Bureau of Internal Revenue vs. Cagang

A tax amnesty under Republic Act No. 9480 does not extend to withholding tax liabilities, as explicitly provided in Section 8(a) of the law. Accordingly, a corporate officer designated as treasurer may be held criminally liable under Section 255 of the NIRC for the willful failure to pay the corporation's withholding taxes, notwithstanding the corporation's availment of amnesty for other tax deficiencies.

CEDCO, Inc. was assessed by the BIR for deficiency income tax, value-added tax (VAT), expanded withholding tax, and withholding tax on compensation for taxable years 2000 and 2001. After its administrative protest was denied, CEDCO availed of the tax amnesty under R.A. No. 9480 in November 2007. The BIR subsequently filed a criminal complaint against CEDCO's president and its treasurer, respondent Samuel B. Cagang, for willful failure to pay the assessed taxes. The DOJ initially dismissed the complaint but later reversed itself, finding probable cause. Cagang then successfully challenged this before the CA, which held the amnesty applied to all the assessed taxes.

• Nature of the Case: This is a petition for review on certiorari assailing the CA decision that nullified the DOJ's finding of probable cause to charge respondent Samuel B. Cagang for violation of Section 255 of the NIRC.
• The Tax Assessment: The BIR issued a Final Decision on Disputed Assessment (FDDA) on September 28, 2007, holding CEDCO liable for deficiency taxes for taxable years 2000 and 2001, including income tax, VAT, expanded withholding tax, and withholding tax on compensation.
• Availment of Tax Amnesty: On November 28, 2007, CEDCO availed of the tax amnesty under R.A. No. 9480, which covers national internal revenue taxes for taxable year 2005 and prior years.
• Criminal Complaint: For CEDCO's failure to pay the assessed taxes, the BIR filed a complaint-affidavit on August 14, 2009, against Cagang (as treasurer) and Paredes (as president) for willful failure to pay deficiency taxes under Section 255 of the NIRC.
• DOJ Proceedings: The DOJ-NPS dismissed the complaint (2010), but the Secretary of Justice reversed this on reconsideration (2013), finding probable cause based on the interpretation that the amnesty's exception for "pending criminal cases" included those filed at the DOJ.
• CA Ruling: The CA granted Cagang's certiorari petition, ruling that CEDCO qualified for the amnesty and that Cagang could not be prosecuted.
• Evidence of Corporate Office: Records showed Cagang was appointed Corporate Secretary/Treasurer effective April 1, 1999, per Board Resolution No. 73. A certification dated June 26, 2000, showed a different person became treasurer, and the 2003 General Information Sheet listed Cagang as treasurer.

• Coverage of Tax Amnesty: The BIR argued that CEDCO is disqualified from availing of the tax amnesty with respect to its withholding tax liabilities, as expressly excepted under Section 8(a) of R.A. No. 9480.
• Probable Cause for Criminal Liability: The BIR maintained that probable cause exists to charge Cagang for violation of Section 255 of the NIRC, as he was the corporate treasurer responsible for the payment of withholding taxes during the relevant period.

• Entitlement to Amnesty: Cagang contended that CEDCO validly availed of the tax amnesty under R.A. No. 9480, which granted immunity from payment of taxes and related penalties, thus extinguishing any criminal liability.
• Lack of Personal Liability: Cagang argued he cannot be held liable as he was never the corporate treasurer but held the positions of Corporate Secretary and Director for Administration & Finance, which are not among the corporate officers enumerated under Section 253(d) of the NIRC.
• Finality of Prior DOJ Resolution: Cagang asserted that the DOJ Resolution dated February 27, 2012, which sustained the dismissal of the complaint, had already become final and executory when the BIR filed its motion for reconsideration.

• Tax Amnesty Exception: Whether CEDCO is disqualified from availing of the tax amnesty under R.A. No. 9480 with respect to its withholding tax liabilities.
• Probable Cause for Criminal Prosecution: Whether there is probable cause to charge respondent Samuel B. Cagang with violation of Section 255 of the NIRC for the willful failure to pay CEDCO's withholding taxes.

• Tax Amnesty Exception: The tax amnesty under R.A. No. 9480 does not extend to CEDCO's withholding tax liabilities. Section 8(a) of the law and Section 5(a) of its Implementing Rules and Regulations explicitly exclude "withholding agents with respect to their withholding tax liabilities." A tax amnesty, like a tax exemption, is construed strictly against the taxpayer. The BIR's assessment clearly identified CEDCO's liabilities as arising from its failure to withhold and remit taxes.
• Probable Cause for Criminal Prosecution: Probable cause exists to charge Cagang under Section 255 of the NIRC. Evidence on record, including a Board Resolution and the General Information Sheet, established that Cagang was the treasurer of CEDCO during part of the taxable year 2000. Under Section 253(d) of the NIRC, the treasurer of a corporation is among those who may be held criminally liable for violations. A finding of probable cause only requires a reasonable belief that the act constituted the offense charged, not proof beyond reasonable doubt.

• Strict Construction of Tax Amnesty — A tax amnesty, similar to a tax exemption, is never favored or presumed in law and must be construed strictly against the taxpayer and liberally in favor of the taxing authority. The Court applied this principle to hold that the explicit exception for withholding taxes in R.A. No. 9480 must be given its plain meaning, disqualifying CEDCO from amnesty for such liabilities.
• Liability of Corporate Officers under the NIRC — Under Section 253(d) of the NIRC, the penalty for violations committed by a corporation shall be imposed on, among others, its treasurer. The Court applied this provision to establish that Cagang, having been identified as the corporate treasurer, could be held personally liable for the corporation's failure to pay withholding taxes.

• "A tax amnesty, much like a tax exemption, is never favored or presumed in law. The grant of a tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer and liberally in favor of the taxing authority." — This passage reaffirms the strict interpretive standard applicable to tax amnesty laws, crucial for determining their scope and exceptions.
• "Probable cause has been defined as the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. The term does not mean 'actual or positive cause' nor does it import absolute certainty." — This excerpt clarifies the evidentiary threshold for initiating a criminal prosecution, emphasizing its preliminary nature.

• CS Garment, Inc. v. Commissioner of Internal Revenue, 729 Phil. 253 (2014) — Cited for the definition and purpose of a tax amnesty as an absolute waiver by the government of its right to collect taxes and impose penalties.
• Commissioner of Internal Revenue v. Philippine Aluminum Wheels, Inc., 816 Phil. 638 (2017) — Cited to reinforce the nature of a tax amnesty as a relinquishment by the government of its right to collect.
• Asia International Auctioneers, Inc. v. Commissioner of Internal Revenue, 695 Phil. 852 (2012) — Cited for the doctrine that tax amnesties, like tax exemptions, are strictly construed against the taxpayer.
• Unilever Phils., Inc. v. Tan, 725 Phil. 486 (2014) — Cited for the definition of probable cause in the context of preliminary investigation.

• Section 8(a), Republic Act No. 9480 (Tax Amnesty Law of 2007) — Provides that the tax amnesty "shall not extend to... [w]ithholding agents with respect to their withholding tax liabilities." The Court relied on this provision to exclude CEDCO's withholding tax liabilities from the amnesty.
• Section 255, National Internal Revenue Code of 1997 — Penalizes any person required under the Code who willfully fails to pay tax, withhold, or remit taxes withheld. This was the substantive offense for which Cagang was charged.
• Section 253(d), National Internal Revenue Code of 1997 — Provides that in the case of corporations, the penalty shall be imposed on the treasurer, among other officers. This provision established Cagang's potential criminal liability as the corporate treasurer.

• Associate Justice Amy C. Lazaro-Javier (Chairperson, per the division composition at the time of decision)
• Associate Justice Rodil V. Zalameda
• Associate Justice Jhosep Y. Lopez
• Associate Justice Antonio T. Kho, Jr.