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Issues:
(1) Whether or not the criminal complaint for tax evasion can be construed as an assessm ent. (2) Whether
or not an assessment is necessary before criminal charges for tax evasion may be instituted.
Held:
The filing of the criminal complaint with the DOJ cannot be construed as a formal assessment. Neither the
Tax Code nor the revenue regulations governing the protest assessments provide a specific definition or
form of an assessment.
An assessment must be sent to and received by the taxpayer, and must demand payment of the taxes
described therein within a specific period. The revenue officers affidavit merely contained a computation
of respondents tax liability. It did not state a demand or period for payment. It was addressed to the
Secretary of Justice not to the taxpayer. They joint affidavit was meant to support the criminal complaint
for tax evasion; it was not meant to be a notice of tax due and a demand to private respondents for the
payment thereof. The fact that the complaint was sent to the DOJ, and not to private respondent, shows
that commissioner intended to file a criminal complaint for tax evasion, not to issue an assessment.
An assessment is not necessary before criminal charges can be filed. A criminal charge need not only be
supported by a prima facie showing of failure to file a required return. The CIR had, in such tax eva sion
cases, discretion on whether to issue an assessment, or to file a criminal caseagainst the taxpayer, or to
do both.
arising under the National Revenue Code or other laws or part of law administered by the Bureau of
Internal Revenue.
SEA-LAND SERVICE, INC. VS. COURT OF APPEALSG.R. No. 122605 April 30, 2001
FACTS
Petitioner
Sea-Land
Service
Incorporated,
an
American
international
shipping
company licensed by the Securitiesand Exchange Commission to do business in the Philippines entered
into a contract with the United States Government totransport military household goods and effects of
U.S. military personnel assigned to the Subic Naval Base. Sea-Land paidits corresponding corporate
income tax for the taxable year 1984 at the rate of 1.5% in accordance with Section 25(a)(2) of the National
Internal Revenue Code in relation to Article 9 of the RP-US Tax Treaty. Subsequently, Sea-Land filed a
claimfor refund alleging that the taxes it paid were made in mistake because under the RP -US Military
Base Agreement, it isexempt from the payment of taxes.
ISSUE:
Does the income that petitioner derived from services in transporting the household goods and effects of
U.S.military personnel fall within the tax exemption provided in the RP -US Military Bases Agreement?
RULING:
NO. Laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally
in favor of the taxing power. The transport or shipment of household goods and effects of U.S. military
personnel is not included in theterm "construction, maintenance, operation and defense of the bases.
Neither could the performance of this service to theU.S. government be interpreted as directly related to
the defense and security of the Philippine territories