G.R. No. 74965 November 9, 1994 COMMISSIONER OF INTERNAL REVENUE, vs.

NATIONAL LABOR RELATIONS COMMISSION, DEPUTY CITY SHERIFF CARMELO V. CACHERO, MARITIME COMPANY OF THE PHILIPPINES, DOMINGO C. NIANGAR, DANIEL C. SABINO, FERNANDO S. TULIAO and TULMAR TRADING CORPORATION. Facts: On January 12, 1984 the Commissioner of the Internal Revenue sent two letters of demand to the Maritime Company of the Philippines for deficiency common carrier's tax, fixed tax, 6% Commercial Broker's tax, documentary stamp tax, income tax and withholding taxes in the total amount of P17,284,882.45. The assessment became final and executory as Maritime did not contest it and likewise did not pay its tax liability, the Commissioner of Internal Revenue issued warrants of distraint of personal property and levy of real property of Maritime. On April 16, 1985 a "Receipt for Goods, Articles, and Things Seized under Authority of the National Internal Revenue Code" was executed, covering, among other things, six barges. The receipt was prepared by the BIR for the signature of a representative of Maritime, but it was not signed by individuals in possession of the barges. The four barges were sold by deputy sheriff Carmelo at a public auction on August 12, 1985. The highest bidder, Daniel C. Sabino, subsequently sold them to private respondents Fernando S. Tuliao and Tulmar Trading Corporation. On September 4, 1985, CIR asked the Labor Arbiter to annul the sale and to enjoin the sheriff from disposing of the proceeds of the sale or, in the alternative, to remit them to the Bureau of Internal Revenue so that the amount could be applied to the payment of Maritimes tax liabilities. On September 30, 1985, Labor Arbiter Ceferina Diosana denied the motion on the ground that CIR failed to show that the barges which were levied upon in execution and sold at public auction had been validly placed under constructive distraint. The Labor Arbiter likewise rejected CIRs contention that the government's claim for taxes was preferred under Art. 2247, in relation to Art. 2241(1) of the Civil Code, on the ground that under this provisions only taxes and fees which are due on specific movables enjoy preference, whereas the taxes claimed by petitioner were not due on the four barges in question. The order was appealed to the NLRC, and on April 4, 1986, affirmed the denial of the Internal Revenue Commissioner's motion. Hence this petition for certiorari. Issue: Is the warrant of distraint valid? Ruling: Yes for the 2 barges (MCP Nos. 1 and 4), it is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. Besides, the distraint on the subject properties of the Maritime Company of the Philippines as well as the notice of their seizure were made by petitioner, through the Commissioner of the Internal Revenue, long before the writ of the execution was issued by the Regional Trial Court of Manila, Branch 31. There is no question then that at the time the writ of execution was issued, the two (2) barges, MPC-1 and MCP-4, were no longer properties of the Maritime Company of the Philippines. The power of the court in execution of judgments extends only to properties unquestionably belonging to the judgment debtor. Execution sales affect the rights of the judgment debtor only, and the purchaser in an auction sale acquires only such right as the judgment debtor had at the time of sale. It is also well-settled that the sheriff is not authorized to attach or levy on property not belonging to the judgment debtor. REPUBLIC vs. HIZON 320 SCRA 574 GR No. 130430, December 13, 1999 "A request for reconsideration of the tax assessment does not effectively suspend the running of the precriptive period if the same is filed after the assessment had become final and unappealable." FACTS: On July 18, 1986, the BIR issued to respondent Salud V. Hizon a deficiency income tax assessment covering the fiscal year 1981-1982. Respondent not having contested the assessment, petitioner BIR, on January 12, 1989, served warrants of distraint and levy to collect the tax deficiency. However, for reasons not known, it did not proceed to dispose of the attached properties. More than three years later, the respondent wrote the BIR requesting a reconsideration of her tax deficiency

assessment. The BIR, in a letter dated August 11, 1994, denied the request. On January 1, 1997, it filed a case with the RTC to collect the tax deficiency. Hizon moved to dismiss the case on two grounds: (1) that the complaint was not filed upon authority of the BIR Commissioner as required by Sec. 221 of the NIRC, and (2) that the action had already prescribed. Over petitioner's objection, the trial court granted the motion and dismissed the complaint. BIR on the other hand contends that respondent's request for reinvestigation of her tax deficiency assessment on November 1992 effectively suspended the running of the period of prescription. ISSUE: Has the action for collection of the tax prescribed? HELD: Yes. Sec. 229 of the NIRC mandates that a request for reconsideration must be made within 30 days from the taxpayer's receipt of the tax deficiency assessment, otherwise the assessment becomes final, unappealable and, therefore, demandable. The notice of assessment for respondent's tax deficiency was issued by petitioner on July 18, 1986. On the other hand, respondent made her request for reconsideration thereof only on November 3, 1992, without stating when she received the notice of tax assessment. Hence, her request for reconsideration did not suspend the running of the prescriptive period provided under Sec. 223(c). Although the Commissioner acted on her request by eventually denying it on August 11, 1994, this is of no moment and does not detract from the fact that the assessment had long become demandable. COMMISSIONER OF INTERNAL REVENUE vs. LA SUERTE CIGAR AND CIGARETTE FACTORY GR. No. 144942, July 4, 2002 TAX REMEDIES; SECTION 220; WHO SHOULD INSTITUTE APPEAL IN TAX CASES Facts: In its resolution, dated 15 November 2000, the Supreme Court denied the Petition for Review on Certiorari submitted by the Commissioner of Internal Revenue for non-compliance with the procedural requirement of verification explicit in Sec. 4, Rule 7 of the 1997 Rules of Civil Procedure and, furthermore, because the appeal was not pursued by the Solicitor-General. When the motion for reconsideration filed by the petitioner was likewise denied, petitioner filed the instant motion seeking an elucidation on the supposed discrepancy between the pronouncement of this Court, on the one hand that would require the participation of the Office of the Solicitor-General and pertinent provisions of the Tax Code, on the other hand, that allow legal officers of the Bureau of Internal Revenue (BIR) to institute and conduct judicial action in behalf of the Government under Sec, 220 of the Tax Reform Act of 1997. Issue: Are the legal officers of the BIR authorized to institute appeal proceedings (as distinguished from commencement of proceeding) without the participation of the Solicitor-General? Held: NO. The institution or commencement before a proper court of civil and criminal actions and proceedings arising under the Tax Reform Act which shall be conducted by legal officers of the Bureau of Internal Revenue is not in dispute. An appeal from such court, however, is not a matter of right. Sec. 220 of the Tax Reform Act must not be understood as overturning the long-established procedure before this Court in requiring the Solicitor-General to represent the interest of the Republic. This court continues to maintain that it is the Solicitor-General who has the primary responsibility to appear for the government in appellate proceedings. This pronouncement finds justification in the various laws defining the Office of the Solicitor-General, beginning with Act No. 135, which took effect on 16 June 1901, up to the present Administrative Code of 1987. Sec. 35, Chapter 12, Title III, Book IV of the said code outlines the powers and functions of the Office of the Solicitor General which includes, but not limited to, its duty to 1. Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government and its officers in the Supreme Court, the Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party.

2. Appear in any court in any action involving the validity of any treaty, law, executive order, or proclamation, rule or regulation when in his judgment his intervention is necessary or when requested by the Court. Philippine National Oil Company vs Court of Appeals G.R. 109976, April 26, 2005 Facts: Tirso Savellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings and yields from the money placements of PNOC, which was violative of P.D. 1931 (which withdrew all tax exemptions of GOCCs)-Acting on such information, the BIR requested PNOC to settle the aforementioned tax liability; PNOC offered to compromise the same by proposing that it be set-off against a claim by NAPOCOR for tax refund/credit (the amount of the tax refund was supposedly a receivable account of PNOC from NAPOCOR). The proposal was found premature by the BIR as NAPOCORs claim was still under process, so PNOC amended its offer and offered to pay an amount representing 30% of the basic tax in accordance with E.O. 44; The same was accepted by BIR Commissioner Bienvenido Tan. Meanwhile, Savellano was paid the informers reward (15% of the tax collected from PNOC and PNB); A month after receiving his last installment for the reward, Savellano wrote the BIR to demand payment of the balance of his reward, to which the BIR (through Comm. Tan) replied that BIR no longer owed Savellano as he had already received an amount equal to 15% of the compromise agreement proposed by PNOC; Savellano sought a reconsideration of the decision, questioning the legality of the compromise agreement between the BIR and PNOC. While his Motion for Reconsideration was yet pending with the BIR, Savellano filed a Petition for Review with the CTA claiming Comm. Tan acted with grave abuse of discretion in entering into a compromise agreement with PNOC which immensely lessened his informers reward. Ultimately, new BIR Commissioner Jose Ong, found meritorious Savellanos Motion for Reconsideration and ordered the PNB to pay the deficiency withholding tax on the interest earnings from PNOCs money placements. The CTA likewise found the compromise agreement entered into between the BIR and PNOC as without any force and effect; and ordered that upon payment by PNOC, Savellano is to be paid the balance of his informers reward. The CA concurred with the CTA decision and affirmed the same.

Issues: 1. Was the CTA declaration finding the compromise agreement between the BIR and PNOC valid? No. 2. Was the CTA finding that the deficiency withholding tax assessment against PNB was already final and unappealable and unenforceable valid? Yes. 3. Was the CTA order directing payment of additional informers reward for Savellano valid? Yes Ruling: 1. Compromise agreement between PNOC and BIR is void for being contrary to law and public policy. PNOC could not apply for a compromise under E.O. 44 because its tax liability was not a delinquent account or a disputed assessment. PNOCs tax liability could not be considered a delinquent account because it was not self-assessed as the BIR conducted an investigation after receiving information from Savellano. Nor is there a deficiency assessment present. Neither PNOC or PNB conducted self-assessment, and neither was there any tax assessment issued by the BIR vs them. PNOC and PNB were both silent about their tax liabilities until they were assessed thereon. 2. The withholding tax assessment vs. PNB had become final and unappealable. The CTA and the CA declared as final and unappealable (and thusunenforceable) the assessment vs PNB since PNB failed to protest it within the 30-day prescribed period. 3. Savellano is entitled to be paid the remainder of his informers reward. Savellano is entitled to additional informers award since the BIR had already collected the full amount of the tax assessment against PNB. (Sec.316(1) of the 1977 NIRC) MARCOS II vs. CA 273 SCRA 47 GR No. 120880, June 5, 1997

"The approval of the court sitting in probate is not a mandatory requirement in the collection of estate taxes." "In case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission." FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos to cover the payment of his tax delinquencies during the period of his exile in the US. The Marcos family was assessed by the BIR after it failed to file estate tax returns. However the assessment were not protested administratively by Mrs. Marcos and the heirs of the late president so that they became final and unappealable after the period for filing of opposition has prescribed. Marcos contends that the properties could not be levied to cover the tax dues because they are still pending probate with the court, and settlement of tax deficiencies could not be had, unless there is an order by the probate court or until the probate proceedings are terminated. Petitioner also pointed out that applying Memorandum Circular No. 38-68, the BIR's Notices of Levy on the Marcos properties were issued beyond the allowed period, and are therefore null and void. ISSUE: Are the contentions of Bongbong Marcos correct? Ruling: No. The deficiency income tax assessments and estate tax assessment are already final and unappealable -and-the subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by Section 213 and 218 of the National Internal Revenue Code. This summary tax remedy is distinct and separate from the other tax remedies (such as Judicial Civil actions and Criminal actions), and is not affected or precluded by the pendency of any other tax remedies instituted by the government. The approval of the court, sitting in probate, or as a settlement tribunal over the deceased's estate is not a mandatory requirement in the collection of estate taxes. On the contrary, under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. This provision disproves the petitioner's contention that it is the probate court which approves the assessment and collection of the estate tax. On the issue of prescription, the omission to file an estate tax return, and the subsequent failure to contest or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under Sec.223 of the NIRC, in case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission, and any tax so assessed may be collected by levy upon real property within 3 years (now 5 years) following the assessment of the tax. Since the estate tax assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said assessment, there is no reason why the BIR cannot continue with the collection of the said tax. EMILIO S. LIM, SR. V. CA G.R. L-48134-37, October 18, 1990 DOCTRINE: Prescriptive Period to File Criminal Case Under NIRC SECTION 281: 5 years from failure to pay tax after notice and demand.

FACTS: Spouses Emilio and Antonia Lim were engaged in the dealership of various household appliances. The NBI conducted a raid on Oct. 5, 1959 on their business address and seized from the spouses were business and accounting records which served as bases for an investigation undertaken by the BIR. On Sept. 30, 1964, Senior Revenue Examiner Raphael S. Daet submitted a memorandum that the income tax returns filed by the spouses Lim for 1958 and 1959 were false or fraudulent. Assessment should be: P835, 127. Acting Commissioner Benjamin M. Tabios informed the couple that there deficiency income taxes are P922, 913.04. On April 10, 1965, spouses requested an re-investigation. BIR expressed willingness on the following conditions: written waiver of the defense of prescription under the statute of limitations; depositing of the assessment and securing the other with a surety bond. Spouses Lim refused to comply with the conditions and reiterated his request.

BIR rendered a final decision holding that there was no cause for reversal of the assessment against the Lim couple. The final notice and demand for payment was served through their daughter in law on July 3, 1968 for the amount of P1,237,190.55 including interest, surcharges and penalty for late payment. BIR referred the matter to the Manilas Fiscals Office for investigation and prosecution. 4 criminal informations were filed against petitioners; violation of NIRC SECTION 45; violation of NIRC SECTION 51 After trial, RTC Manila found petitioners guilty. CA affirmed RTC. 23 days later Emilio Lim Sr., died.

ISSUE/S: 1. WON the offenses prescribe after 5 years (Lim) or 10 years (governments position)? 2. WON the prescriptive period commenced to run from 1965 date of 1st assessment or discovery (accdg to Lim spouses) or from final notice on 1968 (government)? 3. WON the RTC had jurisdiction over the tax collection case? 4. WON the death of Emilio S. Lim, Sr. extinguished his civil liabilities?

Ruling: 1. 5 years but the government instituted the case within the prescriptive period. NIRC SECTION 73. PENALTY FOR FAILURE TO FILE RETURN OR TO PAY TAX. Anyone liable to pay the tax, to make a return or to supply information required under this code, who refuses or neglects to pay such tax, to make such return or to supply such information at the time or times herein specified in each year, shall be punished by a fine of not more than P2,000 or by imprisonment for not more than 6 months, or both. Any individual or any officer of any corporation, or general co-partnership, required by law to make, render, sign or verify any return or to supply any information, who makes any false or fraudulent return or statement with intent to defeat or evade the assessment required by this Code to be made, shall be punished by a fine not exceeding P4,000 or by imprisonment for not exceeding 1 year, or both.

SECTION 354. PRESCRIPTION FOR VIOLATIONS OF ANY PROVISIONS OF THIS CODE. All violations of any provision of this Code shall prescribe after 5 years. Prescription shall run from the day of the commission of the violation of the law, and if the same not be known at the time, from the discovery thereof AND the institution of judicial proceeding for its investigation and punishment. The presumption shall be interrupted when proceedings are instituted against the guilty persons and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy. The term of prescription shall not run when the offender is absent from the Philippines. 2. Commenced from the date of the final notice. In criminal cases, statutes of limitations are acts of grace, a surrendering by the sovereign of its right to prosecute. They receive strict construction in favor of the Government and limitations in such cases will not be presumed in the absence of clear legislation. 3. No, because the criminal case was instituted on June 23, 1970 and PD 69 which mandates RTC to order payment of the taxes took effect only on Jan. 1, 1973. It has no retroactive application. The law applicable was SECTION 316 which does not sanction such imposition. 4. Regarding the liability of Emilio S. Lim, Sr. extinguished by his death in accordance with SECTION 89 of the RPC; but the fine imposed in the 4 criminal cases is affirmed in the case of petitioner Antonia Sun Lim in accordance with NIRC SECTION 73. J. GUTTIERREZ, JR. CONCURRING OPINION suggested an amendment of the law because the wording makes: Date of discovery meaningless; because the discovery and institution of judicial proceedings are conjunctive.

JUDY ANNE L. SANTOS v. PEOPLE, BIR G.R. No. 173176, August 26, 2008 Facts: On 19 May 2005, then BIR Commissioner Guillermo L. Parayno, Jr. wrote to the Department of Justice (DOJ) Secretary Raul M. Gonzales a letter regarding the possible filing of criminal charges against petitioner. In said letter, BIR Commissioner Parayno summarized the findings of the investigating BIR officers that petitioner, in her Annual Income Tax Return for taxable year 2002 filed with the BIR, declared an income of P8,033,332.70derived from her talent fees solely from ABS-CBN; initial documents gathered from the BIR offices and those given by petitioner's accountant and third parties, however, confirmed that petitioner received in 2002 income in the amount of at least P14,796,234.70, not only from ABS-CBN, but also from other sources, such as movies and product endorsements; the estimated tax liability arising from petitioner's under declaration amounted to P1,718,925.52, including incremental penalties; the non-declaration by petitioner of an amount equivalent to at least 84.18% of the income declared in her return was considered a substantial under declaration of income, which constituted prima facie evidence of false or fraudulent return under Section 248(B) of the NIRC, as amended; and petitioner's failure to account as part of her income the professional fees she received from sources other than ABS-CBN and her under declaration of the income she received from ABS-CBN amounted to manifest violations of Sections 254 and 255, as well as Section 248(B) of the NIRC, as amended. After an exchange of affidavits and other pleadings by the parties, Prosecution Attorney Olivia Laroza-Torrevillas issued a Resolution dated 21 October 2005 finding probable cause and recommending the filing of a criminal information against petitioner for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended. The said Resolution was approved by Chief State Prosecutor Zuno. Pursuant to the 21 October 2005 DOJ Resolution, an Information for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended, was filed with the CTA on 3 November 2005 and docketed as C.T.A. Crim. Case No. 0-012. However, the CTA First Division, after noting several discrepancies in the Information filed, required the State Prosecutor to clarify and explain the same, and to submit the original copies of the parties' affidavits, memoranda, and all other evidence on record. Consequently, Prosecution Attorney Torrevillas, on behalf of respondent People, submitted on 1 December 2005 a Compliance with Ex Parte Motion to Admit Attached Information Prosecution Attorney Torrevillas moved that the documents submitted be admitted as part of the record of the case and the first Information be substituted by the attached second Information. The second Information addressed the discrepancies noted by the CTA in the first Information. The CTA First Division then issued on 9 December 2005 a warrant for the arrest of petitioner. The tax court lifted and recalled the warrant of arrest on 21 December 2005 after petitioner voluntarily appeared and submitted herself to its jurisdiction and filed the required bail bond in the amount of P20,000.00. On 10 January 2006, petitioner filed with the CTA First Division a Motion to Quash the Information filed in C.T.A. Crim. Case No. 0-012 on the following grounds: (1) The facts alleged in the INFORMATION do not constitute an offense; (2) The officer who filed the information had no authority to do so; (3) The Honorable Court of Tax Appeals has no jurisdiction over the subject matter of the case; and (4) The information is void ab initio, being violative of due process, and the equal protection of the laws.In 2006, the CTA First Division denied petitioner's Motion to Quash andaccordingly scheduled her arraignment on 2 March 2006 at 9:00 a.m. Petitioner filed a Motion for Reconsideration and/or Reinvestigation, which was again denied by the CTA First Division. On 1 June 2006, petitioner filed with the CTA en banc a Motion for Extension of Time to File Petition for Review, docketed as C.T.A. EB. CRIM. No. 001. She filed her Petition for Review with the CTA en banc on 16 June 2006. However, the court ruled that a resolution denying a motion to quash is not a proper subject of an appeal to the Court En Banc under Section 11 of R.A. No. 9282 because a ruling denying a motion to quash is only an interlocutory order, as such, it cannot be made the subject of an appeal pursuant to said law and the Rules of Court. Petitioner's primary argument is that a resolution of a CTA Division denying a motion to quash is a proper subject of an appeal to the CTA en banc under Section 18 of Republic Act No. 1125, as amended, because the law does not say that only a resolution that constitutes a final disposition of a case may be appealed to the CTA en banc. If the interpretation of the law by the CTA en banc prevails, a procedural void is created leaving the parties, such as petitioner, without any remedy involving erroneous resolutions of a CTA Division.

Issue: WON a resolution of a CTA division denying a motion to quash is a proper subject of an appeal to the CTA En Banc of R.A. No. 9282, amending R.A.1125? Held: NO. 1. General rule: The denial of a motion to quash is an interlocutory order which is not the proper subject of an appeal or a petition for certiorari. a. According to Section 1, Rule 41 of the Revised Rules of Court, governing appeals from the Regional Trial Courts (RTCs) to the Court of Appeals, an appeal may be taken only from a judgment or final order that completely disposes of the case or of a matter therein when declared by the Rules to be appealable. Said provision, thus, explicitly states that no appeal may be taken from an interlocutory order. b. Section 2, Rule 41 of the Revised Rules of Court provides that "(o)nly final judgments or orders shall be subject to appeal." Interlocutory or incidental judgments or orders do not stay the progress of an action nor are they subject of appeal "until final judgment or order is rendered for one party or the other." The test to determine whether an order or judgment is interlocutory or final is this: "Does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final". A court order is final in character if it puts an end to the particular matter resolved or settles definitely the matter therein disposed of, such that no further questions can come before the court except the execution of the order. The term "final" judgment or order signifies a judgment or an order which disposes of the cause as to all the parties, reserving no further questions or directions for future determination. In other words, after a final order or judgment, the court should have nothing more to do in respect of the relative rights of the parties to the case. Conversely, "an order that does not finally dispose of the case and does not end the Court's task of adjudicating the parties' contentions in determining their rights and liabilities as regards each other, but obviously indicates that other things remain to be done by the Court, is interlocutory." c. Rationale in Matute v. Court of Appeals : (i) an "interlocutory order or decree made in the progress of a case is always under the control of the court until the final decision of the suit, and may be modified or rescinded upon sufficient grounds shown at any time before final judgment. (ii) to avoid multiplicity of appeals in a single action, which must necessarily suspend the hearing and decision on the merits of the case during the pendency of the appeal. If such appeal were allowed, the trial on the merits of the case would necessarily be delayed for a considerable length of time, and compel the adverse party to incur unnecessary expenses, for one of the parties may interpose as many appeals as incidental questions may be raised by him, and interlocutory orders rendered or issued by the lower court. d. There is no dispute that a court order denying a motion to quash is interlocutory. The denial of the motion to quash means that the criminal information remains pending with the court, which must proceed with the trial to determine whether the accused is guilty of the crime charged therein. Equally settled is the rule that an order denying a motion to quash, being interlocutory, is not immediately appealable, nor can it be the subject of a petition for certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. e. While the general rule proscribes the appeal of an interlocutory order, there are also recognized exceptions to the same. The general rule is not absolute. Where special circumstances clearly demonstrate the inadequacy of an appeal, then the special civil action of certiorari or prohibition may exceptionally be allowed. This Court recognizes that under certain situations, recourse to extraordinary legal remedies, such as a petition for certiorari, is considered proper to question the denial of a motion to quash (or any other interlocutory order) in the interest of a "more enlightened and substantial justice";or to promote public welfare and public policy; or when the cases "have attracted nationwide attention, making it essential to proceed with dispatch in the consideration thereof";or when the order was rendered with grave abuse of discretion.

Certiorari is an appropriate remedy to assail an interlocutory order (1) when the tribunal issued such order without or in excess of jurisdiction or with grave abuse of discretion; and (2) when the assailed interlocutory order is patently erroneous, and the remedy of appeal would not afford adequate and expeditious relief. 2. The CTA First Division did not commit grave abuse of discretion in denying petitioner's Motion to Quash. a. An act of a court or tribunal may only be considered as committed in grave abuse of discretion when the same was performed in a capricious or whimsical exercise of judgment, which is equivalent to lack of jurisdiction. In this connection, it is only upon showing that the court acted withoutor in excess of jurisdiction or with grave abuse of discretion that an interlocutory order such as that involved in this case may be impugned. b. Recourse to a petition for certiorari to assail an interlocutory order is now expressly recognized in the ultimate paragraph of Section 1, Rule 41 of the Revised Rules of Court on the subject of appeal. c. Petitioner cannot claim denial of due process when she was given the opportunity to file her affidavits and other pleadings and submit evidence before the DOJ during the preliminary investigation of her case and before the Information was filed against her. COMMISSIONER OF INTERNAL REVENUE, vs. HON. RAUL M. GONZALEZ,G.R. No. 177279 October 13, 2010 Facts: Pursuant to Letter of Authority (LA) dated August 25, 2000, conducted a fraud investigation for all internal revenue taxes to ascertain/determine the tax liabilities of respondent L. M. Camus Engineering Corporation (LMCEC) for the taxable years 1997, 1998 and 1999 The audit and investigation against LMCEC was precipitated by theinformation provided by an "informer " that LMCEC had substantial underdeclared income for the said period. For failure to comply with the subpoena duces tecum issued in connection with the tax fraud investigation, a criminal complaint was instituted by the Bureau of Internal Revenue (BIR) against LMCEC on January 19, 2001 for violation of Section266 of the NIRC Based on data obtained from an "informer" and various clients of LMCEC, it was discovered that LMCEC filed fraudulent tax returns with substantial underdeclarations of taxable income for the years 1997, 1998 and 1999. Petitioner thus assessed the company of total deficiency taxes amounting toP430,958,005.90 (income tax - P318,606,380.19 and valueadded tax [VAT] -P112,351,625.71) covering the said period. The Preliminary Assessment Notice (PAN) was received by LMCEC on February 22, 2001 In view of the above findings, assessment notices together with a formal letter of demand Dated August 7, 2002 were sent to LMCEC through personal service on October 1, 2002. Since the company and its representatives refused to receive the said notices and demand letter, the revenue officers resorted to constructive service in accordance with Section 3, Revenue Regulations (RR) No. 12-9911. On May 21, 2003, petitioner, referred to the Secretary of Justice for preliminary investigation its complaint against LMCEC, Luis M. Camus and Lino D. Mendoza, the latter two were sued in their capacities as President and Comptroller, respectively. The case was docketed as I.S. No. 2003-774. In the Joint Affidavit executed by the revenue officers who conducted the tax fraud investigation, it was alleged that despite the receipt of the final assessment notice and formal demand letter on October 1, 2002, LMCEC failed and refused to pay the deficiency tax assessment in the total amount of P630,164,631.61,inclusive of increments, which had become final and executory as aresult of the said taxpayers failure to file a protest thereon within the thirty (30)-day reglementary period Camus and Mendoza filed a Joint Counter-Affidavit contending that LMCECcannot be held liable whatsoever for the alleged tax deficiency which had become due and demandable. Considering that the complaint and its annexes all showed that the suit is a simple civil action for collection and not a tax evasion case, LMCEC further averred that it had availed of the Bureaus Tax Amnesty Programs (Economic Recovery Assistance Payment [ERAP] Program and the Voluntary Assessment Program [VAP]) for 1998 and 1999; for1997, its tax liability was terminated and closed under Letter of Termination LMCEC argued that petitioner is now stopped from further taking any action against it and its corporate officers concerning the taxable years 1997to 1999. With the grant of immunity from audit from the companys availment of ERAP and VAP, which have a feature of a tax amnesty, the element of fraud is negated.

LMCEC further asserted that it filed on April 20, 2001 a protest on the PAN issued by petitioner for having no basis in fact and law. However, until now the said protest remains unresolved In the Joint Reply-Affidavit executed by the Bureaus revenue officers, petitioner disagreed with the contention of LMCEC that the complaint filed is not criminal in nature, pointing out that LMCEC and its officers Camus and Mendoza were being charged for the criminal offenses defined and penalized under Sections 254 (Attempt to Evade or Defeat Tax) and 255 (Willful Failure to Pay Tax) of the NIRC. In this case, the BIR decided to simultaneously pursue both remedies and thusaside from this criminal action, the Bureau also initiated administrative proceedings against LMCEC. Petitioner stressed that LMCEC already lost its right to file a protest letter after the lapse of the thirty (30)-day reglementary period. LMCECs protest-letter dated December 12, 2002 to RDO Clavelina S. Nacar,RD No. 40, Cubao, Quezon City was actually filed only on December 16,2002, which was disregarded by the petitioner for being filed out of time. Petitioner further asserted that LMCECs claim that it was granted immunity from audit when it availed of the VAP and ERAP programs is misleading LMCEC failed to state that its availment of ERAP under RR No. 2-99 is not a grant of absolute immunity from audit and investigation, Petitioner also pointed out that LMCECs assertion correlating this casewith I.S. No. 00-956 is misleading because said case involves another violation and offense due to the failure of LMCEC to submit or present its books of accounts and other accounting records for examination despite the issuance of subpoena duces tecum against Camusin his capacity as President of LMCEC. The determination of probable cause in said case is confined to the issue of whether there was already a violation of the NIRC by Camus in not complying with the subpoena duces tecum issued by the BIR. ISSUE: Whether LMCEC and its corporate officers may be prosecuted for violation of Sections 254 (Attempt to Evade or Defeat Tax) and 255 (Willful Failure to Supply Correct and Accurate Information and Pay Tax). Ruling: There is no dispute that prior to the filing of the complaint with the DOJ, the report on the tax fraud investigation conducted on LMCEC disclosed that it made substantial underdeclarations in its income tax returns for1997, 1998 and 1999. Pursuant to RR No. 12-99, a PAN was sent to and received by LMCEC on February 22, 2001 wherein it was notified of the proposed assessment of deficiency taxes. In response to said PAN, LMCEC sent a letterprotest to the TFD, which denied the same on April 12, 2001 for lack of legal and factual basis and also for having been filed beyond the 15-day reglementary period As mentioned in the PAN, the revenue officers were not given the opportunity to examine LMCECs books of accounts and other accounting records because its officers failed to comply with the subpoena ducestecum earlier issued, to verify its alleged underdeclarations of income reported by the Bureaus informant under Section 282 of the NIRC. Hence, a criminal complaint was filed by the Bureau against private respondents for violation of Section 266. For the crime of tax evasion in particular, compliance by the taxpayerwith such subpoena, if any had been issued, is irrelevant. As we held in Ungab v. Cusi, Jr., "the crime is complete when the [taxpayer] has xx x knowingly and willfully filed [a] fraudulent [return] with intent to evade and defeat x x x the tax." In the Details of Discrepancies attached as Annex B of the PAN,42 private respondents were already notified that inasmuch as the revenue officers were not given the opportunity to examine LMCECs books of accounts, accounting records and other documents, said revenue officers gathered information from third parties. Such procedure is authorized under Section 5 of the NIRC, Respondent Secretary, however, fully concurred with private respondents contention that the assessment notices were invalid for being unnumbered and the tax liabilities therein stated have already been settled and/or terminated A notice of assessment is a declaration of deficiency taxes issued to a taxpayer who fails to respond to a PreAssessment Notice (PAN) within the prescribed period of time, or whose reply to the PAN was found to be without merit. The Notice of Assessment shall inform the taxpayer of this fact, and that the report of investigation submitted by the Revenue Officer conducting the audit shall be given due course.

The formal letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state the fact, the law, rules and regulations or jurisprudence on which the assessment is based, otherwise the formal letter of demand and the notice of assessment shall be void The formality of a control number in the assessment notice is not a requirement for its validity but rather the contents thereof which should inform the taxpayer of the declaration of deficiency tax against said taxpayer. The Formal Letter of Demand dated August 7, 2002 contains not only a detailed computation of LMCECs tax deficiencies but also details of the specified discrepancies, explaining the legal and factual bases of the assessment. It also reiterated that in the absence of accounting records and other documents necessary for the proper determination of the companys internal revenue tax liabilities, the investigating revenue officers resorted to the "Best Evidence Obtainable" as provided in Section 6(B) of the NIRC (third party information) Economic Recovery Assistance Payment (ERAP) Program The program named as "Economic Recovery Assistance Payment (ERAP) Program" granted immunity from audit and investigation of income tax, VAT and percentage tax returns for 1998. It expressly excluded withholding tax returns (whether for income, VAT, or percentage tax purposes. Since such immunity from audit and investigation does not preclude the collection of revenues generated from audit and enforcement activities, it follows that the Bureau is likewise not barred from collecting any tax deficiency discovered as a result of tax fraud investigations. Tax amnesty is a general pardon to taxpayers who want to start a clean tax slate. It also gives the government a chance to collect uncollected tax from tax evaders without having to go through the tedious process of a tax case. Even assuming arguendo that the issuance of RR No. 2-99 is in the nature of tax amnesty, it bears noting that a tax amnesty, much like a tax exemption, is never favored nor presumed in law and if granted by statute, the terms of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority. For the same reason, the availment by LMCEC of VAP under RR No. 8-2001 as amended by RR No. 10-2001, through payment supposedly made in October29, 2001 before the said program ended on October 31, 2001, did not amount to settlement of its assessed tax deficiencies for the period 1997 to1999, nor immunity from prosecution for filing fraudulent return and attempt to evade or defeat tax. As correctly asserted by petitioner, from the express terms of the aforesaid revenue regulations, LMCEC is not qualified to avail of the VAP granting taxpayers the privilege of last priority in the audit and investigation of all internal revenue taxes for the taxable year 2000 and all prior years under certain conditions, considering that, first, it was issued a PAN on February 19, 2001, and second, it was the subject of investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC duly recorded in the BIR Official Registry as Confidential Information (CI) No. 29-200053 even prior to the issuance of the PAN. Moreover, private respondents cannot invoke LMCECs availment of VAP to foreclose any subsequent audit of its account books and other accounting records in view of the strong finding of under declaration in LMCECs payment of correct income tax liability by more than 30% LMCEC -- the alleged violation of the general rule in Section 235 of the NIRC Allowing the examination and inspection of taxpayers books of accounts and other accounting records only once in a taxable year likewise untenable, the discovery of substantial under declarations of income by LMCEC for taxable years 1997, 1998 and 1999, as well as the necessity of obtaining information from third parties to ascertain the correctness of the return filed or evaluation of tax compliance in collecting taxes (as a result of the disobedience to the summons issued by the Bureau against the private respondents), are circumstances warranting exception from the general rule in Section 235. Consequently, respondent Secretarys ruling that the filing of criminal complaint for violation of Sections 254 and 255 of the NIRC cannot prosper because of lack of prior determination of the existence of fraud, is bereft of factual basis and contradicted by the evidence on record. Tax assessments by tax examiners are presumed correct and made in good faith, and all presumptions are in favor of the correctness of a tax assessment unless proven otherwise. The Supreme Court held that a taxpayers failure to file a petition for review with the Court of Tax Appeals within the statutory period rendered the disputed assessment final, executory and demandable, thereby precluding it from interposing the defenses of legality or validity of the assessment and prescription of the Governments right to assess. Indeed, any objection against the assessment should have been pursued following the avenue paved in Section 229 (now Section 228) of the NIRC on protests on assessments of internal revenue taxes. Records bear out that the assessment notice and Formal Letter of Demand dated August 7, 2002 were duly served on LMCEC on October 1, 2002

Private respondents did not file a motion for reconsideration of the said assessment notice and formal demand; neither did they appeal to the Court of Tax Appeals. xxxxx assessment may be protested by filing a request for reconsideration or reinvestigation within 30 days from receipt of the assessment by the taxpayer. No such administrative protest was filed by private respondents seeking reconsideration of the August 7, 2002 assessment notice and formal letter of demand. Moreover, these objections to the assessments should have been raised, considering the ample remedies afforded the taxpayer by the Tax Code, with the Bureau of Internal Revenue and the Court of Tax Appeals, as described earlier, and cannot be raised now via Petition for Certiorari, under the pretext of grave abuse of discretion. The subject tax assessments having become final, executory and enforceable, the same can no longer be contested by means of a disguised protest. The determination of probable cause is part of the discretion granted to the investigating prosecutor and ultimately, the Secretary of Justice. However, this Court and the CA possess the power to review findings of prosecutors in preliminary investigations. Although policy considerations call for the widest latitude of deference to the prosecutors findings, courts should never shirk from exercising their power, when the circumstances warrant, to determine whether the prosecutors findings are supported by the facts, or by the law. In so doing, courts do not act as prosecutors but as organs of the judiciary, exercising their mandate under the Constitution, relevant statutes, and remedial rules to settle cases and controversies. Clearly, the power of the Secretary of Justice to review does not preclude this Court and the CA from intervening and exercising our own powers of review with respect to the DOJs findings, such as in the exceptional case in which grave abuse of discretion is committed, as when a clear sufficiency or insufficiency of evidence to support a finding of probable cause is ignored.