SECOND DIVISION
G.R. No. 193381, February 08, 2017
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. APO CEMENT CORPORATION, Respondent.
D E C I S I O N
LEONEN, J.:
This resolves a Petition for Review1 seeking to reverse and set asidethe Court of Tax Appeals En Banc's Decision2 dated June 24, 2010, which affirmed the Second Division's Resolution3 dated June 11, 2009 granting respondent's Motion to Cancel Tax Assessment; and Resolution4 dated August 23, 2010 denying respondent's motion for reconsideration.
On September 1, 2003, the Bureau of Internal Revenue sent Apo Cement Corporation (Apo Cement) a Final Assessment Notice (FAN) for deficiency taxes for the taxable year 1999, as follows:
Apo Cement protested the FAN.6 The Bureau issued the Final Decision on Disputed Assessment dated June 15, 2006 denying the Apo Cement's protest.7 The Final Decision contained the following deficiency
DEFICIENCY TAXES AMOUNT Income Tax P 479,977,176.22 Value-Added Tax 181,345,963.86 VAT Withholding 23,536,374.48 Withholding Tax on Compensation 15,595,098.12 Unremitted Withholding Tax on Compensation 10,388,757.86 Expanded Withholding Tax 17,642,981.74 Unremitted Expanded Withholding Tax 3,510,390.71 Final Withholding Tax 53,808,355.59 Fringe Benefits Tax 167,337.31 Documentary Stamp Tax 52,480,372.77 Administrative Penalties 25,000.005
On August 3, 2006, Apo Cement filed a Petition for Review with the Court of Tax Appeals.9
DEFICIENCY TAXES AMOUNT Income Tax P 9,305,697.74 Value-Added Tax 1,610,070.51 Withholding Tax on Compensation 20,916,611.66 Unremitted Withholding Tax on Compensation 13,479,061.25 Expanded Withholding Tax 23,664,416.36 Unremitted Expanded Withholding Tax 4,549,677.32 Final Withholding Tax 3,095,786.45 Fringe Benefits Tax 213,656.97 Documentary Stamp Tax 67,433,862.97 Administrative Penalties 25,000.00Total P144293840.658
(Emphasis supplied)
WHEREFORE, premises considered:The Commissioner filed a Motion for Reconsideration, which the Court of Tax Appeals denied in a Resolution dated October 19, 2009 for lack of merit.
1) the Assessment Notices for deficiency Documentary Stamp Taxes for taxable year 1999 issued against [Apo Cement Corporation] are hereby CANCELLED and SET ASIDE, solely in view of [its] availment of the Tax Amnesty under RA 9480; 2) the Assessment Notices for deficiency Income Tax, Value-Added Tax, VAT Withholding Tax, Withholding Tax on Compensation, Unremitted Withholding Tax on Compensation, Expanded Withholding Tax, Unremitted Expanded Withholding Tax, Final Withholding Tax, and Fringe Benefits Tax are CANCELLED and SET ASIDE in view of petitioner's payment of said taxes.
Accordingly, the above-captioned case is hereby considered CLOSED and TERMINATED.
SO ORDERED.18
Mere belief is insufficient basis and negates the verification which should be on the basis of personal knowledge or authentic records. Verification is required to secure an assurance that the allegations of the petition have been made in good faith, or are true and correct and not merely speculative.35To emphasize this further, the third paragraph of Rule 7, Section 4 of the 1997 Rules of Civil Procedure, as amended, expressly treats pleadings with a verification based on "information and belief' or "knowledge, information and belief," as unsigned.36
Clearly, the amendment was introduced in order to make the verification requirement stricter, such that the party cannot now merely state under oath that he believes the statements made in the pleading. He cannot even merely state under oath that he has knowledge that such statements are true and correct. His knowledge must be specifically alleged under oath to be either personal knowledge or at least based on authentic records.In this case, petitioner did not submit a corrected verification despite the order of this Court. This alone merits the denial of the Petition outright.
Unlike, however, the requirement for a Certification against Forum Shopping in Section 5, wherein failure to comply with the requirements is not curable by amendment of the complaint or other initiatory pleading, Section 4 of Rule 7, as amended, states that the effect of the failure to properly verify a pleading is that the pleading shall be treated as unsigned:A pleading required to be verified which contains a verification based on "information and belief'', or upon "knowledge, information and belief', or lacks a proper verification, shall be treated as an unsigned pleading.Unsigned pleadings are discussed in the immediately preceding section of Rule 7:
SEC. 3. Signature and address.An unsigned pleading produces no legal effect. However, the court may, in its discretion, allow such deficiency to be remedied if it shall appear that the same was due to mere inadvertence and not intended for delay. Counsel who deliberately files an unsigned pleading, or signs a pleading in violation of this Rule, or alleges scandalous or indecent matter therein, or fails to promptly report to the court a change of his address, shall be subject to appropriate disciplinary action. (5a)
A pleading, therefore, wherein the Verification is merely based on the party's knowledge and belief produces no legal effect, subject to the discretion of the court to allow the deficiency to be remedied.38
SECTION 1. Coverage.-There is hereby 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 assessments duly issued therefor, that have remained unpaid as of December 31, 2005: Provided, however, That the amnesty hereby authorized and granted shall not cover persons or cases enumerated under Section 8 hereof.In addition to the above provisions of law, the Department of Finance Department Order No. 29-0739 provides:
SEC. 2. Availment of the Amnesty. Any person, natural or juridical, who wishes to avail himself of the tax amnesty authorized and granted under this Act shall file with the Bureau of Internal Revenue (BIR) a notice and Tax Amnesty Return accompanied by a Statement of Assets, Liabilities and Net worth (SALN) as of December 31, 2005, in such form as may be prescribed in the implementing rules and regulations (JRR) of this Act, and pay the applicable amnesty tax within six months from the effectivity of the IRR.
SECTION 3. What to Declare in the SALN - The SALN shall contain a declaration of the assets, liabilities and net worth as of December 31,2005, as follows:
a) Assets within or without the Philippines, whether real or personal, tangible or intangible, whether or not used in trade or business: Provided, That property other than money shall be valued at the cost at which the property was acquired: Provided, further, That foreign currency assets and/or securities shall be valued at the rate of exchange prevailing as of the date of the SALN;
(b) All existing liabilities which are legitimate and enforceable, secured or unsecured, whether or not incurred in trade or business; and
(c) The net worth of the taxpayer, which shall be the difference between the total assets and total liabilities.
SEC. 5. Grant of Tax Amnesty. Except for the persons or cases covered in Section 8 hereof, any person, whether natural or juridical, may avail himself of the benefits of tax amnesty under this Act, and pay the amnesty tax due thereon, based on his net worth as of December 31, 2005 as declared in the SALN as of said period, in accordance with the following schedule of amnesty tax rates and minimum amnesty tax payments required:(d) Taxpayers who :filed their balance sheet/SALN, together with their income tax returns for 2005, and who desire to avail of the tax amnesty under this Act shall amend such previously :filed statements by including still undeclared assets and/or liabilities and pay an amnesty tax equal to :five percent (5%) based on the resulting increase in net worth: Provided, That such taxpayers shall likewise be categorized in accordance with, and subjected to the minimum amounts of amnesty tax prescribed under the provisions of this Section. (Emphasis supplied)
(b) Corporations (1) With subscribed
capital of above
P50 Million 5% or P500,000,
whichever is higher (2) With subscribed
capital of above
P20 Million up to
P50 Million 5% or P250,000,
whichever is higher (3) With subscribed
capital of P5Million to
P20Million 5% or P100,000,
whichever is higher (4) With subscribed
capital of below
P5 Million 5% or P25,000,
whichever is higher
SECTION 6. Method of Availment of Tax Amnesty.-Taxpayers who availed themselves of the tax amnesty program are entitled to the immunities and privileges under Section 6 of the law:
1. Forms/Documents to be filed. - To avail of the general tax amnesty, concerned taxpayers shall file the following documents/requirements:
a. Notice of Availment in such form as may be prescribed by the BIR.
b. Statements of Assets, Liabilities and Net worth (SALN) as of December 31, 2005 in such form, as may be prescribed by the BIR.
c. Tax Amnesty Return in such form as may be prescribed by the BIR.
2. Place of Filing of Amnesty Tax Return. - The Tax Amnesty Return, together with the other documents stated in Sec. 6 (1) hereof, shall be filed as follows:
a. Residents shall file with the Revenue District Officer (RDO)/Large Taxpayer District Office of the BIR which has jurisdiction over the legal residence or principal place of business of the taxpayer, as the case may be.
b. Non-residents shall file with the office of the Commissioner of the BIR, or with any RDO.
c. At the option of the taxpayer, the RDO may assist the taxpayer in accomplishing the forms and computing the taxable base and the amnesty tax payable, but may not look into, question or examine the veracity of the entries contained in the Tax Amnesty Return, Statement of Assets, Liabilities and Net worth, or such other documents submitted by the taxpayer.
3. Payment of Amnesty Tax and Full Compliance.- Upon filing of the Tax Amnesty Return in accordance with Sec. 6 (2) hereof, the taxpayer shall pay the amnesty tax to the authorized agent bank or in the absence thereof, the Collection Agent or duly authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business.
The RDO shall issue sufficient Acceptance of Payment Forms, as may be prescribed by the BIR for the use of-or to be accomplished by the bank, the collection agent or the Treasurer, showing the acceptance of the amnesty tax payment. In case of the authorized agent bank, the branch manager or the assistant branch manager shall sign the acceptance of payment form.
The Acceptance of Payment Form, the Notice of Availment, the SALN, and the Tax Amnesty Return shall be submitted to the RDO, which shall be received only after complete payment. The completion of these requirements shall be deemed full compliance with the provisions of RA 9480.
4. Time for Filing and Payment of Amnesty Tax. -The filing of the Tax Amnesty Return, together with the SALN, and the payment of the amnesty tax shall be made within six (6) months from the effectivity of these Rules.
SEC. 6. Immunities and Privileges. Those who availed themselves of the tax amnesty under Section 5 hereof, and have fully complied with all its conditions shall be entitled to the following immunities and privileges:This Court has declared40 that submission of the documentary requirements and payment of the amnesty tax is considered full compliance with Republic Act No. 9480 and the taxpayer can immediately enjoy the immunities and privileges enumerated in Section 6 of the law.
(a) The taxpayer shall be immune from the payment of taxes, as well as additions thereto, and the appurtenant civil, criminal or administrative penalties under the National Internal Revenue Code of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years.
(b) The taxpayer's Tax Amnesty Return and the SALN as of December 31, 2005 shall not be admissible as evidence in all proceedings that pertain to taxable year 2005 and prior years, insofar as such proceedings relate to internal revenue taxes, before judicial, quasi-judicial or administrative bodies in which he is a defendant or respondent, and except for the purpose of ascertaining the net worth beginning January 1, 2006, the same shall not be examined, inquired or looked into by any person or government office. However, the taxpayer may use this as a defense, whenever appropriate, in cases brought against him.
(c) The books of accounts and other records of the taxpayer for the years covered by the tax amnesty availed of shall not be examined: Provided, That the Commissioner of Internal Revenue may authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for any tax refund, tax credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or exemptions under existing laws.
All these immunities and privileges shall not apply where the person failed to file a SALN and the Tax Amnesty Return, or where the amount of net worth as of December 31, 2005 is proven to be understated to the extent of thirty percent (30%) or more, in accordance with the provisions of Section 3 hereof.
The Court of Tax Appeals further found that there was nothing in the records, which would show that proceedings to question the correctness of the Statement of Assets, Liabilities, and Net Worth (SALN) have been filed within the one-year period stated in Section 4 of the law.43 Hence, it concluded that respondent had duly complied with the requisites enumerated under Republic Act No. 9480 and is therefore entitled to the benefits under Section 6.44
- Letter to the Commissioner of Internal Revenue, addressed to the Chief-LT Audit and Investigation Division II, Ms. Olivia 0. Lao, received on January 25, 2008;
- Notice of Availment of the Tax Amnesty;
- Tax Amnesty Payment Form/Acceptance of Payment Form (BIR Form No. 0617);
- Tax Amnesty Return (BIR Form No. 2116);
- Statement of Assets, Liabilities and Net worth;
- Annual Income Tax Return for the taxable year 2005 with Audited Financial Statements for the year 2005; and
- Development Bank of the Philippines BIR Tax Payment Deposit Slip in the amount of P3,668,951.06.42
SEC. 4. Presumption of Correctness of the SALN. -The SALN as of December 31, 2005 shall be considered as true and correct except where the amount of declared net worth is understated to the extent of thirty percent (30%) or more as may be established in proceedings initiated by, or at the instance of, parties other than the BIR or its agents: Provided, That such proceedings must be initiated within one year following the date of the filing of the tax amnesty return and the SALN. Findings of or admission in congressional hearings, other administrative agencies of government, and/or courts shall be admissible to prove a thirty percent (30%) under-declaration. (Emphasis and underscoring supplied)Under the above-stated prov1s10n, the SALN is presumed correct unless there is a concurrence of the following:
The one-year period referred to in the law should ... be considered only as a prescriptive period within which third parties, meaning 'parties other than the BIR or its agents,' can question the SALN - not as a waiting period during which the BIR may contest the SALN and the tax payer prevented from enjoying the immunities and privileges under the law. 58The Court explained that the documentary requirements and payment of the amnesty tax operate as a suspensive condition, such that completion of these requirements entitles the taxpayer-applicant to immediately enjoy the immunities and privileges under Republic Act No. 9480.
This clarification, however, does not mean that the amnesty taxpayers would go scot-free in case they substantially understate the amounts of their net worth in their SALN. The 2007 Tax Amnesty Law imposes a resolutory condition insofar as the enjoyment of immunities and privileges under the law is concerned. Pursuant to Section 4 of the law, third parties may initiate proceedings contesting the declared amount of net worth of the amnesty taxpayer within one year following the date of the filing of the tax amnesty return and the SALN. Section 6 then states that "All these immunities and privileges shall not apply ... where the amount of net worth as of December 31, 2005 is proven to be understated to the extent of thirty percent (30%) or more, in accordance with the provisions of Section 3 hereof." Accordingly, Section 10 provides that amnesty taxpayers who willfully understate their net worth shall be (a) liable for perjury under the Revised Penal Code; and (b) subject to immediate tax fraud investigation in order to collect all taxes due and to criminally prosecute those found to have willfully evaded lawful taxes due.59Thus, the amnesty granted under the law is revoked once the taxpayer is proven to have under-declared his assets in his SALN by 30% or more. Pursuant to Section 1060of the Tax Amnesty Law, amnesty taxpayers who wilfully understate their net worth shall not only be liable for perjury under the Revised Penal Code, but, upon conviction, also subject to immediate tax fraud investigation in order to collect all taxes due and to criminally prosecute for tax evasion.
Endnotes:
1Rollo, pp. 10-34. Filed under Rule 45 of the Rules of Court.
2 Id. at 35-57. The Decision was penned by Associate Justice Lovell R. Bautista and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Caesar A. Casanova, Olga Palanca-Enriquez, Esperanza R. Fabon-Victorino and Amelia R. Cotangco Manalastas of the En Banc, Court of Tax Appeals, Quezon City; Associate Justice Cielito N. Mindaro Grulla was on leave.
3 Id. at 58-60. The Resolution was signed by Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy and Olga Palanca-Enriquez of the Second Division, Court of Tax Appeals, Quezon City.
4 Id. at 54-57. The Resolution was penned by Associate Justice Lovell R. Bautista and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Caesar A. Casanova, Olga Palanca-Enriquez, Esperanza R. Fabon-Victorino, Cielito N. Mindaro Grulla and Amelia R. Cotangco-Manalastas of the En Bane, Court of Tax Appeals, Quezon City.
5 Id. at 36.
6 Id. at 37.
7 Id.
8 Id.
9 Id.
10 Id.
11 Id. at 37-38.
12 Id.
13 Id. at 133, Comment.
14 Id. at 61-75.
15 Id. at 38.
16 Id. at 58-60.
17 An Act Enhancing Revenue Administration and Collection by Granting an Amnesty on All Unpaid Internal Revenue Taxes Imposed by the National Government for Taxable Year 2005 and Prior Years (2007).
18Rollo, p. 60.
19 Id. at 17.
20 Id. at 46.
21 Id. at 47-48.
22 Id. at 49.
23 Id.
24 Id.at 51.
25 Id. at 17.
26 ld. at 126-165.
27 Id.at 166-172.
28 Id. at 189.
29 Id. at 31-32.
30 Id. at 31.
31 Id. at 114.
32 Id. at 168.
33 A.M. No. 00-2-10-SC (2000).
34 557 Phil. 700 (2007) [Per J. Quisumbing, Second Division).
35 Id. at 707.
36 Vicencio v. Villar, 690 Phil. 59,67 (2012) [Per C.J. Sereno, En Banc]. Rules of Court, Rule 7, sec. 4, as amended by A.M. No. 00-2-1 0-SC (2000) provides:
SEC. 4. Verification..- Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records.
A pleading required. to be verified which contains a verification based on "information and belief' or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an unsigned pleading.
37 595 Phil. 1158 (2008) [Per J. Chico-Nazario, Third Division].
38 Id. at 1166-1167.
39 Rules and Regulations to Implement Republic Act No. 9480 (2007).
40CS Garment, Inc. v. Commissioner of Internal Revenue, 729 Phil. 253, 267-272 [Per CJ Sereno, First Division]; Metropolitan Bank and Trust Co. v. Commissioner of Internal Revenue, 612 Phil. 544, 571- 572 (2009) [PerJ. Chico-Nazario, Third Division); Philippine Banking Corporation (now Global Business Banking) v. Commissioner of Internal Revenue, 597 Phil. 363, 383-389 (2009) [Per J. Carpio, First Division].
41 Rep. Act No. 9480 (2007) was entitled An Act Enhancing Revenue Administration And Collection By Granting An Amnesty On All Unpaid Internal Revenue Taxes Imposed By The National Government For Taxable Year 2005 And Prior Years.
42 Id. at 47-48.
43 Id. at 49-50.
44 Id. at 50.
45 Id. at 22.
46 Id. at 23-24.
47 Id. at 27.
48 Id. at 148.
49 Id.
50 Id. at 151.
51 Id.
52 Id.
53 Id. at 170.
54 Id. at 49.
55Commissioner of internal Revenue v. San Roque Power Corp., 703 Phil. 310, 370 (2013) [Per J. Carpio, En Banc]; Commissioner of internal Revenue. v. Solidbank Corp., 462 Phil. 96, 129 (2003) [Per J. Panganiban, First Division]; Commissioner of internal Revenue v. Court of Appeals, 358 Phil. 562, 577(1998) [Per J. Panganiban, First Division].
56 Commissioner of internal Revenue v. Ariete, 624 Phil. 458, 468 (2010) [Per J. Carpio, Second Division].
57 729 Phil. 253 [Per CJ Sereno, First Division].
58 Id. at 271.
59CS Garment, Inc. v. Commissioner of Internal Revenue, 729 Phil. 253, 272 [Per CJ Sereno, First Division].
60 Rep. Act No. 9480, sec. 10 provides:
SECTION 10. Penalties. (a) Any person who, having filed a statement or Tax Amnesty Return under this Act, willfully understates his net worth to the extent of thirty percent (30%) or more shall, upon conviction, be subject to the penalties of perjury under the Revised Penal Code.
(b) The willful failure to declare any property in the statement and/or in the Tax Amnesty Return shall be deemed a prima facie evidence of fraud and shall constitute a ground upon which attachment of such property may be issued in favor of the BIR to answer for the satisfaction of any judgment that may be acquired against the declarant.
In addition to the penalties provided in paragraphs (a) and (b) above, immediate tax fraud investigation shall be conducted to collect all taxes due, including increments, and to criminally prosecute those found to have willfully evaded lawful taxes due.
In the case of associations, partnerships, or corporations, the penalty shall be imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge and employees responsible for the violation.
(c) Any person who makes an unlawful divulgence of the Tax Amnesty Return or the SALN shall be penalized by a fine of not less than Fifty thousand pesos (P50,000.00) and imprisonment of not less than six years but not more than ten (10) years.
If the offender is an officer or employee of the BIR or any government entity, he/she shall likewise suffer an additional penalty of perpetual disqualification to hold public office, to vote and to participate in any public election.
61Rollo, p. 128.
62 Id. at 49.
63 Id. at 181-182.
64 Id. at 154.
65 Id. at 42.
66 RULES OF COURT, Rule 45 provides:
Rule 45 -Appeal by Certiorari to the Supreme Court
Section 1. Filing of Petition with Supreme Court. A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
67Southern Power Corp. v. Commissioner of Internal Revenue, 675 Phil. 732, 741 (2011) [Per J. Abad, Third Division]; Commissioner of Internal Revenue v. Benguet Corp., 501 Phil. 343, 352 (2005) [Per J. Tinga, Second Division]; Republic v. Court of Tax Appeals, 418 Phil. 758, 767 (2001) [Per J. Vitug, Third Division].