COMMISSIONER
OF INTERNAL G.R. Nos. 167274-75
REVENUE,
Petitioner, Present:
QUISUMBING,
J.,
Chairperson,
YNARES-SANTIAGO,
- versus - CARPIO
MORALES,
TINGA, and
VELASCO,
JR., JJ.
FORTUNE
TOBACCO
CORPORATION, Promulgated:
Respondent.
x---------------------------------------------------------------------------x
Tinga,
J.:
Simple
and uncomplicated is the central issue involved, yet whopping is the amount at
stake in this case.
After
much wrangling in the Court of Tax Appeals (CTA) and the Court of Appeals, Fortune
Tobacco Corporation (Fortune Tobacco) was granted a tax refund or tax credit representing
specific taxes erroneously collected from its tobacco products. The tax refund is being re-claimed by the Commissioner
of Internal Revenue (Commissioner) in this petition.
The
following undisputed facts, summarized by the Court of Appeals, are quoted in
the assailed Decision[1]
dated
CAG.R.
SP No. 80675
x x x x
Petitioner[2] is a
domestic corporation duly organized and existing under and by virtue of the
laws of the Republic of the
Petitioner is the manufacturer/producer of, among others, the following cigarette brands, with tax rate classification based on net retail price prescribed by Annex “D” to R.A. No. 4280, to wit:
Brand Tax Rate
Champion M 100 P1.00
P1.00
Salem M King P1.00
Camel F King P1.00
Camel Lights Box 20’s P1.00
Camel Filters Box 20’s P1.00
Winston F Kings P5.00
Winston Lights P5.00
Immediately prior to
Section
145. Cigars and Cigarettes-
(A) Cigars. – There shall be levied, assessed and collected on
cigars a tax of One peso (P1.00) per cigar.
“(B) Cigarettes packed by
hand. – There shall be levied, assessesed and collected on cigarettes
packed by hand a tax of Forty centavos (P0.40) per pack.
(C) Cigarettes packed by machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below:
(1) If the net retail price (excluding the excise tax and the
value-added tax) is above Ten pesos (P10.00) per pack, the tax
shall be Twelve (P12.00) per pack;
(2) If the net retail price (excluding the excise tax and the value
added tax) exceeds Six pesos and Fifty centavos (P6.50) but does
not exceed Ten pesos (P10.00) per pack, the tax shall be Eight Pesos
(P8.00) per pack.
(3) If the net retail price (excluding the excise tax and the
value-added tax) is Five pesos (P5.00) but does not exceed Six Pesos
and fifty centavos (P6.50) per pack, the tax shall be Five pesos
(P5.00) per pack;
(4) If the net retail price (excluding the excise tax and the
value-added tax) is below Five pesos (P5.00) per pack, the tax
shall be One peso (P1.00) per pack;
“Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of R.A. No. 8240 shall be taxed under the highest classification of any variant of that brand.
The excise tax from any brand of cigarettes within the next three (3)
years from the effectivity of R.A. No. 8240 shall not be lower than the tax,
which is due from each brand on
Duly registered or existing brands of cigarettes or new brands thereof packed by machine shall only be packed in twenties.
The rates of excise tax on cigars and cigarettes under paragraphs
(1), (2) (3) and (4) hereof, shall be increased by twelve percent (12%) on
New brands shall be classified according to their current net retail price.
For the above purpose, ‘net retail price’ shall mean the price at which the cigarette is sold on retail in twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and value-added tax. For brands which are marketed only outside Metro [M]anila, the ‘net retail price’ shall mean the price at which the cigarette is sold in five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.
The classification of each brand of cigarettes based on its average
retail price as of
Variant of a brand shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand and/or a different brand which carries the same logo or design of the existing brand.
To implement the provisions for a twelve percent (12%) increase of excise tax on, among others, cigars and cigarettes packed by machines by January 1, 2000, the Secretary of Finance, upon recommendation of the respondent Commissioner of Internal Revenue, issued Revenue Regulations No. 17-99, dated December 16, 1999, which provides the increase on the applicable tax rates on cigar and cigarettes as follows:
|
SECTION |
DESCRIPTION OF ARTICLES |
PRESENT SPECIFIC TAX RATE PRIOR TO JAN.
1, 2000 |
NEW SPECIFIC TAX RATE EFFECTIVE JAN. 1,
2000 |
|
145 |
(A) |
|
|
|
|
(B)Cigarettes packed by machine (1) Net
retail price (excluding VAT and excise) exceeds (2) Exceeds (3) Net
retail price (excluding VAT and excise) is (4) Net
Retail Price (excluding VAT and excise) is below
|
|
|
Revenue Regulations No. 17-99
likewise provides in the last paragraph of Section 1 thereof, “(t)hat the
new specific tax rate for any existing brand of cigars, cigarettes packed by
machine, distilled spirits, wines and fermented liquor shall not be lower than
the excise tax that is actually being paid prior to
For the period covering P585,705,250.00.
On P35,651,410.00
On June 21, 2001, petitioner filed with respondent’s Legal Service a
letter dated June 20, 2001 reiterating all the claims for refund/tax credit of
its overpaid excise taxes filed on various dates, including the present claim
for the month of January 2000 in the amount of P35,651,410.00.
As there was no action on
the part of the respondent, petitioner filed the instant petition for review
with this Court on
In his answer filed on
4. Petitioner’s alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau;
5.
The amount of P35,651,410 being
claimed by petitioner as alleged overpaid excise tax for the month of January
2000 was not properly documented.
6. In an action for tax refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to its claim for refund/credit.
7. Petitioner must show that it has complied with the provisions of Section 204(C) in relation [to] Section 229 of the Tax Code on the prescriptive period for claiming tax refund/credit;
8. Claims for refund are construed strictly against the claimant for the same partake of tax exemption from taxation; and
9. The last paragraph of Section 1 of Revenue Regulation[s] [No.]17-99 is a valid implementing regulation which has the force and effect of law.”
CA G.R.
SP No. 83165
The petition contains essentially similar facts, except that the said
case questions the CTA’s December 4, 2003 decision in CTA Case No. 6612
granting respondent’s[3]
claim for refund of the amount of P355,385,920.00 representing
erroneously or illegally collected specific taxes covering the period January
1, 2002 to December 31, 2002, as well as its March 17, 2004 Resolution denying
a reconsideration thereof.
x x x x
In
both CTA Case Nos. 6365 & 6383 and CTA No. 6612, the Court of Tax Appeals
reduced the issues to be resolved into two as stipulated by the parties, to wit: (1) Whether or not the last
paragraph of Section 1 of Revenue Regulation[s] [No.] 17-99 is in accordance
with the pertinent provisions of Republic Act [No.] 8240, now incorporated in
Section 145 of the Tax Code of 1997; and (2) Whether or not petitioner is
entitled to a refund of P35,651,410.00 as alleged overpaid excise tax
for the month of January 2000.
x x x x
Hence, the respondent
CTA in its assailed
WHEREFORE, in view of the foregoing,
the court finds the instant petition meritorious and in accordance with law.
Accordingly, respondent is hereby ORDERED to REFUND to petitioner the amount of
P35,651.410.00 representing erroneously paid excise taxes for the period
January 1 to
SO ORDERED.
Herein petitioner sought
reconsideration of the above-quoted decision.
In [twin] resolution[s] [both] dated
However, on consolidated
motions for reconsideration filed by the respondent in CTA Case Nos. 6363 and
6383, the
WHEREFORE,
our Decisions in CTA Case Nos. 6365 and 6383 are hereby REINSTATED. Accordingly, respondent is hereby ORDERED to
REFUND petitioner the total amount of P680,387,025.00 representing
erroneously paid excise taxes for the period
SO ORDERED.
Meanwhile, on P355,385,920.00 representing overpaid excise tax
for the period covering
IN VIEW OF THE FOREGOING, the Petition
for Review is GRANTED. Accordingly,
respondent is hereby ORDERED to REFUND to petitioner the amount of P355,385,920.00
representing overpaid excise tax for the period covering
SO ORDERED.
Petitioner sought
reconsideration of the decision, but the same was denied in a Resolution dated
The Commissioner appealed the aforesaid decisions of the
CTA. The petition questioning the grant
of refund in the amount of P680,387,025.00 was docketed as CA-G.R. SP
No. 80675, whereas that assailing the grant of refund in the amount of P355,385,920.00
was docketed as CA-G.R. SP No. 83165. The
petitions were consolidated and eventually denied by the Court of Appeals. The appellate court also denied
reconsideration in its Resolution[5]
dated
In its Memorandum[6] 22
dated November 2006, filed on behalf of the Commissioner, the Office of the
Solicitor General (OSG) seeks to convince the Court that the literal
interpretation given by the CTA and the Court of Appeals of Section 145 of the
Tax Code of 1997 (Tax Code) would lead to a lower tax imposable on 1 January
2000 than that imposable during the transition period. Instead of an increase of 12% in the tax rate
effective on
The OSG argues that Section 145 of the Tax Code admits of
several interpretations, such as:
1.
That by January 1, 2000, the excise tax
on cigarettes should be the higher tax imposed under the specific tax system
and the tax imposed under the ad valorem tax system plus the 12%
increase imposed by par. 5, Sec. 145 of the Tax Code;
2.
The increase of 12% starting on January
1, 2000 does not apply to the brands of cigarettes listed under Annex “D”
referred to in par. 8, Sec. 145 of the Tax Code;
3. The 12% increment shall be computed based on the net retail price as indicated in par. C, sub-par. (1)-(4), Sec. 145 of the Tax Code even if the resulting figure will be lower than the amount already being paid at the end of the transition period. This is the interpretation followed by both the CTA and the Court of Appeals.[7]
This being so, the
interpretation which will give life to the legislative intent to raise revenue
should govern, the OSG stresses.
Finally, the OSG asserts that a tax refund is in the nature
of a tax exemption and must, therefore, be construed strictly against the
taxpayer, such as Fortune Tobacco.
In its Memorandum[8]
dated 10 November 2006, Fortune Tobacco argues that the CTA and the Court of
Appeals merely followed the letter of the law when they ruled that the basis
for the 12% increase in the tax rate should be the net retail price of the
cigarettes in the market as outlined in paragraph C, sub paragraphs (1)-(4), Section 145 of the
Tax Code. The Commissioner allegedly has
gone beyond his delegated rule-making power when he promulgated, enforced and
implemented Revenue Regulation No. 17-99, which effectively created a separate
classification for cigarettes based on the excise tax “actually being paid
prior to
It should be mentioned at the outset that there is no
dispute between the fact of payment of the taxes sought to be refunded and the receipt
thereof by the Bureau of Internal Revenue (BIR). There is also no question about the mathematical
accuracy of Fortune Tobacco’s claim since the documentary evidence in support of
the refund has not been controverted by the revenue agency. Likewise, the
claims have been made and the actions have been filed within the two (2)-year
prescriptive period provided under Section 229 of the Tax Code.
The power to tax is inherent in the State,
such power being inherently legislative, based on the principle that taxes are
a grant of the people who are taxed, and the grant must be made by the
immediate representatives of the people; and where the people have laid the
power, there it must remain and be exercised.[10]
This entire controversy revolves around the interplay
between Section 145 of the Tax Code and Revenue
Regulation 17-99. The main issue is an
inquiry into whether the revenue regulation has exceeded the allowable limits
of legislative delegation.
For ease of reference, Section 145 of the Tax Code is again
reproduced in full as follows:
Section 145. Cigars and Cigarettes-
(A) Cigars.—There shall be levied, assessed and collected on
cigars a tax of One peso (P1.00) per cigar.
(B). Cigarettes packed by
hand.—There shall be levied, assessed and collected on cigarettes packed by
hand a tax of Forty centavos (P0.40) per pack.
(C) Cigarettes packed by machine.—There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below:
(1) If the net retail price (excluding the excise tax and the
value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be
Twelve pesos (P12.00) per pack;
(2) If the net retail price (excluding the excise tax and the value
added tax) exceeds Six pesos and Fifty centavos (P6.50) but does
not exceed Ten pesos (P10.00) per pack, the tax shall be Eight Pesos (P8.00)
per pack.
(3) If the net retail price (excluding the excise tax and the
value-added tax) is Five pesos (P5.00) but does not exceed Six Pesos and
fifty centavos (P6.50) per pack, the tax shall be Five pesos (P5.00)
per pack;
(4) If the net retail price (excluding the excise tax and the
value-added tax) is below Five pesos (P5.00) per pack, the tax shall be
One peso (P1.00) per pack;
Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of R.A. No. 8240 shall be taxed under the highest classification of any variant of that brand.
The excise tax from any brand of cigarettes within the next three (3)
years from the effectivity of R.A. No. 8240 shall not be lower than the tax,
which is due from each brand on
Duly registered or existing brands of cigarettes or new brands thereof packed by machine shall only be packed in twenties.
The rates of excise tax on cigars and cigarettes under paragraphs
(1), (2) (3) and (4) hereof, shall be increased by twelve percent (12%) on
New brands shall be classified according to their current net retail price.
For the above purpose, ‘net retail price’ shall mean the price at which the cigarette is sold on retail in twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and value-added tax. For brands which are marketed only outside Metro Manila, the ‘net retail price’ shall mean the price at which the cigarette is sold in five (5) major intended to cover the applicable excise tax and the value-added tax.
The classification of each brand of cigarettes based on its average
retail price as of
Variant of a brand’ shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand and/or a different brand which carries the same logo or design of the existing brand.[11](Emphasis supplied)
Revenue Regulation 17-99, which was issued pursuant to
the unquestioned authority of the Secretary of Finance to promulgate rules and
regulations for the effective implementation of the Tax Code,[12] interprets
the above-quoted provision and reflects the 12% increase in excise taxes in the
following manner:
|
SECTION |
DESCRIPTION OF ARTICLES |
PRESENT SPECIFIC TAX RATES PRIOR TO JAN.
1, 2000 |
NEW SPECIFIC TAX RATE Effective Jan.. 1,
2000 |
|
145 |
(A) Cigars |
|
|
|
|
(B)Cigarettes packed by Machine (1) Net Retail
Price (excluding VAT and Excise) exceeds (2) Net Retail
Price (excluding VAT and Excise) is (3) Net Retail
Price (excluding VAT and excise) is (4) Net
Retail Price (excluding VAT and excise) is below
|
|
|
This table reflects Section 145 of the Tax Code insofar as
it mandates a 12% increase effective on 1 January 2000 based on the taxes
indicated under paragraph C, sub-paragraph (1)-(4). However, Revenue Regulation No. 17-99 went
further and added that “[T]he new
specific tax rate for any existing brand of cigars, cigarettes packed by
machine, distilled spirits, wines and fermented liquor shall not be lower than
the excise tax that is actually being paid prior to January 1, 2000.”[13]
Parenthetically, Section 145 states that during the
transition period, i.e., within the next three (3) years from the
effectivity of the Tax Code, the excise tax from any brand of cigarettes shall
not be lower than the tax due from each brand on 1 October 1996. This qualification, however, is conspicuously
absent as regards the 12% increase which is to be applied on cigars and cigarettes
packed by machine, among others, effective on
By adding the qualification that the tax due after the 12%
increase becomes effective shall not be lower than the tax actually paid prior
to 1 January 2000, Revenue Regulation No. 17-99 effectively imposes a tax which
is the higher amount between the ad valorem tax being paid at the end of
the three (3)-year transition period and
the specific tax under paragraph C, sub-paragraph (1)-(4), as increased by 12%—a
situation not supported by the plain wording of Section 145 of the Tax
Code.
This is not the first time that national revenue officials
had ventured in the area of unauthorized administrative legislation.
In Commissioner of Internal
Revenue v. Reyes,[14]
respondent was not informed in writing of the law and the facts on which the
assessment of estate taxes was made pursuant to Section 228 of the 1997 Tax
Code, as amended by Republic Act (R.A.) No. 8424. She was merely notified of
the findings by the Commissioner, who had simply relied upon the old provisions
of the law and Revenue Regulation No. 12-85 which was based on the old
provision of the law. The Court held that in case of discrepancy between the
law as amended and the implementing regulation based on the old law, the former
necessarily prevails. The law must still be followed, even though the existing
tax regulation at that time provided for a different procedure.[15]
In Commissioner of Internal Revenue v. Central Luzon
Drug Corporation,[16] the
tax authorities gave the term “tax credit” in Sections 2(i) and 4 of Revenue Regulation
2-94 a meaning utterly disparate from what R.A. No. 7432 provides. Their
interpretation muddled up the intent of Congress to grant a mere discount
privilege and not a sales discount. The Court, striking down the revenue
regulation, held that an administrative agency issuing regulations may not
enlarge, alter or restrict the provisions of the law it administers, and it cannot
engraft additional requirements not contemplated by the legislature. The Court emphasized that tax administrators are
not allowed to expand or contract the legislative mandate and that the “plain
meaning rule” or verba legis in statutory construction should be applied
such that where the words of a statute are clear, plain and free from ambiguity,
it must be given its literal meaning and applied without attempted
interpretation.
As we have previously declared, rule-making power must be
confined to details for regulating the mode or proceedings in order to carry
into effect the law as it has been enacted, and it cannot be extended to amend
or expand the statutory requirements or to embrace matters not covered by the
statute. Administrative regulations must always be in harmony with the
provisions of the law because any resulting discrepancy between the two will
always be resolved in favor of the basic law.[17]
In Commissioner
of Internal Revenue v. Michel J. Lhuillier Pawnshop, Inc.,[18]
Commissioner Jose Ong issued Revenue Memorandum Order (RMO) No. 15-91, as well
as the clarificatory Revenue Memorandum Circular (RMC) 43-91, imposing a 5%
lending investor’s tax under the 1977 Tax Code, as amended by Executive Order (E.O.)
No. 273, on pawnshops. The Commissioner anchored the imposition on the
definition of lending investors provided in the 1977 Tax Code which, according
to him, was broad enough to include pawnshop operators. However, the Court noted that pawnshops and
lending investors were subjected to different tax treatments under the Tax Code
prior to its amendment by the executive order; that Congress never intended to
treat pawnshops in the same way as lending investors; and that the particularly
involved section of the Tax Code explicitly subjected lending investors and
dealers in securities only to percentage tax. And so the Court affirmed the
invalidity of the challenged circulars, stressing that “administrative
issuances must not override, supplant or modify the law, but must remain
consistent with the law they intend to carry out.”[19]
In Philippine
Bank of Communications v. Commissioner of Internal Revenue,[20]
the then acting Commissioner issued RMC 7-85, changing the prescriptive
period of two years to ten years for claims of excess quarterly income tax
payments, thereby creating a clear inconsistency with the provision of Section
230 of the 1977 Tax Code. The Court
nullified the circular, ruling that the BIR did not simply interpret the law;
rather it legislated guidelines contrary to the statute passed by Congress. The Court held:
It
bears repeating that Revenue memorandum-circulars are considered administrative
rulings (in the sense of more specific and less general interpretations of tax
laws) which are issued from time to time by the Commissioner of Internal
Revenue. It is widely accepted that the
interpretation placed upon a statute by the executive officers, whose duty is
to enforce it, is entitled to great respect by the courts. Nevertheless, such interpretation is not
conclusive and will be ignored if judicially found to be erroneous. Thus,
courts will not countenance administrative issuances that override, instead of
remaining consistent and in harmony with, the law they seek to apply and
implement.[21]
In Commissioner of Internal Revenue v. CA, et al.,[22]
the central issue was the validity of RMO 4-87 which had construed the amnesty coverage
under E.O. No. 41 (1986) to include only assessments issued by the BIR after
the promulgation of the executive order on 22 August 1986 and not assessments
made to that date. Resolving the issue
in the negative, the Court held:
x x x all such issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law.[23]
x x x
If,
as the Commissioner argues, Executive Order No. 41 had not been intended to
include 1981-1985 tax liabilities already assessed (administratively) prior to
22 August 1986, the law could have simply so provided in its exclusionary
clauses. It did not. The conclusion is unavoidable, and it is that the
executive order has been designed to be in the nature of a general grant of tax
amnesty subject only to the cases specifically excepted by it.[24]
In
the case at bar, the OSG’s argument that by 1 January 2000, the excise tax on
cigarettes should be the higher tax imposed under the specific tax system and
the tax imposed under the ad valorem tax system plus the 12% increase
imposed by paragraph 5, Section 145 of the Tax Code, is an unsuccessful attempt
to justify what is clearly an impermissible incursion into the limits of
administrative legislation. Such an
interpretation is not supported by the clear language of the law and is obviously
only meant to validate the OSG’s thesis that Section 145 of the Tax Code is
ambiguous and admits of several interpretations.
The contention that the increase of 12% starting on
The foregoing leads us to conclude that Revenue Regulation
No. 17-99 is indeed indefensibly flawed. The Commissioner cannot seek refuge in
his claim that the purpose behind the passage of the Tax Code is to generate
additional revenues for the government. Revenue
generation has undoubtedly been a major consideration in the passage of the Tax
Code. However, as borne by the legislative
record,[25] the
shift from the ad valorem system to the specific tax system is likewise meant to
promote fair competition
among the players in the
industries concerned, to ensure an equitable distribution of the tax burden and
to simplify tax administration by classifying cigarettes, among others, into
high, medium and low-priced based on their net retail price and accordingly
graduating tax rates.
At any rate, this advertence to the legislative record is
merely gratuitous because, as we have held, the meaning of the law is clear on
its face and free from the ambiguities that the Commissioner imputes. We simply
cannot disregard the letter of the law on the pretext of pursuing its spirit.[26]
Finally, the Commissioner’s
contention that a tax refund partakes the nature of a tax exemption does not
apply to the tax refund to which Fortune Tobacco is entitled. There is parity between tax refund and tax
exemption only when the former is based either on a tax exemption statute or a
tax refund statute. Obviously, that is
not the situation here. Quite the
contrary, Fortune Tobaccos claim for refund is premised on its erroneous
payment of the tax, or better still the government’s exaction in the absence of
a law.
Tax exemption is a result of
legislative grace. And he who claims an
exemption from the burden of taxation must justify his claim by showing that
the legislature intended to exempt him by words too plain to be mistaken.[27] The rule is that tax exemptions must be
strictly construed such that the exemption will not be held to be conferred
unless the terms under which it is granted clearly and distinctly show that
such was the intention.[28]
A claim for tax refund may be based
on statutes granting tax exemption or tax refund. In such case, the rule of strict
interpretation against the taxpayer is applicable as the claim for refund
partakes of the nature of an exemption, a legislative grace, which cannot be
allowed unless granted in the most explicit and categorical language. The taxpayer must show that the legislature
intended to exempt him from the tax by words too plain to be mistaken.[29]
Tax
refunds (or tax credits), on the other hand, are not founded principally on
legislative grace but on the legal principle which underlies all
quasi-contracts abhorring a person’s unjust enrichment at the expense of
another.[30] The
dynamic of erroneous payment of tax fits to a tee the prototypic
quasi-contract, solutio indebiti, which
covers not only mistake in fact but also mistake in law.[31]
The Government is not exempt from the
application of solutio indebiti.[32] Indeed, the taxpayer expects fair dealing
from the Government, and the latter has the duty to refund without any
unreasonable delay what it has erroneously collected.[33] If the State expects its taxpayers to observe
fairness and honesty in paying their taxes, it must hold itself against the
same standard in refunding excess (or erroneous) payments of such taxes. It should not unjustly enrich itself at the
expense of taxpayers.[34]
And so, given its essence, a claim for tax refund necessitates only
preponderance of evidence for its approbation like in any other ordinary civil
case.
Under the Tax Code itself, apparently
in recognition of the pervasive quasi-contract principle, a claim for tax
refund may be based on the following: (a) erroneously or illegally assessed or
collected internal revenue taxes; (b) penalties imposed without authority; and (c)
any sum alleged to have been excessive or in any manner wrongfully collected.[35]
What
is controlling in this case is the well-settled doctrine of strict
interpretation in the imposition of taxes, not the similar doctrine as applied
to tax exemptions. The rule in the interpretation of tax laws is that a statute
will not be construed as imposing a tax unless it does so clearly, expressly,
and unambiguously. A tax cannot be
imposed without clear and express words for that purpose. Accordingly, the general rule of requiring
adherence to the letter in construing statutes applies with peculiar strictness
to tax laws and the provisions of a taxing act are not to be extended by
implication. In answering the question of who is subject to tax statutes, it is
basic that in case of doubt, such statutes are to be construed most strongly
against the government and in favor of the subjects or citizens because burdens
are not to be imposed nor presumed to be imposed beyond what statutes expressly
and clearly import.[36] As burdens, taxes should not be unduly
exacted nor assumed beyond the plain meaning of the tax laws.[37]
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals in CA G.R. SP No. 80675, dated
SO ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CONSUELO YNARES-SANTIAGO CONCHITA CARPIO MORALES
Associate Justice Associate Justice
PRESBITERO J. VELASCO,
JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate
Justice
Chairperson,
Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairperson’s Attestation, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1]Rollo, pp. 59-93; penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices Eubulo G. Verzola and Monina Arevalo-Zenarosa.
[12]Tax Code, Sec. 244, provides:
Sec. 244. Authority of Secretary of Finance to Promulgate Rules and Regulations.—The Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of this Code.
See ABAKADA
Guro Party List Officers v. Ermita, G.R. No. 168056,
[15]
[19]
[22]310 Phil. 392 (1995).
[27]Surigao Consolidated Mining Co. Inc. v. Commissioner of Internal Revenue and Court of Tax Appeals, 119 Phil. 33, 37 (1963).
[28]Phil. Acetylene Co. v. Commission of Internal Revenue, et
al., 127 Phil. 461, 472 (1967);
[29]See Surigao Consolidated Mining Co. Inc. v. CIR, supra at 732-733; Philex Mining Corp. v. . Commissioner of Internal Revenue, 365 Phil. 572, 579 (1999); Davao Gulf Lumber Corp. v. . Commissioner of Internal Revenue, 354 Phil. 891-892 (1998); . Commissioner of Internal Revenue v. Tokyo Shipping Co., Ltd., 314 Phil. 220, 228 (1995).
[30]Ramie Textiles, Inc. v. Hon. Mathay, Sr.,
178 Phil. 482 (1979); Puyat & Sons v. City of
[32]Commissioner of Internal Revenue v. Fireman’s Fund Insurance Co., G.R. No.
L-30644,
[34]AB Leasing and Finance Corporation v. . Commissioner of Internal Revenue, 453 Phil. 297.. Citing BPI-Family Savings Bank, Inc. v. Court of Appeals, 330 SCRA 507, 510, 518 (200).