Tax Remedies Cases

G.R. No.
L-41919-24 May 30, 1980
QUIRICO P. UNGAB, petitioner,

vs.
HON. VICENTE N. CUSI, JR., in his capacity as Judge of the Court of First Instance, Branch 1, 16TH
Judicial District, Davao City, THE COMMISSIONER OF INTERNAL REVENUE, and JESUS N. ACEBES, in
his capacity as State Prosecutor, respondents.
CONCEPCION JR., J:
Petition for certiorari and prohibition with preliminary injunction and restraining order to annul and set
aside the informations filed in Criminal Case Nos. 1960, 1961, 1962, 1963, 1964, and 1965 of the Court of
First Instance of Davao, all entitled: "People of the Philippines, plaintiff, versus Quirico Ungab, accused;"
and to restrain the respondent Judge from further proceeding with the hearing and trial of the said cases.
It is not disputed that sometime in July, 1974, BIR Examiner Ben Garcia examined the income tax returns
filed by the herein petitioner, Quirico P. Ungab, for the calendar year ending December 31, 1973. In the
course of his examination, he discovered that the petitioner failed to report his income derived from sales
of banana saplings. As a result, the BIR District Revenue Officer at Davao City sent a "Notice of Taxpayer"
to the petitioner informing him that there is due from him (petitioner) the amount of P104,980.81,
representing income, business tax and forest charges for the year 1973 and inviting petitioner to an
informal conference where the petitioner, duly assisted by counsel, may present his objections to the
findings of the BIR Examiner. 1 Upon receipt of the notice, the petitioner wrote the BIR District Revenue
Officer protesting the assessment, claiming that he was only a dealer or agent on commission basis in the
banana sapling business and that his income, as reported in his income tax returns for the said year, was
accurately stated. BIR Examiner Ben Garcia, however, was fully convinced that the petitioner had filed a
fraudulent income tax return so that he submitted a "Fraud Referral Report," to the Tax Fraud Unit of the
Bureau of Internal Revenue. After examining the records of the case, the Special Investigation Division of
the Bureau of Internal Revenue found sufficient proof that the herein petitioner is guilty of tax evasion for
the taxable year 1973 and recommended his prosecution: t.hqw
(1) For having filed a false or fraudulent income tax return for 1973 with intent to evade
his just taxes due the government under Section 45 in relation to Section 72 of the National
Internal Revenue Code;
(2) For failure to pay a fixed annual tax of P50.00 a year in 1973 and 1974, or a total of
unpaid fixed taxes of P100.00 plus penalties of 175.00 or a total of P175.00, in accordance
with Section 183 of the National Internal Revenue Code;
(3) For failure to pay the 7% percentage tax, as a producer of banana poles or saplings, on
the total sales of P129,580.35 to the Davao Fruit Corporation, depriving thereby the
government of its due revenue in the amount of P15,872.59, inclusive of surcharge. 2
In a second indorsement to the Chief of the Prosecution Division, dated December 12, 1974, the
Commissioner of Internal Revenue approved the prosecution of the petitioner. 3
Thereafter, State Prosecutor Jesus Acebes who had been designated to assist all Provincial and City
Fiscals throughout the Philippines in the investigation and prosecution, if the evidence warrants, of all
violations of the National Internal Revenue Code, as amended, and other related laws, in Administrative
Order No. 116 dated December 5, 1974, and to whom the case was assigned, conducted a preliminary
investigation of the case, and finding probable cause, filed six (6) informations against the petitioner with
the Court of First Instance of Davao City, to wit: t.hqw
(1) Criminal Case No. 1960 Violation of Sec. 45, in relation to Sec. 72 of the National
Internal-Revenue Code, for filing a fraudulent income tax return for the calendar year
ending December 31, 1973; 4
(2) Criminal Case No. 1961 Violation of Sec. 182 (a), in relation to Secs. 178, 186, and
208 of the National Internal Revenue Code, for engaging in business as producer of
saplings, from January, 1973 to December, 1973, without first paying the annual fixed or
privilege tax thereof; 5
(3) Criminal Case No. 1962 Violation of Sec. 183 (a), in relation to Secs. 186 and 209 of
the National Internal Revenue Code, for failure to render a true and complete return on the
gross quarterly sales, receipts and earnings in his business as producer of banana saplings
and to pay the percentage tax due thereon, for the quarter ending December 31, 1973; 6
gross quarterly sales receipts and earnings in his business as producer of saplings, and to
pay the percentage tax due thereon, for the quarter ending on March 31, 1973; 7
gross quarterly sales, receipts and earnings in his business as producer of banana saplings
for the quarter ending on June 30, 1973, and to pay the percentage tax due thereon; 8
gross quarterly sales, receipts and earnings as producer of banana saplings, for the quarter
ending on September 30, 1973, and to pay the percentage tax due thereon. 9
On September 16, 1975, the petitioner filed a motion to quash the informations upon the grounds that:
(1) the informations are null and void for want of authority on the part of the State Prosecutor to initiate
and prosecute the said cases; and (2) the trial court has no jurisdiction to take cognizance of the above-
entitled cases in view of his pending protest against the assessment made by the BIR
Examiner. 10 However, the trial court denied the motion on October 22, 1975. 11 Whereupon, the
petitioner filed the instant recourse. As prayed for, a temporary restraining order was issued by the
Court, ordering the respondent Judge from further proceeding with the trial and hearing of Criminal Case
Nos. 1960, 1961, 1962, 1963, 1964, and 1965 of the Court of First Instance of Davao, all entitled: "People
of the Philippines, plaintiff, versus Quirico Ungab, accused."
The petitioner seeks the annulment of the informations filed against him on the ground that the
respondent State Prosecutor is allegedly without authority to do so. The petitioner argues that while the
respondent State Prosecutor may initiate the investigation of and prosecute crimes and violations of
penal laws when duly authorized, certain requisites, enumerated by this Court in its decision in the case
of Estrella vs. Orendain, 12 should be observed before such authority may be exercised; otherwise, the
provisions of the Charter of Davao City on the functions and powers of the City Fiscal will be meaningless
because according to said charter he has charge of the prosecution of all crimes committed within his
jurisdiction; and since "appropriate circumstances are not extant to warrant the intervention of the State
Prosecution to initiate the investigation, sign the informations and prosecute these cases, said
informations are null and void." The ruling adverted to by the petitioner reads, as follows: t.hqw
In view of all the foregoing considerations, it is the ruling of this Court that under Sections
1679 and 1686 of the Revised Administrative Code, in any instance where a provincial or
city fiscal fails, refuses or is unable, for any reason, to investigate or prosecute a case and, in
the opinion of the Secretary of Justice it is advisable in the public interest to take a different
course of action, the Secretary of Justice may either appoint as acting provincial or city
fiscal to handle the investigation or prosecution exclusively and only of such case, any
practicing attorney or some competent officer of the Department of Justice or office of any
city or provincial fiscal, with complete authority to act therein in all respects as if he were
the provincial or city fiscal himself, or appoint any lawyer in the government service,
temporarily to assist such city of provincial fiscal in the discharge of his duties, with the
same complete authority to act independently of and for such city or provincial fiscal
provided that no such appointment may be made without first hearing the fiscal concerned
and never after the corresponding information has already been filed with the court by the
corresponding city or provincial fiscal without the conformity of the latter, except when it
can be patently shown to the court having cognizance of the case that said fiscal is intent on
prejudicing the interests of justice. The same sphere of authority is true with the
prosecutor directed and authorized under Section 3 of Republic Act 3783, as amended
and/or inserted by Republic Act 5184. The observation in Salcedo vs. Liwag, supra,
regarding the nature of the power of the Secretary of Justice over fiscals as being purely
over administrative matters only was not really necessary, as indicated in the above
relation of the facts and discussion of the legal issues of said case, for the resolution thereof.
In any event, to any extent that the opinion therein may be inconsistent herewith the same
is hereby modified.
The contention is without merit. Contrary to the petitioner's claim, the rule therein established had not
been violated. The respondent State Prosecutor, although believing that he can proceed independently of
the City Fiscal in the investigation and prosecution of these cases, first sought permission from the City
Fiscal of Davao City before he started the preliminary investigation of these cases, and the City Fiscal,
after being shown Administrative Order No. 116, dated December 5, 1974, designating the said State
Prosecutor to assist all Provincial and City fiscals throughout the Philippines in the investigation and
prosecution of all violations of the National Internal Revenue Code, as amended, and other related laws,
graciously allowed the respondent State Prosecutor to conduct the investigation of said cases, and in fact,
said investigation was conducted in the office of the City Fiscal. 13
The petitioner also claims that the filing of the informations was precipitate and premature since the
Commissioner of Internal Revenue has not yet resolved his protests against the assessment of the
Revenue District Officer; and that he was denied recourse to the Court of Tax Appeals.
The contention is without merit. What is involved here is not the collection of taxes where the assessment
of the Commissioner of Internal Revenue may be reviewed by the Court of Tax Appeals, but a criminal
prosecution for violations of the National Internal Revenue Code which is within the cognizance of courts
of first instance. While there can be no civil action to enforce collection before the assessment procedures
provided in the Code have been followed, there is no requirement for the precise computation and
assessment of the tax before there can be a criminal prosecution under the Code. t.hqw
The contention is made, and is here rejected, that an assessment of the deficiency tax due is
necessary before the taxpayer can be prosecuted criminally for the charges preferred. The
crime is complete when the violator has, as in this case, knowingly and willfully filed
fraudulent returns with intent to evade and defeat a part or all of the tax. 14
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 willfuly 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. 15
Besides, it has been ruled that a petition for reconsideration of an assessment may affect the suspension
of the prescriptive period for the collection of taxes, but not the prescriptive period of a criminal action
for violation of law. 16Obviously, the protest of the petitioner against the assessment of the District
Revenue Officer cannot stop his prosecution for violation of the National Internal Revenue Code.
Accordingly, the respondent Judge did not abuse his discretion in denying the motion to quash filed by
the petitioner.
WHEREFORE, the petition should be, as it is hereby dismissed. The temporary restraining order
heretofore issued is hereby set aside. With costs against the petitioner. SO ORDERED.
G.R. No. L-41919-24 May 30, 1980
QUIRICO P. UNGAB, petitioner,
vs.
HON. VICENTE N. CUSI, JR., in his capacity as Judge of the Court of First Instance, Branch 1, 16TH
Judicial District, Davao City, THE COMMISSIONER OF INTERNAL REVENUE, and JESUS N. ACEBES, in
his capacity as State Prosecutor, respondents.
Taxation Tax Evasion Protest Criminal Case Against Taxpayer May Be Filed Sans A Final Assessment
In July 1974, Quirico Ungab filed his income tax return. He was subjected to a tax audit and the tax
examiner was convinced that Ungab filed a fraudulent return. He was issued an assessment demanding
payment of P104k in taxes. At the same time, the tax examiner recommended the filing of criminal cases
of tax evasion against Ungab. Meanwhile, Ungab filed a protest with the Commissioner
of Internal Revenue (CIR).
Acting on the recommendation of the tax examiner, a state prosecutor filed 6 informations against Ungab
for various violations of the National Internal Revenue Code. The informations were filed with Court of
First Instance of Davao presided by Judge Vicente Cusi, Jr. Ungab filed a motion to quash the informations
on the ground that his pending protest with the CIR has not yet been acted upon hence the assessment is
not yet final and executory and therefore the trial court has no jurisdiction yet over the criminal cases.
ISSUE: Whether or not Ungab is correct.
HELD: No. What is involved here is not the collection of taxes where the assessment of the Commissioner
of Internal Revenue may be reviewed by the Court of Tax Appeals, but a criminal prosecution for
violations of the National Internal Revenue Code (NIRC) which is within the cognizance of courts of first
instance (regional trial courts). While there can be no civil action to enforce collection before the
assessment procedures provided in the NIRC have been followed, there is no requirement for the precise
computation and assessment of the tax before there can be a criminal prosecution under the Code. In fact,
there is not even a requirement that an assessment first be issued before a criminal case for violation of
the NIRC be filed.
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PASCOR REALTY AND DEVELOPMENT
CORPORATION, ROGELIO A. DIO and VIRGINIA S. DIO, respondents.
DECISION
PANGANIBAN, J.:
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.
Statement of the Case
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court praying for
the nullification of the October 30, 1996 Decision[1] of the Court of Appeals[2] in CA-GR SP No. 40853,
which effectively affirmed the January 25, 1996 Resolution[3] of the Court of Tax Appeals[4] in CTA Case
No. 5271. The CTA disposed as follows:
WHEREFORE, finding [the herein petitioners] Motion to Dismiss as UNMERITORIOUS, the same is hereby
DENIED. [The CIR] is hereby given a period of thirty (30) days from receipt hereof to file her answer.
Petitioner also seeks to nullify the February 13, 1997 Resolution[5] of the Court of Appeals denying
reconsideration.
The Facts
As found by the Court of Appeals, the undisputed facts of the case are as follows:
It appears that by virtue of Letter of Authority No. 001198, then BIR Commissioner Jose U. Ong
authorized Revenue Officers Thomas T. Que, Sonia T. Estorco and Emmanuel M. Savellano to examine the
books of accounts and other accounting records of Pascor Realty and Development Corporation. (PRDC)
for the years ending 1986, 1987 and 1988. The said examination 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 of Internal Revenue filed a criminal complaint before the
Department of Justice against the 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 PRDC, et. al. filed an
Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability.
On March 23, 1995, private respondents received a subpoena from the DOJ in connection with the
criminal complaint filed by the Commissioner of Internal Revenue (BIR) against them.
In a letter dated May 17, 1995, the CIR denied the urgent request for reconsideration/reinvestigation of
the private respondents on the ground that no formal assessment has as yet been issued by the
Commissioner.
Private respondents then elevated the Decision of the CIR dated May 17, 1995 to the Court of Tax Appeals
on a petition for review docketed as CTA Case No. 5271 on July 21, 1995. On September 6, 1995, the CIR
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 no formal assessment issued against the petitioners. The CTA denied
the said motion to dismiss in a Resolution dated January 25, 1996 and ordered the CIR to file an answer
within thirty (30) days from receipt of said resolution. The CIR received the resolution on January 31,
1996 but did not file an answer nor did she move to reconsider the resolution.
Instead, the CIR filed this petition on June 7, 1996, alleging as grounds that:
Respondent Court of Tax Appeals acted with grave abuse of discretion and without jurisdiction in
considering the affidavit/report of the revenue officer and the indorsement of said report to the secretary
of justice as assessment which may be appealed to the Court of Tax Appeals;
Respondent Court of Tax Appeals acted with grave abuse of discretion in considering the denial by
petitioner of private respondents Motion for Reconsideration as [a] final decision which may be appealed
to the Court of Tax Appeals.
In denying the motion to dismiss filed by the CIR, the Court of Tax Appeals stated:
We agree with petitioners contentions, that the criminal complaint for tax evasion is the assessment
issued, and that the letter denial of May 17, 1995 is the decision properly appealable to [u]s. Respondents
ground of denial, therefore, that there was no formal assessment issued, is untenable.
It is the Courts honest belief, that the criminal case for tax evasion is already an assessment. The
complaint, more particularly, the Joint Affidavit of Revenue Examiners Lagmay and Savellano attached
thereto, contains the details of the assessment like the kind and amount of tax due, and the period
covered.
Petitioners are right, in claiming that the provisions of Republic Act No. 1125, relating to exclusive
appellate jurisdiction of this Court, do not, make any mention of formal assessment. The law merely
states, that this Court has exclusive appellate jurisdiction over decisions of the Commissioner of Internal
Revenue on disputed assessments, and other matters arising under the National Internal Revenue Code,
other law or part administered by the Bureau of Internal Revenue Code.
As far as this Court is concerned, the amount and kind of tax due, and the period covered, are sufficient
details needed for an assessment. These details are more than complete, compared to the following
definitions of the term as quoted hereunder. Thus:
Assessment is laying a tax. Johnson City v. Clinchfield R. Co., 43 S.W. (2d) 386, 387, 163 Tenn. 332. (Words
and Phrases, Permanent Edition, Vol. 4, p. 446)
The word assessment when used in connection with taxation, may have more than one meaning. The
ultimate purpose of an assessment to such a connection is to ascertain the amount that each taxpayer is
to pay. More commonly, the word assessment means the official valuation of a taxpayers property for
purpose of taxation.State v. New York, N.H. and H.R. Co. 22 A. 765, 768, 60 Conn. 326, 325. (Ibid. p. 445)
From the above, it can be gleaned that an assessment simply states how much tax is due from a
taxpayer. Thus, based on these definitions, the details of the tax as given in the Joint Affidavit of
respondents examiners, which was attached to the tax evasion complaint, more than suffice to qualify as
an assessment. Therefore, this assessment having been disputed by petitioners, and there being a denial
of their letter disputing such assessment, this Court unquestionably acquired jurisdiction over the instant
petition for review.[6]
As earlier observed, the Court of Appeals sustained the CTA and dismissed the petition.
Hence, this recourse to this Court.[7]
Ruling of the Court of Appeals
The Court of Appeals held that the tax court committed no grave abuse of discretion in ruling that the
Criminal Complaint for tax evasion filed by the Commissioner of Internal Revenue with the Department
of Justice constituted an assessment of the tax due, and that the said assessment could be the subject of a
protest. By definition, an assessment is simply the statement of the details and the amount of tax due
from a taxpayer. Based on this definition, the details of the tax contained in the BIR examiners Joint
Affidavit,[8] which was attached to the criminal Complaint, constituted an assessment. Since the assailed
Order of the CTA was merely interlocutory and devoid of grave abuse of discretion, a petition
for certiorari did not lie.
Issues
Petitioners submit for the consideration of this Court the following issues:
(1) Whether or not the criminal complaint for tax evasion can be construed as an assessment.
(2) Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted.
(3) Whether or not the CTA can take cognizance of the case in the absence of an assessment.[9]
In the main, the Court will resolve whether the revenue officers Affidavit-Report, which was attached
to the criminal Complaint filed with the Department of Justice, constituted an assessment that could be
questioned before the Court of Tax Appeals.
The Courts Ruling
The petition is meritorious.
Main Issue: Assessment
Petitioner argues that the filing of the criminal complaint with the Department of Justice cannot in
any way be construed as a formal assessment of private respondents tax liabilities. This position is based
on Section 205 of the National Internal Revenue Code[10] (NIRC), which provides that remedies for the
collection of deficient taxes may be by either civil or criminal action. Likewise, petitioner cites Section
223(a) of the same Code, which states that in case of failure to file a return, the tax may be assessed or a
proceeding in court may be begun without assessment.
Respondents, on the other hand, maintain that an assessment is not an action or proceeding for the
collection of taxes, but merely a notice that the amount stated therein is due as tax and that the taxpayer
is required to pay the same. Thus, qualifying as an assessment was the BIR examiners Joint Affidavit,
which contained the details of the supposed taxes due from respondent for taxable years ending 1987
and 1988, and which was attached to the tax evasion Complaint filed with the DOJ.Consequently, the
denial by the BIR of private respondents request for reinvestigation of the disputed assessment is
properly appealable to the CTA.
We agree with petitioner. Neither the NIRC nor the revenue regulations governing the protest of
assessments[11] 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.[12]
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[13]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,[14] 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[15] 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.[16]
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.[17]
Fixes the liability of the taxpayer and ascertains the facts and furnishes the data for the proper
presentation of tax rolls.[18]
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.
In addition, what private respondents sent to the commissioner was a motion for a reconsideration
of the tax evasion charges filed, not of an assessment, as shown thus:
This is to request for reconsideration of the tax evasion charges against my client, PASCOR Realty and
Development Corporation and for the same to be referred to the Appellate Division in order to give my
client the opportunity of a fair and objective hearing[19]
Additional Issues: Assessment Not Necessary Before Filing of Criminal Complaint
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.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision is REVERSED and SET
ASIDE. CTA Case No. 5271 is likewise DISMISSED. No costs. SO ORDERED.
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PASCOR REALTY AND DEVELOPMENT
CORPORATION, ROGELIO A. DIO and VIRGINIA S. DIO, respondents.
309 SCRA 402
GR No. 128315 June 29, 1999
"An assessment is not necessary before a criminal charge can be filed."
FACTS: The BIR examined the books of account of Pascor Realty and Devt Corp for years 1986, 1987 and
1988, from which a tax liability of 10.5 Million Pesos was found. Based on the recommendations of the
examiners, the CIR filed an information with the DOJ for tax evasion against the officers of Pascor. Upon
receipt of the subpoena, the latter filed an urgent request for reconsideration/reinvestigation with the
CIR, which was immediately denied upon the ground that no formal assessment has yet been issued by
the Commisioner. Pascor elevated the CIR's decision to the CTA on a petition for review. The CIR filed a
Motion to Dismiss on the ground of lack of jurisdiction of CTA as there was no formal assessment made
against the respondents. The CTA dismissed the motion, hence this petition.
ISSUE: Is a formal assessment necessary in the filing of a criminal complaint?
HELD: No. Section 222 of the NIRC 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.
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.
x-- - - - - - - - - - - - - - - - - - - - - - - - x
COMMISSIONER OF G.R. No. 124557
INTERNAL REVENUE,
Petitioner,
Present:
-versus- PUNO, C.J., Chairperson,

CARPIO,
CORONA,
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
DECISION
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 March 21,
1995 and Resolution issued on July 6, 1995 of the Court of Appeals in CA-G.R. SP No. 35488 (Liwayway
Vinzons-Chato, et al. v. Hon. Judge Erna Falloran-Aliposa, et al.).
G.R. No. 124557 is a petition for review on certiorari filed by the Commissioner, assailing the Decision
dated March 29, 1996 of the Court of Appeals in CA-G.R. SP No. 35520, titled Commissioner of Internal
Revenue v. Court of Tax Appeals, Adamson Management Corporation, Lucas G. Adamson, Therese June D.
Adamson and Sara S. de los Reyes. In the said Decision, the Court of Appeals upheld the Resolution
promulgated on September 19, 1994 by the Court of Tax Appeals (CTA) in C.T.A. Case No. 5075 (Adamson
Management Corporation, Lucas G. Adamson, Therese Adamson and Sara de los Reyes v. Commissioner of
Internal Revenue).
The facts, as culled from the findings of the appellate court, follow:
On June 20, 1990, Lucas Adamson and AMC sold 131,897 common shares of stock in Adamson and
Adamson, Inc. (AAI) to APACHolding Limited (APAC). The shares were valued
at P7,789,995.00.[1] On June 22, 1990, P159,363.21 was paid as capital gains tax for the transaction.
On October 12, 1990, AMC sold to APAC Philippines, Inc. another 229,870 common shares of stock
in AAI for P17,718,360.00. AMC paid the capital gains tax of P352,242.96.
On October 15, 1993, the Commissioner issued a Notice of Taxpayer to AMC, Lucas G. Adamson, Therese
June D. Adamson and Sara S. de los Reyes, informing them of deficiencies on their payment of capital
gains tax and Value Added Tax (VAT). The notice contained a schedule for preliminary conference.
The events preceding G.R. No. 120935 are the following:
On October 22, 1993, the Commissioner filed with the Department of Justice (DOJ) her Affidavit of
Complaint[2] against AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes for
violation of Sections 45 (a) and (d)[3], and 110[4], in relation to Section 100[5], as penalized under Section
255,[6] and for violation of Section 253[7], in relation to Section 252 (b) and (d) of the National Internal
Revenue Code (NIRC).[8]
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 CTAcases. Initially, the trial court denied the motion. A Motion for Reconsideration was however
filed, this time assailing the trial courts 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 courts 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 courts 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.[9] 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.[10]
Private respondents filed a Motion for Reconsideration, but the trial court denied the motion on July 6,
1995. Thus, they filed the petition in G.R. No. 120935, raising the following issues:
1. WHETHER OR NOT THE RESPONDENT HONORABLE COURT OF APPEALS ERRED IN
APPLYING THE DOCTRINE IN UNGAB V. CUSI (Nos. L-41919-24, May 30, 1980, 97 SCRA
877) TO THE CASE AT BAR.
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, July 20, 1982, 115 SCRA 286) AND CIR V. UNION SHIPPING
CORP. (G.R. No. 66160, May 21, 1990, 185 SCRA 547) ARE APPLICABLE TO THE
CASE AT BAR.
7. WHETHER OR NOT THE COURT OF TAX APPEALS HAS JURISDICTION OVER THE
DISPUTE ON WHAT CONSTITUTES THE PROPER TAXES DUE FROM THE
TAXPAYER.
In parallel circumstances, the following events preceded G.R. No. 124557:
On December 1, 1993, AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes filed a
letter request for re-investigation with the Commissioner of the Examiners Findings earlier issued by the
Bureau of Internal Revenue (BIR), which pointed out the tax deficiencies.
On March 15, 1994 before the Commissioner could act on their letter-request, AMC, Lucas G. Adamson,
Therese June D. Adamson and Sara S. de los Reyes filed a Petition for Review with the CTA. They assailed
the Commissioners finding of tax evasion against them. The Commissioner moved to dismiss the petition,
on the ground that it was premature, as she had not yet issued a formal assessment of the tax liability of
therein petitioners. On September 19, 1994, the CTA denied the Motion to Dismiss. It considered the
criminal complaint filed by the Commissioner with the DOJ as an implied formal assessment, and the
filing of the criminal informations with the RTC as a denial of petitioners protest regarding the tax
deficiency.
The Commissioner repaired to the Court of Appeals on the ground that the CTA acted with grave abuse of
discretion. She contended that, with regard to the protest provided under Section 229 of the NIRC, there
must first be a formal assessment issued by the Commissioner, and it must be in accord with Section 6 of
Revenue Regulation No. 12-85. She maintained that she had not yet issued a formal assessment of tax
liability, and the tax deficiency amounts mentioned in her criminal complaint with the DOJ were given
only to show the difference between the tax returns filed and the audit findings of the revenue examiner.
The Court of Appeals sustained the CTAs denial of the Commissioners Motion to Dismiss. Thus, the
Commissioner filed the petition for review under G.R. No. 124557, raising the following issues:
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 HAS JURISDICTION TO ACT

ON PRIVATE RESPONDENTS PETITION FOR REVIEW FILED WITH THE SAID
COURT.
The issues in G.R. No. 124557 and G.R. No. 120935 can be compressed into three:
1. WHETHER THE COMMISSIONER HAS ALREADY RENDERED AN

ASSESSMENT (FORMAL OR OTHERWISE) OF THE TAX LIABILITY OF AMC,
LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON AND SARA S. DE LOS
REYES;
2. WHETHER THERE IS BASIS FOR THE CRIMINAL CASES FOR TAX EVASION
TO PROCEED AGAINST AMC, LUCAS G. ADAMSON, THERESE JUNE D.
ADAMSON AND SARA S. DE LOS REYES; and
3. WHETHER THE COURT OF TAX APPEALS HAS JURISDICTION TO TAKE

COGNIZANCE OF BOTH THE CIVIL AND THE CRIMINAL ASPECTS OF THE
TAX LIABILITY OF AMC, LUCAS G. ADAMSON, THERESE JUNE D.
ADAMSON AND SARA S. DE LOS REYES.
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 Commissioners 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 examiners 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 Mertens 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 governments 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:

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

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;
xxx
(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. Flojoare 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 Courts 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 March 29, 1996, and ORDERING the dismissal of C.T.A. Case No. 5075.
No costs.
SO ORDERED.
ADAMSON vs. CIR
GR 120935 May 21, 2009
FACTS:
A deficiency tax assessment was issued against Petitioners relating to their payment of capital gains tax
and VAT on their sale of shares of stock and parcels of land. Subsequent to the preliminary conference,
the CIR filed with the Department of Justice her Affidavit of Complaint against Petitioners. The Court of
Appeals ultimately ruled 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.
ISSUES:
(1) Dis the CIR issue an assessment?
(2) Must a criminal prosecution for tax evasion be preceded by a deficiency tax assessment?
(3) Does the CTA have jurisdiction on the case?
HELD:
(1) NO. The recommendation letter of the Commissioner cannot be considered a formal assessment as (a)
it was not addressed to the taxpayers; (b) there was no demand made on the taxpayers to pay the tax
liability, nor a period for payment set therein; (c) the letter was never mailed or sent to the taxpayers by
the Commissioner. It was only an affidavit of the computation of the alleged liabilities and thus merely
served as prima facie basis for filing criminal informations.
(2) YES. 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 considering that 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 transactions. The Tax Code is clear that the remedies may proceed
simultaneously.
(3) NO. While the laws governing the CTA have expanded the jurisdiction of the Court, they did not
change the jurisdiction of the CTA to entertain an appeal only from a final decision of the Commissioner,
or in cases of inaction within the prescribed period. Since in the cases at bar, the Commissioner has not
issued an assessment of the tax liability of the Petitioners, the CTA has no jurisdiction.
G.R. No. 179260 April 2, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
TEAM [PHILIPPINES] OPERATIONS CORPORATION [formerly MIRANT (PHILS) OPERATIONS
CORPORATION], Respondent.
DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside the 19 June 2007
Decision1and the 13 August 2007 Resolution2 of the Court of Tax Appeals (CTA) En Banc in C.T.A. EB No.
224 which affirmed in toto the Decision and Resolution dated 4 August 2006 and 8 November 2006,
respectively, of the First Division of the CTA (CTA in Division)3 in C.T.A. Case No. 6623, granting Team
(Philippines) Operations Corporations (respondent) claim for refund in the amount of 69,562,412.00
representing unutilized tax credits for taxable period ending 31 December 2001.
The Facts
The factual antecedents of the case are undisputed:
Petitioner is the duly appointed Commissioner of Internal Revenue, charged with the duty of enforcing
the provisions of the National Internal Revenue Code (NIRC), including the power to decide and approve
administrative claims for refund.
Respondent, on the other hand, is a corporation duly organized and existing under and virtue of the laws
of the Republic of the Philippines, with its principal office at Bo. Ibabang Pulo, Pagbilao Grande Island,
Pagbilao, Quezon Province. It is primarily engaged in the business of designing, constructing, erecting,
assembling, commissioning, operating, maintaining, rehabilitating and managing gas turbine and other
power generating plants and related facilities for the conversion into electricity of coal, distillate and
other fuels provided by and under contract with the Government of the Republic of the Philippines, or
any subdivision, instrumentality or agency thereof, or any government owned or controlled corporations
or other entity engaged in the development, supply or distribution of energy.
On 30 April 2001, respondent secured from the Securities and Exchange Commission (SEC) its Certificate
of Filing of Amended Articles of Incorporation, reflecting its change of name from Southern Energy Asia-
Pacific Operations (Phils.), Inc. to Mirant (Philippines) Operations Corporation. Prior to its use of the
name Southern Energy Asia-Pacific Operations (Phils.), Inc., respondent operated under the corporate
names CEPA Operations (Philippines) Corporation, CEPA Tileman Project Management Corporation and
Hopewell Tileman Project Management Corporation. The changes in respondents corporate name from
CEPA Operations (Philippines) Corp. to Southern Energy Asia-Pacific Operations (Phils.) Inc., from CEPA
Tileman Project Management Corporation to CEPA Operations (Philippines) Corp. and from Hopewell
Tileman Project Management Corporation to CEPA Tileman Project Management Corp., were approved
by the SEC on 24 November 2000, 21 November 1997 and 29 July 1994, respectively.
Under its original corporate name, Hopewell Tileman Project Management Corp., respondent was
registered with the Bureau of Internal Revenue (BIR) with Tax Identification No. 003-057-796 as shown
by its original BIR Certificate of Registration issued on 29 March 1994.
In line with its primary purpose, respondent entered into Operating and Management Agreements with
Mirant Pagbilao Corporation (MPC) [formerly Southern Energy Quezon, Inc.] and Mirant Sual Corporation
(MSC) [formerly Southern Energy Pangasinan, Inc.] to provide MPC and MSC with operation and
maintenance services in connection with the operation, construction and commissioning of the coal-fired
thermal power stations situated in Pagbilao, Quezon and Sual, Pangasinan, respectively. Payments
received by respondent from MPC and MSC relative to the said agreements were allegedly subjected to
creditable withholding taxes.
On 15 April 2002, respondent filed its 2001 income tax return with the BIR, reporting an income tax
overpayment in the amount of 69,562,412.00 arising from unutilized creditable taxes withheld during
the year, detailed as follows:4
Sales/Revenues 922,569,303.00
Less: Cost of Sales/Services 938,543,252.00
Gross Income from Operation (15,973,949.00)
Add: Non-Operating & Other Income 74,995,982.00
Total Gross Income P 59,022,033.00
Less: Deductions 59,022,033.00
Taxable Income -
Tax Rate 32%
Income Tax NIL
Less: Tax Credits/Payments

Creditable Tax Withheld for the
First Three Quarters
Creditable Tax Withheld for the P 27,784,217.00
Fourth Quarter 41,778,195.00
Total Tax Credits/Payments P 69,652,412.00
Tax Payable/(Overpayment) (69,562,412.00)
Respondent marked the appropriate box manifesting its intent to have the above overpayment refunded.
On 19 March 2003, pursuant to Section 76 in relation to Section 204 of the NIRC of 1997, as amended,
respondent filed with the BIR, a letter requesting for the refund or issuance of a tax credit certificate
corresponding to its reported unutilized creditable withholding taxes for taxable year 2001 in the
amount of 69,562,412.00.
Thereafter, on 27 March 2003, respondent filed a Petition for Review before the CTA, in order to toll the
running of the two-year prescriptive period provided under Section 229 of the NIRC of 1997, as amended,
which was docketed as C.T.A. Case No. 6623.
The Ruling of the CTA in Division

In a Decision dated 4 August 2006,5 the CTA in Division granted respondents Petition and ordered
petitioner to refund or issue a tax credit certificate in favor of the former the entire amount of
69,562,412.00, representing its unutilized tax credits for the taxable year ended 31 December 2001.
The CTA in Division based its ruling on the numerous documentary evidence presented by respondent
during the proceedings, such as its Income Tax Returns (ITRs) for taxable years 2001 and 2002, various
Certificates of Creditable Tax Withheld at Source for taxable year 2001 duly issued to it by its withholding
agents, and Report of the Commissioned Independent Certified Public Accountant dated 15 March 2004,
among others. The court a quo reasoned that respondent has indeed established its entitlement to a
refund/tax credit of its excess creditable withholding taxes in compliance with the following basic
requirements: (1) that the claim for refund (or issuance of a tax credit certificate) was filed within the
two-year prescriptive period prescribed under Section 204(C), in relation to Section 229 of the NIRC of
1997, as amended; (2) that the fact of withholding is established by a copy of a statement duly issued by
the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld
therefrom; and (3) that the income upon which the taxes were withheld was included in the return of the
recipient.6
Subsequently, on 8 November 2006, the CTA in Division denied petitioners Motion for Reconsideration
for lack of merit.7
Aggrieved, petitioner appealed to the CTA En Banc by filing a Petition for Review pursuant to Section 18
of Republic Act (RA) No. 1125, as amended by RA No. 92828 on 6 December 2006, docketed as CTA EB
No. 224.
The Ruling of the CTA En Banc
The CTA En Banc affirmed in toto both the aforesaid Decision and Resolution rendered by the CTA in
Division in CTA Case No. 6623, pronouncing that there was no cogent reason to disturb the findings and
conclusion spelled out therein. It revealed that what the petition seeks to accomplish was for the CTA En
Banc to view and appreciate the evidence in another perspective, which unfortunately had already been
considered and passed upon correctly by the CTA in Division.
Upon denial of petitioners Motion for Reconsideration of the 19 June 2007 Decision9 of the CTA En Banc,
it filed this Petition for Review on Certiorari before this Court seeking the reversal of the aforementioned
Decision and the 13 August 2007 Resolution10 rendered in CTA EB No. 224. Petitioner11 relies on the sole
ground that the CTA En Banc gravely erred on a question of law in affirming the CTA in Divisions ruling
which ordered a refund or issuance of tax credit certificate in favor of respondent despite the fact that it
is not supported by the evidence on record.12
The Issue and Our Ruling
The core issue for the Courts resolution is whether or not respondent has established its entitlement for
the refund or issuance of a tax credit certificate in its favor the entire amount of 69,562,412.00
representing its unutilized tax credits for taxable year ended 31 December 2001, pursuant to the
applicable provisions of the NIRC of 1997, as amended.
This is not novel.
In order to be entitled to a refund claim or issuance of a tax credit certificate representing any excess or
unutilized creditable withholding tax, it must be shown that the claimant has complied with the essential
basic conditions set forth under pertinent provisions of law and existing jurisprudential declarations.
In Banco Filipino Savings and Mortgage Bank v. Court of Appeals,13 this Court had previously articulated
that there are three essential conditions for the grant of a claim for refund of creditable withholding
income tax, to wit: (1) the claim is filed with the Commissioner of Internal Revenue within the two-year
period from the date of payment of the tax;14 (2) it is shown on the return of the recipient that the income
payment received was declared as part of the gross income;15 and (3) the fact of withholding is
established by a copy of a statement duly issued by the payor to the payee showing the amount paid and
the amount of the tax withheld therefrom.
The first condition is pursuant to Sections 204(C) and 229 of the NIRC of 1997, as amended, viz:
SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. The
Commissioner may
xxxx
(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority,
refund the value of internal revenue stamps when they are returned in good condition by the purchaser,
and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund
their value upon proof of destruction.
No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the
Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty:
Provided, however, That a return filed showing an overpayment shall be considered as a written claim for
credit or refund. (Emphasis supplied)
xxxx
SEC. 229. Recovery of Tax Erroneously or Illegally Collected. No suit or proceeding shall be maintained
in any court for the recovery of any national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without
authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of
payment of the tax or penalty regardless of any supervening cause that may arise after payment:
Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit
any tax, where on the face of the return upon which payment was made, such payment appears clearly to
have been erroneously paid. (Emphasis supplied)
The second and third conditions are anchored on Section 2.58.3(B) of Revenue Regulations No. 2-
98,16 which states:
Sec. 2.58.3.Claim for Tax Credit or Refund
xxxx
(B) Claims for tax credit or refund of any creditable income tax which was deducted and withheld on
income payments shall be given due course only when it is shown that the income payment has been
declared as part of the gross income and the fact of withholding is established by a copy of the
withholding tax statement duly issued by the payor to the payee showing the amount paid and the
amount of tax withheld therefrom. (Emphasis supplied)
In addition to the abovementioned requisites, the NIRC of 1997, as amended, likewise provides for the
strict observance of the concept of the irrevocability rule,17 the focal provision of which is Section 76
thereof, quoted hereunder for easy reference:
SEC. 76. Final Adjustment Return. Every corporation liable to tax under Section 27 shall file a final
adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum
of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the
entire taxable income of that year, the corporation shall either:
(A) Pay the balance of tax still due; or
(B) Carry-over the excess credit; or
(C) Be credited or refunded with the excess amount paid, as the case may be.
In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes
paid, the excess amount shown on its final adjustment return may be carried over and credited against
the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years.
Once the option to carry-over and apply the excess quarterly income tax against income tax due for the
taxable quarters of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for cash refund or issuance of a tax credit
certificate shall be allowed therefor. (Emphasis supplied)
Applying the foregoing discussion to the present case, we find that respondent had indeed complied with
the abovementioned requirements.
Here, it is undisputed that the claim for refund was filed within the two-year prescriptive period
prescribed under Section 22918 of the NIRC of 1997, as amended. Respondent filed19 its income tax return
for taxable year 2001 on 15 April 2002. Counting from said date, it indeed had until 14 April
200420 within which to file its claim for refund or issuance of tax credit certificate in its favor both
administratively and judicially. Thus, petitioners administrative claim and petition for review filed on 19
March 2003 and 27 March 2003, respectively, fell within the abovementioned prescriptive period.
Likewise, respondent was able to present various certificates of creditable tax withheld at source from its
payors, MPC and MSC, for taxable year 2001, showing creditable withholding taxes in the aggregate
amount of 70,805,771.42 (although the refund claim was only 69,562,412.00).21 Moreover, as
determined by the CTA in Division, respondent declared the income related to the claimed creditable
withholding taxes of 69,562,412.00 on its return.22
Lastly, in compliance with Section 76 of the NIRC of 1997, as amended, respondent opted to be refunded
of its unutilized tax credit (as evidenced by the "x" mark in the appropriate box of its 2001 income tax
return), and the same was not carried over in its 2002 income tax return; therefore, the entire amount of
69,562,412.00 may be a proper subject of a claim for refund/tax credit certificate.23
It is apt to restate here the hornbook doctrine that the findings and conclusions of the CTA are accorded
the highest respect and will not be lightly set aside. The CTA, by the very nature of its functions, is
dedicated exclusively to the resolution of tax problems and has accordingly developed an expertise on
the subject unless there has been an abusive or improvident exercise of authority.24
Consequently, its conclusions will not be overturned unless there has been an abuse or improvident
exercise of authority. Its findings can only be disturbed on appeal if they are not supported by substantial
evidence or there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any
clear and convincing proof to the contrary, this Court must presume that the CTA rendered a decision
which is valid in every respect.25
The Court in this case agrees with the conclusion of the CTA in Division and subsequent affirmation of the
CTA En Banc that respondent complied with all the requirements for the refund of its unutilized
creditable withholding taxes for taxable period ending 31 December 2001. We adopt the factual and legal
findings as follows:
On the first ground, [petitioner] argues that [respondent] failed to present the various withholding
agents/payors to testify on the validity of the contents of the Certificates of Creditable Tax Withheld at
Source ("certificates"). Thus, the certificates presented by [respondent] are not valid. And even assuming
that the certificates are valid, this Court cannot entertain the claim for refund/tax credit certificates
because the certificates were not submitted to [petitioner].
[Petitioners] arguments are untenable since the certificates presented (Exhibits "R", "S", "T", "U", "V",
"W", and "X") were duly signed and prepared under penalties of perjury, the figures appearing therein
are presumed to be true and correct. Thus, the testimony of the various agents/payors need not be
presented to validate the authenticity of the certificates.
In addition, that [respondent] did not submit the certificates to the [petitioner] is of no moment. The
administrative and judicial claim for refund and/or tax credit certificates must be filed within the two-
year prescriptive period starting from the date of payment of the tax (Section 229, NIRC). In the instant
case, [respondent] filed its judicial claim (after filing its administrative claim) precisely to preserve its
right to claim. Otherwise, [respondent's] right to the claim would have been barred. Considering that this
[c]ourt had jurisdiction over the claim, frespondent] rightfully presented the certificates before this
[c]ourt. Besides, any records that [petitioner] may have on the administrative claim would eventually be
transmitted to this [c]ourt under Section S(b), Rule 6 of the Revised Rules of the Court of (Tax) Appeals.
As for the second ground, this [ c ]ourt finds [petitioner's] contention unmeritorious.1wphi1 The
requirements for claiming a tax refund/tax credit certificates had been laid down in Citibank N.A. vs.
Court of Appeals, G.R. No. 107434, October 10, 1997. Nowhere in the case cited is proof of actual
remittance of the withheld taxes to the [petitioner] required before the taxpayer may claim for a tax
refund/tax credit certificates.26 (Emphasis supplied)
In the same vein, this Court finds no abusive or improvident exercise of authority on the part of the CT A
in Division. Since there is no showing of gross error or abuse on the part of the CT A in Division, and its
findings are supported by substantial evidence which were thoroughly considered during the trial, there
is no cogent reason to disturb its findings and conclusions.
All told, respondent complied with all the legal requirements and it is entitled, as it opted, to a refund of
its excess creditable withholding tax for the taxable year 2001 in the amount of 69,562,412.00.
WHEREFORE, the petition is hereby DENIED for lack of merit. Accordingly, the Decision dated 19 June
2007 and Resolution dated 13 August 2007 of the CTA En Banc are hereby AFFIRMED. No costs.
SO ORDERED.
National Internal Revenue Code; income tax; creditable withholding tax; refund; requisites. There are three essential
conditions for the grant of a claim for refund of creditable withholding income tax, to wit: (1) the claim is filed with the
Commissioner of Internal Revenue within the two-year period from the date of payment of the tax; (2) it is shown on
the return of the recipient that the income payment received was declared as part of the gross income; and (3) the
fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the
amount paid and the amount of the tax withheld therefrom. Commissioner of Internal Revenue v. Team (Philippines)
Operations Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260, April 2, 2014.
National Internal Revenue Code; income tax; tax credit or refund; corporations; irrevocability rule. In case the corporation is
entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on
its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for
the taxable quarters of the succeeding taxable years. Once the option to carry-over and apply the excess quarterly
income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such
option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax
credit certificate shall be allowed therefor. Commissioner of Internal Revenue v. Team (Philippines) Operations
Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260, April 2, 2014.
Court of Tax Appeals; findings and conclusions of the CTA are accorded highest respect. The findings and conclusions of
the Court of Tax Appeals (CTA) are accorded the highest respect and will not be lightly set aside. The CTA, by the
very nature of its functions, is dedicated exclusively to the resolution of tax problems and has accordingly developed
an expertise on the subject unless there has been an abusive or improvident exercise of authority. Consequently, its
conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Its findings
can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross
error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the contrary, the
Court must presume that the CTA rendered a decision which is valid in every respect. Commissioner of Internal
Revenue v. Team (Philippines) Operations Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260,
April 2, 2014.
COMMISSIONER OF INTERNAL G.R. No. 162155
REVENUE and ARTURO V.
PARCERO in his official
capacity as Revenue District
Officer of Revenue District
No. 049 (Makati),
Petitioners, Present:
PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.
PRIMETOWN PROPERTY
GROUP, INC.,
Respondent. Promulgated:
August 28, 2007
x-----------------------------------------x
DECISION
CORONA, J.:
This petition for review on certiorari[1] seeks to set aside the August 1, 2003 decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 64782 and its February 9, 2004 resolution denying
reconsideration.[3]
On March 11, 1999, Gilbert Yap, vice chair of respondent Primetown Property Group, Inc.,
applied for the refund or credit of income tax respondent paid in 1997. In Yap's letter to
petitioner revenue district officer Arturo V. Parcero of Revenue District No. 049 (Makati) of the
Bureau of Internal Revenue (BIR),[4] he explained that the increase in the cost of labor and
materials and difficulty in obtaining financing for projects and collecting receivables caused the
real estate industry to slowdown.[5] As a consequence, while business was good during the first
quarter of 1997, respondent suffered losses amounting to P71,879,228 that year.[6]
According to Yap, because respondent suffered losses, it was not liable for income
taxes.[7] Nevertheless, respondent paid its quarterly corporate income tax and remitted creditable
withholding tax from real estate sales to the BIR in the total amount
of P26,318,398.32.[8]Therefore, respondent was entitled to tax refund or tax credit.[9]
On May 13, 1999, revenue officer Elizabeth Y. Santos required respondent to submit additional
documents to support its claim.[10] Respondent complied but its claim was not acted upon. Thus,
on April 14, 2000, it filed a petition for review[11] in the Court of Tax Appeals (CTA).
On December 15, 2000, the CTA dismissed the petition as it was filed beyond the two-year
prescriptive period for filing a judicial claim for tax refund or tax credit. [12] It invoked Section
229 of the National Internal Revenue Code (NIRC):
Sec. 229. Recovery of Taxes Erroneously or Illegally Collected. -- No suit or

proceeding shall be maintained in any court for the recovery of any national internal
revenue tax hereafter alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected without authority, or of
any sum alleged to have been excessively or in any manner wrongfully collected,
until a claim for refund or credit has been duly filed with the Commissioner; but
such suit or proceeding may be maintained, whether or not such tax, penalty, or sum
has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two
(2) years from the date of payment of the tax or penalty regardless of any
supervening cause that may arise after payment: Provided, however, That the
Commissioner may, even without a claim therefor, refund or credit any tax, where
on the face of the return upon which payment was made, such payment appears
clearly to have been erroneously paid. (emphasis supplied)
The CTA found that respondent filed its final adjusted return on April 14, 1998. Thus, its right
to claim a refund or credit commenced on that date.[13]
The tax court applied Article 13 of the Civil Code which states:
Art. 13. When the law speaks of years, months, days or nights, it shall be understood
that years are of three hundred sixty-five days each; months, of thirty days; days, of
twenty-four hours, and nights from sunset to sunrise.
If the months are designated by their name, they shall be computed by the number of
days which they respectively have.
In computing a period, the first day shall be excluded, and the last included. (emphasis
supplied)
Thus, according to the CTA, the two-year prescriptive period under Section 229 of the NIRC
for the filing of judicial claims was equivalent to 730 days. Because the year 2000 was a leap
year, respondent's petition, which was filed 731 days [14] after respondent filed its final adjusted
return, was filed beyond the reglementary period.[15]
Respondent moved for reconsideration but it was denied.[16] Hence, it filed an appeal in the
CA.[17]
On August 1, 2003, the CA reversed and set aside the decision of the CTA. [18] It ruled that
Article 13 of the Civil Code did not distinguish between a regular year and a leap year.
According to the CA:
The rule that a year has 365 days applies, notwithstanding the fact that a particular
year is a leap year.[19]
In other words, even if the year 2000 was a leap year, the periods covered by April 15, 1998 to
April 14, 1999 and April 15, 1999 to April 14, 2000 should still be counted as 365 days each or
a total of 730 days. A statute which is clear and explicit shall be neither interpreted nor
construed.[20]
Petitioners moved for reconsideration but it was denied.[21] Thus, this appeal.
Petitioners contend that tax refunds, being in the nature of an exemption, should be strictly
construed against claimants.[22] Section 229 of the NIRC should be strictly applied against
respondent inasmuch as it has been consistently held that the prescriptive period (for the filing
of tax refunds and tax credits) begins to run on the day claimants file their final adjusted
returns.[23] Hence, the claim should have been filed on or before April 13, 2000 or within 730
days, reckoned from the time respondent filed its final adjusted return.
The conclusion of the CA that respondent filed its petition for review in the CTA within the
two-year prescriptive period provided in Section 229 of the NIRC is correct. Its basis, however,
is not.
The rule is that the two-year prescriptive period is reckoned from the filing of the final adjusted
return.[24] But how should the two-year prescriptive period be computed?
As already quoted, Article 13 of the Civil Code provides that when the law speaks of a year, it
is understood to be equivalent to 365 days. In National Marketing Corporation v. Tecson,[25] we
ruled that a year is equivalent to 365 days regardless of whether it is a regular year or a leap
year.[26]
However, in 1987, EO[27] 292 or the Administrative Code of 1987 was enacted. Section 31,
Chapter VIII, Book I thereof provides:
Sec. 31. Legal Periods. Year shall be understood to be twelve calendar

months; month of thirty days, unless it refers to a specific calendar month in which
case it shall be computed according to the number of days the specific month
contains; day, to a day of twenty-four hours and; night from sunrise to sunset.
(emphasis supplied)
A calendar month is a month designated in the calendar without regard to the number of days it
may contain.[28] It is the period of time running from the beginning of a certain numbered day
up to, but not including, the corresponding numbered day of the next month, and if there is not a
sufficient number of days in the next month, then up to and including the last day of that
month.[29] To illustrate, one calendar month from December 31, 2007 will be from January 1,
2008 to January 31, 2008; one calendar month from January 31, 2008 will be from February 1,
2008 until February 29, 2008.[30]
A law may be repealed expressly (by a categorical declaration that the law is revoked and
abrogated by another) or impliedly (when the provisions of a more recent law cannot be
reasonably reconciled with the previous one).[31] Section 27, Book VII (Final Provisions) of the
Administrative Code of 1987 states:
Sec. 27. Repealing clause. All laws, decrees, orders, rules and regulation, or portions
thereof, inconsistent with this Code are hereby repealed or modified accordingly.
A repealing clause like Sec. 27 above is not an express repealing clause because it fails to
identify or designate the laws to be abolished.[32]Thus, the provision above
only impliedly repealed all laws inconsistent with the Administrative Code of 1987.
Implied repeals, however, are not favored. An implied repeal must have been clearly and
unmistakably intended by the legislature. The test is whether the subsequent law encompasses
entirely the subject matter of the former law and they cannot be logically or reasonably
reconciled.[33]
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative
Code of 1987 deal with the same subject matter the computation of legal periods. Under the
Civil Code, a year is equivalent to 365 days whether it be a regular year or a leap year. Under
the Administrative Code of 1987, however, a year is composed of 12 calendar months. Needless
to state, under the Administrative Code of 1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of computing legal periods
under the Civil Code and the Administrative Code of 1987. For this reason, we hold that
Section 31, Chapter VIII, Book I of the
Administrative Code of 1987, being the more recent law, governs the computation of legal
periods. Lex posteriori derogat priori.
Applying Section 31, Chapter VIII, Book I of the Administrative Code of 1987 to this case, the
two-
year prescriptive period (reckoned from the time respondent filed its final adjusted return [34] on
April 14, 1998) consisted of 24 calendar months, computed as follows:
Year 1 1st calendar month April 15, 1998 to May 14, 1998
2nd calendar month May 15, 1998 to June 14, 1998
3rd calendar month June 15, 1998 to July 14, 1998
4th calendar month July 15, 1998 to August 14, 1998
5th calendar month August 15, 1998 to September 14, 1998 We therefore hold that
6th calendar month September 15, 1998 to October 14, 1998
7th calendar month October 15, 1998 to November 14, 1998 respondent's petition (filed on
8th calendar month November 15, 1998 to December 14, 1998
9th calendar month December 15, 1998 to January 14, 1999 April 14, 2000) was filed on the
10th calendar month January 15, 1999 to February 14, 1999
11th calendar month February 15, 1999 to March 14, 1999 last day of the 24th calendar
12th calendar month March 15, 1999 to April 14, 1999
Year 2 13th calendar month April 15, 1999 to May 14, 1999
14th calendar month May 15, 1999 to June 14, 1999
month from the day respondent
15th calendar month June 15, 1999 to July 14, 1999
16th calendar month July 15, 1999 to August 14, 1999 filed its final adjusted return.
17th calendar month August 15, 1999 to September 14, 1999
18th calendar month September 15, 1999 to October 14, 1999 Hence, it was filed within the
19th calendar month October 15, 1999 to November 14, 1999
20th calendar month November 15, 1999 to December 14, 1999 reglementary period.
21st calendar month December 15, 1999 to January 14, 2000
22nd calendar month January 15, 2000 to February 14, 2000 Accordingly, the petition is
23rd calendar month February 15, 2000 to March 14, 2000
24th calendar month March 15, 2000 to April 14, 2000 hereby DENIED. The case
is REMANDED to the Court of
Tax Appeals which is ordered to expeditiously proceed to hear C.T.A. Case No. 6113
entitled Primetown Property Group, Inc. v. Commissioner of Internal Revenue and Arturo V.
Parcero.
No costs.
SO ORDERED.
COMMISSIONER OF INTERNAL REVENUE and ARTURO V. PARCERO, petitioners,vs.

PRIMETOWN PROPERTY GROUP INC., respondent.
G.R. No. 162155. August 28,2007.
Facts:
On March 11, 1999, Gilbert Yap, the Vice President of Primetown (respondent), applied for refund of
the income tax which they have paid on 1997. According to Yap, the company accrued losses
amounting to P/ 71,879,228. These losses enabled them to be exempt from paying income tax, which
respondent paid diligently. Respondent was therefore claiming a refund. Respondents
submitted requirements but the petitioners ignored their claim. On April 14, 2000, respondents filed
a review in the Court of Tax Appeals. The said Court, however, denied the petition stating that the
petition was filed beyond the 2-year prescriptive period for filing judicial claim for tax refund.
According to Sec 229 of the National Internal Revenue Code, no suit or proceedings shall be filed
after the expiration of 2-yearsfrom the date of the payment of the tax regardless of any supervening
cause that may arise after payment. Respondents paid the last income tax return on April 14, 1998.
Article 13 of the New Civil Code states that a year is considered 365 days; months 30 days; days 24-
hours; and night from sunset to sunrise. Therefore, according to CTA, the date of filing a petition fell
on the 731st day, which is beyond the prescriptive period.
Issues:
Whether the two-year/730-day prescriptive period ends on April 13, 2000 or April 14, 2000
considering that the last payment of tax was on April 14, 1998 and that year 2000 was a leap year.
Whether or not Article 13 of the New Civil Code be repealed by EO 292 Sec 31 Chap 8 Book 1 of the
Administrative Code of 1987.
Ruling:
The Court ruled that when a subsequent law impliedly repeals a prior law, the new law shall apply. In
the case at bar, Art 13 of the New Civil Code, which states that a year shall compose 365 days, shall be
repealed by EO 292 Sec 31 of the Administrative Code of 1987, which states that a year shall be
composed of 12 months regardless of the number of days in a month. Therefore, the two-
year prescriptive period ends on April 14, 2000. Respondents filed petition on April 14, 2000 (which
is the last day prescribed to file a petition
PHILIPPINE JOURNALISTS, INC., G.R. No. 162852

Petitioner,
Present:
Davide, Jr., C.J. (Chairman),

- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
COMMISSIONER OF INTERNAL
REVENUE, Promulgated:
Respondent.
December 16, 2004
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review filed by Philippine Journalists, Incorporated (PJI) assailing
the Decision[1] of the Court of Appeals dated August 5, 2003,[2] which ordered petitioner to pay
the assessed tax liability of P111,291,214.46 and the Resolution [3] dated March 31, 2004 which
denied the Motion for Reconsideration.
The case arose from the Annual Income Tax Return filed by petitioner for the calendar
year ended December 31, 1994 which presented a net income of P30,877,387.00 and the tax due
of P10,807,086.00. After deducting tax credits for the year, petitioner paid the amount of
P10,247,384.00.
On August 10, 1995, Revenue District Office No. 33 of the Bureau of Internal Revenue
(BIR) issued Letter of Authority No. 87120[4] for Revenue Officer Federico de Vera, Jr. and
Group Supervisor Vivencio Gapasin to examine petitioners books of account and other
accounting records for internal revenue taxes for the period January 1, 1994 to December 31,
1994.
From the examination, the petitioner was told that there were deficiency taxes, inclusive
of surcharges, interest and compromise penalty in the following amounts:
Value Added Tax P 229,527.90

Income Tax 125,002,892.95
Withholding Tax 2,748,012.35
_______________
Total P 127,980,433.20
In a letter dated August 29, 1997, Revenue District Officer Jaime Concepcion invited
petitioner to send a representative to an informal conference on September 15, 1997 for an
opportunity to object and present documentary evidence relative to the proposed
assessment. On September 22, 1997, petitioners Comptroller, Lorenza Tolentino, executed a
Waiver of the Statute of Limitation Under the National Internal Revenue Code (NIRC). [5] The
document waive[d] the running of the prescriptive period provided by Sections 223 and 224 and
other relevant provisions of the NIRC and consent[ed] to the assessment and collection of taxes
which may be found due after the examination at any time after the lapse of the period of
limitations fixed by said Sections 223 and 224 and other relevant provisions of the NIRC, until
the completion of the investigation.[6]
On July 2, 1998, Revenue Officer De Vera submitted his audit report recommending the
issuance of an assessment and finding that petitioner had deficiency taxes in the total amount of
P136,952,408.97. On October 5, 1998, the Assessment Division of the BIR issued Pre-
Assessment Notices which informed petitioner of the results of the investigation. Thus, BIR
Revenue Region No. 6, Assessment Division/Billing Section, issued Assessment/Demand No.
33-1-000757-94[7] on December 9, 1998 stating the following deficiency taxes, inclusive of
interest and compromise penalty:
Income Tax P108,743,694.88

Value Added Tax 184,299.20
Expanded Withholding Tax 2,363,220.38
______________
Total P111,291,214.46
On March 16, 1999, a Preliminary Collection Letter was sent by Deputy Commissioner
Romeo S. Panganiban to the petitioner to pay the assessment within ten (10) days from receipt
of the letter. On November 10, 1999, a Final Notice Before Seizure[8] was issued by the same
deputy commissioner giving the petitioner ten (10) days from receipt to pay. Petitioner
received a copy of the final notice on November 24, 1999. By letters dated November 26,
1999, petitioner asked to be clarified how the tax liability of P111,291,214.46 was reached and
requested an extension of thirty (30) days from receipt of the clarification within which to
reply.[9]
The BIR received a follow-up letter from the petitioner asserting that its (PJI) records do
not show receipt of Tax Assessment/Demand No. 33-1-000757-94.[10] Petitioner also contested
that the assessment had no factual and legal basis. On March 28, 2000, a Warrant of Distraint
and/or Levy No. 33-06-046[11] signed by Deputy Commissioner Romeo Panganiban for the BIR
was received by the petitioner.
Petitioner filed a Petition for Review[12] with the Court of Tax Appeals (CTA) which was
amended on May 12, 2000. Petitioner complains: (a) that no assessment or demand was
received from the BIR; (b) that the warrant of distraint and/or levy was without factual and legal
bases as its issuance was premature; (c) that the assessment, having been made beyond the 3-
year prescriptive period, is null and void; (d) that the issuance of the warrant without being
given the opportunity to dispute the same violates its right to due process; and (e) that the grave
prejudice that will be sustained if the warrant is enforced is enough basis for the issuance of the
writ of preliminary injunction.
On May 14, 2002, the CTA rendered its decision,[13] to wit:
As to whether or not the assessment notices were received by the petitioner,

this Court rules in the affirmative.
To disprove petitioners allegation of non-receipt of the aforesaid assessment

notices, respondent presented a certification issued by the Post Master of the Central
Post Office, Manila to the effect that Registered Letter No. 76134 sent by the BIR,
Region No. 6, Manila on December 15, 1998 addressed to Phil. Journalists, Inc. at
Journal Bldg., Railroad St., Manila was duly delivered to and received by a certain
Alfonso Sanchez, Jr. (Authorized Representative) on January 8, 1999. Respondent
also showed proof that in claiming Registered Letter No. 76134, Mr. Sanchez
presented three identification cards, one of which is his company ID with herein
petitioner.
However, as to whether or not the Waiver of the Statute of Limitations is valid

and binding on the petitioner is another question. Since the subject assessments were
issued beyond the three-year prescriptive period, it becomes imperative on our part to
rule first on the validity of the waiver allegedly executed on September 22, 1997, for
if this court finds the same to be ineffective, then the assessments must necessarily
fail.
After carefully examining the questioned Waiver of the Statute of Limitations,

this Court considers the same to be without any binding effect on the petitioner for the
following reasons:
The waiver is an unlimited waiver. It does not contain a definite expiration

date. Under RMO No. 20-90, the phrase indicating the expiry date of the period
agreed upon to assess/collect the tax after the regular three-year period of prescription
should be filled up
Secondly, the waiver failed to state the date of acceptance by the Bureau which
under the aforequoted RMO should likewise be indicated
Finally, petitioner was not furnished a copy of the waiver. It is to be noted that
under RMO No. 20-90, the waiver must be executed in three (3) copies, the second
copy of which is for the taxpayer. It is likewise required that the fact of receipt by the
taxpayer of his/her file copy be indicated in the original copy. Again, respondent
failed to comply.
It bears stressing that RMO No. 20-90 is directed to all concerned internal
revenue officers. The said RMO even provides that the procedures found therein
should be strictly followed, under pain of being administratively dealt with should
non-compliance result to prescription of the right to assess/collect
Thus, finding the waiver executed by the petitioner on September 22, 1997 to
be suffering from legal infirmities, rendering the same invalid and ineffective, the
Court finds Assessment/Demand No. 33-1-000757-94 issued on December 5, 1998 to
be time-barred. Consequently, the Warrant of Distraint and/or Levy issued pursuant
thereto is considered null and void.
WHEREFORE, in view of all the foregoing, the instant Petition for Review is
hereby GRANTED. Accordingly, the deficiency income, value-added and expanded
withholding tax assessments issued by the respondent against the petitioner on
December 9, 1998, in the total amount of P111,291,214.46 for the year 1994 are
hereby declared CANCELLED, WITHDRAWN and WITH NO FORCE AND
EFFECT. Likewise, Warrant of Distraint and/or Levy No. 33-06-046 is hereby
declared NULL and VOID.
SO ORDERED.[14]
After the motion for reconsideration of the Commissioner of Internal Revenue was
denied by the CTA in a Resolution dated August 2, 2002, an appeal was filed with the Court of
Appeals on August 12, 2002.
In its decision dated August 5, 2003, the Court of Appeals disagreed with the ruling of
the CTA, to wit:
The petition for review filed on 26 April 2000 with CTA was neither timely filed nor
the proper remedy. Only decisions of the BIR, denying the request for
reconsideration or reinvestigation may be appealed to the CTA. Mere assessment
notices which have become final after the lapse of the thirty (30)-day reglementary
period are not appealable. Thus, the CTA should not have entertained the petition at
all.
[T]he CTA found the waiver executed by Phil. Journalists to be invalid for the
following reasons: (1) it does not indicate a definite expiration date; (2) it does not
state the date of acceptance by the BIR; and (3) Phil. Journalist, the taxpayer, was not
furnished a copy of the waiver. These grounds are merely formal in nature. The date
of acceptance by the BIR does not categorically appear in the document but it states at
the bottom page that the BIR accepted and agreed to:, followed by the signature of the
BIRs authorized representative. Although the date of acceptance was not stated, the
document was dated 22 September 1997. This date could reasonably be understood as
the same date of acceptance by the BIR since a different date was not otherwise
indicated. As to the allegation that Phil. Journalists was not furnished a copy of the
waiver, this requirement appears ridiculous. Phil. Journalists, through its comptroller,
Lorenza Tolentino, signed the waiver. Why would it need a copy of the document it
knowingly executed when the reason why copies are furnished to a party is to notify it
of the existence of a document, event or proceeding?
As regards the need for a definite expiration date, this is the biggest flaw of the
decision. The period of prescription for the assessment of taxes may be extended
provided that the extension be made in writing and that it be made prior to the
expiration of the period of prescription. These are the requirements for a valid
extension of the prescriptive period. To these requirements provided by law, the
memorandum order adds that the length of the extension be specified by indicating its
expiration date. This requirement could be reasonably construed from the rule on
extension of the prescriptive period. But this requirement does not apply in the instant
case because what we have here is not an extension of the prescriptive period but a
waiver thereof. These are two (2) very different things. What Phil. Journalists
executed was a renunciation of its right to invoke the defense of prescription. This is
a valid waiver. When one waives the prescriptive period, it is no longer necessary to
indicate the length of the extension of the prescriptive period since the person waiving
may no longer use this defense.
WHEREFORE, the 02 August 2002 resolution and 14 May 2002 decision of the
CTA are hereby SET ASIDE. Respondent Phil. Journalists is ordered [to] pay its
assessed tax liability of P111,291,214.46.
SO ORDERED.[15]
Petitioners Motion for Reconsideration was denied in a Resolution dated March 31,
2004. Hence, this appeal on the following assignment of errors:
I.
The Honorable Court of Appeals committed grave error in ruling that it is outside the
jurisdiction of the Court of Tax Appeals to entertain the Petition for Review filed by
the herein Petitioner at the CTA despite the fact that such case inevitably rests upon
the validity of the issuance by the BIR of warrants of distraint and levy contrary to the
provisions of Section 7(1) of Republic Act No. 1125.
II.
The Honorable Court of Appeals gravely erred when it ruled that failure to comply
with the provisions of Revenue Memorandum Order (RMO) No. 20-90 is merely a
formal defect that does not invalidate the waiver of the statute of limitations without
stating the legal justification for such conclusion. Such ruling totally disregarded the
mandatory requirements of Section 222(b) of the Tax Code and its implementing
regulation, RMO No. 20-90 which are substantive in nature. The RMO provides that
violation thereof subjects the erring officer to administrative sanction. This directive
shows that the RMO is not merely cover forms.
III.
The Honorable Court of Appeals gravely erred when it ruled that the assessment
notices became final and unappealable. The assessment issued is void and legally
non-existent because the BIR has no power to issue an assessment beyond the three-
year prescriptive period where there is no valid and binding waiver of the statute of
limitation.
IV.
The Honorable Court of Appeals gravely erred when it held that the assessment in
question has became final and executory due to the failure of the Petitioner to protest
the same. Respondent had no power to issue an assessment beyond the three year
period under the mandatory provisions of Section 203 of the NIRC. Such assessment
should be held void and non-existent, otherwise, Section 203, an expression of a
public policy, would be rendered useless and nugatory. Besides, such right to assess
cannot be validly granted after three years since it would arise from a violation of the
mandatory provisions of Section 203 and would go against the vested right of the
Petitioner to claim prescription of assessment.
V.
The Honorable Court of Appeals committed grave error when it HELD valid a
defective waiver by considering the latter a waiver of the right to invoke the defense
of prescription rather than an extension of the three year period of prescription (to
make an assessment) as provided under Section 222 in relation to Section 203 of the
Tax Code, an interpretation that is contrary to law, existing jurisprudence and outside
of the purpose and intent for which they were enacted.[16]
We find merit in the appeal.
The first assigned error relates to the jurisdiction of the CTA over the issues in this
case. The Court of Appeals ruled that only decisions of the BIR denying a request for
reconsideration or reinvestigation may be appealed to the CTA. Since the petitioner did not file
a request for reinvestigation or reconsideration within thirty (30) days, the assessment notices
became final and unappealable. The petitioner now argue that the case was brought to the CTA
because the warrant of distraint or levy was illegally issued and that no assessment was issued
because it was based on an invalid waiver of the statutes of limitations.
We agree with petitioner. Section 7(1) of Republic Act No. 1125, the Act Creating the
Court of Tax Appeals, provides for the jurisdiction of that special court:
SEC. 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive
appellate jurisdiction to review by appeal, as herein provided

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; (Emphasis supplied).
The appellate jurisdiction of the CTA is not limited to cases which involve decisions of
the Commissioner of Internal Revenue on matters relating to assessments or refunds. The
second part of the provision covers other cases that arise out of the NIRC or related laws
administered by the Bureau of Internal Revenue. The wording of the provision is clear and
simple. It gives the CTA the jurisdiction to determine if the warrant of distraint and levy issued
by the BIR is valid and to rule if the Waiver of Statute of Limitations was validly effected.
This is not the first case where the CTA validly ruled on issues that did not relate directly
to a disputed assessment or a claim for refund. In Pantoja v. David,[17] we upheld the
jurisdiction of the CTA to act on a petition to invalidate and annul the distraint orders of the
Commissioner of Internal Revenue. Also, in Commissioner of Internal Revenue v. Court of
Appeals,[18] the decision of the CTA declaring several waivers executed by the taxpayer as null
and void, thus invalidating the assessments issued by the BIR, was upheld by this Court.
The second and fifth assigned errors both focus on Revenue Memorandum Circular No.
20-90 (RMO No. 20-90) on the requisites of a valid waiver of the statute of limitations. The
Court of Appeals held that the requirements and procedures laid down in the RMO are only
formal in nature and did not invalidate the waiver that was signed even if the requirements were
not strictly observed.
The NIRC, under Sections 203 and 222,[19] provides for a statute of limitations on the
assessment and collection of internal revenue taxes in order to safeguard the interest of the
taxpayer against unreasonable investigation.[20] Unreasonable investigation contemplates cases
where the period for assessment extends indefinitely because this deprives the taxpayer of the
assurance that it will no longer be subjected to further investigation for taxes after the expiration
of a reasonable period of time. As was held in Republic of the Phils. v. Ablaza:[21]
The law prescribing a limitation of actions for the collection of the income tax is
beneficial both to the Government and to its citizens; to the Government because tax officers
would be obliged to act promptly in the making of assessment, and to citizens because after the
lapse of the period of prescription citizens would have a feeling of security against unscrupulous
tax agents who will always find an excuse to inspect the books of taxpayers, not to determine the
latters real liability, but to take advantage of every opportunity to molest peaceful, law-abiding
citizens. Without such a legal defense taxpayers would furthermore be under obligation to
always keep their books and keep them open for inspection subject to harassment by
unscrupulous tax agents. The law on prescription being a remedial measure should be
interpreted in a way conducive to bringing about the beneficent purpose of affording
protection to the taxpayer within the contemplation of the Commission which recommend
the approval of the law. (Emphasis supplied)
RMO No. 20-90 implements these provisions of the NIRC relating to the period of
prescription for the assessment and collection of taxes. A cursory reading of the Order supports
petitioners argument that the RMO must be strictly followed, thus:
In the execution of said waiver, the following procedures should be followed:
1. The waiver must be in the form identified hereof. This form may be
reproduced by the Office concerned but there should be no deviation from
such form. The phrase but not after __________ 19___ should be filled up
2.
Soon after the waiver is signed by the taxpayer, the Commissioner of Internal
Revenue or the revenue official authorized by him, as hereinafter
provided, shall sign the waiver indicating that the Bureau has accepted
and agreed to the waiver. The date of such acceptance by the Bureau should
be indicated
3. The following revenue officials are authorized to sign the waiver.
A. In the National Office

3. Commissioner For tax cases involving
more than P1M
B. In the Regional Offices
1. The Revenue District Officer with respect to tax cases still
pending investigation and the period to assess is about to prescribe
regardless of amount.
5. The foregoing procedures shall be strictly followed. Any revenue

official found not to have complied with this Order resulting in
prescription of the right to assess/collect shall be administratively
dealt with. (Emphasis supplied)[22]
A waiver of the statute of limitations under the NIRC, to a certain extent, is a derogation
of the taxpayers right to security against prolonged and unscrupulous investigations and must
therefore be carefully and strictly construed.[23] The waiver of the statute of limitations is not a
waiver of the right to invoke the defense of prescription as erroneously held by the Court of
Appeals. It is an agreement between the taxpayer and the BIR that the period to issue an
assessment and collect the taxes due is extended to a date certain. The waiver does not mean
that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where
the language of the document is equivocal. For the purpose of safeguarding taxpayers from any
unreasonable examination, investigation or assessment, our tax law provides a statute of
limitations in the collection of taxes. Thus, the law on prescription, being a remedial measure,
should be liberally construed in order to afford such protection. As a corollary, the exceptions
to the law on prescription should perforce be strictly construed.[24] RMO No. 20-90 explains the
rationale of a waiver:
... The phrase but not after _________ 19___ should be filled up. This indicates the expiry date
of the period agreed upon to assess/collect the tax after the regular three-year period of
prescription. The period agreed upon shall constitute the time within which to effect the
assessment/collection of the tax in addition to the ordinary prescriptive period. (Emphasis
supplied)
As found by the CTA, the Waiver of Statute of Limitations, signed by petitioners

comptroller on September 22, 1997 is not valid and binding because it does not conform with
the provisions of RMO No. 20-90. It did not specify a definite agreed date between the BIR
and petitioner, within which the former may assess and collect revenue taxes. Thus, petitioners
waiver became unlimited in time, violating Section 222(b) of the NIRC.
The waiver is also defective from the government side because it was signed only by a
revenue district officer, not the Commissioner, as mandated by the NIRC and RMO No. 20-
90. The waiver is not a unilateral act by the taxpayer or the BIR, but is a bilateral agreement
between two parties to extend the period to a date certain. The conformity of the BIR must be
made by either the Commissioner or the Revenue District Officer. This case involves taxes
amounting to more than One Million Pesos (P1,000,000.00) and executed almost seven months
before the expiration of the three-year prescription period. For this, RMO No. 20-90 requires
the Commissioner of Internal Revenue to sign for the BIR.
The case of Commissioner of Internal Revenue v. Court of Appeals,[25] dealt with waivers
that were not signed by the Commissioner but were argued to have been given implied consent
by the BIR. We invalidated the subject waivers and ruled:
Petitioners submission is inaccurate
The Court of Appeals itself also passed upon the validity of the waivers
executed by Carnation, observing thus:
We cannot go along with the petitioners theory. Section 319 of the

Tax Code earlier quoted is clear and explicit that the waiver of the five-
year[26] prescriptive period must be in writing and signed by both the
BIR Commissioner and the taxpayer.
Here, the three waivers signed by Carnation do not bear the

written consent of the BIR Commissioner as required by law.
We agree with the CTA in holding these waivers to be invalid and
without any binding effect on petitioner (Carnation) for the reason that
there was no consent by the respondent (Commissioner of Internal
Revenue).
For sure, no such written agreement concerning the said three waivers
exists between the petitioner and private respondent Carnation.
What is more, the waivers in question reveal that they are in no wise
unequivocal, and therefore necessitates for its binding effect the concurrence of the
Commissioner of Internal Revenue. On this basis neither implied consent can be
presumed nor can it be contended that the waiver required under Sec. 319 of the
Tax Code is one which is unilateral nor can it be said that concurrence to such an
agreement is a mere formality because it is the very signatures of both the
Commissioner of Internal Revenue and the taxpayer which give birth to such a
valid agreement.[27] (Emphasis supplied)
The other defect noted in this case is the date of acceptance which makes it difficult to fix
with certainty if the waiver was actually agreed before the expiration of the three-year
prescriptive period. The Court of Appeals held that the date of the execution of the waiver on
September 22, 1997 could reasonably be understood as the same date of acceptance by the
BIR. Petitioner points out however that Revenue District Officer Sarmiento could not have
accepted the waiver yet because she was not the Revenue District Officer of RDO No. 33 on
such date. Ms. Sarmientos transfer and assignment to RDO No. 33 was only signed by the BIR
Commissioner on January 16, 1998 as shown by the Revenue Travel Assignment Order No. 14-
98.[28] The Court of Tax Appeals noted in its decision that it is unlikely as well that Ms.
Sarmiento made the acceptance on January 16, 1998 because Revenue Officials normally have
to conduct first an inventory of their pending papers and property responsibilities.[29]
Finally, the records show that petitioner was not furnished a copy of the waiver. Under
RMO No. 20-90, the waiver must be executed in three copies with the second copy for the
taxpayer. The Court of Appeals did not think this was important because the petitioner need not
have a copy of the document it knowingly executed. It stated that the reason copies are
furnished is for a party to be notified of the existence of a document, event or proceeding.
The flaw in the appellate courts reasoning stems from its assumption that the waiver is a
unilateral act of the taxpayer when it is in fact and in law an agreement between the taxpayer
and the BIR. When the petitioners comptroller signed the waiver on September 22, 1997, it was
not yet complete and final because the BIR had not assented. There is compliance with the
provision of RMO No. 20-90 only after the taxpayer received a copy of the waiver accepted by
the BIR. The requirement to furnish the taxpayer with a copy of the waiver is not only to give
notice of the existence of the document but of the acceptance by the BIR and the perfection of
the agreement.
The waiver document is incomplete and defective and thus the three-year prescriptive
period was not tolled or extended and continued to run until April 17, 1998. Consequently, the
Assessment/Demand No. 33-1-000757-94 issued on December 9, 1998 was invalid because it
was issued beyond the three (3) year period. In the same manner, Warrant of Distraint and/or
Levy No. 33-06-046 which petitioner received on March 28, 2000 is also null and void for
having been issued pursuant to an invalid assessment.
WHEREFORE, premises considered, the instant petition for review is GRANTED. The
Decision of the Court of Appeals dated August 5, 2003 and its Resolution dated March 31, 2004
are REVERSED and SET ASIDE. The Decision of the Court of Tax Appeals in CTA Case
No. 6108 dated May 14, 2002, declaring Warrant of Distraint and/or Levy No. 33-06-046 null
and void, is REINSTATED.
SO ORDERED.
Taxation Waiver of the Statute of Limitations
In April 1995, the Philippine Journalists, Inc. (PJI) filed its income tax return for the year 1994. In 1995, a tax audit
was conducted by the Bureau of Internal Revenue (BIR) where it was found that PJI was liable for a tax deficiency.
In September 1997, PJI asked that it be allowed to present its evidence to dispute the finding. In the same month,
the Comptroller of PJI (Lorenza Tolentino) executed a waiver of the statute of limitations whereby PJI agreed
waived the running of the prescriptive period of the governments right to make an assessment. Said right was set
to expire on April 17, 1998 but due to the additional evidence that PJI sought to present, the government needed
more time.
And so a reinvestigation took place which yielded the same result PJI is liable for tax deficiencies. In December
1998, a formal assessment notice (FAN) was sent via registered mail to PJI. Subsequently, a warrant for
distraint/levy was issued against the assets of PJI.
PJI filed a protest which eventually reached the Court of Tax Appeals. PJI averred that the waiver executed by
Tolentino was incomplete; that no acceptance date was indicated to show that the waiver was accepted by BIR;
that no copy was furnished PJI; that the waiver was an unlimited waiver because it did not indicate as to how long
the extension of the prescriptive period should last. As such, there was no valid waiver of the statute of limitations
which in turn make the FAN issued in December 1998 void.
The Commissioner of Internal Revenue (CIR) argued that the placing of the acceptance date is merely a formal
requirement and not vital to the validity of the waiver; that there is no need to furnish PJI a copy of the waiver
because in the first place, it was PJI, through its representative, who was making the waiver so it should know
about it; and that there is no need to place a specific date as to how long the prescriptive period should be
extended because PJI was waiving the prescriptive period and was not asking to extend it.
The Court of Tax Appeals (CTA) ruled in favor of PJI. But the Court of Appeals reversed the CTA as it ruled in favor
of the CIR.
ISSUE: Whether or not the arguments of the CIR is valid.
HELD: No. The requirement to place the acceptance date is not merely formal. The waiver of the statute of
limitations is not a unilateral act by the taxpayer. The BIR has to accept it hence the need for a BIR representative
to affix his signature and the date of acceptance. There is also therefore a need to furnish a copy to the taxpayer
for the latter to be apprised that his waiver has been accepted. It must be noted that the waiver is an agreement
between the taxpayer and the BIR that the period to issue an assessment and collect the taxes due is extended to
a date certain and not to waive the right to invoke the defense of prescription. The waiver does not mean that the
taxpayer relinquishes the right to invoke prescription unequivocally particularly where the language of the
document is equivocal. For the purpose of safeguarding taxpayers from any unreasonable examination,
investigation or assessment, our tax law provides a statute of limitations in the collection of taxes. Thus, the law
on prescription, being a remedial measure, should be liberally construed in order to afford such protection.

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G.R. No.

L-41919-24 May 30, 1980

QUIRICO P. UNGAB, petitioner,

An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt

G.R. No. L-41919-24 May 30, 1980

QUIRICO P. UNGAB, petitioner,

Statement of the Case

Ruling of the Court of Appeals

The Courts Ruling

The petition is meritorious.

Main Issue: Assessment

Additional Issues: Assessment Not Necessary Before Filing of Criminal Complaint

"An assessment is not necessary before a criminal charge can be filed."

ISSUE: Is a formal assessment necessary in the filing of a criminal complaint?

COURT OF APPEALS and

-versus- PUNO, C.J., Chairperson,

2. WHETHER OR NOT AN ASSESSMENT IS REQUIRED UNDER THE SECOND

3. WHETHER OR NOT THERE WAS A VALID ASSESSMENT MADE BY THE

4. WHETHER OR NOT THE FILING OF A CRIMINAL COMPLAINT SERVES AS AN

5. WHETHER OR NOT THE FILING OF THE CRIMINAL INFORMATION FOR TAX

6. WHETHER OR NOT THE DOCTRINES LAID DOWN IN THE CASES OF YABES V.

1. WHETHER OR NOT THE INSTANT PETITION SHOULD BE DISMISSED FOR

3. WHETHER OR NOT THE COMPLAINT FILED WITH THE DEPARTMENT OF

4. WHETHER OR NOT THE COURT OF TAX APPEALS HAS JURISDICTION TO ACT

1. WHETHER THE COMMISSIONER HAS ALREADY RENDERED AN

3. WHETHER THE COURT OF TAX APPEALS HAS JURISDICTION TO TAKE

Respondents maintain that an assessment, in relation to taxation, is simply understood

The issuance of an assessment must be distinguished from the filing of a

1. It was not addressed to the taxpayers.

Sec. 269. Exceptions as to period of limitation of assessment and collection of taxes.-(a) In

An assessment of a deficiency is not necessary to a criminal prosecution for willful

(1) Decisions of the Commissioner of Internal Revenue in cases involving

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

(2) Inaction by the Commissioner of Internal Revenue in cases involving

IN VIEW WHEREOF, premises considered, judgment is rendered:

The factual antecedents of the case are undisputed:

Less: Cost of Sales/Services 938,543,252.00

Gross Income from Operation (15,973,949.00)

Add: Non-Operating & Other Income 74,995,982.00

Total Gross Income P 59,022,033.00

Less: Deductions 59,022,033.00

Tax Rate 32%

Income Tax NIL

Less: Tax Credits/Payments

Creditable Tax Withheld for the P 27,784,217.00

Fourth Quarter 41,778,195.00

Total Tax Credits/Payments P 69,652,412.00

Tax Payable/(Overpayment) (69,562,412.00)

The Ruling of the CTA in Division

The Ruling of the CTA En Banc

The Issue and Our Ruling

This is not novel.

Sec. 2.58.3.Claim for Tax Credit or Refund

(A) Pay the balance of tax still due; or

(B) Carry-over the excess credit; or

PUNO, C.J., Chairperson,

Sec. 229. Recovery of Taxes Erroneously or Illegally Collected. -- No suit or

Sec. 31. Legal Periods. Year shall be understood to be twelve calendar

COMMISSIONER OF INTERNAL REVENUE and ARTURO V. PARCERO, petitioners,vs.

PHILIPPINE JOURNALISTS, INC., G.R. No. 162852

Davide, Jr., C.J. (Chairman),

Value Added Tax P 229,527.90