BIR case against Manny Pacquiao Manny Pacquiao is a Filipino professional boxer and politician.

His professional boxing career started in 1995 up to present fighting in different countries with 55 wins out of 6 fights to date. !nly two days after Pacquiao"s #ictory o#er $randon %ios in their &atch held in Macau' (hina' his celebration was cut short as the Philippines" $ureau of )nternal %e#enue *$)%+ had fro,en his banaccounts as well as other assets. Pacquiao has allegedly failed to pro#e that he has paid taxes in ../ to ..9. 0hese years co#er the winnings of Pacquiao against %ic-y Hatton and !scar 1ela Hoya' where he has see&ingly too- ho&e guaranteed pri,e &oney worth 26 &illion and 21 &illion' respecti#ely. 0he $ureau of )nternal %e#enue *$)%+ is now collecting Pacquiao"s tax delinquencies a&ounting to Php . billion pesos *5..3 45 &illion dollars+' on pri,e earnings fro& top6billed &atches in ../ and ..9. )n ../ Pacquiao paid Php 1 5 &illion in taxes. He reported all his inco&e including the inco&e he earned fro& abroad. 0he $)% assessed his tax liability should be Php 7.. &illion. He failed to substantiate so&e expenses and he failed to pay his #alue6added tax. 0he discrepancy between Php 1 5 &illion and Php 7.. &illion is &ore than 3. percent' creating the presu&ption of fraud. 0he $)% then charged Pacquiao with a 5.6percent surcharge' and interest of . percent per annu& co&puted up to 1ec. 31' .1 . 0hus' his tax liability was P868 &illion. )n ..9' Pacquiao paid Php 8.7 &illion in inco&e taxes. He was assessed P1.7 billion in taxes' resulting fro& the su& of his total inco&e fro& the 4nited 5tates' undeclared inco&e fro& the Philippines disallowed expenses' the 9:0' the 5.6percent surcharge and the interest of . percent per annu&. : ;etter of :uthority *;!:+ was ser#ed on Pacquiao on <uly 8' .1. infor&ing hi& a tax&an was co&ing. He was infor&ed that his tax returns of ../ and ..9 were to be audited. 0he ;!: was con#erted into another ;!: including Pacquiao=s wife' <in-ee Pacquiao on 5ept. 1' .1. which the couple recei#ed only on 1ec. 1' .1.. : subpoena duces tecum was issued requiring the& to sub&it a list of docu&ents to the $)% on <uly 15' .11. 0he 45 inco&e tax return is one of those docu&ents they were required to sub&it. 0he spouses sub&itted a sworn affida#it stating that they had recei#ed the subpoena and would sub&it the docu&ents on <uly 9' .11. Howe#er they did not sub&it their 45 inco&e tax return and boo-s of accounts' receipts and contracts. Pacquiao recei#ed a notice of infor&al conference on <an. .' .1 . !n March ' .1 ' a preli&inary assess&ent notice *P:>+ dated Feb. .' .1 was ser#ed which Pacquiao protested. His protest was denied. Pacquiao recei#ed the for&al letter of de&and with final assess&ent notice *F;1?F:>+ dated May ' .1 !n <uly .' .1 ' Pacquiao filed a protest against the F;1?F:> with the sa&e argu&ents presented in the P:>. !n May .' .13' the final decision on disputed assess&ent dated May 17' .13' was recei#ed by Pacquiao. @arrants of distraint and le#y were issued on <uly 1' .13 to co&panies and ban-s which are possibly holding cash for Pacquiao. 0hirty warrants were issuedA answered and eight ha#e not yet replied. !f the ' two ban-s said they held P3..'... and P/..'... of his &oney.

Pacquiao recei#ed a copy of the preli&inary collection letter *P(;+ on <uly 3' .13 dated <uly 19' .13. 0he final decision on disputed assess&ent beca&e final after 3. days' when the $)% did not recei#e any protest fro& Pacquiao which resulted to the issuance of the P(;. !n :ug. 1' .13' Pacquiao went to the (ourt of 0ax :ppeals and filed a petition for re#iew. He had filed on !ctober .13 an urgent &otion to lift the warrants of distraint and?or le#y and garnish&ent to suspend the collection of tax. 666666666666 ISSUE 0he issues in this case are whether or not the Bo#ern&ent had the right to issue warrants of distraint and le#y and free,e Pacquiao=s ban- account for alleging hi& as a delinquent tax payer ARGUMENTS Lifeblood Doct ine of Ta!ation )t is Cust proper for the Bo#ern&ent to issue warrants of distraint and le#y because of the failure of Pacquiao to fulfill his obligation as a taxpayer. 0hese two are so&e of the re&edies a#ailable to the Bo#ern&ent in tax collection as well as tax enforce&ent as pro#ided by the >ational )nternal %e#enue (ode. !ther re&edies are tax lien' co&pro&ise' ci#il action' cri&inal action' forfeiture' suspension of business operations for #iolations of the 9alue6:dded 0ax law and enforce&ent of ad&inistrati#e fines. 0he Bo#ern&ent can &a-e use of the other re&edies to collect tax since taxes are i&portant. 0axes are i&portant because they are the lifeblood of the Bo#ern&ent and so should be calculated without unnecessary hindrance. *Commissioner of Internal Revenue v. Algue, Inc., et al., supra + $eing the lifeblood of the Bo#ern&ent' their pro&pt and certain a#ailability is an i&perious need. (Collector of Internal Revenue v. Goodrich International Rubber Co., L-222 , !ec. 22, "#$%& )t is upon taxation that the Bo#ern&ent chiefly relies to obtain the &eans to carry on its operations and it is of ut&ost i&portance that the &odes adopted to enforce the collection of taxes le#ied should be su&&ary and interfered with as little as possible. ('hilippine (an) of Communications v. Commissioner of Internal Revenue, et al., G.R. *o. ""#+2,, -an. 2., "###& P o" iety of Assess#ent 0he assess&ent &ade by Bo#ern&ent of tax deficiency of Pacquiao is presu&ed correct and done in good faith. )n !a/rit, et al vs. Cru0 et al assess&ent is pri&a facie presu&ed correct and &ade in good faith. 0he burden is on Pacquiao to pro#e that such assess&ent was erroneously &ade. )n Calte1 vs. CA a party challenging appraiser=s finding of #alue in required to pro#e not only the appraised #alue is erroneous but also what the proper #alue is. Pacquiao has not presented any e#idence to pro#e that the assessed #alue of his tax delinquency was erroneous. For an assess&ent to be proper the following processes &ust be co&plied withD 1. . 3. 7. 5. 6. )ssuance of ;!: :udit 5tage )ssuance of >otice of )nfor&al (onference )nfor&al (onference )ssuance of Preli&inary :ssess&ent )ssuance of For&al ;etter of 1e&and

$ased on the facts of this case' these processes were acco&plished by the $)%. Pacquiao was gi#en due process and was properly assessed. 666666666insert finality of assess&ent since Pacquiao did not file an appeal within the regle&entary perion' the assess&ent was final and executor6666666666 Dist aint >ow the Bo#ern&ent can use the a#ailable re&edies as pro#ided by the 0ax (ode. 0he first re&edy already used by the Bo#ern&ent is distraint. 1istraint is a su&&ary re&edy whereby the collection of tax is enforced on the goods, chattels or effects of the taxpayer *including other personal property of whate#er character as well as stoc-s and other securities' debts' credits' ban- accounts and interest in or rights to personal property.+ 0he property &ay be offered in a public sale' if taxes are not #oluntarily paid. 0here are two for&s of distraint. 0hese are actual and constructi#e. :ctual distraint is resorted when there is actual delinquency in tax pay&ent. Meanwhile' constructi#e distraint is a pre#enti#e re&edy which ai&s at forestalling a possible dissipation of the taxpayer=s assets when delinquency sets in. Hence' no actual delinquency in pay&ent is necessary.* *ational Internal Revenue Code+ 0o a#ail this re&edy the following requisites &ust be co&plied withD 1. 0axpayer is delinquent in pay&ent of taxA . 0here &ust be subsequent de&and to payA 3. 0axpayer failed to pay delinquent tax on ti&eA and 7. Period within which to assess and collect the tax due has not yet prescribed. 0hese requisites are present in this case. Pacquiao is delinquent in paying tax because he did not pay the right a&ount of his taxes for ../ and ..9. @hen the $)% issued warrant it de&anded Pacquiao to pay taxes within 3. days after a series of assess&ents that the agency conducted with the taxpayer. Howe#er Pacquiao failed to pay these taxes within the prescribed period. 0he period within which to assess and collect the tax due has not yet prescribed. )n ('I vs. CIR, GR "2#%2$ the (ourt held that Ewhere an assess&ent is &ade' a period of collection by distraint or le#y of property is within 3 years has been released' &ailed or sent.F :pplying the said ruling of the 5upre&e (ourt' the assess&ent of $)% against Pacquiao was &ade in .1 ' hence' the $)% has until .15 to collect. )t cannot be barred by prescription. (abrera explained. @hen the deadline lapses and no legal recourse was sought' the $)% can distrain or enforce future pay&ent by free,ing ban- accounts' stoc-s' real estate and other interest in properties. $)% decided to free,e Pacquiao=s ban- accounts because ban- accounts are easier to liquidate. )f these are not sufficient to co#er tax liabilities' the other properties co&e along. $$$$inse t you "a t e ga nis%#ent$$$$$$ Le&y 0he Bo#ern&ent can also use the re&edy of le#y after resorting to garnish&ent. ;e#y is the sei,ure of real property and interest in or rights to such properties for the satisfaction of taxes due fro& the delinquent taxpayer. )t &ay be &ade before' si&ultaneously or after the distraint of personal property on the sa&e taxpayer. )t &ay be effected by ser#ing upon the taxpayer a written notice of le#y in the for& of a duly authenticated certificate prepared by %e#enue 1istrict !fficer containing description of the

property upon which le#y is &ade' na&e of the taxpayer and a&ount of tax and penalty due. (*ational Internal Revenue Code& ;e#y shall be effected by writing upon said certificate a description of the property upon which le#y is &ade. @ritten notice of le#y shall be &ailed to or ser#ed upon the %egister of 1eeds of the pro#ince or city where the property is located and upon the delinquent taxpayer' or if he is absent fro& the Philippines' to his agent or the &anager of the business in respect to which the liability arose' or if there be none' to the occupant of the property in question. )n case the warrant of le#y on real property is not issued before or si&ultaneously with the warrant of distraint on personal property' and the personal property of the taxpayer is not sufficient to satisfy his tax delinquency' the (o&&issioner or his duly authori,ed representati#e shall' within 3. days after execution of the distraint' proceed with the le#y on the taxpayer=s real property. (*ational Internal Revenue Code& 0he Bo#ern&ent &ay proceed on le#ying Pacquiao=s real property if his personal properties are insufficient to pay his deficiency. 666666application of le#y to the case66666666 'i&il Action For tax re&edy purposes' ci#il actions are actions instituted by the go#ern&ent to collect internal re#enue taxes in the regular courts after assess&ent by $)% has beco&e final and executory. )t includes' howe#er' the filing by the go#ern&ent of clai&s against the deceased taxpayer with the probate court. 0here are two ways to enforce the ci#il action. 0hey are either by filing a ci#il case for collection of a su& of &oney with the proper regular court or by filing an answer to the petition for re#iew filed by taxpayer with (0:. (i#il action is resorted when tax liability beco&es collectible. (ollectibility of taxes arised in the following instancesD

)t is resorted to when a taxpayer liability beco&es collectible. )t is collectible 1. @hen tax is assessed and the assess&ent beca&e final and executory because the taxpayer fails to file a protest with the $)% within 3. days fro& receipt. (*ational Internal Revenue Code& . @hen the protest is not acted upon by the $)% within 1/. days fro& the sub&ission of the docu&ents and the taxpayer failed to appeal with the (0: within 3. days fro& the lapse of the 1/. days period. (*ational Internal Revenue Code& : ci#il action &ay also be filed in order to collect the so6called self6assessed tax which is co&puted by the taxpayer hi&self and reflected in his return under the pay6as6you6file syste&. 0he Bo#ern&ent can resort to this re&edy since Pacquiao failed to file the protest within the regle&entary period for the assess&ent of his taxes for ../ and ..9. 0his assess&ent has beco&e final and executory.

6666add further explanation ng application ng le#y ' i#inal Action 66666666666666insert (%)M)>:; :(0)!> based on fraud66666666666666666 0he re&edy of cri&inal action is resorted to not only for collection of taxes but also for enforce&ent of statutory penalties of all sorts. (*ational Internal Revenue Code& 0he Cudg&ent in the cri&inal case shall not only i&pose the penalty but shall also order the pay&ent of taxes subCect of the cri&inal case as finally decided by the (o&&issioner. (*ational Internal Revenue Code& 0his ci#il liability arises not as a consequence of felonious act but because of the taxpayer=s failure to pay taxes. Hence the extinction of one=s cri&inal liability does not necessarily result in the extinguish&ent of ci#il liability. 0he subsequent satisfaction of a tax liability will not operate as to extinguish the cri&inal liability. ('eople v. Idefonso 3ierra, L-"%"%%-.+, !ecember 2., "#$,+ 666666666666Gxplain fraud co&&itted by Pacquiao6666666666666666 Fraud was li-ewise found to exist in a case where there was substantial and intentional o#erstate&ent of deductions or exe&ptions li-e the presence of fictitious expenses which were clai&ed by the taxpayer as deductions fro& gross inco&e. (3an Guan v. C3A, L-22$%$, April 2%, "#$%& '(N'LUSI(N 0he Bo#ern&ent cannot be prohibited fro& exercising these re&edies. >o court shall ha#e authority to grant an inCunction to restrain the collection of any internal6re#enue tax' fee' or charge i&posed by this (ode. (*ational Internal Revenue Code&