosecute those found t
o have
willfully evaded lawful taxes due.
Nevertheless, in this case we note that the OSG has already
indicated
27
that the CIR had not filed a case relative to the tax amnesty
26
Compliance (filed on 29 November 2013) at 2,
rollo
at 367.
27
Compliance (filed on 29 November 2013) at 2,
rollo
at 367.
Decision 12 G.R. No. 182399
application of CS Garment, from the time the documents were
fil
ed in
March 2008. Neither did the OSG m
ention that a third party had
initiated
proceedings challenging the declared amount of net worth of
the
amnesty
taxpayer within the one-year period.
Taxpayers with pending tax cases are still
qualified to avail themselves of the tax
amnesty program.
With respect to its last assertion, the OSG quotes the followin
g
guidelines under BIR RMC 19-2008 t
o establish that CS Garment i
s
disqualified from availing itself
of the tax amnesty program:
28
A BASIC GUIDE ON THE T
AX AMNESTY ACT OF 2007
The following is a basic guide for
taxpayers who wish to avail
of tax
amnesty pursuant of Republic Act No. 9480 (Tax Amnesty Act of 2
007).
Who may avail of the amnesty?
xxxx
EXCEPT:

Withholding agents with respect
to their withholding tax liab
ilities

Those with pending cases:

Under the jurisdiction of the PCGG

Involving violations of the Anti-Graft and Corrupt Practices
Act

Involving violations of the A
nti-Money Laundering Law

For tax evasion and other criminal offenses under the NIRC
and/or the RPC

Issues and cases which were ruled by any court (even without
finality) in favor of the BIR prior to amnesty availment of the
taxpayer.
(e.g. Taxpayers who have failed to observe or follow
BOI and/or PEZA rules on entitle
ment to Income Tax Holiday
Incentives and other incentives)

Cases involving issues ruled w
ith finality by the Supreme Cou
rt
prior to the effectivity of R.A.
9480 (e.g. DST on Special Savi
ngs
Account)

Taxes passed-on and collected from customers for remittance t
o
the BIR

Delinquent Accounts/Accounts Receivable considered as assets
of
the BIR/Government, includin
g self-assessed tax (Emphasis
supplied)
28
BIR RMC 19-2008, 22 February 2008.
Decision 13 G.R. No. 182399
To resolve the matter, we refer to the basic text of the Tax Am
nesty
Law and its implementing
rules and regulations,
viz
:
Republic Act No. 9480
SECTION 8.
Exceptions
. — The tax amnesty provided in Section
5 hereof shall not extend to th
e following persons or cases exi
sting as of
the effectivity of this Act:
xxxx
(f)
Tax cases subject of final and executory judgment by
the courts.
DOF Order No. 29-07: Rules and Re
gulations to Implement R.A. 94
80
SECTION 5.
Exceptions
. — The tax amnesty shall not extend to
the following persons or cases existing as of the effectivity o
f R.A. 9480:
xxxx
7.
Tax cases subject of final and executory judgment by
the courts.
(Emphases supplied)
We cull from the aforementioned
provisions that neither the law
nor
the implementing rules state that a court ruling that has not a
ttained finality
would preclude the availment of
the benefits of the Tax Amnesty
Law. Both
R.A. 9480 and DOF Order No. 29-07 are quite precise in
declarin
g that
“[t]ax cases
subject of final and executory judgment
by the courts” are the
ones excepted from the benefits of the law. In fact, we have al
ready pointed
out the erroneous interpretation of the law in
Philippine Banking
Corporation (Now: Global Business Bank
, Inc.) v. Commissioner of Internal
Revenue
,
viz
:
The BIR’s
inclusion of “issues and cases which were ruled by
any court (even without finality) in favor of the BIR prior to
amnesty
availment of the taxpayer” as one of the exceptions
in RMC 19-2008 is
misplaced
. RA 9480 is specifically clear t
hat the exceptions to the tax
amnesty program include "tax cases subject of final and executo
ry
judgment by the courts." The present case has not become final
and
executory when Metrobank availed of the tax amnesty program.
29
(Emphasis supplied)
While tax amnesty, similar to
a tax exemption, must be
construed strictly against the t
axpayer and liberally in favor
of the taxing
29
Supra note 14.
Decision 14 G.R. No. 182399
authority,
30
it is also a well-settled doctrine
31
that the rule-making power of
administrative agencies cannot be extended to amend or expand
s
tatutory
requirements or to embrace matte
rs not originally encompassed b
y the law.
Administrative regulations shoul
d always be in accord with the
provisions of
the statute they seek to carry into effect, and any resulting i
nconsistency
shall be resolved in favor of the basic law. We thus definitive
ly declare that
the exception “[i]ssues and case
s which were ruled by any court
(even
without finality) in favor of the BIR prior to amnesty availmen
t of the
taxpayer” under BIR RMC 19-2008 is
invalid, as the exception go
es beyond
the scope of the provisions
of the 2007 Tax Amnesty Law.
32
Considering the completion of the
aforementioned requirements,
we
find that petitioner has successfully availed itself of the tax
amnesty benefits
granted under the Tax Amnesty Law. Therefore, we no longer
see
any need
to further discuss the issue of the deficiency tax assessments.
CS Garment is
now deemed to have been absolved of its obligations and is alre
ady immune
from the payment of taxes – including the assessed deficiency i
n the
payment of VAT, DST,
and income tax as affirmed by the CTA
en banc
– as
well as of the additions thereto (
e.g.
, interests and surcharges). Furthermore,
the tax amnesty benefits include
immunity from “the appurtenant
civil,
criminal, or administrative penalties under the NIRC of 1997, a
s amended,
arising from the failure to pay a
ny and all internal revenue ta
xes for taxable
year 2005 and prior years.”
33
WHEREFORE
, the instant Petition for Review is
GRANTED
. The
14 January 2008 Decision and 2 April 2008 Resolution of the
Cou
rt of Tax
Appeals
en banc
in CTA EB Case No. 287 is hereby
SET ASIDE,
and the
remaining assessments for deficiency taxes for taxable year 199
8 are hereby
CANCELLED
solely
in the light of the availment by CS Garment, Inc. of
the tax amnesty program
under Republic Act No. 9480.
30
Metropolitan Bank and Trust Co. v. Commissioner of Internal Revenue
, G.R. No. 178797, 4 August
2009, 595 SCRA 234 (citing
Philippine Banking Corporation
, supra note 14).
31
People v. Maceren
, G.R. No. L-32166, 18 October 1977, 79 SCRA 450 (citing
Calalang v. Williams
, 70
Phil. 726 [1940];
People v. Rosenthal
, 68 Phil. 328 [1939];
U.S. v. Tupasi Molina
, 29 Phil. 119 [1914];
Santos v. Estenzo
, 109 Phil. 419 [1960];
Teoxon v. Members of the Board of Administrators
, G.R. No. L-
25619, 30 June 1970, 33 SCRA 585;
Manuel v. General Auditing Office
, G.R. No. L-28952, 29 December
1971, 42 SCRA 660;
Deluao v. Casteel
, G.R. No. L-21906, 29 August 1969, 29 SCRA 350;
University of
Santo Tomas v. Board of Tax Appeals
, 93 Phil. 376 [1953];
El Colector de Rentas Internas v. Villaflor
, 69
Phil. 319 [1940];
Wise & Co. v. Meer
, 78 Phil. 655 [1947]; and
Del Mar v. Phil. Veterans Administration
,
G.R. No. L-27299, 27 June 1973, 51 SCRA 340);
Land Bank of the Philippines v. Court of Appeals
, G.R.
Nos. 118712 and 118745, 05 July 1996, 258 SCRA 404 (citing
Shell Philippines, Inc. v. Central Bank of
the Philippines
, 162 SCRA 628 [1988];
Philippine Petroleum Corporation v. Municipality of Pililla
, 198
SCRA 82 [1991]; and
Tayug Rural Bank v. Central Bank
, 146 SCRA 120 [1986]).
32
In
Philippine Banking Corporation
(supra note 14), we ruled that t
he BIR was “misplaced” in inclu
ding
in RMC 19-2008 as one of the exceptions those “issues and cases
which were ruled by any court (even
without finality) in favor of the BIR prior to amnesty availmen
t of the taxpayer.” Since in that case the
bank availed itself of the tax amnesty program before the judgm
ent against it had become “final and
executory,” we resolved to set aside the CTA Decision; see also
Metropolitan Bank and Trust Co. v.
Commissioner of Internal Revenue
, G.R. No. 178797, 4 August 2009, 595 SCRA 234.
33
R.A. 9480, Sec. 6(a).
Decision
15
G.R.
No.
182399
SO
ORDERED.
WE
CONCUR:
MARIA
LOURDES
P.
A.
SERENO
Chief
Justice,
Chairperson

TERESITA
J.
LEONARDO-DE
CASTRO
Associate
Justice
Associate
Justice
Associate
Justice
CERTIFICATION
'JR.
Pursuant
to
Section
13,
Article
VIII
of
the
Constitution,
I
certify
that
the
conclusions
in
the
above
Decision
had
been
reached
in
consultation
before
the
case
was
assigned
to
the
writer
of
the
opinion
of
the
Court's
Division.
MARIA
LOURDES
P.
A.
SERENO
Chief
Justice