003 CIR Vs CA (D)

G.R. No.
108358 January 20, 1995
COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
THE HON. COURT OF APPEALS, R.O.H. AUTO PRODUCTS PHILIPPINES, INC. and THE HON.
COURT OF TAX APPEALS, respondents.
VITUG, J.:
Facts of the case:
On 22 August 1986, during the period when the President of the Republic still wielded legislative
powers, Executive Order No. 41 was promulgated declaring a one-time tax amnesty on unpaid
income taxes, later amended to include estate and donor's taxes and taxes on business, for the
taxable years 1981 to 1985.
Availing itself of the amnesty, respondent R.O.H. Auto Products Philippines, Inc., filed, in October
1986 and November 1986, its Tax Amnesty Return No. 34-F-00146-41 and Supplemental Tax
Amnesty Return No. 34-F-00146-64-B, respectively, and paid the corresponding amnesty taxes due.
Prior to this availment, petitioner Commissioner of Internal Revenue, in a communication received by

private respondent on 13 August 1986, assessed the latter deficiency income and business taxes for
its fiscal years ended 30 September 1981 and 30 September 1982 in an aggregate amount of
P1,410,157.71. The taxpayer wrote back to state that since it had been able to avail itself of the tax
amnesty, the deficiency tax notice should forthwith be cancelled and withdrawn. The request was
denied by the Commissioner, in his letter of 22 November 1988, on the ground that Revenue
Memorandum Order No. 4-87, dated 09 February 1987, implementing Executive Order No. 41, had
construed the amnesty coverage to include only assessments issued by the Bureau of Internal
Revenue after the promulgation of the executive order on 22 August 1986 and not to assessments
theretofore made.
Private respondent appealed the Commissioner's denial to the Court of Tax Appeals which ruled for
the taxpayer. On appeal by the Commissioner to the Court of Appeals, the decision of the tax court
was affirmed. Hence this petition.
Issue: WHETHER OR NOT REVENUE MEMORANDUM ORDER NO. 4-87, PROMULGATED TO

IMPLEMENT E.O. NO. 41, IS VALID.
Ruling: Yes, the RMO is VALID. Decision of CA and CTA is affirmed.
The authority of the Minister of Finance (now the Secretary of Finance), in conjunction with the
Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective
enforcement of internal revenue laws cannot be controverted. Neither can it be disputed that such
rules and regulations, as well as administrative opinions and rulings, ordinarily should deserve
weight and respect by the courts. Much more fundamental than either of the above, however, is that
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.
We agree with both the court of Appeals and court of Tax Appeals that Executive Order No. 41 is
quite explicit and requires hardly anything beyond a simple application of its provisions.
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.
It might not be amiss to recall that the taxable periods covered by the amnesty include the years
immediately preceding the 1986 revolution during which time there had been persistent calls, all too
vivid to be easily forgotten, for civil disobedience, most particularly in the payment of taxes, to the
martial law regime. It should be understandable then that those who ultimately took over the reigns
of government following the successful revolution would promptly provide for abroad, and not a
confined, tax amnesty.
There is no pretension that the tax amnesty returns and due payments made by the taxpayer did not
conform with the conditions expressed in the amnesty order.

003 CIR Vs CA (D)

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G.R. No.

108358 January 20, 1995

COMMISSIONER OF INTERNAL REVENUE, petitioner,

Facts of the case:

Prior to this availment, petitioner Commissioner of Internal Revenue, in a communication received by

Issue: WHETHER OR NOT REVENUE MEMORANDUM ORDER NO. 4-87, PROMULGATED TO

Ruling: Yes, the RMO is VALID. Decision of CA and CTA is affirmed.

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