(BDB Law’s “Tax Law For Business” appears in the opinion section of BusinessMirror every

Thursday. BDB Law is an affiliate of Punongbayan & Araullo (P&A).

The Burden of being a taxpayer

As a principal attribute of sovereignty, taxes affect each and every one of us, as the
saying goes, from the cradle to the grave. And as taxpayers, we bear the burden of
paying the taxes and duties imposed on us by the government which, in turn, is
supposed to use the collected funds to finance not only its very existence but, more
important, to promote public welfare and to sustain a civilized society.

Even with such burdens already unilaterally imposed upon taxpayers, fate has it that the
odds lean in favor of the government and, in turn, against the former.

In accordance with all the theories justifying the collection of taxes, the very first of the
burdens that a taxpayer usually encounters is the principle of law which states that all
laws passed by Congress, or ordinances in the case of local government units (LGUs),
are presumed to be valid unless declared unconstitutional.

No matter how unfair it may seem to those affected by the imposition of a particular tax
measure, taxpayers are usually left with no choice but to pay the applicable taxes, or
else suffer the corresponding penalties exacted from those who do not comply, until and
unless the issues raised questioning the validity of such law/ordinance are finally settled
in court.

This presumption of validity extends even to the regulations, circulars and orders issued
by the Bureau of Internal Revenue (BIR), no matter how these may contradict the law
which they seek to implement. Classic examples of these are the recently issued
regulations/circulars relating to the tax-amnesty program under Republic Act 9480,
which had caused a stir in the tax community.
In addition to this is the principle that tax exemptions are strictly construed against the
taxpayer but are liberally in favor of the State, which, as ruled in Davao Gulf Lumber v.
Commissioner of Internal Revenue, et. al., 293 SCRA 76, “must be clearly shown and
based on language in the law too plain to be mistaken.”

Such mandate compels each taxpayer claiming exemption from payment of certain
taxes to prove in unmistakable terms that it is, indeed, excused from payment of such
tax. The same goes with condonation of tax liabilities as well as tax refunds, since these
are considered to be of the same nature as tax exemptions.

When it comes to the power of the BIR to assess delinquent and/or deficiency taxes,
nothing is more contentious than the principle of regularity in the performance of official
functions, which suggests that assessments shall be presumed valid in the absence of
proof of irregularities in conducting the same.

This brings to mind the assertion in favor of the government that pursuant to Revenue
Memorandum Circular 23-2000, even assessments based on estimates or best evidence
obtainable are prima facie valid unless negated by evidence to the contrary.
Furthermore, jeopardy assessments may be issued against taxpayers under certain
circumstances.

No explanation regarding this presumption concerning the validity of assessments is

more definite than that expounded in the case of Commissioner of Internal Revenue v.
Construction Resources of Asia Inc., G.R. No. 68230, (November 25, 1986), where it
was declared that, “All presumptions are in favor of the correctness of tax assessments.
The good faith of tax assessors and the validity of their actions are presumed. They will
be presumed to have taken into consideration all the facts to which their attention was
called. No presumption can be indulged that all of the public officials of the State in the
various counties who have to do with the assessment of property for taxation will
knowingly violate the duties imposed upon them by law.”

Although an assessment may have been haphazardly made, taxpayers are left with no
recourse but to be vigilant in proving whatever defenses they have against the onslaught
of the taxing power and file their respective position papers and/or protests, no matter
how clueless they might have been as to the legal and factual bases of the assessment
against them; otherwise, it shall become final.

However, additional burden is unwittingly inflicted upon them, usually in the form of extra
financial expenses, along with the time and effort that could have been spent for
activities more beneficial to such taxpayers.

The only consolation available for taxpayers is that, eventually, after protracted litigation,
the Supreme Court may finally rule on the issue pertaining to the validity of such
assessment, in relation to the presumption that the revenue officers had regularly
performed their duties.

At the end of the day, it shall be easier for taxpayers to have a more open mind in terms
of accepting the burden of paying taxes, if the funds collected through the process are
appropriately spent for public welfare and development.