835 Phil. 875
Before the Court are consolidated petitions for review on
certiorari under Rule 45 of the Rules of Court, as
amended, filed by petitioner Commissioner of Internal Revenue (CIR):
- G.R. No. 197945 assailing the
Decision[1] dated
February 22, 2011 and Resolution[2] dated July 27, 2011 of the Court of Tax Appeals
(CTA) in CTA En Banc Case No. 535; and
- G.R. Nos. 204119-20 assailing the
Decision[3] dated
March 21, 2012 and Resolution[4] dated October 10, 2012 of the Court of Appeals
in CA-G.R. SP Nos. 55329-30.
Respondents Pilipinas Shell Petroleum Corporation (Shell) and Petron
Corporation (Petron) are domestic corporations engaged in the production
of petroleum products and are duly registered with the Board of
Investments (BOI) under the Omnibus Investments Code of 1987.
[5]
On different occasions during 1988 to 1996, respondents separately sold
bunker oil and other fuel products to other BOT-registered entities
engaged in the export of their own manufactured goods (BOI export
entities).
[6]
These BOT-registered export entities used Tax Credit Certificates (TCCs)
originally issued in their name to pay for these purchases.
To proceed with this mode of payment, the BOT-registered export entities
executed Deeds of Assignment in favor of respondents, transferring the
TCCs to the latter. Subsequently, the Department of Finance (DOF),
through its One Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center (DOF Center), approved the Deeds of Assignment.
[7]
Thereafter, respondents sought the DOF Center's permission to use the
assigned TCCs in settling respondents' own excise tax liabilities. The
DOF Center issued Tax Debit Memoranda (DOF TDMs) addressed to the
Collection Program Division of the Bureau of Internal Revenue
(BIR),
[8] allowing
respondents to do so.
Thus, to pay for their excise tax liabilities from 1992 to 1997 (Covered
Years),
[9]
respondents presented the DOF TDMs to the BIR. The BIR accepted the TDMs
and issued the following: (a) TDMs signed by the BIR Assistant
Commissioner for Collection Service
[10] (BIR TDMs); (b) Authorities to Accept Payment
for Excise Taxes (ATAPETs) signed by the BIR Regional District Officer;
and (c) corresponding instructions to BIR's authorized agent banks to
accept respondents' payments in the form of BIR TDMs.
[11]
Three significant incidents arising from the foregoing antecedents
resulted in the filing of several petitions before this Court,
viz.:
Significant Incidents | Resultant
Petition/s before the Court |
(a) 1998 Collection Letters issued by the BIR against respondents | G.R. Nos. 204119-20 (one of the pr sent petitions) |
(b) 1999 Assessments issued by the BIR against respondents | Pilipinas Shell
Petroleum Corporation v. Commissioner of Internal Revenue,
G.R. No. 172598, December 21, 2007 (2007 Shell
Case)
Petron Corporation v. Commissioner
of Internal Revenue, G.R. No. 180385, July 28, 2010
(2010 Petron Case) |
(c) 2002 Collection Letter issued
by the BIR against respondent Shell | G.R. No. 197945 (one of the present petitions) |
Said incidents and petitions are discussed in detail below.
A. 1998 Collection Letters
(G.R. Nos. 204119-20)
In its collection letters
[12] dated April 22, 1998 (1998 Collection Letters)
addressed to respondents' respective presidents, the BIR
[13] pointed out that
respondents partly paid for their excise tax liabilities during the
Covered Years using TCCs issued in the names of other companies;
invalidated respondents' tax payments using said TCCs; and requested
respondent Shell and respondent Petron to pay their delinquent tax
liabilities amounting to P1,705,028,008.06 and P1,107,542,547.08,
respectively. The 1998 Collection Letters similarly read:
Our records show that for the years x x x, you have
been paying part of your excise tax liabilities in the form of Tax
Credit Certificate (TCC) which bear the name of a company other than
yours in violation of Rule IX of the Rules and Regulations issued by the
Board of Investments to implement P.D. No. 1789 and B.P. 391.
Accordingly, your payment through the aforesaid TCC's are
considered invalid and therefore, you are hereby requested to
pay the amount of x x x inclusive of delinquency for late
payments as of even date, covering the years heretofore mentioned within
thirty days (30) from receipt hereof, lest we will be
constrained to resort to administrative and legal
remedies available in accordance with law. (Emphasis
supplied.)
Respondents separately filed their administrative protests
[14] against the 1998
Collection Letters, but the BIR denied
[15] said protests. The BIR maintained that the
transfers of the TCCs from the BOI-registered export entities to
respondents and the use of the same TCCs by respondents to pay for their
self-assessed specific tax liabilities were invalid, and reiterated its
demand that respondents pay their delinquent taxes.
This prompted respondent Petron to file a Petition for Review
[16] before the CTA
docketed as CTA Case No. 5657.
As for respondent Shell, it first requested for reconsideration of the
denial of its protest by the BIR.
[17] However, while said request for reconsideration
was pending, the BIR issued a Warrant of Garnishment
[18] against respondent
Shell. Taking this as a denial of its request for reconsideration,
respondent Shell likewise filed a Petition for Review
[19] before the CTA
docketed as CTA Case No. 5728.
In their respective petitions before the CTA, respondents raised similar
arguments against petitioner, to wit: (a) The collection of tax without
prior assessment was a denial of the taxpayer's right to due process;
(b) The use of TCCs as payment of excise tax liabilities was valid; (c)
Since the BIR approved the transfers and subsequent use of the TCCs, it
was estopped from questioning the validity thereof; and (d) The BIR's
right to collect the alleged delinquent taxes had already prescribed.
The CTA granted respondents' petitions in separate Decisions both dated July 23, 1999, decreeing as follows:
CTA Case No. 5657
WHEREFORE, in view of the foregoing, the instant Petition for Review is
hereby GRANTED. The collection of the alleged delinquent excise taxes in
the amount of P1,107,542,547.08 is hereby CANCELLED AND SET ASIDE for
being contrary to law. Accordingly, [herein petitioner and BIR Regional
Director of Makati, Region No. 8] are ENJOINED from collecting the said
amount of taxes against [herein respondent Petron].[20]
CTA Case No. 5728
IN LIGHT OF ALL THE FOREGOING, the instant petition for review is
GRANTED. The collection letter issued by [herein petitioner] dated April
22, 1998 is considered withdrawn and he is ENJOINED from any attempts
to collect from [herein respondent Shell] the specific tax, surcharge
and interest subject of this petition.[21]
In both Decisions, the CTA upheld the validity of the TCC transfers from
the BOI-registered export entities to respondents, the latter having
complied with the requirements of transferability. The CTA further ruled
that the BIR's attempt to collect taxes without an assessment was a
denial of due process and a violation of Section 228
[22] of the National
Internal Revenue Code of the Philippines of 1997 (Tax Code). The CTA
also noted that the BIR might have purposely avoided the issuance of a
for;mal assessment because its right to assess majority of respondents'
alleged delinquent taxes had already prescribed.
Petitioner's motions for reconsideration of the above-mentioned
decisions were denied by the CTA.
[23] Thus, petitioner CIR sought recourse before the
Court of Appeals
[24] through the consolidated petitions docketed as
CA-G.R. SP Nos. 55329-30.
However, the Court of Appeals dismissed the petitions and found the
transfer and utilization of the subject TCCs were valid, in accordance
with the
2007 Shell Case.
[25] The appellate court eventually
denied petitioner's motion for reconsideration.
Undaunted, petitioner CIR filed the present petition docketed as G.R. Nos. 204119-20.
B. 1999 Assessments (The 2007 Shell Case and 2010 Petron Case)
During the pendency of the consolidated petitions in CA-G.R. SP Nos.
55329-30 before the Court of Appeals, the DOF Center conducted separate
post-audit procedures
[26] on all of the TCCs acquired and used by
respondents during the Covered Years, requiring them to submit documents
to support their acquisition of the TCCs from the BOI-registered export
entities. As a result of its post-audit procedures, the DOF Center
cancelled the first batch of the transferred TCCs
[27] used by respondent Shell and
Petron, with aggregate amount of P830,560,791.00 and P284,390,845.00,
respectively.
Following the cancellation of the TCCs, petitioner issued separate
assessment letters to respondents in November 1999 (1999 Assessments)
for the payment of deficiency excise taxes, surcharges, and interest for
the Covered Years, which were also covered by the 1998 Collection
Letters. Respondents filed their respective administrative protests
against said assessments. While petitioner denied respondent Shell's
protest, he did not act upon that of respondent Petron.
B.1 The 2007 Shell Case
Respondent Shell raised petitioner's denial of its protest through a
petition for review before the CTA, docketed as CTA Case No. 6003. The
CTA Division rendered a Decision dated August 2, 2004 granting said
petition and cancelled and set aside the assessment against respondent
Shell; but then the CTA
en banc, in its Decision
dated April 28, 2006, set aside the CTA Division's judgment and ordered
respondent Shell to pay petitioner deficiency excise tax, surcharges,
and interest. Hence, respondent Shell filed a petition for review before
this Court docketed as G.R. No. 172598, the
2007 Shell
Case.
In its Decision in the
2007 Shell Case, the Court
cancelled the 1999 assessment against respondent Shell and disposed
thus:
WHEREFORE, the petition is GRANTED. The April 28, 2006
CTA En Banc Decision in CTA EB No. 64 is hereby
REVERSED and SET ASIDE, and the August 2, 2004 CTA Decision in CTA Case
No. 6003 disallowing the assessment is hereby REINSTATED. The assessment
of respondent for deficiency excise taxes against petitioner for 1992
and 1994 to 1997 inclusive contained in the April 22, 1998 letter of
respondent is cancelled and declared without force and effect for lack
of legal basis. No pronouncement as to costs.[28]
In nullifying petitioner's assessments, the Court upheld the TCCs'
validity, respondent Shell's qualifications as transferees of said TCCs,
respondent Shell's status as a transferee in good faith and for value,
and respondent Shell's right to due process.
The
2007 Shell Case became final and executory on
March 17, 2008.
[29]
B.2 The 2010 Petron Case
Considering petitioner's inaction on its protest, respondent Petron
likewise filed a petition for review with the CTA, docketed as CTA Case
No. 6136, to challenge the assessment. In a Decision dated August 23,
2006, the CTA Division denied the petition and ordered respondent Petron
to pay petitioner deficiency excise taxes, surcharges, and interest.
Said judgment was subsequently affirmed by the CTA
En
Banc in. its Decision dated October 30, 2007. This prompted
respondent Petron to seek relief from this Court through a petition for
review, docketed as G.R. No. 180385, the
2010 Petron
Case.
[30]
Citing the
2007 Shell Case, the Court similarly
cancelled the 1999 assessment against respondent Petron and decided the
2010 Petron Case as follows:
WHEREFORE, premises considered, the petition is
GRANTED and the October 30, 2007 CTA En Banc Decision
in CTA EB No. 238 is, accordingly, REVERSED and SET ASIDE. In lieu
thereof, another is entered invalidating respondent's Assessment of
petitioner's deficiency excise taxes for the years 1995 to 1997 for lack
of legal bases. No pronouncement as to costs.[31]
Entry of Judgment
[32] was made in the
2010 Petron
Case on November 2, 2010.
C. 2002 Collection Letter
(G.R. No. 197945)
Meanwhile, during the pendency of respondent Shell's CTA Case No. 6003
(which was eventually elevated to this Court in the
2007 Shell
Case), the BIR requested respondent Shell to pay its purported
excise tax liabilities amounting to P234,555,275.48, in a collection
letter
[33] dated
June 17, 2002 (2002 Collection Letter), which read:
Collection Letter
x x x x
Our records show that a letter dated January 30, 2002 was served to you
by our Collection Service, for the collection of cancelled Tax Credit
Certificates and Tax Debit Memos which were used to pay your 1995 to
1998 excise tax liabilities. Said cancellation was embodied in EXCOM
Resolution No. 03-05-99 of the Tax & Duty Drawback Center of the
Department of Finance. Upon verification by this Office, however, some
of these TCCs/TDMs were already included in the tax case previously
filed in [the] Court of Tax Appeals. Accordingly, the collectible amount
has been reduced from P691,508,005.82 to P234,555,275.48, the summary
of which is hereto attached for your ready reference.
Basic | P 87,893,876.00 | |
Surcharge | 21,973,469.00 | |
Interest | 124,687,930.48 | |
TOTAL | P 234,555,275.48 | |
In view thereof, you are hereby requested to pay the aforesaid
tax liability/ties within ten (10) days from receipt hereof
thru any authorized agent bank x x x Should you fail to do so,
this Office, much to our regret, will be constrained to enforce the
collection of the said amount thru the summary administrative
remedies provided by law, without any further
notice. (Emphasis supplied.)
DOF Executive Committee Resolution No. 03-05-99 referred to in the
aforequoted Collection Letter prescribed the guidelines and procedures
for the cancellation, recall, and recovery of fraudulently-issued TCCs.
Respondent Shell filed on July 11, 2002 its administrative
protest
[34] to the
2002 Collection Letter. However, without resolving said protest,
petitioner
[35]
issued a Warrant of Distraint and/or Levy dated September 12, 2002 for
the satisfaction of the following alleged tax delinquency of respondent
Shell:
WHEREAS, THERE IS DUE FROM:
PILIPINAS SHELL PETROLEUM CORP. x x x x
The sum of TWO HUNDRED THIRTY[-]FOUR MILLION FIVE HUNDRED FIFTY[-]FIVE
THOUSAND TWO HUNDRED TWENTY[-]FIVE PESOS AND 48 CENTAVOS as Internal
Revenue Taxes shown hereunder, plus all increments incident to
delinquency.
Assessment Notice No. | : | Unnumbered |
Date Issued | : | January 30, 2002 |
Tax Type | : | Excise Tax |
Period Covered | : | Various Dates (December 18, 1995 to July 03, 1997) |
Amount | : | P234,555,275.48 |
WHEREAS, the said taxpayer failed and refused and still fails and
refuses to pay the same notwithstanding demands made by this Office.[36]
Aggrieved, respondent Shell filed a petition for review
[37] before the CTA
docketed as CTA Case No. 6547, arguing that: (a) the issuance of the
2002 Collection Letter and Warrant of Distraint and/or Levy and
enforcement of DOF Center's Executive Committee Resolution No. 03-05-99
violated its right to due process; (b) The DOF Center did not have
authority to cancel the TCCs; (c) The TCCs' transfers and utilizations
were valid and legal; (d) It was an innocent purchaser for value; (e)
The HIR was estopped from invalidating the transfer and utilization of
the TCCs; and (f) The HIR's right to collect had already prescribed.
The CTA Second Division ruled in favor of respondent Shell in its
Decision
[38] dated
April 30, 2009:
WHEREFORE, premises considered, the instant Petition
for Review is hereby GRANTED. The Collection Letters and Warrant of
Distraint and/or Levy are CANCELLED and declared without force and
effect for lack of legal basis.[39]
After the CTA Division denied
[40] his motion for reconsideration, petitioner
elevated the case to the CTA
En Banc via a petition
for review
[41]
docketed as CTA EB No. 535.
In its Decision dated February 22, 2011, the CTA
En
Banc denied the petition and affirmed the judgment of the CTA
Division.
The CTA
En Banc resolved the issues relying on the
2007 Shell Case. Pursuant to this ruling, the real
issue is not whether the BOI-registered export entities validly procured
the TCCs from the DOF Center, but whether respondent Shell fraudulently
obtained the TCCs from said BOI-registered export entities.
The CTA
En Banc brushed aside petitioner's argument
that respondent Shell was aware that the transferred TCCs were subject
to post-audit procedures. It explained that the TCCs were valid and
effective upon issuance and were not subject to post-audit procedures as
a suspensive condition. Further, the TCCs could no longer be cancelled
once these had been fully utilized or duly applied against any
outstanding tax liability of an innocent transferee for value.
In this regard, the CTA
En Banc found that respondent
Shell did not participate in any fraud attending the issuance of the
TCCs, as well as its subsequent transfers. Thus, respondent Shell is an
innocent transferee in good faith and for value and could not be
prejudiced by fraud attending the TCCs' procurement.
In the absence of fraud, petitioner could only reassess Shell for
deficiency tax within the three-year prescriptive period under Section
203 of the Tax Code, not the 10-year period under Section 222(a) of the
same Code. Further, petitioner violated respondent Shell's right to due
process when he issued the 2002 Collection Letter without a Notice of
Informal Conference (NIC) or a Preliminary Assessment Notice as required
by Revenue Regulations No. (RR) 12-99.
The CIR moved for reconsideration but was denied.
Hence, petitioner now comes before this Court citing in the petitions at
bar the following errors allegedly committed by the courts
a
quo in G.R. Nos. 204119-20 and G.R. No. 197945:
G.R. Nos. 204119-20
The Court of Appeals erred:
I.
IN NOT HOLDING THAT RESPONDENTS SHELL AND PETRON WERE NOT QUALIFIED
TRANSFEREES OF THE TAX CREDIT CERTIFICATES (TCCs) SINCE THEY WERE NOT
SUPPLIERS OF DOMESTIC CAPITAL EQUIPMENT OR OF RAW MATERIAL AND/OR
COMPONENTS TO THEIR TRANSFERORS.
II.
IN NOT HOLDING THAT SINCE RESPONDENTS WERE NOT QUALIFIED TRANSFEREES OF
THE TCCs, THE SAME COULD NOT BE VALIDLY USED IN PAYING THEIR EXCISE TAX
LIABILITIES.
III.
IN NOT HOLDING THAT GOVERNMENT IS NOT ESTOPPED FROM COLLECTING TAXES DUE TO THE MISTAKES OF ITS AGENTS.
IV.
IN NOT HOLDING THAT SHELL WAS ACCORDED DUE PROCESS IN PETITIONER'S
ATTEMPT TO COLLECT ITS EXCISE TAX LIABILITIES.[42]
G.R. No. 197945
I. The CTA EN BANC COMMITTED GRIEVOUS ERROR IN NOT
RULING ON THE VALIDITY OF THE TCCs AND ITS CONSEQUENT EFFECTS ON THE
RIGHTS AND OBLIGATIONS ASSUMED BY RESPONDENT.
II. THE CTA EN BANC COMMITTED GRIEVOUS ERROR IN
HOLDING THAT RESPONDENT IS AN INNOCENT TRANSFEREE OF THE DISPUTED TCCs
IN GOOD FAITH.
III. THE CTA EN BANC COMMITTED GRIEVOUS ERROR IN RULING THAT RESPONDENT IS NOT LIABLE TO PAY EXCISE TAXES.
IV. THE CTA EN BANC COMMITTED GRIEVOUS ERROR IN
HOLDING THAT THE GOVERNMENT IS ESTOPPED FROM NULLIFYING THE TCCs, AND
DECLARING THEIR USE, TRANSFER AND UTILIZATION AS FRAUDULENT.
V. THE CTA EN BANC COMMITTED GRIEVOUS ERROR IN RULING THAT RESPONDENT WAS DENIED DUE PROCESS.
VI. THE CTA EN BANC COMMITTED A GRIEVOUS ERROR IN
DECLARING THAT THE PERIOD TO COLLECT RESPONDENT'S UNPAID EXCISE TAXES
HAS ALREADY PRESCRIBED.
VII. THE CTA EN BANC COMMITTED A GRIEVOUS ERROR IN
RULING THAT,RESPONDENT IS NOT LIABLE TO PAY SURCHARGES AND
INTERESTS.[43]
The Ruling of the Court
The petitions are without merit.
The issues concerning the transferred TCCs' validity,
respondents' qualifications as transferees of said TCCs, and the
respondents' valid use of the TCCs to pay for their excise tax
liabilities for the Covered Years had been finally settled in the 2007
Shell Case and 2010 Petron Case and are already barred from being
re-litigated herein by the doctrine of res judicata
in the concept of conclusiveness of judgment.
While the present petitions, on one hand, and the
2007 Shell
Case and
2010 Petron Case, on the other
hand, involve identical parties and originate from the same factual
antecedents, there are also substantial distinctions between these
cases, for which reason, the Court cannot simply dismiss the former on
account of the latter based on the doctrine of
res
judicata in the concept of "barby prior judgment."
The
2007 Shell Case and
2010 Petron
Case were assessment cases. These initiated from respondents'
protests of the
1999 Assessments issued by petitioner
CIR against them for deficiency excise taxes, surcharges, and interest,
following cancellation of the transferred TCCs and the corresponding
TDMs which respondents used to pay for said excise taxes. Said cases
were primarily concerned with the legality and propriety of petitioner's
issuance of the 1999 Assessments against respondents.
In contrast, the consolidated petitions now before the Court arose from
respondents' protests of petitioner's
1998 and 2002 Collection
Letters for essentially the same excise tax deficiencies
covered by the 1999
Assessments, but apparently issued and pursued by the petitioner and BIR
separately from and concurrently with the assessment cases. At the crux
of these cases is petitioner's right to collect the deficiency excise
taxes from respondents.
In the instant petitions, petitioner asserts his right to collect as
excise tax deficiencies the excise tax liabilities which respondents had
previously settled using the transferred TCCs, impugning the TCCs'
validity on account of fraud as well as respondents' qualifications as
transferees of said TCCs. However, respondents already raised the same
arguments and the Court definitively ruled thereon in its final and
executory decisions in the
2007 Shell Case and
2010 Petron Case.
The re-litigation of these issues in the present petitions, when said
issues had already been settled with finality in the
2007 Shell
Case and
2010 Petron Case, is precluded by
res judicata in the concept of "conclusiveness of
judgment."
In
Ocho v. Calos,
[44] the Court extensively explained the doctrine of
res judicata in the concept of "conclusiveness of
judgment," thus:
The doctrine of res judicata as
embodied in Section 47, Rule 39 of the Rules of Court states:
SECTION 47. Effect of judgments or final
orders. - The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronom:tce the
judgment or final order, may be as follows:
x x x x
(b) In other cases, the judgment or final order is, with respect to the
matter directly adjudged or as to any other matter that could have been
raised in relation thereto, conclusive between the parties and their
successors-in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under
the same title and in the same capacity; and
(c) In any other litigation between the same parties or their
successors-in-interest, that only is deemed. to have been adjudged in a
former judgment or final order which appears upon its face to have been
so adjudged, or which was actually and necessarily included therein or
necessary thereto.
It must be pointed out at this point that, contrary to the insistence of
the Caloses, the doctrine of res judicata applies to
both judicial and quasi-judiCial proceedings. The doctrine actually
embraces two (2) concepts: the first is "bar by prior judgment" under
paragraph (b) of Rule 39, Section 47, and the second is
"conclusiveness of judgment" under paragraph
(c) thereof. In the present case, the second concept -
conclusiveness of judgment- applies. The said concept is explained in
this manner:
[A] fact or question which was in issue in a
former suit and was there judicially passed upon and determined by a
court of competent jurisdiction, is conclusively settled by the judgment
therein as far as the parties to that action and persons in privity
with them are concerned and cannot be again litigated in any future
action between such parties or their privies, in the same court or any
other court of concurrent jurisdiction on either the same or different
cause of action, while the judgment remains unreversed by proper
authority. It has been held that in order. that a judgment in
one action can be conclusive as to a particular matter in another action
between the same parties or their privies, it is essential
that the issue be identical. If a particular point or question
is in issue in the second action, and the judgment will depend on the
determination of that particular point or question, a former judgment
between the same parties or their privies will be final and
conclusive in the second if that same point or question was in
issue and adjudicated in the first suit. x x x.
Although the action instituted by the Caloses in Adm. Case No. 006-90
(Anomalies/Irregularities in OLT Transfer Action and Other Related
Activities) is different from the action in Adm. Case No. (X)-014
(Annulment of Deeds of Assignment, Emancipation Patents and Transfer
Certificate of Titles, Retention and Recovery of Possession and
Ownership), the concept of conclusiveness of judgment still applies
because under this principle "the identity of causes of action
is not required but merely identity of issues."
[Simply] put, conclusiveness of judgment bars the relitigation
of particular facts or issues in another litigation between the same
parties on a different claim or cause of action. In
Lopez vs. Reyes, we expounded on the concept of
conclusiveness of judgment as follows:
The general rule precluding the relitigation of
material facts or questions which were in issue and adjudicated in
former action are commonly applied to all matters essentially connected
with the subject matter of litigation. Thus it extends to questions
necessarily involved in an issue, and necessarily adjudicated, or
necessarily implied in the final judgment, although no specific finding
may have been made in reference thereto, and although such matters were
directly referred to in the pleadings and were not actually or formally
presented. Under this rule, if the record of the former trial shows that
the judgment could not have been rendered without deciding the
particular matter, it will be considered as having settled that matter
as to all future actions between the parties, and if a judgment
necessarily presupposes certain premises, they are as conclusive as the
judgment itself. Reasons for the rule are that a judgment is an
adjudication on all the matters which are essential to support it, and
that every proposition assumed or decided by the court leading up to the
final conclusion upon which such conclusion is based is as effectually
passed upon as the ultimate question which is solved.
x x x x
As held in Legarda vs. Savellano:
x x x It is a general rule common to all civilized
system of jurisprudence, that the solemn and deliberate sentence of the
law, pronounced by its appointed organs, upon a disputed fact or a state
of facts, should be regarded as a final and conclusive determination of
the question litigated, and should forever set the controversy at rest.
Indeed, it has been well said that this maxim is more than a mere rule
of law; more even than an important principle of public policy; and that
it is not too much to say that it is a fundamental concept in the
organization of every jural system. Public policy and sound practice
demand that, at the risk of occasional errors, judgments of courts
should become final at some definite date fixed by law. The very object
for which courts were constituted was to put an end to
controversies.
The findings of the Hearing Officer in Adm. Case No. 006-90, which had
long attained finality, that petitioner is not the owner of other
agricultural lands foreclosed any inquiry on the same issue involving
the same parties and property. The CA thus erred in still making a
finding that petitioner is not qualified to be a farmer-beneficiary
because he owns other agricultural lands. (Emphases supplied, citations
omitted.)
In the
2007 Shell Case, the Court affirmed the
validity of the TCCs, the transfer of the TCCs to respondent Shell, and
the use of the transfe ed TCCs by respondent Shell to partly pay for its
excise tax liabilities for the Covered Years. The Court ratiocinated as
follows:
First, the results of
postaudit procedures conducted in connection with the TCCs should not
operate as a suspensive condition to the TCCs' validity.
Second, while it was one of the
conditions appearing on the face of the TCCs, the post-audit
contemplated therein did not pertain to the TCCs' genuineness or
validity, but to computational discrepancies that might have resulted
from their utilization and transfer.
Third, the DOF Center or DOF could
not compel respondent Shell to submit sales documents for the purported
post-audit. As a BOI-registered enterprise, respondent Shell was a
qualified transferee of the subject TCCs, pursuant to existing rules and
regulations.
[45]
Fourth, respondent Shell was a
transferee in good faith and for value as it secured the necessary
approvals from various government agencies before it used and applied
the transferred TCCs against its tax liabilities and it did not
participate in the perpetuation of fraudulent acts in the procurement of
the said TCCs. As a transferee in good faith, respondent Shell could
not be prejudiced with a re-assessment of excise tax liabilities it had
already settled when due using the subject TCCs nor by any fraud
attending the procurement of the subject TCCs.
Fifth, while the DOF Center was
authorized to cancel TCCs it might have erroneously issued, it could no
longer exercise such authority after the subject TCCs have already been
utilized and accepted as payment for respondent Shell's excise tax
liabilities. What had been used up, debited, and cancelled could no
longer be voided and cancelled anew. While the State was not estopped by
the neglect or omission of its agents, this principle could not be
applied to the prejudice of an innocent transferee in good faith and for
value.
And
finally, the Court found in
the
2007 Shell Case that respondent Shell's right to
due process was violated. Petitioner did not issue a Notice of Informal
Conference (NIC) and Preliminary Assessment Notice (PAN) to respondent
Shell, in violation of the formal assessment procedure required by
Revenue Regulations No. (RR) 12-99.
[46] Petitioner merely relied on the DOF Center's
findings supporting the cancellation of respondent Shell's TCCs. Thus,
the Court voided the assessment dated November 15, 1999 issued by the
CIR against herein respondent Shell.
On the other hand, the Court resolved the
2010 Petron
Case in accordance with its ruling in the
2007 Shell
Case, reiterating that:
First, the subject TCCs' validity
and effectivity should be immediate and should not be dependent on the
outcome of a post-audit as a suspensive condition.
Second, respondent Petron could
not be prejudiced by fraud alleged to have attended such issuance as it
was not privy to the issuance of the subject TCCs and it had already
used said TCCs in settling its tax liabilities.
Third, respondent Petron was also
an innocent transferee in good faith and for value because it was a
qualified transferee of the TCCs based on existing rules and regulations
and the TCCs' transfers were approved by the appropriate government
agencies. And
fourth, while the
government cannot be estopped from collecting taxes by the mistake,
negligence, or omission of its agents, the rights of a transferee in
good faith and for value should be protected.
The Court's aforementioned findings in the
2007 Shell
Case and
2010 Petron Case are conclusive
and binding upon this Court in the petitions at bar.
Res
judicata by conclusiveness of judgment bars the Court from
relitigating the issues on the TCCs' validity and respondents'
qualifications as transferees in these cases. As a result of such
findings in the
2007 Shell Case and
2010
Petron Case, then respondents could not have had excise tax
deficiencies for the Covered Years as they had validly paid for and
settled their excise tax liabilities using the transferred TCCs.
In any case, the present petitions are dismissed as
petitioner violated respondents' right to due process for failing to
observe the prescribed procedure for collection of unpaid taxes through
summary administrative remedies.
The Court dismisses the present petitions for it cannot allow petitioner
to collect any excise tax deficiency from respondents by mere issuance
of the 1998 and 2002 Collection Letters. Petitioner had failed to comply
with the prescribed procedure for collection of unpaid taxes through
summary administrative remedies and, thus, violated respondents' right
to due process.
That taxation is an essential attribute of sovereignty and the lifeblood
of every nation are doctrines well-entrenched in our jurisdiction.
Taxes are the government's primary means to generate funds needed to
fulfill its mandate of promoting the general welfare and well-being of
the people
[47] and
so should be collected without unnecessary hindrance.
[48]
While taxation
per se is generally legislative in
nature, collection of tax is administrative in character.
[49] Thus, Congress
delegated the assessment and collection of all national internal revenue
taxes, fees, and charges to the BIR.
[50] And as the BIR's chief, the CIR has the power
to make assessments and prescribe additional requirements for tax
administration and enforcement.
[51]
The Tax Code provides two types of remedies to enforce the collection of
unpaid taxes, to wit: (a)
summary administrative
remedies, such as the distraint and/or levy of
taxpayer's property;
[52] and/or (b)
judicial
remedies, such as the filing of a criminal or civil
action against the erring taxpayer.
[53]
Verily, pursuant to the lifeblood doctrine, the Court has allowed tax
authorities ample discretion to avail themselves of the most expeditious
way to collect the taxes,
[54] including summary processes,
with as little interference as possible.
[55] However, the Court, at the same time, has
not hesitated to strike down these processes in cases wherein tax
authorities disregarded due process.
[56] The BIR's power to collect taxes must yield to
the fundamental rule that no person shall be deprived of his/her
property without due process of law.
[57] The rule is that taxes must be
collected reasonably and in accordance with the prescribed
procedure.[58]
In the normal course of tax administration and enforcement, the BIR must
first make an
assessment then enforce the
collection of the amounts so assessed. "An assessment
is not an action or proceeding for the collection of taxes. x x x It is
a step preliminary, but essential to warrant
distraint, if still feasible, and, also, to establish a cause for
judicial action."
[59] The BIR may summarily enforce collection only
when it has accorded the taxpayer
administrative due
process, which vitally includes the issuance of a valid
assessment.
[60] A
valid assessment sufficiently informs the taxpayer in writing of the
legal and factual bases of the said assessment, thereby allowing the
taxpayer to effectively protest the assessment and adduce supporting
evidence in its behalf.
In
Commissioner of Internal Revenue v. Reyes[61] (
Reyes
Case), the petitioner issued an assessment notice and a demand
letter for alleged deficiency estate tax against the taxpayer estate.
The assessment notice and demand letter. simply notified the taxpayer
estate of petitioner's findings, without stating the factual and legal
bases for said assessment. The Court, absent a valid assessment, refused
to accord validity and effect to petitioner's collection efforts -
which involved, among other things, the successive issuances of a
collection letter, a final notice before seizure, and a warrant of
distraint and/or levy against the taxpayer estate - and declared that:
x x x [P]etitioner violated the cardinal rule in
administrative law that the taxpayer be accorded due process. Not only
was the law here disregarded, but no valid notice was sent, either. A
void assessment bears no valid fruit.
The law imposes a substantive, not merely a formal,
requirement. To proceed heedlessly with tax collection without first
establishing a valid assessment is evidently violative of the cardinal
principle in administrative investigations: that taxpayers should be able
to present their case and adduce supporting evidence. In the
instant case, respondent has not been informed of the basis of the
estate tax liability. Without complying with the unequivocal mandate of
first informing the taxpayer of the government's claim, there can be no
deprivation of property, because no effective protest can be made. The
haphazard shot at slapping an assessment, supposedly based on estate
taxation's general provisions that are expected to be known by the
taxpayer, is utter chicanery.
Even a cursory review of the preliminary assessment notice, as well as
the demand letter sent, reveals the lack of basis for - not to mention
the insufficiency of - the gross figures and details of the itemized
deductions indicated in the notice and the letter. This Court cannot
countenance an assessment based on estimates that appear to have been
arbitrarily or capriciously arrived at. Although taxes are the lifeblood
of the government, their assessment and collection "should be made in
accordance with law as any arbitrariness will negate the very reason for
government itself."[62] (Emphasis supplied.)
The Court similarly found that there was no valid assessment in
Commissioner of Internal Revenue v. BASF Coating + Inks Phils.,
Inc.[63] (
BASF Coating Case) as the
assessment notice therein was sent to the taxpayer company's former
address. Without a valid assessment, the Court pronounced that
petitioner's issuance of a First Notice Before Issuance of Warrant of
Distraint and Levy to be in violation of the taxpayer company's right to
due process and effectively blocked any further efforts by petitioner
to collect by virtue thereof. The Court ratiocinated that:
It might not also be amiss to point out that
petitioner's issuance of the First Notice Before Issuance of Warrant of
Distraint and Levy violated respondent's right to due process because no
valid notice of assessment was sent to it. An invalid assessment bears
no valid fruit. The law imposes a substantive, not merely a formal,
requirement. To proceed heedlessly with tax collection without first
establishing a valid assessment is evidently violative of the cardinal
principle in administrative investigations: that taxpayers should be
able to present their case and adduce supporting evidence. In the
instant case, respondent has not properly been informed of the basis of
its tax liabilities. Without complying with the unequivocal mandate of
first informing the taxpayer of the government's claim, there can be no
deprivation of property, because no effective protest can be made.
x x x x
It is an elementary rule enshrined in the 1987 Constitution that no
person shall be deprived of property without due process of law. In
balancing the scales between the power of the State to tax and its
inherent right to prosecute perceived transgressors of the law on one
side, and the constitutional rights of a citizen to due process of law
and the equal protection of the laws on the other, the scales must tilt
in favor of the individual, for a citizen's right is amply protected by
the Bill of Rights under the Constitution.[64]
It is worthy to note that in the
Reyes Case and BASF Coating
Case, there were assessments actually issued against the
taxpayers therein, except that said assessments were adjudged invalid
for different reasons (
i.e., for failing to state the
factual and legal bases for the assessment in the
Reyes
Case and for sending the assessment to the wrong address in
the
BASF Coating Case). In the instant cases,
petitioner did not issue at all an assessment against respondents prior
to his issuance of the 1998 and 2002 Collection Letters. Thus, there is
even more reason for the Court to bar petitioner's attempts to collect
the alleged deficiency excise taxes through any summary administrative
remedy.
In the present case, it is clear from the wording of the 1998 and 2002
Collection Letters that petitioner intended to pursue, through said
collection letters,
summary administrative remedies
for the collection of respondents' alleged excise tax deficiencies for
the Covered Years. In fact, in the respondent Shell's case, the
collection letters were already followed by the BIR's issuance of
Warrants of Garnishment and Distraint and/or Levy against it.
That the BIR proceeded with the collection of respondents' alleged
unpaid taxes
without a previous valid assessment is
evident from the following:
First,
petitioner admitted in CTA Case Nos. 5728
[65] and 6547 that: (a) the collections letters
were not tax assessment notices; (b) the letters were issued solely
based on the DOF Center's findings; and (c) the BIR never issued any
preliminary assessment notice prior to the issuance of the collection
letters.
Second, although the 1998
and 2002 Collection Letters and the 1999 Assessments against
respondents were for the same excise taxes for the Covered Years, the
former were evidently not based on the latter. The 1998 Collection
Letters against respondents were issued prior to the 1999 Assessments;
while the 2002 Collection Letter against respondent Shell was issued
even while respondent Shell's protest of the 1999 Assessment was still
pending before the CTA. And
third,
assuming
arguendo that the 1998 and 2002 Collection
Letters were intended to implement the 1999 Assessments against
respondents, the 1999 Assessments were already nullified in the
2007 Shell Case and
2010 Petron
Case.
Absent a previously issued assessment supporting the 1998 and 2002
Collection Letters, it is clear that petitioner's attempts to collect
through said collection letters as well as the subsequent Warrants of
Garnishment and Distraint and/or Levy are void and ineffectual. If an
invalid assessment bears no valid fruit, with more reason will no such
fruit arise if there was no assessment in the first place.
The period for petitioner to collect the alleged
deficiency excise taxes from respondents through judicial remedies had
already prescribed.
After establishing that petitioner could not collect respondents'
alleged deficiency excise taxes for the covered years through summary
administrative remedies without a valid assessment, the Court next
determines whether petitioner could still resort to judicial remedies to
enforce collection.
The Court answers in the negative as the period for collection o£ the
respondents' alleged deficiency excise taxes for the Covered Years
through judicial remedies had already prescribed.
The alleged deficiency excise taxes petitioner seeks to collect from
respondents in the cases at bar pertain to the Covered Years,
i.e., 1992 to 1997, during which, the National
Internal Revenue Code of the Philippines of 1977
[66] (1977 NIRC) was the governing law.
Pertinent provisions of the 1977 NIRC read:
Sec. 318. Period of Limitation Upon
Assessment and Collection. - Except as provided in the
succeeding section, internal-revenue taxes shall be assessed
within five years after the return was filed, and
no proceeding in court without assessment
for the collection of such taxes shall be begun after the expiration of
such period. For the purposes of this section, a return filed
before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day: Provided, That
this limitation shall not apply to cases already investigated prior to
the approval of this Code. (Emphasis Supplied)
Sec. 319. Exceptions as to period of limitation of assessment
and collection of taxes. - (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:
Provided, That in a fraud assessment which has become
final and executory, the fact of fraud shall be judicially taken
cognizance of in the civil or criminal action for the collection
thereof.
(b) Where before the expiration of the time prescribed in the preceding
section for the assessment of the tax, both the Commissioner and the
taxpayer have consented in writing to its assessment after such time,
the tax may be assessed at any time prior to the expiration of the
period agreed upon. The period so agreed upon may be extended by
subsequent agreements in writing made before the expiration of the
period previously agreed upon.
(c) Where the assessment of any internal revenue tax has been made
within the period of limitation above-prescribed, such tax may be
collected by distraint or levy or by a proceeding in court, but only if
began (1) within five years after assessment of the tax, or (2) prior to
the expiration of any period for collection agreed upon in writing by
the Commissioner and the taxpayer before the expiration of such
five-year period. The period so agreed upon may be extended by
subsequent agreements in writing made before the expiration of the
period previously agreed upon.
Under Section 318 of the 1977 NIRC, petitioner had five years
[67] from the time
respondents filed their excise tax returns in question to: (a) issue an
assessment; and/or (b) file a court action for collection without an
assessment. In the petitions at bar, respondents filed their returns for
the Covered Years from 1992 to 1997, and the five-year prescriptive
period under Section 319 of the 1977 NIRC would have prescribed
accordingly from 1997 to 2002.
As the Court has explicitly found herein as well as in the
2007
Shell Case and
2010 Petron Case,
petitioner failed to issue any valid assessment against respondents for
the latter's alleged deficiency excise taxes for the Covered Years.
Without a valid assessment, the five-year prescriptive period
to assess continued to run and had, in fact, expired
in these cases. Irrefragably, petitioner is already barred by
prescription from issuing an assessment against respondents for
deficiency excise taxes for the Covered Years. Resultantly, this also
bars petitioner from undertaking any
summary administrative
remedies,
i.e., distraint and/or levy,
against respondents for collection of the same taxes.
Unlike summary administrative remedies,
the government's power
to enforce the collection through judicial action is not conditioned
upon a previous valid assessment. Sections 318 and 319(a) of
the 1977 NIRC expressly allowed the institution of court proceedings for
collection of taxes without assessment within five years from the
filing of the tax return and 10 years from the discovery of falsity,
fraud, or omission, respectively.
[68]
A judicial action for the collection of a tax is begun: (a) by the
filing of a complaint with the court of competent
jurisdiction, or (b) where the assessment is appealed to the Court of
Tax Appeals, by
filing an answer to the taxpayer's petition for
review wherein payment of the tax is prayed for.
[69]
From respondents' filing of their excise tax returns in the years 1992
to 1997 until the lapse of the five-year prescriptive period under
Section 318 of the 1977 NIRC in the years 1997 to 2002,
petitioner did not institute any judicial action for collection
of tax as aforedescribed. Instead, petitioner relied solely
on summary administrative remedies by issuing the collection letters and
warrants of garnishment and distraint and/or levy without prior
assessment against respondents. Sifting through records, it can be said
that petitioner's earliest attempts to
judicially
enforce collection of respondents' alleged deficiency excise taxes were
his
Answers to respondents' Petitions for Review
filed before the CTA in Case Nos. 5657, 5728, and 6547 on August 6,
1998,
[70] March 2,
1999,
[71] and
November 29, 2002,
[72] respectively.
Verily, in a long line of jurisprudence, the Court deemed the filing of
such pleadings as effective tax collection suits so as to stop the
running of the prescriptive period in cases where: (a) the CIR issued an
assessment and the taxpayer appealed the same to the CTA;
[73] (b) the CIR filed the
answer praying for the payment of tax within five years after the
issuance of the assessment;
[74] and (c) at the time of its filing, jurisdiction
over judicial actions for collection of internal revenue taxes was
vested in the CTA, not in the regular courts.
[75]
However, judging by the foregoing conditions, even petitioner's Answers
in CTA Case Nos. 5657, 5728, and 6547 cannot be deemed judicial actions
for collection of tax.
First, CTA
Case Nos. 5657, 5728, and 6547 were not appeals of assessments.
Respondents went before the CTA to challenge the 1998 and 2002
Collection Letters, which, by petitioner's own admission, are not
assessments.
Second, by the time
petitioner filed. his Answers before the CTA on August 6, 1998, March 2,
1999, and November 29, 2002, his power to collect alleged deficiency
excise taxes, the returns for which were filed from 1992 to 1997, had
already partially prescribed, particularly those pertaining to the
earlier portion of the Covered Years.
Third, at the time petitioner
filed his Answers before the CTA, the jurisdiction over judicial actions
for collection of internal revenue taxes was vested in the regular
courts, not the CTA.
[76] Original jurisdiction over collection
cases
[77] was
transferred to the CTA only on April 23, 2004, upon the effectivity of
Republic Act No. 9282.
[78]
Without either a
formal tax collection suit filed
before the court of competent jurisdiction or an
answer deemed as a judicial action for collection of
tax within the prescribed five-year period under Section 318 of the 1977
NIRC, petitioner's
power to institute a court proceeding for
the collection of respondents' alleged deficiency excise taxes without
an assessment had already prescribed in 1997 to 2002.
The Court's ruling remains the same even if the 10-year prescriptive
period under Section 319(a) of the 1977 NIRC, in case of falsity, fraud,
or omission in the taxpayer's return, is applied to the present cases.
Even if the Court concedes, for the sake of argument, that respondents'
returns for the Covered Years were false or fraudulent, Section 319(a)
of the 1977 NIRC similarly required petitioner to (a) issue an
assessment; and/or (b) file a court action for collection without an
assessment, but within 10 years after the discovery of the falsity,
fraud, or omission in the taxpayer's return. As early as the 1998
Collection Letters, petitioner could already be charged with knowledge
of the alleged falsity or fraud in respondents' excise tax returns,
which precisely led petitioner to invalidate respondents' payments using
the transferred TCCs and to demand payment of deficiency excise taxes
through said letters. The 10-year prescriptive period under Section
319(a) of the 1977 NIRC wholly expired in 2008 without petitioner
issuing a valid assessment or instituting judicial action for
collection.
The Court cannot countenance the tax authorities' non-performance of
their duties in the present cases. The law provides for a statute of
limitations on the assessment and collection of internal revenue taxes
in order to safeguard the interest of the taxpayer against unreasonable
investigation.
[79]
While taxes are the lifeblood of the nation, the Court cannot allow tax
authorities indefinite periods to assess and/or collect alleged unpaid
taxes. Certainly, it is an injustice to leave any taxpayer in perpetual
uncertainty whether he will be made liable for deficiency or delinquent
taxes.
In sum, petitioner's attempts to collect the alleged deficiency excise
taxes from respondents are void and ineffectual because (a) the Issues
regarding the transferred TCCs' validity, respondents' qualifications as
transferees of said TCCs, and respondents' use of the TCCs to pay for
their excise tax liabilities for the Covered Years, had already been
settled with finality in the
2007 Shell Case and
2010 Petron Case, and could no longer be re-litigated
on the ground of
res judicata in the concept of
conclusiveness of judgment; (b) petitioner's resort to summary
administrative remedies without a valid assessment was not in accordance
with the prescribed procedure and was in violation of respondents'
right to substantive due process; and (c) none of petitioner's
collection efforts constitute a valid institution of a judicial remedy
for collection of taxes without an assessment, and any such judicial
remedy is now barred by prescription.
WHEREFORE, premises considered, the Court
DENIES the petition of the Commissioner of Internal
Revenue in G.R. No. 197945 and
AFFIRMS the Decision
dated February 22, 2011 and Resolution dated July 27, 2011 of the Court
of Tax Appeals
en banc in CTA
En
Banc Case No. 535.
The Court likewise
DENIES the petition of the
Commissioner of Internal Revenue in G.R. Nos. 204119-20 and
AFFIRMS the Decision dated March 21, 2012 and
Resolution dated October 10, 2012 of the Court of Appeals in CA-G.R. SP
Nos. 55329-30.
SO ORDERED.
Peralta,
** Del Castillo, Tijam, and
Gesmundo,
*** JJ., concur.
* Per Special Order No. 2559 dated May 11, 2018.
** Per Raffle dated February 26, 2018.
*** Per Special Order No. 2560 dated May 11, 2018.
[1]
Rollo (G.R. No. 197945), pp. 62-109; penned by
Associate Justice Cielito N. Mindaro-Grulla with Presiding Justice
Ernesto D. Acosta and Associate Justices Juanito C. Castañeda, Jr.,
Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Olga
Palanca-Enriquez, Esperanza R. Fabon-Victorino and Amelia R.
Cotangco-Manalastas concurring.
[2] Id. at 110-117.
[3]
Rollo (G.R. Nos. 204119-20), pp. 52-68; penned by
Associate Justice Ramon A. Cruz with Associate Justices Rosalinda
Asuncion-Vicente and Antonio L. Villamor concurring.
[4] Id. at 70-71.
[5] Executive Order No. 226 dated July 16, 1987.
[6] Rollo (G.R.. Nos. 204119-20), p. 213.
[7] The DOF Center
was created pursuant to Administrative Order No. 266 dated February 7,
1992, in relation to EO 226, to centralize tax credit availment
processing. It is composed of representatives from the DOF, the BOI, the
Bureau of Customs, and the Bureau of Internal Revenue.
[8]
See Joint Stipulation of Facts and Issues in CTA Case
No. 5728;
rollo (G.R. Nos. 204119-20), pp. 579-580.
[9] Inclusive of
the years 1992, 1994 to 1997 for respondent Shell and 1993 to 1997 for
respondent Petron.
[10]
See Joint Stipulation of Facts and Issues in CTA Case
No. 5728;
rollo (G.R. Nos. 204119-20), p. 579, and
Amended Joint Stipulation of Facts and Issues in CTA Case No. 6547;
rollo (G.R. No. 197945), p. 882.
See also petitioner's Memorandum dated April 27,
2015;
rollo (G.R. No. 197945), pp. 931, 934.
[11]
See Amended Joint Stipulation of Facts and Issues in
CTA Case No. 6547;
rollo (G.R. No. 197945), p. 883.
[12] Rollo (G.R. Nos. 204119-20), pp. 141, 269.
[13] Through its Revenue District Officer Ruperto P. Somera.
[14]
Rollo (G.R. Nos. 2041 19-20), pp. 152-156, 289-301,
and 302-307.
[15] Id. at 161, 308-318.
[16] Id. at 247-266.
[17] Id. at 161-165.
[18] Signed by BIR
Regional Director Antonio I. Ortega and received by Shell on July 17,
1998. (Id. at 166.)
[19] Id. at 113-140.
[20] Id. at 477.
[21] Id. at 109.
[22] As amended by
the Tax Reform Act of 1997, Republic Act No. 8424 (December 11, 1997).
[23] In
Resolutions dated September 7, 1999.
Rollo (G.R. Nos.
204119-20), p. 112 and 246.
[24] Prior to the
effectivity of Republic Act No. 9282, a CTA decision is appealable to
the Court of Appeals. After its enactment, the CTA became an appellate
court of equal rank to the Court of Appeals. Thus, a decision of a CTA
Division is appealable to the CTA
En Banc.
[25]
Pilipinas Shell Petroleum Corp. v. Commissioner of Internal
Revenue, 565 Phil. 613 (2007).
[26] In letters
dated August 31, 1999 and September 1, 1999 [
Rollo
(G.R. No. 197945), pp. 732-734].
[27] In a letter
addressed to respondent Shell dated November 3, 1999
[
Rollo (G.R. No. 197945), pp. 736-742] and a letter
addressed to respondent Petron dated October 24, 1999.
[28]
Pilipinas Shell Petroleum Corp. v. Commissioner of Internal
Revenue, supra note 25 at 657.
[29] As per Entry
of Judgment, Supreme Court of the Philippines Second Division.
[30]
Petron Corporation v. Commissioner of Internal
Revenue, 640 Phil. 163 (2010).
[31] Id. at 188.
[32] Supreme Court of the Philippines, First Division.
[33] Rollo (G.R. No. 197945), p. 765.
[34] Id. at 767-773.
[35] Through BIR Assistant Commissioner Edwin R. Abella.
[36] Rollo (G.R. No. 197945), p. 731.
[37] Id. at 681-730.
[38] Id. at 174-216.
[39] Id. at 215.
[40] In a Resolution dated August 18, 2009. (Id. at 239-242.)
[41] Id. at 243-301.
[42] Rollo (G.R. Nos. 204119-20), pp. 24-25.
[43] Rollo (G.R. No. 197945), pp. 25-26.
[44] 399 Phil. 205, 215-218 (2000).
[45] October 5,
1982 Memorandum of Agreement between DOF and BOI, and the rules
implementing the Omnibus Investments Code of 1987.
[46] Dated
September 6, 1999. Subject: Implementing the Provisions of the National
Internal Revenue Code of 1997 Governing the Rules on Assessment of
National Internal Revenue Taxes, Civil Penalties and Interest and the
Extra-judicial Settlement of a Taxpayer's Criminal Violation of the Code
Through Payment of a Suggested Compromise Penalty.
[47] See
Philippine Bank of Communications v. Commissioner of Internal
Revenue, 361 Phil. 916, 927 (1999);
Commissioner of
Internal Revenue v. Bank of the Philippine Islands, 549 Phil.
886, 903 (2007).
[48]
Commissioner of Internal Revenue v. Algue, Inc., 241
Phil. 829, 830 (1988).
[49] De Leon,
Hector S.,
Fundamentals of Taxation (2004 Ed.), p. 7.
[50] Section 2 of
the Tax Code provides,
"Powers and Duties of the Bureau of
Internal Revenue. - The Bureau of Internal Revenue shall be
under the supervision and control of the Department of Finance and its
powers and duties shall comprehend the assessment and collection of all
national internal revenue taxes, fees, and charges, and the enforcement
of all forfeitures, penalties, and fines connected therewith, including
the execution of judgments in all cases decided in its favor by the
Court of Tax Appeals and the ordinary courts. The Bureau shall give
effect to and administer the supervisory and police powers conferred to
it by this Code or other laws." This section amended Section 3 of the
National Internal Revenue Code of the Philippines of 1977.
[51] Section 6, Tax Code.
[52]
See Section 207, Tax Code. Formerly Sections 304 and
310 of the National Internal Revenue Code of the Philippines of 1977.
[53]
See Sections 203 and 220, Tax Code. Formerly Sections
318 and 319 of the National Internal Revenue Code of the Philippines of
1977.
[54]
Commissioner of Internal Revenue v. Pineda, 128 Phil.
146, 150 (1967).
[55]
Philippine Bank of Communications v. Commissioner of Internal
Revenue, supra note 47 at 927.
[56] See
Commissioner of Internal Revenue v. Metro Star Superama, Inc.,
652 Phil. 172, 188 (2010),
Commissioner of Internal Revenue v.
Algue, Inc., supra note 48 at 836;
Commissioner of
Internal Revenue v. Reyes, 516 Phil. 176, 190 (2006);
Commissioner of Internal Revenue v. BASF Coating + INKS Phils.,
Inc., 748 Phil. 760, 772 (2014).
[57]
See Article III, Section 1, 1987 Constitution. Also
see Commissioner of Internal Revenue v. Metro Star Superama,
Inc., id. at 187.
[58] See
Commissioner of Internal Revenue v. BASF Coating + INKS Phils.,
Inc., supra note 56 at 772 citing
Commissioner of
Internal Revenue v. Algue, Inc., supra note 48 at 836.
[59]
Alhambra Cigar & Cigarette Manufacturing Co. v. Collector
of Internal Revenue, 105 Phil. 1337 (1959), as quoted in
Republic v. De Yu, 119 Phil. 1013, 1017 (1964).
[60]
Commissioner of Internal Revenue v. BASF Coating + INKS Phils.,
Inc., supra note 56. Also
see Remedies of the Bureau
in the Audit Process and Collection of Delinquent Accounts,
https://www.bir.gov.ph/index.php/taxpayer-bill-of-rights.html#remedies-of-the-bureau-in-theaudit-process-and-collection-of-delinquent-accounts.
(Last visited January 11, 2018.)
[61] Supra note 56.
[62] Id. at 189-190.
[63] Supra note 56.
[64] Id. at 771-772.
[65] Rollo (G.R. Nos. 204119-20), p. 580.
[66] Section 318
of the National Internal Revenue Code of 1977 (Presidential Decree No.
1158, [June 3, 1977]) was previously Section 331 of the National
Internal Revenue Code of 1939 (Commonwealth Act No. 466, [June 15,
1939]).
[67] Section 318
was amended by Republic Act No. 8424, shortening the prescriptive period
to assess and collect national internal revenue taxes from five to
three years, to quote: "SECTION 203.
Period of Limitation Upon
Assessment and Collection. - Except as provided in Section
222, internal revenue taxes shall be assessed
within three (3)
years after the last day prescribed by law for the filing of
the return, and no proceeding in court without assessment for the
collection of such taxes shall be begun after the expiration of such
period: Provided, That in a case where a return is filed beyond the
period prescribed by law, the three (3)-year period shall be counted
from the day the return was filed. For purposes of this Section, a
return filed before the last day prescribed by law for the filing
thereof shall be considered as filed on such last day." (Emphasis
supplied.)
[68] In case an
assessment had been timely issued, Section 319(c) of the 1977 NIRC
provided: "Where the assessment of any internal revenue tax has been
made within the period of limitation aboveprescribed, such tax may be
collected by distraint or levy or by a proceeding in court, but only if
began (1) within five years after assessment of the tax, or (2) prior to
the expiration of any period for collection agreed upon in writing by
the Commissioner and the taxpayer before the expiration of such
five-year period. x x x"
[69]
Palanca v. Commissioner of Internal Revenue, 114
Phil. 203, 207 (1962).
[70] Rollo (G.R. Nos. 204119-20), p. 199.
[71] Id. at 72.
[72] Rollo (G.R. No. 197945), p. 181.
[73] See
Philippine National Oil Company v. Court of Appeals, 496 Phil.
506 (2005);
Fernandez Hermanos, Inc. v. Commissioner of
Internal Revenue, 140 Phil. 31, 47 (1969);
Palanca v.
Commissioner of Internal Revenue, supra note 69.
[74] Bank
of the Philippine Islands v. Commissioner of Internal
Revenue, 510 Phil. 1 (2005).
[75]
China Banking Corporation v. Commissioner of Internal
Revenue, 753 Phil. 58 (2015).
[76] Bank
of the Philippine Islands v. Commissioner of internal
Revenue, supra note 74.
[77] In which the principal amount involved is one million pesos or more.
[78] Entitled, "An
Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA),
Elevating Its Rank to the Level of a Collegiate Court with Special
Jurisdiction and Enlarging Its Membership, Amending for the Purpose
Certain Sections of Republic Act No. 1125, as Amended, Otherwise Known
as the Law Creating the Court of Tax Appeals, and for Other Purposes."
[79]
Philippine Journalists, Inc. v. Commissioner of Internal
Revenue, 488 Phil. 218, 229-230 (2004).