CIR V.

MARUBENI CORPORATION
GR No. 137377, December 18, 2001
Puno

FACTS:
 Respondent Marubeni Corporation is a foreign corporation organized and existing under the laws of
Japan and is duly registered in the Philippines.
 Petitioner found that respondent has undeclared income from its 2 contracts. Its gross income from
the said contracts was P967,269,811.14 subject to internal revenue taxes.
 Respondent filed 2 petitions with CTA on 26 Sept 1986 questioning the: (1) deficiency income,
branch profit remittance and contractor’s tax assessments; and (2) deficiency commercial broker’s
assessment.
 Meanwhile, EO No.41 was issued on 22 Aug 1986 declaring a one-time amnesty covering unpaid
income taxes. Taxpayer who wished to avail of the income tax amnesty should file it on or before 31
Oct 1986. Respondent filed its tax amnesty return. Later on, EO No.64 expanded EO No.41.
Subsequently, respondent filed a supplemental tax amnesty return under EO No.64.
 In 1996, CTA ordered CIR to desist from collecting the 1985 deficiency income, branch profit
remittance and contractor’s taxes from respondent after finding the latter to have properly availed of
the tax amnesty under EOs Nos. 41 and 64, as amended. On appeal, CA affirmed CTA’s decision.
 Hence, this petition. Petitioner claimed that respondent is disqualified from availing of the said
amnesties because the latter falls under the exception in Sec.4(b) of E.O. No. 41.

ISSUE: WON respondent’s deficiency tax liabilities were extinguished upon respondent’s availment of
tax amnesty under Executive Orders Nos. 41 and 64.

RULING: NO, respondent was disqualified to avail amnesty for income tax under EO Nos.41 and 64.

A tax amnesty is a general pardon or intentional overlooking by the State of its authority to impose
penalties on persons otherwise guilty of evasion or violation of a revenue or tax law. It is an absolute
forgiveness or 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 nor presumed in law. If granted, its terms must be construed strictly against the taxpayer and
liberally in favor of the State. For the right of taxation is inherent in government.

In this case, EO Nos. 41 and 64 are tax amnesty issuances. Sec.4(b) of E.O. No. 41 is very clear that
taxpayers “with income tax cases already filed in court as of the effectivity hereof” are exceptions from
tax amnesty. The basis is the effectivity date of E.O. No. 41 which is 22 Aug 1986. Income tax cases
must be filed in court before and as of the date of its effectivity. Here, CTA case was filed on 26 Sept
1986. When the order became effective, CTA Case had not yet been filed. Respondent did not fall
under the said exception in Sec.4(b), hence, qualified from availing the amnesty for income tax.
However, the vagueness in Sec 4(b) brought about by E.O. No. 64 should be construed strictly against
the taxpayer. The term “income tax cases” should be read as to refer to estate and donor’s taxes and
taxes on business while “hereof,” to E.O. No. 64. Since EO No. 64 took effect on 17 Nov 1986,
consequently, the date of effectivity referred to in Sec.4(b) of E.O. No. 41 should be 17 Nov 1986. When
E.O. No. 64 took effect on 17 Nov 1986, CTA Case was already filed and pending in court. By the time
respondent filed its supplementary tax amnesty return on 15 Dec 1986, respondent already fell under
the exception in Sec. 4(b) of E.O. Nos. 41 and 64. Thus, it is disqualified from availing of the business
tax amnesty granted therein.

DISPOSITIVE: PETITION DENIED.