BIR Ruling

February 5, 1976 Maj. Gen. Pedro Q. Molina Director, RASAC-MBA, Region IV Camp Gen. Emilio Aguinaldo Quezon City S i r : This refers to your letter dated January 19, 1976 stating that acting on a sworn complaint, the ASAC Investigation and Prosecution Committee is presently conducting an investigation on the alleged overshipment of logs which also resulted in the salting of dollars abroad thru technical smuggling by the Mindanao Mahogany Corporation, a timber concessionaire, as evidenced by Credit Memo No. C-2104 dated December 27, 1973, wherein the amount of $140,167.24 appears to have been credited to the account of said Corporation by Nissho-Iwai Company, Ltd., Tokyo, Japan; that said amount was never repatriated to the Philippines per records of the Central Bank; that your prosecution panel has included in its assessment a 30% corporate income tax on the amount of dollars credited therein; and that the respondent corporation, instead of refuting your assessment, claimed immunity from being investigated on any tax liabilities incurred from 1973 and prior years by virtue of the tax amnesties. acd With the foregoing as a premise, you now request opinion whether the dollars in question can still be the subject of assessment for the collection of whatever amount of income tax due thereon considering the provisions of Paragraph 1 (c) of Presidential Decree No. 67, which reads: "If such previously untaxed wealth or a part thereof, consist of cash hoarded abroad, such cash must be repatriated and deposited with any bank in the Philippines or invested in any of the following within six (6) months from the time of such disclosure. . . ." In reply, I have the honor to inform you that in the letter of Messrs. Angara, Abello, Concepcion, Regala & Cruz, counsel of Mindanao Mahogany Corporation, dated November 20, 1975, it was claimed that Mindanao Mahogany Corporation has availed of the tax amnesties provided under Presidential Decree Nos. 23, as amended, 157, 370 and 631. It is noted that among the different tax amnesty decrees only Presidential Decree No. 67, which amended Presidential Decree No. 23 covering untaxed income and/or wealth earned or realized prior to 1972, and Presidential Decree No. 370 which also covers untaxed income and/or wealth acquired in 1972 and prior years, contain the aforequoted proviso relative to cash hoarded abroad. Presidential Decree No. 631 which grants an ultimate tax amnesty on untaxed income and/or wealth earned or acquired in 1973 and prior years does not contain a similar provision. Accordingly, since the alleged salting of dollar abroad thru technical smuggling happened in 1973, then the same can no longer be subject to investigation for non-payment of income tax and other internal revenue taxes. It may be stated that the investigation conducted by that Office on the books of account of the taxpayer to determine collectible income tax and other internal revenue taxes for 1973 and prior years "constitute inquiry prohibited by the Presidential Decree (on amnesty) and would destroy the absolute privilege and confidentiality of the said documents which are relevant to the income or part thereof covered by the tax amnesty declaration filed (by declarant), and that the immunity extended by the said presidential decrees includes any inquiry that might give rise to a civil liability of the taxpayer not only to the government but even to another private individual, as otherwise, the objective desired of having parties concerned disclose their hidden income may not be achieved, . . ." (Chuidian vs. Puno, et. al., G.R. No. L-37884, Nov. 14, 1975). aisadc Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3