THIRD DIVISION
G.R. No. 202789, June 22, 2015
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. PUREGOLD DUTY FREE, INC., Respondent.
D E C I S I O N
VELASCO JR., J.:
At bar is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure assailing the May 9, 2012 Decision and July 18, 2012 Resolution of the Court of Tax Appeals (CTA) en banc in CTA EB No. 723 (CTA Case No. 7812). The CTA en banc upheld the November 25, 2010 and January 20, 2011 Resolutions of the CTA Second Division stating that herein respondent Puregold Duty Free, Inc. (Puregold) is entitled to, and properly availed of, the tax amnesty under Republic Act No. (RA) 93991 and so is no longer liable for deficiency value-added tax (VAT) and excise tax for its importation of distilled spirits, wines, and cigarettes from January 1998 to May 2004.
As culled from the records, the facts of this case are:LawlibraryofCRAlaw
Puregold is engaged in the sale of various consumer goods exclusively within the Clark Special Economic Zone (CSEZ),2 and operates its store under the authority and jurisdiction of Clark Development" Corporation (CDC) and CSEZ.
As an enterprise located within CSEZ and registered with the CDC, Puregold had been issued Certificate of Tax Exemption No. 94-4,3 later superseded by Certificate of Tax Exemption No. 98-54,4 which enumerated the tax incentives granted to it, including tax and duty-free importation of goods. The certificates were issued pursuant to Sec. 5 of Executive Order No. (EO) 80,5 extending to business enterprises operating within the CSEZ all the incentives granted to enterprises within the Subic Special Economic Zone (SSEZ) under RA 7227, otherwise known as the "Bases Conversion and Development Act of 1992."
Notably, Sec. 12 of RA 7227 provides duty-free importations and exemptions of businesses within the SSEZ from local and national taxes.6 Thus, in accordance with the tax exemption certificates granted to respondent Puregold, it filed its Annual Income Tax Returns and paid the five percent (5%) preferential tax, in lieu of all other national and local taxes for the period of January 1998 to May 2004.7redarclaw
On July 25, 2005, in Coconut Oil Refiners v. Torre,8 however, this Court annulled the adverted Sec. 5 of EO 80, in effect withdrawing the preferential tax treatment heretofore enjoyed by all businesses located in the CSEZ.
On November 7, 2005, then Deputy Commissioner for Special Concerns/OIC-Large Taxpayers Service of the Bureau of Internal Revenue (BIR) Kim Jacinto-Henares issued a Preliminary Assessment Notice regarding unpaid VAT and excise tax on wines, liquors and tobacco products imported by Puregold from January 1998 to May 2004. In due time, Puregold protested the assessment.
Pending the resolution of Puregold's protest, Congress enacted RA 9399,9 specifically to grant a tax amnesty to business enterprises affected by this Court's rulings in John Hay People's Coalition v. Lim10 and Coconut Oil Refiners. Under RA 9399, availment of the tax amnesty relieves the qualified taxpayers of any civil, criminal and/or administrative liabilities arising from, or incident to, nonpayment of taxes, duties and other charges, viz:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
SECTION 1. Grant of Tax Amnesty. - Registered business enterprises operating prior to the effectivity of this Act within the special economic zones and freeports created pursuant to Section 15 of Republic Act No. 7227, as amended, such as the Clark Special Economic Zone [CSEZ] created under Proclamation No. 163, series of 1993 x x x may avail themselves of the benefits of remedial tax amnesty herein granted on all applicable tax and duty liabilities, inclusive of fines, penalties, interests and other additions thereto, incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay People's Coalition v. Lim, et. al., G. R. No. 119775 dated 24 October 2003 and Coconut Oil Refiners Association, Inc. v. Torres, et. al., G. R. No. 132527 dated 29 July 2005, by filing a notice and return in such form as shall be prescribed by the Commissioner of Internal Revenue and the Commissioner of Customs and thereafter, by paying an amnesty tax of Twenty-five Thousand pesos (P25,000.00) within six months from the effectivity of this Act: Provided, That the applicable tax and duty liabilities to be covered by the tax amnesty shall refer only to the difference between: (i) all national and local tax impositions under relevant tax laws, rules and regulations; and (ii) the five percent (5%) tax on gross income earned by said registered business enterprises as determined under relevant revenue regulations of the Bureau of Internal Revenue and memorandum circulars of the Bureau of Customs during the period covered: Provided, however, that the coverage of the tax amnesty herein granted shall not include the applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from the special economic zone and freeport and entered in the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties prescribed in the National Internal Revenue Code (NIRC) of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended. (emphasis added)
Sec. 2. Immunities and Privileges. Those who have availed themselves of the tax amnesty and have fully complied with all its conditions shall be relieved of any civil, criminal and/or administrative liabilities arising from or incident to the nonpayment of taxes, duties and other charges covered by the tax amnesty granted under Section 1 herein.11
In substantiating its compliance with Section 1 of Republic Act No. 9399, petitioner submitted Certificates of Registration/Tax Exemption2 issued by the Clark Development Corporation, its Amnesty Tax Payment Form3 and its BIR Tax Payment Deposit Slip4.
Based on the foregoing, the Court finds that petitioner has sufficiently established its compliance with the requirements provided under R.A. No. 9399.
As to whether or not petitioner's tax liabilities are excluded under R.A. 9399; it is significant to note that what petitioner seeks to cancel in its petition for review and Motion for Early Resolution, is respondent's (CIR) assessment of deficiency excise tax and Value Added Tax (VAT) on imported alcohol and tobacco products.
Clearly, these are not taxes on articles, raw materials, capital goods, equipment and consumer items removed from the Special Economic Zones and Freeport Zones and entered into the customs territory of the Philippines for local or domestic sale. This may be verified in respondent's Formal Letter of Demand where it was stated that the assessment was made against petitioner's importation of wines, liquors and tobacco products. In view thereof, the deficiency tax assessments made against petitioner, which were sought to be cancelled in the instant petition, are not excluded under R.A. No. 9399.
As to respondent's contention that petitioner is not entitled to avail of the tax amnesty provided under R.A. No. 9399 on the basis of Section 131 of the NIRC of 19971, this Court is not persuaded.
The coverage of the tax amnesty is the difference of all national and local taxes that petitioner is liable under the Local Government Code, the Tax Code and other pertinent laws, and the 5% tax that petitioner had previously been liable pursuant to Executive Order (EO) No. 80.
Being liable to VAT and excise taxes on importations of alcohol and cigars under Section 131 of the 1997 Tax Code is not a condition to be excluded from the tax amnesty. Contrarily, being liable to such taxes is obviously contemplated by RA No. 9399 thru the phrase "all national and local tax impositions under relevant tax laws, rules and regulations." If petitioner is liable to VAT and excise taxes pursuant to the provision of Section 131 (A) of the 1997 Tax Code, then such amount of taxes will be used in determining the difference mandated by R.A. 9399, which in tum, is the subject of the latter law. (emphasis added)
After a close scrutiny of the arguments raised by respondent (CIR), this Court finds that the same contentions were already raised in her "Comment (Re: Petitioner's Manifestation of Compliance)" filed on November 15, 2010 and which have already been sufficiently addressed in the assailed Resolution dated November 25, 2010.
To reiterate, the liability for VAT and excise taxes on importations of alcohol and cigars under Section 131 of the NIRC of 1997, as amended, is contemplated under R.A. 9399 when it provides that "registered business enterprises operation prior to the effectivity of this Act within the special economic zones and freeports created pursuant to Section 15 of Republic Act No. 7227, as amended, such as the Clark Special Economic Zone created under Proclamation No. 163, series of 1993, x x x may avail themselves of the benefits of remedial tax amnesty herein granted on all applicable tax and duty liabilities, inclusive of fines, penalties, interest and other additions thereto, incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay Peoples Coalition vs. Lim, et al., G.R. No. 119775 dated 23 October 2003 and Coconut Oil Refiners Association, Inc. vs. Torres, et al. G.R. No. 132527 dated 29 July 2005.
Petitioner (Puregold) incurred liability for the assessed deficiency VAT, excise taxes and inspection fees when its tax incentives was in effect removed by the Supreme Court when it ruled in the case of Coconut Oil Refiners Association, Inc. vs. Torres, that the incentives provided under R.A. No. 7227 extends only to business enterprises registered within the Subic Special Economic Zone (SSEZ). Since, petitioner's tax liabilities accrued because of the said ruling, it is clear that petitioner's tax liabilities fall within the coverage of R.A. No. 9399.
After a careful review of the records and arguments raised by the petitioner, we agree with respondent's (Puregold) contention that the same are merely a rehash of previous arguments already passed upon and discussed by the Court.
Petitioner's arguments rely on (1) the applicability of Section 131(A) of the National Internal Revenue Code of 1997 (Tax Code); and, (2) that the subject deficiency taxes are not covered by the tax amnesty under R.A. No. 9399. These contentions have been discussed and resolved by the CTA Second Division and there are no compelling reasons to deviate from the said rulings. x x x
I
THE HONORABLE CTA EN BANC GRAVELY ERRED IN LIMITING THE REQUIREMENTS UNDER REPUBLIC ACT NO. 9399 FOR THE AVAILMENT OF TAX AMNESTY OF (i) FILING OF NOTICE AND RETURN FOR TAX AMNESTY WITHIN SIX (6) MONTHS FROM EFFECTIVITY OF THE LAW AND (ii) PAYMENT OF THE TAX AMNESTY TAX OF PHP 25,000.00, AND TOTALLY AND DELIBERATELY DISREGARDING THE MATERIAL AND SUBSTANTIAL FACT THAT PUREGOLD'S PLACE OF BUSINESS IS IN METRO MANILA AND NOT CLARK FIELD, PAMPANGA, AS STATED IN ITS ARTICLES OF INCORPORATION; THUS, PUREGOLD IS NOT ENTITLED TO THE BENEFITS UNDER RA 9399.II
ASSUMING WITHOUT ADMITTING THAT RESPONDENT IS A DULY CSEZ REGISTERED ENTERPRISE WITH PRINCIPAL PLACE OF BUSINESS IN CLARK FIELD, PAMPANGA, STILL THE CTA EN BANC GRAVELY AND SERIOUSLY ERRED, AS ITS RULING IS CONTRARY TO THE INTENT OF RA 9399 WHICH EXCLUDES DEFICIENCY TAX; THUS, PUREGOLD REMAINS TO BE LIABLE FOR EXCISE TAXES ON ITS WINE, LIQUOR, AND TOBACCO IMPORTATIONS.
It is well established that issues raised for the first time on appeal and not raised in the proceedings in the lower court are barred by estoppel. Points of law, theories, issues, and arguments not brought to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal. To consider the alleged facts and arguments belatedly raised would amount to trampling on the basic principles of fair play, justice, and due process.
Jurisprudence has consistently shown that this Court accords the findings of fact by the CTA with the highest respect. In Sea-Land Service Inc. v. Court of Appeals, [G.R. No. 122605, 30 April 2001, 357 SCRA 441, 445-446], this Court recognizes that the Court of Tax Appeals, which by the very nature of its function is dedicated exclusively to the consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Such findings can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the contrary, this Court must presume that the CTA rendered a decision which is valid in every respect.
SECTION 1. Grant of Tax Amnesty. - Registered business enterprises operating prior to the effectivity of this Act within the special economic zones and freeports created pursuant to Section 15 of Republic Act No. 7227, as amended, such as the Clark Special Economic Zone created under Proclamation No. 163, series of 1993 x x x may avail themselves of the benefits of remedial tax amnesty herein granted on all applicable tax and duty liabilities, inclusive of fines, penalties, interests and other additions thereto, incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay People's Coalition v. Lim, et. al., G. R. No. 119775 dated 24 October 2003 and Coconut Oil Refiners Association, Inc. v. Torres, et. al., G. R. No. 132527 dated 29 July 2005 x x x.Hence, to conclude that respondent Puregold - a registered business enterprise operating within the CSEZ - cannot avail of the amnesty extended by the law with regard to its liability under Section 131(A) of the 1997 NIRC simply goes against the plain and unambiguous language ofRA 9399.
While E.O. 80 and R.A. No. 7227, as implemented by Revenue Regulations No. 1-95, and as further implemented by 12-97, were approved and made effective prior to January 1, 1998, the date of effectivity of R.A. No. 8424, otherwise known as the Tax Code of 1997, the same are not covered by the above cited repealing provision of the said Code. Since it is settled that a special and local statute, providing for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and applications, unless the intent to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law. It is a canon of statutory construction that a later statute, general in its terms and not expressly repealing prior special statute, will ordinarily not affect the special provisions of such earlier statute. (Steamboat Company vs. Collector, 18 Wall (US)., 478; Cass County vs. Gillet, 100 US 585; Minnesota vs. Hitchcock, 185 US 373, 396)
Such being the case, the special income tax regime or tax incentives granted to enterprises registered within the secured area o( Subic and Clark Special Economic Zones have not been repealed by R.A. 8424. (emphasis supplied)
The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution." It is understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta v. Hill and the decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co.22
SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayers, except in the following cases:LawlibraryofCRAlaw
(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document required of him by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith.
Thus, under Section 246 of the 1997 NIRC, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given retroactive effect.24
A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of violation of a tax law. It partakes of an absolute waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate.
SECTION 1. Grant of Tax Amnesty. - Registered business enterprises operating prior to the effectivity of this Act within the special economic zones and freeports created pursuant to Section 15 of Republic Act No. 7227, as amended, such as the Clark Special Economic Zone created under Proclamation No. 163, series of 1993 x x x may avail themselves of the benefits of remedial tax amnesty herein granted on all applicable tax and duty liabilities, inclusive of fines, penalties, interests and other additions thereto, incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay People's Coalition v. Lim, et. al., G. R. No. 119775 dated 24 October 2003 and Coconut Oil Refiners Association, Inc. v. Torres, et. al., G. R. No. 132527 dated 29 July 2005, by filing a notice and return in such form as shall be prescribed by the Commissioner of Internal Revenue and the Commissioner of Customs and thereafter, by paying an amnesty tax of Twenty-five Thousand pesos (P25,000.00) within six months from the effectivity of this Act: Provided, That the applicable tax and duty liabilities to be covered by the tax amnesty shall refer only to the difference between: (i) all national and local tax impositions under relevant tax laws, rules and regulations; and (ii) the five percent (5%) tax on gross income earned by said registered business enterprises as determined under relevant revenue regulations of the Bureau of Internal Revenue and memorandum circulars of the Bureau of Customs during the period covered: Provided, however, that the coverage of the tax amnesty herein granted shall not include the applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from the special economic zone and freeport and entered in the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties prescribed in the National Internal Revenue Code (NIRC) of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.
Article 7. Exclusions —The one-time remedial amnesty under RA 9399 shall not include applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from the Special Economic Zones and Freeport Zones and entered into the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties, as prescribed in the National Internal Revenue Code of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.
The real and only issue is whether or not the position taken by the Commissioner coincides with the meaning and intent of executive Order No. 41.
We agree with both the Court of Appeals and Court of Tax Appeals that Executive Order No. 41 is quite explicit and requires hardly anything beyond a simple application of its provisions. It reads:LawlibraryofCRAlaw
x x x x
If, as the Commissioner argues, Executive Order No. 41 had not been intended to include 1981-1985 tax liabilities already assessed (administratively) prior to 22 August 1986, the law could have simply so provided in its exclusionary clauses. It did not. The conclusion is unavoidable, and it is that the executive order has been designed to be in the nature of a general grant of tax amnesty subject only to the cases specifically excepted by it.
Endnotes:
* Additional member per Special Order No. 2058 dated June 10, 2015.
1 Otherwise known as "An Act Declaring a One-Time Amnesty on Certain Tax and Duty Liabilities, Inclusive of Fees, Fines, Penalties, Interests and other additions thereto, Incurred by Certain Business Enterprises Operating Within the Special Economic Zones and Freeports Created Under Proclamation No. 163, Series of 1993; Proclamation No. 216, Series of 1993; Proclamation No. 120, Series of 1991; and Proclamation No. 984, Series of 1997, Pursuant to Section 15 of Republic Act No. 7227, as Amended, and for Other Purposes."
2 Specifically at C.M. Recto Hi-Way, P. Kalaw St., Clarkfield, Pampanga.
3Rollo, p. 203.
4 ld. at 204.
5 SECTION 5. Investment Climate in the CSEZ. -Pursuant to Section 5(m) and Section 15 of RA 7227, the BCDA shall promulgate all necessary policies, rules and regulations governing the CSEZ, including investment incentives, in consultation with the local government units and pe1tinent government departments for implementation by the CDC.
Among others, the CSEZ shall have all the applicable incentives in the Subic Special Economic and Free Port Zone under RA 7227 and those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and new investments laws which may hereinafter be enacted. (emphasis supplied)
6 SECTION 12. Subic Special Economic Zone.-x x x
The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment. However, exportation or removal of goods from the territory of the Subic Special Economic Zone to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines;
The provisions of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed within the Subic Special Economic Zone. In lieu of paying taxes, three percent (3%) of the gross income earned by all businesses and enterprises within the Subic Special Economic Zone shall be remitted to the National Government, one percent (1%) each to the local government units affected by the declaration of the zone in proportion to their population area, and other factors. In addition, there is hereby established a development fund of one percent (1%) of the gross income earned by all businesses and enterprises within the Subic Special Economic Zone to be utilized for the development of municipalities outside the City of Olongapo and the Municipality of Subic, and other municipalities contiguous to be base areas. x x x (emphasis supplied)
7Rollo, pp. 205-240. See Judicial Affidavit of Marissa I. Delos Reyes (Dated 26 February 2009), id. at 266-267.
8 G.R. No. 132527, July 29, 2005, 465 SCRA 47.
9 Signed into law by then President Gloria Macapagal-Arroyo on March 20, 2007.
10 G.R. No. 119775, October 24, 2003, 414 SCRA 356.
11 Department Order No. (DO) 33-07 was thereafter issued by the Department of Finance (DOF) on September II, 2007 to prescribe the implementing rules and regulations for RA 9399.
12Rollo, pp. 556-557. Annexes "8" and "9" of Puregold's Comment.
13People v. Echegaray, G.R. No. 117472, February 7, 1997, 267 SCRA 682.
14S.C. Megaworld Construction and Development Corporation v. Parada, G.R. No. 183804, September 11, 2013, 705 SCRA 584; Villaranda v. Villaranda, 467 Phil. 1089, 1098 (2004).
15 G.R. No. 178110, June 15, 2011, 652 SCRA 143.
16Rollo, p. 509. See Puregold's Formal Offer of Evidence before the CTA First Division, id. at 185-186.
17 G.R. No. 157594, March 9, 2010,614 SCRA 526.
18 BIR VAT Ruling No. 014-04, issued on 18 May 2004, granting VAT exemption to an operator of a duty free store in Clark Special Economic Zone.
19 Supra note 8.
20Republic v. Court of Appeals, G.R. No. 79732, November 8, 1993, 227 SCRA 509; cited in Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, October 8, 2013.
21 148 Phil. 443,447-448 (1971): cited in Commissioner of lnternal Revenue v. San Roque Power Corporation, supra.
22 Emphasis and underscoring supplied. Citations omitted.
23 Supra.
24Emphasis supplied.
25 G.R. No. 170574, January 30, 2009, 577 SCRA 366.
26Rollo, p. 23.
27PAGCOR v. BIR, G.R. No. 172087, March 15, 2011; Nasipit Integrated Arrastre and Stevedoring Services, Inc. (NIASSI), represented by Ramon M Calo v. Nasipit Employees Labor Union (NELU)-ALU-TUCP, represented by Donell P. Dagani, G.R. No. 162411, June 30, 2008.
28C.N. Hodges v. Municipal Board. Iloilo City, et al., 125 Phil. 442, 449 (1967); Ruben E. Agpalo, STATUTORY CONSTRUCTION 222-223 (5th ed., 2003).
29 G.R. No. 108358, January 20, 1995, 240 SCRA 368.
30Reyes v. Almanzor, Nos. L-49839-46, April 26, 1991, 196 SCRA 322.
VILLARAMA, JR., J.:
If this is not SMUGGLING, I do not know what it is.
With all due respect, I DISSENT.
Before us is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated May 9, 2012 and Resolution2 dated July 18, 2012 of the Court of Tax Appeals (CTA) En Banc in CTA EB No. 723 (CTA Case No. 7812). The CTA En Banc upheld the Resolutions3 dated November 25, 2010 and January 20, 2011 of the Second Division which cancelled and set aside the assessment for deficiency value added tax (VAT) and excise tax against the respondent.
In the light of this Court's findings that petitioner has substantially complied with the tax amnesty program, petitioner is thereby relieved of any civil, criminal and/or administrative liabilities arising from or incident to the nonpayment of taxes, duties and other charges covered by the tax amnesty. However, the applicable tax and duty liabilities to be covered by the tax amnesty shall refer only to the difference between: (i) all national and local impositions under relevant tax laws, rules and regulations; and (ii) five percent (5%) tax on gross income earned by said registered business enterprises as determined under relevant revenue regulations of the Bureau of Internal Revenue and memorandum circulars of the Bureau of Customs during the period covered.
Accordingly, the amount covered by the tax amnesty shall be the difference between the amount of P2,780,610,174.51, which comprises petitioner's deficiency excise tax and VAT; and the amount of P38,700,200.55 which is the equivalent of 5% tax on gross income earned by said registered business enterprises for the calendar year 1998 to 2004; or a total ofP2,741,909,973.96. Details are as follows:LawlibraryofCRAlaw
Deficiency Excise Tax, VAT and Inspection Fees per Assessment Excise Tax P 923,418,902.25VAT 1,857,037,916.57Inspection Fees 153,355.70P2,780,610,174.51 Less: 5% Income Tax Paid Per Returns Filed Exh Year 5%Tax G 1998 P 2,504,241.00 I 1999 11,357,233.00 K 2000 8,748,137.00 M 2001 3,419,044.00 O 2002 3,938,554.00 P 2003 4,295,522.00 Q 2004 4,437,469.55 38,700,200.55Taxes covered by the tax amnesty P2,741,909,973.96
WHEREFORE, premises considered, the instant Motion for Reconsideration is hereby GRANTED. The Resolution of this Court promulgated on June 3, 2010 is hereby set aside. Respondent's assessment against petitioner for deficiency VAT and excise tax for the importation of alcohol and tobacco products covering the period January 1998 to May 2004 is hereby CANCELLED and SET ASIDE solely in view of petitioner's availment of Tax Amnesty under Republic Act No. 9399. Accordingly, the instant Petition for Review is hereby deemed WITHDRAWN and the case is considered CLOSED and TERMINATED.
SO ORDERED.12
I
THE HONORABLE CTA EN BANC GRAVELY ERRED IN LIMITING THE REQUIREMENTS UNDER REPUBLIC ACT NO. 9399 FOR THE AVAILMENT OF TAX AMNESTY OF (i) FILING OF NOTICE AND RETURN FOR TAX AMNESTY WITHIN SIX (6) MONTHS FROM EFFECTIVITY OF THE LAW AND (ii) PAYMENT OF THE AMNESTY TAX OF P25,000.00, AND TOTALLY AND DELIBERATELY DISREGARDING THE MATERIAL AND SUBSTANTIAL FACT THAT RESPONDENT'S PLACE OF BUSINESS IS IN METRO MANILA AND NOT CLARK FIELD, PAMPANGA, AS STATED IN ITS ARTICLES OF INCORPORATION; THUS, RESPONDENT IS NOT ENTITLED TO THE BENEFITS UNDER R.A. NO. 9399.II
ASSUMING WITHOUT ADMITTING THAT RESPONDENT IS A DULY CSEZ REGISTERED ENTERPRISE WITH PRINCIPAL PLACE OF BUSINESS IN CLARK FIELD, PAMPANGA, STILL THE HONORABLE CTA EN BANC GRAVELY AND SERIOUSLY ERRED, AS ITS RULING IS CONTRARY TO THE INTENT OF R.A. 9399 WHICH EXCLUDES DEFICIENCY TAX; THUS, RESPONDENT REMAINS TO BE LIABLE FOR EXCISE TAXES ON ITS WINE, LIQUOR AND TOBACCO IMPORTATIONS.13
SECTION 5. Investment Climate in the CSEZ. - Pursuant to Section 5(m) and Section 15 of RA 7227, the BCDA shall promulgate all necessary policies, rules and regulations governing the CSEZ, including investment incentives, in consultation with the local government units and pertinent government departments for implementation by the CDC.
Among others, the CSEZ shall have all the applicable incentives in the Subic Special Economic and Free Port Zone under RA 7227 and those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and new investments laws which may hereinafter be enacted.
x x x x (Emphasis supplied)
In John Hay Peoples Alternative Coalition, et al. v. Victor Lim, et al., this Court resolved an issue, very much like the one herein, concerning the legality of the tax exemption benefits given to the John Hay Economic Zone under Presidential Proclamation No. 420, Series of 1994, "CREATING AND DESIGNATING A PORTION OF THE AREA COVERED BY THE FORMER CAMP JOHN AS THE JOHN HAY SPECIAL ECONOMIC ZONE PURSUANT TO REPUBLIC ACT NO. 7227."
In that case, among the arguments raised was that the granting of tax exemptions to John Hay was an invalid and illegal exercise by the President of the powers granted only to the Legislature. Petitioners therein argued that Republic Act No. 7227 expressly granted tax exemption only to Subic and not to the other economic zones yet to be established. Thus, the grant of tax exemption to John Hay by Presidential Proclamation contravenes the constitutional mandate that "[n]o law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress."
This Court sustained the argument and ruled that the incentives under Republic Act No. 7227 are exclusive only to the SSEZ. The President, therefore, had no authority to extend their application to John Hay. To quote from the Decision:LawlibraryofCRAlaw
ChanRoblesVirtualawlibraryMore importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature, unless limited by a provision of a state constitution, that has full power to exempt any person or corporation or class of property from taxation, its power to exempt being as broad as its power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions, or local governments may pass ordinances on exemption only from local taxes.
The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon.
Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation should be manifest and unmistakable from the language of the law on which it is based; it must be expressly granted in a statute stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must be categorically and unmistakably expressed.
If it were the intent of the legislature to grant to John Hay SEZ the same tax exemption and incentives given to the Subic SEZ, it would have so expressly provided in R.A. No. 7227.
In the present case, while Section 12 of Republic Act No. 7227 expressly provides for the grant of incentives to the SSEZ, it fails to make any similar grant in favor of other economic zones, including the CSEZ. Tax and duty-free incentives being in the nature of tax exemptions, the basis thereof should be categorically and unmistakably expressed from the language of the statute. Consequently, in the absence of any express grant of tax and duty-free privileges to the CSEZ in Republic Act No. 7227, there would be no legal basis to uphold [the] questioned portions of two issuances: Section 5 of Executive Order No. 80 and Section 4 ofBCDA Board Resolution No. 93-05-034, which both pertain to the CSEZ.16 (Emphasis supplied)
SECTION 1. Grant of Tax Amnesty. - Registered business enterprises operating prior to the effectivity of this Act within the special economic zones and freeports created pursuant to Section 15 of Republic Act No. 7227, as amended, such as the Clark Special Economic Zone created under Proclamation No. 163, series of 1993; Poro Point Special Economic and Freeport Zone created under Proclamation No. 216, series of 1993; John Hay Special Economic Zone created under Proclamation No. 420, series of 1994; and Morong Special Economic Zone created under Proclamation No. 984, series of 1997, may avail themselves of the benefits of remedial tax amnesty herein granted on all applicable tax and duty liabilities, inclusive of f'mes, penalties, interests and other additions thereto, incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay People's Coalition v. Lim, et. al., G. R. No. 119775 dated 24 October 2003 and Coconut Oil Refiners Association, Inc. v. Torres, et. al., G. R. No. 132527 dated 29 July 2005, by filing a notice and return in such form as shall be prescribed by the Commissioner of Internal Revenue and the Commissioner of Customs and thereafter, by paying an amnesty tax of Twenty-five thousand pesos (P25,000.00) within six months from the effectivity of this Act: Provided, That the applicable tax and duty liabilities to be covered by the tax amnesty shall refer only to the difference between: (i) all national and local tax impositions under relevant tax laws, rules and regulations; and (ii) the five percent (5%) tax on gross income earned by said registered business enterprises as determined under relevant revenue regulations of the Bureau of Internal Revenue and memorandum circulars of the Bureau of Customs during the period covered: Provided, however, That the coverage of the tax amnesty herein granted shall not include the applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from the special economic zone and freeport and entered in the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties prescribed in the National Internal Revenue Code (NIRC) of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.
SEC. 2. Immunities and Privileges. Those who have availed themselves of the tax amnesty and have fully complied with all its conditions shall be relieved of any civil, criminal and/or administrative liabilities arising from or incident to the nonpayment of taxes, duties and other charges covered by the tax amnesty granted under Section 1 herein.
x x x As clearly ruled by Us "To allow a litigant to assume a different posture when he comes before the court and challenges the position he had accepted at the administrative level," would be to sanction a procedure whereby the Court - which is supposed to review administrative determinations - would not review, but determine and decide for the first time, a question not raised at the administrative forum. Thus it is well settled that under the same underlying principle of prior exhaustion of administrative remedies, on the judicial level, issues not raised in the lower court cannot generally be raised for the first time on appeal. x x x
Nonetheless it is axiomatic that the State can never be in estoppel, and this is particularly true in matters involving taxation. The errors of certain administrative officers should never be allowed to jeopardize the government's financial position.21 (Emphasis supplied; citation omitted)
ARTICLE 4. Coverage. - Business enterprises operating, authorized, duly registered and granted with tax and duty incentives prior to the effectivity of RA 9399, within the following Special Economic Zones and Freeport Zones may avail themselves of the one-time remedial amnesty, to wit:LawlibraryofCRAlaw
- Clark Special Economic Zone (CSEZ) created under Proclamation No. 163, Series of 1993;
x x x x (Emphasis supplied)
SEC. 131. Payment of Excise Taxes on Imported Articles. -
(A) Persons Liable.- x x x
x x x x
The provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled spirits and wines into the Philippines, even if destined for tax and duty free shops, shall be subject to all applicable taxes, duties, charges, including excise taxes due thereon: Provided, however, That this shall not apply to cigars and cigarettes, distilled spirits and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and are not transshipped to any other port in the Philippines: Provided, further, That importations of cigars and cigarettes, distilled spirits and wines by a government-owned and operated duty-free shop, like the Duty-Free Philippines (DFP), shall be exempted from all applicable taxes, duties, charges, including excise tax due thereon: Provided, still .fUrther, That such articles directly imported by a government-owned and operated duty-free shop like the Duty-Free Philippines, shall be labelled 'tax and duty-free' and 'not for resale': Provided, still further, That if such articles brought into the duly chartered or legislated freeports under Republic Acts No. 7227, 7922 and 7903 are subsequently introduced into the Philippine customs territory, then such articles shall, upon such introduction, be deemed imported into the Philippines and shall be subject to all imposts and excise taxes provided herein and other statutes: Provided, finally, That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar articles, from one freeport to another freeport, shall not be deemed an introduction into the Philippine customs territory.
x x x x
SEC. 131. Payment of Excise Taxes on Imported Articles -
(A) Persons Liable. - x x x
The provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled spirits, fermented liquors and wines into the Philippines, even if destined for tax and duty-free shops, shall be subject to all applicable taxes, duties, charges, including excise taxes due thereon. This shall apply to cigars and cigarettes, distilled spirits, fermented liquors and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and such other freeports as may hereafter be established or created by law: Provided, further, That importations of cigars and cigarettes, distilled spirits, fermented liquors and wines made directly by a government-owned and operated duty-free shop, like the Duty-Free Philippines (DFP), shall be exempted from all applicable duties only: Provided, still further, That such articles directly imported by a government-owned and operated duty-free shop, like the Duty-Free Philippines, shall be labeled 'duty-free' and 'not for resale': Provided, finally, That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar articles other than cigars and cigarettes, distilled spirits, fermented liquors and wines, from one freeport to another freeport, shall not be deemed an introduction into the Philippine customs territory.
ARTICLE 7. Exclusions.- The one-time remedial amnesty under RA 9399 shall not include applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from Special Economic Zones and Freeport Zones and entered into the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties, as prescribed in the National Internal Revenue Code of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.
Endnotes:
1Rollo, pp. 61-67. Penned by Associate Justice Amelia R. Cotangco-Manalastas.
2 Id. at 68-70.
3 CTA En Banc records, pp. 22-33.
4 CTA Division records, pp. 218-233.
5 BIR records, pp. 87-88,91-105, 123-129 & 131-133.
6 CTA Division records, pp. 21, 26-27.
7 Id. at 89-90.
8 503 Phil. 42 (2003).
9 CTA Division records, pp. 167-182, 211-323, 329-330, 332-341, 394, 427-428.
10 Id. at 442-444, 492-494.
11 Supra note 3, at 22-29.
12 Id. at 28-29.
13Rollo, pp. 30-31.
14 460 Phil. 530 (2003).
15 Supra note 8.
16 Id. at 60-61.
17 AN ACT DECLARING A ONE-TIME AMNESTY ON CERTAIN TAX AND DUTY LIABILITIES, INCLUSIVE OF FEES, FINES, PENALTIES, INTERESTS AND OTHER ADDITIONS THERETO, INCURRED BY CERTAIN BUSINESS ENTERPRISES OPERATING WITHIN THE SPECIAL ECONOMIC ZONES AND FREEPORTS CREATED UNDER PROCLAMATION NO. 163, SERIES OF 1993; PROCLAMATION No. 216, SERIES OF 1993; PROCLAMATION NO. 420, SERIES OF 1994; AND PROCLAMATION NO. 984, SERIES OF 1997, PURSUANT TO SECrtON 15 OF REPUBLIC ACT No. 7227, As AMENDED, AND FOR OTHER PURPOSES.
18Commissioner of Internal Revenue v. The Philippine American Accident Insurance Company, Inc., 493 Phil. 785, 792 (2005), citing Lim v. Queensland Tokyo Commodities, Inc., 424 Phil. 35, 47 (2002).
19Commissioner of Internal Revenue v. Eastern Telecommunications Phils., Inc., 638 Phil. 334, 348 (2010), citing CIR v. Mirant Pagbilao Corporation, 535 Phil. 481, 491 (2006).
20 243 Phil. 703 (1988).
21 Id. at 709.
22 CTA Division records, pp. 218-229.
23Rollo, pp. 551-555.
24 J. CAMPOS, JR. and M. C. L. CAMPOS, The Corporation Code: Comments, Notes and Selected Cases, Vol. 1, 1990 Ed., p. 77.
25 C. L. VILLANUEVA, Philippine Corporate Law, 2001 Ed., p. 201.
26 CTADivision records, pp. 231-237 & 291-322.
27 Supra note 14.
28 Supra note 8.
29 AN ACT AMENDING REPUBLIC ACT No. 7227, AAMENDED, OTHERWISE KNOWN As THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992, AND FOR OTHER PURPOSES.
30 AN ACT RESTRUCTURING THE EXCISE TAX ON ALCOHOL AND TOBACCO PRODUCTS BY AMENDING SECTIONS 141, 142, 143, 144, 145, 8, 131 AND 288 OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 9334, AND FOR OTHER PURPOSES.
31 453 Phil. 1043, 1052 (2003).
32 361 Phil. 916 (1999).
33 ld. at 931.
34Bañas, Jr. v. Court of Appeals, 382 Phil. 144, 156 (2000). See also People v. Castaneda, Jr., 247-A PhiL 420,434 (1988), citing E. Rodriguez, Inc. v.The Collector of Internal Revenue, 139 PhiL 354, 364 (1969); Commissioner of Internal Revenue v. Guerrero, 128 Phil. 197, 201 (1967).
35Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 106611, July 21, 1994, 234 SCRA 348, 356.
36Province of Tarlac v. Alcantara, G.R. No. 65230, 23 December 1992, 216 SCRA 790,798.
37 Internal Rules of the Supreme Court, A.M. No. 10-4-20-SC, Part I, Rule 2, Section 3, sub-paragraph k)