TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS FITNESS BY DESIGN V. COMMISSIONER OF INTERNAL REVENUE G.R. No.

177982 October 17, 2008 FACTS: On March 17, 2004, the Commissioner on Internal Revenue (respondent) assessed Fitness by Design, Inc. (petitioner) for deficiency income taxes for the tax year 1995 in the total amount of P10,647,529.69. Petitioner protested the assessment on the ground that it was issued beyond the three-year prescriptive period under Section 203 of the Tax Code. Additionally, petitioner claimed that since it was incorporated only on May 30, 1995, there was no basis to assume that it had already earned income for the tax year 1995. On February 1, 2005, respondent issued a warrant of distraint and/or levy against petitioner, drawing petitioner to file on March 1, 2005 a Petition for Review before the Court of Tax Appeals before which it reiterated its defense of prescription. In his Answer, respondent alleged: The right of the respondent to assess petitioner for deficiency income tax, VAT and Documentary Stamp Tax for the year 1995 has not prescribed pursuant to Section 222(a) of the 1997 Tax Code. Petitioner's 1995 Income Tax Return (ITR) filed on April 11, 1996 was false and fraudulent for its deliberate failure to declare its true sales. Petitioner declared in its 1995 Income Tax Return that it was on its pre-operation stage and has not declared its income. Investigation by the revenue officers of the respondent, however, disclosed that it has been operating/doing business and had sales operations for the year 1995 in the total amount of P7,156,336.08 which it failed to report in its 1995 ITR. Thus, for the year 1995, petitioner filed a fraudulent annual income return with intent to evade tax. Likewise, petitioner failed to file Value-Added Tax (VAT) Return and reported the amount of P7,156,336.08 as its gross sales for the year 1995. Hence, for failure to file a VAT return and for filing a fraudulent income tax return for the year 1995, the corresponding taxes may be assessed at any time within ten (10) years after the discovery of such omission or fraud pursuant to Section 222(a) of the 1997 Tax Code. The subject deficiency tax assessments have already become final, executory and demandable for failure of the petitioner to file a protest within the reglementary period provided for by law. The "alleged protest" allegedly filed on June 25, 2004 at the Legal Division, Revenue Region No. 8, Makati City is nowhere to be found in the BIR Records nor reflected in the Record Book of the Legal Division as normally done by our receiving clerk when she receive[s] any document. The respondent, therefore, has legal basis to collect the tax liability either by distraint and levy or civil action. the CTA denied petitioner's Motion for Issuance of Subpoenas and disallowed the submission by petitioner of written interrogatories to Sablan, who is not a party to the case, and the revenue officers, it finding that the testimony, documents, and admissions sought are not relevant. Besides, the CTA found that to require Sablan to testify would violate Section 2 of Republic Act No. 2338, as implemented by Section 12 of Finance Department Order No. 46-66, proscribing the revelation of identities of informers of violations of internal revenue laws, except when the information is proven to be malicious or false. In any event, the CTA held that there was no need to issue a subpoena duces tecum to obtain the Affidavit of the Informer as the same formed part of the BIR records of the case, the production of which had been ordered by it. ISSUE: 1. W/N the submission of petitioner’s documents to the BIR without its consent means that the latter obtained it illegally. RATIO: 1. No. Petitioner impugns the manner in which the documents in question reached the BIR, Sablan having allegedly submitted them to the BIR without its (petitioner's) consent. Petitioner's lack of consent does not, however, imply that the BIR obtained them illegally or that the information received is false or malicious. Nor does the lack of consent preclude the BIR from assessing deficiency taxes on petitioner based on the documents. Thus Section 5 of the Tax Code provides: In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized: (A) To examine any book, paper, record or other data which may be relevant or material to such query; (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned and -controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships and their members; (C) To summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other person, to appear before the Commissioner or his duly authorized representatives at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony; (D) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry; and (E) To cause revenue officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax, and all persons owning or having the care, management or possession of any object with respect to which a tax is imposed. x x x x (Emphasis and underscoring supplied) The law thus allows the BIR access to all relevant or material records and data in the person of the taxpayer, and the BIR can accept documents which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed. To require the consent of the taxpayer would defeat the intent of the law to help the BIR assess and collect the correct amount of taxes. Petitioner's invocation of the rights of an accused in a criminal prosecution to cross examine the witness against him and to have compulsory process issued to secure the attendance of witnesses and the production of other evidence in his behalf does not lie. CTA Case No. 7160 is not a criminal prosecution, and even granting that it is related to I.S. No. 2005-203, the respondents in the latter proceeding are the officers and accountant of petitioner-corporation, not petitioner. From the complaint and supporting affidavits in I.S. No. 2005-203, Sablan does not even appear to be a witness against the respondents therein. DISPOSITIVE PORTION: WHEREFORE, in light of the foregoing disquisition, the petition is DISMISSED. ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 1

This prompted the team with the assistance of the PC Company. The law is specific and clear. The rule on the "best evidence obtainable" applies when a tax report required by law for the purpose of assessment is not available or when the tax report is incomplete or fraudulent. Accordingly. Costs against petitioner. 16. In the taxable years 1964 to 1972. 81446 August 18. statements. Mr.R. ISSUE: Whether or not the assessments have valid and legal bases? RATIO: YES. The warrants were admittedly received by petitioner on October 14. The taxpayer has the duty to prove otherwise. the Commissioner of Internal Revenue shall assess the proper tax on the best evidence obtainable.When a report required by law as a basis for the assessment of an national internal revenue tax shall not be forthcoming within the time fixed by law or regulation or when there is reason to believe that any such report is false. On the basis of a denunciation against Silver Cup allegedly "for tax evasion amounting to millions of pesos" the then Secretary of Finance Cesar Virata directed the Finance-BIR-NBI team constituted to conduct the corresponding investigation in a memorandum dated April 2. On the basis of the team's report of investigation. Benipayo G. SY PO vs. which shall be prima facie correct and sufficient for all legal purposes. 1971. It reads: Sec. reports and other documents. The findings of fact of the respondent Court of Tax Appeals are entitled to the highest respect.R. The existence of fraud as found by the respondents can not be lightly set aside absent substantial evidence presented by the petitioner to counteract such finding. respectively. In case a person fails to file a required return or other document at the time prescribed by law. Po Bien Sing. Po Bien Sing deficiency income tax for 1966 to 1970 and for deficiency specific tax for January 2. SO ORDERED. Costs against the petitioner. No. Cebu City. or willfully or otherwise. incomplete. we find that the fraudulent acts detailed in the decision under review had not been satisfactorily rebutted by the petitioner.1971. CA G. consisting of 1. He was engaged in the business of manufacture and sale of compounded liquors. We do not find anything in the questioned decision that should disturb this long-established doctrine. 1962 FACTS: Respondent is the owner and operator of the Lucena Theater located in the ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 2 .1971 and May 3. files a false or fraudulent return or other documents. Petitioner protested the deficiency assessments. Power of the Commissioner of Internal Revenue to make assessments. an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. the Petition is DENIED. DISPOSITIVE PORTION: WHEREFORE.TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS conferred upon him under Section 16 of the Tax Code. On the whole.— xxx xxx xxx (b) Failure to submit required returns. 1972. 1988 FACTS: Petitioner is the widow of the late Mr. or erroneous. compelling respondent to issue warrants of distraint and levy. 1981. using alcohol and other ingredients as raw materials. There are indeed clear indications on the part of the taxpayer to deprive the Government of the taxes due. the persistent failure of the late Po Bien Sing and the herein petitioner to present their books of accounts for examination for the taxable years involved left the Commissioner of Internal Revenue no other legal option except to resort to the power CIR vs. In the absence of proof of any irregularities in the performance of duties. All presumptions are in favor of the correctness of tax assessments. SO ORDERED. L-13656 January 31. were issued against Silver Cup requesting production of the accounting records and other related documents for the examination of the team. The tax figures arrived at by the Commissioner of Internal Revenue are by no means arbitrary.555 cases of alcohol products. the deceased Po Bien Sing was the sole proprietor of Silver Cup Wine Factory. the respondent Commissioner of Internal Revenue assessed Mr.1964 to January 19. a letter and a subpoena duces tecum dated April 13. Tax assessments by tax examiners are presumed correct and made in good faith. OTHER DOCTRINE: The applicable legal provision is Section 16(b) of the National Internal Revenue Code of 1977 as amended. The corresponding report recommended the reiteration of the assessments in view of the taxpayer's persistent failure to present the books of accounts for examination. In the instant case. No. Po Bien Sing did not produce his books of accounts as requested. The Decision of the respondent Court of Tax Appeals is hereby AFFIRMED. the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise. to enter the factory bodega of Silver Cup and seized different brands. . which petitioner deemed respondent's decision denying her protest on the subject assessments.

it must be supported by clear and convincing proof which. while during the period in question. against ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 3 ." In a letter dated April 5. DISPOSITIVE PORTION: WHEREFORE. the late Juan G. As soon as it is served. assessments should not be based on mere presumptions no matter how reasonable or logical said presumptions may be. . an obligation arises on the part of the taxpayer concerned to pay the amount assessed and demanded.45 covering the period from August. inclusive of 25% surcharge. the Commissioner informed Maniago of his findings and ruling and therefore denied Maniago's claim for informer's reward on a non-existent deficiency. SAVELLANO G. 1953. After considering said report. The returns from July 1-11. since under the law then prevailing "in the case of dividends received by a domestic or foreign resident corporation liable to (corporate income) tax under this Chapter . the appealed judgment is hereby affirmed with costs. represents and conveys the true picture of the situation under the law of averages. demanding from the latter the payment of the total sum of P12. L-36181 October 23. In view thereof. Quezon. the Conference Staff of the BIR recommended to the Collector of Internal Revenue the issuance of the deficiency amusement tax assessment in question. cheated and defrauded the government by selling to each adult patron two children's tax-free tickets instead of one ticket subject to the amusement tax provided for in Section 260 of the National Internal Revenue Code. After due hearing. the remaining 68. for the years 1962-1966. Internal Revenue Agent Romeo de Guia investigated respondent's amusement tax liability in connection with the operation of said theater during the period from August.. to the absence of agents in the premises. for a considerable period of time. 1955.e. the same does not give rise to the inference that the same conditions existed during the years in question (1952 and 1953). petitioner referred the case back to the Provincial Revenue Agent of Quezon for further investigation. What respondent appears to have admitted was that during a certain limited period he had adopted a sort of rebate system applicable to cases where adults and children . instead of one 40-centavo ticket for each adult customer. Petitioner issued a deficiency amusement tax assessment against respondent. Respondent filed the corresponding protest with the Conference Staff of the BIR. devoid of findings of the fact of the alleged fraudulent practices of the herein taxpayer". This action of the Commissioner was sustained by the Secretary of Finance.152. in the present case. discontinued when he was informed by the Bureau of Internal Revenue that it was not in accordance with law. In the case under consideration there are no substantial facts to support the assessment in question.193. in order to avoid payment of the amusement tax prescribed in Section 260 of the National Internal Revenue Code. i. and as recommended by the Conference Staff. thereby allegedly shortchanging the government of income tax due from 75% of the said dividends.24.only twenty-five per centum thereof shall be returnable for the purposes of the tax imposed under this section. however. But during the period from July 14 . From this he concluded that respondent must have fraudulently sold two tax-free 20-centavo tickets. During this said period due. 1982 FACTS: In 1967.This practice was. 1952 to September.. . De Guia's indorsement report to this Office's new findings of a proportion of 76:24. the assessment must be based on actual facts. Hence. one child was also admitted. provided that the film being shown is not a children's show." The Commissioner accordingly rejected Maniago's contention that the Meralco from whom the dividends were received is "not a domestic corporation liable to tax under this Chapter. subject taxpayer was able to manipulate the issuance of tickets in the way and manner alleged in Asst. to be sustained. There is no hard and fast rule in this regard. The presumption of correctness of assessment being a mere presumption cannot be made to rest on another presumption that the circumstances in 1952 and 1953 are presumed to be the same as those existing in 1949 to 1951 and July 1955. . 1955 does not provide a sufficient inference on the conditions in 1952 and 1953. No. to cheat or defraud the Government RATIO: ITt should be borne in mind that to sustain the deficiency tax assessed against respondent would amount. to a finding that he had. . The fact that almost the same ratio existed during the month of July. .754 consisted of adults. is lacking. but this findings would seem to admit no contradiction.three children to one adult. the Conference Staff submitted to petitioner CIR its finding to the effect that the "meager reports of these fieldmen (Examiner de Guia and the Provincial Revenue Agent of Quezon) are mere presumptions and conclusions.R.00 for violation of section 260 of the National Internal Revenue Code. in effect. 1968.93 within thirty days from receipt thereof.. 1953 De Guia submitted his report to the Provincial Revenue Agent to the effect that respondent had disproportionately issued tax-free 20-centavo children's tickets. Bernardo after this last investigation partly reads as follows:. 1953 inclusive. SC Affirmed CA: An assessment fixes and determines the tax liability of a taxpayer. when agents of this Office supervised in the sales of admission tickets the sales for adults soared upwards to 76% while that for children dropped correspondingly to 24%. showed that 31. or a total sum of P12. for every three adults entering the theater. sold and issued to his adult customers two tax-free 20-centavo children's tickets. It is opined without fear of contradiction that the ratio of three (3) adults to every one (1) child in the audience or a proportion of 75:25 as reckoned in Asst. perhaps. Petitioner CIR caused the investigation of the denunciation after which he found and held that no deficiency corporate income tax was due from the Meralco Securities Corporation on the dividends it received from the Manila Electric Co. . Based on the average ratio between adult and children attendance in the past years. In order to stand the test of judicial scrutiny.57% of children. The claim that respondent admitted having resorted to the anomalous practice already mentioned is not entirely correct.093.TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS municipality of Lucena. ISSUE: Whether or not there is sufficient evidence in the record showing that respondent. On October 15. Assuming arguendo that the average ratio of adults and children patronizing the Lucena Theater from 1949 to 1951 was 3 to 1.45. The report submitted by Provincial Revenue Officer H. plus a suggested compromise penalty of P900. 1952 to September. during the period under review.. Fraud is a serious charge and.43% of the entire audience of 12. Maniago filed a petition for mandamus in the Court of First Instance of Manila. De Guia's indorsement report mentioned above. MERALCO SECURITIES CORPORATION vs. Maniago (substituted in these proceedings by his wife and children) submitted to petitioner CIR confidential denunciation against the Meralco Securities Corporation for tax evasion for having paid income tax only on 25 % of the dividends it received from the Manila Electric Co. the proportion is reversed .I. Examiner de Guia recommended a deficiency amusement tax assessment against respondent in the sum of P11. His finding was that during the years 1949 to 1951 the average ratio of adults and children patronizing the Lucena Theater was 3 to 1.

since the office of the Commissioner of Internal Revenue is charged with the administration of revenue laws. after the Commissioner who is specifically charged by law with the task of enforcing and implementing the tax laws and the collection of taxes had after a mature and thorough study rendered his decision or ruling that no tax is due or collectible. 2008 FACTS: BIR Commissioner Parayno wrote to the DOJ Secretary Gonzales. much less any collection. 1954. JUDY ANN SANTOS VS PEOPLE G.612. which is the primary responsibility of the executive branch of the government. respondent judge's writ for the Commissioner to pay respondents 25% informer's reward is gross error and without factual nor legal basis. arguing that since in matters of issuance and non-issuance of assessments. which constitutes a prima facie evidence of false or fraudulent return under Sec. ISSUES: 1. The question of whether or not to impose a deficiency tax assessment on Meralco Securities Corporation undoubtedly comes within the purview of the words "disputed assessments" or of "other matters arising under the National Internal Revenue Code. whereby any stranger or informer would be allowed to usurp and control the official functions of the Commissioner of Internal Revenue would create disorder and confusion. The BIR found that Judy Anne reported an income of ₱8M although BIR’s findings show that she earned at least ₱16. penalties imposed in relation thereto. Since no taxes are to be collected. Thus. 254 and 255 of the Tax Code. now Minister of Finance (whose act is that of the President unless reprobated). On the other hand. 3 He failed to take such an appeal to the tax court. 1973 and his order dated April 6. Thus. no deficiency taxes may therefore be assessed and collected against the said corporation. that the action is premature. The determination of the correctness or incorrectness of a tax assessment to which the taxpayer is not agreeable. under section 7 of Republic Act No. 173176 August 26. or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue. the Commissioner filed a separate petition with this Court praying that the decision of respondent judge dated January 10. 1973 are hereby reversed and set aside. falls within the jurisdiction of the Court of Tax Appeals and not of the Court of First Instance. No. 1973 be reconsidered for respondent judge has no jurisdiction over the subject matter of the case and that the issuance or non-issuance of a deficiency assessment is a prerogative of the Commissioner of Internal Revenue not reviewable by mandamus. The respondent judge rendered a decision granting the writ prayed for and ordering the Commissioner of Internal Revenue to assess and collect from the Meralco Securities Corporation the sum of P51. enacted June 16. He was referring to conducting a preliminary investigation and filing of an information in court if evidence so warrant based on the affidavit attached on the letter. A contrary view. Hence. refunds of internal revenue taxes. and his decision is sustained by the Secretary. may be availed of by strangers or informers like the late Maniago. Section 7 of Republic Act No. 6 Purely administrative and discretionary functions may not be interfered with by the courts. decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. Whether or not the lower court had jurisdiction over the case RATIO: 1. Whether or not the respondent judge can compel the Commissioner of Internal Revenue to assess deficiency corporate income tax against Meralco Securities 2. no informer's reward is due to private respondents as the informer's heirs. Since no assessment. such decision or ruling is a valid exercise of discretion in the performance of official duty and cannot be controlled much less reversed by mandamus. 1125. that mandamus win not lie to compel the Commissioner of Internal Revenue to make an assessment and/or effect the collection of taxes upon a taxpayer. Informer's reward is contingent upon the payment and collection of unpaid or deficiency taxes. fees or other charges. The Meralco Securities Corporation (now First Philippine Holdings Corporation) likewise appealed the same decision of respondent judge. the petitions are hereby granted and the questioned decision of respondent judge dated January 10. 1125. He recommended the prosecution of Judy Anne Santos for substantial underdeclaration of income. An informer is entitled by way of reward only to a percentage of the taxes actually assessed and collected. has been made in the instant case. if not chaos and total disruption of the operations of the government. The ruling is clearly final and no longer subject to review by the courts. among others. The Commissioner filed a motion to dismiss. 4 It is furthermore a well-recognized rule that mandamus only lies to enforce the performance of a ministerial act or duty 5 and not to control the performance of a discretionary power. With costs against private respondents. DISPOSITIVE PORTION: WHEREFORE. 7 Moreover. 1973 and order dated April 6. he cannot be compelled to impose the alleged tax deficiency assessment against the Meralco Securities Corporation.R. the Meralco Securities Corporation filed its answer interposing as special and/or affirmative defenses that the petition states no cause of action. No.840. even assuming arguendo that the right granted the taxpayers affected to question and appeal disputed assessments. ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 4 .TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS the Commissioner of Internal Revenue and the Meralco Securities Corporation to compel the Commissioner to impose the alleged deficiency tax assessment on the Meralco Securities Corporation and to award to him the corresponding informer's reward.00 as deficiency corporate income tax for the period 1962 to 1969 plus interests and surcharges due thereon and to pay 25% thereof to Maniago as informer's reward. granted to the Court of Tax Appeals exclusive appellate jurisdiction to review by appeal. mandamus may not he against the Commissioner to compel him to impose a tax assessment not found by him to be due or proper for that would be tantamount to a usurpation of executive functions.4M in the same year. Respondent judge has no jurisdiction to take cognizance of the case because the subject matter thereof clearly falls within the scope of cases now exclusively within the jurisdiction of the Court of Tax Appeals. the most that he could have done was to appeal to the Court of Tax Appeals the ruling of petitioner Commissioner of Internal Revenue within thirty (30) days from receipt thereof pursuant to section 11 of Republic Act No. 1125. Considering then that respondent judge may not order by mandamus the Commissioner to issue the assessment against Meralco Securities Corporation when no such assessment has been found to be due. he is clothed under the National Internal Revenue Code and existing rules and regulations with discretionary power in evaluating the facts of a case and since mandamus win not lie to compel the performance of a discretionary power.

Hizon G.[52] It has the power to investigate the commission of crimes. and violations of ordinances committed within the territorial jurisdiction of the city. No. and which can be prosecuted before the trial courts of the said city. excluding interest and penalties. More than 3 years after." the findings of the BIR officers recommending the criminal prosecution of petitioner. Section 220 of the NIRC.4M…” (around ₱1. Although the City Prosecutor has the power to investigate crimes. BIR Commissioner Parayno's letter of 19 May 2005 already states his express approval of the filing of an information against petitioner and his signature need not appear on the Resolution of the State Prosecutor or the Information itself. but it does not describe in what form such approval must be given. On the same ground of lack authority. premises considered. simply requires that the BIR Commissioner approve the institution of civil or criminal action against a tax law violator. In said letter.116. In contrast. She asserts that the information was filed without the approval of the BIR Commissioner in violation of Sec. for reasons not known. is already within the exclusive original jurisdiction of the CTA. the DOJ is the principal law agency of the Philippine government which shall be both its legal counsel and prosecution arm. Petitioner argues that respondent’s request for reinvestigation of her tax deficiency assessment on November 3.[ 1. DISPOSITIVE PORTION: WHEREFORE.TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS Note: I think this part is not relevant The Prosecution Attorney issued a resolution finding probable cause and recommending the filing of an information against Judy Ann for violation of Sec. find probable cause against petitioner during the preliminary investigation.359. there is nothing in the Revised Quezon City Charter which would suggest that the power of the City Prosecutor to investigate and prosecute crimes. and violations of ordinances committed within the territorial jurisdiction of the city is to the exclusion of the State Prosecutors. misdemeanors.24. 1997.[53] Under the DOJ is the Office of the State Prosecutor whose functions are described. and the Special Prosecutor's authority to sign and file informations in court proceeds from the exercise of said person's authority to conduct preliminary investigations. The City Prosecutor does not have the authority to appear before the CTA. as amended. the Office of the State Prosecutor exercises control and supervision over City Prosecutors under Executive Order No. ISSUES: Moreover. and feloniously file a false and fraudulent income tax return for the year 2002 by indicating therein a gross income of ₱8M when in truth her correct income for the year is ₱16. 130430 December 13. 1986. respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. Later. misdemeanors. SO ORDERED. Juday filed a Motion to Quash the Information on the following grounds: the facts alleged in the information do not constitute an offense the officer who filed the information had no authority to do so (relevant) CTA has no jurisdiction over the subject matter of the case Information is void ab initio. an Information was filed by the Prosecution Attorney before the CTA alleging that “Judy Ann willfully. unlawfully. In this case. BIR Commissioner Parayno already gave his prior approval to the filing of an information in court should the DOJ. She appeals to the SC via a petition for review. On January 1. it filed a case with the Regional Trial Court to collect the tax deficiency. 1992 effectively suspended the running of the period of prescription such that the government could still file a case for tax collection. 1999 FACTS: On July 18.395.R. based on the evidence submitted. The BIR denied the request. 220 of the NIRC. the BIR issued to respondent a deficiency income tax assessment of P1. it did not proceed to dispose of the attached properties. otherwise known as the Administrative Code of 1987. on January 12. Prosecution Attorney has authority to file the information Republic v.113. The charge against petitioner. however. she asserts that it is the City Prosecutor of QC who has the authority to file the information not the Prosecution Attorney since the crime was committed in Quezon City. 255 in relation to Sec. But it was lifited when Judy Ann appeared voluntarily and filed the required bail bond. 254 and 248N of the NIRC. The power or authority of the Chief State Prosecutor and his deputies in the Department of Justice to prosecute cases is national in scope. Her arraignment was scheduled. ISSUE: WON the Prosecution Attorney has the authority to file the information? YES RATIO: Approval was already given by the Commissioner Juday’sargument must fail in light of BIR Commissioner Parayno's letter dated 19 May 2005 to DOJ Secretary Gonzales referring "for preliminary investigation and filing of an information in court if evidence so warrants. petitioner. as the Information states that her gross underdeclaration resulted in an income tax deficiency of P1. served warrants of distraint and levy to collect the tax deficiency.4M income tax deficiency” CTA then issued a warrant of arrest. 292. being violative of due process and equal protection of the laws CTA denied the MTQ. the instant Petition for Review is hereby DENIED. Respondent not having contested the assessment. w/n the complaint was without approval of the BIR Commissioner as required by ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 5 . 1989. However.68 covering the fiscal year 1981-1982. prosecute offenders and administer the probation and correction system. In fact. Costs against petitioner. She argues that the Prosecution Attorney lacks authority to file the Information. which is now of the same rank as the Court of Appeals.

any tax deficiency: Provided. where compromise requested on the ground of doubtful validity of the assessment can be compromised. w/n the action had already prescribed RATIO: No. it being understood that the jewelry may be delivered to Rovero upon payment of the legal duties. 1994. dated Aug. the Commissioner of Customs found that Rovero had attempted to import the jewelry by fraudulent entry. unappealable and. that it was not the first time that Rovero was guilty of fraudulent entry against the Government because there had been an instance where jewelries were found in his wallet. Rovero received from the Collector of Customs the 259 pieces of jewelry after he had paid the corresponding duty and all charges and the fine of trebel the reappraised value of P9. he having bought them in Bangkok for $4. and minor criminal violations as may be determined by rules and regulations to be promulgated by the Secretary of Finance. 5-83 and 10-95 are in harmony with this statutory mandate. HELD: NO. it should be here stated that according to the RECEIPT. 1952 FACTS: ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 6 . Rovero never mentioned to said Customs officials the presence of said pieces of jewelry in the Chinese vase. As amended by R. said manifestation be stricken from the record and he ordered the Sheriff to carry out the order of execution.880 (not the original appraisal of P23. RAO Nos. After promulgation of the decision of the SC.800. were the jewelries were reappraised at P9. Amparo G. No. For this reason the Commissioner of Customs declared that the seizure of said 259 pieces of jewelry was proper." Incidentally. He brought with him several pieces of baggage. demandable. therefore. and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept. In a decision. Thus. plus the fine. the Committee filed its report. and that upon his failure to take delivery of the articles. Not satisfied with that decision Rovero appealed the case to the CFI Manila which later affirmed the decision of the Commissioner of Customs. seized as property subject to forfeiture under sec1363 (m-2) in relation to sec1292 of the Revised Administrative Code (RAC). 1. It must be clear that the said supervision and control over the judicial Rovero v. respondent made her request for reconsideration thereof only on November 3. The Secretary of Finance granted authority "for the setting aside of the original appraisement and for the collection of the fine imposed by the Supreme Court and of the customs duties and charges based on the reappraisement value of P9. that assessments issued by the Regional Offices involving basic deficiency taxes of five hundred thousand pesos (P500. Acting upon said petition the Collector of Customs in a memorandum order created a Committee on Reappraisement. Evidently. DISPOSITIVE PORTION: WHEREFORE the petition is DENIED. and petitioning for a reappraisal of said jewelry. By order. which the Customs officials appraised at P23. 7 of the present Code authorizes the BIR Commissioner to delegate the powers vested in him under the pertinent provisions of the Code to any subordinate official with the rank equivalent to a division chief or higher. The jewelry was. Rovero wrote to the Commissioner of Customs a letter. Hence. and that he purposely concealed them in the false bottom of the Chinese vase and reasoned out that he was afraid that he might be robbed by hold-up men. Although the Commissioner acted on her request by eventually denying it on August 11. among which was a Chinese vase which he declared and valued at P15.R.353.000. and that he did not then have enough cash with which to pay the duties and taxes which he figured to amount to about P6. CFI declared that it appearing from the "manifestation of satisfaction of judgment" that the full amount of the judgment had not been paid. No. heads of the Legal. None of the exceptions relates to the Commissioner’s power to approve the filing of tax collection cases.736. but that under sec1365 of the same Code. Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer. the Customs officials were not impressed by his explanation. her request for reconsideration was nonetheless filed late since she made it more than 30 days thereafter. The next day. however. 8424.000. Even assuming that she first learned of the deficiency assessment on this date.TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS Sec 221of the NIRC 2. No.A. L-5482 May 5. 1992. except the following: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance. 229 of the Code mandates that a request for reconsideration must be made within 30 days from the taxpayer’s receipt of the tax deficiency assessment. and after the decision has become final the jewelry will be sold at public auction for the satisfaction of the Government's claim.736). as members. and that such jewelry was subject to forfeiture under sec1363 (m-2) of the RAC. therefore. 1951. In the course of the examination of said Chinese vase. (c) The power to compromise or abate under §204(A) and (B) of this Code. 1986. it was found that it had a false bottom which upon being broken open was seen to hold a tin can containing 259 pieces of jewelry with precious stones.00) or less. upon the recommendation of the Commissioner. The notice of assessment for respondent’s tax deficiency was issued by petitioner on July 18. On the other hand. discovered by regional and district officials. stating that the case of the 259 pieces of jewelry was still pending in this Tribunal. Rovero was found guilty of violating sec2703 of the RAC and a fine. revoke or modify any existing ruling of the Bureau. Petitioner Rovero in 1947 arrived at the Makati Airport on board a PAL plane which came from Bangkok. MR denied. 23.880. the NIRC is now even more categorical. The vase together with some of the baggage were retained by the Customs officials for they suspected that they contained merchandise not declared which should pay customs duty. Sec. forfeiture was waived and in lieu thereof a fine in an amount equal to three times the appraised value of the jewelry was imposed. (b) The power to issue rulings of first impression or to reverse. this present petition. the Assistant Regional Director. otherwise the assessment becomes final. Rovero admitted that the pieces of jewelry belonged to him. ISSUE: W/N cases which become final and executory after the final judgment of a court. compensating tax and other charges due thereon. 2. She explained that she was constrained to ask for a reconsideration in order to avoid the harassment of BIR collectors. may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman. Sec. without stating when she received the notice of tax assessment. this is of no moment and does not detract from the fact that the assessment had long become demandable. her request for reconsideration did not suspend the running of the prescriptive period provided under Sec 223(c).

he is not authorized to accept anything different from or anything less than what is adjudicated in favor of the Government. and Things Seized under Authority of the National Internal Revenue Code” was executed. 2241(1) of the Civil Code. or. and it is contended by petitioner that the appraisal ordered by the Commissioner of Customs and sanctioned by the Department of Finance was authorized by Sec1369 of the same Code. Articles. on the ground that under these provisions only taxes and fees which are due on specific movables enjoyed preference. adjust their difficulties by mutual consent in manner which they agree on.TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS proceedings cannot be extended to the modification of a final decision of a court. 2247. including the appeal will be reimbursed to it. DEPUTY CITY SHERIFF CARMELO V. 1994 FACTS: On January 12. Petrache. But surely he cannot under the guise of supervision and control of judicial proceedings. 1985 on Yoly T. MARITIME ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 7 . for preventing for putting an end to a lawsuit. SABINO. modify or alter a final decision of a court. the conduct of the hearing. were served on January 28. fixed tax. in the alternative. 1985. The four barges were then sold by the deputy sheriff at a public auction to on August 12. however in the present case. to the SC. The assessment became final and executory as private respondent did not contest it.21.882. the President alone under Art VII. DANIEL C. six barges identified as MCP-1. the right of compromise claimed on behalf of the Commissioner under Sec1369 of the RAC is clearly inapplicable at this stage of the judicial proceedings. avoid a litigation or terminate one already commenced. among other things. TULIAO and TULMAR TRADING CORPORATION G. Now. Black's Law Dictionary says: "A compromise is an agreement between two or more persons. There is no longer any uncertainty as to the result of the litigation because the Government has definitely and finally won it. ISSUE: WON the warrant of distraint served by the Revenue Seizure Officer is valid. but it has been finally decided by the highest Tribunal.2. as far as the Republic is concerned. Daniel C. adverse to the Government. But they did not pay their tax liability either. 6% Commercial Broker’s tax. The contention may be correct as regards private parties who are the owners of the property subject-matter of the litigation. 1985 a “Receipt for Goods. private respondent’s accountant. COMPANY OF THE PHILIPPINES. 1985. NATIONAL LABOR RELATIONS COMMISSION. v. Unless expressly authorized by his principal or by law." Here. DOMINGO C. only the Legislature by suitable enactment may dispose of it. in the form of money or property belonging to the Government. There no longer is any necessity or reason for its exercise. NIANGAR. so the CIR issued warrants of distraint of personal property and levy of real property of private respondent. CACHERO. had been validly placed under constructive distraint..284. In other words. promising or retaining something or otherwise making reciprocal concessions. the presentation of evidence and even the taking of an appeal from the decision of the CFI. 74965 November 9. it acquired a vested right to the money represented by the fine based on the original appraisement of the jewelry in question. Moreover.736 has not only been taken to court. the petition is granted. for P490. the motion for reconsideration is denied. it appears that four of the barges placed under constructive distraint were levied upon execution by respondent deputy sheriff of Manila on July 20.3. Not so. the time for compromise is over. even to the extent of renouncing the award. against the writ of execution subsequently levied upon the same property by the deputy sheriff of Manila to satisfy the claims of employees in the NLRC Case Domingo C. Niangar.45. Labor Arbiter Ceferina Diosana denied the motion on the ground that the CIR failed to show that the barges which were levied upon and sold.’s tax liabilities. including an appellate court or stay execution of a final judgment in favor of the Government by receiving of said Government anything less than what the judgment calls for. vs. The receipt was prepared by the BIR for the signature of a representative of Maritime Co.R. subsequently sold them to Fernando S. but it was not signed. Copies of the warrants. Here. FERNANDO S. petitioner asked the Labor Arbiter to annul the sale and to enjoin the sheriff from disposing of the proceeds. or condoning the obligation imposed by the judgment of the adverse party. balanced by the danger of losing. 1985. The National Internal Revenue Code provides for the collection of delinquent taxes by any of the following remedies: (a) distraint of personal property or levy of real property of the delinquent taxpayer and (b) civil or criminal action. as they please. documentary stamp tax. whereas the taxes claimed by petitioner were not due on the four barges in question. COMMISSIONER OF INTERNAL REVENUE. and which every one of them prefers to the hope of gaining. Art 1809 of the old CC and Art 2028 of the NCC define a COMPROMISE as a contract whereby the parties in interest by giving. The individuals who had possession of the barges had refused to sign the receipt. covering. The original controversy about the legality of the seizure of the jewelry. Sec10 of the Constitution can remit such fine. HELD/RATIO: YES. He is a mere agent of the Government and acts as a trustee of the money or property in his hands or coming thereto by virtue of a favorable judgment. It is an undertaking by the taxpayer or person in possession of the property covered that he will preserve the property and deliver it upon order of the court or the Internal Revenue Commissioner. In the form of a fine. Maritime Co.749. and who are therefore free to do with what they own or what is awarded to them. in relation to Art.5 and 6. It is argued that the parties to a case may enter into a compromise about even a final judgment rendered by a court. 1984 the Commissioner of Internal Revenue sent two letters of demand to the respondent Maritime Company of the Philippines for deficiency common carrier’s tax. DISPOSITIVE PORTION: In view of all the foregoing. Whatever expense caused to the Government as a result of the suit in court. the imposition of the fine treble the appraised value of P23. No. because of the adjudication of costs in its favor. Tuliao and Tulmar Trading Corporation. the Commissioner of Customs is not a private party and is not the owner of the money involved in the fine based on the original appraisal. remit them to the Bureau of Internal Revenue so that the amount could be applied to the payment of Maritime Co. On April 16. the period for compromise had definitely ended. both dated January 23. there is nothing more to compromise. 1985 to satisfy a judgment for unpaid wages and other benefits of employees of respondent Maritime Co. Sabino. income tax and withholding taxes in the total amount of P17. The Labor Arbiter likewise rejected the contention that the government’s claim for taxes was preferred under Art. The Commissioner of Customs may supervise and control the filing of pleadings. On September 4. who. The highest bidder. For the Government. When the Republic of the Philippines won the case in court by virtue of a final judgment. This receipt is required by § 303 (now § 206) of the NIRC as proof of the constructive distraint of property. et al.4.

the Labor Arbiter nevertheless held that there was no valid distraint on the ground that the receipt of property distrained had not been signed by the taxpayer: “His own receipts for goods attached to his motions does not show that it was received by Maritime. is retiring from any business subject to tax. and the purchaser in an auction sale acquires only such right as the judgment debtor had at the time of sale. or intends to leave the Philippines. or perform any act tending to obstruct the proceedings. among which were the four barges (MCP-2. the record of the prior case also shows that on October 4. He did not find any lien or encumbrance on any of the said four barges. Execution sales affect the rights of the judgment debtor only. any provision of law to the contrary notwithstanding. “Apart from the foregoing. long before the writ of execution was issued by the Regional Trial Court of Manila. .” In addition. he conducted an investigation on the ownership of the barges. 1986 of respondent NLRC in NLRC Case No. 1985. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. for collecting the tax due or which may be due from him. where the validity of the distraint of the six barges. 222 SCRA 264 [1993]) DISPOSITIVE PORTION: WHEREFORE. “enjoy first preference. and 2246-2249 of the Civil Code. movable and immovable. ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 8 . 1985) than the levy on execution in the labor case on July 20. . what was said in the prior case in upholding the validity of distraint fully applies in this case: “It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. had been distrained. Melo in behalf of Maritime Company of the Philippines. It is also well-settled that the sheriff is not authorized to attach or levy on property not belonging to the judgment debtor. 1985. in his opinion. Enriquez. Worker preference in case of bankruptcy. of the Insolvent as taxpayer. . 1. neither does it show any signature of any of Maritime’s Officers. the two (2) barges. (Development Bank of the Philippines vs. Unpaid wages shall be paid in full before other creditors may establish any claims to a share in the assets of the employer. [T]he claim of the Bureau of Internal Revenue for unpaid tobacco inspection fees constitutes a claim for unpaid internal revenue taxes which gives rise to a tax lien upon all the properties and assets. The petitioners admitted that the receipt of property distrained had not been signed by the taxpayer or person in possession of the property allegedly because they had refused. the revenue officer effecting the constructive distraint shall proceed to prepare a list of such property and in the presence of two witnesses leave a copy thereof in the premises where the property distrained is located. The power of the court in execution of judgments extends only to properties unquestionably belonging to the judgment debtor. through the Commissioner of Internal Revenue. the SC has held that Art. or hide or conceal his property.” a copy of which was received by Atty. OTHER DOCTRINES: Constructive distraint of the property of a taxpayer. and respondent deputy sheriff Carmelo V. under Articles 2241 No. the distraint on the subject properties of Maritime Company of the Philippines as well as the notice of their seizure were made by petitioner. together with the receipt of the Coast Guard.TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS With respect to the four barges in question. Redentor R. pursuant to Art. Thus it cannot be true that the Commissioner effected a valid warrant of distraint of personal property on the barges in question. the Commissioner of Internal Revenue may place under constructive distraint the property of a delinquent taxpayer or any taxpayer who. 110. which included the four in this case. In case the taxpayer or the person having the possession and control of the property sought to be placed under constructive distraint refuses or fails to sign the receipt herein referred to. The “Notice of Seizure of Personal Property. were no longer properties of the Maritime Company of the Philippines.” This case has the same facts as Republic v. This is clear from the text of the law: ART. this tax claim must be given preference over any other claim of any other creditor. 1. MCP-5. 110 of the Labor Code applies only in case of bankruptcy or judicial liquidation of the employer. his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation. after which the said property shall be deemed to have been placed under constructive distraint. Sheriff Cachero stated that before he sold the subject four barges. In addition.” Republic v.” Nor is there any merit in the contention of the NLRC that taxes are absolutely preferred claims only with respect to movable or immovable properties on which they are due and that since the taxes sought to be collected in this case are not due on the barges in question the government’s claim cannot prevail over the claims of employees of the Maritime Company of the Philippines which. 110 of the Labor Code. National Labor Relations Commission. The constructive distraint of personal property shall be effected by requiring the taxpayer or any person having possession or control of such property to sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispose of the same in any manner whatever without the express authority of the Commissioner of Internal Revenue. petitioner resorted to constructive distraint pursuant to § 303 (now § 206) of the NIRC.2242 No. There is no question then that at the time the writ of execution was issued.Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on classification and preference of credits. The SC found that the “Receipt for Goods. Peralta rejected a similar contention: “. MCP-3. Clearly. Articles and Things Seized under Authority of the National Internal Revenue Code” covering the six barges had been duly executed. MCP1 and MCP-4. or remove his property therefrom.—In the event of bankruptcy or liquidation of an employer’s business. NCR-12-4233-84 is SET ASIDE insofar as it denies the government’s claim for taxes. belies the claim of the deputy sheriff that when he levied upon the four barges there was no indication that the barges had previously been placed under distraint. Although the warrant of distraint in this case had been issued earlier (January 23. was sustained against the levy on execution made by another deputy sheriff of Manila in another case filed against Maritime Company. in respect of any and all properties of the Insolvent. This case does not involve the liquidation of the employer’s business. the Commissioner of Internal Revenue issued a “Notice of Seizure of Personal Property” stating that the goods and chattels listed on its reverse side. Branch 31. but the receipt had been duly acknowledged by the Coast Guard which obviously had the barges in its possession. and MCP-6).—To safeguard the interest of the Government. the petition for certiorari is GRANTED and the resolution dated April 4. Besides. Accordingly.

ATILANO BARTOLOME BAUTISTA CABRALES CASTRO DUEÑAS FERMIN GUEVARA MACALINO SAMSON TAGRA VALLO WILWAYCO 9 .TAXATION 2 REMEDIES: PRELIMINARY PROVISIONS Cachero or his successor is ORDERED to remit the proceeds of the auction sale to the Bureau of Internal Revenue to be applied as party payment of respondent Maritime Company’s tax liabilities. SO ORDERED.

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