CIR v.

Pascor Realty and Development Digest

FACTS:
The BIR examined the books of account of Pascor Realty and Devt Corp. (PRDC) for the years 1986,
1987 and 1988, from which a tax liability of P10.5M was found. Subsequently, the CIR filed a
criminal complaint against PRDC with the DOJ for tax evasion. Attached to the criminal complaint
was a Joint Affidavit executed by the tax examiners. PRDC filed an Urgent Request for
Reconsideration/Reinvestigation with the CIR, disputing the tax assessment and tax liability, but was
denied upon the ground that no formal assessment has yet been issued by the Commissioner.
PRDC elevated the decision to the CTA. PRDC averred that the Joint Affidavit attached to the
criminal complaint is tantamount to a formal assessment notice and hence can be subjected to protest;
that there is a simultaneous assessment and filing of criminal case; that the same is contrary to due
process because it is its theory that an assessment should come first before a criminal case of tax
evasion should be filed. The CIR filed a Motion to Dismiss the petition on the ground that the CTA
has no jurisdiction over the subject matter of the petition, as there was no formal assessment issued
against the petitioners.
The CTA denied the said motion to dismiss. It ruled that the Joint Affidavit constitutes an assessment;
that an assessment is defined as simply the statement of the details and the amount of tax due from a
taxpayer; thus the Joint Affidavit which contains a computation of the tax liability of PRDC is in effect
an assessment which can be the subject of a protest. CA affirmed the CTA.
ISSUES:
1. Whether or not the criminal complaint for tax evasion can be construed as an assessment. NO
2. Whether or not an assessment is necessary before criminal charges for tax evasion may be
instituted. - NO
HELD:
1. An assessment not only contains a computation of tax liabilities, but also a demand for payment
within a prescribed period. It signals the time when penalties and interests begin to accrue against the
taxpayer.
In the case at bar, the BIR examiners Joint Affidavit which was attached to the criminal complaint
filed with the DOJ against PRDC, did not constitute an assessment. The Joint Affidavit served the
purpose of supporting and substantiating the criminal complaint for tax evasion, and was not meant to
be a notice of the tax due and a demand to the taxpayer (PRDC) for payment thereof.
2. (Extra issue) Section 222 of the NIRC specifically states that in cases where a false or fraudulent
return is submitted or in cases of failure to file a return such as this case, proceedings in court may be
commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandates that
the civil and criminal aspects of the case may be pursued simultaneously.