CASE DIGEST: CIR VS. PHILIPPINE ALUMINUM WHEELS G.R. No. 216161. August 9, 2017

FACTS:

Respondent is a corporation organized and existing under Philippine Laws which is engaged in the manufacture, production, sale, and distribution of automotive parts and accessories. On December 16, 2003, BIR issued a Preliminary Assessment Notice (PAN) against respondent covering deficiency taxes for the taxable year 2001. On March 28, 2004, the BIR issued a Final Assessment Notice (FAN) against respondent and later on issued a Final Decision on Disputed Assessment (FDDA) and demanded full payment of the deficiency tax assessment. 

Respondent filed with the BIR an application for the abatement of its tax liabilities under RR No. 13-2001 for the taxable year 2001 but it was denied by the BIR. 

Respondent also informed the BIR that it already paid its tax deficiency on withholding tax and that it was also in the process of availing of Tax Amnesty. However, BIR denied respondent's request and ordered the payment of the assessed deficiency tax. 

TAXPAYER'S ARGUEMENTS : 

Respondents contends that due to their availment of tax amnesty and compliance with requirements of the same, it is fully entitled to the immunities and privileges granted under RA 9480. Availment of such tax amnesty also immunes the respondent from civil, criminal, or administrative penalties under the NIRC of 1997.

GOVERNMENT'S ARGUEMENTS :

CIR, on the other hand, contends that the respondent is disqualified to avail of the tax amnesty under RA 9480. The CIR asserts that the finality of its assessment, particularly its FDDA is equivalent to a final and executory judgement by the courts, falling within the exceptions to the Tax amnesty Program under Sec. 8 of RA 9480.

 ISSUE : 

Whether respondent is not entitled to the benefits of the TAX Amnesty Program under RA 9480.

RULING: 

Respondent is entitled to the benefits of the Tax Amnesty Program.

A tax amnesty is a general pardon or international 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 partakes of an absolute forgiveness or waiver by the government of its right to collect what is due and to give tax evaders who wish to relent a chance to start with a clean state. A tax amnesty, much like a tax exemption is never favored nor presumed in law. The grant of a tax amnesty, similar to a tax exemptions is must be construed strictly against the taxpayer and liberally in favor of the taxing authority.

RA 9480 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 assessment duly issued therefore, that have remained unpaid as of December 31, 2005. Provided that the amnesty authorized and granted shall not cover persons or cases enumerated under Sec. 8 of RA 9480. 

It is held that the taxpayer's completion of the requirements under RA 9480, as implemented by DO 29-07, will extinguish the taxpayers tax liability, additions and all appurtenant civil, criminal, or administrative penalties under the NIRC. 

Accordingly, Respondent's completion of the requirements under RA 9480 extinguish its liability and immunes it from the tax assessment and liabilities arising from its failure to pay internal revenue taxes for the taxable year 2001. 

The case of respondent was not also considered to be as one of those enumerated in Sec.8 of RA 9480, wherein the grant of the tax amnesty is not applicable. According to CIR, the finality of assessment (FDDA) to respondent is equivalent to a final and executory judgement by the courts, hence falling within exceptions under Sec. 8 of RA 9480.

The CIR is wrong. Section 8 is clear when it provides that only persons with " tax cases subject of final and executory judgement by the courts" are disqualified to avail of the tax amnesty. There must be a judgement promulgated by a court and the judgement must have been final and executory. This rule is not applicable in this case because the FDDA issued by the BIR is not a tax case " subject to final and executory judgement by the courts" 

PERSONAL END NOTE: 

As cited in this case, the grant of tax amnesty is provided in RA 9480. It covers all national internal revenue taxes for the taxable year 2005 and prior years, with or without assessments duly issued and remained unpaid as of December 31, 2005.

To avail of the tax amnesty under RA 9480, DO 29-07 was implemented to provide methods and documents to be filed. The completion of the method and documents provided for will entitle the taxpayers to avail the tax amnesty.

However, not all taxpayers who filed or completed the methods provided by the DO 29-07 will be granted tax amnesty because the rule provides that tax amnesty shall not cover persons or cases enumerated under Section 8 of RA 9480.

This disqualification pertains to those persons with tax cases subject of a final judgement by the courts and not mean the finality of assessments ordered by BIR.