CASE DIGEST
CIR v. Covanta Energy Philippine Holdings, Inc.
G.R. No. 203160,
January 24, 2018
Principle:
While tax amnesty is in the nature of a tax exemption, which is strictly
construed against the taxpayer.
Facts: The CIR issued
Formal Letters of Demand and Assessment Notices against Covanta Energy
Philippine Holdings, Inc. (CEPHI) for deficiency value-added tax (VAT) and expanded
withholding tax (EWT).
CEPHI filed separate petitions
before the CTA, seeking the cancellation and withdrawal of the deficiency assessments.
Moreover, the CEPHI filed a supplemental petition, informing the CTA that it
availed of the Tax Amnesty under RA 9480.
The CIR was of the
position that CEPHI is not entitled to the immunities and privileges under R.A.
No. 9480 because its documentary submissions failed to comply with the requirements
under the tax amnesty law.
Issue: Whether
or not Covanta Energy Philippine Holdings, Inc. (CEPHI) can avail the Tax
Amnesty as provided under RA 9480.
Ruling: Yes, CEPHI is
entitled to the immunities and privileges of the tax amnesty program upon full
compliance with the requirements of R.A. No. 9480. R.A. No. 9480 governs the
tax amnesty program for national internal revenue taxes for the taxable year
2005 and prior years. Subject to certain exceptions, a taxpayer may avail of
this program by complying with the documentary submissions to the (BIR) and
thereafter, paying the applicable amnesty tax.
Upon the taxpayer’s full
compliance with these requirements, the taxpayer is immediately entitled to the
enjoyment of the immunities and privileges of the tax amnesty program. But
when: (a) the taxpayer fails to file a SALN and the Tax Amnesty Return; or (b)
the net worth of the taxpayer in the SALN as of December 31, 2005 is proven to
be understated to the extent of 30% or more, the taxpayer shall cease to enjoy
these immunities and privileges.
The taxpayer’s SALN is presumed true and correct. The tax
amnesty law thus places the burden of overturning this presumption to the
parties who claim that there was an under declaration of the taxpayer’s net
worth.
In this case, it is undisputed that CEPHI submitted all the
documentary requirements for the tax amnesty program. The CIR argued, however, that CEPHI
cannot enjoy the privileges attendant to the tax amnesty program because its
SALN failed to comply with the requirements of R.A. No. 9480. The CIR
specifically points to CEPHI’s supposed omission of the information relating to
the Reference and Basis for Valuation columns in CEPHI’s original and amended
SALNs.
However, aside from the
bare allegations of the CIR, there is no evidence on record to prove that the
amount of CEPHI’s net worth was understated. Neither was the CIR able to
establish that there were findings or admissions in a congressional,
administrative, or court proceeding that CEPHI indeed understated its net worth
by 30%.
Considering that CEPHI completed the requirements and
paid the corresponding amnesty tax, it is considered to have totally complied
with the tax amnesty program. As a matter of course, CEPHI is entitled to the
immediate enjoyment of the immunities and privileges of the tax amnesty program. Nonetheless,
the Court emphasizes that the immunities and privileges granted to taxpayers
under R.A. No. 9480 is not absolute. It is subject to a resolutory condition
insofar as the taxpayers’ enjoyment of the immunities and privileges of the law
is concerned. These immunities cease upon proof that they underdeclared their
net worth by 30%.
Unfortunately for the
CIR, however, there is no such proof in CEPHI’s case. The Court, thus, finds it
necessary to deny the present petition. While tax amnesty is in the nature of a
tax exemption, which is strictly construed against the taxpayer, the Court
cannot disregard the plain text of R.A. No. 9480.
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