Commissioner of Internal Revenue v. Marubeni Corp.

FOURTEENTH DIVISION [CA-G.R. SP No. 42518. January 15, 1999.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . MARUBENI CORPORATION , respondent . D E C I S I O N MABUTAS , JR. , J p : Before Us is a petition for review assailing the decision (promulgated on July 29, 1996) and the resolution (promulgated on October 18, 1996) of the Court of Tax Appeals in C.T.A. Case No. 4109. The dispositive portion of the assailed decision (promulgated on July 29, 1996) is worded as follows: "WHEREFORE, the respondent Commissioner of Internal Revenue is hereby ORDERED to DESIST from collecting the 1985 deficiency taxes it had assessed against petitioner and the same are deemed considered CANCELLED and WITHDRAWN by reason of the proper availment by petitioner of the amnesty under Executive Order No. 41, as amended." (page 100 of the Record). On the other hand, the dispositive portion of the assailed resolution runs thus: "WHEREFORE, in view of all the foregoing, this Court finds no valid reason to disturb or modify the abovementioned decision and this motion for reconsideration is hereby denied." (page 1023 of the Record) The antecedent of the case, as portrayed by the Court of Tax Appeals in its appealed decision, follow: "Petitioner is a foreign corporation organized and existing under the laws of Japan. It is duly licensed to engage in trading and construction business in the Philippines through its Manila branch. "On July 15, 1985, petitioner filed its corporate annual income tax return converting the fiscal year ended March 31, 1985... "On November 7, 1985, a letter of Authority No. 009270NA was issued by Deputy Commissioner Tomas C. Toledo authorizing Revenue Officers Mr. Gabriel Maalac and Ms. Benedicta Du, to be supervised by Mr. Joaquin O. Arceo, to conduct an examination on petitioner's books of accounts. The examination/audit calls for whatever internal revenue taxes petitioner might have for the fiscal year 1984-1985. As a result, petitioner was found to have undeclared income arising from two contracts. One with the National Development Company relative to its Leyte Industrial Estate Port Development Project . . . and the other was with the Philippine Phosphate Fertilizer Corporation relative to its Ammonia Storage Complex. . . . Both projects were 'turn-key' contracts and were both finished in 1985. "On March 1, 1986, a proposed assessment for deficiency income, branch profit remittance, contractor's and commercial broker taxes were recommended by the examiners. These were questioned and protested to by the petitioner in a letter dated June 5, 1986. . . . LibLex "On August 27, 1986, petitioner, through its tax counsel, received a copy of the demand letter together with the assessment notices, all dated August 15, 1986, assessing petitioner for . . . deficiency taxes. . . . "The demand letter further stated that the same is the respondent's final decision and that, if Marubeni disagrees, it may file an appeal with the Court of Tax Appeals within thirty days from receipt thereof. "Thus on September 26, 1986, petitioner filed the instant petition for review. Hence, this appeal. "On October 30, 1986, while the case was pending trial, petitioner availed of the tax amnesty under Executive Order No. 41. The executive order which was promulgated on August 22, 1986 declared a one-time tax amnesty covering unpaid income taxes for the years 1981-1985. "On November 17, 1986, Executive Order No. 64 was issued expanding the coverage of Executive Order No. 41 to include not only income tax but also estate and donor's taxes and taxes on business. Petitioner, likewise, availed of the same on December 15, 1986." (pages 1-5 of the Appealed CTA Decision; pages 990-994 of the Record). LLcd With the foregoing, the Court of Tax Appeals made the following findings/conclusion: "The issues to be resolved by this Court are: 1. Whether or not petitioner's deficiency tax liabilities were extinguished upon petitioner's availment of tax amnesty under Executive Order Nos. 41 and 64; and 2. If not, whether or not petitioner is liable to pay the income, branch profit remittance, and contractor's taxes assessed by the respondent. "The pivotal issue in this case lie on petitioner's availment of the tax amnesty under the provisions of Executive Order Nos. 41 and 64. "Petitioner averred that it is not liable for the taxes being assessed by the respondent on the account of its availment of the amnesty under Executive Order No. 41, as amended. Petitioner relies on Section 6 of Executive Order No. 41 which provides: SECTION 6. Immunities and Privileges . Upon full compliance with the conditions of the tax amnesty and the rules and regulations issued pursuant to this Executive Order, the taxpayer shall enjoy the following immunities and privileges: a) The taxpayer shall be relieved of any income tax liability on any untaxed income from January 1, 1981 to December 31, 1985, including increments thereto and penalties on account of the non-payment of the said tax. Civil, criminal or administrative liability arising from the non-payment of the said tax, which are actionable under the national Internal Revenue Code, as amended, are likewise deemed extinguished. b) The taxpayer's tax amnesty declaration shall be admissible in evidence in all proceeding before judicial, quasi-judicial or administrative bodies, in which he is a defendant or respondent, and the same shall not be examined, inquired or looked into by any person, government official, bureau or office. LLjur c) The books of account and other records of the taxpayer for the period from January 1, 1981 to December 31, 1985 shall not be examined for income tax purposes: Provided , That the Commissioner of Internal Revenue may authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for grant of any tax refund, tax credit (other than refund on credit of withheld taxes on wages), tax incentive, and/or exemptions under existing laws. (Emphasis supplied) "Respondent contends otherwise. "Petitioner cannot validly avail of the tax amnesty because petitioner falls under one of the exceptions mentioned by Section 4 of Executive Order No. 41, to wit: "SECTION 4. Exceptions . The following tax payers may not avail themselves of the amnesty herein quoted: a) The filing under he provisions of E.O. 1, 2 and 14; b) Those all income tax copies already filed in Court as of effectivity hereof ; c) Those with criminal cases involving violations of the income tax law already filed in court as of the effectivity hereof; d) Those that have withheld tax liabilities under the National Internal Revenue Code, as amended, insofar as the said liabilities are concurred; e) Those with tax cases pending investigation by the Bureau of Internal Revenue as of the effectivity hereof as a result of information furnished under Sec. 316 of the National Internal Revenue Code, as amended; f) Those with pending cases involving unexplained or unlawfully acquired wealth before the Sandigan; g) Those liable under Title Seven, Chapter Three (Frauds, Illegal Actions and Transactions) and Chapter Four (Malversation of Public Funds and Property) of the Revised Penal Code, as amended.' (Emphasis supplied) "Respondent pointed out that petitioner has a pending income tax case before this Court when it availed of the tax amnesty. Therefore, it cannot be granted immunity by said law. "We disagree with the respondent. "This controversy has already been settled by the Court of Appeals in the case of Marubeni Corporation v. Court of Tax Appeals & Commissioner of Internal Revenue, CA-G.R. SP-31047, May 22, 1998, which involves the same parties and issue. . . . "The above decision is clear. That Sec. 4 (b) EO 41 is not an obstacle for herein petitioner to avail of the tax amnesty granted by law even if petitioner has a pending income tax case before this Court. "It should be noted that the phrase '(T)hose with income tax cases already filed in court as of the effectivity hereof' does not mean a prospective application, rather, a retrospective one. In fine, what Sec. 4(b) of Executive Order No. 41 excepted to avail are those taxpayers who have income tax case already filed in Court as of August 22, 1986, the effectivity date of E.O. 41, and the dates preceding it. "Hence, when petitioner seasonably filed its amnesty return on October 30, 1986 and paid the corresponding 10% increase in its net worth from 1981 to 1985, petitioner was relieved of its income tax liability of fiscal year 1985. With respect to petitioner's deficiency branch profit remittance tax, the same was also extinguished for being under Sec. 24 Chapter III(2)(II) of Title II on Income Tax. "The immunities and privileges under Section 6 of E.O. No. 41, likewise apply to petitioner's proper availment of the tax amnesty under Executive Order No. 64 as regards to contractor's tax which is a business tax. "Anent the second issue, the same need no further discussion for being moot and academic." (pages 5-11 of the Appealed CTA Decision; pages 994-1000 of the Record). Not satisfied with the tax court's decision, the respondent (petitioner herein) filed a "Motion for Reconsideration" (pages 1002-1005 of the Record) which move was opposed by the petitioner (respondent herein) (pages 1013-1015, id.). On October 18, 1996, the Court of Tax Appeals promulgated the assailed resolution (pages 1019-1023 of the Record) denying the aforementioned motion for reconsideration, the dispositive portion of which was earlier quoted. On November 14, 1996, this Court received the instant petition (pages 5-16 of the Rollo) wherein the petitioner (Commissioner of Internal Revenue) contended that: "The Tax Court made an erroneous application of Executive Orders Nos. 41 and 64 when it considered cancelled and withdrawn the 1985 deficiency tax assessments issued by petitioner Commissioner of Internal Revenue against respondent Marubeni Corporation." (page 5 of the Petitioner; page 9 of the Rollo). cdlex The petition is devoid of merit. After going over the record of the case taking note also of the disputants' arguments (in the petition and in the comment thereon which was extensively supplemented) relative to the error interposed by the petitioner We found that the petition stands on a porous ground. The question/issue raised in the case at bench appears to have been already tackled and answered by this Court (former Seventeenth Division) in its decision (promulgated on May 22, 1996) in CA-G.R. SP No. 31047 & CA-G.R. SP No. 37508, entitled "Marubeni Corporation vs. Court of Tax Appeals & Commissioner of Internal Revenue" that facts in said cases appear similar hence, the decisions must traverse parallel lines. In the aforementioned cases (CA-G.R. SP No. 31047 & CA-G.R. SP No. 37508), this Court (Former Seventeenth Division) ruled: "Essentially, the resolution of the issue of whether or not petitioner comes within the ambit of the excepted taxpayers under E.O. 41 and E.O. 64 hinges on the understanding of the two laws involved. "E.O. 41 became effective on August 22, 1986 granting a one-time tax amnesty covering unpaid income taxes for the years 1981-1986. E.O. 64, which is an amendment of E.O. 41, took effect on November 7, 1986. "Notably, there is nothing significantly drastic in the amendment infused by E.O. 64 on E.O. 41 except for the widening of the coverage of the tax amnesty to include estate and donor's taxes and the tax on business . . . . "The provisions of E.O. 41 which were not amended by E.O. 64 remained in full force and effect. . . . One of said provisions is Section 4 of E.O. 41. This provision, specifically par. (b) thereof, is the bone of contention of the instant controversy. Sec. 4, par. (b) reads: 'SECTION 4. Exceptions . The following taxpayers may not avail themselves of the amnesty herein granted: xxx xxx xxx b) Those with income tax cases already filed in court at the time as of the effectivity thereof; xxx xxx xxx "Petitioner contends that it does not come within the purview of the aforecited exception because the case filed against it is not an income tax case and the same was filed on September 26, 1986 while the effectivity of E.O. 41 was on August 22, 1996. "Petitioner's contention is meritorious. "It is clear that neither petitioner nor its equivalent of tax amnesty for its broker's tax assessment fall under Section 4 (b) of E.O. 41. As of the effectivity of E.O. 41 which was on August 22, 1986, no tax case either income tax case or otherwise has been filed against petitioner. It was only on September 23, 1986 when a tax case was filed against petitioner for deficiency in commercial broker's tax which is a business tax. LLpr "Notably, since section 4 of E.O. 41 specifically mentions the exceptions from the coverage of the tax amnesty, it necessarily follows that those not expressly mentioned such as taxpayers who have no pending income tax cases as of August 22, 1986, as petitioner in the instant case, are qualified to avail of the tax amnesty under the principle of ' Expressio unius est exclusio alterius . ' "It goes without saying that under the terms of E.O. 64, availment of the expanded tax amnesty thereunder, results in the taxpayer being entitled to the same benefits, immunities and privileges (under E.O. 41) with respect to business, estate and donor's tax liabilities. . . . "Since the timely availment of herein petitioner of the tax amnesty under E.O. 41 and E.O. 64 extinguished whatever business tax liability it has including that of the commercial broker's tax, We see no further need , in this present case, to dwell on the issue of whether or not it can be considered a commercial broker." (pages 4-5 of the decision in CA-G.R. Nos. 37508 & 31047). After a close look at Executive Order Nos. 41 and 64, We agree with the aforequoted ruling. Said orders were correctly applied by the Court of Tax Appeals when it rendered its assailed decision, which was promulgated on July 29, 1996, and when it issued its questioned resolution, which was promulgated on October 18, 1996. The presidential edicts are luon clarius they do not call for extraordinary interpretations. As the Latin maxim runs: " A verbis legis non est recedendum ." Taking note of respondent's (Marubeni Corporation) evidence the "Certificate of Availment" (dated September 22, 1987) stating that it had "availed of tax amnesty pursuant to Executive Orders Nos. 41 and 64" and that it had "fully paid the amnesty tax" due thereunder and the effectivity of Executive Order No. 41 (August 22, 1986) and Executive Order No. 64 (on November 17, 1986). We find merit in the following posture of the Court of Tax Appeals: "Respondent is reminded that, this Court, being a tribunal whose decisions are subject to review by the Court of Appeals, must conform to the findings of the latter court. That being the case, We are not in the position to depart from the wisdom of the rulings of the Court of Appeals, whose findings deserves the highest respect second to that of the Supreme Court. For what purpose is the structuring of the Judicial hierarchy, if all inferior courts will not accede to the judicial opinions of a higher court? "We also perceive not merit to the arguments of the respondent that this Court's findings of retrospective application of the E.O. 41 and E.O. 64 is contrary to the doctrine that tax amnesty must be strictly interpreted against the taxpayer because said doctrine is applicable only when there is a controversy as to the correctness of application of the law. In the case at bar, E.O. 41 is clear and explicit in its provision that those with income tax cases already filed in court as of the effectivity hereof' are excepted from availing the benefits of the said amnesty law. The phrase 'as of' connotes a period of time 'before and up to' (retrospective) the time of the effectivity of E.O. 41 on August 22, 1980, definitely not 'after' (prospective) the effectivity of the said law. In the same tenor, the term 'already' indicate a past event not a future application of the law." (pages 5-6 of the Assailed CTA Resolution). dctai Anyway, even the Supreme Court, as a matter of practice and principle, will not set aside the conclusion reached by an agency, such as the Court of Tax Appeals (Commissioner of Internal Revenue vs. Court of Appeals, 242 SCRA 289), on matters which come under its special technical knowledge and training (First Lepanto Ceramic, Inc. vs. Court of Appeals, 253 SCRA 540). In the final analysis, the findings of the Court of Tax Appeals will not ordinarily be reviewed absent a showing or gross error or abuse on its part (Philippine Refining Company vs. Court of Appeals, 256 SCRA 667), which circumstances do not appear in the instant case. WHEREFORE, premises considered, the petition is DISMISSED, hereby affirming the assailed decision (promulgated on July 29, 1996) of the Court of Tax Appeals. SO ORDERED. Aquino and Umali, JJ . , concur.