Republic of Thi Philippimis Court of Tax Appeals Quizom City R.O.H. Auto Products Philippines, Inc. vs. The Commissioner of Internal Revenue

DECISION

CTA CASE NO. 431A on rules in the implementation of the statute, Am necessarily limited to what is provided far oin the legislative enactment, may he found oam orparly am I90R in the case of tinited States vw. Rarriasc (11 Phil, 327), in A914 U.S. v. Tupasi Nolina (29 Phil. 117) im 1996 People vw. Santas (6&3 Phil. 300), in ASRil Chinese Flour Importers Ass. ve. Price Stabilyzation Board (8? Phil. 437), and in 1962 Victorias Ntlling Ca., Ine. v. Social Security Commission (4 SCRA B27). The Court held ain the eame that "A rule is binding oan the courte 380 lang as the procedure fixed for dts promiailgation ia followed aryed Ltea RLF Aen within the atatiuhe granted by the legislature, even if the courte are not in aqreement with the policy abated therein, or its innate wisdom “ x» ou."

"In case oof discrepancy hetween the basic Jaw and aorule or regulation dJasued tea implement maid law, the basic law prevails because maid rude or regulation cannot go bheyond the terms and provisions of the basic law (People v. Lim, 108 Phil, LO?r), Furless that subvert the statute cannot be manetioned (University of Santo Tomas wv. Roard of Tax Appeals, ?3 Phil.

Ay OE Del Nar Ve Phil. Veterans Administration, [1 SCRA 340). Except for conmetitutional officiale who can trace their competence to act to the fundamental law iteelf, ai public official must loacate tn the atatute relied upon a grant of power befare he can exercise it. Department zeal may not be permitted to eutrun the athhor di by conferred by astatute (Radia Communroeatrons ar the Fhilippines, Inc. wv. Santiago, L-2?236, August 21, (3974, GB SCRA $r?ao.” (Tayug Rural Bank v. Central Bank ot the Philippines GR, No. L-4bIS8, November 28, 1986, 146 SCRA (20, 1279-130).

Respondent, for his part, lays emphasis first, the provision in paragraph 1.02 of Revenue Memorandum Qrder Na. 4-87 to stress that, din the

DECISTON

CTA CASE ND. 4318 avadiment of the amnesty, cancellation of armsesamentsa reetulte only for assensment notices and letters of demand dgeened after Auquek 21, I9R4. "1,02, A certification by the Tax Amneety Implementation Officer of the fact of availment af the said tax amnesty shall be a sufficient basis forse TLORP.1. MoM oY 1.07.3, In apprapriate cases, the cancellation/uithdraval of ARBSeacament notices and letters of demand iasued after Magneb BL, 197A4 for the collection of income, bustneam, eatate or donor's tares due during the same taxable years."

Tt ds pointed out that Section & of Executive OQeder Mo. 44, a8 amended expressly conditiona the enjoymenk oof Jimmi dbies and privileges enumerated therein to compliance with the rules and regulations ter be deenec prretiant toa eaid executive order, which is now Fevenue Memarandim Order No. 4-07.

Secondly, reenpondent pomite that where there is AM ammeearment aqainsk a taxpayer, the burden of proof de ooan othe Jatter to prove that the assessment is vanting from legal oand/or factual basis. Absent proaf, the presumption of validity remains. The case of Sy Po vse, CTA, et. al. (G.R. L-S1446, August 18, 1788, 164 SCRA Set) As advanced in support of this position wherein it was said:

Low

DECISTON

CIN CONSE NO, ASIB a Lay nn "tn the came of Collector af Internal Revenue va. Reyer, we riled:

"Where the haspayer is appealing to the tax emt on the ground that the collector's ASReEReMent FR PRP roOnePaus, it ois incumbent upar him to prove there what ode othe correct and just liability by ra full ard fair dieclosure of all pertinent data in his posserrion, Otherwise, if the tasypayer confines himself to proving that the tan arsesament 1a VE CUAG y the tan court proaceecings would settle nothing, and the way would be left apen for eiuibe ecient ARReEAAHRe ts and

APPLE Ala

sucmceraian,."

an "Tax examiners and made baxpayer otherwise. In preof oof any the performance aAmeeramemrk duly

of Internal

aAppraved hy wild nak (GutvYerrez ww.

Jady At, (P65, presumnpt dane are

Ary

has i% { hie g

Are

of

(Collector of

Rohol Land

L~14IG99 &

I?60, G8 0O.G,

Ltd

The cited Bank, supra leaves its mark the importance of Revenue vis-a-vis Executive Order ARSe einen bea qnad the irreqularities Reventie examiner euper tor he

Villegas

bay

Internal Revenue

Transportation

case of Tayug Rural Bank vs.

No.

interminable hy ham correct faith. The duty ta prove the abseence of in

AT

Pruire at

and officers disturbed.

L-17LL7, SCRA SET), Al] the yeesumed of nade ditties, by A in favor of AMBP aRMANts.

Vv.

Co., 29, 46P,. April

2AGT I"

Central

well in the resolution of Memorandum Order No. 4-87 41, as amended.

The intent of the given legislation, as always, ies telling. NM reading of this executive order giving amnesty shows the period covered - January 1, 1981 to December S31, A985 (Section I, Section 6, Executive Order No, 4%, af amencdect). An amnesty affords total pardon oor, forgiveness (3 Werds and Phrases 480, citing cases), as here promtsed by the order for all unpaid income, estate, donor's taxes and. business tanes,. and Alt civil, criminal, administrative liability, that have ardeen from non-payment of tares in the abave qiven period. (Underscoring supplied) Un the other hand, an assessment ie a notice of tar due owitth a demand for payment (Alhawsbra Cigar & Cigarette Na. Co. wv, Commtceezoner, L105 Phil, 1337 anreported), An AB ee sey t can be abated ar caompramtsed on the administrative level (Section 275, National Internal Revenue Cade, nom Section 204) vbile an amneaty is an act of sovereign grace which obliterates an offense (CHords and Phrases, supra) or as seen here, an act which relegates into oblivion all unpaid income, estate, donor’s taxes and business taxes incurred during a given period. The impression created thus is that considering the nature of a tax assernament, its significance could not be more than that of an amnesty properly availed of. An assessment, even a deficiency assessment as in the ibe

DECISION —-

CTN CASE NO. 4518 instant carne, cannot defeat the intended effects of the amnesty because precisely, it is the purpose of the batter to forgive the non-payment of the taxpayer af his tax liabilities. The respondent who seeks to recover tares due cannot demand samething which, Although previously due, is: now nan-exdieatent or has heen obliterated as a consequence of soavereign grace.

Ta thie a case af fireaxt impression then, and are there other factors that could tilt the balance on the other side? The case for the respondent shows None .

Reeapoandent failed to prement any case or law which proves that oan amanreanmment can withstand or negate the force and effects of a tan amnesty. Thin burden of pragof oon the petitioner was created by the clear and eynpress terms of the executive order's drkention - qualtfied availers of the amnesty may pay ano amnesty tax im lieu of said unpaid taxes which are forgiven (Section 2, Section &, Executive Order Na, Al, AS amended), Hore apecifically, the plain provisians in the statute granting tax amnesty for unpaid taxes for the period dJanuary 1, 1981 to December 31, 1985 eahifted the burden of proof oan respondent to show how the issuance of an. assessment before the date of the promulgation of the executive order, could have oa reasonable relation. with the bho

DECISION --

CTN CASE NO. 4318 objective periods of the amnesty, $0 as to make petitioner still answerable for oa tax liability which, through the statute, should have been erased with la proper avaliment oof, the amnesty (Underscoring aap se), Additionally, thre exceptions enumerated in Sectian 4 of Executive Order No. 41, as amended, da not indicate ANY reference to an assessment or pending investigation aside fran ane arising fram information furnished by an dnoformer.

"Section 4. Exceptiona.- The following baospayers may not avail themselves of the aAmneaky herein granted, mn) Phare falling under the proyvdedonn of Fxeeutive Order Norm. 1, 2 and 14.

th) Thoen with tneome tas Caeser aAlremcdy filed an Cour ek AS of the effeotivaty hereof.

ec) Theacse vedthy criminal Mages Povealving viedations of the ineame tas law Adready filed in comet AS af the effeotivity hereof:

ad) Thaee that have withhalding tax lirbtildities cupycd ese the Mational Internal Revenue Cade, ars amended, insofar as the said liabilities are concerneds @) Those with tan cages pending investigation by the Eureau of Internal Revenue as of the effectivity hereof am a result of information furnished under Sectian RAG af the National Internal Revente Code, as amended}

Lbs

DECISION

CTA CASE NO.

~318 - 9 - f)

Tho~P

with pending ca~es J.nvol v ing unexplained or unlawfully acquired wealth before the Sandiganbayana g) Tho!"!e liablP under Title Seve n~

ChRpter

Three

(Frauda~

Illegal

Exactions

and Tr· anr-=;ac tiona) and

Chapter·

Four

(Malversation of Public Funds and Property)

o ·f the r<ev i. sed Pen a 1 Cocjp, a !II amended • Thu~:~, der>m that th£'?

.in

Revenue

Memorandum

OrdPr

No .

~ - 87 promulgating that only asses!;ment !'!l ist=\ued aftel"'

Auquat

21, 1986 shall bf!' abated by the amnesty ia beyond the contemplation of E >:ecut:i.ve Ur·der· No. 41, ar.< amP.ndP-cL To paraphrase the cited pn:•vioU!";

decl.:'lr· .r~tionc;; of the Su preme Court 1-'lhich ~>'11?.1'"1~ lil::et-dse n=~ca] led in the Tayug Rur11l Bank

C<Jse

..-u rr •"l .• B rl m :l ,, i. 5 ~. r· "" t. i. v e and r-egulations pr·omulq i'\ t e d to .implement q.i. v r>n legislation l:=lhou ld not be cont. rr:~cHctor·· y \·d.th t:.he s t .::lt:ut.e but con fo rm to the stand ar-·ct r.;

~>'lhich .i. t pt·· er.; c r-ibPs

(Director of Forestry

nJle ltmulri b e b.i.nd.ing on the cour- · t~ if the e;cope is within the ":",tat.ut.e e ven if th r-= courtro ar-e not .in c:~gr~ r:>ement 1t1it.h the policy thP.rein or itl:'l innate wisdom (Victori s /filling Co., Inc.

v.

SociAl

L - 16704 .• ,.,arch 1 7 . 1962, 4

SCRA

627).

WHEREFORE, the pP.tition i!l GRANTED.

Th•

respondent Commi!llsionf!lr of RevenuP.

ia lbv

DECISION

CTA CASE NO.

~318 - 10 - ordered to de~i~t from coll~cting the deficiency are considerP.d cancPllP.d ~nd withdrawn with the proper AVA! lmt=mt o ·f pet! tioner of the amn~sty undf!Pr Executive Order No.

~1, A~ ~mended.

Judge

I

COI'ICIJF::

C:RR~l" IF-.: CAT I ON

I

hP.t' P.by certify that: thJs decision was r-eached a ·ftet- due consu l tati.on bet~tH?. P.n the members o ·f the Cour·t ryf Ta >l ()ppe.cde:;

.i.n 0:\cconiance ~td.th fkt .icle VIII of the Const.i.tution. ll>u Secti.c:m 1.3,

Judge

Appeals