SECOND DIVISION
G.R. No. 206579. December 01, 2021
PEOPLE OF THE PHILIPPINES, Petitioner, v. GLORIA F. TUYAY, Respondent.
D E C I S I O N
HERNANDO, J.:
Before the Court is a petition for certiorari1 under Rule 65 of the Rules of Court, assailing the March 5, 2012,2 September 10, 2012,3 and February 14, 20134 Resolutions of the Court of Tax Appeals (CTA) in CTA EB Crim. No. 017.
Factual Antecedents:
Respondent Gloria F. Tuyay (Tuyay) is the registered owner of Glo Herbal Trading and Manufacturing, a single proprietorship engaged in the business of manufacturing, selling, and distributing the herbal concoction, Glo-Herbal.5chanRoblesvirtualLawlibrary
On June 25, 2003, Assistant Commissioner Percival T. Salazar of the Bureau of Internal Revenue (BIR) issued a Letter of Authority (LOA)6 authorizing the BIR revenue officers to examine the books of accounts of Glo Herbal Trading and Manufacturing for taxable years 2000 to 2002 as it allegedly sold millions of its product during the said years.7 However, despite receipt of the LOA, Tuyay failed to submit the books of account. The revenue officers, thus, had to use the expenditure method8 to reconstruct the undeclared income and determine the deficiency taxes of Tuyay.
On June 10, 2004, the BIR issued assessment notices9 against Tuyay for deficiency income tax and value-added tax (VAT) for the taxable years 2001 and 2002 in the amounts of P110,305,049.69 and P4,501,011.03, respectively.10 The deficiency tax for taxable year 2001, which is the taxable year involved in this case, is broken down as follows:
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On June 3, 2005, the BIR, through its revenue officers filed with the Department of Justice (DOJ) a criminal complaint13 for violations of Sections 25414 and 25515 of the National Internal Revenue Code (NIRC) against Tuyay.16chanRoblesvirtualLawlibrary
Income Tax Taxable year 2001 P42,494,174.29 Tax Due 21,247,087.15 Add: Surcharge 19,836,280.56 Interest P83,577,542.0011 Total Amount Payable VAT Taxable year 2001 P13,279,429.47 Tax Due 6,639,714.73 Add: Surcharge 6,808,363.49 Interest P26,727,507.6912 Total Amount Payable P110,305,049.69
(A) WHEN IT DID NOT RECOGNIZE THE AUTHORITY OF THE BIR TO INSTITUTE AND PROSECUTE A TAX EVASION CASE BEFORE IT.Petitioner's Arguments:
(B) WHEN IT RULED THAT THOSE WHO AVAIL OF TAX AMNESTY WITH PENDING CRIMINAL CASES FOR TAX EVASION FILED BEFORE THE [DOJ] ARE IMMUNE FROM PROSECUTION UNDER THE TAX AMNESTY ACT.43cralawredlibrary
SECTION 1. Appeal to Supreme Court by Petition for Review on Certiorari. - A party adversely affected by a decision or ruling of the Court en banc may appeal therefrom by filing with the Supreme Court a ve1ified petition for review on certiorari within fifteen days from receipt of a copy of the decision or resolution, as provided in Rule 45 of the Rules of Court. If such party has filed a motion for reconsideration or for new trial, the period herein fixed shall run from party's receipt of a copy of the resolution denying the motion for reconsideration or for new trial.Thus, petitioner availed of the wrong remedy because instead of filing a petition for review en certiorari under Rule 45 of the Rules of Court, petitioner filed a petition for certiorari under Rule 65.
SEC.10. Solicitor General as Counsel for the People and Government Officials Sued in their Official Capacity -- The Solicitor General shall represent the people of the Philippines and government officials sued in their official capacity in all cases brought to the Court in the exercise of its appellate jurisdiction. The former may deputize the legal officers of the Bureau of Internal Revenue in cases brought under the National Internal Revenue Code or others laws enforced by the Bureau of Internal Revenue, or the legal officers of the Bureau of Customs in cases brought under the Tariff and Customs Code of the Philippines or others laws enforced by the Bureau of Customs, to appear in behalf of the officials of said agencies sued in their officials capacity: Provided, however, such duly deputized legal officers shall remain at all times under the direct control and supervision of the Solicitor General.Jurisprudence likewise consistently holds that is it the Solicitor General who has the primary responsibility to appear for the government in appellate proceedings.62 The only exceptions are: (1) when the government is adversely affected by the contrary position taken by the OSG; (2) when there is an express authorization by the OSG deputizing legal officers to assist the Solicitor General and appear or represent the government in cases involving their respective offices; and (3) when the dismissal of the petition could have lasting effect on government tax revenues as in the case of Commissioner of Internal Revenue (CIR) v. La Suerte Cigar and Cigarette Factory,63 where the issue raised was whether the revenue regulation issued by the CIR has exceeded, on constitutional grounds, the allowable limits of legislative delegation.64 In this case, none of the exceptions apply.
SECTION 8. Exceptions. -- The tax amnesty provided in Section 5 hereof shall not extend to the following persons or cases existing as of the effectivity of this Act:Section 5.5 of the IRR of RA 9480, on the other hand, reads:
x x x x
(e) Those with pending criminal cases for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code; x x x
Section 5. Exceptions.-- The tax amnesty shall not extend to the following persons or cases existing as of the effectivity of RA 9480:A comparison of Section 8 (e) of RA 9480 and Section 5.5 of its IRR readily shows that the DOJ inserted the phrase ''filed in court or in the [DOJ]" in the IRR. By adding the said phrase, the DOJ in effect expanded the law. It added another exception by disqualifying those with pending criminal complaints before the DOJ for tax evasion and other criminal offenses under Chapter II of Title X of the NIRC. This is a clear deviation from the law as there is nothing in Section 8(e) of RA 9480 to indicate that those with pending criminal complaints with the DOJ are also excluded from availing the tax amnesty. In fact, the deliberations of Congress on RA 9480 reveal the intention of the legislature that only those with pending tax cases in the courts are excluded. Quoted below are pertinent portions of the deliberations:
x x x x
5. Those with pending criminal cases filed in court or in the Department of Justice for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended.
As to the amount that can be generated from the instant tax amnesty measure, Rep. Suarez replied that the proposed tax amnesty measure is expected to generate a minimum of P15 billionThe Court need not belabor that administrative agencies, which are tasked to promulgate IRR, cannot supplant, modify, or amend the law by altering, enlarging, or restricting the provisions of the law its seeks to implement.69 And in case there is a discrepancy between the law and its IRR, it is the law that must prevail because the IRR cannot go beyond the terms and provisions of the law.70 Thus, as between Section 8(e) of RA 9480, and Section 5.5 of the IRR of RA 9480, it is the former that must prevail. Accordingly, under Section 8(e) of RA 9480, only those with pending criminal cases in court for tax evasion and other criminal offenses under the NIRC, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property, under Chapters III and IV of Title VII of the Revised Penal Code, are excluded.
In his rejoinder, Rep. Malapitan pointed out that if the tax amnesty program would only generate this so much amount, it would be best if the government would just go after the tax evaders who have pending tax cases in the courts and in the process, generate more revenues without the benefit of enacting a tax amnesty program.
Rep. Suarez, in reply, explained that the primary objective of the measure is to entice about half-a-million tax avoiders and tax evaders and make them avail themselves of the tax amnesty program. He pointed out that the only way that the government can go after them is to take them to court to face charges. However, he said that considering the limited capabilities, manpower, and resources of the government the next best alternative in going after these voluminous number of tax avoiders and tax evaders is to grant them tax amnesty.
While he shares the concern of Rep. Malapitan regarding the need to pursue pending tax cases against big tax cheaters, Rep. Suarez underscored however that those with pending tax cases in the courts, particularly criminal in nature, are not qualified for inclusion in the government's tax amnesty program.
x x x x
Rep. Suarez, in reply, reiterated that this was the third time that he had proposed the measure on the floor and in all of these occasions, he had not included the provision allowing those with pending tax cases to avail themselves of the tax amnesty program. He however pointed out that it will be up to the Body to decide Whether such provision should still be included in the measure. This, as he underscored the fact that the success rate of the BIR in collecting back taxes from tax cases docketed in courts was only less than 1% and that most of the corporations involved in these tax cases have already ceased operations.
In his rejoinder, Rep. Serapio however pointed out that there are still pending tax cases in courts which are near resolution because of strong evidence of tax evasion. He then recalled that in one of his interpellations in the Committee deliberations, he had been informed by the DOF that a total amount of P28 billion can be collected from these pending tax cases. It is for this reason, he said, that he was against Section 7 and that despite the DOF's observation, it was a surprise that the committee had included the same provision in the measure.
Rep. Serapio further underscored that if the amount of money that can still be collected from the pending tax cases is more than amount that can be generated by the tax amnesty bill, then what is the need for this particular measure when the government can make more revenues if it only pursues the resolution of these pending tax cases.
In reply, Rep. Suarez explained that the pending big-time tax cases that Rep. Serapio was talking about are mostly criminal cases that cannot be qualified for inclusion under the tax amnesty program. He thereafter informed Rep. Serapio that these are about 2,374 pending ta cases amounting to P53 billion out of which P43 billion involves the Marcos case and about P7 billion are from pending cases that are about 20 to 25 years old. Moreover, he reiterated that the government had only less than one percent record of winning pending tax cases. Nonetheless, he stated that it will still be up to the decision of the Body whether to include those with pending tax cases to avail themselves of tax amnesty.
x x x x
Rep. Aguja next sought clarification on Section 10 (f) of the Bill.
Rep. Suarez affirmed that those with final and executory judgment by the courts or who have pending tax evasion cases in lower courts, the CTA and Supreme Court, cannot avail of the amnesty program. He explained that the cases involved are criminal in nature and are thus not included in the program.68 (Underscoring supplied)
Endnotes:
1 Rollo, pp. 2-27.
2 Id. at 28-32. Penned by Associate Juatice Juanita C. Castañeda, Jr. and concurred in by Presiding Justice Ernesto D. Acosta, Associate Justices Erlinda P. Uy, Caesar A. Casanova, Olga Palanca-Enriquez, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas.
3 Id. at 42-47. Signed by Presiding Justice Ernesto D. Acosta, Associate Justices Juanita 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.
4 Id. at 63-66. Signed by Acting Presiding Justice Juanita C. Castañeda, Jr. and Associate Justices Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas.
5 Id. at 67.
6 Id. at 72.
7 Id. at 67.
8 Id. at 68. Expenditure Method is based on the theory that if the taxpayer's expenditures during a given year exceed her reported income and the source of such expenditures is unexplained, it can be inferred that such expenditures represent unreported income.
9 CTA Division records, pp. 31-32.
10 Id. at 67.
11 Id. at 30.
12 Id. at 31.
13 Amended Joint Complaint-Affidavit, rollo, pp. 67-71.
14 SEC. 254. Attempt to Evade or Defeat Tax.—Any person who willfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be published by a fine of not less than Thirty thousand pesos (P30,000.00) but not more than One hundred thousand pesos (P100,000.00) and suffer imprisonment of not less than two (2) years but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Section shall not be a bar to the filing of a civil suit for the collection of taxes.
15 SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax and Refund excess Taxes Withheld on Compensation.—Any person required Under this Code or by rules and regulations promulgated thereunder to pay any tax, make a return, keep any record, or supply correct and accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply such correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos (P10,000.00) and suffer imprisonment of not less than one (1) year but not more than ten (10) years.
16 Rollo, p. 138.
17 Id. at 83-88.
18 Id. at 89-92.
19 Later transferred to the Third Division.
20 Rollo, pp. 95-102.
21 AN ACT AMENDING 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. Lapsed into law on May 24, 2007 without the signature of the President in accordance with Article VI, Section 27(1) of the Constitution.
22 CTA Division records, p. 257.
23 Id. at 258-259.
24 Id. at 260.
25 Id. at 262.
26 Id. at 261.
27 Id. at 263-267.
28 Id.
29 Id. at 284-287. Signed by Associate Justices Olga Palanca-Enriquez and Amelia R. Cotangco-Manalastas.
30 Id. at 308-316.
31 Id. at 318-329. Penned by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justice Erlinda P. Uy.
32 Id. at 342-347. Signed by Associate Justices Olga Palanca-Enriquez and Amelia R. Cotangco-Manalastas.
33 Rollo, pp. 140-156.
34 Id. at 28-32.
35 Id. at 33-41.
36 Id. at 179-182.
37 Id. at 173-178.
38 CTA En Banc rollo, pp. 158-159. Signed by Associate Justices Juanita C. Castañeda, Jr., Erlinda P. Uy, Caesar A. Casanova, Olga Palanca Enriquez, Esperanza R. Fabon-Voctorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas.
39 Id. at 196-197. Signed by Presiding Justice Ernesto D. Acosta, Associate Justices Juanito Castañeda, Jr. Erlinda P. Uy, Caesar A. Casanova, Olga Palanca Enriquez, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas.
40 Rollo, pp. 42-47.
41 Id. at 48-51.
42 Id. at 63-66.
43 Id. at 8.
44 Id. at 9-13.
45 Id. at 12.
46 Id. at 11-12.
47 Id. at 13-21.
48 Id. at 17-18.
49 Id.
50 Id. at 18.
51 Id. at 193-202.
52 Id. at 199-201.
53 Id. at 196-197.
54 Id. at 194-196.
55 Id. at 197-198.
56 Id. at 193-194.
57 Id. at 203-204.
58 Aichi Forging Co. of Asia, Inc. v. Court of Tax Appeals (En Banc), 817 Phil. 403, 430 (2017).
59 Pfleider v. Court of Appeals-Cebu City, G.R. No. 196058, November 12, 2018.
60 Tankeh v. Development Bank of the Philippines, 720 Phil. 641, 668-669 (2013).
61 VMC Rural Electric Service Cooperative, Inc. v. Court of Appeals, 535 Phil. 345, 358-359 (2006).
62 LG Electronics Philippines, Inc. v. Commissioner of Internal Revenue, 749 Phil. 155, 184 (2014).
63 433 Phil. 463, 467-468 (2002).
64 Civil Service Commission v. Asensi, 488 Phil. 358, 373-375 (2004).
65 SECTION 7. No Second Motion for Reconsideration or for New Trial. – No party shall be allowed to file a second motion for reconsideration of a decision, final resolution or order; or for new trial.
66 Reyes v. People, 764 Phil. 294, 305 (2015).
67 Rollo, pp. 179-182.
[68] Thirteenth Congress, First Regular Session (2004-2005); Journal of the House of Representatives, Journal No. 33, Tues, December 7, 2004, pp. 260-281.
69 Lokin, Jr. v. Commission on Elections, 635 Phil. 372, 394 (2010).
70 Navarro v. Executive Secretary Ermita, 626 Phil. 23, 48 (2010).
71 TSN, June 15, 2011, p. 22; CTA Division records, p. 242.cralawredlibrary