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LG Electronics Philippines, Inc. vs. Commissioner of Internal Revenue
G.R. No. 165451, December 03, 2014

FACTS:
On March 21, 1998 petitioner LG Electronics Philippines, Inc. (LG) was assessed deficiency income tax for the taxable year of 1994. It filed administrative protest with the Bureau of Internal Revenue against the tax assessment claiming that the assessment did not have factual and legal bases.

LG filed a Petition for Review before the Court of Tax Appeals then raised the issue to the Supreme Court. Meanwhile, LG availed itself of the tax amnesty provided under Republic Act No. 9480.

ISSUE:
Whether or not petitioner LG Electronics Philippines, Inc. is entitled to the immunities and privileges granted under Tax Amnesty Act of 1997.

RULING:
Yes. LG has properly availed itself of the tax amnesty under RA No. 9840 by paying the correct amount and submitting the required documents. LG’s completion of the requirements and compliance with the procedure laid down in the law and the implementing rules entitled it to the privileges and immunities under the tax amnesty program.
Moreover, tax assessments that are disputed administratively or judicially are still covered by the tax amnesty law except those cases excluded from the coverage of the law like tax cases subject of final and executory judgments by the courts. The present case has not become final and executory when LG availed of the tax amnesty program.

NOTES:
Nature of a tax amnesty
A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of violation of a tax law. It partakes of an absolute waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate. A tax amnesty, much like a tax exemption, is never favored or presumed in law. The grant of a tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer and liberally in favor of the taxing authority.

What is the role of tax amnesties in the government’s collection of taxes?
Tax amnesty is a general pardon to taxpayers who want to start a clean tax slate. It also gives the government a chance to collect uncollected tax from tax evaders without having to go through the tedious process of a tax case.

Rule-making power of administrative agencies
While tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer and liberally in favor of the taxing authority, it is also a well-settled doctrine that the rule-making power of administrative agencies cannot be extended to amend or expand statutory requirements or to embrace matters not originally encompassed by the law. Administrative regulations should always be in accord with the provisions of the statute they seek to carry into effect, and any resulting inconsistency shall be resolved in favor of the basic law.

BIR’s representation in appellate proceedings
The institution or commencement before a proper court of civil and criminal actions and proceedings arising under the Tax Reform Act which “shall be conducted by legal officers of the Bureau of Internal Revenue” is not in dispute. An appeal from such court, however, is not a matter of right. Section 220 of the Tax Reform Act must not be understood as overturning the long established procedure before this Court in requiring the Solicitor General to represent the interest of the Republic. This Court continues to maintain that it is the Solicitor General who has the primary responsibility to appear for the government in appellate proceedings.

Full text: LG Electronics vs. CIR G.R. No. 165451, December 03, 2014