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CIR v. PASCOR REALTY

FACTS:

The case involves a petition for review seeking the nullification of the decision and resolution of the Court of Appeals, which affirmed the resolution of the Court of Tax Appeals (CTA). The undisputed facts are as follows: Revenue officers were authorized by the Commissioner of Internal Revenue to examine the books of accounts of Pascor Realty and Development Corporation (PRDC) for the years 1986, 1987, and 1988. The examination resulted in a recommendation for the issuance of assessments against PRDC. Subsequently, a criminal complaint for tax evasion was filed against PRDC, its president, and treasurer. PRDC requested for reconsideration/reinvestigation of the tax assessment and liabilities. The Commissioner denied the request on the ground that no formal assessment had been issued. PRDC then elevated the matter to the CTA, which denied the Commissioner's motion to dismiss and ordered her to file an answer. Instead, the Commissioner filed a petition with the Court of Appeals, alleging that the CTA acted without jurisdiction in considering the revenue officers' affidavit/report as an assessment that could be appealed to the CTA.

(Source: CIR vs. Pascor Realty and Development Corporation)

ISSUES:

  1. Whether or not the criminal complaint for tax evasion can be construed as an assessment.

  2. Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted.

  3. Whether or not the CTA can take cognizance of the case in the absence of an assessment.

RULING:

  1. The revenue officers' Affidavit-Report, which was attached to the criminal Complaint filed with the Department of Justice, cannot be construed as an assessment that could be questioned before the Court of Tax Appeals.

  2. An assessment is not necessary before criminal charges for tax evasion may be instituted.

  3. The Court of Tax Appeals can take cognizance of the case in the absence of an assessment.

PRINCIPLES:

  • 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 interests begin to accrue against the taxpayer.

  • Due process requires that the assessment must be served on and received by the taxpayer to enable him to determine his remedies.

  • The provisions of Republic Act No. 1125, relating to exclusive appellate jurisdiction of the Court of Tax Appeals, do not make any mention of "formal assessment." The law merely states that the Court has exclusive appellate jurisdiction over decisions of the Commissioner of Internal Revenue on disputed assessments, and other matters arising under the National Internal Revenue Code, other law or part administered by the Bureau of Internal Revenue.

  • An assessment is simply the statement of the details and the amount of tax due from a taxpayer. The details of the tax contained in the BIR examiners' Joint Affidavit, which was attached to the criminal Complaint, can be considered as an assessment.