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CIR v. APO CEMENT CORPORATION

FACTS:

Apo Cement Corporation received a Final Assessment Notice (FAN) from the Bureau of Internal Revenue for deficiency taxes in 1999. Apo Cement protested the FAN, but the BIR issued a Final Decision denying the protest. Apo Cement then filed a Petition with the Court of Tax Appeals. The Commissioner of Internal Revenue admitted that Apo Cement had already paid the deficiency assessments, except for the documentary stamp taxes. Apo Cement availed of the tax amnesty under Republic Act No. 9480 for the deficiency documentary stamp taxes. Apo Cement filed a Motion to Cancel Tax Assessment, which was granted by the Court of Tax Appeals (Second Division). The Commissioner appealed the decision to the Court of Tax Appeals En Banc, but the appeal was dismissed. The Commissioner filed a Motion for Reconsideration, which was denied. The Commissioner then filed a Petition for Review with the Supreme Court. The main issue is whether Apo Cement fully complied with the requirements to avail of the tax amnesty.

The petitioner filed a petition for review with the Court of Tax Appeals seeking the cancellation of an assessment for deficiency documentary stamp taxes. The CTA denied the petition, prompting the petitioner to file a petition for review with the Supreme Court. However, the Supreme Court found that the verification attached to the petition was insufficient. The amendment to Section 4, Rule 7 of the Rules of Court removes any reference to "belief" as a basis for verification. The SC cited previous cases which emphasized that mere belief is insufficient for verification and that it should be based on personal knowledge or authentic records. The SC held that failure to properly verify a pleading renders it unsigned and without legal effect.

The case involves the interpretation of Republic Act No. 9480 or the Tax Amnesty Act of 2007. The law allows any person, whether natural or juridical, to avail themselves of tax amnesty and pay the amnesty tax based on their net worth as of December 31, 2005, as declared in the Statement of Assets, Liabilities, and Net Worth (SALN). The law provides for a schedule of amnesty tax rates and minimum amnesty tax payments required. The case specifically focuses on the application of the law to corporations with subscribed capital stock.

ISSUES:

  1. Whether or not taxpayers who availed of the tax amnesty program are required to pay the amnesty tax within six months from the effectivity of the implementing rules and regulations (IRR).

  2. Whether the Commissioner of Internal Revenue is the proper party to question the correctness of the Statement of Assets, Liabilities, and Net Worth (SALN) submitted by the taxpayer who availed of the tax amnesty program.

  3. Whether the challenge to the SALN should have been initiated within one year following the date of filing of the tax amnesty documents.

  4. Whether the Court of Tax Appeals was correct in applying Section 4 of the 2007 Tax Amnesty Law, which allows third parties to initiate proceedings contesting the declared amount of net worth of an amnesty taxpayer.

  5. Whether the taxpayer-applicant is entitled to immediately enjoy the immunities and privileges under the law upon completion of the documentary requirements and payment of the amnesty tax.

RULING:

  1. Yes, taxpayers who availed of the tax amnesty program are required to pay the amnesty tax within six months from the effectivity of the IRR. The law explicitly states that the filing of the Tax Amnesty Return and the payment of the amnesty tax shall be made within six months from the effectivity of the rules. Failure to comply with this requirement would result in the forfeiture of the benefits of the tax amnesty program.

  2. The Commissioner of Internal Revenue is not the proper party to question the correctness of the SALN submitted by the taxpayer who availed of the tax amnesty program. The presumption of correctness of the SALN applies even against the Commissioner and the threshold of a thirty percent (30%) under-declaration can be established in proceedings initiated by parties other than the BIR.

  3. The challenge to the SALN should have been initiated within one year following the date of filing of the tax amnesty documents. In this case, since the challenge was made after the one-year period, it is already time-barred.

  4. The Court held that the Court of Tax Appeals was correct in applying Section 4 of the 2007 Tax Amnesty Law. The Court emphasized that the language of the law is clear and unambiguous, and where such language exists, it should be applied as written. The one-year period mentioned in the law is a prescriptive period within which third parties can question the Statement of Assets, Liabilities, and Net Worth (SALN) of the amnesty taxpayer. Moreover, the Court clarified that completion of the documentary requirements and payment of the amnesty tax entitles the taxpayer to immediately enjoy the immunities and privileges under the law.

PRINCIPLES:

  • Tax Amnesty - A tax amnesty is a pardon extended by the government to taxpayers who have committed tax offenses. It grants exemption from civil, criminal, and administrative penalties, as well as immunity from payment of taxes.

  • Amnesty Tax - The amnesty tax is the amount paid by the taxpayer in exchange for the immunities and privileges granted under the tax amnesty program. The rate and minimum amount of amnesty tax payment depend on the taxpayer's net worth as declared in the Statement of Assets, Liabilities, and Net Worth (SALN).

  • Compliance Period - The law provides a specific period within which taxpayers who availed of the tax amnesty program must file the necessary documents and pay the amnesty tax. Failure to comply within this period may result in the forfeiture of the benefits of the tax amnesty program.

  • The SALN as of December 31, 2005 is presumed correct unless there is a under-declaration of net worth by 30% or more, established in proceedings initiated by parties other than the BIR, within one year from the filing of the tax amnesty (Section 4, Republic Act No. 9480).

  • The Commissioner of Internal Revenue is not the proper party to question the correctness of the SALN submitted by the taxpayer who availed of the tax amnesty program. The presumption of correctness of the SALN applies even against the Commissioner, and the threshold of a thirty percent (30%) under-declaration can be established in proceedings initiated by parties other than the BIR.

  • The plain and categorical text of the law should be applied as written if it is clear and unambiguous. The court's job is to interpret the law, not to determine its wisdom or policy.

  • Completion of the documentary requirements and payment of the amnesty tax operate as a suspensive condition, entitling the taxpayer to immediately enjoy the immunities and privileges under the law.

  • The one-year period mentioned in the law is a prescriptive period within which third parties can question the declared amount of net worth of an amnesty taxpayer.

  • Immunities and privileges under the law will cease to apply to taxpayers who have understated their net worth by 30% or more in their SALN.

  • Amnesty taxpayers who willfully understate their net worth shall be liable for perjury under the Revised Penal Code and subject to immediate tax fraud investigation and criminal prosecution for tax evasion.