OMMISSIONER OF INTERNAL REVENUE, petitioner, vs.
THE COURT
OF APPEALS, COURT OF TAX APPEALS and A. SORIANO CORP.,
respondents.
Taxation; Courts; Court of Tax Appeals; The findings of facts of a special court
(CTA) exercising particular expertise on the subject of tax, generally binds the
Supreme Court.—We must emphasize that the application of Sec. 83(b) depends on
the special factual circumstances of each case. The findings of facts of a special
court (CTA) exercising particular expertise on the subject of tax, generally binds
this Court, considering that it is substantially similar to the findings of the CA
which is the final arbiter of questions of facts. The issue in this case does not only
deal with facts but whether the law applies to a particular set of facts. Moreover,
this Court is not necessarily bound by the lower courts’ conclusions of law drawn
from such facts.
Same; Withholding Tax System; Tax Amnesty; A person assessed for deficiency
withholding tax under Sections 53 and 54 of the 1939 Tax Code is being held liable
in its capacity as a withholding agent and not in its personality as a taxpayer.—
May the withholding agent, in such capacity, be deemed a taxpayer for it to avail
of the amnesty? An income taxpayer covers all persons who derive taxable income.
ANSCOR was assessed by petitioner for deficiency withholding tax under Sections
53 and 54 of the 1939 Code. As such, it is being held liable in its capacity as a
withholding agent and not in its personality as a taxpayer.
Same; Same; Same; The withholding agent is merely a tax collector, not a
taxpayer and is not protected by the amnesty under Presidential Decree 67.—In the
operation of the withholding tax system, the withholding agent is the payor, a
separate entity acting no more than an agent of the government for the collection
of the tax in order to ensure its payments; the payer is the taxpayer—he is the
person subject to tax impose by law; and the payee is the taxing authority. In other
words, the withholding agent is merely a tax collector, not a taxpayer. Under the
withholding system, however, the agent-payor becomes a payee by fiction of law.
His (agent) liability is direct and independent from the taxpayer, because
the income tax is still imposed on and due from the latter. The agent is not liable
for the tax as no wealth flowed into him—he earned no income. The Tax Code only
makes the agent personally liable for the tax arising from the breach of its legal
duty to withhold as distinguished from its duty to pay tax since: “the government’s
cause of action against the withholding agent is not for the collection of income tax,
but for the enforcement of the withholding provision of Section 53 of the Tax Code,
compliance with which is imposed on the withholding agent and not upon the
taxpayer.” Not being a taxpayer, a withholding agent, like ANSCOR in this
transaction, is not protected by the amnesty under the decree.
Same; Same; Same; Statutory Construction; Tax amnesty, much like a tax
exemption, is never favored nor presumed in law and if granted by a statute, the
terms of the amnesty like that of a tax exemption must be construed strictly against
the taxpayer and liberally in favor of the taxing authority.—Codal provisions on
withholding tax are mandatory and must be complied with by the withholding
agent. The taxpayer should not answer for the non-performance by the withholding
agent of its legal duty to withhold unless there is collusion or bad faith. The former
could not be deemed to have evaded the tax had the withholding agent performed
its duty. This could be the situation for which the amnesty decree was intended.
Thus, to curtail tax evasion and give tax evaders a chance to reform, it was deemed
administratively feasible to grant tax amnesty in certain instances. In addition, a
“tax amnesty, much like a tax exemption, is never favored nor presumed in law and
if granted by a statute, the terms of the amnesty like that of a tax exemption must
be construed strictly against the taxpayer and liberally in favor of the taxing
authority.” The rule on strictissimi juris equally applies. So that, any doubt in the
application of an amnesty law/decree should be resolved in favor of the taxing
authority.
