1 tax case digest

8/10/2019 1 Tax Case Digest

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Tax case digest:

1. comm vs josefna leal2. Comm Internal revenue vs. PASCOR

FACTS:

- The BIR commissioner athori!ed revene o"cers to examine the #oo$s o%acconts and other acconting records o% &ascor Realt' and (evelo)mentCor)oration and reslted in a recommendation %or the issance o% anassessment in the amonts o% &*+,+,/,.0 and &/+21+3/0./ %or the 'ears10 and 1*+ res)ectivel'.

- Commissioner o% Internal Revene fled a criminal com)laint #e%ore the(e)artment o% 4stice against the &R(C+ its &resident Rogelio A. (io+ and its

Treasrer 5irginia S. (io+ alleging evasion o% taxes in the total amont o%&12+1/+0*1 .22.

- &rivate res)ondents &R(C+ et.al. fled an 6rgent Re7est %orReconsideration8Reinvestigation dis)ting the tax assessment and taxlia#ilit'.

- the CIR denied the rgent re7est %or reconsideration8reinvestigation o% the)rivate res)ondents on the grond that no %ormal assessment o% the has as

'et #een issed #' the Commissioner.

- &rivate res)ondents then elevated the (ecision o% the CIR to the Cort o% TaxA))eals on a )etition %or revie9. Then CIR fled a otion to (ismiss the)etition on the grond that the CTA has no jrisdiction over the s#jectmatter o% the )etition+ as there 9as no %ormal assessment issed against the)etitioners

- The CTA denied the said motion to dismiss in a Resoltion dated 4anar' 3+10 and ordered the CIR to fle an ans9er 9ithin thirt' ;/2< da's %rom

recei)t o% said resoltion. The CIR received the resoltion #t did not fle anans9er nor did move to reconsider the resoltion.

ISS6=S:1. >hether or not the criminal com)laint %or tax evasion can #e constred as an

assessment.3. >hether or not an assessment is necessar' #e%ore criminal charges %or tax

evasion ma' #e institted./. >hether or not the CTA can ta$e cogni!ance o% the case in the a#sence o% an

assessment.?=@(:

1. either the IRC nor the reglations governing the )rotest o%

assessments )rovide a s)ecifc defnition or %orm o% an assessment. An

assessment in%orms the tax)a'er that he or she has tax lia#ilities. Bt not alldocments coming %rom the BIR containing a com)tation o% the tax lia#ilit'

can #e deemed assessments. =ven these defnitions %ail to advance )rivate

res)ondents case. That the BIR examiners 4oint A"davit attached to the

Criminal Com)laint contained some details o% the tax lia#ilities o% )rivate

res)ondents does not i)so %acto ma$e it an assessment. The )r)ose o% the

4oint A"davit 9as merel' to s))ort and s#stantiate the Criminal Com)laint


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%or tax evasion. Clearl'+ it 9as not meant to #e a notice o% the tax de and a

demand to the )rivate res)ondents %or )a'ment thereo%. An assessment

contains not onl' a com)tation o% tax lia#ilities+ #t also a demand %or

)a'ment 9ithin a )rescri#ed )eriod. It also signals the time 9hen )enalties

and )rotests #egin to accre against the tax)a'er. To ena#le the tax)a'er to

determine his remedies thereon+ de )rocess re7ires that it mst #e servedon and received #' the tax)a'er. Accordingl'+ an a"davit+ 9hich 9as

exected #' revene o"cers stating the tax lia#ilities o% a tax)a'er and

attached to a criminal com)laint %or tax evasion+ cannot #e deemed an

assessment that can #e 7estioned #e%ore the Cort o% Tax A))eals. The %act

that the Com)laint itsel% 9as s)ecifcall' directed and sent to the (e)artment

o% 4stice and not to )rivate res)ondents sho9s that the intent o% the

commissioner 9as to fle a criminal com)laint %or tax evasion+ not to isse an

assessment. >hat )rivate res)ondents received 9as a notice %rom the (4

that a criminal case %or tax evasion had #een fled against them+ not a notice

that the Brea o% Internal Revene had made an assessment.

3. Section 333 o% IRC states that an assessment is not necessar' #e%ore a

criminal charge can #e fled. This is the general rle. The fling o% a criminal

com)laint mst #e )receded #' an assessment is incorrect argment. Section

333 o% the IRC s)ecifcall' states that in cases 9here a %alse or %radlent

retrn is s#mitted or in cases o% %ailre to fle a retrn sch as this case+

)roceedings in cort ma' #e commenced 9ithot an assessment.

Frthermore+ Section 32 o% the same Code clearl' mandates that the civil

and criminal as)ects o% the case ma' #e )rsed simltaneosl'. Sch

)rotests cold not sto) or ss)end the criminal action 9hich 9as inde)endent

o% the resoltion o% the )rotest in the CTA. This 9as #ecase thecommissioner o% internal revene had+ in sch tax evasion cases+ discretion

on 9hether to isse an assessment or to fle a criminal case against the

tax)a'er or to do #oth. The criminal charge need onl' #e s))orted #'

aprima faciesho9ing o% %ailre to fle a re7ired retrn. This %act need not #e

)roven #' an assessment

3. Estate vda gabriel vs CIRFACTS:

- (ring the li%etime o% the decedent+ 4liana 5da. (e Da#riel+ her #sinessaEairs 9ere managed #' the &hili))ine Trst Com)an' ;&hiltrst


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her Income Tax Retrn %or the 'ear 1*. Since the relationshi) #et9een &hiltrstand the decedent 9as atomaticall' severed at the moment o% the Tax)a'ersdeath+ none o% &hiltrsts acts or omissions cold #ind the estate o% the Tax)a'er.Service on &hiltrst o% the demand letter and Assessment otice 9as im)ro)erl'done. It mst #e noted that &hiltrst 9as never a))ointed as the administrator o%the =state o% the decedent+ and+ indeed+ that the cort a 7o t9ice rejected

&hiltrsts motion to #e ths a))ointed. Since there 9as never an' valid notice o%this assessment+ it cold not have #ecome fnal+ exector' and incontesta#le+ and+%or %ailre to ma$e the assessment 9ithin the fve-'ear )eriod )rovided in Section/1 o% the ational Internal Revene Code o% 1**+ res)ondents claim against the)etitioner =state is #arred. >hen an estate is nder administration+ notice mst #esent to the administrator o% the estate+ since it is the said administrator+ asre)resentative o% the estate+ 9ho has the legal o#ligation to )a' and discharge allde#ts o% the estate and to )er%orm all orders o% the cort. In this case+ theassessment 9as served not even on an heir o% the =state+ #t on a com)letel'disinterested third )art'. This im)ro)er service 9as clearl' not #inding on the)etitioner.

4. RCBC vs. Commissioner of Internal RevenueFACTS:

- &etitioner Ri!al Commercial Ban$ing Cor)oration received a Formal @etter o%

(emand dated a' 3+ 3221 %rom the res)ondent Commissioner o% Internal

Revene %or its tax lia#ilities )articlarl' %or Dross nshore Tax in the amont

o% &/++,3.3 and (ocmentar' Stam) Tax %or its S)ecial Savings

&lacements in the amont o% &,0+*1*+3.*0+ %or the taxa#le 'ear 1*.,

- &etitioner fled a )rotest letter8re7est %or reconsideration8reinvestigation)rsant to Section 33 o% the ational Internal Revene Code o% 1*;IRC


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Se)tem#er 12+ 322/ Resoltion. Then the CTA Second (ivision set the case%or hearing dring 9hich )etitioners consel 9as )resent.

- The CTA Second (ivision rendered a Resoltion den'ing )etitioners &etition%or Relie% %rom 4dgment. &etitioners motion %or reconsideration 9as deniedhence it fled a )etition %or revie9 9ith the CTA En Banc 9hich a"rmed theassailed Resoltions o% the CTA Second (ivision

ISS6=:1. >hether or not the )etitioner has denied de )rocess #' den'ing the

o))ortnit' to addce evidence to esta#lish the %actal allegationconstitting its alleged excsa#le negligence

?=@(:Relie% %rom jdgment nder Rle / o% the Rles o% Cort is a legal remed' that is

allo9ed onl' in exce)tional cases 9here#' a )art' see$s to set aside a jdgment

rendered against him #' a cort 9henever he 9as njstl' de)rived o% a hearing or

9as )revented %rom ta$ing an a))eal+ in either case+ #ecase o% %rad+ accident+

mista$e or excsa#le neglect. To #e heardG does not onl' mean ver#al argments in

cortH one ma' #e heard also throgh )leadings. >here o))ortnit' to #e heard+

either throgh oral argments or )leadings+ is accorded+ there is no denial o%)rocedral de )rocess. Relie% cannot #e granted on the ims' excse that the

%ailre to a))eal 9as de to the neglect o% )etitioners consel. ther9ise+ all that a

losing )art' 9old do to salvage his case 9old #e to invo$e neglect or mista$e o%

his consel as a grond %or reversing or setting aside the adverse jdgment+

there#' )tting no end to litigation. egligence to #e Gexcsa#leG mst #e one

9hich ordinar' diligence and )rdence cold not have garded against and #'

reason o% 9hich the rights o% an aggrieved )art' have )ro#a#l' #een

im)aired. &etitioners %ormer consels omission cold hardl' #e characteri!ed as

excsa#le+ mch less navoida#le. The %act that consel allegedl' had not rene9ed

the em)lo'ment o% his secretar'+ there#' ma$ing the latter no longer attentive or%ocsed on her 9or$+ did not relieve him o% his res)onsi#ilities to his client. It is a

)ro#lem )ersonal to him 9hich shold not in an' manner inter%ere 9ith his

)ro%essional commitments.

Assming ex gratia argumentithat the negligence o% )etitioners consel is

excsa#le+ still the )etition mst %ail. As a)tl' o#served #' the SD+ even i% the

)etition %or relie% %rom jdgment 9old #e granted+ )etitioner 9ill not %are an' #etter

i% the case 9ere to #e retrned to the CTA Second (ivision since its action %or the

cancellation o% its assessments had alread' )rescri#ed. Sch assessment ma' #e

)rotested administrativel' #' fling a re7est %or reconsideration or reinvestigation

9ithin thirt' ;/2< da's %rom recei)t o% the assessment in sch %orm and manner as

ma' #e )rescri#ed #' im)lementing rles and reglations. >ithin sixt' ;02< da's

%rom fling o% the )rotest+ all relevant s))orting docments shall have #een

s#mittedH other9ise+ the assessment shall #ecome fnal. I% the )rotest is denied in

9hole or in )art+ or is not acted )on 9ithin one hndred eight' ;12< da's %rom

s#mission o% docments+ the tax)a'er adversel' aEected #' the decision or

inaction ma' a))eal to the Cort o% Tax A))eals 9ithin ;/2< da's %rom recei)t o% the


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said decision+ or %rom the la)se o% the one hndred eight' ;12hile the

right to a))eal a decision o% the Commissioner to the Cort o% Tax A))eals is merel'

a stattor' remed'+ nevertheless the re7irement that it mst #e #roght 9ithin /2

da's is jrisdictional. I% a stattor' remed' )rovides as a condition )recedent that

the action to en%orce it mst #e commenced 9ithin a )rescri#ed time+ schre7irement is jrisdictional and %ailre to com)l' there9ith ma' #e raised in a

motion to dismiss.

. CIR vs !"et# sua$o labFACTS:

- &rivate res)ondent >'eth Saco @a#oratories+ Inc. ;>'eth Saco %or #revit''eth Saco. The re)ort disclosed that >'eth Saco 9as )a'ing ro'alties to

its %oreign licensors as 9ell as remneration %or technical services to >'ethInternational @a#oratories o% @ondon. >'eth Saco 9as also %ond to havedeclared cash dividends and these 9ere )aid. ?o9ever+ it allegedl' %ailed toremit 9ithholding tax at sorce %or the %orth ;,th< 7arter o% 1*/ onaccred ro'alties+ remneration %or technical services and cash dividends+reslting in a defcienc' 9ithholding tax at sorce in the aggregate amont o%&/+1*+,.1. oreover+ >'eth Saco dedcted the cost o% non-dedcti#lera9 materials+ reslting in its alleged %ailre to )a' the correct amont o%advance sales tax. There 9as re)ortedl' also a short )a'ment o% advancesales tax in its im)ortation o% Gega &ol'm'cin (G. All these reslted in adefcienc' sales tax in the amont o% &02+.31 and com)romise )enalt' inthe amont o% &/22.22 or a total amont o% &01+1.31.

- The Brea o% Internal Revene assessed >'eth Saco on the a%oresaid taxlia#ilities in t9o ;3< notices. These assessment notices 9ere #oth received #'>'eth Saco. Therea%ter+ >'eth Saco throgh its tax consltant SD5 JCo.+sent the BIR t9o ;3< letters+ )rotesting the assessments and re7esting theircancellation or 9ithdra9al on the grond that said assessments lac$ed%actal or legal #asis. >'eth Sacos contention 9as that a 9ithholding tax atsorce on ro'alties and dividends #ecomes de and )a'a#le onl' )on theiractal )a'ment or remittance. >'eth Saco ho9ever+ admitted lia#ilit' 9ithres)ect to the short )a'ment o% advance sales tax in the amont o%&1+222.22 on its im)ortation o% Gega &ol'm'cin (.G

- &etitioner CIR+ rendered a decision redcing the assessment o% the9ithholding tax at sorce %or 1*/ to &1+*/+113.0. ?o9ever+ the amont o%

&01+1.31 as defcienc' sales tax remained the same.- Therea%ter+ >'eth Saco fled a )etition %or revie9 in Cort o% Tax A))eals

)ra'ing that )etitioner #e enjoined %rom en%orcing the assessments #' reason

o% )rescri)tion and that the assessments #e declared nll and void %or lac$ o%

legal and %actal #asis.


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- )etitioner issed a 9arrant o% distrain o% )ersonal )ro)ert' and 9arrant o%

lev' o% real )ro)ert' again )rivate res)ondent to en%orce collection o% the

defcienc' taxes.

- )etitioner fled his ans9er to >'eth Sacos )etition %or revie9 )ra'ing+

among others+ that )rivate res)ondent #e declared lia#le to )a' the amonto% &01+1.31 as defcienc' sales tax %or the )eriods ovem#er 1+ 1*3 to

(ecem#er /1+ 1*3 and 4anar' 1+ 1*/ to cto#er /1+ 1*/+ )ls 1,K

annal interest thereon %rom (ecem#er 1*+ 1*, ntil )a'ment thereo%

)rsant to Section 1/ ;no9 Section 1/< o% the Tax Code+ and the amont

o% &1+*/+113.0 as defcienc' 9ithholding tax at sorce %or the ,th 7arter

o% 1*/ )ls K srcharge and 1,K )er annm interest thereon %rom

(ecem#er 10+ 1*, to (ecem#er 10+ 1**+ )rsant to Section 1 ;e< o% the

Tax Code o% 1**+ as amended.

- The Cort o% Tax A))eals rendered a decision enjoining the Commissioner o%

Internal Revene %rom collecting the defcienc' taxes

ISS6=:1. >hether or not )etitioners right to collect defcienc' 9ithholding tax at

sorce and sales tax lia#ilities %rom )rivate res)ondent is #arred #'

)rescri)tion.

?=@(:The main thrst o% )etitioner %or the allo9ance o% this )etition is that the fve-'ear

)rescri)tive )eriod )rovided #' la9 to ma$ a collection #' distraint or lev' or #' a

)roceeding in cort has not 'et )rescri#ed. The )eriod o% )rescri)tion o% action tocollect a tax)a'ers defcienc' income tax assessment is interr)ted 9hen the

tax)a'er re7est %or a revie9 or reconsideration o% said assessment+ and starts to

rn again 9hen said re7est is denied. A%ter care%ll' examining the records o% the

case+ it 9as %ond that >'eth Saco admitted that it 9as see$ing reconsideration o%

the tax assessments as sho9n in a letter o% 4ames A. Dm)+ its &resident and

Deneral anager. Frthermore+ 9hen >'eth Saco thr its tax consltant SD5 J Co.

sent the letters )rotesting the assessments+ the Brea o% Internal Revene+

an%actring Adit (ivision+ condcted a revie9 and reinvestigation o% the

assessments. These letters o% >'eth Saco interr)ted the rnning o% the fve-'ear

)rescri)tive )eriod to collect the defcienc' taxes. The Brea o% Internal Revene+

a%ter having revie9ed the record o% >'eth Saco+ in accordance 9ith its re7est %or

reinvestigation+ rendered a fnal assessment. It 9as onl' )on recei)t #' >'eth

Saco o% this fnal assessment that the fve-'ear )rescri)tive )eriod started to rn

again. The fnal assessment issed #' the Brea o% Internal Revene declared the

issance o% defcienc' sales tax assessments to #e legal and valid. It 9as

ascertained that dring the investigation+ >'eth Saco dedcted non-dedcti#le

ra9 materials 9hich 9ere not s#jected to advance sales tax there#' reslting in its


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%ailre to )a' the correct amont o% sales tax nder Section 1/+ in relation to

Section 10 and 10-B o% the Tax Code+ )rior to and a%ter amendment #'

&residential (ecree o. 0. >'eth Saco 9as not a#le to re%te this #' s#mitting

s))orting docments.

%. CIR vs. $onstru$tion resour$es of Asia and C&AFACTS:

- &etitioner is a domestic cor)oration+ dl' registered 9ith the verseasConstrction Board as an overseas contractor. It entered into a contract 9iththe ala'sian government %or the constrction o% a road at Sa#ah. Inconnection there9ith+ )etitioner incrred %oreign loans in the amont o%L/+22+222.22 at -1810K interest )er annm. For the )eriod %rom (ecem#er*+ 1** to 4ne + 1*+ )etitioner )aid the sm o% L1*+10.3 to the %oreigncreditors as interest on its loan.

- CIR examiners condcted an investigation and it 9as ascertained that

)etitioner %ailed to fle 9ithholding tax retrn and to 9ithhold 1K tax on

interest on %oreign loans remitted a#road. It 9as also ascertained that

)etitioner %ailed to )rchase and a"x the corres)onding docmentar' and

science stam)s on the stoc$ certifcates issed #' it covering &1*+2+222.22

9orth o% shares )rsant to Sections 333 and 33, o% the Tax Code. Ths+ in a

demand letter+ res)ondent soght )a'ment o% 9ithholding tax-at-sorce in

the amont o% &/22+1*2.,0 and res)ondent demanded )a'ment o%

)etitioners docmentar' and science stam)s tax lia#ilit' in the sm o%

&+,22.22.

- &etitioner+ )rotested the assessment %or 9ithholding tax-at-sorce

- n a)eal+ the Cort o% Tax A))eals a"rmed the assessment #' the )etitionero% the 9ithholding tax-at-sorce %or the %orth 7arter o% 1** and the frst

and second 7arters o% 1* in the amont o% &3+*32.10+ )ls delin7enc'

)enalties on the interest )a'ments remitted a#road. The res)ondent cort+

ho9ever+ denied the assessment %or docmentar' and science stam)s taxes

on the grond that Gthere is a#soltel' nothing in the records 9hich 9ill sho9

or indicate that the stoc$ certifcates on the )aid-in-ca)ital o% &1*+2+222.22

9ere issed or delivered+ actall' or constrctivel'+ to the stoc$holders+

granting that sch )aid-in-ca)ital 9as originall' issed.G It rled that the #are

statement o% the )etitioners examiners that the )aid-in-ca)ital o%

&1*+2+222.22 9hich 9as originall' issed 9as not s#jected to

docmentar' and science stam)s taxes+ naccom)anied #' inade7ate

evidence+ does not constitte s"cient #asis to sstain the im)osition o% the

said taxes in the amont o% &+*22.22.

ISS6=:1. >hether or not the lia#ilit' to )a' docmentar' and science stam)s taxes

attaches )on the issance o% certifcates o% stoc$s or )on deliver' thereo%.


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3. >hether or not said )rivate res)ondents issed the certifcates o% stoc$

covering the )aid-in-ca)ital o% &1*+2+222.22.

?=@(:The S)reme Cort rled that deliver' either actal or constrctive+ is not

necessar'. It is clear %rom the Section 33, o% IRC that %or the a%orestated tax toattach+ the certifcates o% stoc$s onl' need to #e issed #t not delivered.rdinaril'+ 9hen a cor)oration isses a certifcate o% stoc$ ;re)resenting the

o9nershi) o% stoc$s in the cor)oration to %ll' )aid s#scri)tion< the certifcate o%stoc$ can #e tili!ed %or the exercise o% the attri#tes o% o9nershi) over the stoc$smentioned on its %ace. The stoc$s can #e alienatedH the dividends or %rits derivedthere %rom can #e enjo'ed+ and the' can #e conve'ed+ )ledged or encm#ered. Thecertifcate as issed #' the cor)oration+ irres)ective o% 9hether or not it is in theactal or constrctive )ossession o% the stoc$ holder+ is considered issed #ecaseit is 9ith vale and hence the docmentar' stam) tax mst #e )aid as im)osed #'Section 313 o% the ational Internal Revene Code+ as amended. The deliver' o% thecertifcates o% stoc$s to the )rivate res)ondents stoc$holders 9hether actal or

constrctive+ is not essential %or the docmentar' and science stam)s taxes toattach. >hat is taxed is the )rivilege o% issing shares o% stoc$ and+ there%ore+ thetaxes accre at the time the shares are issed. The )rivate res)ondent neverdis)ted the amont o% the docmentar' and science stam)s taxes assessment #tonl' as$ed that it #e given more time to #e a#le to )a' them a%ter it had %ormall'trans%erred in its %avor the contri#ted ca)ital o% its stoc$holders. As a logical otgro9th o% the )resm)tion in %avor o% the validit' o% assessments+ 9hen schassessments are assailed+ the #rden o% )roo% is )on the com)laining )art'.

'. (eral$o vs savellano)AC&S*

- the late 4an D. aniago ;s#stitted in these )roceedings #' his 9i%e and

children< s#mitted to )etitioner Commissioner o% Internal Reveneconfdential dennciation against the eralco Secrities Cor)oration %or taxevasion %or having )aid income tax onl' on 3 K o% the dividends it received%rom the anila =lectric Co. %or the 'ears 103-100+ there#' allegedl'shortchanging the government o% income tax de %rom *K o% the saiddividends.

- &etitioner CIR cased the investigation o% the dennciation a%ter 9hich he

%ond and held that no defcienc' cor)orate income tax 9as de %rom the

eralco Secrities Cor)oration on the dividends it received %rom the anila

=lectric Co.+ The Commissioner accordingl' rejected aniagos contention

that the eralco %rom 9hom the dividends 9ere received is Gnot a domestic

cor)oration lia#le to tax nder this Cha)ter.G In a letter dated A)ril + 10+

the Commissioner in%ormed aniago o% his fndings and rling and there%ore

denied aniagos claim %or in%ormers re9ard on a non-existent defcienc'.

This action o% the Commissioner 9as sstained #' the Secretar' o% Finance in

a ,th Indorsement.

- aniago fled a )etition %or mandams+ and s#se7entl' an amended

)etition %or mandams+ in the Cort o% First Instance o% anila+ against the


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Commissioner o% Internal Revene and the eralco Secrities Cor)oration to

com)el the Commissioner to im)ose the alleged defcienc' tax assessment

on the eralco Secrities Cor)oration and to a9ard to him the corres)onding

in%ormers re9ard nder the )rovisions o% R.A. 3//.

- The Commissioner fled a motion to dismiss+ arging that since in matters o%issance and non-issance o% assessments+ he is clothed nder the ational

Internal Revene Code and existing rles and reglations 9ith discretionar'

)o9er in evalating the %acts o% a case and since mandams 9in not lie to

com)el the )er%ormance o% a discretionar' )o9er+ he cannot #e com)elled to

im)ose the alleged tax defcienc' assessment against the eralco Secrities

Cor)oration. ?e %rther arged that mandams ma' not lie against him %or

that 9old #e tantamont to a sr)ation o% exective )o9ers+ since the

"ce o% the Commissioner o% Internal Revene is ndenia#l' nder the

control o% the exective de)artment.

- n the other hand+ the eralco Secrities Cor)oration fled its ans9er+

inter)osing as s)ecial and8or a"rmative de%enses that the )etition states no

case o% action+ that the action is )rematre+ that mandams 9in not lie to

com)el the Commissioner o% Internal Revene to ma$e an assessment and8or

eEect the collection o% taxes )on a tax)a'er+ that since no taxes have

actall' #een recovered and8or collected+ aniago has no right to recover the

re9ard )ra'ed %or+ that the action o% )etitioner had alread' )rescri#ed and

that res)ondent cort has no jrisdiction over the s#ject matter as set %orth

in the )etition+ the same #eing cogni!a#le onl' #' the Cort o% Tax A))eals.

- The res)ondent jdge rendered a decision granting the 9rit )ra'ed %or andordering the Commissioner o% Internal Revene to assess and collect %rom the

eralco Secrities Cor)oration the sm o% &1+,2+013.22 as defcienc'

cor)orate income tax %or the )eriod 103 to 10 )ls interests and

srcharges de thereon and to )a' 3K thereo% to aniago as in%ormers

re9ard.

- ?ence+ the Commissioner fled a se)arate )etition 9ith this Cort+ )ra'ing

that the decision o% res)ondent jdge and his order #e reconsidered %or

res)ondent jdge has no jrisdiction over the s#ject matter o% the case and

that the issance or non-issance o% a defcienc' assessment is a )rerogative

o% the Commissioner o% Internal Revene not revie9a#le #' mandams.

- The eralco Secrities Cor)oration ;no9 First &hili))ine ?oldings Cor)orationhether or not the res)ondent jdge has no jrisdiction over the s#ject

matter o% the case and that the issance or non-issance o% a defcienc'

assessment is a )rerogative o% the Commissioner o% Internal Revene.

3. >hether or not the issance or non-issance o% a defcienc' assessment is

revie9a#le #' mandams.

?=@(:1. Res)ondent jdge has no jrisdiction to ta$e cogni!ance o% the case #ecase

the s#ject matter thereo% clearl' %alls 9ithin the sco)e o% cases

no9 exclusively9ithin the jrisdiction o% the Cort o% Tax A))eals. Section *

o% Re)#lic Act o. 113+ enacted 4ne 10+ 1,+ granted to the Cort o% Tax

A))eals exclusive appellate jurisdictionto revie9 #' a))eal+ among others+

decisions o% the Commissioner o% Internal Revene in cases involving

dis)ted assessments+ re%nds o% internal revene taxes+ %ees or other

charges+ )enalties im)osed in relation thereto+ or other matters arising nder

the ational Internal Revene Code or other la9 or )art o% la9 administered

#' the Brea o% Internal Revene.The determination o% the correctness or

incorrectness o% a tax assessment to 9hich the taxpayer is not agreea#le+

%alls 9ithin the jrisdiction o% the Cort o% Tax A))eals and not o% the Cort o%

First Instance+ %or nder the )rovisions o% Section * o% Re)#lic Act o. 113+

the Cort o% Tax A))eals has exclusivea))ellate jrisdiction to revie9+ on

a))eal+ an' decision o% the Collector o% Internal Revene in cases involving

dis)ted assessments and other matters arising nder the ational Internal

Revene Code or other la9 or )art o% la9 administered #' the Brea o%

Internal Revene.G Ths+ even assming that the right granted the tax)a'ers

aEected to 7estion and a))eal dis)ted assessments+ nder section * o%Re)#lic Act o. 113+ ma' #e availed o% #' strangers or in%ormers li$e the

late aniago+ the most that he cold have done 9as to a))eal to the Cort o%

Tax A))eals the rling o% )etitioner Commissioner o% Internal Revene 9ithin

thirt' ;/2< da's %rom recei)t thereo% )rsant to section 11 o% Re)#lic Act

o. 113.3?e %ailed to ta$e sch an a))eal to the tax cort. The rling is

clearl' fnal and no longer s#ject to revie9 #' the corts.

3. It is %rthermore a 9ell-recogni!ed rle that mandams onl' lies to en%orce

the )er%ormance o% a ministerial act or dt'and not to control the

)er%ormance o% a discretionar' )o9er. &rel' administrative and discretionar'

%nctions ma' not #e inter%ered 9ith #' the corts. (iscretion+ as ths

intended+ means the )o9er or right con%erred )on the o"ce #' la9 o% acting

o"ciall' nder certain circmstances according to the dictates o% his o9n

jdgment and conscience and not controlled #' the jdgment or conscience

o% others. andams ma' not #e resorted to so as to inter%ere with the

mannerin 9hich the discretion shall #e exercised or to inence or coerce a

)articlar determination. @i$e9ise+ 9e have held that corts have no )o9er to


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order the Commissioner o% Cstoms to confscate goods im)orted in violation

o% the Im)ort Control @a9+ R.A. ,30+ as said %or%eitre is s#ject to the

discretion o% the said o"cial+ nor ma' corts control the determination o%

9hether or not an a))licant %or a visa has a non-immigrant stats or 9hether

his entr' into this contr' 9old #e contrar' to )#lic sa%et' %or it is not a

sim)le ministerial %nction #t an exercise o% discretion. G(iscretion+G 9hena))lied to )#lic %nctionaries+ means a )o9er or right con%erred )on them

#' la9 o% acting o"ciall'+ nder certain circmstances+ ncontrolled #' the

jdgment or consciences o% others. A )rel' ministerial act or dt' in

contradiction to a discretional act is one 9hich an o"cer or tri#nal )er%orms

in a given state o% %acts+ in a )rescri#ed manner+ in o#edience to the mandate

o% a legal athorit'+ 9ithot regard to or the exercise o% his o9n jdgment

)on the )ro)riet' or im)ro)riet' o% the act done. I% the la9 im)oses a dt'

)on a )#lic o"cer and gives him the right to decide ho9 or 9hen the dt'

shall #e )er%ormed+ sch dt' is discretionar' and not ministerial.

+. $it" lumber vs dominggoFACTS:

- &etitioner see$s the revie9 o% a decision o% the Cort Tax A))eals+)holding an assessment #' res)ondent on an additional income o%&10+0*.0/ re)resenting minor dedctions %rom the alleged ex)enses+ onndisclosed sales o% )l'9ood+ nails and DI sheets amonting to &*+23.2*+and on a cash credit #alance o% &*+0.2.

ISS6=:1. >hether or not the res)ondent cort erred in not holding that )l'9ood and DI

sheets 9ere actall' lost in a fre occring in the cit' and in not consideringthe credit cash #alance as a loan secred #' )etitioner.

3. >hether or not the alleged loan o% the sm o% arond &+222.22 9hich)etitioner claims to #e the cash credit #alance a))earing )etitioner claims to#e his #oo$ o% accont

/. >hether or not the alleged violation o% an order o% Commissioner grantingRegional (irectors athorit' close tax cases involving defcienc' assessmentsnot exceeding &12+222.22 in taxes and )enalties %or it a))ears that a%ter a re-investigation o% the tax lia#ilit' o% )etitioner #' the corres)onding regionaldirector the latter revie9ed the case and redced the assessment %rom&+23.22 to &1*0.22.

?=@(:1. &etitioner introdced as a 9itnesses in his %avor the Chie% o% &olice o% the Cit'

o% (magete to testi%' on the existence o% a fre in the cit' #' reason o%

9hich the store o% )etitioner 9as looted o% )l'9ood and $egs o% nails. Bt said9itness declared that the' recover' onl' 122 )ieces o% )l'9ood and $egs o%

nails+ #t these 9ere retrned to )etitioner. The Cort #elo9+ ho9ever+

rejected the alleged loss o% )l'9ood #ecase said loss 9as never re)orted in

the #oo$s o% )etitionerH and neither 9as sch loss re)orted in the income tax

retrn o% )etitioner %or the 'ear+ s#mitted some months a%ter the alleged


13/13

loss. The condct o% )etitioner in not re)orting said loss in his #oo$ o% accont

or in his income tax trn )roves that the alleged loss had not #een sEered.

3. &etitioners #oo$ o% accont %ailed to sho9 sch a loan also. either 9ere an'

recei)ts or other evidence )rodced to sho9 that said amont 9as a loan

secred #' )etitioner+ or that a loan 9as ever secred. The res)ondent cortdid commit the error charged.

/. The order in 7estion ;emorandm rder o. 5-0/, dated 4l' /+ 10< 9asa))lica#le onl' to s#ordinate o"cers o% the Brea o% Internal Revene andcold not #ind the Commissioner himsel%+ 9ho has #een entrsted #' la9 toma$e fnal assessments. The Commissioner cannot delegate this )o9er toma$e a fnal assessment to his s#ordinate.

1 tax case digest

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