Case Summary (G.R. No. 156413)
BIR Inspection and Criminal Complaint
On October 15, 1993, the Commissioner issued a notice of deficiency for unpaid capital gains tax and VAT. On October 22, 1993, she filed an Affidavit of Complaint with the DOJ, alleging willful violations of NIRC Sections 45(a), 45(d), 110, 100, 253, 252(b)/(d) and Section 255; State Prosecutor found probable cause.
RTC Proceedings and Dismissal
Criminal cases were docketed in RTC Makati. Petitioners moved to dismiss or suspend proceedings, arguing lack of a formal assessment and pendency of related civil cases. RTC initially denied but on reconsideration (August 8, 1994) held that the complaints constituted appealable decisions and lacked jurisdiction, thus dismissing the criminal cases.
Court of Appeals Reinstates Criminal Cases
The Commissioner appealed. On March 21, 1995, the CA reversed the RTC. It held that tax evasion is complete upon filing a fraudulent return with intent to evade; formal assessment is not prerequisite. The CA found prima facie evidence of fraudulent returns and reinstated Criminal Cases Nos. 94-1842 to 94-1846. Reconsideration was denied (July 6, 1995).
CTA Petition for Review and CA Ruling
Concurrently, petitioners filed with the CTA (March 15, 1994) to contest the BIR’s findings. The Commissioner moved to dismiss for lack of formal assessment. On September 19, 1994, the CTA considered the DOJ complaint an implied assessment and denied the motion to dismiss. The Commissioner’s CA appeal (decided March 29, 1996) upheld the CTA.
Definition and Requirements of an Assessment
Supreme Court jurisprudence (Pascor Realty) defines an assessment as a written notice from the BIR to the taxpayer demanding payment within a specific period and triggering penalties and interest. An affidavit attached to a criminal complaint, addressed to the DOJ and lacking demand or payment period, does not qualify as an assessment.
Exception Under Section 222 of the NIRC
Section 222(a) (formerly Sec. 269) permits criminal prosecution for false or fraudulent returns or failure to file without prior assessment, within ten years of discovery. The Court reaffirmed that in cases of fraudulent returns, a criminal complaint may proceed independently of formal assessment.
Jurisdiction of the Court of Tax Appeals
Under RAs 1125, 8424 and 9282, the CTA has exclusive appellate jurisdiction over final decisions or inaction of the Commissioner and exclusive original jurisdiction over criminal tax offenses where the tax involved exceeds
Case Syllabus (G.R. No. 156413)
Procedural History
- The Supreme Court consolidated G.R. No. 120935 and G.R. No. 124557 for decision.
- G.R. No. 120935: Petition for review on certiorari under Rule 45 filed by Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes (in their capacities as officers of AMC) against Commissioner Liwayway Vinzons-Chato and the Court of Appeals decision in CA-G.R. SP No. 35488.
- G.R. No. 124557: Petition for review on certiorari filed by the Commissioner of Internal Revenue against the Court of Appeals decision in CA-G.R. SP No. 35520 upholding CTA Resolution in C.T.A. Case No. 5075.
Facts
- June 20, 1990: AMC and Lucas Adamson sold 131,897 AAI shares to APAC Holding Limited for ₱7,789,995.00 and paid ₱159,363.21 as capital gains tax.
- October 12, 1990: AMC sold 229,870 additional AAI shares to APAC Philippines, Inc. for ₱17,718,360.00 and paid ₱352,242.96 capital gains tax.
- October 15, 1993: Commissioner issued a “Notice of Taxpayer” alleging deficiencies in capital gains tax and VAT, and scheduled a preliminary conference.
- October 22, 1993: Commissioner filed criminal Affidavit of Complaint with DOJ for violations of NIRC Sections 45(a) & (d), 110 (in relation to 100), 253 (in relation to 252(b) & (d)) as penalized by Sections 255 and 100.
- Preliminary investigation found probable cause; complaints were filed before RTC Makati (Criminal Case Nos. 94-1842 to 94-1846).
- RTC initially denied, then on reconsideration (August 8, 1994) dismissed the criminal complaints for lack of jurisdiction, ruling that an assessment is appealable to the CTA and pending civil assessment case deprived RTC of jurisdiction.
- Commissioner sought relief with the Court of Appeals, which on March 21, 1995 reversed RTC and reinstated criminal complaints. Motion for reconsideration denied July 6, 1995.
- Meanwhile, AMC and officers filed a letter-request for reinvestigation (Dec 1, 1993) and a petition for review with the CTA (March 15, 1994). CTA on September 19, 1994 denied the Commissioner’s motion to dismiss for prematurity, treating the criminal complaint as an implied assessment.
Issues
- G.R. No. 120935 rais