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CIR v. Pilipinas Shell G.R. No. 197945 09 July 2018

The Bureau of Internal Revenue (BIR) conducted post-audit procedures on tax credit certificates used by Shell and Petron, which resulted in the cancellation of some certificates. The BIR then issued assessment letters to Shell and Petron for deficiency excise taxes. Shell and Petron protested these assessments. The BIR also issued collection letters for the same taxes even before assessing them, and subsequently issued warrants of garnishment against Shell. The court ruled that the BIR's actions were void and ineffectual because they proceeded with collection without a valid previous assessment, and the period for judicial collection of the taxes had already prescribed.

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1K views3 pages

CIR v. Pilipinas Shell G.R. No. 197945 09 July 2018

The Bureau of Internal Revenue (BIR) conducted post-audit procedures on tax credit certificates used by Shell and Petron, which resulted in the cancellation of some certificates. The BIR then issued assessment letters to Shell and Petron for deficiency excise taxes. Shell and Petron protested these assessments. The BIR also issued collection letters for the same taxes even before assessing them, and subsequently issued warrants of garnishment against Shell. The court ruled that the BIR's actions were void and ineffectual because they proceeded with collection without a valid previous assessment, and the period for judicial collection of the taxes had already prescribed.

Uploaded by

Nadzlah Bandila
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1. CIR v. Pilipinas Shell; G.R. No.

197945; 09 July 2018


FACTS:

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 procedures26 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 TCCs27 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.

ISSUE: Whether or not petitioner’s action to collect through said collection


letters as well as the subsequent Warrants of Garnishment and Distraint
and/or Levy are void and ineffectual

RULING:
Yes. The action is void and ineffectual.
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. 572865 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 197766 (1977 NIRC) was the governing law.

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