CIR vs. Pascor Realty 1999

8/13/2019 CIR vs. Pascor Realty 1999

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THIRD DIVISION

[G.R. No. 128315. June 29, 1999]

COMMISSIONER OF INTERNAL REVENUE,petitioner, vs. ASCORREALT! AN" "EVELOMENT CORORATION, ROGELIO A. "IO#n$ VIRGINIA S. "IO, respondents.

" E C I S I O N

ANGANI%AN,J.:

An assessment contains not only a computation of tax liabilities, but also a demandfor payment witin a prescribed period! It also si"nals te time wen penalties andinterests be"in to accrue a"ainst te taxpayer! To enable te taxpayer to determine isremedies tereon, due process re#uires tat it must be ser$ed on and recei$ed by tetaxpayer! Accordin"ly, an affida$it, wic was executed by re$enue officers statin" tetax liabilities of a taxpayer and attaced to a criminal complaint for tax e$asion, cannotbe deemed an assessment tat can be #uestioned before te %ourt of Tax Appeals!

S&e'en& o( &)e C#*e

&efore tis %ourt is a 'etition for Re$iew on Certiorariunder Rule () of te Rules of%ourt prayin" for te nullification of te October *+, --. Decision /0of te %ourt ofAppeals/10 in %A23R S' No! (+4)*, wic effecti$ely affirmed te 5anuary 1), --.Resolution/*0of te %ourt of Tax Appeals/(0in %TA %ase No! )16! Te %TA disposed asfollows7

89H:R:;OR:, findin" /te erein petitionerotion to Dismiss< as?N>:RITORIO?S, te same is ereby D:NI:D! /Te %IR0 is ereby "i$en a period oftirty @*+ days from receipt ereof to file er answer!B

'etitioner also seeCs to nullify te ;ebruary *, --6 Resolution/)0of te %ourt ofAppeals denyin" reconsideration!

T)e F#+&*

As found by te %ourt of Appeals, te undisputed facts of te case are as follows7
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8It appears tat by $irtue of etter of Autority No! ++-4, ten &IR %ommissioner5ose ?! On" autoriEed Re$enue Officers Tomas T! Fue, Sonia T! :storco and:mmanuel >! Sa$ellano to examine te booCs of accounts and oter accountin"records of 'ascor Realty and De$elopment %orporation! @'RD% for te years endin"-4., -46 and -44! Te said examination resulted in a recommendation for te

issuance of an assessment in te amounts of '6,(-4,(*(!.) and '*,+),1*.!*) for teyears -4. and -46, respecti$ely!

%IR Co''**one- On **ue$ # Le&&e- o( Au&)o-&/ &o &)e Re0enue o((+e-* &oe#'ne &)e oo* o( #++oun&* #n$ o&)e- #++oun&n -e+o-$* o( Re*4on$en*+o- Re#&/ "e0eo4'en& Co-4 6R"C7 (o- &)e /e#-* 198, 198 #n$ 1988.

A**e**'en&* n &)e #'oun&* o( M: #n$ 3M: (o- /e#-* 198 #n$ 198,-e*4e+&0e/ ;e-e **ue$. T)e CIR (e$ # +-'n# +o'4#n& ##n*& &)e -e*$enn$ T-e#*u-e- 6-0#&e -e*4on$en&*7 o( R"C (o- e0#*on n &)e #'oun& o(1arc , --), te %ommissioner of Internal Re$enue filed a criminal complaintbefore te Department of 5ustice a"ainst te 'RD%, its 'resident Ro"elio A! Dio, andits Treasurer Vir"inia S! Dio, alle"in" e$asion of taxes in te total amount of'+,)*,.6!++! 'ri$ate respondents 'RD%, et! al! filed an ?r"ent Re#uest forReconsiderationGRein$esti"ation disputin" te tax assessment and tax liability!

8On >arc 1*, --), pri$ate respondents recei$ed a subpoena from te DO5 inconnection wit te criminal complaint filed by te %ommissioner of Internal Re$enue

@&IR a"ainst tem!

8In a letter dated >ay 6, --), te %IR denied te ur"ent re#uest forreconsiderationGrein$esti"ation of te pri$ate respondents on te "round tat no formalassessment as as yet been issued by te %ommissioner!

8'ri$ate respondents ten ele$ated te Decision of te %IR dated >ay 6, --) to te%ourt of Tax Appeals on a petition for re$iew docCeted as %TA %ase No! )16 on 5uly1, --)! On September ., --), te %IR filed a >otion to Dismiss te petition on te"round tat te %TA as no urisdiction o$er te subect matter of te petition, as tere

was no formal assessment issued a"ainst te petitioners! Te %TA denied te said

motion to dismiss in a Resolution dated 5anuary 1), --. and ordered te %IR to file ananswer witin tirty @*+ days from receipt of said resolution! Te %IR recei$ed teresolution on 5anuary *, --. but did not file an answer nor did se mo$e toreconsider te resolution!

-0#&e -e*4on$en&* (e$ # 4e&&on (o- -e0e; ;&) &)e CTA. CIR (e$ # MT" on&)e -oun$ &)#& &)e CTA )#* no >u-*$+&on o0e- &)e *u>e+& '#&&e- o( &)e


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4e&&on, on &)e *#'e -oun$, &)#& no (o-'# #**e**'en& )#* een **ue$ &o &)e4-0#&e -e*4on$en&*. CTA $ene$ &)e MT".

8Instead, te %IR filed tis petition on 5une 6, --., alle"in" as "rounds tat7

=Respondent %ourt of Tax Appeals acted wit "ra$e abuse of discretion and witouturisdiction in considerin" te affida$itGreport of te re$enue officer and te indorsementof said report to te secretary of ustice as assessment wic may be appealed to te%ourt of Tax Appeals

Respondent %ourt of Tax Appeals acted wit "ra$e abuse of discretion in considerin"te denial by petitioner of pri$ate respondents< >otion for Reconsideration as /a0 finaldecision wic may be appealed to te %ourt of Tax Appeals!ay 6, --) is te decision properlyappealable to /u0s! Respondent


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=;rom te abo$e, it can be "leaned tat an assessment simply states ow muc tax isdue from a taxpayer! Tus, based on tese definitions, te details of te tax as "i$en inte 5oint Affida$it of respondent


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@1 9eter or not an assessment is necessary before criminal car"es for tax e$asionmay be instituted!

@* 9eter or not te %TA can taCe co"niEance of te case in te absence of anassessment!B/-0

In te main, te %ourt will resol$e weter te re$enue officers< Affida$it2Report,wic was attaced to te criminal %omplaint filed wit te Department of 5ustice,constituted an assessment tat could be #uestioned before te %ourt of Tax Appeals!

T)e Cou-&B* Run

Te petition is meritorious!

M#n I**ue@Assessment

?EL"@ No.

An #**e**'en& 'u*& e *en& &o #n$ -e+e0e$ / # #/e-, #n$ 'u*& $e'#n$4#/'en& o( &)e e* $e*+-e$ &)e-en ;&)n # *4e+(+ 4e-o$. T)u*, &)e NIRC'4o*e* # 25 4e-+en& 4en#&/, n #$$&on &o &)e $ue, n +#*e &)e #/e- (#*&o 4#/ &)e $e(+en+/ ;&)n &)e &'e 4-e*+-e$ (o- &* 4#/'en& n &)e no&+eo( #**e**'en&. Le;*e, #n n&e-e*& o( 2< 4e-+en& 4e- #nnu', o- *u+) ))e-

-#&e #* '#/ e 4-e*+-e$ / -ue* #n$ -eu#&on*, * &o e +oe+&e$ (-o' &)e$#&e 4-e*+-e$ (o- &* 4#/'en& un& &)e (u 4#/'en&.

T)e **u#n+e o( #n #**e**'en& * 0 n $e&e-'nn &)e 4e-o$ o( '&on-e#-$n &* 4-o4e- **u#n+e #n$ &)e 4e-o$ ;&)n ;)+) &o 4-o&e*& &. Se+&on2


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In &)e 4-e*en& +#*e, &)e -e0enue o((+e-*B A(($#0& 'e-e/ +onne$ #+o'4u&on o( -e*4on$en&*B #&/. I& $$ no& *&e # $e'#n$ o- # 4e-o$ (o-4#/'en&. o-*e, & ;#* #$$-e**e$ &o &)e >u*&+e *e+-e-/, no& &o &)e #/e-*.

N.%. T?E ISSUANCE OF AN ASSESSMENT MUST %E "ISTINGUIS?E" FROMT?E FILING OF A COMLAINT. %e(o-e #n #**e**'en& * **ue$, &)e-e *, /

4-#+&+e, # 4-e#**e**'en& no&+e *en& &o &)e #/e-. T)e #/e- * &)en0en # +)#n+e &o *u'& 4o*&on 4#4e-* #n$ $o+u'en&* &o 4-o0e &)#& &)e#**e**'en& * un;#--#n&e$. I( &)e +o''**one- * un*#&*(e$, #n #**e**'en&*ne$ / )' o- )e- * &)en *en& &o &)e #/e- n(o-'n &)e #&&e- *4e+(+#/#n$ +e#-/ &)#& #n #**e**'en& )#* een '#$e ##n*& )' o- )e-. In +on&-#*&,&)e +-'n# +)#-e nee$ no& o &)-ou) # &)e*e. T)e +-'n# +)#-e * (e$$-e+&/ ;&) &)e "OJ. T)e-e#(&e-, &)e #/e- * no&(e$ &)#& # +-'n# +#*e )#$een (e$ ##n*& )', no& &)#& &)e +o''**one- )#* **ue$ #n #**e**'en&. I&'u*& e *&-e**e$ &)#& # +-'n# +o'4#n& * n*&&u&e$ no& &o $e'#n$ 4#/'en&,u& &o 4en#De &)e #/e- (o- 0o#&on o( &)e T# Co$e.

'etitioner ar"ues tat te filin" of te criminal complaint wit te Department of5ustice cannot in any way be construed as a formal assessment of pri$ate respondentsarc , --), te %ommissioner of Internal Re$enue @%IR filed a criminalcomplaint before te Department of 5ustice a"ainst respondents alle"in" e$asion oftaxes! 'ri$ate respondents ten filed a re#uest for reconsideration and rein$esti"ation!Te %IR denied said re#uest on te "round tat no formal assessment as been

issued! Te matter was ele$ated to te %ourt of Tax Appeals @%TA! Te %IR mo$edto dismiss! Te %TA denied said motion to dismiss and eld tat te criminal complaintfor tax e$asion was already an assessment! Te %ourt of Appeals affirmed te %T AKsdenial! Hence, tis petition!

Te re$enue officersK affida$it attaced to te criminal complaint merely containeda computation of respondentsK tax liability! It did not state a demand or a period ofpayment! It was addressed to te ustice secretary, not to te taxpayers!

As to te respondentsK contention tat te filin" of a criminal complaint must bepreceded by an assessment, te %ourt ruled tat tis was incorrect! Section 111 of teNR% especially states tat in cases of failure to file a return suc as tis case,

proceedin"s in court may be commenced witout an assessment! A criminal complaintis instituted not to demand payment, but to penaliEe te taxpayer for $iolation of te Tax%ode!

S!LLA%US

1. TAATION TA ASSESSMENT CONSTRUE".L An assessment must be sent to and recei$ed bya taxpayer, and must demand payment of te taxes described terein witin a specific period! Teissuance of an assessment is $ital in determinin" te period of limitation re"ardin" its properissuance and te period witin wic to protest it! Necessarily, te taxpayer must be certain tat aspecific document constitutes an assessment! Oterwise, confusion would arise re"ardin" teperiod witin wic to maCe an assessment or to protest te same, or weter interest and penaltymay accrue tereon! It sould also be stressed tat te said document is a notice duly sent to tetaxpayer! Indeed, an assessment is deemed made only wen te collector of internal re$enue

releases, mails or sends suc notice to te taxpayer!

2. I". I". REVENUE OFFICERS AFFI"AVIT IT?OUT "EMAN" OR ERIO" OF A!MENT, NOTAN ASSESSMENT. 2 In te present case, te re$enue officersK Affida$it merely contained acomputation of respondentsK tax liability! It did not state a demand or a period for payment! 9orse,it was addressed to te 5ustice Secretary, not to te taxpayers! Tat te &IR examinersK 5ointAffida$it attaced to te %riminal %omplaint contained some details of te tax liabilities of pri$aterespondents does not ipso factomaCe it an assessment! Te purpose of te 5oint Affida$it wasmerely to support and substantiate te %riminal %omplaint for tax e$asion! %learly, it was not meantto be a notice of te tax due and a demand to te pri$ate respondents for payment tereof!


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3. I". I". FALSE OR FRAU"ULENT RETURNS ROCEE"INGS IN COURT MA!%E COMMENCE"I IT?OUT ASSESSMENT. 2 Section 111 of te NIR% specifically states tat in cases were a falseor fraudulent return is submitted or in cases of failure to file a return suc as tis case, proceedin"sin court may be commenced without anassessment! ;urtermore, Section 1+) of te same %odeclearly mandates tat te ci$il and criminal aspects of te case may be pursued simultaneously!

H. I". I". I". I". ROTEST ILL NOT STO OR SUSEN" CRIMINAL ACTION. 2 In Ungab v.

Cusi, petitioner terein sou"t te dismissal of te criminal %omplaints for bein" premature, since isprotest to te %TA ad not yet been resol$ed! Te %ourt eld tat suc protests could not stop orsuspend te criminal action wic was independent of te resolution of te protest in te %TA! Tis

was because te commissioner of internal re$enue ad, in suc tax e$asion cases, discretion onweter to issue an assessment or to file a criminal case a"ainst te taxpayer or to do bot!

5. I". I". ASSESSMENT "ISTINGUIS?E" FROM FILING OF COMLAINT. 2 Te issuance of anassessment must be distin"uised from te filin" of a complaint! &efore an assessment is issued,tere is, by practice, a pre2assessment notice sent to te taxpayer! Te taxpayer is ten "i$en acance to submit position papers and documents to pro$e tat te assessment is unwarranted! Ifte commissioner is unsatisfied, an assessment si"ned by im or er is ten sent to te taxpayerinformin" te latter specifically and clearly tat an assessment as been made a"ainst im or er! Incontrast, te criminal car"e need not "o trou" all tese! Te criminal car"e is filed directly witte DO5! Tereafter, te taxpayer is notified tat a criminal case ad been filed a"ainst im, not tatte commissioner as issued an assessment! It must be stressed tat a criminal complaint isinstituted not to demand payment, but to penaliEe te taxpayer for $iolation of te Tax %ode!

AEARANCES OF COUNSEL

The o*icitor Genera* for petitioner.De Gu$man Ce*is +aw ffice for private respon-ents.

Documents

CIR vs. Pascor Realty 1999