CAN THE OFFICE DISMISSED CRIMINAL CASES UNDER TAX CODE BY REASON OF

PAYMENT OF COMPROMISED PENALTY?

Revenue Regulations No. 12-99, Implementing the Provisions of the National Internal Revenue
11

Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil
Penalties and Interest and the Extrajudicial Settlement of a Taxpayer’s Criminal Violation of the
Code through Payment of a Suggested Compromise Penalty, September 6, 1999.

Revenue Regulation No. 12-99

Issued September 14, 1999 implements the provisions of the Tax Code of 1997 relative to the rules
on assessment of national internal revenue taxes, fees and charges, as well as provides the rules for
the extra-judicial settlement of a taxpayer's criminal violation of the said Code or any of its
implementing Regulations through payment of a suggested compromise penalty. As a general
principle, in case the tax due from the taxpayer is paid on a partial or installment basis, the interest
on the deficiency tax or on the delinquency tax liability of the taxpayer will be imposed from due date
of the tax until full payment thereof. The interest will be computed based on the diminishing balance
of the tax, inclusive of interests.

general provision must give way to a particular provision. Special provision governs. (RPC –

December 8, 1930; Tax Code - 1997

People vs. Magdaluyo –

In view of said full payment of the specific tax and the compromise penalty, the Deputy
Commissioner of Internal Revenue, on August 25, 1959, wrote a letter to the Pasay City Attorney,
which reads:

I have the honor to inform you that M.r. Carlos Magdaluyo of 1786 Taft Avenue, Pasay City,
whose criminal prosecution for violation of sections 133, 137 and 147, all penalized under
section 174 of the National Internal Revenue Code, was recommended to that office on
December 4, 1958, has already paid in full his specific tax liability in the total sum
of P1,000.00 as compromise penalty in extrajudicial settlement of his criminal liability arising
from his aforesaid violation.

In view thereof, this Office will interpose no objection to the withdrawal of the criminal case
instituted against Mr. Magdaluyo. (Emphasis supplied.)

Section 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. -
The Commissioner may -

(B) Abate or cancel a tax liability, when:

xxxxxxxxxxxxxxxx

All criminal violations may be compromised except: (a) those already filed in court, or
(b) those involving fraud.

Section 7. Authority of the Commissioner to Delegate Power. - The Commissioner may delegate the
powers vested in him under the pertinent provisions of this Code to any or such subordinate officials
with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as
may be imposed under rules and regulations to be promulgated by the Secretary of finance, upon
recommendation of the Commissioner: Provided, However, That the following powers of the
Commissioner shall not be delegated:

(a) The power to recommend the promulgation of rules and regulations by the Secretary of
Finance;

(b) The power to issue rulings of first impression or to reverse, revoke or modify any existing
ruling of the Bureau;
 (c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code, any tax
liability: Provided, however, That assessments issued by the regional offices involving basic
deficiency taxes of Five hundred thousand pesos (P500,000) or less, and minor criminal
violations, as may be determined by rules and regulations to be promulgated by the
Secretary of finance, upon recommendation of the Commissioner, discovered by regional
and district officials, may be compromised by a regional evaluation board which shall be
composed of the Regional Director as Chairman, the Assistant Regional Director, the heads
of the Legal, Assessment and C

TITLE XII
OVERSIGHT COMMITTEE

Section 290. Congressional Oversight Committee. -

A Congressional Oversight Committee, hereinafter referred to as the Committee, is hereby

constituted in accordance with the provisions of this Code. The Committee shall be composed of the
Chairmen of the Committee on Ways and Means of the Senate and House Representatives and four
(4) additional members from each house, to be designated by the Speaker of the House of
Representatives and the Senate President, respectively.

The Committee shall, among others, in aid of legislation:

(1) Monitor and ensure the proper implementation of Republic Act No. 8240;

(2) Determine that the power of the Commissioner to compromise and abate is reasonably
exercised

To this motion, the Assistant City Attorney filed an opposition. On October 5, 1959, the court
dismissed the case, in an order of this tenor:

ORDER

Acting upon the motions to quash dated September 16, 1959, and September 29, 1959, and
the opposition thereto, and it appearing that the Commissioner of Internal Revenue has
agreed to compromise this case (Annex I) and that the City Fiscal, upon being advised
thereof on November 24, 1958, has expressed his conformity to the compromise agreement
(Annex I), and it appearing further that the accused has fully paid already the amount of
P24,438.40 mentioned in the compromise agreement,

AS PRAYED FOR, this case is hereby dismissed with costs de oficio. The bond filed by the
accused for his provisional release is hereby ordered cancelled.

----Finally, Section 9, Rule 123 of the Rules of Court is inapplicable because it has reference to
criminal cases not allowed by law to be compromise; the instant case involves a tax case, which the
law (Sec. 309 of the Tax Code) expressly allows to be compromised.

In the third issue he raises, appellant contends that his criminal liability in the first three informations
(L-171779) has been extinguished because of the failure of the government to take any timely
action, judicial or administrative, to collect his income tax liabilities, and because of this failure, the
right of the government to collect the taxes was lost by prescription in accordance with section 332
of the National Internal Revenue Code. On the premise that his criminal liability arose from his failure
to satisfy this civil liability, appellant argues that the extinguishment of this civil liability by
prescription ipso facto extinguished any criminal action based thereon.

We cannot uphold appellant's view. The filing of a false and fraudulent income tax return and the
failure to pay the tax necessarily makes the delinquent taxpayer amenable to the penal provisions of
Section 73 of the Code. Any subsequent satisfaction of the tax liability, by payment or
prescription, will not operate to extinguish such criminal liability, since the duty to pay the tax is
imposed by statute independent of any attempt on the part of the taxpayer to evade payment.
Whether under the National Internal Revenue Code or under the Revised Penal Code, the
satisfaction of civil liability is not one of the grounds for the extinction of criminal action. The failure of
the government, therefore, to enforce by appropriate civil remedies the collection of the taxes, does
not detract from its right criminally to prosecute violations of the Code. The criminal actions subsist
so long as there are no legal grounds that would bar their prosecution. -
https://lawphil.net/judjuris/juri1964/dec1964/gr_17177_1964.html

In Trinidad v. Office of the Ombudsman,22 this Court held:

It is a firmly recognized rule, however, that criminal liability cannot be the subject of a
compromise. For a criminal case is committed against the People, and the offended party may not
waive or extinguish the criminal liability that the law imposes for its commission. And that explains
why a compromise is not one of the grounds prescribed by the Revised Penal Code for the [extinguishment]
of criminal liability.23