G.R. No. 230104 - Bureau of Internal Revenue vs. Cagang

1987 Philippine Constitution (taxing power and separation of powers)
National Internal Revenue Code of 1997, as amended (Sections 253[d], 255, 256)
Republic Act No. 9480 (2007 Tax Amnesty Law) and its Implementing Rules and Regulations (Department Order No. 29-07)

February–April 2003: BIR issued and CEDCO sought cancellation of Letter of Authority to examine books (taxable years 1997–2001); BIR denied cancellation.
May 2005: BIR issued Preliminary Assessment Notice assessing income tax, VAT, expanded withholding tax, and withholding tax on compensation for 2000–2001.
December 2005: Formal Letter of Demand for ₱126,564,315.98.
February 2006: CEDCO (through Cagang) protested; September 2007: BIR denied protest via Final Decision on Disputed Assessment (FDDA).
November 2007: CEDCO availed of tax amnesty under RA 9480 for unpaid national internal revenue taxes prior to 2006; paid amnesty tax December 2007.
June 2008: BIR demanded payment of deficiency; August 2009: complaint affidavit filed against Cagang and Paredes for violation of Section 255 (wilful failure to pay taxes).

March 12, 2010: DOJ-NPS Task Force dismissed complaint for lack of probable cause, distinguishing pending prosecutor’s office cases from court-filed cases.
January 5, 2011: DOJ-NPS denied BIR’s motion for reconsideration.
February 27, 2012: Undersecretary denied BIR’s petition for review.
August 13, 2013: Secretary of Justice Leila De Lima granted BIR’s petition, reversed prior resolutions, and directed filing of criminal information against respondents.

October 2013: Cagang filed petition for certiorari before the CA challenging Secretary’s August 2013 Resolution.
February 11 and September 17, 2014: Informations filed in Court of Tax Appeals and Regional Trial Court for income tax, VAT, expanded withholding tax, withholding tax on compensation.
June 27, 2016: CA granted Cagang’s petition, annulled DOJ Secretary’s August 2013 Resolution, reinstated February 2012 dismissal.
February 6, 2017: CA denied DOJ/BIR’s motion for reconsideration.

Whether CEDCO is entitled to avail of tax amnesty under RA 9480.
Whether there is probable cause to charge Cagang for violation of Section 255, NIRC (wilful failure to pay, withhold, and remit taxes).

RA 9480 grants immunity from national internal revenue taxes (income tax, VAT, etc.) for unpaid liabilities as of December 31, 2005, except withholding tax liabilities.
Section 8(a) RA 9480 and Section 5(a) IRR exclude withholding agents for withholding tax liabilities from amnesty.
FDDA shows CEDCO was assessed for failure to withhold expanded withholding tax (Section 57) and withholding tax on compensation (Section 79).
CEDCO’s amnesty avails income tax and VAT deficiencies but not withholding tax liabilities.
Tax amnesty construed strictly against taxpayer and liberally in favor of the State.
Conclusion: CEDCO is disqualified from amnesty for withholding tax liabilities but qualified for income tax and VAT under RA 9480.

Section 255 imposes criminal liability for wilful failure to pay, withhold, or remit taxes; Section 253(d) identifies liable corporate officers (including treasurer).
Evidence: Board Resolution No. 73 (April 19

Petition for Review on Certiorari was filed in the Supreme Court under G.R. No. 230104, seeking reversal of:
- The June 27, 2016 Decision of the Court of Appeals in CA-G.R. SP No. 132453
- The February 6, 2017 Resolution of the Court of Appeals denying reconsideration
Those CA rulings had annulled and set aside the August 13, 2013 Resolution of the Secretary of Justice, which reinstated probable cause to prosecute respondent Samuel B. Cagang and Romulo M. Paredes for violation of Section 255 of the NIRC.

March 4, 2003: CEDCO, Inc. received a BIR Letter of Authority dated February 20, 2003, authorizing an audit covering taxable years 1997–2001.
April 14, 2003: CEDCO petitioned to cancel the LOA, citing prior yearly examinations, participation in the Voluntary Assessment and Abatement Program (years 2000–2001), full payment of assessed deficiencies, and lawful disposal of records (1997–2000) under NIRC § 235.
BIR denied the cancellation request; CEDCO submitted all available documents.
May 24, 2005: CEDCO received a Preliminary Assessment Notice for deficiencies in income tax, VAT, expanded withholding tax, and withholding tax on compensation for 2000–2001.
CEDCO protested in June and August 2005; BIR issued a Formal Letter of Demand on December 9, 2005, totaling ₱126,564,315.98.
February 8, 2006: CEDCO, through Cagang, appealed the FLD/FAN; September 28, 2007: BIR issued a Final Decision on Disputed Assessment denying the protest.
November 28, 2007: CEDCO availed of tax amnesty under RA 9480 for taxes unpaid as of December 31, 2005, and paid the required amnesty tax on November 29, 2007.
June 24, 2008: BIR demanded payment of remaining liabilities per the FDDA.
August 14, 2009: A complaint-affidavit was filed against Cagang and Paredes for willful failure to pay CEDCO’s deficiency taxes (Sec. 255, NIRC).

The DOJ-NPS Task Force on Revenue Cases dismissed the complaint for lack of probable cause.
It distinguished “pending criminal cases” before prosecutors from those “filed in court,” holding the former did not bar amnesty under RA 9480.
Motion for reconsideration by BIR was denied on January 5, 2011.