BIR Ruling [DA-208-97]

May 20, 1997 BIR RULING [DA-208-97] Cebu Rattan Company P. O. Box 410, Cebu City Attention: Mr . Wilson P . Lanot Group Controller Gentlemen : This refers to your letters dated November 8, 1996 and January 23, 1997, requesting a ruling as to whether you are still liable to pay the amount of P699,845.02 representing deficiency income tax for the year 1981 since you have already availed of the tax amnesty under the Executive Order No. 41 as amended by Executive Order No. 64. Documents submitted show that on October 30, 1986, you filed an Amnesty Tax Return pursuant to EO 41 and paid an amnesty tax of 10% in the amount of P10,000.00 under Confirmation Receipt No. 9815672 dated November 3, 1986; that on December 15, 1986, you again availed of the tax amnesty under EO 64 by paying the 5% amnesty tax in the amount of P9,000.00 under Confirmation Receipt No. 9232601; and that despite your availment of said tax amnesties, you are still being required to pay the aforestated amount of P699,845.02 on the ground that the deficiency assessment in question was issued prior to August 26, 1986 and therefore, no longer qualified under EO 41 pursuant to Revenue Memorandum Order No. 42-86. The issue of whether or not the availment of the tax amnesty under EO 41, as expanded by EO 64, cancelled or closed the deficiency income tax assessment issued prior to the effectivity of said tax amnesties was already decided by the Court of Tax Appeals in the case of "Tikicrafts Industries, Inc. vs. Commissioner of Internal Revenue", CTA Case No. 4266 promulgated January 31, 1991. In that case, the deficiency income tax for FY ended June 30, 1986 was issued on April 25, 1985 but Tikicrafts invoked that it availed of the tax amnesty under EO 41. It also contended that: ". . ., Section 4 of EO No. 41, as expanded by EO No. 64. specifically enumerates those excepted from the coverage of the tax amnesty and clearly, tax assessment issued prior to August 22, 1986 are not among the exceptions. Under the rule of " expressio unius est exclusio alterius ", "where a statute enumerates the subjects or things on which it is to operate, it is to be construed as excluding from its effects all those not expressly mentioned" (Dave's Place v. Liquor Control Commission, 269 N.W. p. 594). Hence, since Section 4 of EO 41 expressly mentions the exceptions from the intended coverage of the tax amnesty, it follows that others not mentioned such as assessments issued prior to August 21, 1986 are not included. "Revenue Memorandum Order No. 42-46 dated November 24, 1986 relied upon by the respondent would effect additional exception to the valid application of the tax amnesty, to wit: Income, donor's estate, business and other internal revenue tax cases where a deficiency tax assessment had been issued beginning January 1 up to August 21, 1986 shall likewise qualify under the expanded tax amnesty. . . "The effect, if respondent's interpretation is followed, is to allow him to amend a law, which he cannot legally do, through a mere Revenue Memorandum Order, which does not have the force and effect of law. Nonetheless, the subject assessment was issued on April 25, 1985 while those excepted are assessments issued beginning January 1, 1986 up to August 21, 1986." xxx xxx xxx In granting the relief sought by Tikicrafts, the Court of Tax Appeals rules as follows: "Petitioner could not have said it better. We agree. We do not in the case at bar find difficulty in dissentangling the apparent quibble posed. The tax amnesty insofar as the same is brought to bear upon the circumstances obtaining hardly seem a gripping question. The pellucidity of the language used in Sections 1 and 4 of Executive Order No. 41, as amended, insofar as it relates to the scope and exceptions requires no further exegesis. It will be too much of a stretch to hold petitioner straight-jacketed to the provision of a mere memorandum order and deny altogether the opportunity to a serendipitous enjoyment of the immunities and privileges granted including relief from any income and business tax liabilities from 1981 to 1985. We cannot but think that the respondent has mistakenly invoked such a quirk of an expediency which falls short of measuring up to the compelling import and force of the Executive Order. On the principle that legal rights must be enforced according to legal rules, petitioner is entitled to the desired relief." xxx xxx xxx In view thereof, since you have properly availed of the tax amnesty under EO 41 as expanded by EO 64, you are relieved from the payment of the aforesaid amount of P699,845.02 as deficiency income tax for the year 1981. You may now, therefore, consider the case closed and terminated. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue