Commissioner of Internal Revenue vs. Covanta Energy Philippine Holdings, Inc.

A taxpayer that has submitted all documentary requirements and paid the applicable amnesty tax under R.A. No. 9480 is entitled to the immunities and privileges of the tax amnesty program, and the SALN is presumed true and correct unless the CIR proves an underdeclaration of net worth by at least 30%. Blank entries in certain columns of the SALN do not invalidate the submission where the required information is provided in attached schedules.

The CIR is the head of the Bureau of Internal Revenue tasked with assessing and collecting national internal revenue taxes. CEPHI is a corporate taxpayer subject to deficiency assessments for value-added tax (VAT), expanded withholding tax (EWT), and minimum corporate income tax (MCIT) for taxable year 2001. R.A. No. 9480, approved on May 24, 2007, established a tax amnesty program covering all unpaid internal revenue taxes for taxable year 2005 and prior years, allowing taxpayers to settle tax liabilities upon submission of prescribed documents—principally a Statement of Assets, Liabilities, and Net Worth (SALN) and a Tax Amnesty Return—and payment of the applicable amnesty tax. The law's implementing rules, embodied in DOF Department Order No. 29-07, prescribe the procedure and documentary requirements for availment.

On December 6, 2004, the CIR issued Formal Letters of Demand and Assessment Notices against CEPHI for deficiency VAT and EWT in the aggregate amount of ₱754,496.99, representing CEPHI's liabilities for taxable year 2001. CEPHI protested these assessments by filing two separate Letters of Protest on January 19, 2005. The CIR, however, issued another Formal Letter of Demand and Assessment Notice dated January 11, 2005, assessing CEPHI for deficiency MCIT in the amount of ₱467,801.99, likewise for taxable year 2001. CEPHI filed a Letter of Protest on the MCIT assessment on February 16, 2005.

The protests remained unacted upon. CEPHI filed separate petitions before the CTA seeking cancellation and withdrawal of the deficiency assessments: on October 10, 2005, for the deficiency VAT and EWT (docketed as CTA Case No. 7338), and on November 9, 2005, for the deficiency MCIT (docketed as CTA Case No. 7365). The CIR filed his Answers on December 6, 2005, and January 10, 2006, respectively, and the cases were consolidated upon his motion.

After the parties submitted their formal offers of evidence, CEPHI filed a Supplemental Petition on October 7, 2008, informing the CTA that it had availed of the tax amnesty under R.A. No. 9480. CEPHI submitted a Supplemental Formal Offer of Evidence together with the documents relevant to its tax amnesty, including its SALN and Tax Amnesty Return. The CTA required the parties to submit memoranda, and the case was submitted for decision upon compliance.

The CTA Second Division partially granted CEPHI's petitions on July 27, 2010, cancelling the deficiency VAT and MCIT assessments but sustaining the deficiency EWT assessment of ₱131,791.02 plus surcharge and interest, because tax amnesty does not extend to withholding agents with respect to their withholding tax liabilities. The CIR's motion for reconsideration was denied on December 13, 2010. The CIR elevated the matter to the CTA en banc, raising the sole issue of whether CEPHI validly availed of the tax amnesty. The CTA en banc denied the appeal on March 30, 2012, and denied the CIR's motion for reconsideration on August 16, 2012. The CIR then filed the present petition before the Supreme Court, assailing the validity of CEPHI's tax amnesty on the ground that CEPHI's SALN failed to provide complete information, specifically the entries for the "Reference" and "Basis for Valuation" columns.

• Insufficiency of SALN: The CIR argued that CEPHI is not entitled to the immunities and privileges under R.A. No. 9480 because its SALN failed to comply with the documentary requirements of the tax amnesty law, specifically the omission of information in the "Reference" and "Basis for Valuation" columns in both its original and amended SALNs.
• No Period of Limitation: The CIR alleged that there is no period of limitation in challenging CEPHI's compliance with the requirements of the tax amnesty program.

• Validity of Tax Amnesty Availment: Whether CEPHI validly availed of the tax amnesty under R.A. No. 9480 despite leaving the "Reference" and "Basis for Valuation" columns in its SALN blank.
• Presumption of Compliance: Whether the SALN submitted by CEPHI is presumed true and correct absent proof of a 30% underdeclaration of net worth.

• Validity of Tax Amnesty Availment: Yes. CEPHI's SALN substantially complied with the requirements of R.A. No. 9480 because the information required in the blank columns was supplied through Schedules 1 to 7 attached to the SALN.
• Presumption of Compliance: Yes. Pursuant to Section 4 of R.A. No. 9480, the SALN is presumed true and correct, and the burden of overturning this presumption falls on the party claiming an underdeclaration. The CIR failed to adduce evidence proving a 30% underdeclaration of CEPHI's net worth.

• Validity of Tax Amnesty Availment: R.A. No. 9480 and its implementing rules (DOF Department Order No. 29-07) require taxpayers to file a Notice of Availment, a SALN as of December 31, 2005, and a Tax Amnesty Return, and to pay the applicable amnesty tax. Section 3 of R.A. No. 9480 and Section 8 of the implementing rules enumerate the essential contents of the SALN: a declaration of assets (with descriptions, classification, location, and valuation), liabilities (with creditor information), and net worth. A review of CEPHI's original and amended SALN showed that all statutorily mandated information was reflected in its submission. While the columns for "Reference" and "Basis for Valuation" were left blank, CEPHI attached Schedules 1 to 7 to its SALN, which provided the required information under the law and its implementing rules. The information required in those columns—the specific description of declared assets—was deemed supplied when CEPHI referred to the attached schedules. The CIR could not disregard or set aside the SALN on the basis of blank columns where the substance of the required information was furnished through attachments.

• Presumption of Compliance: Under Section 4 of R.A. No. 9480, the SALN is presumed true and correct. This presumption may be overturned only if the CIR establishes that the taxpayer understated its net worth by at least 30%. The underdeclaration may be proven through (a) proceedings initiated by parties other than the BIR or its agents within one year from the filing of the SALN and Tax Amnesty Return, or (b) findings or admissions in congressional, administrative, or court proceedings. In this case, aside from bare allegations, the CIR presented no evidence that CEPHI's net worth was understated. No third-party proceedings were initiated within the one-year period, and no findings or admissions in any congressional, administrative, or court proceeding established a 30% underdeclaration. As held in CS Garment, Inc. vs. CIR, the tax amnesty law contains suspensive conditions (filing and payment requirements) and resolutory conditions (proof of 30% underdeclaration). CEPHI fulfilled the suspensive conditions by submitting all required documents and paying the amnesty tax, entitling it to immediate enjoyment of the immunities and privileges. The resolutory condition was not triggered because the CIR failed to prove the requisite underdeclaration. While tax amnesty is in the nature of a tax exemption strictly construed against the taxpayer, the plain text of R.A. No. 9480 could not be disregarded.

• Suspensive and Resolutory Conditions in Tax Amnesty — R.A. No. 9480 contains two types of conditions: suspensive and resolutory. The suspensive conditions consist of the filing of the required documents (Notice of Availment, SALN, and Tax Amnesty Return) and payment of the amnesty tax; upon fulfillment, the taxpayer immediately acquires the right to enjoy the immunities and privileges of the program. The resolutory condition is the proven underdeclaration of net worth by at least 30%, which extinguishes those rights. The Court applied this framework to hold that CEPHI, having fulfilled the suspensive conditions, was entitled to the amnesty privileges, and the CIR, having failed to prove the resolutory condition, could not disqualify CEPHI.

• Presumption of Truth and Correctness of SALN — Under Section 4 of R.A. No. 9480, the taxpayer's SALN is presumed true and correct. The burden of overturning this presumption rests on the party claiming an underdeclaration of net worth. The presumption may be overturned only by proof of a 30% or more understatement, established through proceedings initiated by non-BIR parties within one year of filing, or through findings or admissions in congressional, administrative, or court proceedings. The Court applied this presumption to CEPHI's SALN, finding that the CIR adduced no evidence of any underdeclaration.

• "Upon the taxpayer's full compliance with these requirements, the taxpayer is immediately entitled to the enjoyment of the immunities and privileges of the tax amnesty program." — This passage states the suspensive-condition rule: once documentary and payment requirements are met, entitlement to amnesty immunities attaches immediately, without need of further BIR approval.

• "A careful scrutiny of the 2007 Tax Amnesty Law would tell us that the law contains two types of conditions one suspensive, the other resolutory." — This quotation, drawn from CS Garment, Inc. vs. CIR and adopted in the decision, articulates the doctrinal framework distinguishing the conditions that trigger and extinguish tax amnesty privileges.

• "While tax amnesty is in the nature of a tax exemption, which is strictly construed against the taxpayer, the Court cannot disregard the plain text of R.A. No. 9480." — This passage balances the principle of strict construction of tax exemptions against the Court's obligation to apply the statutory text as written, reinforcing that the presumption of correctness of the SALN and the 30% threshold are statutory mandates the CIR must satisfy.

• CS Garment, Inc. vs. CIR, 729 Phil. 253 (2014) — Controlling precedent. The Court relied on this case for the doctrinal distinction between suspensive and resolutory conditions under R.A. No. 9480, applying its framework to hold that CEPHI's fulfillment of suspensive conditions entitled it to amnesty privileges.

• CIR vs. Apo Cement Corporation, G.R. No. 193381, February 8, 2017 — Followed. Cited in support of the proposition that upon full compliance with the requirements of R.A. No. 9480, the taxpayer is immediately entitled to the immunities and privileges of the tax amnesty program.

• Philippine Banking Corp. vs. CIR, 597 Phil. 363 (2009) — Cited for the principle that tax amnesty is in the nature of a tax exemption and is therefore strictly construed against the taxpayer, a principle the Court acknowledged but did not allow to override the plain text of the statute.

• Section 1, R.A. No. 9480 — Defines the scope of the tax amnesty program, covering all unpaid internal revenue taxes for taxable year 2005 and prior years. Applied to establish that CEPHI's 2001 tax liabilities fell within the coverage of the amnesty.

• Section 3, R.A. No. 9480 — Enumerates the required contents of the SALN: assets (with valuation), liabilities (with creditor information), and net worth. Applied to determine whether CEPHI's SALN contained all statutorily mandated information, which the Court found it did through the SALN and attached schedules.

• Section 4, R.A. No. 9480 — Establishes the presumption that the SALN is true and correct, and provides the conditions under which this presumption may be overturned (proof of 30% underdeclaration through specified proceedings). Applied to place the burden on the CIR, who failed to adduce the required proof.

• Section 6, R.A. No. 9480 — Provides that all immunities and privileges shall not apply where the net worth is proven to be understated by 30% or more. Applied as the resolutory condition that was not triggered in CEPHI's case.

• Section 8, R.A. No. 9480 — Lists exceptions to the tax amnesty coverage, including withholding agents with respect to their withholding tax liabilities. Applied by the CTA to sustain the deficiency EWT assessment against CEPHI.

• DOF Department Order No. 29-07, Rule III, Section 6 — Prescribes the method of availment, including the documents to be filed, place of filing, payment of amnesty tax, and the rule that completion of requirements constitutes full compliance. Applied to confirm that CEPHI's submission of all required documents and payment of the amnesty tax constituted full compliance.

• Sections 249(B) and 249(C), NIRC of 1997 — Govern deficiency interest and delinquency interest, respectively. Applied by the CTA in computing the interest on CEPHI's deficiency EWT liability.

Carpio (Chairperson), Peralta, Perlas-Bernabe, and Caguioa, JJ., concurred.