BPI vs. CIR

G.R. No. 174942             March 7, 2008

BANK OF THE PHILIPPINE ISLANDS (Formerly: Far East Bank and Trust Company), petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, respondent.

FACTS:

Respondent thru then Revenue Service Chief Valdez, issued to the petitioner a pre-assessment notice (PAN). Petitioner, in a letter requested for the details of the amounts alleged as deficiency taxes mentioned in the PAN.

Respondent issued to the petitioner, assessment/demand notices for deficiency withholding tax at source (Swap Transactions) and DST involving the for the years 1982 to 1986.

The etitioner filed a protest on the demand/assessment notices. Thereafter petitioner filed a supplemental protest. Also, petitioner requested for an opportunity to present or submit additional documentation in connection with the reinvestigation of the abovementioned assessment, petitioner submitted to the BIR, Swap Contracts with the Central Bank.

Petitioner executed several Waivers of the Statutes of Limitations, the last of which was effective until December 31, 1994.

Then, respondent issued a final decision on petitioner’s protest, the deficiency DST assessment was reiterated and the petitioner was ordered to pay the said amount within thirty (30) days from receipt of such order. 

Thereafter, petitioner filed a Petition for Review before the Court. The Court rendered a Decision denying the petitioner’s Petition for Review.

ISSUE:

Whether the prescriptive period for collecting the tax deficiency was effectively tolled by BPI’s filing of the protest letters. (request for reinvestigation).

RULING:

NO.

Sec. 320. Suspension of running of statute. xxx. One of which is when the taxpayer requests for a re-investigation which is granted by the Commissioner; 

The above section is plainly worded. In order to suspend the running of the prescriptive periods for assessment and collection, the request for reinvestigation must be granted by the CIR.

The act of requesting a reinvestigation alone does not suspend the period. The request should first be granted, in order to effect suspension.

Such grant may be expressed in its communications with the taxpayer or implied from the action of the CIR or his authorized representative in response to the request for reinvestigation.

In the case at bar, there is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had granted the request for reinvestigation filed by BPI. What is reflected in the records is the piercing silence and inaction of the CIR on the request for reinvestigation, as he considered BPI’s letters of protest to be.

Adamson vs CA

G.R. No. 120935               May 21, 2009

LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE LOS REYES, in their capacities as President, Treasurer and Secretary of Adamson Management Corporation, Petitioners,

vs.

COURT OF APPEALS and LIWAYWAY VINZONS-CHATO, in her capacity as Commissioner of the Bureau of Internal Revenue, Respondents.

FACTS:

Commissioner filed with the Department of Justice (DOJ) her Affidavit of Complaint against AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes for violation of Sections 45 (a) and (d), and 1104 , in relation to Section 1005 , as penalized under Section 255,6 and for violation of Section 2537 , in relation to Section 252 (b) and (d) of the National Internal Revenue Code (NIRC).

AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes filed with the DOJ a motion to suspend proceedings on the ground of prejudicial question, pendency of a civil case with the Supreme Court, and pendency of their letter-request for re-investigation with the Commissioner. After the preliminary investigation, State Prosecutor Alfredo P. Agcaoili found probable cause. The Motion for Reconsideration against the findings of probable cause was denied by the prosecutor.

On April 29, 1994, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes were charged before the Regional Trial Court (RTC) of Makati, Branch 150 in Criminal Case Nos. 94-1842 to 94-1846. They filed a Motion to Dismiss or Suspend the Proceedings. They invoked the grounds that there was yet no final assessment of their tax liability, and there were still pending relevant Supreme Court and CTA cases. Initially, the trial court denied the motion. A Motion for Reconsideration was however filed, this time assailing the trial court’s lack of jurisdiction over the nature of the subject cases. On August 8, 1994, the trial court granted the Motion. It ruled that the complaints for tax evasion filed by the Commissioner should be regarded as a decision of the Commissioner regarding the tax liabilities of Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes, and appealable to the CTA. It further held that the said cases cannot proceed independently of the assessment case pending before the CTA, which has jurisdiction to determine the civil and criminal tax liability of the respondents therein.

On October 10, 1994, the Commissioner filed a Petition for Review with the Court of Appeals assailing the trial court’s dismissal of the criminal cases. She averred that it was not a condition prerequisite that a formal assessment should first be given to the private respondents before she may file the aforesaid criminal complaints against them. She argued that the criminal complaints for tax evasion may proceed independently from the assessment cases pending before the CTA.

On March 21, 1995, the Court of Appeals reversed the trial court’s decision and reinstated the criminal complaints. The appellate court held that, in a criminal prosecution for tax evasion, assessment of tax deficiency is not required because the offense of tax evasion is complete or consummated when the offender has knowingly and willfully filed a fraudulent return with intent to evade the tax. It ruled that private respondents filed false and fraudulent returns with intent to evade taxes, and acting thereupon, petitioner filed an Affidavit of Complaint with the Department of Justice, without an accompanying assessment of the tax deficiency of private respondents, in order to commence criminal action against the latter for tax evasion.

Private respondents filed a Motion for Reconsideration, but the trial court denied the motion. Hence, petition.

ISSUE:

Whether the filing of a criminal complaint must be preceded by an assessment. 

RULING:

No, section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case, proceedings in court may be commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. In Ungab v. Cusi, the Honorable Supreme Court ruled that the commissioner of internal revenue had, in such tax evasion cases, discretion on whether to issue an assessment or to file a criminal case against the taxpayer or to do both.

The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and evade the income tax. A crime is complete when the violator has knowingly and willfully filed a fraudulent return, with intent to evade and defeat the tax. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return, and the government’s failure to discover the error and promptly to assess has no connections with the commission of the crime.

Marcos II vs. CA

G.R. No. 120880 June 5, 1997

FERDINAND R. MARCOS II, petitioner,

vs.

COURT OF APPEALS, THE COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE and HERMINIA D. DE GUZMAN, respondents.

FACTS:

Petitioner Ferdinand R. Marcos II, the eldest son of the decedent, questions the actuations of the respondent Commissioner of Internal Revenue in assessing, and collecting through the summary remedy of Levy on Real Properties, estate and income tax delinquencies upon the estate and properties of his father, despite the pendency of the proceedings on probate of the will of the late president.

Petitioner had filed with the respondent Court of Appeals a Petition for Certiorari and Prohibition with an application for writ of preliminary injunction and/or temporary restraining order seeking to among others to —

Annul and set aside the Notices of Levy on real property issued by respondent Commissioner of Internal Revenue.

ISSUE:

Whether the pendency of probate proceedings over the estate of the deceased does preclude the assessment and collection of taxes.

RULING:

No. The pendency of probate proceedings over the estate of the deceased does not preclude the assessment and collection of taxes.

Thus, it is discernible that the approval of the court, sitting in probate, or as a settlement tribunal over the deceased is not a mandatory requirement in the collection of estate taxes. It cannot therefore be argued that the Tax Bureau erred in proceeding with the levying and sale of the properties allegedly owned by the late President, on the ground that it was required to seek first the probate court's sanction. There is nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's approval of the state's claim for estate taxes, before the same can be enforced and collected.

Moreover, it has been repeatedly observed, and not without merit, that the enforcement of tax laws and the collection of taxes, is of paramount importance for the sustenance of government. Taxes are the lifeblood of the government and should be collected without unnecessary hindrance. However, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. 

SIKLAIR vs CIR

 G.R. No. 173594             February 6, 2008

SILKAIR (SINGAPORE) PTE, LTD., petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, respondent.

FACTS:

Petitioner, Silkair (Singapore) Pte. Ltd. (Silkair), a corporation organized under the laws of Singapore which has a Philippine representative office, is an online international air carrier.

Silkair filed with the (BIR) a written application for the refund of P4,567,450.79 excise taxes it claimed to have paid on its purchases of jet fuel from Petron Corporation.

As the BIR had not yet acted on the application. Silkair filed a Petition for Review before the CTA.

By Decision, Second Division of the CTA denied Silkair’s petition on the ground that as the excise tax was imposed on Petron Corporation as the manufacturer of petroleum products, any claim for refund should be filed by the latter; and where the burden of tax is shifted to the purchaser, the amount passed on to it is no longer a tax but becomes an added cost of the goods purchased.

ISSUE:

WHETHER SIKLAIR IS THE PROPER PARTY TO CLAIM FOR REFUND OR TAX CREDIT.

RULING:

NO.

The incidence of taxation or the person statutorily liable to pay the tax falls on Petron Corporation though the impact of taxation or the burden of taxation falls on another person, which in this case is petitioner Silkair.

The proper party to question, or seek a refund of, an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another.

Section 130 (A) (2) of the NIRC provides that "[u]nless otherwise specifically allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production." Thus, Petron Corporation, not Silkair, is the statutory taxpayer which is entitled to claim a refund based on Section 135 of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and Singapore.

Statutes granting tax exemptions must be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.

Judy Anne Santos vs. People of the Philippines

 G.R. No. 173176             August 26, 2008

JUDY ANNE L. SANTOS, petitioner,

vs.

PEOPLE OF THE PHILIPPINES and BUREAU OF INTERNAL REVENUE, respondents.

FACTS:

BIR Commissioner Parayno wrote to the DOJ Secretary Gonzales a letter regarding the possible filing of criminal charges against petitioner MS. JUDY ANNE LUMAGUI SANTOS. In said letter the commissioner recommended the criminal prosecution of the petitioner for substantial underdeclaration of income, which constitutes as prima facie evidence of false or fraudulent return under Section 248(B) of the NIRC and punishable under Sections 254 and 255 of the Tax Code. The commissioner refer the matter to DOJ for preliminary investigation and filing of an information in court if evidence so warrants.

After an exchange of affidavits and other pleadings by the parties, Prosecution Attorney issued a Resolution finding probable cause and recommending the filing of a criminal information against petitioner for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended. The said Resolution was approved by Chief State Prosecutor. 

Petitioner filed with the CTA First Division a Motion to Quash the Information on the ground among others the information is void ab initio, being violative of due process, and the equal protection of the laws. Petitioner asserts that she has been denied due process and equal protection of the laws when similar charges for violation of the NIRC against Regina Encarnacion A. Velasquez (Velasquez) were dismissed by the DOJ in its for the reason that Velasquez’s tax liability was not yet fully determined when the charges were filed.

CTA First Division denied petitioner’s Motion to Quash. Petitioner filed a Motion for Reconsideration and/or Reinvestigation, which was again denied by the CTA First Division.

Petitioner filed with the CTA en banc a Motion for Extension of Time to File Petition for Review. However, CTA en banc denied petitioner’s Motion for Extension of Time to File Petition for Review.

ISSUES:

(1) WHETHER THERE IS DENIAL OF DUE PROCESS AND EQUAL PROTECTION OF LAWS.

(2)WHETHER A RESOLUTION OF A CTA DIVISION DENYING A MOTION TO QUASH IS A PROPER SUBJECT OF AN APPEAL TO THE CTA EN BANC.

RULING:

(1) NONE, The Court is unconvinced.

First, a motion to quash should be based on a defect in the information which is evident on its face. The same cannot be said herein. The Information against petitioner appears valid on its face; and that it was filed in violation of her constitutional rights to due process and equal protection of the laws is not evident on the face thereof. 

Petitioner cannot claim denial of due process when she was given the opportunity to file her affidavits and other pleadings and submit evidence before the DOJ during the preliminary investigation of her case and before the Information was filed against her. Due process is merely an opportunity to be heard. In addition, preliminary investigation conducted by the DOJ is merely inquisitorial. It is not a trial of the case on the merits. Its sole purpose is to determine whether a crime has been committed and whether the respondent therein is probably guilty of the crime. It is not the occasion for the full and exhaustive display of the parties’ evidence. Hence, if the investigating prosecutor is already satisfied that he can reasonably determine the existence of probable cause based on the parties’ evidence thus presented, he may terminate the proceedings and resolve the case.

Petitioner cannot likewise aver that she has been denied equal protection of the laws. The equal protection clause exists to prevent undue favor or privilege. It is intended to eliminate discrimination and oppression based on inequality. Recognizing the existence of real differences among men, the equal protection clause does not demand absolute equality. It merely requires that all persons shall be treated alike, under like circumstances and conditions, both as to the privileges conferred and liabilities enforced. 

Petitioner was not able to duly establish to the satisfaction of this Court that she and Velasquez were indeed similarly situated, i.e., that they committed identical acts for which they were charged with the violation of the same provisions of the NIRC; and that they presented similar arguments and evidence in their defense - yet, they were treated differently.

Furthermore, that the Prosecution Attorney dismissed what were supposedly similar charges against Velasquez did not compel Prosecution Attorney Torrevillas to rule the same way on the charges against petitioner. Petitioner has failed to show that, in charging her in court, that there was a "clear and intentional discrimination" on the part of the prosecuting officials.

The discretion of who to prosecute depends on the prosecution’s sound assessment whether the evidence before it can justify a reasonable belief that a person has committed an offense.

(2) NO. The Honorable Supreme Court opined that a resolution denying a motion to quash is not a proper subject of an appeal to the Court En Banc because a ruling denying a motion to quash is only an interlocutory order, as such, it cannot be made the subject of an appeal. Hence, since a denial of a Motion to Quash is not appealable, granting petitioner’s Motion for Extension of Time to File Petition for Review will only be an exercise in futility considering that the dismissal of the Petition for Review that will be filed by way of appeal is mandated both by law and jurisprudence.

Ultimately, the CTA en banc denial of Motion for Extension of Time to File Petition is meritorious.