G.R. No. 202105. April 28, 2021
LA FLOR DELA ISABELA, INC., PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
HERNANDO, J.:
in CTA EB No. 672, which denied petitioner La Flor Dela Isabela, Inc.’s
(La Flor) petition for cancellation of assessments issued by respondent
Commissioner of Internal Revenue (CIR) for lack of merit.
The Antecedents:
On September 6, 2000, the CIR issued a Letter of Authority[4]
for the examination of La Flor’s books of account for “all internal
revenue taxes for the period January 1, 1999 to December 31, 1999.”
In connection thereto, La Flor executed five waivers of the
statute of limitations to extend the CIR’s period to assess and collect
the deficiency taxes, to wit:
dated October 2, 2002 effective until June 30, 2003. The waiver was
received by the CIR on the same day but was notarized only on November
4, 2002;
dated April 11, 2003 which was effective until December 31, 2003. The
said Waiver was notarized on the same day but was submitted to the CIR’s
Large Taxpayers Audit and Investigation Division (LTAID) II only on
April 14, 2003. It was signed by Assistant Commissioner for LTAID II
Edwin R. Abella;
On April 8, 2003, the company received a Preliminary Assessment Notice dated March 19, 2003.[10]
On March 14, 2005, La Flor received a Formal Letter of Demand (FLD)[11]
with the following attachments: (a) Assessment No. LTAID II IT-99-00077
for deficiency income tax (IT); (b) Assessment No. LTAID II VT-99-0091
for value-added tax (VAT); (c) Assessment No. LTAID II WC-99-00019 for
withholding tax (WT) on compensation; and (d) Assessment No. LTAID II
CP-99-00020 for compromise penalty.
The company filed its protest[12] on March 30, 2005 against the FLD and a Supplemental Protest Letter[13] on April 12, 2005.
Thereafter, on July 9, 2007, it received the CIR’s Final Decision on Disputed Assessments (FDDA)[14] dated June 1, 2007, with a total assessment of deficiency taxes in the amount P10,460,217.23.
On October 8, 2007, La Flor applied for a tax amnesty under Republic Act No. (RA) 9480,[15] as well as for a compromise on October 18, 2007 pursuant to Section 204 of the National Internal Revenue Code (NIRC).
On November 23, 2007, the company received an undated Warrant of Distraint and/or Levy (WDL)[16]
issued by the CIR. This prompted petitioner to file a Petition for
Review with the CTA on November 29, 2007, assailing the CIR’s issuance
of WDL.
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Ruling of the Court of Tax Appeals in Division:
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In its June 9, 2010 Decision,[17]
the CTA’s Former Second Division dismissed La Flor’s petition on the
ground that it was filed out of time. It held that La Flor had thirty
(30) days or until August 8, 2007 from July 9, 2007 within which to
appeal the CIR’s FDDA as per Section 228 of the NIRC, as amended, or to
elevate its protest to the Commissioner as provided in Section 3.1.5 of
Revenue Regulations No. 12-99. However, instead of appealing the said
FDDA or elevating its protest to the Commissioner, La Flor availed of
the tax amnesty under RA 9480 for its assessed IT and VAT deficiencies
and filed an application for compromise for its assessed WT deficiencies
on October 8, 2007 and October 18, 2007, respectively. Hence, its
Petition for Review which was filed on November 29, 2007, or three
months from July 9, 2007, with the CTA in Division was clearly beyond
the 30-day reglementary period The FDDA dated June 1, 2007, therefore,
had become final, executory, and demandable.
La Flor filed a Motion for Reconsideration, which was denied by the CTA Division in its August 4, 2010 Resolution.[18]
Hence, La Flor filed a Petition for Review with the CTA En Banc on September 7, 2010.
| Ruling of the Court of Tax Appeals En Banc: |
In the assailed February 2, 2012 Decision,[19] the CTA En Banc
denied La Flor’s petition for lack of merit. It held that if a protest
is not acted upon by the CIR within 180 days from submission of
supporting documents, the taxpayer may appeal to the CTA within 30 days
from the lapse of the 180-day period. When the CIR issued its FLD dated
March 21, 2005, petitioner timely filed its protest on March 30, 2005.
It subsequently filed a Supplemental Protest Letter to submit additional
documents on April 12, 2005.
However, since the CIR did not act on La Flor’s protest within
180 days from the submission of its Supplemental Protest Letter on
April 12, 2005, petitioner had 30 days from October 9, 2005, or until
November 8, 2005, within which to file a Petition for Review before the
CTA. However, petitioner slept on its right and sought relief only on
November 29, 2007, or more than two years beyond the reglementary
period. According to the CTA En Banc, even granting that the
30-day period to appeal commenced to run only from July 9, 2007, when La
Flor received the CIR’s FDDA dated June 1, 2007, still La Flor’s
petition filed on November 29, 2007 was beyond the 30-day reglementary
period.
Moreover, the CTA En Banc found all waivers
executed by La Flor to be valid. The tax court noted that before the
expiration of the last waiver, the CIR issued FLD dated March 14, 2005,
which was received by petitioner on March 21, 2005. Hence, considering
that all waivers were validly executed, the subsequent issuance by the
CIR of the WDL for the purpose of collecting the assessed tax due was
necessarily valid.
Petitioner filed a Motion for Reconsideration which was denied by the CTA En Banc in its May 24, 2012 Resolution.[20]
Hence, this Petition.
Issues
The issues presented for Our resolution are as follows:
that La Flor’s obligation to pay IT and VAT deficiency has been absolved
by its availment of the tax amnesty; and
Arguments of the Petitioner:
Petitioner argues that the waivers were null and void and thus did
not toll the running of the prescriptive period for the CIR to make the
assessment.[22] It also claims that the CTA had jurisdiction to rule on the validity or invalidity of the assessments and the WDL.
La Flor further contends that the ruling in Philippine Journalists, Inc. v. Commissioner of Internal Revenue (Philippine Journalists[23]
that invalidated the therein assessments and warrant of distraint and
levy due to the nullity of the waiver executed by the taxpayer for its
failure to strictly comply with the requisites of a valid, binding, and
enforceable waiver of statute of limitations should similarly apply in
this case.
Petitioner insists that the first waiver was null and
void as to the assessed VAT deficiency for the first quarter of 1999
and WT deficiency from January to April 1999 as it was executed only on
May 28, 2002, when the said assessed VAT and WT deficiencies had already
prescribed. Similar to the first waiver, the second waiver was also
null and void as it was executed on October 2, 2002 beyond the
three-year prescriptive period.[24]
As regards the third waiver, petitioner avers that no date of
acceptance was provided by the CIR, hence, it was null and void for
being incomplete and defective.[25]
The fourth waiver was not accepted by the CIR or any duly authorized
representative. The Chief of LTAID II, Manuel V. Mapoy, had no authority
to accept and agree with the waiver for and on behalf of the CIR. Also,
the fourth waiver was executed only on January 6, 2004 or six days
after the expiration of the third waiver.[26] Lastly, the fifth waiver was necessarily null and void considering the nullity of the previous four waivers.[27]
Moreover, La Flor opines that it has been absolved from paying its IT
and VAT deficiencies by virtue of its availment of the tax amnesty under
RA 9480 on October 8, 2007. Petitioner further maintains that Section
8(f)[28] of RA 9480 does not
apply to its case as there was yet no final and executory judgment by
the courts on the validity and finality of the assessment. Hence, as to
its IT and VAT deficiencies, petitioner is immune from paying the same.[29]
Lastly, petitioner argues that it is not liable to pay compromise
penalty considering that the CIR failed to present proof that La Flor
agreed to a P25,000 compromise penalty.[30]
Arguments of the Respondent:
On the other hand, respondent CIR insists that La Flor cannot question
the validity of assessments in the guise of requesting the cancellation
of an undated WDL because the latter was issued pursuant to an FDDA
which had already become final, executory, and demandable.[31] It argues that Philippine Journalists
cannot be applied in the case at bar as there is no issue as to whether
the CTA could assume jurisdiction over a cancellation of WDL since the
present petition disputing the assessment made by the CIR was belatedly
filed. Hence, the tax court cannot anymore assume jurisdiction over the
present petition.[32]
Further, respondent CIR contends that due to La Flor’s failure to file
on time its petition before the CTA, its right to question the validity
of the five waivers had been waived. In addition, the CTA En Banc
already passed upon the issue of the validity of these waivers. As a
highly specialized agency, the conclusions of the CTA are not set aside
as a matter of principle.[33]
Lastly, respondent CIR maintains that the CTA did not err when it did
not rule on petitioner’s obligation to pay IT and VAT in lieu of its
application for tax amnesty and to pay a compromise penalty. Since the
petition was filed beyond the reglementary period, the tax court
correctly refrained from ruling on said issues. Besides, La Flor had
applied for tax amnesty on October 8, 2007. Ten days later or on October
18, 2007, it also applied for a compromise agreement. Hence, with its
subsequent application for compromise agreement, petitioner abandoned
its previous application for a tax amnesty.[34]
Our Ruling
The petition is meritorious.
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Jurisdiction of the Court of Tax Appeals:
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Section 7 of RA 9282 provides for the exclusive appellate
jurisdiction of the CTA on matters arising under the NIRC or other law
administered by the Bureau of Internal Revenue (BIR), to wit:
Sec. 7. Jurisdiction. — The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
x x x x
2. Inaction by the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue taxes, fees
or other charges, penalties in relation thereto, or other matter arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue,
where the National Internal Revenue Code provides a specific period of
action, in which case the inaction shall be deemed a denial; (Emphasis
supplied.)
In Philippine Journalists, we ruled that the CTA’s
appellate jurisdiction is not limited to cases involving decisions of
the CIR on matters relating to assessments or refunds. Section 7 (a)(2)
of RA 9282 also covers “other matter arising under the National
Internal Revenue Code or other laws administered by the Bureau of
Internal Revenue.” Clearly, the CTA has jurisdiction to determine
whether the WDL issued by the BIR is valid and rule on the validity of
the five waivers of the statute of limitations and La Flor’s application
for tax amnesty under RA 9480.
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CIR’s period to assess and collect internal revenue taxes:
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Section 203 of the NIRC, as amended, provides for a period of three
years for the BIR to assess and collect internal revenue taxes, counted
from the last day prescribed by law for the filing of the return or
from the day the return was filed, whichever comes later. Consequently,
any assessment issued after the expiration of such period is no longer
valid and effective.
On the other hand, Section 222 of the NIRC provides for the period to collect taxes by WDL, to wit:
Section 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes.
x x x x
(b) If before the expiration of the time prescribed in Section
203 for the assessment of the tax, both the Commissioner and the
taxpayer have agreed in writing to its assessment after such time, the
tax may be assessed within the period agreed upon. The period so agreed
upon may be extended by subsequent written agreement made before the
expiration of the period previously agreed upon.x x x x
(d) Any internal revenue tax, which has been assessed within the
period agreed upon as provided in paragraph (b) hereinabove, may be
collected by distraint or levy or by a proceeding in court within the
period agreed upon in writing before the expiration of the five (5)-year
period. The period so agreed upon may be extended by subsequent written
agreements made before the expiration of the period previously agreed
upon.x x x x
In this case, the Court is confronted with the issue of whether
the CIR validly issued the WDL to collect the alleged deficiency taxes
of La Flor. Verily, the validity of the WDL hinges on the validity of
the FLD issued by the CIR, which must be within the prescriptive period
of three years or the period agreed upon in the waiver/s of statute of
limitations. Hence, it is important to determine at this point whether
the waivers executed by La Flor were valid.
To stress, Section
222(b) of the NIRC provides that any internal revenue tax which has been
assessed within the period of limitation may be collected by distraint
or levy or by a proceeding in court within five years from the
assessment. The law is clear that for a collection to be valid, the
assessment must be within the period of limitation. Essentially, when
the assessment is issued beyond the prescriptive period, the
government’s right to collect deficiency taxes also prescribes. Hence,
there is no more basis for its collection save for certain exceptions.[35]
Validity of the Waivers:
Section 222 (b) of the NIRC, as amended, states that:
SECTION 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. —
x x x x
b) If before the expiration of the time prescribed in Section
203 for the assessment of the tax, both the Commissioner and the
taxpayer have agreed in writing to its assessment after such time, the
tax may be assessed within the period agreed upon. The period so agreed
upon may be extended by subsequent written agreement made before the
expiration of the period previously agreed upon.
On April 4, 1990, the BIR issued Revenue Memorandum Order (RMO)
No. 20-90, which provides for the guidelines in the proper execution of
the waiver of statute of limitations under the NIRC. It holds that a
valid waiver of statute of limitations must be: (a) in writing; (b)
agreed to by both the Commissioner and the taxpayer; (c) before the
expiration of the ordinary prescriptive periods for assessment and
collection; and (d) for a definite period beyond ordinary prescriptive
period for assessment and collection.[36]
The period agreed upon can still be extended by subsequent written
agreement, provided that it is executed prior to the expiration of the
first period agreed upon.[37]
Parenthetically, Revenue Delegation Authority Order (RDAO) No. 05-01
dated August 2, 2001 authorized subordinate officials to sign the
waivers and introduced a new waiver form. It provides for the following
procedures for the proper execution of a valid waiver, to wit:
1. The waiver must be in the proper form prescribed by RMO
20-90. The phrase “but not after ______ 19____,” which indicates the
expiry date of the period agreed upon to assess/collect the tax after
the regular three-year period of prescription, should be filled up.2. The waiver must be signed by the taxpayer himself or his duly
authorized representative. In the case of a corporation, the waiver
must be signed by any of its responsible officials. In case the
authority is delegated by the taxpayer to a representative, such
delegation should be in writing and duly notarized.3. The waiver should be duly notarized.
4. The CIR or the revenue official authorized by him must sign
the waiver indicating that the BIR has accepted and agreed to the
waiver. The date of such acceptance by the BIR should be indicated.
However, before signing the waiver, the CIR or the revenue official
authorized by him must make sure that the waiver is in the prescribed
form, duly notarized, and executed by the taxpayer or his duly
authorized representative.5. Both the date of execution by the taxpayer and date of
acceptance by the Bureau should be before the expiration of the period
of prescription or before the lapse of the period agreed upon in case a
subsequent agreement is executed.6. The waiver must be executed in three copies, the original
copy to be attached to the docket of the case, the second copy for the
taxpayer and the third copy for the Office accepting the waiver. The
fact of receipt by the taxpayer of his/her file copy must be indicated
in the original copy to show that the taxpayer was notified of the
acceptance of the BIR and the perfection of the agreement.[38]
This Court had invalidated waivers which did not strictly comply
with the provisions of RMO No. 20-90 and RDAO No. 05-01, such as, but
not limited to: (a) failure to state the specific date within which the
BIR may assess and collect revenue taxes;[39] (b) failure to sign by the CIR as mandated by law or by his duly authorized representative;[40]
(c) failure to indicate the date of acceptance to determine whether the
waiver was validly accepted before the expiration of the original
three-year period;[41] (d) failure to furnish the taxpayer of a copy of the waiver;[42] (e) failure to indicate on the original copies of the waivers the date of receipt by the taxpayer of their file copy;[43] (f) execution of the waivers without the written authority of the taxpayer’s representative to sign the waiver on their behalf;[44] (g) absence of any proof that the taxpayer was furnished a copy of the waiver;[45] (h) a waiver signed by the Assistant Commissioner-Large Taxpayers Service and not by the CIR;[46] (i) failure to specify the kind and amount of tax due;[47]
and (j) a waiver which refers to a request for extension of time within
which to present additional documents and not for reinvestigation
and/or reconsideration of the pending internal revenue case.[48]
Applying Section 222 (b) in relation with Section 203 of the NIRC, as
well as the applicable BIR issuances, namely, RMO 20-90 and RDAO 05-01,
and the relevant jurisprudence, We find that the waivers subject of this
case failed to strictly comply with the requirements under the law.
First,
the first and fourth waivers executed on May 28, 2002 and January 6,
2004, respectively, failed to specify the date of acceptance by the CIR
or his duly authorized representative for the purpose of determining
whether the said waivers were validly accepted before the expiration of
the original three year period and the period agreed upon in case of
subsequent agreement.
Second, all five waivers were
signed by Cesar C. Maranan (Maranan), the Accounting Manager of
petitioner La Flor. Section 25 of Batas Pambansa Blg. 68, also known as The Corporation Code of the Philippines,
states that the corporate officers of a stock corporation are the
president, secretary, treasurer, or any other officers as may be
provided for in the by-laws. No notarized written authority was attached
to the waivers authorizing Maranan to sign the waivers for and on
behalf of La Flor. Neither was there any evidence showing that Maranan
was among the responsible officials of petitioner La Flor authorized by
its by-laws to execute a waiver.
Third, even assuming
that the first three waivers were validly executed and that Maranan had
authority to sign the waivers on behalf of petitioner, the fourth Waiver
was executed and notarized only on January 6, 2004, clearly beyond the
expiry of the third waiver on December 31, 2003. The fourth waiver did
not also indicate the date of acceptance by the CIR or his duly
authorized representative. It bears noting that both the execution and
the acceptance of the subsequent waiver should be made before the
expiration of the period of prescription or before the lapse of the
period agreed upon in the prior or preceding waiver. Patently, the
fourth Waiver was executed and accepted on January 6, 2004, or beyond
the period agreed upon by La Flor and the CIR in the third Waiver, i.e. until December 31, 2003.
Consequently, with the nullity of the fourth waiver, the execution and
acceptance of the fifth waiver on November 4, 2004 were not valid since
there was no more period to extend for which the CIR could assess La
Flor’s internal revenue taxes for taxable year 1999. Section 222(b) of
the NIRC is explicit that the period agreed upon may be extended by
subsequent written agreement made before the expiration of the period
previously agreed upon.
Considering the foregoing defects in the
waivers executed by the parties, the periods for the CIR to assess or
collect the alleged Withholding Tax on Compensation (WTC) and Expanded
Withholding Tax (EWT) deficiencies were not extended. The period within
which the CIR could assess the internal revenue taxes of La Flor had
already prescribed. In fine, the assessments issued by the BIR are
therefore considered void and of no legal effect. Without a valid
waiver, the statute of limitations on assessment and consequently on
collection of the deficiency taxes could not have been suspended. We
thus hold that La Flor’s assessed EWT and WTC deficiencies under FDDA
dated July 9, 2007 had already prescribed on the ground that the subject
waivers failed to strictly comply with the requirements under the law.
Hence, the CIR’s issuance of the FLD dated March 14, 2005 was null and
void as it was issued beyond the period agreed upon in the third Waiver
or until December 31, 2003. In turn, the issuance of the WDL to collect
the deficiency taxes under FLD dated March 14, 2005 was therefore null
and void as it was clearly issued beyond the prescriptive period. Thus,
the CTA erred when it denied La Flor’s petition for the cancellation of
the undated WDL on the ground of prescription.
Thus, assuming
that La Flor indeed failed to timely file an appeal within 30 days (a)
from the lapse of the 180-day period from April 12, 2005; or (b) from
receipt of the denial of its protest on July 9, 2007, its failure to
file an appeal with the CTA on the disputed assessment is immaterial in
view of the invalidity of the assessments.
In any event,
petitioner rightly and timely filed an appeal with the CTA assailing the
validity of the WDL upon its availment of the tax amnesty of its
assessed IT and VAT deficiencies under RA 9480. Its subsequent filing of
the application and the payment of the corresponding amnesty tax under
RA 9480 operate as suspensive and resolutory conditions which vested La
Flor with immunities and privileges under RA 9480 and finally settled La
Flor’s IT and VAT deficiencies for taxable year 1999, respectively.
Evidently, the CTA had jurisdiction over the petition for review filed
by petitioner La Flor questioning the validity of the undated WDL issued
by the BIR after its availment of the Tax Amnesty Program under RA
9480.
It bears stressing that petitioner applied for tax amnesty
under RA 9480 after the CIR’s issuance of FLD dated March 14, 2005 and
FDDA dated July 9, 2007. In Commissioner of Internal Revenue v. Transfield Philippines, Inc.,[49]
We upheld the subsequent application and completion of the tax amnesty
of the taxpayer under RA 9480 even after the issuance by the BIR of the Final Notice before Seizure dated December 20, 2007, to wit:
As regards the issue on the propriety and timeliness of the
petition for review, suffice it to say that in this case, the reckoning
point of the 30-day period to appeal the assessments is immaterial
because the assessments have already been extinguished by respondent’s
compliance with the requirements for tax amnesty under R.A. No. 9480. To
sustain petitioner’s contention that respondent should have elevated an
appeal to the CTA when it received the Final Notice before Seizure, or
at most, when it received the July 10, 2008 Letter of the
BIR, would lead to an absurd and unjust situation wherein the taxpayer
avails of the benefits of a tax amnesty law, yet the BIR still issues a
WDAL simply because the taxpayer did not appeal the assessment to the
CTA. The requirement of filing an appeal with the CTA even after the
taxpayer has already complied with the requirements of the tax amnesty
law negates the amnesty granted to the taxpayer and creates a condition
which is not found in the law. It is worthy to note that
respondent filed a protest to the assessments, but because of the
passage of R.A. No. 9480, it no longer pursued its legal remedies
against the assessments. Thus, respondent cannot be faulted for
filing a petition for review with the CTA only upon receipt of the WDAL
for it rightfully relied on the provision of R.A. No. 9480 that “those
who availed themselves of the tax amnesty x x x, and have fully complied
with all its conditions x x x shall be immune from the payment of taxes
x x x.” Finally, in CS Garment, Inc. v. Commissioner of Internal Revenue,
the Court pronounced that taxpayers may immediately enjoy the
privileges and immunities under R.A. No. 9480 as soon as they fulfill
the suspensive condition imposed therein, i.e., submission of
1) Notice of Availment of Tax Amnesty Form; 2) Tax Amnesty Return Form
(BIR Form No. 2116); 3) SALN as of December 31, 2005; and 4) Tax Amnesty
Payment Form (Acceptance of Payment Form or BIR Form No. 0617). In
fine, the deficiency taxes for Fiscal Year July 1, 2001 to June 30, 2002
are deemed settled in view of respondent’s compliance with the
requirements for tax amnesty under R.A. No. 9480.[50] (Emphasis supplied.)
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Tax Amnesty Program under RA 9840:
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On May 24, 2007, RA 9480 was enacted into law. It granted a tax
amnesty to all national internal revenue taxes for the taxable year 2005
and prior years, with or without assessments duly issued therefor, that
have remained unpaid as of December 31, 2005 with the following
exceptions:
SECTION 8. Exceptions. — The tax amnesty provided in
Section 5 hereof shall not extend to the following persons or cases
existing as of the effectivity of this Act:(a) Withholding agents with respect to their withholding tax liabilities;
(b) Those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government;(c) Those with pending cases involving unexplained or unlawfully
acquired wealth or under the Anti-Graft and Corrupt Practices Act;
(d) Those with pending cases filed in court involving violation of the Anti-Money Laundering Law;(e) Those with pending criminal cases for tax evasion and other
criminal offenses under Chapter II of Title X of the National Internal
Revenue Code of 1997, as amended, and the felonies of frauds, illegal
exactions and transactions, and malversation of public funds and
property under Chapters III and IV of Title VII of the Revised Penal
Code; and
(f) Tax cases subject of final and executory judgment by the courts.
On August 15, 2007, the Department of Finance (DOF) issued DOF
Department Order No. 29-07 (DOF DO No. 29-07), otherwise known as the Rules and Regulations to Implement RA 9840.
On October 8, 2007, petitioner La Flor filed an application for tax
amnesty under RA 9480. Section 6 of DOF DO No. 29-07 provides for the
method of availing a tax amnesty under RA 9480, to wit:
SEC. 6. Method of Availment of Tax Amnesty. –
1. Forms/Documents to be filed. – To avail of the general tax amnesty, concerned taxpayers shall file the following documents/requirements:
a. Notice of Availment in such forms as mav be prescribed by the BIR.
b. Statement of Assets, Liabilities and Networth (SALN) as of December 31, 2005 in such forms, as may be prescribed by the BIR.
c. Tax Amnesty Return in such form as may be prescribed by the BIR.
2. Place of Filing of Amnesty Tax Return. – The Tax Amnesty Return, together with the other documents stated in Sec. 6 (1) hereof, shall be filed as follows:
a. Residents shall file with the Revenue District Officer
(RDO)/Large Taxpayer District Office of the BIR which has jurisdiction
over the legal residence or principal place of business of the taxpayer,
as the case may be.b. Non-residents shall file with the office of the Commissioner of the BIR, or with the RDO.
c. At the option of the taxpayer, the RDO may assist the taxpayer
in accomplishing the forms and computing the taxable base and the
amnesty tax payable, but may not look into, question or examine the
veracity of the entries contained in the Tax Amnesty Return, Statement
of Assets, Liabilities and Networth, or such other documents submitted
by the taxpayer.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 Agents or duly authorized
Treasurer of the city or municipality in which such person has his legal
residence or principal 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
by 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 completion of these
requirements shall be deemed full compliance with the provisions of RA
9480.
Petitioner La Flor presented as evidence the following documents
to support its availment of the Tax Amnesty under R.A. No. 9480: (a) Tax
Amnesty Return dated October 8, 2007;[51] (b) Tax Amnesty Payment Form dated October 8, 2007;[52] (c) Tax Payment Deposit Slip dated October 8, 2007;[53] (d) Notice of Availment of Tax Amnesty dated October 4, 2007;[54] and (e) Statement of Assets and Liabilities (SALN) as of December 31, 2005.[55]
Section 7 of DOF DO No. 29-07 provides that “qualified tax payers are
required to pay an amnesty tax equivalent to five percent (5%) of their
total declared networth as of December 31, 2005, as declared in the SALN
as of the said period, or resulting increase in networth by amending
such previously filed statements for purposes of this tax amnesty,
thereby including still undeclared assets and/or liabilities, as the
case may be, as of December 31, 2005, or the absolute minimum amnesty
payment, whichever is higher.” Below is the schedule of tax amnesty
payments:[56]
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1. Individual (whether resident or nonresident, including resident or nonresident aliens), Estates, and Trusts
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5% or P50,000 whichever is higher
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2. Corporations
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(a) With subscribed capital above P50 million
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5% or P500,000 whichever is higher
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(b) With subscribed capital above P20 million up to P50 million
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5% or P250,000 whichever is higher
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(c) With subscribed capital of P5 million to P20 million
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5% or P100,000 whichever is higher
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(d) With subscribed capital of P5 million
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5% or P25,000 whichever is higher
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3. Other judicial entities, including
partnerships, but not limited to, cooperatives and foundations, that have become taxable as of December 31, 2005 |
5% or P50,000 whichever is higher
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4. Taxpayers who filed their balance
sheets/SALN, together with their income tax returns for 2005, and who desire to avail of the tax amnesty under this Act by amending such previously file statements thereby including still undeclared assets and/or liabilities |
15% base on the resulting increase in
networth or the minimum absolute amounts of amnesty tax prescribed above, whichever is higher. |
Verily, petitioner La Flor complied with all the requirements under
RA 9480 as implemented by DOF DO No. 29-07 and paid the corresponding
amnesty tax. Thus, having fully complied with the conditions under RA
9480 and DOF DO No. 29-07, La Flor is entitled to the following
immunities and privileges:
SEC 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 following
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, before 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 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 validity or correctness of a claim for any tax refund, tax
credit (other 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 where 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. [Emphasis supplied.]
Petitioner La Flor’s compliance with the requirements under RA
9480 as implemented by DOF DO No. 20-97 extinguished its tax
liabilities, additions, and all appurtenant civil, criminal, or
administrative penalties under the NIRC.[57]
Specifically, petitioner La Flor is already immune from the payment of
deficiency taxes assessed for taxable year 1999 as per FLD dated March
14, 2005 and FDDA dated July 9, 2007, namely, IT, VAT, and compromise
penalty, except the EWT and WTC, which are not covered by RA 9480.
Further, La Flor’s immunity from paying taxes under RA 9480 is
effective despite the fact that the CIR already issued the FDDA dated
July 9, 2007 prior to its application for tax amnesty and subsequent
payment thereof. In Commissioner of Internal Revenue v. Philippine Aluminum Wheels, Inc.,[58]
we ruled that only persons with “tax cases subject of final and
executory judgment by the courts” are disqualified to avail of the Tax
Amnesty Program under RA 9480, which means that there must be a final
and executory judgment promulgated by a court. The FDDA dated July 9,
2007 issued by the BIR is not a tax case subject of final and executory
judgment by the court as contemplated under Section 8(f) of RA 9480.
Hence, even with the issuance of the subject FDDA dated July 9, 2007,
petitioner La Flor is not disqualified to avail of the immunities and
privileges under RA 9480.
In addition, the alleged compromise agreement for EWT and WTC
filed by petitioner is not considered as an abandonment of its availment
of the tax amnesty under RA 9480. This is especially when the Tax
Amnesty Program does not include its assessed EWT and WTC deficiencies
for taxable year 1999 as per FDDA dated July 9, 2007. Clearly, La Flor
validly applied for a compromise agreement even after filing its
application for tax amnesty under RA 9480.
Considering petitioner
La Flor’s compliance with the requirements under RA 9480 as implemented
by DOF DO No. 20-97, it is now deemed absolved of its obligations and
is already immune from the payment of the said taxes as well as
additions, civil, criminal and administrative penalties.
Finally, the doctrine of estoppel cannot be applied as an exception to
the statute of limitations on assessment of taxes considering that the
BIR provides a detailed procedure for the proper execution of waiver
which must be strictly followed.[59]
The BIR cannot simply invoke the doctrine of estoppel to conceal its
failure to comply with its own issuances, namely, RMO No. 20-90 and RDAO
No. 05-01.[60] It cannot just
collect taxes based on an already prescribed assessment, even when
taxes are considered the lifeblood of government. A waiver of the
statute of limitations is a derogation of a taxpayer’s right to security
against prolonged and unscrupulous investigations. Thus, it must be
carefully and strictly construed.[61]
Hence, both the assessment and collection “should be made in accordance
with law as any arbitrariness will negate the very reason for
government itself.”[62]
WHEREFORE, the instant Petition is hereby GRANTED. The assailed February 2, 2012 Decision and May 24, 2012 Resolution of the Court of Tax Appeals En Banc in CTA EB No. 672 (CTA Case No. 7709) are hereby REVERSED and SET ASIDE.
SO ORDERED.
Leonen (Chairperson), Inting, Delos Santos, and J. Lopez, JJ., concur.
[1] Rollo, pp. 31-50.
[2] Id. at 6-29; penned
by Associate Justice Esperanza R. Fabon-Victorino and concurred in by
Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Caesar A.
Casanova, Olga Palanca-Enriquez, and Amelia R. Cotangco-Manalastas.
Associate Justices Lovell R. Bautista and Cielito N. Mindaro-Grulla were
on wellness leave.
[3] Records, pp. 709-713.
[4] Folder of Exhibits, pp. 1-2.
[5] Records, pp. 270-271.
[6] Id. at 272.
[7] Records, p. 273.
[8] Id. at 274.
[9] Id. at 275.
[10] Folder of Exhibits, pp. 449-458
[11] Records, pp. 276-278.
[12] Id. at 279-281.
[13] Id. at 282-283.
[14] Id. at 284-286.
[15] Id. at 290. AN ACT
ENHANCING REVENUE ADMINISTRATION AND COLLECTION BY GRANTING AN AMNESTY
ON ALL UNPAID INTERNAL REVENUE TAXES IMPOSED BY THE NATIONAL GOVERNMENT
FOR TAXABLE YEAR 2005 AND PRIOR YEARS. (Approved: May 24, 2007)
[16] Records, pp. 291-292.
[17] Id. at 430-444.
[18] Id. at 479-480
[19] Rollo, pp. 6-29.
[20] Records, pp. 709-713.
[21] Rollo, p. 36.
[22] Id. at 39.
[23] 488 Phil. 218, 228-229 (2004).
[24] Rollo, pp. 43-44.
[25] Id. at 44.
[26] Id.
[27] Id. at 44-45.
[28] Republic Act No. 9480
SECTION 8. Exceptions. –The tax amnesty provided in Section 5
hereof shall not extend to the following persons or cases existing as of
the effectivity of this Act:
x x x
(f) Tax cases subject of final and executory judgment by the courts.
[29] Rollo, pp. 46-47.
[30] Id. at 48.
[31] Id. at 157-161.
[32] Id. at 161-162.
[33] Id. at 162-166.
[34] Id. at 166.
[35] Section 222 (a) and Section 223 of NIRC.
[36] Bank of the Philippine Islands v. Commissioner of Internal Revenue, 510 Phil. 1, 21 (2005).
[37] Id. at 21-22.
[38] Commissioner of Internal Revenue v. Systems Technology Institute, Inc., 814 Phil. 933, 942-943 (2017) citing Commissioner of Internal Revenue v. The Stanley Works-Sales (Phils.), Inc., 749 Phil. 280, 290 (2014), citing Commissioner of Internal Revenue v. Kudos Metal Corporation, 634 Phil. 314, 325-326 (2010), further citing Philippine Journalists, Inc. v. Commissioner of Internal Revenue, supra note 23 at 231 (2004).
[39] Id. at 943, citing Philippine Journalists, Inc. v. Commissioner of Internal Revenue, supra note 23 at 232.
[40] Id. at 943-944, citing Philippine Journalists, Inc. v. Commissioner of Internal Revenue, supra note 23 at 232-233, Commissioner of Internal Revenue v. FMF Development Corporation, 579 Phil. 174, 185 (2008), Commissioner of Internal Revenue v. The Stanley Works-Sales (Phils.), Inc., supra note 38 at 290.
[41] Id. citing Philippine Journalists, Inc. v. Commissioner of Internal Revenue, supra note 23 at 234, Commissioner of Internal Revenue v. FMF Development Corporation, supra note 40 at 185 Commissioner of Internal Revenue vs. Kudos Metal Corporation, supra note 38 at 326, Commissioner of Internal Revenue v. Standard Chartered Bank, 765 Phil. 102, 116-117, (2015)
[42] Id. citing Philippine Journalists, Inc. v. Commissioner of Internal Revenue, supra note 23 at 234-235 and Commissioner of Internal Revenue v. FMF Development Corporation, supra note 40 at 185.
[43] Id. at 944 citing Commissioner of Internal Revenue vs. Kudos Metal Corporation, supra note 38 at 326.
[44] Id.
[45] Id. citing Commissioner of Internal Revenue v. The Stanley Works-Sales (Phils.), Inc., supra note 38 at 290.
[46] Id. citing Commissioner of Internal Revenue v. Standard Chartered Bank, supra note 41 at 117.
[47] Id.
[48] Id.
[49] G.R. No. 211449, January 16, 2019.
[50] Id.
[51] Records, p. 287.
[52] Id. at 288.
[53] Id. at 289.
[54] Id. at 290.
[55] Id. at 1128.
[56] Section 5 of R.A. No. 9480.
[57] Commissioner of Internal Revenue v. Philippine Aluminum Wheels, Inc., 816 Phil. 638, 645 (2017), citing Philippine Banking Corporation v. Commissioner of Internal Revenue, 597 Phil. 363, 388 (2009).
[58] Id. at 647.
[59] Commissioner of Internal Revenue v. Systems Technology Institute, Inc., supra note 38 at 946 citing Commissioner of Internal Revenue v. Kudos Metal Corporation, supra note 38 at 328.
[60] Id. citing Commissioner of Internal Revenue v. Kudos Metal Corporation, supra note 38 at 329.
[61] Id.
[62] Commissioner of Internal Revenue v. Bank of the Philippine Islands, G.R. No. 224327, June 11, 2018 citing Marcos II v. CA, 339 Phil. 253, 263 (1997).