4/7/2021
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BIR's assessment for deficiency taxes for 1999 and 2000 amounting to P33,847,574.18
became final, executory and demandable.[4]
On May 19, 2005, the BIR charged the officers of Chiat Corp., petitioners Imelda T. Sze
(Sze), Sze Kou For (For), and Teresita A. Ng (Ng), with tax evasion and/or tax fraud for
violation of Sections 27(A), 31, 32, 56(A)(l), 79(A)(B), 80(A), 81, 106, ll4(A)(B), in
relation to Sections 251, 253(d), 254, 255, and 256 of the National Internal Revenue
Code of 1997 (NIRC).[5]
Petitioners Sze, For, and Ng denied the accusations against them and claimed, among
other allegations, that: (1) there was no factual and legal basis for the charges; (2) the
filing was premature and violated their rights to due process; (3) they did not receive
the notices; (4) they were not responsible for any underdeclaration, misdeclaration or
importation; (5) they were not responsible for the preparation and filing of tax returns;
(6) Chiat Corp. has no assets to satisfy the assessed taxes; (7) Chiat Corp. notified the
BIR of the termination of business as of December 2004; and (8) the BIR presumed
that Chiat Corp. manufactured the raw materials into final products and sold them.[6]
The State Prosecutor dismissed the complaint on July 12, 2006. The BIR moved for
reconsideration, which was denied on November 29, 2006. The BIR filed a petition for
review before the Department of Justice (DOJ), which denied the same in a resolution
dated April 27, 2007. The DOJ also denied the BIR's motion for reconsideration on June
17, 2010. The BIR elevated the case before the Court of Appeals (CA) through a
petition for certiorari.[7]
The CA Decision
In its May 31, 2012 Decision,[8] the CA gave due course to the petition after finding
that the records showed sufficient evidence of probable cause for tax evasion and
violation of the NIRC. Chiat Corp. failed to present countervailing evidence to refute the
documents and other importation records from different government agencies.[9]
The CA held that the DOJ abused its discretion when it failed to consider various
documents from the Department of Trade and Industry's Bureau of Import Services,
the BIR's Audit Information Tax Exemption Incentive Division, and the Bureau of
Custom's Management Information System Technology Group.[10]
The CA observed that Chiat Corp. filed an application for retirement of business after
applying for YAP. the CA found this move as suspicious, if not an indication of bad faith.
[11]
The CA resolved that probable cause was sufficiently established, and ordered the DOJ
to file the corresponding Information with the proper court.[12]
Chiat Corp. moved for reconsideration, which the CA denied in its November 26, 2013
Resolution.[13] Undeterred, petitioners Sze, For, and Ng filed this petition for review on
https://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/66082
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