CASE BRIEF NO. 2019-0059


“Tax assessments have already been extinguished by the taxpayer’s compliance with the requirements for tax amnesty under R.A. No. 9480.


CASE: Commissioner of Internal Revenue vs. Transfield Philippines, Inc. [G.R. No. 211449, January 16, 2019]

PONENTE: Justice Jose C. Reyes, Jr.

SUBJECT:

A.       TAXATION LAW:
          i.        Tax Amnesty under R.A. 9480 – Requirements and Exceptions
          ii.       Warrant of Distraint or Levy
          iii.      Appeal to Court of Tax Appeals

B.       ADMINISTRATIVE LAW:
          i.        Rule-making power of administrative agencies – Limitations  

FACTS: Transfield Philippines, Inc. (Transfield) received copies of Final Assessment Notice (FAN) issued by Commissioner of Internal Revenue (CIR). Transfield was assessed the total sum of P563,168,996.70 for deficiency income tax, Expanded Withholding Tax (EWT), and Value-Added Tax (VAT), inclusive of interest and compromise penalties for the Fiscal Year July 2001 to June 2002.

Transfield filed a protest with the Bureau of Internal Revenue (BIR). Without acting on Transfield’s protest, the BIR issued the First Collection Letter dated August 3, 2007, demanding immediate payment of the assessments.

Then, on January 17, 2008, CIR constructively served a Final Notice Before Seizureto Transfield’s office.

Transfield did not file any petition for review from its receipt of the Final Notice Before Seizure.

On February 29, 2008, Transfield availed of the benefits of Republic Act (R.A.) No. 9480 by submitting the following documents to the Development Bank of the Philippines (DBP), an authorized agent bank of the BIR: 1) Notice of Availment of Tax Amnesty; 2) Tax Amnesty Return (BIR Form No. 2116); 3) Statement of Assets, Liabilities and Net Worth (SALN) as of December 31, 2005; and 4) Tax Amnesty Payment Form (BIR Form No. 0617). On the same day, Transfield paid the BIR, through DBP, an amnesty tax in the amount of P112,500.00.

On May 5, 2008, Transfield informed the BIR in a letter that it availed of the benefits of R.A. No. 9480 and furnished the same with copies of the tax amnesty documents. 

 On July 10, 2008, BIR sent a letter to Transfield, advising the latter that under Revenue Memorandum Circular (RMC) No. 19-2008, those “with delinquent accounts/accounts receivable considered as assets of the BIR/ Government, including self-assessed tax,” are not allowed to avail of the benefits of R.A. No. 9480.

Likewise, Transfield did not assail the July 10, 2008 Letter of the CIR.


Subsequently, CIR issued a Warrant of Distraint and/or Levy (WDAL) directing the seizure of Transfield’s personal properties, and/or levy of its real property and interest in/or rights to real property. A copy of the WDAL was served on Transfield’s offices on September 11, 2008. On the same day, the Bank of the Philippine Islands (BPI) informed Transfield that the latter’s account was being put on hold because of the WDAL.

Transfield filed a petition for review with the CTA on October 10, 2008.

The CTA First Division ruled that the CIR is already barred from collecting from Transfield the alleged tax liabilities because it is undisputed that Transfield had complied with all the legal requirements pertaining to its application for tax amnesty. It added that when Transfield complied with all the requirements of R.A. No. 9480, it is deemed to have settled in full all its tax liabilities for the years covered by the tax amnesty.

The CIR moved for reconsideration, but the same was denied by the CTA- Division

Aggrieved, the CIR filed a petition for review before the CTA En Banc which denied the same.

The CTA En Banc concluded that Transfield properly availed of the immunity from payment of taxes under R.A. No. 9480, and as such, the issuance of a WDAL was invalid.

The CIR moved for reconsideration, but the same was denied by the CTA En Banc. Hence, it filed a petition for review on certiorari before the Supreme Court.

The CIR argues that Section 9 of R.A. No. 9282 provides that a party adversely affected by a decision, ruling or inaction of the CIR may file an appeal with the CTA within 30 days after the receipt of such decision or ruling; that the 30-day period for filing an appeal with the CTA should be reckoned from Transfield’s receipt of the Final Notice Before Seizure, or at the latest, its receipt of the Letter dated July 10, 2008.


ISSUES:
A.       Whether or not Transfield can avail of the tax amnesty under R.A. No. 9480.
          a.       What is tax amnesty?
          b.       Whether Transfield has complied with the requirements for the grant of tax amnesty under R.A. No. 9480.
          c.       Who are disqualified to avail of R.A. No. 9480?

B.       Whether Transfield timely filed its appeal to the CTA questioning the CIR’s assessment.
          a.       Whether availment of tax amnesty by Transfield negates the CIR to issue the Warrant of Distraint and/or Levy (WDAL).


RULING:
A.       A tax amnesty operates as a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law. It is an absolute forgiveness or waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate. A tax amnesty, much like a tax exemption, is never favored nor presumed in law. The grant of a tax amnesty is akin to a tax exemption; thus, it must be construed strictly against the taxpayer and liberally in favor of the taxing authority [Commissioner of Internal Revenue v. Marubeni Corporation, 423 Phil. 862 (2001)].

On May 24, 2007, R.A. No. 9480 took effect and authorized the grant of a tax amnesty to qualified taxpayers for 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. The pertinent provisions of R.A. No. 9480 are:

SEC. 1. Coverage. — There is hereby authorized and granted a tax amnesty which shall cover 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: Provided, however, that the amnesty hereby authorized and granted shall not cover persons or cases enumerated under Section 8 hereof. Xxxx

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. (Emphases supplied) x x x x

To implement R.A. No. 9480, the Department of Finance (DOF) issued DOF Department Order No. 29-07 (DO 29-07). Section 6 thereof outlines the method for availing a tax amnesty under R.A. No. 9480, viz.:

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 form as may be prescribed by the BIR;
b. Statement of Assets, Liabilities and Networth (SALN) as of December 31, 2005 in such [form], 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, [SALN], 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 [R.A. No.] 9480. x x x (Emphasis supplied)

In this case, it remains undisputed that Transfield complied with all the requirements pertaining to its application for tax amnesty by submitting to the BIR a Notice of Availment of Tax Amnesty, Tax Amnesty Return, SALN and Tax Amnesty Payment Form. Further, it paid the corresponding amnesty taxes. Hence, Transfield has successfully availed itself of the tax amnesty benefits granted under R.A. No. 9480 which include immunity from “the appurtenant civil, criminal, or administrative penalties under the NIRC of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years.”

The CIR, however, insists that Transfield is still liable for deficiency taxes, contending that under RMC No. 19-2008, Transfield is disqualified to avail of the tax amnesty because it falls under the exception of “delinquent accounts or accounts receivable considered as assets by the BIR or the Government, including self-assessed tax.”

In Commissioner of Internal Revenue v. Philippine Aluminum Wheels, Inc. (G.R. No. 216161, August 9, 2017), CIR raised a similar argument which the Court did not sustain and instead ruled that “in case there is a discrepancy between the law and a regulation issued to implement the law, the law prevails because the rule or regulation cannot go beyond the terms and provisions of the law. x x x To give effect to the exception under RMC No. 19-2008 of delinquent accounts or accounts receivable by the BIR, as interpreted by the BIR, would unlawfully create a new exception for availing of the Tax Amnesty Program under [R.A. No.] 9480.”

Moreover, it must be noted that under Section 8 of R.A. No. 9480, only the following persons are disqualified from availing of the tax amnesty:

SEC. 8. Exceptions. — x x x
(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.

It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the maxim expressio unius est exclusio alterius.In implementing tax amnesty laws, the CIR cannot now insert an exception where there is none under the law. Indeed, a tax amnesty must be construed strictly against the taxpayer and liberally in favor of the taxing authority. However, the rule-making power of administrative agencies cannot be extended to amend or expand statutory requirements or to embrace matters not originally encompassed by the law. Administrative regulations should always be in accord with the provisions of the statute they seek to implement, and any resulting inconsistency shall be resolved in favor of the basic law (CS Garment, Inc. v. Commissioner of Internal Revenue, 729 Phil. 253).


B.       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 Transfield’s compliance with the requirements for tax amnesty under R.A. No. 9480. To sustain CIR’s contention that Transfield 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 Transfield 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, Transfield 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 [729 Phil. 253 (2014)], 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 thereini.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 Transfield’s compliance with the requirements for tax amnesty under R.A. No. 9480.

Related Case Briefs:
a)       CIR v. Marubeni Corporation, 423 Phil. 862 (2001)
b)       CS Garment, Inc. v. CIR, 729 Phil. 253 (2014)
c)       CIR v. Philippine Aluminum Wheels, Inc. (G.R. No. 216161, August 9, 2017)
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THINGS DECIDED:

A.       A tax amnesty operates as a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law. It is an absolute forgiveness or waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate. A tax amnesty, much like a tax exemption, is never favored nor presumed in law. The grant of a tax amnesty is akin to a tax exemption; thus, it must be construed strictly against the taxpayer and liberally in favor of the taxing authority [Commissioner of Internal Revenue v. Marubeni Corporation, 423 Phil. 862 (2001)].

B.       To give effect to the exception under RMC No. 19-2008 of delinquent accounts or accounts receivable by the BIR, as interpreted by the BIR, would unlawfully create a new exception for availing of the Tax Amnesty Program under [R.A. No.] 9480.”


Moreover, it must be noted that under Section 8 of R.A. No. 9480, only the following persons are disqualified from availing of the tax amnesty:

SEC. 8. Exceptions. — x x x


(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.

C.       It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the maxim expressio unius est exclusio alterius. In implementing tax amnesty laws, the CIR cannot now insert an exception where there is none under the law.

D.      In CS Garment, Inc. v. Commissioner of Internal Revenue [729 Phil. 253 (2014)], 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).

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