Digests 3 of 5
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Philippine National Oil Company vs Court of Appeals G.R. 109976 – April 26, 2005 -TirsoSavellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings and yields from the money placements of PNOC, which was violative of P.D. 1931 (which withdrew all tax exemptions of GOCCs) -Acting on such information, the BIR requested PNOC to settle the aforementioned tax liability; PNOC offered to compromise the same by proposing that it be set-off against a claim by NAPOCOR for tax refund/credit (the amount of the tax refund was supposedly a receivable account of PNOC from NAPOCOR) -The proposalwas found premature by the BIR as NAPOCOR’s claim was still under process, so PNOC amended its offer and offered to pay an amount representing 30% of the basic tax in accordance with E.O. 44;The same was accepted by BIR Commissioner Bienvenido Tan -Meanwhile,Savellano was paid the informer’s reward (15% of the tax collected from PNOC and PNB); A month after receiving his last installment for the reward, Savellano wrote the BIR to demand payment of the balance of his reward, to which the BIR (through Comm. Tan) replied that Savellano was no longer owed by them as he had already received an amount equal to 15% of the compromise agreement proposed by PNOC; Savellano sought a reconsideration of the decision, questioning the legality of the compromise agreement between the BIR and PNOC -While his Motion for Reconsideration was yet pending with the BIR, Savellano filed a Petition for Review with the CTA claiming Comm. Tan acted with grave abuse of discretion in entering into a compromise agreement with PNOC which immensely lessened his informer’s reward -Ultimately, new BIR Commissioner Jose Ong, found meritorious Savellano’s Motion for Reconsideration and ordered the PNB to pay the deficiency withholding tax on the interest earnings from PNOC’s money placements -The CTA later on likewise found the compromise agreement entered into between the BIR and PNOC as without any force and effect; They likewise ordered that upon payment by PNOC, Savellano was entitled to the balance of his informer’s reward -The CA concurred with the CTA decision and affirmed the same, hence the case at bar Issue/s: 1. Was the CTA declaration finding the compromise agreement between the BIR and PNOC valid?
2. Was the CTA finding that the deficiency withholding tax assessment against PNB was already final and unappealable and unenforceable valid? 3. Was the CTA order directing payment of additional informer’s reward for Savellano valid? Held: 1. Compromise agreement between PNOC and BIR is void for being contrary to law and public policy 2. The withholding tax assessment vs. PNB had become final and unappealable 3. Savellano is entitled to be paid the remainder of his informer’s reward Ratio: 1. PNOC could not apply for a compromise under E.O. 44 because its tax liability was not a delinquent account or a disputed assessment. PNOC’s tax liability could not be considered a delinquent account because it was not self-assessed as the BIR conducted an investigation after receiving information from Savellano. Nor is there a deficiency assessment present. Neither PNOC or PNB conducted self-assessment, and neither was there any tax assessment issued by the BIR vs them. PNOC and PNB were both silent about their tax liabilities until they were assessed thereon. (Try to make it more specific or particular by infusing your own understanding of E.O. 44. This is alien to me so I won’t elaborate too much, foundation nalangito to make your work easier. Anghaba din ng Ratio, grabe. I think this might be the only or at least the main issue/premise where tax is heavily involved.) 2. The CTA and the CA declared as final and unappealable (and thus unenforceable) the assessment vs PNB since PNB failed to protest it within the 30-day prescribed period. 3. Savellano is entitled to additional informer’s award since the BIR had already collected the full amount of the tax assessment against PNB. (Sec. 316(1) of the 1977 NIRC)
Commissioner of Internal Revenue vsPascor Realty and Development Corp. G.R. 128315 – June 29, 1999 -Then BIR Commissioner Jose Ong authorized certain Revenue Officers to examine the books of accounts and other accounting records of Pascor Realty for the years 1986-1988 -The CIR Comm. Filed a criminal complaint vsPascor and some of its officers before the DOJ alleging evasion of taxes; a subpoena was issued by the BIR against Pascor in connection with the criminal complaint -Pascor had filed an Urgent Request for Reconsideration/Reinvestigation but the same was denied as no formal assessment had yet been issued by the CIR Comm., so Pascor elevated the decision to the CTA -The CIR sought to dismiss the petition claiming that the CTA had no jurisdiction, but the CTA denied the motion to dismiss and instead ordered the CIR to file an answer -The CIR, instead of filing an answer, filed the current petition alleging that the CTA acted with grave abuse of discretion and without jurisdiction in considering the report of the revenue officers and its indorsement by the secretary of justice as an assessment (which may be appealable to the CTA) -The CTA denied the motion to dismiss yet again, stating that the criminal case for tax evasion is already an assessment and as such they obtained jurisdiction over the dispute; hence, the case at bar Issue/s: 1. W/n the criminal complaint for tax evasion can be construed as an assessment? (MAIN ISSUE) 2. W/n an assessment is necessary before criminal charges for tax evasion may be instituted? 3. W/n the CTA can take cognizance of the case in the absence of an assessment? Held: Petition MERITORIOUS. Assailed decision REVERSED and SET ASIDE. Ratio: Neither the NIRC nor the regulations governing the protest of assessments provide a specific definition or form of an assessment, but the NIRC does define the specific functions and effects of an assessment, and 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.
While it is true that an assessment informs the taxpayer that he/she has tax liabilities, not all documents from the BIR containing a computation of the tax liability can be deemed assessments. It must be sent to and received by a taxpayer and must demand payment of the taxes described therein within a specified period. It is deemed made only when the collector of internal revenue releases, mails, or sends such notice to the taxpayer. In the case at bar, the revenue officers’ affidavit merely contained a computation of Pascor’s tax liability. It did not state a demand or a period for payment, and was even addressed to the secretary of justice and not Pascor. The fact that it was specifically directed and sent to the DOJ and not Pascor shows that the intent of the CIR Comm. was to file a criminal complaint for tax evasion, not to issue an assessment.
Ferdinand R. Marcos II vs CA G.R. 120880 – June 5, 1997 -When former president Ferdinand Marcos died, investigations and examinations of his tax liabilities and obligations were made (as well as to those of his family and cronies); Such investigation revealed that the Marcoses failed to file a written notice of the former president’s death as well as several income tax returns, in violation of the NIRC -The eldest son of the former president,Bongbong Marcos, questions the acts of the CIR Commissioner of assessing and collecting estate and income tax delinquencies upon the estate and properties of his late father (as well as his and the rest of their family’s members) despite the pendency of the proceedings on probate of the will of the latter; Bongbong claims such was done with disregard of the established procedure for the enforcement of taxes due upon the estate of the deceased -Bongbong sought for a writ of preliminary injunction and/or restraining order to annul and set aside certain orders and notices of the CIR Commissioner (including the public auction of several parcels of land seized from the Marcoses) but the CA dismissed such petitions; hence the case at bar Issue: W/n the proper venues of assessment and collection of the said tax obligations were taken by the BIR? Held: Petition DENIED. CA decision AFFIRMED. Ratio: The approval of the court sitting in probate or as a settlement tribunal over the deceased is not a mandatory requirement in the collection of estate taxes. The Tax Bureau had not erred in proceeding with the levying and sale of the properties allegedly owned by Ferdinand Marcos for not first seeking the probate court’s sanction. There is nothing in the Tax Code that implies the necessity of the probate or estate settlement court’s approval of the state’s claim for estate taxes before it can be enforced and collected. Section 87 of the NIRC in fact states that “it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent’s estate to deliver any distributive share to any party interested in the estate unless it is shown a Certification by the Commisioner of Internal Revenue that the estate taxes have been paid.” If there was any issue as to the validity of the BIR’s decision to assess estate taxes, it should have been pursued through the proper administrative and
judicial avenues provided by law, namely under Section 229 of the NIRC. (PLEASE ADD NALANG)