Commissioner of Internal Revenue v. Apo Cement
REITERATIONFacts
The Antecedents: Respondent Apo Cement Corporation was assessed by the Bureau of Internal Revenue (BIR) for deficiency taxes for the taxable year 1999. The initial assessment, issued via a Final Assessment Notice (FAN) on September 1, 2003, amounted to P881,656,124.19. Following a protest by Apo Cement, the BIR issued a Final Decision on Disputed Assessment dated June 15, 2006, which reduced the total deficiency taxes to P144,293,840.65. The Commissioner of Internal Revenue (CIR) admitted that Apo Cement had paid all deficiency assessments except for documentary stamp taxes, which were allegedly based on an incorrect valuation of real property transactions. Procedural History: Apo Cement filed a Petition for Review with the Court of Tax Appeals (CTA) on August 3, 2006. Subsequently, Apo Cement availed itself of the tax amnesty under Republic Act No. 9480, specifically concerning the 1999 deficiency documentary stamp taxes. On June 11, 2009, the CTA Second Division granted Apo Cement's Motion to Cancel Tax Assessment, finding it a qualified and compliant applicant for the tax amnesty. The CIR's Motion for Reconsideration was denied. The CIR then appealed to the CTA En Banc, which, in a Decision dated June 24, 2010, dismissed the appeal and affirmed the cancellation of the assessment. The CIR's subsequent Motion for Reconsideration was also denied. The Petition: The Commissioner of Internal Revenue filed a Petition for Review under Rule 45 of the Rules of Court, seeking to reverse the CTA En Banc's decision. The CIR argued that Apo Cement failed to fully comply with the requirements of Republic Act No. 9480, specifically by allegedly understating its net worth in its Statement of Assets, Liabilities, and Net Worth (SALN) and failing to pay the correct amnesty tax. The CIR contended that the one-year prescriptive period for challenging the SALN had not yet commenced or had not yet lapsed. The Supreme Court, however, found the petition devoid of merit, noting, among other issues, a defective verification and that the one-year period to challenge the SALN had indeed lapsed without any such proceeding being initiated by parties other than the BIR or its agents.
Issue(s)
Whether the Petition for Review filed by the Commissioner of Internal Revenue is procedurally infirm due to a defective verification. Whether Apo Cement Corporation fully complied with the requirements to avail of the tax amnesty granted under Republic Act No. 9480. Whether the Commissioner of Internal Revenue is the proper party to question the correctness of Apo Cement Corporation's Statement of Assets, Liabilities and Net Worth (SALN). Whether the one-year prescriptive period to challenge the SALN under Republic Act No. 9480 had lapsed.
Ruling
The Petition is denied. The Court of Tax Appeals committed no reversible error. The Petition is devoid of merit.
Ratio Decidendi
On the procedural issue of defective verification: The Court found the Petition for Review procedurally infirm due to a defective verification. The verification stated that the contents of the Petition were true and correct of the affiant's "knowledge and belief based on authentic records." The Court emphasized that amendments to the Rules of Civil Procedure removed any reference to "belief" as a basis for verification, requiring it to be based on personal knowledge or authentic records. Pleadings with a verification based on "information and belief" or "knowledge, information and belief" are treated as unsigned and produce no legal effect. Despite being directed to submit a sufficient verification, the petitioner failed to comply, which alone merited the denial of the Petition. On compliance with tax amnesty requirements: The Court found that Apo Cement had fully complied with the requirements of Republic Act No. 9480. It was undisputed that Apo Cement submitted all the required documentary requirements, including a Notice of Availment, Tax Amnesty Return, Statement of Assets, Liabilities and Net Worth (SALN), and proof of payment of the amnesty tax. The Court reiterated that submission of these documents and payment of the amnesty tax are considered full compliance, entitling the taxpayer to the immunities and privileges under Section 6 of the law. On the Commissioner's standing to question the SALN: The Court affirmed the CTA's ruling that the Commissioner of Internal Revenue is not the proper party to question the correctness of Apo Cement's SALN. Section 4 of Republic Act No. 9480 explicitly states that the SALN is presumed correct except where the under-declaration is established in proceedings initiated by, or at the instance of, parties other than the BIR or its agents. The plain and categorical text of the law was applied, as statutory construction dictates that clear and unambiguous language should be applied as written. On the prescriptive period to challenge the SALN: The Court held that the one-year prescriptive period to challenge the SALN had lapsed. Apo Cement filed its Tax Amnesty documents on January 25, 2008. The Commissioner raised the issue of under-declaration of assets only in her Opposition to Apo Cement's Motion to Cancel Tax Assessment, filed in April 2009. This was beyond the one-year period prescribed by Section 4 of Republic Act No. 9480. The Court noted that the Commissioner never alleged the existence of any proceeding to challenge the SALN during the prescribed period. Furthermore, the Court pointed out that the shares of stock in question were sold in 2002, prior to the tax amnesty availment, negating any understatement in the 2005 SALN.
Main Doctrine
The Court affirmed the cancellation of tax assessments against Apo Cement Corporation, holding that the Commissioner of Internal Revenue failed to timely and properly challenge the Statement of Assets, Liabilities, and Net Worth (SALN) submitted by the corporation in its availment of tax amnesty under Republic Act No. 9480, and that the petition was procedurally infirm due to a defective verification.