GR 128315; (June, 1999) (Digest)
G.R. No. 128315 June 29, 1999
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PASCOR REALTY AND DEVELOPMENT CORPORATION, ROGELIO A. DIO and VIRGINIA S. DIO, respondents.
FACTS
The Bureau of Internal Revenue (BIR) examined the books of Pascor Realty and Development Corporation (PRDC) for 1986-1988 and recommended tax assessments. On March 1, 1995, the BIR Commissioner filed a criminal complaint for tax evasion against PRDC and its officers before the Department of Justice. Attached to the complaint was a Joint Affidavit of Revenue Officers detailing the tax liabilities. The taxpayers filed an urgent request for reconsideration with the BIR, which was denied in a May 17, 1995 letter stating that no formal assessment had been issued. The taxpayers then filed a petition for review with the Court of Tax Appeals (CTA).
The Commissioner moved to dismiss the CTA petition for lack of jurisdiction, arguing no formal assessment existed to appeal. The CTA denied the motion, ruling the criminal complaint and attached affidavit constituted a valid assessment, and the denial letter was an appealable decision. The Court of Appeals affirmed the CTA. The Commissioner elevated the case to the Supreme Court via a petition for review on certiorari.
ISSUE
Whether the criminal complaint for tax evasion, together with the attached revenue officers’ affidavit, constitutes a formal tax assessment that can be appealed to the Court of Tax Appeals.
RULING
No. The Supreme Court ruled that the criminal complaint and its attached affidavit do not constitute a formal assessment. An assessment is not merely a computation of tax liability; it is a formal written demand for payment issued by the Commissioner of Internal Revenue to the taxpayer. It must inform the taxpayer of the amount due and demand payment within a prescribed period, signaling the accrual of penalties and the start of the period to protest.
The affidavit attached to the criminal complaint was prepared for the purpose of initiating a criminal prosecution for tax evasion, not for issuing a formal assessment notice. The Court emphasized that a tax assessment and a criminal complaint for tax evasion serve distinct purposes and are governed by different procedures. The taxpayer’s right to dispute an assessment administratively before the BIR and judicially before the CTA is triggered only upon receipt of a formal assessment notice. Since no such notice was issued and received, the CTA did not acquire jurisdiction over the petition for review. The Supreme Court reversed the decisions of the Court of Appeals and the CTA and dismissed the petition before the CTA.