FIRST DIVISION
LUCAS G. ADAMSON, THERESE G.R.
No. 120935
JUNE D. ADAMSON, and SARA
S. DE LOS REYES, in their
capacities
as President, Treasurer
and Secretary
of Adamson Management Corporation,
Petitioners,
-
versus -
COURT OF APPEALS and
LIWAYWAY VINZONS-CHATO,
in her capacity as
Commissioner
of the Bureau of Internal
Revenue,
Respondents.
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- - - - - - - - - - - - - - - - - - - - - x
COMMISSIONER
OF G.R.
No. 124557
INTERNAL REVENUE,
Petitioner,
Present:
-versus-
PUNO,
C.J., Chairperson,
CARPIO,
COURT
OF APPEALS, COURT LEONARDO-DE CASTRO, and
OF TAX APPEALS, ADAMSON BERSAMIN, JJ.
MANAGEMENT CORPORATION,
LUCAS G. ADAMSON, THERESE
JUNE D. ADAMSON, and SARA Promulgated:
S. DE LOS REYES,
Respondents. May 21, 2009
x - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - x
D E C I S I O N
PUNO, C.J.:
Before the Court are the
consolidated cases of G.R. No. 120935 and G.R. No. 124557.
G.R. No. 120935 involves a petition for review on certiorari
filed by petitioners LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE
LOS REYES (private respondents), in their respective capacities as president,
treasurer and secretary of Adamson Management Corporation (AMC) against then
Commissioner of Internal Revenue Liwayway Vinzons-Chato (COMMISSIONER), under
Rule 45 of the Revised Rules of Court.
They seek to review and reverse the Decision promulgated on
G.R. No. 124557 is a petition for review on
certiorari filed by the Commissioner, assailing the Decision dated
The facts, as culled from the findings of the
appellate court, follow:
On P7,789,995.00.[1] On P159,363.21 was paid as capital
gains tax for the transaction.
On P17,718,360.00. AMC paid the
capital gains tax of P352,242.96.
On
The events preceding G.R. No. 120935 are the following:
On
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
On
On
Private respondents filed a Motion for
Reconsideration, but the trial court denied the motion on
1.
WHETHER
OR NOT THE RESPONDENT HONORABLE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE
IN UNGAB V. CUSI (Nos. L-41919-24,
2.
WHETHER
OR NOT AN ASSESSMENT IS REQUIRED UNDER THE SECOND CATEGORY OF THE OFFENSE IN
SECTION 253 OF THE NIRC.
3.
WHETHER
OR NOT THERE WAS A VALID ASSESSMENT MADE BY THE COMMISSIONER IN THE CASE AT
BAR.
4.
WHETHER
OR NOT THE FILING OF A CRIMINAL COMPLAINT SERVES AS AN IMPLIED ASSESSMENT ON THE
TAX LIABILITY OF THE TAXPAYER.
5.
WHETHER
OR NOT THE FILING OF THE CRIMINAL INFORMATION FOR TAX EVASION IN THE TRIAL
COURT IS PREMATURE BECAUSE THERE IS YET NO BASIS FOR THE CRIMINAL CHARGE OF
WILLFULL INTENT TO EVADE THE PAYMENT OF A TAX.
6.
WHETHER
OR NOT THE DOCTRINES LAID DOWN IN THE CASES OF YABES V. FLOJO (No. L-46954,
7.
WHETHER
OR NOT THE COURT OF TAX APPEALS
In parallel circumstances, the
following events preceded G.R. No. 124557:
On
On
The Commissioner repaired to the Court of Appeals on
the ground that the
The Court of Appeals sustained the
1.
WHETHER
OR NOT THE INSTANT PETITION SHOULD BE DISMISSED FOR FAILURE TO COMPLY WITH THE
MANDATORY REQUIREMENT OF A CERTIFICATION UNDER OATH AGAINST FORUM SHOPPING;
2.
WHETHER
OR NOT THE CRIMINAL CASE FOR TAX EVASION IN THE CASE AT BAR CAN PROCEED WITHOUT
AN ASSESSMENT;
3.
WHETHER
OR NOT THE COMPLAINT FILED WITH THE DEPARTMENT OF JUSTICE CAN BE CONSTRUED AS
AN IMPLIED ASSESSMENT; and
4.
WHETHER
OR NOT THE COURT OF TAX APPEALS
The issues in G.R. No. 124557 and G.R. No.
120935 can
be compressed into three:
1.
WHETHER THE COMMISSIONER
2.
WHETHER THERE IS BASIS FOR THE CRIMINAL CASES FOR TAX EVASION TO
PROCEED AGAINST AMC, LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON
3.
WHETHER THE COURT OF TAX APPEALS
The case of
CIR v. Pascor Realty, et al.[11] is relevant.
In this case, then
BIR Commissioner Jose U. Ong authorized revenue officers to examine the books
of accounts and other accounting records of Pascor Realty and Development
Corporation (PRDC) for 1986, 1987 and 1988. This resulted in a recommendation
for the issuance of an assessment in the amounts of P7,498,434.65 and P3,015,236.35
for the years 1986 and 1987, respectively.
On March 1,
1995, the Commissioner filed a criminal complaint before the DOJ against PRDC,
its President Rogelio A. Dio, and its Treasurer Virginia S. Dio, alleging
evasion of taxes in the total amount of P10,513,671.00. Private respondents filed an Urgent Request
for Reconsideration/Reinvestigation disputing the tax assessment and tax
liability.
The Commissioner
denied the urgent request for reconsideration/reinvestigation because she had
not yet issued a formal assessment.
Private respondents then elevated the Decision of the Commissioner to the
CTA on a petition for review. The Commissioner
filed a Motion to Dismiss the petition on the ground that the CTA has no
jurisdiction over the subject matter of the petition, as there was yet no
formal assessment issued against the petitioners. The CTA denied the said motion to dismiss and
ordered the Commissioner to file an answer within thirty (30) days. The Commissioner did not file an answer nor
did she move to reconsider the resolution.
Instead, the Commissioner filed a petition for review of the CTA
decision with the Court of Appeals. The
Court of Appeals upheld the CTA order. However, this Court reversed the Court
of Appeals decision and the CTA order, and ordered the dismissal of the
petition. We held:
An assessment contains not only a computation
of tax liabilities, but also a demand for payment within a prescribed
period. It also signals the time when
penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his
remedies thereon, due process requires that it must be served on and received
by the taxpayer. Accordingly, an
affidavit, which was executed by revenue officers stating the tax liabilities
of a taxpayer and attached to a criminal complaint for tax evasion, cannot be deemed an assessment that can be questioned
before the Court of Tax Appeals.
Neither the NIRC nor the revenue regulations governing the protest
of assessments[12] provide a specific definition or form of an assessment. However, the NIRC defines the specific
functions and effects of an assessment.
To consider the affidavit attached to the Complaint as a proper
assessment is to subvert the nature of an assessment and to set a bad precedent
that will prejudice innocent taxpayers.
True, as pointed out by the private respondents, an assessment
informs the taxpayer that he or she has tax liabilities. But not all documents coming from the BIR
containing a computation of the tax liability can be deemed assessments.
To start with, an assessment must be sent to and received by a
taxpayer, and must demand payment of the taxes described therein within a
specific period. Thus, the NIRC imposes
a 25 percent penalty, in addition to the tax due, in case the taxpayer fails to
pay the deficiency tax within the time prescribed for its payment in the notice
of assessment. Likewise, an interest of
20 percent per annum, or such higher rate as may be prescribed by rules and
regulations, is to be collected from the date prescribed for its payment until
the full payment.[13]
The issuance of an assessment is vital in determining the period
of limitation regarding its proper issuance and the period within which to
protest it. Section 203[14]
of the NIRC provides that internal revenue taxes must be assessed within three
years from the last day within which to file the return. Section 222,[15]
on the other hand, specifies a period of
ten years in case a fraudulent return with intent to evade was submitted or in
case of failure to file a return. Also,
Section 228[16]
of the same law states that said assessment may be protested only within thirty
days from receipt thereof. Necessarily,
the taxpayer must be certain that a specific document constitutes an
assessment. Otherwise, confusion would
arise regarding the period within which to make an assessment or to protest the
same, or whether interest and penalty may accrue thereon.
It should also be stressed that the said document is a notice duly
sent to the taxpayer. Indeed, an
assessment is deemed made only when the collector of internal revenue releases,
mails or sends such notice to the taxpayer.[17]
In the present case, the revenue officers’ Affidavit merely
contained a computation of respondents’ tax liability. It did not state a demand or a period for
payment. Worse, it was addressed to the
justice secretary, not to the taxpayers.
Respondents maintain that an assessment, in relation to taxation,
is simply understood to mean:
“A notice to the effect that the amount therein stated is due as
tax and a demand for payment thereof.”[18]
“Fixes the liability of the taxpayer and ascertains the facts and
furnishes the data for the proper presentation of tax rolls.”[19]
Even these definitions fail to advance private respondents’ case.
That the BIR examiners’ Joint Affidavit attached to the Criminal Complaint
contained some details of the tax liabilities of private respondents does not ipso
facto make it an assessment. The
purpose of the Joint Affidavit was merely to support and substantiate the
Criminal Complaint for tax evasion. Clearly, it was not meant to be a notice of
the tax due and a demand to the private respondents for payment thereof.
The fact that the Complaint itself was specifically directed and
sent to the Department of Justice and not to private respondents shows that the
intent of the commissioner was to file a criminal complaint for tax
evasion, not to issue an assessment. Although the revenue officers recommended the
issuance of an assessment, the commissioner opted instead to file a criminal
case for tax evasion. What private respondents received was a
notice from the DOJ that a criminal case for tax evasion had been filed against them, not a notice that the
Bureau of Internal Revenue had made an assessment.
Private respondents maintain that the filing of a criminal complaint
must be preceded by an assessment. This
is incorrect, because 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,[20]
petitioner therein sought the dismissal of the criminal Complaints for being
premature, since his protest to the CTA had not yet been resolved. The Court held that such protests could not
stop or suspend the criminal action which was independent of the resolution of
the protest in the CTA. This was because
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.
Private respondents insist that Section 222 should be read in
relation to Section 255 of the NIRC,[21]
which penalizes failure to file a return.
They add that a tax assessment should precede a criminal
indictment. We disagree. To reiterate, said Section 222 states that an
assessment is not necessary before a criminal charge can be filed. This is the general rule. Private respondents failed to show that they
are entitled to an exception. Moreover,
the criminal charge need only be supported by a prima facie showing of
failure to file a required return. This
fact need not be proven by an assessment.
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.
In the cases at bar, the
Commissioner denied that she issued a formal assessment of the tax liability of
AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes. She admits though that she wrote the
recommendation letter[22]
addressed to the Secretary of the DOJ recommending the filing of criminal
complaints against AMC and the aforecited persons for fraudulent returns and tax
evasion.
The first issue is
whether the Commissioner’s recommendation letter can be considered as a formal
assessment of private respondents’ tax liability.
In the context in which it is used in the NIRC, an
assessment is a written notice and demand made by the BIR on the taxpayer for
the settlement of a due tax liability that is there definitely set and
fixed. A written communication
containing a computation by a revenue officer of the tax liability of a
taxpayer and giving him an opportunity to contest or disprove the BIR
examiner’s findings is not an assessment since it is yet indefinite.[23]
We rule that the recommendation letter of the
Commissioner cannot be considered a formal assessment. Even a cursory perusal of the said letter
would reveal three key points:
1. It was not
addressed to the taxpayers.
2. There was no
demand made on the taxpayers to pay the tax liability, nor a period for payment
set therein.
3. The letter was
never mailed or sent to the taxpayers by the Commissioner.
In fine, the said recommendation letter served merely
as the prima facie basis for filing
criminal informations that the taxpayers had violated Section 45 (a) and (d),
and 110, in relation to Section 100, as penalized under Section 255, and for
violation of Section 253, in relation to Section 252 9(b) and (d) of the Tax Code.[24]
The next issue is whether the filing of the criminal
complaints against the private respondents by the DOJ is premature for lack of
a formal assessment.
Section 269 of the NIRC (now Section 222 of the Tax
Reform Act of 1997) provides:
Sec.
269. Exceptions as to period of
limitation of assessment and collection of taxes.-(a) In the case of a false or
fraudulent return with intent to evade tax or of failure to file a return, the
tax may be assessed, or a proceeding in court after the collection of such tax
may be begun without assessment, at any time within ten years after the
discovery of the falsity, fraud or omission: Provided, That in a fraud
assessment which has become final and executory, the fact of fraud shall be
judicially taken cognizance of in the civil or criminal action for collection
thereof…
The law
is clear. When fraudulent tax returns
are involved as in the cases at bar, a proceeding in court after the
collection of such tax may be begun without assessment. Here, the private respondents had already
filed the capital gains tax return and the VAT returns, and paid the taxes they
have declared due therefrom. Upon
investigation of the examiners of the BIR, there was a preliminary finding of gross
discrepancy in the computation of the capital gains taxes due from the sale of
two lots of AAI shares, first to APAC and then to APAC Philippines,
Limited. The examiners also found that the
VAT had not been paid for VAT-liable sale of services for the third and fourth
quarters of 1990. Arguably, the gross
disparity in the taxes due and the amounts actually declared by the private
respondents constitutes badges of fraud.
Thus, the applicability of Ungab v.
Cusi[25] is evident to the
cases at bar. In this seminal case, this
Court ruled that there was no need for precise computation and formal
assessment in order for criminal complaints to be filed against him. It quoted Merten’s Law of Federal Income
Taxation, Vol. 10, Sec. 55A.05, p. 21, thus:
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.
This hoary
principle still underlies Section 269 and related provisions of the present Tax
Code.
We now go to the issue of
whether the CTA has no jurisdiction to take cognizance of both the criminal and
civil cases here at bar.
Under Republic
Act No. 1125 (An Act Creating the Court of Tax Appeals) as amended, the
rulings of the Commissioner are appealable to the CTA, thus:
SEC. 7.
Jurisdiction. – The Court of
Tax Appeals shall exercise exclusive appellate jurisdiction to review by
appeal, as herein provided -
(1) Decisions of the Commissioner of
Internal Revenue in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or
other matters arising under the National Internal Revenue Code or other laws or
part of law administered by the Bureau of Internal Revenue;
Republic Act No. 8424, titled “An Act Amending the National
Internal Revenue Code, As Amended, And For Other Purposes,” later expanded the
jurisdiction of the Commissioner and, correspondingly, that of the CTA, thus:
SEC. 4. Power of the Commissioner to Interpret Tax
Laws and to Decide Tax Cases. – The power to interpret the provisions of
this Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the Secretary of
Finance.
The power to
decide disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under
this Code or other laws or portions thereof administered by the Bureau of
Internal Revenue is vested in the Commissioner, subject to the exclusive
appellate jurisdiction of the Court of Tax Appeals.
The latest statute
dealing with the jurisdiction of the CTA is Republic Act No. 9282.[26] It provides:
SEC. 7. Section 7 of the same Act is hereby amended to read
as follows:
Sec. 7. Jurisdiction. —
The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by appeal, as herein
provided:
(1) Decisions of the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue taxes, fees or
other charges, penalties in relation thereto, or other matters arising under
the National Internal Revenue or other laws administered by the Bureau of
Internal Revenue;
(2) Inaction by the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue taxes, fees or
other charges, penalties in relation thereto, or other matters arising under
the National Internal Revenue Code or other laws administered by the Bureau of
Internal Revenue, where the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be deemed a denial;
(3) Decisions, orders or resolutions of the Regional Trial Courts
in local tax cases originally decided or resolved by them in the exercise of
their original or appellate jurisdiction;
x x x
(b) Jurisdiction over cases
involving criminal offenses as herein provided:
(1) Exclusive original
jurisdiction over all criminal offenses arising from violations of the National
Internal Revenue Code or Tariff and Customs Code and other laws administered by
the Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this
paragraph where the principal amount of taxes and fees, exclusive of charges
and penalties, claimed is less than One million pesos (P1,000,000.00) or where
there is no specified amount claimed shall be tried by the regular courts and
the jurisdiction of the CTA shall be appellate. Any provision of law or the
Rules of Court to the contrary notwithstanding, the criminal action and the
corresponding civil action for the recovery of civil liability for taxes and
penalties shall at all times be simultaneously instituted with, and jointly
determined in the same proceeding by the CTA, the filing of the criminal action
being deemed to necessarily carry with it the filing of the civil action, and
no right to reserve the filling of such civil action separately from the
criminal action will be recognized.
(2) Exclusive appellate jurisdiction in criminal offenses:
(a) Over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax cases originally decided by them, in their
respected territorial jurisdiction.
(b) Over petitions for review of the judgments, resolutions
or orders of the Regional Trial Courts in the exercise of their appellate
jurisdiction over tax cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their
respective jurisdiction.
(c) Jurisdiction over tax collection cases as herein
provided:
(1) Exclusive original jurisdiction in tax collection cases
involving final and executory assessments for taxes, fees, charges and
penalties: Provided, however, That collection cases where the principal amount
of taxes and fees, exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) shall be tried by the proper Municipal
Trial Court, Metropolitan Trial Court and Regional Trial Court.
(2) Exclusive appellate jurisdiction in tax collection
cases:
(a) Over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax collection cases originally decided by
them, in their respective territorial jurisdiction.
(b) Over petitions for review of the judgments, resolutions
or orders of the Regional Trial Courts in the exercise of their appellate
jurisdiction over tax collection cases originally decided by the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in
their respective jurisdiction.
These laws have expanded
the jurisdiction of the CTA. However, they
did not change the jurisdiction of the CTA to entertain an appeal only from a
final decision or assessment of the Commissioner, or in cases where the
Commissioner has not acted within the period prescribed by the NIRC. In the cases at bar, the Commissioner has not
issued an assessment of the tax liability of private respondents.
Finally, we hold that contrary to private respondents’
stance, the doctrines laid down in CIR v. Union Shipping Co. and Yabes v.
Flojo
are not applicable to the cases at bar.
In these earlier cases, the Commissioner already rendered an assessment
of the tax liabilities of the delinquent taxpayers, for which reason the Court ruled
that the filing of the civil suit for collection of the taxes due was a final
denial of the taxpayers’ request for reconsideration of the tax assessment.
IN
VIEW WHEREOF, premises
considered, judgment is rendered:
1.
In
G.R. No. 120935, AFFIRMING the CA decision dated March 21, 1995, which set
aside the Regional Trial Court’s Order dated August 8, 1994, and REINSTATING
Criminal Case Nos. 94-1842 to 94-1846 for further proceedings before the trial
court; and
2.
In
G.R. No. 124557, REVERSING and SETTING ASIDE the Decision of the Court of
Appeals dated
No costs.
SO ORDERED.
REYNATO S. PUNO
Chief Justice
WE
CONCUR:
RENATO C. CORONA TERESITA J. LEONARDO-DE CASTRO
Associate Justice Associate Justice
LUCAS P. BERSAMIN
Associate Justice
Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S.
PUNO
[1] Lucas
G. Adamson and
[2] I.S. No. 93-581.
[3]
The NIRC
of the
Section 45. Corporation
Returns. -
(A) Requirements.
- Every corporation, subject to the tax herein imposed, except foreign
corporations not engaged in trade or business in the
x x x
(D) Return on Capital Gains Realized from
[4]
SECTION
110. Return and
Payment of Value-Added Tax. –
(A) Where to File the Return and Pay the Tax. - Every person subject to value-added tax shall file
a quarterly return of his gross sales or receipts and pay the tax due thereon
to a bank duly accredited by the Commissioner located in the revenue district
where such person is registered or required to be registered. However, in cases where there are no duly
accredited agent banks within the city or municipality, the return shall be
filed and any amount due shall be paid to any duly accredited bank within the
district, or to the Revenue District Officer, Collection Agent or duly
authorized Treasurer of the city or municipality where such taxpayer has his
principal place of business. Only one
consolidated return shall be filed by the taxpayer for all the branches and
lines of business subject to value-added tax.
If no tax is payable because the amount of input tax and any amount authorized
to be offset against the output tax is equal to or is in excess of the output
tax due on the return, the taxpayer shall file the return with the Revenue
District Officer, Collection Agent or authorized municipal treasurer where the
taxpayer’s principal place of business is located.
(B) Time for filing of
return and payment of tax. – The return shall be filed and the tax paid within
20 days following the end of each quarter specifically prescribed for a
VAT-registered person under regulations to be promulgated by the Secretary of
Finance: Provided, however, That any person whose registration is cancelled in
accordance with paragraph (e) of Section 107 shall file a return within 20 days
from the cancellation of such registration.
(C) Initial returns. – The Commissioner may prescribe an initial taxable period for any
VAT-registered person for his first return, which in no case shall exceed 5
months.
[5]
Supra note 3 at pp. 588-590.
Section 100. Value-Added Tax on
(A) Rate and Base of Tax. - There shall be levied, assessed and
collected on every sale, barter or exchange of goods, a value-added tax
equivalent to 10% of the gross selling price or gross value in money of the
goods or properties sold, bartered or exchanged, such tax to be paid by the
seller or transferor: Provided, That the following sales by VAT-registered
persons shall be subject to zero percent (0%):
(1) Export
sales; and
(2) Sales to persons or entities
whose exemption under special laws or international agreements to which the
“Export Sales” means the sale and shipment or
exportation of goods from the
(B) Transactions Deemed
(1)
Transfer, use or consumption not in the course of business of goods originally
intended for sale or for use in the course of business;
(2)
Distribution or transfer to:
(a)
Shareholders or investors as share in the profits of the registered person; or
(b)
Creditors in payment of debt;
(3)
Consignment of goods if actual sale is not made within sixty (60) days
following the date such goods were consigned;
(4)
Retirement from or cessation of business, with respect to inventories of
taxable goods existing as of such retirement or cessation.
(C)
Changes in or Cessation of Status of a VAT-registered Person. - The tax imposed
in paragraph (a) of this Section shall also apply to goods disposed of or
existing as of a certain date if under circumstances to be prescribed in
Regulations to be promulgated by the Secretary of Finance, the status of a
person as a VAT-registered person changes or is terminated.
(D) Determination of the Tax. -
(1)
Tax billed as a separate item in the invoice. – If the tax is billed as a
separate item in the invoice, the tax shall be based on the gross selling
price, excluding the tax. “Gross selling
price” means the total amount of money or its equivalent which the purchaser
pays or is obligated to pay to the seller in consideration of the sale, barter
or exchange of the goods, excluding the value-added tax. The excise tax, if
any, on such goods or properties shall form part of the gross selling price.
(2)
Tax not billed separately or is billed erroneously in the invoice. – In case the tax is not billed separately or
is billed erroneously in the invoice, the tax shall be determined by
multiplying the gross selling price, including th amount intended by the seller
to cover the tax or the tax billed erroneously, by the factor 1/11 or such
factor as may be prescribed by regulations in case of persons partially exempt
under special laws.
(3)
Sales Returns, Allowances and Sales Discounts. - The value of goods sold and
subsequently returned or for which allowances were granted by a VAT-registered
person may be deducted from the gross sales or receipts for the quarter in
which a refund is made or a credit memorandum or refund is issued. Sales
discount granted and indicated in the invoice at the time of sale may be
excluded from the gross sales within the same quarter.
(4)
Authority of the Commissioner to Determine the Appropriate Tax Base. - The
Commissioner shall, by regulations,
determine the appropriate tax base in cases where a transaction is deemed a
sale, barter or exchange of goods under paragraph (b) hereof, or where the
gross selling price is unreasonably lower than the actual market value.
[6] Id. at 1022.
Section 255.
Penal Liability of Corporations. – Any corporation, association or general
co-partnership liable for any of the acts or omissions penalized under this
Code, in addition to the penalties imposed herein upon the responsible
corporate officers, partners or employees, shall, upon conviction, for each act
or omission be fined for not less than ten thousand pesos but not more than one
hundred thousand pesos.
[7] Id. at 1021.
Section 253.
Attempt to evade or defeat tax. -- Any
person who willfully attempts in any manner to evade or defeat any tax imposed
under this Code or the payment thereof shall, in addition to other penalties
provided by law, upon conviction thereof, be fined not more than ten thousand
pesos or imprisoned for not more than two years, or both.
[8]
Section
252. General provisions.
x x x
(b) Any person who willfully aids or abets in the commission of a crime penalized herein or who causes the commission of any such offense by another, shall be liable in the same manner as the principal.
x x x
(d) In the case of associations, partnerships, or corporations, the penalty shall be imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge, and employees responsible for the violation.
[9] Rollo, p. 65.
[10]
[11] G.R. No. 128315, June 29, 1999, 309 SCRA 402.
[12] Revenue Regulation No. 12-85.
[13]NIRC (1997)
“Sec. 205. Remedies for the Collection
of Delinquent Taxes. -- The civil remedies for the collection of internal
revenue, fees, or charges, and increment thereto resulting from delinquency shall be:
(a) By distraint of goods, chattels, or effects, and other
personal property of whatever character, including stocks and other securities,
debts, credits, bank accounts, and interest in and rights to personal property,
and by levy upon real property and interest in or rights to real property; and
(b) By civil or criminal action.
Either of these remedies or both simultaneously may be pursued in
the discretion of the authorities charged with the collection of such taxes: Provided,
however, That the remedies of distraint and levy shall not be availed of
where the amount of tax involved is not more than One hundred pesos (P100).
The judgment in the criminal case shall not only impose the
penalty but shall also order payment of the taxes subject of the criminal case
as finally decided by the Commissioner.
The Bureau of Internal Revenue shall advance the amounts needed to defray costs of collection by means of civil or criminal action, including the preservation or transportation of personal property distrained and the advertisement and sale thereof, as well as of real property and improvements thereon.”
[14]
“SEC. 203. Period of Limitation Upon Assessment and Collection. -- Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day.”
[15]
“Sec. 222. Exceptions as to Period of
Limitation of Assessment and Collection of Taxes. –
(a) In the case of a false or fraudulent
return with intent to evade tax or of failure to file a return, the tax may be
assessed, or a proceeding in court for the collection of such tax may be filed
without assessment, at any time within ten (10) years after the discovery of
the falsity, fraud or omission: Provided,
That in a fraud assessment which has become final and executory, the fact of
fraud shall be judicially taken cognizance of in the civil or criminal action
for the collection thereof.
(b) If before the expiration of the time
prescribed in the Section 203 for the assessment of the tax, both the Commissioner
and the taxpayer have agreed in writing to its assessment after such time, the
tax may be assessed within the period agreed upon. The period so agreed upon
may be extended by subsequent written agreement made before the expiration of
the period previously agreed upon.
(c) Any internal revenue tax which has
been assessed within the period of limitation as prescribed in paragraph (a)
hereof may be collected by distraint or levy or by a proceeding in court within
five (5) years following the assessment of the tax.
(d) Any internal revenue tax, which has
been assessed within the period agreed upon as provided in paragraph (b)
hereinabove, may be collected by distraint or levy or by a proceeding in court
within the period agreed upon writing before the expiration of the five
(5)-year period. The period so agreed
upon may be extended by subsequent written agreements made before the
expiration of the period previously agreed upon.
(e) Provided, however, That nothing in the immediately preceding Section and paragraph (a) hereof shall be construed to authorize the examination and investigation or inquiry into any tax return filed in accordance with the provisions of any tax amnesty law or decree.”
[16]
“Section 228. Protesting of Assessment. -- When the
Commissioner or his duly authorized representative finds that proper taxes
should be assessed, he shall first notify the taxpayer of his findings: Provided,
however, That a reassessment notice shall not be required in the following
cases:
(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
(b) When a discrepancy has been determined
between the tax withheld and the amount actually remitted by the withholding
agent; or
(c) When a taxpayer who opted to claim a
refund or tax credit of excess creditable 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
(d) When the excise tax due on excisable
articles has not been paid; or
(e) When an article locally purchased or
imported by an exempt person, such as, but not limited to, vehicles, capital
equipment, machineries and spare parts, has been sold, traded or transferred to
non-exempt persons.
The taxpayer shall be informed
in writing of the law and the facts on which the assessment is made; otherwise,
the assessment shall be void.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings.”
[17] Basilan Estates v. Commissioner of Internal Revenue, No. L-22492,
[18] Citing Philippine Law Dictionary, 2nd ed., p. 49.
[19]Citing Black’s Law Dictionary, 5th ed., p. 107.
[20] Nos. L-41919-24,
[21] “SEC 255. Failure to File Return, Supply Correct and Accurate
Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld
on Compensation. -- Any person required under this Code or by rules and
regulations promulgated thereunder to pay any tax, make a return, keep any
record, or supply correct and accurate any information, who willfully fails to
pay such tax, make such return, keep such record, or supply correct and
accurate information, or withhold or remit taxes withheld, or refund excess
taxes withheld on compensation, at the time or times required by law or rules
and regulations shall, in addition to other penalties provided by law, upon
conviction thereof, be punished by a fine of not less than one (1) year but not
more than ten (10) years.
Any person who attempts to make it appear for any reason
that he or another has in fact filed a return or statement, or actually files a
return or statement and subsequently withdraws the same return or statement
after securing the official receiving seal or stamp of receipt of an internal
revenue office wherein the same was actually filed shall, upon conviction
therefor, be punished by a fine of not less than Ten thousand pesos (P10,000)
but not more than Twenty thousand pesos (P20,000) and suffer
imprisonment of not less than one (1) year but not more than three (3) years.”
[22] Annex “F,” rollo (G.R. No. 120935), pp. 252-258.
[23] Tax Law and Jurisprudence, 2nd Edition, Vitug, J. and Acosta, E., (2000), p. 282.
[24] Supra, 3-8.
[25] Nos. L-41919-24,
[26] An Act Expanding The Jurisdiction Of The Court Of Tax Appeals (CTA), Elevating Its Rank To The Level Of A Collegiate Court With Special Jurisdiction And Enlarging Its Membership, Amending For The Purpose Certain Sections Of Republic Act No. 1125, As Amended, Otherwise Known As The Law Creating The Court Of Tax Appeals, And For Other Purposes.