CTA Case No. 4722

DECISION -

C.T.A. CASE NO. 4722 - 2 - Th e respondent, however, imposed anot h er 25% s ur chat~ge, in addition to the penalty for the lat e filing of the t~ et•.w n , this time fo r t h e l ate pa yment of the tax under Sec. 248 <a> <3> of t he Tax Cod e.

Consequently, the petitionE:n~ , on July 26, 199 1 pai d under protest the amount of P218,322.48 consti tuting the addit i on.;;tl and the co r t~espon ding inter~est the~~eon and subsequentl y f iled a t~e quest fat~ the refund of t h e said am ount.

To pr event prescription ft~om setting i n , it fi l ed the i nstant petition wit h out waiting fot~ the f i n al dec ision of the r e spo n d ent . Th e crux of t he disagree men t l ies in the inte t~ preta t io n of Sec. 2 4 8 of th e Tax Cod e, wh ich p t~ov ides:

Sec::. 248. Civil Penalties ~ <a> Thet~e shall be impo se d , in additi on to t he tax req u ired to be paid, penalty eq u iva l ent to twenty five percent <25'}{.)

o f the a mo unt d ue, in the following cases: <1> Fa:i.lt..n~e to file an y t~ett.n~n required under t h e grov is i on s of t h e Code or reg ul ation s o n the date prescri bed ; or <2 > Filing a return wi t h an internal revenue officer other than t h os e wi t h whom the ret ur n i s te q uired to be filed; or (3) Fai lur~~ to ~ Qc<\Y the ta x withi n the time prescribed for its pay me nt; or 1 n '1 fi ·'

DECIS ION -

C.T.A. CASE NO. 4722 - 3 - (4) Failure to pay t h e full amount of tax shown on any return required to b e filed under the provisions of this Code or regulations, m~ thew full amount of tax due for which no return is requi r ed to b e filed on or before the date prescribed for its payme n t (b) In case of willful neglect to file t~etut•n within the pet• i od pt•escribed by this Code ot~ t•egulations , or in case a false or fraudulent return is willfully made the penalty to be im p osed shall be fifty pet~cent <50'1-> of the t ax a t~ of the deficiency tax, in case any payment has been made on the basis of such return befot•e the discovet~y of t h e falsity or ft'aLid <c> The penalt · es imp o sed he t•eundet~ shall form part of the tax and the entire amount shall be s•.tbject to the interest prescribed in Sec. 249.

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11 <Underscoring supplied) It is the petitioner's conte n tion that the 25'1- surchat•ge undet~ the above-q•Joted provision is imposed once, of h ow many of t h e enumet•at ed acts c o mmitted by t h e delinquent t axpayet· .

Accot•ding l y, it at~gue d t h a t t h e imposition and payment of t h e 25,C.

sm~charg e as d e c l ared i n its estate tax return CExh.

D> prec l ude s the additional imposition of an oth et" 25,C.

sm~c h a rge f or its l ate payme nt. 1 n ' J ,J

DECISION -

C.T.A. CASE NO. 4722 4 - On the other~ hand, the r~espondent' s r~eject ion of the p etitioner's claim for ref und is based on its interpretation that Sec. 248 of the Tax Code i mposes a 25i(. penalty or~ stn~ ch;;:n~ge on each and ever~y act co m m i t t e d by t h e t a>< pa y e t~.

Thus, the responde nt concluded that th e petitioner~ is liable to pay an aggregate surcharge of SOK for its delay

(1) in the filing of the return and <2 > payment of the estate tax due under~ <a> < 1 > and <a> < 3 > , r~ e s p e c t i v e 1 y, of the said provision.

We agree with the petitioner. A sm~ char~ge is in the nature of a su,.~tax, an additiona l tax that a tax payer has to pay . It is a well-established principl e in our~ jt.wisdiction that if the intent or meaning of t he tax statute is not clear' , or is doubtful as to whether a taxpayer is covered by th e tax ob ligation, the ·tax law s hall be con st r~•.1 ed against the becat.lse laws impose specia l burd e ns .

CLu 2 on St vedoring vs.

Trinidad 43 Phil 803) In this connection, th e Supreme Court has adopted the following related rules: 1022

DECISION -

C.T.A. CASE NO. 4722 - 5 - II 'A statute will not be construed as imposing a tax unless it does so expr•e s sly and ttnambi guo us~·' (82 <Italics Supplied) cl ear·l y, CJS '356)

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·It is an ancient pt·inciple that a tax can not be imposed without clear· and expr·ess wor•ds fot· that pm•pose • .

Accot•dingly, the genet·al t·ule of requit·ing adher·ence to the letter· in constr·uing statutes applies 1-vith peculiar· str•ictness t o tax 1 a w s and the pr• o vi s i on s o f' a taxi n g act are not to be extended by implication.' <30 Am.

Jm·.

153;

also McQuillin on Municipal Cot·p. Vol.

16, p.

257; italics om•s) 11 <Mat• induque Iron Mine s Agents, Inc.

vs. Municipal Council of the Municipality of Hin abangan, Samat·,

11 SCRA

L•16) Nowhet•e in Sec. 248 (a) of the Tax Code can we clearly infet· that the 25~ stwtax or sut·chat·ge is imposable on each of the enumet•ated acts thet•ein. In the a bsence of an express provisio n to that effect, We cottld not give the said law an intet•pt•etation which will impose a heavier burden on the taxpayers. It must be emphasized that the legislative intent in imposing surcharges is to hasten tax payment s ot• to punish evasion or neglect of duty. The imposition of the surcharge provides more teeth to out• tax laws which helps attai n the pr.n•pose for 102:} ~.

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DECISION -

C.T.A. CASE NO. 4722 - 6 - which taxes are imposed <Aguinaldo I ndustries Corporation vs.

CoMMissioner of Internal Revenue,

112 SCRA

136) .

In othet' wot'd s, the s ut'chat'ge or penalty i s met' ely incidental to the imposition and collection of taxes.

It does not see k to equal t he tax sought to be collecte d since its purpose i~ not to reven ues.

It instead be proportional to the po ssible harmful effects of the act in ham p t:n' i n g the pro pe t' and efficient enforcement or collection of much need ed revenues. It is not unl ikely to have a taxpayer who inadvet'tent ly filed and paid the corresponding ta x beyond the time pre scr ibed by law to an improper revenue officer. If we are to follow the intet' pt'etation given by the respondent on Sec. 248 of the Tax Code, he will be chat"ged with an aggregate imposable sm~ chat'ge of 75'1- of th e amount due.

·his m a ns that a tax pay t" who may have belatedly b•.rb 1..minte11t ionally .com mitted the said act will be made liable to pay a surcharge which is 25'1- more than the 50'1- surcharge under Sec.

248( b) impo sed on a taxpayer who fraudulent!~ attempted to deprive the government of much needed funds by 102 t -

DECISION -

C.T.A. CASE NO. 4722 - 7 - wilfully neglecting to file a t~etLn~ n or~ filing a false at~ ft~audulent retut~n undet~ (b) of the same pt~ovision.

would consequently be subject to a 501- sm~chat~ge similcn~ly impo s ed on f t~a udulent retl..n~ns inasmuch as the late filing of a return not~mally entails the l ate payment of the t ax due. Such i s but a blatant repudiation of the jus t and equitable nature of our tax laws.

Thus, to sustain the t~espondent' s view would give to ineq1..dtous, if not sit uations .

Moreover , We believe that a surcharge of 25~ of the amount due will serve the purpose for which such penalty is imposed.

WHEREFORE, judgement is het~eby t~ end et~ed ordering the respondent to refund to th~ petitioner the amount of P218,322.48.

DECISION -

C.T.A. CASE NO. 4722 - a -

WE CONCUR:

CERTXF:J:CAT IDN

I hereby certify that this decision was reached after due consultation among the members of the Cour t of Tax Appeals in accot'dance with Section 13 Articl e VII of the Constitution. 1 ()? fl ~~-~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals