G.R. No. 128315 – 368 Phil. 714 – 309 SCRA 402 – Taxation Law – NIRC Rules of Procedure – Function of an Assessment Notice – Filing of Criminal Case for Tax Evasion – An affidavit-complaint for tax evasion is not a formal assessment notice
Pascor Realty and Development Corporation (PRDC) was found out to be liable for a total of P10.5 million tax deficiency for the years 1986 and 1987. In March 1995, the Commissioner of Internal Revenue (CIR) filed a criminal complaint against PRDC with the Department of Justice. Attached to the criminal complaint was a joint affidavit executed by the tax examiners.
PRDC then filed a protest with the Court of Tax Appeals (CTA). PRDC averred that the affidavit attached to the criminal complaint is tantamount to a formal assessment notice (FAN) hence can be subjected to protest; that there is a simultaneous assessment and filing of criminal case; that the same is contrary to due process because it is its theory that an assessment should come first before a criminal case of tax evasion should be filed. The CIR then filed a motion to dismiss (MTD) on the ground that the CTA has no jurisdiction over the case because the CIR has not yet issued a FAN against PRDC; that the affidavit attached to the complaint is not a FAN; that since there is no FAN, there cannot be a valid subject of a protest.
The CTA however denied the MTD. It ruled that the joint affidavit attached to the complaint submitted to the DOJ constitutes an assessment; that an assessment is defined as simply the statement of the details and the amount of tax due from a taxpayer; that therefore, the joint affidavit which contains a computation of the tax liability of PRDC is in effect an assessment which can be the subject of a protest. This ruling was affirmed by the Court of Appeals.
ISSUE: Whether or not the Court of Tax Appeal is correct.
HELD: No. 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 protests 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 CTA. Further, such affidavit was not issued to the taxpayer, it was submitted as an attachment to the DOJ. It must also be noted that not every document coming from the Bureau of Internal Revenue which provides a computation of the tax liability of a taxpayer can be considered as an assessment. An assessment is deemed made only when the CIR releases, mails or sends such notice to the taxpayer.
Anent the issue of the filing of the criminal complaint, Section 222 of the National Internal Revenue Code 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 NIRC clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously.
