16: EMILIO S. LIM, SR. V. CA CA affirmed RTC. 23 days later Antonio Lim, Sr. died.
October 18, 1990; C.J. Fernan; G.R. L-48134-37
ISSUE/S:
DOCTRINE: Prescriptive Period to File Criminal Case 1.) WON the offenses prescribe after 5 years (Lim) or
Under NIRC SECTION 281: 5 years from failure 10 years (government’s position)?
to pay tax after notice and demand.
2.) WON the prescriptive period commenced to run
from 1965 date of 1st assessment or discovery
NATURE: Petition for Review on Certiorari (accdg to Lim spouses) or from final notice on 1968
(government)?
FACTS: Spouses Lim were engaged in the dealership of 3.) WON the RTC had jurisdiction over the tax
various household appliances. collection case?
The NBI conducted a raid on Oct. 5, 1959 on their: 4.) WON the death of Emilio S. Lim, Sr. extinguished
1.) Business Address: No. 336 Nueva Street, Manila; his civil liabilities?
and
2.) 111 12th Street, Quezon City.
HELD:
Seized from the Lim couple were business and 1.) 5 years – but the government instituted the case
accounting records which served as bases for an within the prescriptive period.
investigation undertaken by the BIR.
NIRC
On Sept. 30, 1964, Senior Revenue Examiner Raphael
S. Daet submitted a memorandum that the income tax SECTION 73. PENALTY FOR FAILURE TO FILE
returns filed by the spouses Lim for 1958 and 1959 RETURN OR TO PAY TAX. – Anyone liable to pay
were false or fraudulent. the tax, to make a return or to supply information
required under this code, who refuses or neglects to
Assessment should be: P835, 127. pay such tax, to make such return or to supply such
information at the time or times herein specified in
Acting Commissioner Benjamin M. Tabios informed the each year, shall be punished by a fine of not more
couple that there deficiency income taxes are P922, than P2,000 or by imprisonment for not more than
913.04. 6 months, or both.
On April 10, 1965, spouses requested an re-
investigation. Any individual or any officer of any corporation, or
general co-partnership…, required by law to make,
BIR expressed willingness on the following conditions: render, sign or verify any return or to supply any
1.) written waiver of the defense of prescription under information, who makes any false or fraudulent
the statute of limitations; return or statement with intent to defeat or evade
2.) depositing ½ of the assessment and securing the the assessment required by this Code to be made,
other ½ with a surety bond. shall be punished by a fine not exceeding P4,000 or
by imprisonment for not exceeding 1 year, or both.
Spouses Lim refused to comply with the conditions and
reiterated his request.
SECTION 354. PRESCRIPTION FOR
BIR rendered a final decision holding that there was no VIOLATIONS OF ANY PROVISIONS OF THIS
cause for reversal of the assessment against the Lim CODE. – All violations of any provision of this Code
couple. shall prescribe after 5 years.
The final notice and demand for payment was served Prescription shall run from the day of the
through their daughter in law on July 3, 1968 for the commission of the violation of the law, and if the
amount of P1,237,190.55 including interest, surcharges same not be known at the time, from the discovery
and penalty for late payment. thereof AND the institution of judicial proceeding
for its investigation and punishment.
BIR referred the matter to the Manila’s Fiscal’s Office
for investigation and prosecution.
The presumption shall be interrupted when
4 criminal informations were filed against petitioners. proceedings are instituted against the guilty
• violation of NIRC SECTION 45 persons and shall begin to run again if the
• violation of NIRC SECTION 51 proceedings are dismissed for reasons not
constituting jeopardy.
RTC Manila found petitioners guilty.
– suggested an amendment of the law because the - In violation of SECTION 110, in relation to
wording makes: Date of discovery – SECTION 100 of the Tax Code.
meaningless; because the discovery and
institution of judicial proceedings are
conjunctive. On Sept. 7, 1993, CIR filed a criminal complaint for tax
evasion with the DOJ against Fortune Tobacco Corp., its
corporate officers, 9 other corporations, and their
respective corporate officers.
FACTS: On June 1, 1993, the President created a Task On August 3, 1993, Fortune Tobacco Corporation (Fortune) questioned the validity
Force: of the reclassification of the brands as violative of
1.) Due process
1.) to investigate the tax liabilities of manufacturers 2.) Equal Protection of Law
engaged in tax evasion schemes such as: selling
CTA enjoined the enforcement of the reclassification - “of doubtful legality.”
MARY ANN JOY R. LEE 2
TAX 2 – PROF LAFORTEZA CASE DIGESTS TOPIC: REMEDIES
SECTION 142 (c.) contended by private
Fortune Tobacco filed M.T.D. and Motion to Suspend, respondents
grounds:
(1.)The CIR follows a pattern of prosecution against Same process with the BIR’s assessment for
Fortune Tobacco in violation of their right to due fraudulent tax evasion for the years 1990 & 1991
process and equal protection of the laws;
(2.)CIR and CTA still has to determine Fortune’s tax
liability for 1992 – without any tax liability, there C.I.R. and D.O.J. Prosecutors filed in the SC a petition
can be no tax evasion; for certiorari and prohibition with prayer for preliminary
(3.)D.O.J. has no jurisdiction – should be C.T.A.; injunction against the RTC orders.
(4.)The Complaint is not supported by any
evidence. SC referred the matter to the CA.
Fortune claims that Assistant City Prosecutor Baraquia - Petitioners should have
cannot conduct the preliminary investigation in an
impartial manner because he was a former classmate of (1.) filed an Answer as ordained in the
Presidential Legal Counsel Antonio T. Carpio. RULES OF COURT
- held that there is a prejudicial legal question that (2.)Then proceed to trial in order that thereafter
should first be settled before any criminal complaint the case may be decided on the merits by the
for tax evasion can be initiated – the issue of the respondent court.
basis of respondents’ tax liability:
Whether its SECTION 127 (b.) of the NIRC as (3.)If the decision is adverse to them – appeal the
contended by the B.I.R.; OR decision.
The amount of ad valorem tax payments together If there was fraud or willful attempt to evade
with the Payment Order and Confirmation Receipt
payment of ad valorem taxes by private
Nos. must be indicated in the sales and delivery
respondents through the manipulation of the
invoices and together with the Manufacturer’s
registered wholesale price of the cigarettes, it
Sworn Declarations on
must have been with the connivance or
cooperation of certain BIR officials and
(a.) the quantity of raw materials used during the
employees who supervised and monitored
day’s operations;
Fortune’s production activities to see to it that
the correct taxes were paid.3
(b.) the total quantity produced according to brand;
There is no allegation, much less evidence, of
(c.) the corresponding quantity removed during the
BIR personnel’s malfeasance.
day,
Presumption that the BIR personnel performed
(d.) the corresponding wholesale price their duties in the regular course in ensuing the
thereof, and correct taxes were paid by Fortune.
(b.) When necessary for the orderly administration of SECTION 3. PROCEDURE. – Except as provided for in
justice or to avoid oppression or multiplicity of SECTION 7 hereof, no complaint or information for an
actions (Dimayuga, et. al. V. Fernandez; Hernandez offense cognizable by the RTC shall be filed without a
V. Albano; Fortun V. Labang, et. al.); preliminary investigation having been first conducted in
the ff. manner:
(c.) When there is a prejudicial question which is sub
judice (De Leon V. Mabanag); (a.) The complaint shall state the known address of
the respondents and be accompanied by affidavits
(d.) When the acts of the officer are without or in excess of the complainant and his witnesses as well as
of authority (Planas V. Gil); other supporting documents, in such number of
copies as there are respondents, plus 2 copies for
(e.) Where the prosecution is under an invalid law, the official file.
ordinance or regulation (Young V. Rafferty; Yu Cong
Eng V. Trinidad);
- The said affidavits shall be sworn to before any
(f.) When double jeopardy is clearly apparent fiscal, state prosecutor, or government official
(Sangalang V. People and Alvendia); authorized to administer oath, or, in their absence
or unavailability, a notary public, who must certify
4
I disagree because intention is a mental state (mens rea) which has to be that he personally examined the affiants and that
proven by other evidence. he is satisfied that they voluntarily executed and
understood their affidavits.
So if the BIR is not allowed in a proper hearing to adduce evidence to prove this
“intention” “to defraud” all criminal complaints of similar nature against other
similarly tax evading companies will also be killed at preliminary investigation
stage pa lang - - will not proceed or prosper anymore. (b.) Within 10 days after the filing of the complaint,
the investigating officer shall either dismiss the
Corruption is not only in the Government but is worse in the Private Sector – by same if he finds no ground to continue with the
persons who do not pay taxes or do not pay “correct” taxes.
The quantum of evidence required for one is It is therefore necessary to reconcile the
different from that of the other so it does not apparently conflicting interests of the
necessarily follow that if the court grants and authorities and the taxpayers so that the
issued the temporary writ applied for the same real purpose of taxation, which is the
court will not have to rule in favor of the promotion of the common good, may be
petition for prohibition and ipso facto make the achieved.
provisional injunction permanent.
xxx xxx xxx
RULE 58, SECTION 7. A wide latitude is given to
the RTC. It is said that taxes are what we pay for
civilized society.
Due to the overzealousness in collecting taxes Errors of courts acting within its jurisdictions are mere
from private respondents and to some accident errors of judgment which are reviewable by timely
of immediate overwhelming interest which appeal and not by a special civil action of certiorari.
distressingly impassions and distorts judgment,
the State has unwittingly ignored the citizens’
constitutional rights. This is applicable to the private respondents when they
resorted to the remedy of certiorari and prohibition with
application for preliminary injunction with the RTC to
Thus even the rule that injunction will not lie to stop the preliminary investigation conducted by the
prevent a criminal prosecution has admitted D.O.J. Task Force.
exceptions, which were enumerated in Brocka
V. Enrile and in Ocampo IV V. Ombudsman.
Note: The Proceedings before the investigators are far
from terminated.
Courts should not hesitate to invoke the
constitutional guarantees to give adequate
protection to the citizens when faced with the In fact the private respondents were merely
enormous powers of the State, even when what subpoenaed and asked to submit counter-affidavits.
is in issue are only provisional remedies.
But when we do, we set in motion an arbitrary The proper procedure should have been an appeal from
or subversive influence by our own design such an adverse resolution to the Secretary of Justice.
which destroys us from within.
Let not the present case dangerously sway As a corollary, the RTC should have desisted from
toward that trend. entertaining private respondents’ original petition for
certiorari and prohibition with prayer for preliminary
injunction because a court order to stop a preliminary
Dissent in: finding of “selective prosecution” of private investigation is an act of interference with the
respondents investigating officers’ discretion, absent any showing of
This Court should not conduct the Preliminary 5. Issue of WON the evidence submitted by
Investigation. petitioners is sufficient to warrant the filing of
criminal informations for fraudulent tax evasion is
It is not a trier of facts. prematurely raised.
A crime is complete when the violator has The ruling is undisputably on all fours with, and
knowingly and willfully filed a fraudulent return with conclusive to the case at bar.
intent to evade and defeat the tax.
There, SC denied the prayer of therein
The perpetration of the crime is grounded upon petitioner to quash informations for tax evasion
knowledge on the part of the taxpayer that he has that had already been filed in court.
made an inaccurate return, and the government’s
failure to discover the error and promptly to assess Despite the fact that the prosecutors in Ungab
has no connections with the commission of the had already found probably cause to try therein
crime.” petitioner for tax evasion, there was no finding
by the Court of any violation of any of
Under the Ungab doctrine - the filing of a criminal petitioner’s constitutional rights.
complaint for fraudulent tax evasion would be
proper even without a previous assessment of the The Ungab Doctrine is good law.
correct tax.
How can there now be a violation of private
Involved the filing of a fraudulent income tax respondents’ constitutional rights upon a
return because the defendant failed to report requirement by the investigators that private
his income derived from the sale of banana respondents submit their counter-affidavits?
saplings.
Case at bar: fraudulent concealment of actual 7. The validity of the BIR RMC 37-93 which
price of products sold through declaration of reclassified cigarette brands “Hope” “More” and
registered wholesale prices lower than the “Champion” manufactured by Fortune to a 10%
actual wholesale prices. increase in ad valorem taxes is irrelevant to the
issue of fraudulent tax evasion involved in this
case.
Dispositive Portion affirmed the decision It is precisely through the preliminary investigation
of the trial court dismissing the petition for that the DOJ Task Force on Revenue Cases can
certiorari and prohibition with prayer for determine WON there are grounds to file
preliminary injunction filed to stay the informations in court OR to dismiss the BIR
preliminary investigation of criminal complaints complaints.
against petitioner Hernandez.
There the complaints were filed merely Rules of Criminal Procedure do not even require, as
as a form of harassment against the judge and a condition sine qua non to the validity of a
which “could have no other purpose than to preliminary investigation, the presence of the
place petitioner-judge in contempt and respondent as long as efforts to reach him are
disrepute.” made, and an opportunity to controvert the
complainant’s evidence is accorded him.
There was an express finding by the
The purpose of the rule is to check attempts of
Court that complaints against judges of the CFI
unscrupulous respondents to thwart criminal
are properly filed with the S.C. under E.O. No.
investigations by not appearing or employing
264 (1970) since the Court is considered as the
dilatory tactics.
department head of the judiciary.
They should be allowed to resume until their GR No. 119761; August 29, 1996; J. Vitug
final conclusion or completion, with private
respondents given a non-extendible period of
10 days from notice to submit to the NATURE: Petition for Review
investigating panel their respective counter-
affidavits and supporting documents, if any.
FACTS: Fortune Tobacco Corporation (Fortune) is
engaged in the manufacture of different brands of
ISSUE DIFFERENTLY - STATED: Did the Trial cigarettes.
Court commit grave abuse of discretion in
stopping the subject preliminary investigation?
They registered trademark names:
1. Champion
J. PADILLA: Yes. 2. Hope
3. More
RTC should be ENJOINED from proceeding in
any manner in the civil case, at least until
further orders from the S.C. Because of foreign companies with same brands, 1987
CIR Tan was to classify them as “foreign brands” so
CA decision should be SET ASIDE. Fortune changed:
Hope to “Hope Luxury” and
More to “Premium More”.
J. VITUG DISSENTING: Fortune was taxed as local brands at 40%, 45% based
on NIRC SECTION 142, (c.) (2.) for:
ISSUE: WON judicial relief could be resorted to in order 1. Hope Luxury M. 100’s
to stop state prosecutors from going through with their 2. Hope Luxury M. King
investigation of complaints lodged against private 3. More Premium M. 100’s
respondents. 4. More Premium International
5. Champion Int’l M. 100’s
SC should not unduly interfere, let alone to 6. Champion M. 100’s
peremptorily prevent, the prosecuting agencies or
offices of the government in their investigatorial work at 15%, 20% based on NIRC SECTION 142, (c.)
or in their own evaluation of the results of investigation. last paragraph for:
7. Champion M. King
In this case – the parties have exhaustively and 8. Champion Lights
adequately presented their respective caes.
In the interest of good order, the practical measure of On July 1, 1993, CIR issued Revenue Memorandum
enjoining the Trial Court from taking further cognizance Circular (RMC) 37-97, reclassifying “Hope”, “More”, and
of the case would not be unwarranted. “Champion” as bearing foreign brands [appearing in the
World Tobacco Directory] subject to 55% ad valorem
Civil Liability for the due payment of Internal Revenue tax.
Taxes, including the applicable remedies and
proceedings in the determination thereof,
CIR assessed Fortune deficiency Ad Valorem Tax of
Must be considered “apart from” and “technically P9,598,334.
independent of”:
The Criminal Aspect that may be brought to bear in 2 days later RA 7654 became effective, which
appropriate cases. amended NIRC:
Fortune Tobacco filed a petition for review in the CTA. i. “WHITE HORSE”
ISSUE/S: WON RMC 37-97 is a mere interpretative SC differentiated 2 kinds of administrative issuances:
(administrative opinion) ruling of the BIR which 1.) a legislative rule;
(1.) can become effective without need for prior
notice and hearing, 2.) an interpretative rule
(2.) nor publication,
(3.) that its issuance is not discriminatory since it Citing: Misamis Oriental Association of Coco Traders,
would apply under similar circumstances to all Inc. V. Department of Finance Secretary:
locally manufactured cigarettes
(4.) that BIR is not prescribed from reclassifying … a legislative rule is in the nature of subordinate
“Hope” “More” and “Champion” before the legislation, designed to implement a primary
effectivity of RA 7654 legislation by providing the details therof.
(2.) In the fixing of rates, no rule or final order Uniformity requires that all subjects or objects of
shall be valid unless the proposed rates shall taxation, similarly situated are to be treated alike or put
have been published in a newspaper of general on equal footing both in privileges and liabilities.
circulation at least 2 weeks before the 1st hearing
thereon.
Thus, all taxable articles or kinds of property of the
(3.) In case of opposition, the rules on contested same class must be taxed at the same rate and the tax
cases shall be observed. must operate with the same force and effect in every
place where the subject may be found.
In addition such rule must be published.
On the other hand, interpretative rules are SC cited the Transcript of the Hearing conducted on
designed to provide guidelines to the law which Aug. 10, 1993 by the Committee on Ways and Means of
the administrative agency is in charge of the House of Representatives wherein:
enforcing.
1. the CIR Liwayway Vinzons-Chato admitted that
they promulgated RMC 37-93 in haste to come out
SC cited BIR RMC 10-86: EFFECTIVITY OF before the effectivity of RA 7654; (midnight law)
INTERNAL REVENUE RULES & REGULATIONS which
provides: 2. that they have prepared an RMC supposed to come
after which named the list of other locally
1 of the problem areas bearing on compliance with manufactured cigarettes bearing a foreign brand to
Internal Revenue Tax Rules and Regulations is lack be taxed at 55% also.
or insufficiency of due notice to the tax paying
public.
DISPOSITION: CA is AFFIRMED.
“due process” requires due notice (1987
CONSTITUTION, ARTICLE IV, SECTION 1; NCC
ARTICLE 2) NOTES:
1987 Constitution
ARTICLE VI.
SECTION 28.
MARY ANN JOY R. LEE 17
TAX 2 – PROF LAFORTEZA CASE DIGESTS TOPIC: REMEDIES
Discussed Powers and Functions of Administrative due process must be observed - No
Bodies: person shall be deprived of life, liberty or
property without due process of law.
a.) Supplementary or Detailed Legislation 1.) Right to a Hearing, which includes the
right of the party interested or affected to
b.) Contingent Legislation present his own case and submit evidence in
support thereof;
c.) Interpretative Rules – interprets,
clarifies or explain statutes; 2.) Tribunal must consider evidence
presented;
Purpose is merely to construe
the statute being administered 3.) Decision must have something to
support itself;
Generally refers to no single
person or party in particular but 4.) Evidence must be substantial;
concerns all those belonging to the
same class which may be covered 5.) Decision must be rendered on the
evidence presented at the hearing, or at least
Citing: Tanada V. Tuvera: “need contained in the record and disclosed to the
not be published.” parties affected;
Therefore:
MARY ANN JOY R. LEE 18
TAX 2 – PROF LAFORTEZA CASE DIGESTS TOPIC: REMEDIES
• due process – notice & hearing; and
without prejudice to the power of the CIR to make
• publication are required. rulings or opinions in connection with the
implementation of the provisions of internal revenue
laws, including rulings on the classification of articles
Reception of evidence is appropriate if not for sales tax and similar purposes.
necessary for the determination of WON a brand is
foreign.
BIR Ruling No. 410-88, Aug. 24, 1988 – “in cases BIR has powers:
where it cannot be established OR there is dearth
of evidence as to whether a brand is foreign or 1. to investigate;
not…” 2. to initiate action and control the range of
investigation;
3. to promulgate rules and regulations to better
Comparision with RMC 47-91 in Misamis Oriental carry our statutory policies
Association of Coco Traders V. Department of 4. to adjudicate controversies within the scope of
Finance Secretary: their activities
Fortune will not be shielded by any “vested 19: CIR V. PASCO REALTY AND DEVELOPMENT
rights”, for there are no vested rights to speak of, CORPORATION
respecting a wrong construction of the law by GR No. 128315; June 29, 1999; J. Panganiban
administrative officials, and such wrong
interpretation does not place the Government in
estoppels to correct or overrule the same. DOCTRINE: Assessment is not necessary before filing
criminal complaint for Tax Evasion based on
SECTION 222 itself.
It is irrelevant that the CTA makes much of the
effect of the passing of RA 7654.
CIR can reclassify cigarette brands prior to the NATURE: Petition for Review on Certiorari under RULE
effectivity of the RA. 45 praying for the nullification of CA decision.
2: The determination of the classification of the FACTS: Then CIR Jose U. Ong authorized Revenue
cigarette brands was an “interpretation” of the Officers to examine the books of accounts and other
CIR of the Tax Code. accounting records of Pascor Realty and Development
Corporation (PRDC) for the years 1986, 1987 and 1988.
NIRC SECTION 142 (c.) is subject to various and
changing constructions.
The Revenue Officers:
1.) Thomas T. Que;
The RMC did not have any penal sanction.
2.) Sonia T. Estorco; and
3.) Emmanuel M. Savellano
No detail had to be filled in by the CIR.
Recommended issuance of an assessment in the
amounts of:
The basis for the classification of cigarettes has
(a.) P7,498,434.65 for 1986 and
been provided for by the legislature.
(b.) P3, 015, 236.35 for 1987.
The law merely states, that CTA has EAJ over Either of these remedies or both
decisions of the CIR on “disputed assessments,” simultaneously may be pursued in the
and “other matters” arising under the NIRC, other discretion of the authorities charged with
law or part administered by the BIR. the collection of such taxes:
Provided, That in a case where a return is filed beyond the period prescribed by
law, the 3 year period shall be counted from the day the return was filed before the
last day prescribed by law for the filing hereof shall be considered as filed on such
last day.
5
REVENUE REGULATIONS 12-85
(b.) If before the expiration of the time prescribed in SECTION 203 for the
assessment of the tax, both CIR and the taxpayer have agreed in writing to 2. NO
its assessment after such time, the tax may be assessed within the period
agreed upon. NIRC
- The period so agreed upon may be extended by subsequent written
agreements made before the expiration of the period previously agreed SECTION 222 specifically states that in cases where a
upon. false or fraudulent return is submitted or in cases of
failure to file a Return such as this case, proceeding in
(c.) Any internal revenue tax, which has been assessed within the period of
limitations as prescribed in paragraph (a.) hereof may be collected by court may be commenced without an assessment.
distraint or levy or by a proceeding in court within 5 yeas following the
assessment of the tax. - This is the General Rule.
(d.) Any internal revenue tax, which has been assessed within the period agreed
upon as provided in paragraph (b.) herein above may be collected by SECTION 205 clearly mandates that the civil and
distraint or levy or by a proceeding in court within the period agreed upon in criminal aspects of the case may be pursued
writing before the expiration of the 5 year period. simultaneously.
- The period so agreed upon may be extended by subsequent written
Citing Ungab V. Cusi – petitioner therein sought the
agreements made before the expiration of the period previously agreed
upon dismissal of the criminal Complaints for being
premature, since his protest to the CTA had not yet
(e.) Provided, however, that nothing in the immediately preceding SECTION and
paragraph (a.) hereof shall be construed to authorize the examination or been resolved.
inquiry into any tax return filed in accordance with the provisions of any tax
amnesty law or decree. - The Court held that such protest could not stop or
9 suspend the criminal action which was independent
of the resolution of the protest in the CTA.
SECTION 228. PROTESTING OF ASSESSMENT. – When the CIR or his duly
authorized representative finds that proper taxes should be assessed, he shall first - This was because the CIR had, in such tax evasion
notify the taxpayer of his findings:
cases, DISCRETION on whether to issue an
Provided, however, that a pre - assessment notice shall not be required in the ff. “assessment” OR to file a criminal case against the
cases:
taxpayer OR to do both.
(a.) When the finding for any deficiency tax is the result of mathematical error in
the computation of the tax as appearing on the face of the return; or Private Respondents insist that SECTION 222 should be
(b.) when the discrepancy has been determined between the tax withheld and the
read in relation to SECTION 25510 of the NIRC, which
amount actually remitted by the withholding agent; or penalizes failure to file a Return.
(c.) when a taxpayer who opted to claim a refund or tax credit of excess creditable 10
withholding tax for a taxable period was determined to have carried over and
automatically applied the same amount claimed against the estimated tax liabilities
for the taxable quarter or quarters of the succeeding taxable year; or SECTION 255. FAILURE TO FILE RETURN, SUPPLY CORRECT AND
ACCURATE INFORMATION, PAY TAX, WITHHOLD AND REMIT TAX AND
(d.) When the excise tax due on excisable articles has not been paid; or REFUND EXCESS TAXES WITHHELD ON COMPENSATION. –
(e.) When an article locally purchased or imported by an exempt person, such as, Any person required under this Code or by rules and regulations promulgated
but not limited to, vehicles, capital equipment, machineries and spare parts, has there under to:
been sold, traded or transferred to non-exempt persons.
1. pay any tax,
The taxpayer shall be informed in writing of the law and the facts on which the 2. make a return,
assessment is made; otherwise, the assessment shall be void. 3. keep any record, or
4. supply correct and accurate information
Within a period to be prescribed by IRRs, the taxpayer shall be required to
respond to said notice. who willfully fails to:
1. pay such tax,
If the taxpayer fails to respond, the CIR or his duly authorized representative shall
issue an assessment based on his findings.
2. make such accurate information or
3. withhold or remit taxes withheld, or
MARY ANN JOY R. LEE 23
TAX 2 – PROF LAFORTEZA CASE DIGESTS TOPIC: REMEDIES
Moreover, the criminal charge need only be supported 20: LASCONA LAND CO., INC. V. COMMISSIONER
by a prima facie showing of failure to file a required OF INTERNAL REVENUE
return. Associate Justice Estela M. Perlas-Bernabe
Before an “Assessment” is issued, there is by DOCTRINE: When to elevate assessment to the CTA
practice a “pre – assessment notice” sent to the
taxpayer.
NATURE: Petition for Review
The taxpayer is then given a chance to submit position
papers and documents to prove that the assessment is
unwarranted. FACTS: On March 27, 1998, the CIR issued
Assessment Notice against Lascona Land Co., Inc. for
If the CIR is unsatisfied, an “assessment” signed by him deficiency Income tax for 1993 of P753,266.56.
or her is then sent to the taxpayer informing the latter
specifically and clearly that an assessment has been BIR Region No. 8, Makati City – OIC Regional Director
made against him or her. Norberto R. Odulio in their denial of Lascona’s protest
stated: that the assessment has become final,
In contrast, the criminal charge need not go through all executory and demandable because it was not elevated
these. to the CTA as mandated by the last paragraph of
SECTION 228 of the Tax Code.
The Criminal Charge is filed directly with the DOJ.
C.T.A. nullified the assessment.
Thereafter, the taxpayer is notified that a criminal case
had been filed against him, not that the CIR had issued C.T.A. Case No. 5777; Jan. 4, 2000 (eto yung
an assessment. assigned actually pero hindi ko nahanap but this CA
case citing it has the same facts and because this
It must be stressed that a criminal complaint is not CA decision overturned the C.T.A. doctrine … )
instituted to demand payment, but to penalize the
taxpayer for violation of the Tax Code. B.I.R. filed an M.F.R. citing REVENUE REGULATIONS
No. 12-99 dated Sept. 6, 1999
4. refund excess taxes withheld on compensation, at the time or times required C.T.A. denied M.F.R. for lack of merit.
by law or rules and regulations,
2. actually files a return or statement and subsequently withdraws the same Corollary thereto, C.T.A. committed reversible error in
return or statement after securing the official receiving seal or stamp of declaring RR 12-99 null and void because to sustain
receipt of an internal revenue office wherein the same was actually filed
shall, upon conviction there for, be punished by a fine of not less than P10K but
such ruling would allow the taxpayers to hamper the
not more than P20K and suffer imprisonment of not less than 1 year but not more expedient collection of taxes by their failure to act
than 3 years. within a reasonable period.
NIRC
The word “decision” in the last paragraph cannot be
SECTION 228. PROTESTING OF ASSESSMENT. – strictly construed as referring only to the decision per
When the Commissioner or his duly authorized se of the BIR but should also be considered
representative finds that proper taxes should be synonymous with the disputed assessment.
assessed, he shall first notify the taxpayer of his
findings; Citing: CIR V. S.C. Johnson and Son, Inc. (1999) –
“laws are not just mere compositions, but have
Provided, however, that a pre-assessment notice shall ends to be achieved and that the general purpose
not be required in the ff. cases: is a more important aid to the meaning of a law
than any rule which grammar may lay down.
(a.) When the finding for any deficiency tax is the result
It is the duty of the courts to look to the
of mathematical error in the computation of the tax
objective to be accomplished, the evils to be
appearing on the face of the return; or
remedied, or the purpose to be subserved, and
should give the law a reasonable or liberal
(b.) when a discrepancy has been determined between construction which will best effectuate its
the tax withheld and the amount actually remitted purpose.”
by the withholding agent; or
Tax Assessments made by tax examiners are presumed
(c.) When a taxpayer who opted to claim a refund correct and made in good faith.
or tax credit of excess creditable withholding tax for
a taxable period was determined to have carried A taxpayer has to prove otherwise.
over and automatically applied the same amount
claimed against the estimated tax liabilities for the Failure of Lascona to appeal to C.T.A. in due time made
taxable quarter or quarters of the succeeding the assessments in question final, executory and
taxable year; or demandable.
DISPOSITION: Petition GRANTED. In case of inaction, Sec. 228 of the Tax Code merely
gave the taxpayer an option:
C.T.A. decision REVERSED and SET ASIDE. first, he may appeal to the CTA within 30 days from
the lapse of the 180-day period; or
Assessment Notice declared final, executory second, he may wait until the Commissioner decides
and demandable. on his protest before he elevates his case.
21: ALLIED BANKING CORPORATION V. GUILLERMO 3. In the case of BPI-Family Bank V. CIR & CTA, CA-
L. PARAYNO, JR. et. al. GR No. SP 29853, Sept. 19, 1994, the CA in
interpreting NIRC SECTION 180 named with
C.T.A. 6565; Nov. 3, 2004; particularity the instruments subject to D.S.T.:
Associate Justice Juanito C. Castaneda, Jr.
i. promissory note, whether negotiable or
not;
Decision of 2nd Division of C.T.A. Q.C. ii. bills of exchange;
iii. drafts;
iv. certificates of deposit;
NATURE: Petition for Review v. debt instruments used for deposit
substitutes.
BIR’s Answer – Special and Affirmative Defenses: 6. SECTION 180 does not prescribe any particular
form for a “certificate of deposit.”
1. C.T.A. has no jurisdiction over the instant case as the
subject assessments have already become final, 7. All presumptions are in favor of the correctness
executory and demandable in accordance with of tax assessments.
SECTION 228 of the 1997 Tax Code;
Good Faith are tax assessors and the validity of
xxx xxx xxx their actions are presumed.
If the protest is denied in whole or in part, or is not acted They will be presumed to have taken into
upon within 180 days from submission of documents, the consideration all the facts to which their attention
taxpayer adversely affected by the decision or inaction was called. (CIR V. Construction Resources of
may appeal to the C.T.A. within 30 days from receipt of Asia, Inc.)
the said decision, or from the lapse of the 180-day period;
It is incumbent upon the taxpayer to prove the
contrary (Mindanao Bus Company V. CIR; CIR V.
Otherwise, the decision shall become final, executory
Antonio Tuazon, Inc.), and failure to do so shall
and demandable.
vest legality to respondent’s actions and
assessments.
Since the 30 day period expired from the lapse of the The case was deemed submitted for decision on June
180-day period without Allied Bank filing the appeal 18, 2004.
as required by law – the assessments have become
final. Allied Bank claims that “Market Savings Deposit” is
not the same as “Time Deposit” since
BIR claims that the 180-day period ran from Sept. 24, (1.) it has no specific maturity date;
1999, the date when petitioner filed its protest-letter. (2.) it is evidenced by a regular savings passbook
2.) Yes – both the certificate of time deposit as well as SECTION 11. WHO MAY APPEAL; EFFECT
the passbook evidencing market savings deposit, are OF APPEAL. – Any person, association or
subject to Documentary Stamp Tax. corporation adversely affected by a decision or
ruling the the Collector of Internal Revenue,
the Collector of Customs or any provincial or
RATIO: city Board of Assessment Appeals may file an
(1.) In this particular case, the petition for review was appeal in the CTA within 30 days after the
filed on time, on Nov. 14, 2002, within 30 days from receipt of such decision or ruling.
receipt of the Decision of the CIR.
Citing LASCONA LAND CO., INC. V. CIR – C.T.A. Note that the law uses the word ‘decisions’,
Case No. 5777; Jan. 4, 2000: not ‘assessments’, thus further indicating
the legislative intent to subject to judicial
“It bears stressing that the wordings of Section review the decision of the Commissioner on
228 of the Tax Code clearly provide that it is only the protest against an assessment but not the
the decision not appealed by the taxpayer that assessment itself.
becomes final, executory and demandable.
Verily, in case of inaction, Sec. 228 of the Tax
Otherwise, the authors of the law could have easily Code merely gave the taxpayer an option:
included the words assessment as also becoming first, he may appeal to the CTA within 30 days
final, executory and demandable should the BIR from the lapse of the 180-day period; or
fail to act on the protest within 180 days. second, he may wait until the Commissioner
decides on his protest before he elevates his case.
As aptly cited by Petitioner, in Commissioner of
Internal Revenue V. Villa, the SC held: The court believes that the taxpayer was given this
option so that in case his protest is not acted upon
“The word “decisions” in paragraph 1, within the 180-day period, he may be able to seek
SECTION 7 of RA 1125, quoted above has immediate relief and need not wait for an indefinite
been interpreted to mean the decisions of the period of time for the Commissioner to decide.
Commissioner of Internal Revenue on the
protest of the taxpayer against the But if he chooses to wait for a positive action on
assessments. the part of the Commissioner, then the same could
not result in the assessment becoming final,
Definitely, said word does not signify the executory and demandable.”
assessment itself.
“In the first place, we believe the (2.) Terminologies are mere matters which are capable
respondent court erred in holding that of being overturned by circumstances.
the assessment in question is the
respondent Collector’s decision or ruling What is controlling is the nature and the true character
appealable to it, and that consequently, of the transaction as it is conveyed by the instrument or
the period of 30 days prescribed by document attached to it. (L.R. Heat Treating Co.)
SECTION 11 of RA 1125 within which
petitioner should have appealed to the Documentary Stamp Tax is an excise tax on the
privilege to enter into a transaction.
MARY ANN JOY R. LEE 28
TAX 2 – PROF LAFORTEZA CASE DIGESTS TOPIC: REMEDIES
SECTION 180. STAMP TAX ON ALL LOAN Time Deposit Certificate of Deposit
AGREEMENTS, PROMISSORY NOTES, BILLS OF Market Savings Deposit Passbook
EXCHANGE, DRAFTS, INSTRUMENTS AND
SECURITIES ISSUED BY THE GOVERNMENT OR The Court cited the testimony of Allied Bank’s Witness
ANY OF ITS INSTRUMENTALITIES, CERTIFICATES Ms. Jimenez.
OF DEPOSIT BEARING INTEREST AND OTEHRS
NOT PAYABLE ON SIGHT OR DEMAND. - - On all: The premium rate given in a Market Savings
(1.) loan agreements signed abroad wherein the object Deposit is an incentive for a client who keeps his
of the contract is located or used in the Philippines, bills money for at least 30 days in the bank.
of exchange (between points within the Philippines),
(2.) drafts, instruments and securities issued by the The client can choose a period: 30 or 60 days.
Government or any of its instrumentalities or
(3.) certificates of deposits drawing interest, or
(4.) orders for the payment of any sum of money DISPOSITION: Petition DISMISSED for lack of merit.
otherwise than at sight or on demand, or
(5.) on all promissory notes, whether negotiable or CIR Decision assessing Allied Bank of Deficiency
non-negotiable, except bank notes issued for Documentary Stamp Tax for 1997 are hereby
circulation, and AFFIRMED.
(6.) on each renewal of any such note,
There shall be collected a Documentary Stamp Tax Allied Bank is DIRECTED TO PAY the
(DST) of P0.30 on each P200, or fractional part thereof, assessment, plus 30% delinquency interest
of the face value of any such: agreement, bill of from Nov. 14, 2002 up to the time such amount
exchange, draft, certificate of deposit, or note: is fully paid.
xxx xxx xxx It’s not really fair to expect us to know the proper
interpretation when the CTA interpretation – specialized
court for taxes gets overturned by CA’s interpretation.
The law subjects a “certificate of deposit” to
documentary stamp tax.