CTA Case No. 4266 (Decision)

? REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY TIKICRAFTS INDUSTRIES, INC., Petitioner, - vers�.ts - C.T.A. CASE NO. 4266 COMMISSIONER OF INTERNAL REVENUE, - - - )(- - - - - - - - Responc:le!nt. )( DEC s Cl N This case involves assessments fot~ 1) Deficiency Income Tax <1981) in the amount of P598,431.60; 2) Deficiency Withholding Tax (1981) - P39,457.95; 3) Fixed Tax <FY 6-30-81> P3,809.86; 4) Fixed Tax <FY 6-30-82) - P3,594.06, �.tnder Assessment Not ice and Lettet~ of Demand No. 000262- 81/85 dated 25, 1985 against pet it ioner. forth, �' A!J set petitionet~ filed the pt~otest on J1.1ne 6, 1985 citing the same reasons in its protests at the proposed assessment stage on October 15, 1984 and February '20, 1985, and on December 15, 1986 invoked the availed income tax amne9ty under Executive Ot~det~ No. 41 dated August 22, 1986 as amended by Executive Orders Nos. 53 and 64 covering income and business tax liabilities for the years 1981 to 1985. 1~

DECISION CTA CASE NO. 4266 - 2- On March 30, 1988, r~ e s pond ent issued his decision on the matt et~ finally demanding the payment for the defi c iency income tax in the amount of P597, 868.71 fot~ the fi s cal year~ ended June 30, 1981 contained in his letter, to wits We t"'egt"'et to inform you that yout" avai lment of the tax amnesty Ltndet" Executive Order No. 41 did not cancel and/or close yoll't" deficiency income tax assessment in the amount of P598, 431.00 for the fi seal year ended June 30, 1981. Purs1JIAT1t to Memot"andum Order No. 42-86, an income tax case where a deficiency tax assessment has already been issued beginning January 1 up to August 21, 1986, may no longet"' qualify under E.O. 41. As thet~ e was ah--eady an assessment iS!!IIJed as early as Apt"'il 25, 1985, your deficiency income tax as s es s ment is, therefore, not covered by E. 0. No. 41. However, after a careful consideration of yoll't~ pt~ otest dated June 26, 1987 filed by the S.G.V. in yoL\'t"' behalf, we found meritorious your arg,Jment t"'elative to the disallowed miscellaneoLts expense. Accot"'dingly, we found yoLt liable fot~ the amount of P597,868.74 computed as follows. )()()( )()()( )()()( In view thet"'eof, you at"e t"'equested to pay the above-stated amount of P597,868.74 through the Chief, Receivable Acco1.1nts Diviaion, Room 203,' BIR National Office Bldg., Quezon City in ot~ der that this case may. be considet"ed closed and terminat�d. This is our final decision, and in case you are not agreeable with our findings, you may appeal your case to the Court of Appeals within thit~ ty (30> days

DECISION CTA CASE NO. 4266 - 3- from t"'ecei pt het"'eof. Othet"'wise, failut"'e to do so will make your assessment final and unappealable. Hence, this instant petition t"'aising the sole i s��Je of whether ot"' not petitioner's avai 1 ment of the tax amnest y oancelled or closed the deficiency income tax ass essment fot" the fi seal yeat"' ended June 30, 1981. By and petit i onet"' posits the proposition thi$ wise1 It availed of the t x amn sty under Executive Order No. 41 as amended by paying 30" of the basic taxes assessed under File No. 32 F-00460-41-B with payment evidenced by CB Confit"'mation Receipt No. 5684515 and Payment Ot..der No. 9479701 both dated December 15, 1986. The very nature of a tax amrHaty, plus the very title of EO 41 itself, as expanded by EO No. 64 - ' Declat"'i ng a One-Time Tax Amnesty Covet"':ing Income Tax, xxx and the Tax on B�..~tine 6li UndtH"' Chaptet"' II, Title V of the National lnterne.l RevenL\e Code, as amended, fot"' the years 1981 - 1986' cl early and obviously 'i mply that the tax amnesty has to be given r troactive effect so as to include in its coverage unpaid income and business taxet!i for the past ye1ars specifically mentioned, namely, 1981 to 1986. 4- .l. u

DECISION CTA CASE NO. 4266 - 4- MoreoYer, Section 4 of EO No. 41, as expanded by EO No. 64, specifically enumet~ates those excepted from the coyerage of the tax amnesty and clearly, tax assessments issued prior to August 22, 1986 are not among the exceptions. Undet"' the r~ule a statute enumerates the subjects or things on which it is to opet"'ate, it is to be constt"'Lied as excluding from its effects all those not expressly mentioned 11 � <Dave's Place v. Liquor Control Hence, since Section 4 of EO 41 expressly mentions the exceptions from the intended coverage of the tax amnesty, it follows that other~s not mentioned such as assessments i ssL1ed pt"'i ot"' to August 21, 1986 are not incl�Jded. Reyenue Memot"'andum upon dated NoYember 24, 1986 t"'e 1 i ed �' by the r"'espondent would effect additional exception to the valid application of the tax amnesty, to wit: Income, donor's estate; business and other internal revenue tax vases where a deficiency tax assessment had been issued beginning January 1 up to August 21, 1986 shall likewise qualify under the expanded tax amnesty )Ooc. The effect, if r--espondent's inter--pr--etation is followed, is to allow him to amend a law, which he cannot legally do, tht"'Ollgh a mere Revenue 12

DECISION CTA CASE NO. 4266 - 5- Memorandum Order, which does not have the force and effect of law. Nonetheless, the subject assessment was issued on Apt~il 25, 1985 while those excepted are a��e��monts issued beginning Januat~ y 1, 1986 LIP to August 21, 1986. Petitioner could not have said it bettet~. We agree. We do not in the case at bat~ find difficulty in disentangling the appat~ent quibble posed. The tax amnesty insofar as the same is brought to bear upon the circumstances obtaining hardly seem a gripping question. The pellucidity of the language used in Sections 1 and 4 of Executive Order No. 41, as amended, insofat~ as i t t~elates to the scope and exceptions t~equit~es no fLn~ thet~ exegesis. It will be too much of a s tretch to hold petitioner straight - jacketed to the pt~ o vision of a mere memorandum and deny altogethet~ �' the opportunity to a set~endipitous enjoyment of the immunities and pt~ ivileges gt~ anted including t~ elief from any income and business tax liabilities ft~om 1981 to 1985. We cannot but think that the respondent has mistakenly invoked such a quit~k of an expediency which falls short of measuring up to the compe 11 i ng i mpot~t and fot~ce of the Executive

DECISION CTA CASE NO. 4266 - 6- Order. On the principle that legal rights must be enforced accot~ding to legal t~ ules, petitioner is entitled to the desired relief. WHEREFORE, ~inding the petition well-taken, the sa�e is granted and the subject assess�ent h�reby cancelled and ter�inated. No costs. SO ORDERED. Que:.:on City, Mett~ o Mcmi la, Januat~y 31, 1991. I CONCURz ~ / CONS~~IN As~~I;I.� Jlldge CE RT I F I CAT I 0 N �' I hereby certify that this decision was reached after due consultation between the members of the Com~t of Tax Appeals i,.n accot~dance with Section 13, Article VIII of the Constitution. ng Judge Court of Tax Appeals