Surigao Cons. Minining v.

Collector
9 SCRA 728
FACTS
Before the outbreak of the War, the Surigao
Consolidated Mining Co. was operating itsmining
concessions in Mainit, Surigao. Due to the
interruption of communications at theoutbreak of the
war, the company lost contact with its mines and
never received the productionreports for the 4th
quarter of 1941. To avoid incurring any tax liability or
penalty, it deposited ofcheck payable to and indorsed
in favor of the City Treasurer, in payment of ad
valorem taxes forthe said period. After the war, the
company filed its ad valorem tax for the said period
pursuantto Commonwealth Act 772. Its return was
revised, until eventually the company claimed
arefund of P17,158.01. The collector of Internal
Revenue denied the request for refund

include only assessments issued by the Bureauof

Internal Revenue after the promulgation of the
executive order on August 1986 and not
toassessments theretofore made. The invoked
provisions of the memorandum order read:xxx xxx
xxx1.02.3. In appropriate cases, the
cancellation/withdrawal of
assessment noticesand letters of demand issued
after August 21, 1986 for the collection of
income,business, estate or donor's taxes due during
the same taxable years
.

ISSUE
Whether Surigao Consolidated may recover its tax
payment in light of the condonationmade under a
subsequent law.

2.
Whether said deficiency assessments in question
were extinguished by reason or
private respondents availment of the E.O?

RULING
The provision refers to the condonation of unpaid
taxes only. The condonation of a taxliability is
equivalent and is in the nature of tax exemption.
Being so, it should be sustained onlywhen expressed
in explicit terms, and it cannot be extended beyond
the plain meaning of thoseterms. He who claims an
exemption from his share of the common burden of
taxation mustjustify his claim by showing that the
Legislature intended to exempt him. The company
failed toshow any portion of the law that explicitly
provided for a refund of those taxpayers who hadpaid
their taxes on the items.It is a settled doctrine that in
a suit for the recovery of the payment of taxes or
anyportion thereof as having been illegally or
erroneously collected, the burden is upon
thetaxpayer to establish the facts which show the
illegality of the tax or that the determinationthereof
is erroneous. In this case, petitioner failed to show
that the amount of taxes sought to berefunded have
been erroneously collected.

RULING
1. YES. The authority of the Minister of Finance (now
the Secretary of Finance), in conjunctionwith the
Commissioner of Internal Revenue, to promulgate all
needful rules and regulations forthe effective
enforcement of internal revenue laws cannot be
controverted. Neither can it bedisputed that such
rules and regulations, as well as administrative
opinions and rulings,ordinarily should deserve weight
and respect by the courts. Much more fundamental
than eitherof the above, however, is that all such
issuances must not override, but must remain
consistentand in harmony with, the law they seek to
apply and implement. Administrative rules
andregulations are intended to carry out, neither to
supplant nor to modify, the law.

Commissioner v. CA
G.R. No. 108358 | January 20, 1995
FACTS
On 1986, Executive Order No. 41 was promulgated
declaring a one-time tax amnesty onunpaid income
taxes, later to include estate and donor's taxes and
taxes on business, for thetaxable years 1981 to
1985.Availing of the amnesty, respondent R.O.H.
Auto Products Philippines, Inc., filed its TaxAmnesty
Return No. 34-F-00146-41 and Supplemental Tax
Amnesty Return No. 34-F-00146-64-B, respectively,
and paid the corresponding amnesty taxes due.Prior
to this availment, petitioner Commissioner of Internal
Revenue assessed the latterdeficiency taxes in an
aggregate amount of P1,410,157.71. The taxpayer
wrote back to state thatsince it had been able to
avail itself of the tax amnesty, the deficiency tax
notice should forthwithbe cancelled and withdrawn.
The request was denied by the Commissioner on the
ground thatRevenue Memorandum Order No. 4-87,
dated 09 February 1987, implementing Executive
OrderNo. 41, had construed the amnesty coverage to

(Emphasissupplied)
ISSUE/S
1.
Is Memorandum No. 4-87 promulgated to implement
E.O. No. 41 is valid?

2. YES. We agree with both the court of Appeals and

court of Tax Appeals that Executive OrderNo. 41 is
quite explicit and requires hardly anything beyond a
simple application of itsprovisions. It reads:Sec. 1.
Scope of Amnesty.

A one-time tax amnesty covering unpaid income

taxes forthe years 1981 to 1985 is hereby
declared.Sec. 2. Conditions of the Amnesty.

A taxpayer who wishes to avail himself of the

taxamnesty shall, on or before October 31, 1986;a)
file a sworn statement declaring his net worth as of
December 31, 1985;b) file a certified true copy of his
statement declaring his net worth as of December
31,1980 on record with the Bureau of Internal
Revenue, or if no such record exists, file astatement
of said net worth therewith, subject to verification by
the Bureau of InternalRevenue;c) file a return and
pay a tax equivalent to ten per cent (10%) of the
increase in networth from December 31, 1980 to
December 31, 1985:
Provided
, That in no case shallthe tax be less than P5,000.00
for individuals and P10,000.00 for judicial persons.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 couldhave 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 taxamnesty subject only to the
cases
specifically
excepted by it.Moreover, we need only quote from
Executive Order No. 41 itself; thus:Sec. 6. Immunities
and Privileges.

Upon full compliance with the conditionsof the tax

amnesty and the rules and regulations issued
pursuant to thisExecutive order, the taxpayer shall
enjoy the following immunities andprivileges:a)
The taxpayer shall be relieved of any income tax
liabilityon any untaxed income from January 1, 1981
to December31, 1985, including increments thereto
and penalties onaccount of the non-payment of the
said tax. Civil, criminalor administrative liability
arising from the non-paymentof the said tax, which
are actionable under the National Internal Revenue
Code, as amended, are likewise deemed
extinguished

. Commissioner v. Marubeni
GR No. 137377 | Dec. 18, 2001
FACTS
Respondent Marubeni Corporation is a foreign
corporation organized and existingunder the laws of
Japan. It is engaged in general import and export
trading, financing and theconstruction business. It is
duly registered to engage in such business in the
Philippines andmaintains a branch office in
Manila.Sometime in November 1985, petitioner
Commissioner of Internal Revenue issued aletter of
authority to examine the books of accounts of the
Manila branch office of respondentcorporation for the
fiscal year ending March 1985. In the course of the
examination, petitionerfound respondent to have
undeclared income from two (2) contracts in the
Philippines, both ofwhich were completed in 1984.
One of the contracts was with the National
DevelopmentCompany (NDC) in connection with the
construction and installation of a wharf/port complex
atthe Leyte Industrial Development Estate in the
municipality of Isabel, province of Leyte. Theother
contract was with the Philippine Phosphate Fertilizer
Corporation (Philphos) for theconstruction of an
ammonia storage complex also at the Leyte
Industrial Development Estate.
Petitioner found that the NDC and Philphos contracts
were made on a turn

key basis
and that the gross income from the two projects
amounted to P967,269,811.14. Each contractwas for
a piece of work and since the projects called for the
construction and installation offacilities in the
Philippines, the entire income therefrom constituted
income from Philippinesources, hence, subject to
internal revenue taxes. The assessment letter further
stated that the
same was petitioners final decision and that if
respondent disagreed with it, respondent may
file an appeal with the Court of Tax Appeals within
thirty (30) days from receipt of theassessment.In
accordance with the terms of E.O. No. 41, respondent
filed its tax amnesty returndated October 30, 1986
and attached thereto its sworn statement of assets
and liabilities andnet worth as of Fiscal Year (FY) 1981
and FY 1986. The return was received by the BIR
onNovember 3, 1986 and respondent paid the
amount of P2,891,273.00 equivalent to ten
percent(10%) of its net worth increase between 1981
and 1986.
ISSUE
:Whether or not the Court of Appeals erred in
affirming the Decision of the Court of Tax
Appeals which ruled that herein respondents
deficiency tax liabilities were extinguished
uponrespondents availment of tax amnesty under
Executive Orders Nos. 41 and
64.
RULING
The ruling of the CA is affirmed. Respondents
liabilities were extinguished by availing
of a tax amnesty. A tax amnesty is a general pardon
or intentional overlooking by the State of itsauthority
to impose penalties on persons otherwise guilty of
evasion or violation of a revenue ortax law. It
partakes of an absolute forgiveness or waiver by the
government of its right to collectwhat is due it and to
give tax evaders who wish to relent a chance to start
with a clean slate. A tax amnesty, much like a tax
exemption, is never favored nor presumed in law. If
granted, the
terms of the amnesty, like that of a tax exemption,
must be construed strictly against thetaxpayer and
liberally in favor of the taxing authority. For the right
of taxation is inherent ingovernment. The State
cannot strip itself of the most essential power of
taxation by doubtfulwords. He who claims an
exemption (or an amnesty) from the common burden
must justify his claim by the clearest grant of organic
or state law. It cannot be allowed to exist upon a
vague implication. If a doubt arises as to the intent of
the legislature, that doubt must be resolved infavor
of the state