In Commissioner of Internal Revenue v. Transfield Philippines, Inc., the Supreme Court affirmed that taxpayers who fully comply with the requirements of a tax amnesty are immune from deficiency tax assessments for the years covered by the amnesty. This means that if a taxpayer properly avails of a tax amnesty program by fulfilling all the stipulated conditions, the government cannot later collect additional taxes for the covered period, providing a clean slate for taxpayers who have chosen to settle their past tax obligations.

Taxpayer’s Triumph: How Amnesty Compliance Trumped Tax Deficiency Claims

This case arose from a deficiency tax assessment issued by the Commissioner of Internal Revenue (CIR) against Transfield Philippines, Inc. (Transfield) for the fiscal year 2001-2002, covering income tax, Expanded Withholding Tax (EWT), and Value-Added Tax (VAT). Transfield, contesting the assessment, subsequently availed of the tax amnesty program under Republic Act (R.A.) No. 9480. R.A. No. 9480 offered a tax amnesty for national internal revenue taxes for the taxable year 2005 and prior years, aiming to provide taxpayers a chance to settle unpaid tax liabilities. Transfield complied with all the requirements for availing the tax amnesty, including submitting the necessary documents and paying the amnesty tax. However, the CIR later issued a Warrant of Distraint and/or Levy (WDAL) to seize Transfield’s assets for the alleged deficiency taxes, arguing that Transfield was not eligible for the tax amnesty because it had delinquent accounts.

The Court of Tax Appeals (CTA) ruled in favor of Transfield, declaring the WDAL null and void, and precluding the CIR from collecting the assessed tax liability. The CTA emphasized that Transfield had complied with all the legal requirements for tax amnesty under R.A. No. 9480. The CIR appealed the CTA’s decision, leading to the Supreme Court, which was tasked to determine whether the CTA erred in ruling that Transfield was entitled to the immunities under the tax amnesty program.

The Supreme Court affirmed the CTA’s decision, underscoring the principle that compliance with the tax amnesty requirements grants immunity from tax liabilities covered by the amnesty. The Court cited Section 6 of R.A. No. 9480, which provides that those who availed themselves of the tax amnesty and have fully complied with all its conditions 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 (NIRC). The Court also referred to Department of Finance (DOF) Department Order No. 29-07 (DO 29-07), which implements R.A. No. 9480 and outlines the method for availing a tax amnesty.

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:

(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.

The Supreme Court rejected the CIR’s argument that Transfield was disqualified from the tax amnesty because of delinquent accounts, as stated in Revenue Memorandum Circular (RMC) No. 19-2008. The Court clarified that administrative regulations cannot expand or amend statutory requirements. RMC No. 19-2008, in providing for the exception that delinquent accounts, or accounts receivable considered assets of the government are not eligible under the tax amnesty program, cannot prevail over the express provisions of R.A. No. 9480. The Court emphasized that the exceptions to the tax amnesty are explicitly listed in Section 8 of R.A. No. 9480, and delinquent accounts are not among them.

The Court also cited the principle of expressio unius est exclusio alterius, which means that the express mention of one thing excludes all others. Since R.A. No. 9480 explicitly lists the exceptions to the tax amnesty, the CIR cannot add to these exceptions through administrative issuances. The Court underscored that while tax amnesty laws should be construed strictly against the taxpayer and liberally in favor of the taxing authority, the rule-making power of administrative agencies cannot be extended to amend or expand statutory requirements or to embrace matters not originally encompassed by the law.

The Supreme Court addressed the issue of the timeliness of the petition for review, stating that the reckoning point of the 30-day period to appeal the assessments is immaterial because the assessments had already been extinguished by Transfield’s compliance with the requirements for tax amnesty under R.A. No. 9480. To require Transfield to appeal the assessment even after complying with the tax amnesty law would negate the amnesty granted and create a condition not found in the law. The Court emphasized that taxpayers may immediately enjoy the privileges and immunities under R.A. No. 9480 as soon as they fulfill the suspensive condition imposed therein, namely, the submission of the required documents and payment of the amnesty tax.

The decision in Commissioner of Internal Revenue v. Transfield Philippines, Inc. clarifies the rights and obligations of taxpayers availing of tax amnesty programs. It reinforces the principle that full compliance with the requirements of a tax amnesty grants immunity from tax liabilities covered by the amnesty. This provides certainty to taxpayers who have availed of tax amnesty programs in good faith and ensures that they are not subjected to further tax assessments for the same period. By extension, the ruling also underscores the limits on the power of administrative agencies to issue regulations that expand or amend statutory requirements. The Supreme Court thus affirmed that the deficiency taxes for Fiscal Year July 1, 2001 to June 30, 2002 were deemed settled in view of Transfield’s compliance with the requirements for tax amnesty under R.A. No. 9480.

FAQs

What was the key issue in this case?	The key issue was whether Transfield, having complied with the requirements for tax amnesty under R.A. No. 9480, was immune from deficiency tax assessments for the fiscal year 2001-2002.
What is a tax amnesty?	A tax amnesty is a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law.
What did R.A. No. 9480 provide?	R.A. No. 9480 authorized the grant of a tax amnesty for 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.
What were the requirements for availing the tax amnesty under R.A. No. 9480?	The requirements included submitting a Notice of Availment of Tax Amnesty, Tax Amnesty Return, Statement of Assets, Liabilities and Net Worth (SALN) as of December 31, 2005, and Tax Amnesty Payment Form, as well as paying the corresponding amnesty taxes.
What is the significance of complying with the tax amnesty requirements?	Compliance with the tax amnesty requirements grants immunity from the payment of taxes, as well as additions thereto, and the appurtenant civil, criminal, or administrative penalties under the NIRC for the covered period.
Can the BIR add exceptions to the tax amnesty not mentioned in the law?	No, the BIR cannot add exceptions to the tax amnesty that are not explicitly listed in the law. Administrative regulations cannot expand or amend statutory requirements.
What is the principle of expressio unius est exclusio alterius?	The principle of expressio unius est exclusio alterius means that the express mention of one thing excludes all others.
What was the Court’s ruling on the timeliness of the petition for review?	The Court ruled that the timeliness of the petition for review was immaterial because the assessments had already been extinguished by Transfield’s compliance with the requirements for tax amnesty.

In conclusion, the Supreme Court’s decision in Commissioner of Internal Revenue v. Transfield Philippines, Inc. reinforces the importance of adhering to the statutory provisions of tax amnesty laws and the limitations on administrative agencies in expanding or amending these laws. This ruling provides clarity and protection for taxpayers who avail of tax amnesty programs in good faith.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Commissioner of Internal Revenue vs. Transfield Philippines, Inc., G.R. No. 211449, January 16, 2019