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LUCAS G. ADAMSON Versus COURT OF APPEALS and LIWAYWAY VINZONS-CHATO, in Her Capacity As Commissioner of The Bureau of Internal Revenue

1. The Bureau of Internal Revenue (BIR) Commissioner issued a "Notice of Taxpayer" to petitioners informing them of deficiencies in their payment of capital gains tax and value added tax. 2. Petitioners filed a request for re-investigation with the Commissioner regarding the tax deficiencies found in an earlier BIR examiner's findings. 3. Before the Commissioner could act, petitioners filed a petition for review with the Court of Tax Appeals assailing the Commissioner's finding of tax evasion. 4. The Commissioner argued the petition was premature as she had not yet issued a formal tax assessment, while the Court of Tax Appeals viewed the criminal complaint filed with the Department of Justice as an

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Charles Roger Raya
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106 views1 page

LUCAS G. ADAMSON Versus COURT OF APPEALS and LIWAYWAY VINZONS-CHATO, in Her Capacity As Commissioner of The Bureau of Internal Revenue

1. The Bureau of Internal Revenue (BIR) Commissioner issued a "Notice of Taxpayer" to petitioners informing them of deficiencies in their payment of capital gains tax and value added tax. 2. Petitioners filed a request for re-investigation with the Commissioner regarding the tax deficiencies found in an earlier BIR examiner's findings. 3. Before the Commissioner could act, petitioners filed a petition for review with the Court of Tax Appeals assailing the Commissioner's finding of tax evasion. 4. The Commissioner argued the petition was premature as she had not yet issued a formal tax assessment, while the Court of Tax Appeals viewed the criminal complaint filed with the Department of Justice as an

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Charles Roger Raya
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© © All Rights Reserved
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LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and We rule that the formal assessment.

Even a cursory perusal of the


SARA S. DE LOS REYES, in their capacities as President, said letter would reveal THREE KEY POINTS:
Treasurer and Secretary of Adamson Management
Corporation, Petitioners, 1. It was not addressed to the taxpayers.
vs.
COURT OF APPEALS and LIWAYWAY VINZONS-CHATO,
in her capacity as Commissioner of the Bureau of Internal 2. There was no demand made on the taxpayers to pay the tax
Revenue, Respondents.G.R. No. 120935 | May 21, 2009 liability, nor a period for payment set therein.

FACTS: On June 20, 1990, Lucas Adamson and AMC sold common 3. The letter was never mailed or sent to the taxpayers by the
shares of stock in Adamson and Adamson, Inc. (AAI) to APAC Commissioner.
Holding Limited (APAC). Capital gains tax for the transaction was
paid. Subsequently, AMC sold to APAC Philippines, Inc. another In the present case, the revenue officers’ Affidavit merely contained a
common shares of stock in AAI. AMC paid the capital gains tax. computation of respondents’ tax liability. It did not state a demand or
a period for payment. Worse, it was addressed to the justice secretary,
Thereafter, Commissioner issued a "Notice of Taxpayer" to AMC, not to the taxpayers.
Lucas G. Adamson, Therese June D. Adamson and Sara S. de los
Reyes, informing them of deficiencies on their payment of capital In fine, the said recommendation letter served merely as
gains tax and Value Added Tax (VAT). the prima facie basis for filing criminal informations that the
taxpayers had violated Section 45 (a) and (d), and 110, in relation
Petitioners filed a letter request for re-investigation with the to Section 100, as penalized under Section 255, and for violation
Commissioner of the "Examiner’s Findings" earlier issued by the BIR of Section 253, in relation to Section 252 9(b) and (d) of the Tax
which pointed out the tax deficiencies. Code.

On March 15, 1994 before the Commissioner could act on their


letter-request, AMC, Lucas G. Adamson, Therese June D. Adamson
and Sara S. de los Reyes filed a Petition for Review with the CTA.
They assailed the Commissioner’s finding of tax evasion against
them. The Commissioner moved to dismiss the petition, on the
ground that it was premature, as she had not yet issued a formal
assessment of the tax liability of therein petitioners.

CTA denied the Motion to Dismiss. It considered the criminal


complaint filed by the Commissioner with the DOJ as an implied
formal assessment, and the filing of the criminal informations with
the RTC as a denial of petitioners’ protest regarding the tax
deficiency.

The Commissioner repaired to the CA on the ground that the CTA


acted with grave abuse of discretion contending that with regard to
the protest provided under Section 229 of the NIRC, there must first
be a formal assessment issued by the Commissioner, and it must be in
accord with Section 6 of Revenue Regulation No. 12-85. She
maintained that she had not yet issued a formal assessment of tax
liability, and the tax deficiency amounts mentioned in her criminal
complaint with the DOJ were given only to show the difference
between the tax returns filed and the audit findings of the revenue
examiner.

CA sustained the CTA’s denial of the Commissioner’s Motion to


Dismiss.

Hence this case.

ISSUE: Whether the Commissioner’s recommendation letter can be


considered as a formal assessment of private respondents’ tax
liability.

RULING: NO. In the context in which it is used in the NIRC, an


ASSESSMENT is a written notice and demand made by the BIR on
the taxpayer for the settlement of a due tax liability that is there
definitely set and fixed. A written communication containing a
computation by a revenue officer of the tax liability of a taxpayer and
giving him an opportunity to contest or disprove the BIR examiner’s
findings is not an assessment since it is yet indefinite.

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