COMMISSIONER OF CUSTOMS vs. HON.FEDERICO ALIKPALA
Nowhere does the law expressly vest in the Court of Tax
G.R. No. L-32542 NOVEMBER 26, 1970
FACTS:
The Collector of Customs of the port of Manila issued several
warrants of seizure and detention against the cargo of the
petitioners consisting of apples, lemons, oranges and grapes,
on the ground that they were imported in violation of Central
Bank circulars in relation to Section 2530-F (which declares
that articles of prohibited importation are subject to
forfeiture) of the Tariff and Customs Code.
In due time, the petitioners were notified of the seizure, but
before they could be heard, respondent Collector of Customs
issued a notice of sale of the imported fruits which was
scheduled for sale on August 10, 1970.
On August 11, 1970, the petitioners filed an action wherein it
was prayed that the Commissioner of Customs and the
Collector of Customs be restrained from carrying out the
seizure and scheduled auction sale of the fruits they imported
from abroad and that the said cargo be released to them under
the surety bonds which they have already submitted to
respondent Collector of Customs. The Court issued an order
setting the hearing of the petition for the issuance of a writ of
preliminary injunction on August 19, 1970, and restraining the
respondents, their agents, representatives and attorneys in
the meantime from carrying out the scheduled auction sale of
the fruits imported by the petitioners, until further orders from
the Court.
The petitioners filed with the Court of Tax Appeals a petition
seeking a review of the action taken by the Collector of
Customs of Manila who ordered the seizure of the imported
fresh fruits, with a prayer that pending final determination of
the case, a writ of preliminary injunction be issued restraining
the Commissioner of Customs and Collector of Customs from
carrying out the seizure. On August 12, 1970, said Court,
however, denied the petition on the ground that it had no
jurisdiction over the subject matter thereof and to grant the
writ of preliminary injunction.
ISSUE:
Whether or not respondent court acted with grave abuse oF
discretion when it granted the writ of preliminary injuncton.
RULING:
YES.
Appeals original jurisdiction to issue writs of prohibition or
injunction independently of, and apart from, an appealed case.
The writ of prohibition or injunction that it may issue under the
provisions of section 11, Republic Act No. 1125, to suspend the
collection of taxes, is merely ancillary to and in furtherance of
its appellate jurisdiction in the cases mentioned in section 7 of
the Act. The power to issue the writ exists only in cases
appealed to it. This is reflected in the explanatory note of the
bill (House No. 175), creating the Court of Tax Appeal.
Respondent Court of First Instance assumed jurisdiction over
the petition before it on the ground that "the question
presented for resolution (was) whether there was absence of
due process," citing our decision in Nadeco vs. Collector of
Customs, G.R. No. L-19180, Oct. 31, 1969. The said Court
found: "Counsel for the respondents admitted that the
petitioners have not been heard on the seizure proceedings
and the imported cargo have already been advertised for sale
and some would have been sold had not this Court issued a
restraining order." Due notice and hearing, besides being an
inherent element of due process, is provided for in Section
2303 of the Tariff and Customs Code, which requires the
Collector to give the owner or importer of the property written
notice of the seizure and an opportunity to be heard in relation
to the delinquency which was the occasion for such seizure, as
well as in Section 2601, which directs that seized property,
other than contraband, shall be subject to sale after liability to
sale shall have been established by proper administrative or
judicial proceedings in conformity with the provisions of said
Code.
In view of the foregoing, we hold that respondent Court of First
Instance had jurisdiction to take cognizance of the petition for
injunction before it. The remedy prayed for was one in equity,
which the petitioner below tried to seek in the Court of Tax
Appeals, but was denied on the ground that no appealable
decision had yet been rendered by the Collector and the
Commissioner of Customs.
The jurisdiction of respondent Court was not invoked to
determine the validity of the seizure proceedings, which are
pending before the Collector of Customs and regarding which
an appeal could be eventually taken only to the Tax Court, but
rather to stop the projected auction sale of the goods in
question and secure the release thereof under surety bond,
without prejudice to the main issue concerning the validity of
the seizure. Such relief is interlocutory in nature, and is
sanctioned by Section 2301 of the Tariff and Customs Code,
which provides that "upon making any seizure the Collector
shall issue a warrant for the detention of the property; but if
the owner or importer desires to secure the release of the
property for legitimate use, the Collector may surrender it
upon the filing of a sufficient bond, in an amount to be fixed
by him, conditioned for payment of the appraised value of the
article and/or any fine, expenses and costs which may be
adjudged in the case."
 CIR vs. AZUCENA REYES
G.R. No. 159694 JANUARY 27, 2006
FACTS:
By virtue of a sworn affidavit for reward by one Abad, an
investigation was conducted by BIR on the estate of the
deceased Maria Tancinco who died in 1993 leaving a
residential lot and old house in Dasmarinas, Makati. Without
submitting a preliminary finding report, a Letter of Assesment
was issued and received by respondent Reyes, one of the heirs
on 14 March 1997.
Then on 12 Feb 1998, a PAN was issued against the estate, and
a FAN as well as demand letter was issued on 22 April 1998 for
the assessment of P14.9M for estate tax of the estate of Maria
Tancinco. On March 11, 1999, the heirs proposed a
compromise settlement of P1,000,000.00.
During those dates, RA 8424 Tax Reform Act was already in
effect. RA 8424 stated that the taxpayer must be informed of
both the law and facts on which the assessment was based.
The notice required under the old law was no longer sufficient
under the new law. First, RA 8424 has already amended the
provision of Section 229 on protesting an assessment. The old
requirement of merely notifying the taxpayer of the CIR’s
findings was changed in 1998 to informing the taxpayer of not
only the law, but also of the facts on which an assessment
would be made; otherwise, the assessment itself would be
invalid.
Due to failure to pay tax on the deadline BIR notified on June
6, 2000 that the subject property would be sold at public
auction on August 8, 2000. Hence the petition for review filed
by Reyes in CTA and a TRO to desist and refrain from
proceeding with the auction sale of the subject property or
from issuing a warrant pending determination of the case
and/or unless a contrary order is issued.
The CIR filed a motion saying CTA has no jurisdiction since the
assessment against the estate is already final and executory;
and (ii) that the petition was filed out of time
The CTA Ruled in favour of CIR ordering Reyes to pay the estate
tax amounting to 19M. CTA ratiocinated that there can only be
a perfected and consummated compromise of the estate’s tax
liability, if the NEB has approved Reyes’ application for
compromise in accordance with RR No. 6-2000, as
implemented by RMO No. 42-2000.
ISSUE:
1.Whether or not the assessment against the estate is valid.
2.Whether the compromise entered into is valid.
RULING:
1. NO. Under the present provisions of the Tax Code and
pursuant to elementary due process, taxpayers must be
informed in writing of the law and the facts upon which a tax
assessment is based; otherwise, the assessment is void. Being
invalid, the assessment cannot in turn be used as a basis for
the perfection of a tax compromise. This was clear and
mandatory under Section 228.
Reyes was not informed in writing of the law and the facts on
which the assessment of estate taxes had been made. She was
merely notified of the findings by the CIR, who had simply
relied upon the provisions of former Section 22913 prior to its
amendment by Republic Act (RA) No. 8424, otherwise known
as the Tax Reform Act of 1997.
To be simply informed in writing of the investigation being
conducted and of the recommendation for the assessment of
the estate taxes due is nothing but a perfunctory discharge of
the tax function of correctly assessing a taxpayer. The act
cannot be taken to mean that Reyes already knew the law and
the facts on which the assessment was based. It does not at all
conform to the compulsory requirement under Section 228.
Moreover, the Letter of Authority received by respondent on
March 14, 1997 was for the sheer purpose of investigation and
was not even the requisite notice under the law.
2. It would be premature for this Court to declare that the
compromise on the estate tax liability has been perfected and
consummated, considering the earlier determination that the
assessment against the estate was void. Nothing has been
settled or finalized. Under Section 204(A) of the Tax Code,
where the basic tax involved exceeds one million pesos or the
settlement offered is less than the prescribed minimum rates,
the compromise shall be subject to the approval of the NEB
composed of the petitioner and four deputy commissioners.
Finally, as correctly held by the appellate court, this provision
applies to all compromises, whether government-initiated or
not. Ubi lex non distinguit, nec nos distinguere debemos.
Where the law does not distinguish, we should not distinguish.
CIR vs. WYETH SUACO LABORATORIES
G.R. No. 76281 September 30, 1991
FACTS:
On December 19, 1974, Wyeth Suaco received notice of
assessment from the BIR for its failure to remit withholding tax
at source for the 4th quarter of 1973. The same was based on
accrued royalties, remuneration for technical services paid
abroad and cash dividends, including the deduction of non-
deductible raw materials from its reports.
The company, thru its tax consultant, SVG & co., sent BIR two
letters dated January 17, 1975 and February 8, 1975 protesting
the assessment and requesting their cancellation or
withdrawal on the ground that said assessments lacked factual
or legal basis. Wyeth Suaco argued that it was not liable to pay
withholding tax at source on the accrued royalties and
dividends because they have yet to be remitted or paid
abroad. It claimed that it was not able to remit the balance of
fifty percent (50%) of the accrued royalties to its foreign
licensors because of Central Bank Circular No. 289 allowing
remittance of royalties up to fifty percent (50%) only. With
regard to what the Bureau of Internal Revenue claimed as the
amount of P2,952,391.00 forming part of the cash dividends
declared in 1973, Wyeth Suaco alleged that the same was due
its foreign stockholders.
On September 12, 1975, the CIR offered to compromise, but
only resulted to a slight reduction of the tax as per the acting
Commissioner’s decision on December 10,1979. Subsequently,
on January 18, 1980, Wyeth Suaco filed petition for review
with the CTA, praying that CIR been joined from enforcing the
assessments by reason of prescription and that assessments
be declared null and void for lack of legal and factual basis.
The CTA decided against the CIR holding that while the
assessments for the deficiency taxes were made within the
five-year period of limitation, the right of CIR to collect the
same has already prescribed, in accordance with Sec. 319(c) of
the NIRC.
ISSUE:
Whether or not the right of CIR to collect has already
prescribed.
RULING:
NO. Although the protest letters prepared by SGV & Co. in
behalf of private respondent did not categorically state or use
th words "reinvestigation" and "reconsideration," the same
are to be treated as letters of reinvestigation and
reconsideration. By virtue of these letters, the Bureau of
Internal Revenue ordered its Manufacturing Audit Division to
review the assessment made. Furthermore, private
respondent's claim that it did not seek reinvestigation or
reconsideration of the assessments is belied by the
subsequent correspondence or letters written by its officers,
as shown above.
These letters of Wyeth Suaco interrupted the running of the
five-year prescriptive period to collect the deficiency taxes.
The Bureau of Internal Revenue, after having reviewed the
record of Wyeth Suaco, in accordance with its request for
reinvestigation, rendered a final assessment. This final
assessment issue by then Acting Commissioner Ruben B.
Ancheta was date December 10, 1979 and received by private
respondent on January 2, 1980, fixed its tax liability at
P1,973,112.86 as deficiency withholding tax at source and
P61,155.21 as deficiency sales tax. It was only upon receipt by
Wyeth Suaco of this final assessment that the five-year
prescriptive period started to run again.
Verily, the original assessments dated December 16 and 17,
1974 were both received by Wyeth Suaco on December 19,
1974. However, when Wyeth Suaco protested the assessments
and sought its reconsideration in two (2) letters received by
the Bureau of Internal Revenue on January 20 and February 10,
1975, the prescriptive period was interrupted. This period
started to run again when the Bureau of Internal Revenue
served the final assessment to Wyeth Suaco on January 2,
1980. Since the warrants of distraint and levy were served on
Wyeth Suaco on March 12, 1980, then, only about four (4)
months of the five-year prescriptive period was used.
JOSE AZNAR vs. Court of Tax Appeals
GR No. 20569, 23 August 1974
FACTS:
Petitioner, as administrator of the estate of the deceased,
Matias H. Aznar, seeks a review and nullification of the
decision of the Court of Tax Appeals ordering the petitioner to
pay the government the sum of P227,691.77 representing
deficiency income taxes for the years 1946 to 1951. An
investigation by the Commissioner of Internal Revenue (CIR)
ascertained the assets and liabilities of the taxpayer and it was
discovered that from 1946 to 1951, his net worth had
increased every year, which increases in net worth was very
much more than the income reported during said years. The
findings clearly indicated that the taxpayer did not declare
correctly the income reported in his income tax returns for the
aforesaid years.
Petitioner avers that according to the NIRC, the right of the CIR
to assess deficiency income taxes of the late Aznar for the
years 1946, 1947, and 1948 had already prescribed at the time
the assessment was made on November 28, 1952; there being
a five year limitation upon assessment and collection from the
filing of the returns.
Meanwhile, respondents believe that the prescription period
in the case at bar that is applicable is under Sec. 332 of the
NIRC which provides that: "(a) In the case of a false or
fraudulent return with intent to evade tax or of a failure to file
a return, the tax may be assessed, or a proceeding in court for
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". Petitioner argues said provision does not
apply because the taxpayer did not file false and fraudulent
returns with intent to evade tax.
ISSUE:
1.Whether or not the deceased Aznar filed false or fraudulent
income tax returns.
2.Whether or not the action has prescribed.
RULING:
1. YES. Petitioner argues that Sec. 332 of the NIRC does not
apply because the taxpayer did not file false and fraudulent
returns with intent to evade tax, while respondent
Commissioner of Internal Revenue insists contrariwise, with
respondent Court of Tax Appeals concluding that the very
"substantial under declarations of income for six consecutive
years eloquently demonstrate the falsity or fraudulence of the
income tax returns with an intent to evade the payment of
tax."
To our minds we can dispense with these controversial
arguments on facts, although we do not deny that the findings
of facts by the Court of Tax Appeals, supported as they are by
very substantial evidence, carry great weight, by resorting to a
proper interpretation of Section 332 of the NIRC. We believe
that the proper and reasonable interpretation of said provision
should be that in the three different cases of (1) false return,
(2) fraudulent return with intent to evade tax, (3) failure to file
a return, the tax may be assessed, or a proceeding in court for
the collection of such tax may be begun without assessment,
at any time within ten years after the discovery of the (1)
falsity, (2) fraud, (3) omission. Our stand that the law should
be interpreted to mean a separation of the three different
situations of false return, fraudulent return with intent to
evade tax, and failure to file a return is strengthened
immeasurably by the last portion of the provision which
segregates the situations into three different classes, namely
"falsity", "fraud" and "omission". That there is a difference
between "false return" and "fraudulent return" cannot be
denied. While the first merely implies deviation from the truth,
whether intentional or not, the second implies intentional or
deceitful entry with intent to evade the taxes due.
2. NO. The ordinary period of prescription of 5 years within
which to assess tax liabilities under Sec. 331 of the NIRC should
be applicable to normal circumstances, but whenever the
government is placed at a disadvantage so as to prevent its
lawful agents from proper assessment of tax liabilities due to
false returns, fraudulent return intended to evade payment of
tax or failure to file returns, the period of ten years provided
for in Sec. 332 (a) NIRC, from the time of the discovery of the
falsity, fraud or omission even seems to be inadequate and
should be the one enforced.
There being undoubtedly false tax returns in this case, We
affirm the conclusion of the respondent Court of Tax Appeals
that Sec. 332 (a) of the NIRC should apply and that the period
of ten years within which to assess petitioner's tax liability had
not expired at the time said assessment was made.