MACARIO LIM GAW, JR.

, The DOJ then filed two criminal

PETITIONER, VS. COMMISSIONER informations for tax evasion against
OF INTERNAL REVENUE, petitioner in the CTA. At the time the
RESPONDENT. TIJAM, J.: Informations were filed, CIR had not yet
issued a final decision on the deficiency
FACTS:  assessment against petitioner.
On July 11, 2008, petitioner conveyed the
10 parcels of land to Eagle I Landholdings, Halfway through the trial, the respondent
Inc. (Eagle I), via an Agreement to Sell. issued a Final Decision on Disputed
Assessment (FDDA) against petitioner,
In compliance with Revenue Memorandum assessing him of deficiency income tax and
Order No. 15-2003, petitioner requested VAT covering taxable years 2007 and 2008.
the BIR-RDO to compute the tax liabilities
due on the sale of the 10 parcels of land to With respect to the deficiency assessment
Eagle I. against petitioner for the year 2007,
petitioner filed a petition for review with
In accordance with the One Time the CTA, docketed as CTA Case No. 8502.
Transactions (ONETT) Computation The clerk of court of the CTA assessed
sheets, petitioner paid Capital Gains Tax petitioner for filing fees which the latter
amounting to P505,177,213.81 and promptly paid.
Documentary Stamp Tax amounting to
P330,390.00. However, with respect to the deficiency
assessment against petitioner for the year
On July 23, 2008, the BIR-RDO No. 52 2008, the same involves the same tax
issued the corresponding Certificates liabilities being recovered in the pending
Authorizing Registration and Tax Clearance criminal cases. Thus, petitioner filed before
Certificates. the CTA a motion to clarify as to whether
petitioner has to file a separate petition to
Two years later, the CIR said petitioner is question the deficiency assessment for the
liable NOT for the 6% capital gains tax but year 2008.
for the 32% regular income tax and
12% value added tax, on the theory that On June 6, 2012, the CTA issued a
the properties petitioner sold were ordinary Resolution granting petitioner's motion and
assets and not capital assets. Further, held that the recovery of the civil liabilities
respondent found petitioner to have for the taxable year 2008 was deemed
misdeclared his income, misclassified the instituted with the consolidated criminal
properties and used multiple tax cases.
identification numbers to avoid being
assessed the correct amount of taxes. However, as a caution, petitioner still filed a
Petition for Review Ad Cautelam (with
CIR issued a Letter of Authority to Motion for Consolidation with CTA
commence investigation on petitioner's tax Criminal Case Nos. O-206 and O-207).
account. Upon filing of the said petition, the clerk of
court of the CTA assessed petitioner with
The next day, CIR filed with the DOJ a "zero filing fees."
Joint Complaint Affidavit for tax evasion
against petitioner. Petitioner was acquitted in Criminal Case
Nos. O-206 and O-207 and the CTA
directed the litigation of the civil aspect in that is created by law and does not arise
CTA Case No. 8503. from the offense of tax evasion, as
Thereafter, CIR filed a Motion to Dismiss such, the same is not deemed instituted in
the Petition for Review Ad Cautelam on the the criminal case.
ground that the CTA First Division lacks
jurisdiction to resolve the case due to
petitioner's non-payment of the filing Civil liability to pay taxes arises from the
fees. fact that one has engaged himself in
business, and not because of any criminal
CTA First Division granted the Motion to act committed by him. The acquittal in the
Dismiss. Petitioner elevated the case to the said criminal cases cannot operate to
CTA En Banc. Dismissal affirmed. discharge the taxpayer from the duty of
paying the taxes which the law requires to
be paid, since that duty is imposed by
ISSUES: [1] Is the civil action filed by statute prior to and independently of any
petitioner to question the FDDA attempts by the taxpayer to evade payment.
deemed instituted in the criminal
case for tax evasion?
SECOND ISSUE: The civil action for the
[2] Is the Petition for Review Ad recovery of civil liability for taxes and
Cautelam filed by petitioner deemed penalties is deemed instituted with the
instituted in the civil action for criminal action, not the Petition for Review
recovery of taxes? Ad Cautelam filed by petitioner.

Under Sections 254 and 255 of the NIRC,

[3] Is the CTA correct in dismissing the government can file a criminal case for
the petition for failure by the tax evasion against any taxpayer who
petitioner to pay docket fees? willfully attempts in any manner to evade
or defeat any tax imposed in the tax code or
[4] What tax is petitioner liable for? the payment thereof. The crime of tax
In other words, is petitioner liable for evasion is committed by the mere fact that
the assessed tax deficiency? the taxpayer knowingly and willfully filed a
fraudulent return with intent to evade and
HELD. The petition is PARTLY defeat a part or all of the tax. It is
GRANTED. therefore not required that a tax
deficiency assessment must first be
FIRST ISSUE: Under the Revised Rules issued for a criminal prosecution for tax
of the Court of Tax Appeals (RRCTA), the evasion to prosper.[51]
civil action filed by the petitioner to
question the FDDA is not deemed instituted
with the criminal case for tax evasion. Civil While the tax evasion case is pending, the
liability arising from a different source of BIR is not precluded from issuing a final
obligation, such as when the obligation is decision on a disputed assessment, such as
created by law, such civil liability is not what happened in this case. In order to
deemed instituted with the criminal action. prevent the assessment from becoming
final, executory and demandable, Section 9
It is well-settled that the taxpayer's of R.A. No. 9282 allows the taxpayer to file
obligation to pay the tax is an obligation with the CTA, a Petition for Review within
30 days from receipt of the decision or the he appealed the FDDA insofar as the
inaction of the respondent. taxable year 2007 was concerned, he
promptly paid the docket fees when he filed
The tax evasion case filed by the his Petition for Review.
government against the erring taxpayer
has, for its purpose, the imposition of Confusion resulted when the FDDA also
criminal liability on the latter. While the covered tax deficiencies pertaining to
Petition for Review filed by the petitioner taxable year 2008 which was also the
was aimed to question the FDDA and to subject of the consolidated criminal cases
prevent it from becoming final. The stark for tax evasion. To guide the petitioner, he
difference between them is glaringly sought the advise of the CTA First Division
apparent. As such, the Petition for on whether he was still required to pay the
Review Ad Cautelam is not deemed docket fees. The CTA First Division said
instituted with the criminal case for tax that the civil action for recovery of the civil
evasion. liabilities of petitioner for taxable year
2008 stated in the FDDA was deemed
instituted with the consolidated criminal
What is deemed instituted with the cases. Pursuant to said CTA Resolution, the
criminal action is only the government's Clerk of Court issued a computed "zero
recovery of the taxes and penalties relative filing fees" when petitioner filed his Petition
to the criminal case. The remedy of the for Review Ad Cautelam.
taxpayer to appeal the disputed assessment
is not deemed instituted with the criminal Petitioner merely relied on good faith on
case. To rule otherwise would be to render the pronouncements of the CTA First
nugatory the procedure in assailing the tax Division that he is no longer required to pay
deficiency assessment. the docket fees. As such, the CTA cannot
just simply dismiss the case on the ground
THIRD ISSUE: The CTA En Banc erred in of nonpayment of docket fees. The CTA
affirming the dismissal of the case for should have instead directed the clerk of
nonpayment of docket fees. court to assess the correct docket fees and
ordered the petitioner to pay the same
Basic is the rule that the payment of docket within a reasonable period. It should be
and other legal fees is both mandatory and borne in mind that technical rules of
jurisdictional. The court acquires procedure must sometimes give way, in
jurisdiction over the case only upon the order to resolve the case on the merits and
payment of the prescribed fees. However, prevent a miscarriage of justice.
while the court acquires jurisdiction over
any case only upon the payment of the FOURTH ISSUE: The Supreme Court
prescribed docket fees, its nonpayment at cannot rule on the merits of the CTA
filing does not automatically cause its case.
dismissal so long as the docket fees are paid
within a reasonable period; and that the Rule 4, Section 3(a), paragraph 1 of the
party had no intention to defraud the RRCTA provides that the CTA First
government. Division has exclusive appellate jurisdiction
over decisions of the Commissioner of
In this case, records reveal that petitioner Internal Revenue on disputed assessments,
has no intention to defraud the government refunds of internal revenue taxes, fees or
in not paying the docket fees. In fact, when other charges, penalties in relation thereto,
or other matters arising under the NIRC or
other laws administered by the BIR. This
means that the CTA exercises exclusive
appellate jurisdiction to resolve decisions of
the commissioner of internal revenue.

The Supreme Court has no jurisdiction to

review tax cases at the first instance
without first letting the CTA to study and
resolve the same.

Under Rule 16, Section 1 of the RRCTA, The

High Court's review of the decision of the
CTA En Banc is limited in determining
whether there is grave abuse of discretion
on the part of the CTA in resolving the case.
Rule 45 petition is only limited to questions
of law.

The statutory definition of capital assets is

negative in nature. Thus, if the property or
asset is not among the exceptions, it is a
capital asset; conversely, assets falling
within the exceptions are ordinary assets.

To determine as to whether the transaction

between petitioner and Eagle I is an
isolated transaction or whether the 10
parcels of land sold by petitioner is
classified as capital assets or ordinary
assets should properly be resolved by the
CTA. The Supreme Court is not a trier of
facts; therefore, the case should be
remanded to the CTA Division.