Purple Wings

Google
The Next Web - Google Now Launcher is now available for all Android 4.1 and later devices
powered by

Friday, January 13, 2012
Digested Cases in Taxation

1. CIR V PASCOR REALTY & DEVT CORP et. al.
GR No. 128315, June 29, 1999

Facts: The CIR authorized certain BIR officers to examine the books of accounts and other accounting records of
Pascor Realty and Development Corp. (PRDC) for 1986, 1987 and 1988. The examination resulted in
recommendation for the issuance of an assessment of P7,498,434.65 and P3,015,236.35 for 1986 and 1987,
respectively. The Commissioner filed a criminal complaint for tax evasion against PRDC, its president and treasurer
before the DOJ. Private respondents filed immediately an urgent request for reconsideration on reinvestigation
disputing the tax assessment and tax liability. The Commissioner denied private respondents request for
reconsideration/reinvestigation on the ground that no formal assessment has been issued which the latter
elevated to the CTA on a petition for review. The Commissioners motion to dismiss on the ground of the CTAs
lack of jurisdiction denied by CTA and ordered the Commissioner to file an answer. Instead of complying with the
order of CTA, Commissioner filed a petition with the CA alleging grave abuse of discretion and lack of jurisdiction
on the part of CTA for considering the affidavit/report of the revenue officers and the endorsement of said report
as assessment which may be appealed to the CTA. The CA sustained the CTA decision and dismissed the petition.

Issues: (1) Whether or not the criminal complaint for tax evasion can be construed as an assessment. (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 evasion cases, discretion on
whether to issue an assessment, or to file a criminal case against the taxpayer, or to do both.

2. Marcos II vs. CA
273 SCRA 47 1997

Facts: Ferdinand R. Marcos II assailed the decision of the Court of Appeals declaring the deficiency income tax
assessments and estate tax assessments upon the estate and properties of his late father despite the pendency of
the probate proceedings of the will of the late President. On the other hand, the BIR argued that the States
authority to collect internal revenue taxes is paramount.

Petitioner further argues that "the numerous pending court cases questioning the late president's ownership or
interests in several properties (both real and personal) make the total value of his estate, and the consequent
estate tax due, incapable of exact pecuniary determination at this time. Thus, respondents' assessment of the
estate tax and their issuance of the Notices of Levy and sale are premature and oppressive." He points out the
pendency of Sandiganbayan Civil Case Nos. 0001-0034 and 0141, which were filed by the government to question
the ownership and interests of the late President in real and personal properties located within and outside the
Philippines. Petitioner, however, omits to allege whether the properties levied upon by the BIR in the collection of
estate taxes upon the decedent's estate were among those involved in the said cases pending in the
Sandiganbayan. Indeed, the court is at a loss as to how these cases are relevant to the matter at issue. The mere
fact that the decedent has pending cases involving ill-gotten wealth does not affect the enforcement of tax
assessments over the properties indubitably included in his estate.

Issue: Is the contention of Marcos correct?

Held: No. The approval of the court, sitting in probate or as a settlement tribunal over the deceaseds estate, is not
a mandatory requirement in the collection of estate taxes.

There is nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the probate or
estate settlement court's approval of the state's claim for estate taxes, before the same can be enforced and
collected.

The enforcement of tax laws and the collection of taxes are of paramount importance for the sustenance of
government. Taxes are the lifeblood of government and should be collected without unnecessary hindrance.
However, such collection should be made in accordance with law as any arbitrariness will negate the existence of
government itself.

It is not the Department of Justice which is the government agency tasked to determine the amount of taxes due
upon the subject estate, but the Bureau of Internal Revenue whose determinations and assessments are presumed
correct and made in good faith. The taxpayer has the duty of proving otherwise. In the absence of proof of any
irregularities in the performance of official duties, an assessment will not be disturbed. Even an assessment based
on estimates is prima facie valid and lawful where it does not appear to have been arrived at arbitrarily or
capriciously. The burden of proof is upon the complaining party to show clearly that the assessment is erroneous.
Failure to present proof of error in the assessment will justify the judicial affirmance of said assessment. In this
instance, petitioner has not pointed out one single provision in the Memorandum of the Special Audit Team which
gave rise to the questioned assessment, which bears a trace of falsity. Indeed, the petitioner's attack on the
assessment bears mainly on the alleged improbable and unconscionable amount of the taxes charged. But mere
rhetoric cannot supply the basis for the charge of impropriety of the assessments made.

3. Meralco Securities Corporation vs. Savellano
GR No. L-36181 October 23, 1982

Facts: On May 22, 1967, the late Juan G. Maniago (substituted in these proceedings by his wife and children)
submitted to petitioner Commissioner of Internal Revenue confidential denunciation against the Meralco
Securities Corporation for tax evasion for having paid income tax only on 25 % of the dividends it received from the
Manila Electric Co. for the years 1962-1966, thereby allegedly shortchanging the government of income tax due
from 75% of the said dividends.

Petitioner Commissioner of Internal Revenue caused the investigation of the denunciation after which he found
and held that no deficiency corporate income tax was due from the Meralco Securities Corporation on the
dividends it received from the Manila Electric Co. and accordingly denied Maniago's claim for informer's reward on
a non-existent deficiency.
On August 28, 1970, Maniago filed a petition for mandamus, and subsequently an amended petition for
mandamus, in the Court of First Instance of Manila, docketed therein as Civil Case No. 80830, against the
Commissioner of Internal Revenue and the Meralco Securities Corporation to compel the Commissioner to impose
the alleged deficiency tax assessment on the Meralco Securities Corporation and to award to him the
corresponding informer's reward under the provisions of R.A. 2338. Respondent judge granted the said petition
and thereafter, denied the motions for reconsideration filed by all the parties.

Issues: (1) Whether or not respondent judge has jurisdiction over the subject matter of the case; (2) Whether or
not respondent heirs of Maniago are entitled to informers reward.

Held: (1) Respondent judge has no jurisdiction to take cognizance of the case because the subject matter thereof
clearly falls within the scope of cases now exclusively within the jurisdiction of the Court of Tax Appeals. Section 7
of Republic Act No. 1125, enacted June 16, 1954, granted to the Court of Tax Appeals exclusive appellate
jurisdiction to review by appeal, among others, decisions of the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in
relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue. The law transferred to the Court of Tax Appeals jurisdiction over
all cases involving said assessments previously cognizable by courts of first instance, and even those already
pending in said courts. The question of whether or not to impose a deficiency tax assessment on Meralco
Securities Corporation undoubtedly comes within the purview of the words "disputed assessments" or of "other
matters arising under the National Internal Revenue Code . . . .In the case of Blaquera vs. Rodriguez, et al, this
Court ruled that "the determination of the correctness or incorrectness of a tax assessment to which the taxpayer
is not agreeable, falls within the jurisdiction of the Court of Tax Appeals and not of the Court of First Instance, for
under the provisions of Section 7 of Republic Act No. 1125, the Court of Tax Appeals has exclusive appellate
jurisdiction to review, on appeal, any decision of the Collector of Internal Revenue in cases involving disputed
assessments and other matters arising under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue."

(2) Considering then that respondent judge may not order by mandamus the Commissioner to issue the
assessment against Meralco Securities Corporation when no such assessment has been found to be due, no
deficiency taxes may therefore be assessed and collected against the said corporation. Since no taxes are to be
collected, no informer's reward is due to private respondents as the informer's heirs. Informer's reward is
contingent upon the payment and collection of unpaid or deficiency taxes. An informer is entitled by way of
reward only to a percentage of the taxes actually assessed and collected. Since no assessment, much less any
collection, has been made in the instant case, respondent judge's writ for the Commissioner to pay respondents
25% informer's reward is gross error and without factual nor legal basis.

Petitions granted and the questioned decision of respondent judge and order reversed and set aside.

4. SY PO vs. CTA
G.R. No. 81446; August 18, 1988

Facts: Po Bien Sing, the sole proprietor of Silver Cup Wine Factory (SCWF), engaged in the business of manufacture
and sale of compounded liquors. On the basis of a denunciation against SCWF allegedly "for tax evasion amounting
to millions of pesos, Secretary of Finance directed the Finance-BIR--NBI team to investigate.

On the basis of the team's report of investigation, the respondent Commissioner of Internal Revenue assessed Mr.
Po Bien Sing deficiency income tax for 1966 to 1970 in the amount of P7,154,685.16 and for deficiency specific tax
for January 2,1964 to January 19, 1972 in the amount of P5,595,003.68

Petitioner protested the deficiency assessments. The BIR recommended the reiteration of the assessments in view
of the taxpayer's persistent failure to present the books of accounts for examination.

Issue: WON the assessments have valid and legal basis.

Held: The law is specific and clear. The rule on The Best Evidence Obtainable applies when a tax report required
by law for the purpose of assessment is not available or when tax report is incomplete or fraudulent.

The tax assessment by tax examiners are presumed correct and made in good faith. The taxpayer has the duty to
prove otherwise. In the absence of proof of irregularities in the performance of duties, an assessment duly made
by the BIR examiner and approved by his superior officers will not be disturbed. All presumptions are in favour of
the correctness of tax assessments.

5. CIR vs. CA, CTA and FORTUNE TOBACCO CORP.
G.R. No. 119761; August 29, 1996

Facts: Fortune Tobacco Corporation ("Fortune Tobacco"), engaged in the manufacture of different brands of
cigarettes, registered "Champion," "Hope," and "More" cigarettes. BIR classified them as foreign brands since they
were listed in the World Tobacco Directory as belonging to foreign companies. However, Fortun changed the
names of 'Hope' to 'Hope Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the
foreign brand category.

A 45% Ad Valorem taxes were imposed on these brands. Then Republic Act ("RA") No. 7654 was enacted 55% for
locally manufactured foreign brand while 45% for locally manufactured brands. 2 days before the effectivity of RA
7654, Revenue Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the BIR saying since there is no
showing who the real owner/s are of Champion, Hope and More, it follows that the same shall be considered
locally manufactured foreign brand for purposes of determining the ad valorem tax - 55%. BIR sent via telefax a
copy of RMC 37-93 to Fortune Tobacco addressed to no one in particular. Then Fortune Tobacco received, by
ordinary mail, a certified xerox copy of RMC 37-93. CIR assessed Fortune Tobacco for ad valorem tax deficiency
amounting to P9,598,334.00.

Fortune Tobacco filed a petition for review with the CTA.
8
CTA upheld the position of Fortune. CA affirmed.

Issue: WON it was necessary for BIR to follow the legal requirements when it issued its RMC

Held. YES. CIR may not disregard legal requirements in the exercise of its quasi-legislative powers which
publication, filing, and prior hearing.
When an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare
issuance for it gives no real consequence more than what the law itself has already prescribed. BUT when, upon
the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render
least cumbersome the implementation of the law but substantially increases the burden of those governed, the
agency must accord, at least to those directly affected, a chance to be heard, before that new issuance is given the
force and effect of law.
RMC 37-93 cannot be viewed simply as construing Section 142(c)(1) of the NIRC, as amended, but has, in fact and
most importantly, been made in order to place "Hope Luxury," "Premium More" and "Champion" within the
classification of locally manufactured cigarettes bearing foreign brands and to thereby have them covered by RA
7654 which subjects mentioned brands to 55% the BIR not simply interpreted the law; verily, it legislated under its
quasi-legislative authority. The due observance of the requirements of notice, of hearing, and of publication should
not have been then ignored.

6. CIR v. Benguet Corp
G.R. Nos. 134587 and 134588; January 8, 2005

Facts: Benguet Corporation is a domestic corporation engaged in the exploration, development and operation of
mineral resources, and the sale or marketing thereof to various entities. It is a VAT registered enterprise.

The transactions in question occurred during the period between 1988 and 1991. Under Sec. 99 of NIRC as
amended by E.O. 273 s. 1987 then in effect, any person who, in the course of trade or business, sells, barters or
exchanges goods, renders services, or engages in similar transactions and any person who imports goods is liable
for output VAT at rates of either 10% or 0% (zero-rated) depending on the classification of the transaction under
Sec. 100 of the NIRC.

In January of 1988, Benguet applied for and was granted by the BIR zero-rated status on its sale of gold to Central
Bank. On 28 August 1988 VAT Ruling No. 3788-88 was issued which declared that the sale of gold to Central Bank is
considered as export sale subject to zero-rate pursuant to
Section 100 of the Tax Code, as amended by EO 273.

Relying on its zero-rated status and the above issuances, Benguet sold gold to the Central Bank during the period
of 1 August 1989 to 31 July 1991 and entered into transactions that resulted in input VAT incurred in relation to
the subject sales of gold. It then filed applications for tax refunds/credits
corresponding to input VAT.

However, such request was not granted due to BIR VAT Ruling No. 008-92 dated 23 January 1992 that was issued
subsequent to the consummation of the subject sales of gold to the Central Ban`k which provides that sales of gold
to the Central Bank shall not be considered as export sales and thus, shall be subject to 10% VAT. BIR VAT Ruling
No. 008-92 withdrew, modified, and superseded all inconsistent BIR issuances.
Both petitioner and Benguet agree that the retroactive application of VAT Ruling No. 008-92 is valid only if such
application would not be prejudicial to the Benguet pursuant Sec. 246 of the NIRC.

Issues: (1) WON Benguets sale of gold to the Central Bank during the
period when such was classified by BIR issuances as zerorated could be taxed validly at a 10% rate after the
consummation of the transactions involved; (2) WON there was prejudice to Benguet Corp due to the new BIR VAT
Ruling.

Held: (1) NO. At the time when the subject transactions were consummated, the prevailing BIR regulations relied
upon by Benguet ordained that gold sales to the Central Bank were zero-rated. Benguet should not be faulted for
relying on the BIRs interpretation of the said laws and regulations.

While it is true, as CIR alleges, that government is not estopped from collecting taxes which remain unpaid on
account of the errors or mistakes of its agents and/or officials and there could be no vested right arising from an
erroneous interpretation of law, these principles must give way to
exceptions based on and in keeping with the interest of justice and fair play. (then the Court cited the ABS-CBN
case).

(2) YES. The adverse effect is that Benguet Corp became the unexpected and unwilling debtor to the BIR of the
amount equivalent to the total VAT cost of its product, a liability it previously could have recovered from the BIR in
a zero-rated scenario or at least passed on to the Central Bank had it known it would have been taxed at a 10%
rate. Thus, it is clear that Benguet suffered economic prejudice when it consummated sales of gold to the Central
Bank were taken out of the zero-rated category. The change in the VAT rating of Benguets transactions with the
Central Bank resulted in the twin loss of its exemption from payment of output VAT and its opportunity to recover
input VAT, and at the same time subjected it to the 10% VAT sans the option to pass on this cost to the Central
Bank, with the total prejudice in money terms being equivalent to the 10% VAT levied on its sales of gold to the
Central Bank.

Even assuming that the right to recover Benguets excess payment of income tax has not yet prescribed, this relief
would only address Benguets overpayment of income tax but not the other burdens discussed above. Verily, this
remedy is not a feasible option for Benguet because the very reason why it was issued a deficiency tax assessment
is that its input VAT
was not enough to offset its retroactive output VAT. Indeed, the burden of having to go through an unnecessary
and cumbersome refund process is prejudice enough.

7. CIR v Bursmeiters & Wain Scandinavian
GR 153205; January 22, 2007

Facts: A foreign consortium, parent company of Burmeister, entered into an O&M contract with NPC. The foreign
entity then subcontracted the actual O&M to Burmeister. NPC paid the foreign consortium a mixture of currencies
while the consortium, in turn, paid Burmeister foreign currency inwardly remitted into the Philippines. BIR did not
want to grant refund since the services are not destined for consumption abroad (or the destination principle).

Issue: Are the receipts of Burmeister entitled to VAT zero-rated status?

Held: PARTIALLY. Respondent is entitled to the refund prayed for BUT ONLY for the period covered prior to the
filing of CIRs Answer in the CTA.

The claim has no merit since the consortium, which was the recipient of services rendered by Burmeister, was
deemed doing business within the Philippines since its 15-year O&M with NPC can not be interpreted as an
isolated transaction.

In addition, the services referring to processing, manufacturing, repacking and services other than those in (1) of
Sec. 102 both require (i) payment in foreign currency; (ii) inward remittance; (iii) accounted for by the BSP; AND
(iv) that the service recipient is doing business outside the Philippines. The Court ruled that if this is not the case,
taxpayers can circumvent just by stipulating payment in foreign currency.

The refund was partially allowed since Burmeister secured a ruling from the BIR allowing zero-rating of its sales to
foreign consortium. However, the ruling is only valid until the time that CIR filed its Answer in the CTA which is
deemed revocation of the previously-issued ruling. The Court said the revocation can not retroact since none of
the instances in Section 246 (bad faith, omission of facts, etc.) are present.


8. CIR vs. HANTEX TRADING CO., INC.
G.R. No. 136975; March 31, 2005

Facts: Hantex Trading Co is a company organized under the Philippines. It is engaged in the sale of plastic products,
it imports synthetic resin and other chemicals for the manufacture of its products. For this purpose, it is required
to file an Import Entry and Internal Revenue Declaration (Consumption Entry) with the Bureau of Customs under
Section 1301 of the Tariff and Customs Code. Sometime in October 1989, Lt. Vicente Amoto, Acting Chief of
Counter-Intelligence Division of the Economic Intelligence and Investigation Bureau (EIIB), received confidential
information that the respondent had imported synthetic resin amounting to P115,599,018.00 but only declared
P45,538,694.57. Thus, Hentex receive a subpoena to present its books of account which it failed to do. The bureau
cannot find any original copies of the products Hentex imported since the originals were eaten by termites. Thus,
the Bureau relied on the certified copies of the respondents Profit and Loss Statement for 1987 and 1988 on file
with the SEC, the machine copies of the Consumption Entries, Series of 1987, submitted by the informer, as well as
excerpts from the entries certified by Tomas and Danganan. The case was submitted to the CTA which ruled that
Hentex have tax deficiency and is ordered to pay, per investigation of the Bureau. The CA ruled that the income
and sales tax deficiency assessments issued by the petitioner were unlawful and baseless since the copies of the
import entries relied upon in computing the deficiency tax of the respondent were not duly authenticated by the
public officer charged with their custody, nor verified under oath by the EIIB and the BIR investigators.

Issue: Whether or not the final assessment of the petitioner against the respondent for deficiency income tax and
sales tax for the latters 1987 importation of resins and calcium bicarbonate is based on competent evidence and
the law.

Held: Central to the second issue is Section 16 of the NIRC of 1977, as amended which provides that the
Commissioner of Internal Revenue has the power to make assessments and prescribe additional requirements for
tax administration and enforcement. Among such powers are those provided in paragraph (b), which provides that
Failure to submit required returns, statements, reports and other documents. When a report required by law as
a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by
law or regulation or when there is reason to believe that any such report is false, incomplete or erroneous, the
Commissioner shall assess the proper tax on the best evidence obtainable. This provision applies when the
Commissioner of Internal Revenue undertakes to perform her administrative duty of assessing the proper tax
against a taxpayer, to make a return in case of a taxpayers failure to file one, or to amend a return already filed in
the BIR. The best evidence envisaged in Section 16 of the 1977 NIRC, as amended, includes the corporate and
accounting records of the taxpayer who is the subject of the assessment process, the accounting records of other
taxpayers engaged in the same line of business, including their gross profit and net profit sales. Such evidence also
includes data, record, paper, document or any evidence gathered by internal revenue officers from other
taxpayers who had personal transactions or from whom the subject taxpayer received any income; and record,
data, document and information secured from government offices or agencies, such as the SEC, the Central Bank
of the Philippines, the Bureau of Customs, and the Tariff and Customs Commission. However, the best evidence
obtainable under Section 16 of the 1977 NIRC, as amended, does not include mere photocopies of
records/documents. The petitioner, in making a preliminary and final tax deficiency assessment against a taxpayer,
cannot anchor the said assessment on mere machine copies of records/documents. Mere photocopies of the
Consumption Entries have no probative weight if offered as proof of the contents thereof. The reason for this is
that such copies are mere scraps of paper and are of no probative value as basis for any deficiency income or
business taxes against a taxpayer.

Companies exempt from zero-rate tax

9. BPI v CIR
G.R No. 139786O; ctober 17, 2005

Facts: The BIR issued an Assessment for a deficiency of Documentary Stamp Tax (DST). The petitioner filed a
protest letter, requesting for reconsideration with BIR however the latter did not reply. Instead, BIR issued a
warrant for distraint/levy against petitioner BPI. The petitioner did not hear from BIR until September 11, 1997
when then Commissioner Liwayway Vinzons-Chado, denied its request for reconsideration. Subsequently, the
petitioner filed a petition for review with the CTA, raising the defense of prescription. The CTA denied the petition
and held that the period of prescription had not yet prescribed nonetheless, it held that the petitioner was not
liable for the deficiency of DST. On appeal, the CA reversed the ruling of CTA on the issue of DST tax and held that
the petitioner was indeed liable for DST.

Issue: Whether or not the right of the respondent to collect from petitioner BPIis barred by prescription?

Held : Yes, the Court ruled that the period to collect has already prescribed. The BIR has three years, counted from
the date of actual filing of the return or from the last date prescribed by law for the filing of such return, whichever
comes later, to assess a national internal revenue tax or to begin a court proceeding or the collection thereof
without an assessment. In case of a false or fraudulent return with intent to evade tax or the failure to file any
return at all, the prescriptive period for assessment of the tax due shall be 10 years from discovery by the BIR of
the falsity, fraud, or omission. When the BIR validly issues an assessment, within either the three-year or ten-year
period, whichever is appropriate, then the BIR has another three years after the assessment within which to collect
the national internal revenue tax due thereon by distraint, levy, and/or court proceeding. The assessment of the
tax is deemed made and the three-year period for collection of the assessed tax begins to run on the date the
assessment notice had been released, mailed or sent by the BIR to the taxpayer.

In their Decisions, both the CTA and the Court of Appeals found that the filing by petitioner BPI of a protest letter
suspended the running of the prescriptive period for collecting the assessed DST. This Court, however, takes the
opposing view, and, based on the succeeding discussion, concludes that there is no valid ground for suspending
the running of the prescriptive period for collection of the deficiency DST assessed against petitioner BPI.

The statute of limitations on assessment and collection of taxes is for the protection of the taxpayer and, thus,
shall be construed liberally in his favor



10. ESTATE OF THE LATE JULIANA DIEZ VDA. DE GABRIEL vs. CIR
GR. No. 155541; January 27, 2004

Facts: During the lifetime of the decedent Juliana vda. De Gabriel, her business affairs were managed by the
Philippine Trust Company (PhilTrust). The decedent died on April 3, 1979 but two days after her death, PhilTrust
filed her income tax return for 1978 not indicating that the decedent had died. The BIR conducted an
administrative investigation of the decedents tax liability and found a deficiency income tax for the year 1997 in
the amount of P318,233.93. Thus, in November 18, 1982, the BIR sent by registered mail a demand letter and
assessment notice addressed to the decedent c/o PhilTrust, Sta. Cruz, Manila, which was the address stated in her
1978 income tax return. On June 18, 1984, respondent Commissioner of Internal Revenue issued warrants of
distraint and levy to enforce the collection of decedents deficiency income tax liability and serve the same upon
her heir, Francisco Gabriel. On November 22, 1984, Commissioner filed a motion to allow his claim with probate
court for the deficiency tax. The Court denied BIRs claim against the estate on the ground that no proper notice of
the tax assessment was made on the proper party. On appeal, the CA held that BIRs service on PhilTrust of the
notice of assessment was binding on the estate as PhilTrust failed in its legal duty to inform the respondent of
antecedents death. Consequently, as the estate failed to question the assessment within the statutory period of
thirty days, the assessment became final, executory, and incontestable.

Issue: (1) Whether or not the CA erred in holding that the service of deficiency tax assessment on Juliana through
PhilTrust was a valid service as to bind the estate; (2) Whether or not the CA erred in holding that the tax
assessment had become final, executory, and incontestable.

Held: (1) Since the relationship between PhilTrust and the decedent was automatically severed the moment of the
taxpayers death, none of the PhilTrusts acts or omissions could bind the estate of the taxpayer. Although the
administrator of the estate may have been remiss in his legal obligation to inform respondent of the decedents
death, the consequence thereof merely refer to the imposition of certain penal sanction on the administrator.
These do not include the indefinite tolling of the prescriptive period for making deficiency tax assessment or
waiver of the notice requirement for such assessment.

(2) The assessment was served not even on an heir or the estate but on a completely disinterested party. This
improper service was clearly not binding on the petitioner. The most crucial point to be remembered is that
PhilTust had absolutely no legal relationship with the deceased or to her Estate. There was therefore no
assessment served on the estate as to the alleged underpayment of tax. Absent this assessment, no proceeding
could be initiated in court for collection of said tax; therefore, it could not have become final, executory and
incontestable. Respondents claim for collection filed with the court only on November 22, 1984 was barred for
having been made beyond the five-year prescriptive period set by law.

11. CIR v. Tulio
GR139858; October 25, 2005.

Facts: This involves the collection of percentage taxes for 1986 and 1987. Tulio did not file tax returns. BIR
discovered on September 14 1989. RTC dismissed BIR collection case on the ground of prescription. It counted 3
years from the return was supposed to be filed with the BIR instead of 10 yrs from discovery of omission to file
return by the respondent.

Issue: Whether petitioners cause of action for the collection of deficiency percentage taxes against respondent
has prescribed.
The lower court erroneously applied Section 203 of the same Code providing for the three-year prescriptive period
from the filing of the tax return within which internal revenue taxes shall be assessed. It held that such period
should be counted from the day the return was filed, or from August 15, 1990 up to August 15, 1993. However, as
shown by the records, respondent failed to file a tax return, forcing petitioner to invoke the powers of his office in
tax administration and enforcement. Respondents failure to file his tax returns is thus covered by Section 223
providing for a ten-year prescriptive period within which a proceeding in court may be filed.
Here, respondent failed to file his tax returns for 1986 and 1987. On September 14, 1989, petitioner found
respondents omission. Hence, the running of the ten-year prescriptive period within which to assess and collect
the taxes due from respondent commenced on that date until September 14, 1999. The two final assessment
notices were issued on February 28, 1991, well within the prescriptive period of three (3) years. When respondent
failed to question or protest the deficiency assessments thirty (30) days therefrom, or until March 30, 1991, the
same became final and executory.

12. Oceanic Wireless v. CIR
GR NO. 148380, December 9, 2005


Facts: On March 17, 1988, petitioner received from the Bureau of Internal Revenue (BIR) deficiency tax
assessments for the taxable year 1984 in the total amount of P8,644,998.71. Petitioner filed its protest against the
tax assessments and requested a reconsideration or cancellation of the same in a letter to the BIR Commissioner.

Acting in behalf of the BIR Commissioner, then Chief of the BIR Accounts Receivable and Billing Division, Mr.
Severino B. Buot, reiterated the tax assessments while denying petitioners request for reinvestigation. Said letter
likewise requested petitioner to pay within 10 days from receipt thereof, otherwise the case shall be referred to
the Collection Enforcement Division of the BIR National Office for the issuance of a warrant of distraint and levy
without further notice.

Upon petitioners failure to pay the subject tax assessments within the prescribed period, the Assistant
Commissioner for Collection, acting for the Commissioner of Internal Revenue, issued the corresponding warrants
of distraint and/or levy and garnishment.

Petitioner filed a Petition for Review with the Court of Tax Appeals (CTA) to contest the issuance of the warrants to
enforce the collection of the tax assessments. The CTA dismissed the petition for lack of jurisdiction.
Petitioner filed a Motion for Reconsideration arguing that the demand letter cannot be considered as the final
decision of the Commissioner of Internal Revenue on its protest because the same was signed by a mere
subordinate and not by the Commissioner himself.

With the denial of its motion for reconsideration, petitioner consequently filed a Petition for Review with the Court
of Appeals contending that there was no final decision to speak of because the Commissioner had yet to make a
personal determination as regards the merits of petitioners case.

The Court of Appeals denied the petition.
Issue: Whether the demand letter for tax deficiency issued and signed by a subordinate officer who was acting in
behalf of the CIR is deemed final and executor and subject to an appeal to the CTA.

Held: YES. A demand letter for payment of delinquent taxes may be considered a decision on a disputed or
protested assessment. The determination on whether or not a demand letter is final is conditioned upon the
language used or the tenor of the letter being sent to the taxpayer. In this case, the letter of demand,
unquestionably constitutes the final action taken by the Bureau of Internal Revenue on petitioners request for
reconsideration when it reiterated the tax deficiency assessments due from petitioner, and requested its payment.
Failure to do so would result in the issuance of a warrant of distraint and levy to enforce its collection without
further notice. In addition, the letter contained a notation indicating that petitioners request for reconsideration
had been denied for lack of supporting documents. The demand letter received by petitioner verily signified a
character of finality. Therefore, it was tantamount to a rejection of the request for reconsideration.

This now brings us to the crux of the matter as to whether said demand letter indeed attained finality despite the
fact that it was issued and signed by the Chief of the Accounts Receivable and Billing Division instead of the BIR
Commissioner.

The general rule is that the Commissioner of Internal Revenue may delegate any power vested upon him by law to
Division Chiefs or to officials of higher rank. He cannot, however, delegate the four powers granted to him under
the National Internal Revenue Code (NIRC) enumerated in Section .

As amended by Republic Act No. 8424, Section 7 of the Code authorizes the BIR Commissioner to delegate the
powers vested in him under the pertinent provisions of the Code to any subordinate official with the rank
equivalent to a division chief or higher, except the following:

(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 Section 204(A) and (B) of this Code, any tax deficiency: 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 the 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, heads of the Legal, Assessment and Collection Divisions and
the Revenue District Officer having jurisdiction over the taxpayer, as members; and

(d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax
are produced or kept.
It is clear from the above provision that the act of issuance of the demand letter by the Chief of the Accounts
Receivable and Billing Division does not fall under any of the exceptions that have been mentioned as non-
delegable.

Thus, the authority to make tax assessments may be delegated to subordinate officers. Said assessment has the
same force and effect.

13. Philam Asset Management, Inc. vs CTA
G.R.156637 and 162004; December 14, 2005

Facts: Petitioner acts as investment manager of PFI &PBFI. It provides management &technical services and thus
respectively paid for its services. PFI & PBFI withhold the amount of equivalent to 5% creditable tax regulation. On
April 3, 1998, filed ITR with a net loss thus incurred withholding tax. Petitioner filed for refund from BIR but was
unanswered . CTA denied the petition for review. CA held that to request for either a refund or credit of income
tax paid, a corporation must signify its intention by marking the corresponding box on its annual corporate
adjustment return.

Issue: Whether or not petitioner is entitled to a refund of its creditible taxes.

Ruling: Any tax income that is paid in excess of its amount due to the government may be refunded, provided that
a taxpayer properly applies for the refund. One can not get a tax refund and a tax credit at the same time for the
same excess to income taxes paid. Failure to signify ones intention in Final Assessment Return (FAR) does not
mean outright barring of a valid request for a refund

Requiring that the ITR on the FAR of the succeeding year be presented to the BIR in requesting a tax refund has no
basis in law and jurisprudence. The Tax Code likewise allows the refund of taxes to taxpayer that claims it in writing
within 2 years after payment of the taxes. Technicalities and legalism should not be misused by the government to
keep money not belonging to it, and thereby enriched itself at the expense of its law-abiding citizens.


14. Philippine Journalist, Inc. v. CIR
G.R. No. 162852; December 16, 2004

Facts: In 1995, the Bureau of Internal Revenue (BIR) issued Letter of Authority for two Revenue Officers to examine
petitioners books of account and other accounting records for internal revenue taxes for the period January 1,
1994 to December 31, 1994.
In 1997, petitioners Comptroller, executed a "Waiver of the Statute of Limitation Under the National Internal
Revenue Code (NIRC)". The document "waive[d] the running of the prescriptive period provided by Sections 223
and 224 and other relevant provisions of the NIRC and consent[ed] to the assessment and collection of taxes which
may be found due after the examination at any time after the lapse of the period of limitations fixed by said
Sections 223 and 224 and other relevant provisions of the NIRC, until the completion of the investigation.
In 1998, Revenue Officer submitted his audit report recommending the issuance of an assessment and finding that
petitioner had deficiency taxes. Subsequently, the Assessment Division of the BIR issued Pre-Assessment Notices
which informed petitioner of the results of the investigation. Thus, BIR issued Assessment/Demand stating the
deficiency taxes, inclusive of interest and compromise penalty
On March 16, 1999, a Preliminary Collection Letter was sent by Deputy Commissioner Romeo S. Panganiban to the
petitioner to pay the assessment within ten (10) days from receipt of the letter. On November 10, 1999, a Final
Notice Before Seizure was issued by the same deputy commissioner giving the petitioner ten (10) days from
receipt to pay. Petitioner received a copy of the final notice on November 24, 1999. By letters dated November 26,
1999, petitioner asked to be clarified how the tax liability of P111,291,214.46 was reached and requested an
extension of thirty (30) days from receipt of the clarification within which to reply.
The BIR received a follow-up letter from the petitioner asserting that its (PJI) records do not show receipt of Tax
Assessment/Demand. Petitioner also contested that the assessment had no factual and legal basis. On March 28,
2000, a Warrant of Distraint and/or Levy was received by the petitioner.
Petitioner filed a Petition for Review with the Court of Tax Appeals (CTA) which was amended on May 12, 2000.
Petitioner complains: (a) that no assessment or demand was received from the BIR; (b) that the warrant of
distraint and/or levy was without factual and legal bases as its issuance was premature; (c) that the assessment,
having been made beyond the 3-year prescriptive period, is null and void; (d) that the issuance of the warrant
without being given the opportunity to dispute the same violates its right to due process; and (e) that the grave
prejudice that will be sustained if the warrant is enforced is enough basis for the issuance of the writ of preliminary
injunction.
CTA ruled in favor of PJI. It declared that the deficiency income, value-added and expanded withholding tax
assessments issued by the respondent against the petitioner on December 9, 1998, in the total amount of
P111,291,214.46 for the year 1994 ANCELLED, WITHDRAWN and WITH NO FORCE AND EFFECT. Likewise, it
declared that the Warrant of Distraint and/or Levy No. 33-06-046 NULL and VOID.
On appeal CA ruled that Mere assessment notices which have become final after the lapse of the thirty (30)-day
reglementary period are not appealable. Thus, the CTA should not have entertained the petition at all. Also, it
ruled that there is a valid waiver thus the running of the prescriptive period is tolled.
Issues: (1) whether or not CTA has jurisdiction over the issues in this case. (2) Whether or not the Waiver of the
Statute of Limitations is valid and binding on the petitioner
Held: (1) No. The appellate jurisdiction of the CTA is not limited to cases which involve decisions of the
Commissioner of Internal Revenue on matters relating to assessments or refunds. The second part of the provision
covers other cases that arise out of the NIRC or related laws administered by the Bureau of Internal Revenue. The
wording of the provision is clear and simple. It gives the CTA the jurisdiction to determine if the warrant of
distraint and levy issued by the BIR is valid and to rule if the Waiver of Statute of Limitations was validly effected.
(2) No. As found by the CTA, the Waiver of Statute of Limitations, signed by petitioners comptroller on September
22, 1997 is not valid and binding because it does not conform with the provisions of RMO No. 20-90. It did not
specify a definite agreed date between the BIR and petitioner, within which the former may assess and collect
revenue taxes. Thus, petitioners waiver became unlimited in time, violating Section 222(b) of the NIRC.
The waiver document is being incomplete and defective, the three-year prescriptive period was not tolled or
extended and continued to run until April 17, 1998. Consequently, the Assessment/Demand No. 33-1-000757-94
issued on December 9, 1998 was invalid because it was issued beyond the three (3) year period. In the same
manner, Warrant of Distraint and/or Levy No. 33-06-046 which petitioner received on March 28, 2000 is also null
and void for having been issued pursuant to an invalid assessment.

15. Rafael Arsenio S. Dizon, v. CTA and CIR
G.R. No. 140944; April 30, 2008

Facts: Jose P. Fernandez died in November 7, 1987. Thereafter, a petition for the probate of his will was filed. The
probate court appointed Atty. Rafael Arsenio P. Dizon as administrator of the Estate of Jose Fernandez.

An estate tax return was filed later on which showed ZERO estate tax liability. BIR thereafter issued a deficiency
estate tax assessment, demanding payment of Php 66.97 million as deficiency estate tax. This was subsequently
reduced by CTA to Php 37.42 million. The CA affirmed the CTAs ruling, hence, the instant petition.

The petitioner claims that in as much as the valid claims of creditors against the Estate are in excess of the gross
estate, no estate tax was due. On the other hand, respondents argue that since the claims of the Estates creditors
have been condoned, such claims may no longer be deducted from the gross estate of the decedent.

Issue: Whether the actual claims of creditors may be fully allowed as deductions from the gross estate of Jose
despite the fact that the said claims were reduced or condoned through compromise agreements entered into by
the Estate with its creditors

Held: YES. Following the US Supreme Courts ruling in Ithaca Trust Co. v. United States, the Court held that post-
death developments are not material in determining the amount of deduction. This is because estate tax is a tax
imposed on the act of transferring property by will or intestacy and, because the act on which the tax is levied
occurs at a discrete time, i.e., the instance of death, the net value of the property transferred should be
ascertained, as nearly as possible, as of the that time. This is the date-of-death valuation rule.

The Court, in adopting the date-of-death valuation principle, explained that: First. There is no law, nor do we
discern any legislative intent in our tax laws, which disregards the date-of-death valuation principle and
particularly provides that post-death developments must be considered in determining the net value of the estate.
It bears emphasis that tax burdens are not to be imposed, nor presumed to be imposed, beyond what the statute
expressly and clearly imports, tax statutes being construed strictissimi juris against the government. Second. Such
construction finds relevance and consistency in our Rules on Special Proceedings wherein the term "claims"
required to be presented against a decedent's estate is generally construed to mean debts or demands of a
pecuniary nature which could have been enforced against the deceased in his lifetime, or liability contracted by
the deceased before his death. Therefore, the claims existing at the time of death are significant to, and should be
made the basis of, the determination of allowable deductions.

16. Pilipinas Shell Petrolium Corp v. CIR
G.R. No. 172598; December 21, 2007

Facts: In 1988, BIR sent a collection letter to Petitioner Pilipinas Shell Petroleum Corporation (PSPC) for alleged
deficiency excise tax liabilities of PhP 1,705,028,008.06 for the taxable years 1992 and 1994 to 1997, inclusive of
delinquency surcharges and interest. As basis for the collection letter, the BIR alleged that PSPC is not a qualified
transferee of the TCCs it acquired from other BOI-registered companies. These alleged excise tax deficiencies
covered by the collection letter were already paid by PSPC with TCCs acquired through, and issued and duly
authorized by the Center, and duly covered by Tax Debit Memoranda (TDM) of both the Center and BIR, with the
latter also issuing the corresponding Accept Payment for Excise Taxes (APETs).

PSPC protested the collection letter, but it was denied. Because of respondent inaction on a motion for
reconsideration PSPC filed a petition for review before the CTA.

In 1999, the CTA ruled that the use by PSPC of the TCCs was legal and valid, and that respondents attempt to
collect alleged delinquent taxes and penalties from PSPC without an assessment constitutes denial of due process.
Respondent elevated CTA Decision to the Court of Appeals (CA) through a petition for review.

Despite the pendency of this case, PSPC received assessment letter from respondent for excise tax deficiencies,
surcharges, and interest based on the first batch of cancelled TCCs and TDM covering PSPCs use of the TCCs. All
these cancelled TDM and TCCs were also part of the subject matter of the now pending before the CA.

PSPC protested the assessment letter, but the protest was denied by the BIR, constraining it to file another case
before the CTA. Subsequently, CTA ruled in favor of PSPC and accordingly cancelled and set aside the assessment
issued by the respondent. Respondent motion for reconsideration of the above decision which was rejected thus
respondent appealed the above decision before the CTA En Banc.

The CTA En Banc ruled in favor of respondent and ordered PSPC to pay the amount of P570,577,401.61 as
deficiency excise tax for the taxable years 1992 and 1994 to 1997, inclusive of 25% surcharge and 20% interest.
Issue: Whether or not petitioner is liable for the assessment of deficiency excise tax after the validly issued TCCs
were subsequently cancelled for having been issued fraudulently

Held: No. Petitioner is not liable for the assessment of deficiency excise tax.

In the instant case, with due application, approval, and acceptance of the payment by PSPC of the subject TCCs for
its then outstanding excise tax liabilities in 1992 and 1994 to 1997, the subject TCCs have been canceled as the
money value of the tax credits these represented have been used up. Therefore, the DOF through the Center may
not now cancel the subject TCCs as these have already been canceled and used up after their acceptance as
payment for PSPCs excise tax liabilities. What has been used up, debited, and canceled cannot anymore be
declared to be void, ineffective, and canceled anew.

Besides, it is indubitable that with the issuance of the corresponding TDM, not only is the TCC canceled when fully
utilized, but the payment is also final subject only to a post-audit on computational errors. Under RR 5-2000, a
TDM is a certification, duly issued by the Commissioner or his duly authorized representative, reduced in a BIR
Accountable Form in accordance with the prescribed formalities, acknowledging that the taxpayer named therein
has duly paid his internal revenue tax liability in the form of and through the use of a Tax Credit Certificate, duly
issued and existing in accordance with the provisions of these Regulations. The Tax Debit Memo shall serve as the
official receipt from the BIR evidencing a taxpayers payment or satisfaction of his tax obligation. The amount
shown therein shall be charged against and deducted from the credit balance of the aforesaid Tax Credit
Certificate.

Thus, with the due issuance of TDM by the Center and TDM by the BIR, the payments made by PSPC with the use
of the subject TCCs have been effected and consummated as the TDMs serve as the official receipts evidencing
PSPCs payment or satisfaction of its tax obligation. Moreover, the BIR not only issued the corresponding TDM, but
it also issued ATAPETs which doubly show the payment of the subject excise taxes of PSPC.

Based on the above discussion, we hold that respondent erroneously and without factual and legal basis levied the
assessment. Consequently, the CTA En Banc erred in sustaining respondents assessment.

17. CIR v. Primetown Property Group
GR 161155; August 28, 2007

Facts: Gilbert Yap, vice chair of respondent Primetown Property Group, Inc., applied for the refund or credit of
income tax respondents paid in 1997.

The CTA found that respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a refund or
credit commenced on that date. According to the CTA, the two-year prescriptive period under Section 229 of the
NIRC for the filing of judicial claims was equivalent to 730 days. Because the year 2000 was a leap year,
respondent's petition, which was filed 731 days after respondent filed its final adjusted return, was filed beyond
the reglementary period.

On appeal, the CA reversed and set aside the decision of the CTA. It ruled that Article 13 of the Civil Code did not
distinguish between a regular year and a leap year. According to the CA, even if the year 2000 was a leap year, the
periods covered by April 15, 1998 to April 14, 1999 and April 15, 1999 to April 14, 2000 should still be counted as
365 days each or a total of 730 days. A statute which is clear and explicit shall be neither interpreted nor
construed.

Issue: Whether or not the counting of the 2-year prescriptive period for filing claim of refund is governed by the
Civil Code.

Held: Counting of 2-year period for filing claim for refund is no longer in accordance with Art 13 of the Civil Code
but under Sec 31 of EO 227 - The Administrative Code of 1987.

As between the Civil Code, which provides that a year is equivalent to 365 days, and the Administrative Code of
1987, which states that a year is composed of 12 calendar months, it is the latter that must prevail being the more
recent law, following the legal maxim, Lex posteriori derogat priori.

In the case at bar, there are 24 calendar months in 2 years. For a Final Corporate ITR filed on Apr 14, 1998, the
counting should start from Apr 15, 1998 and end on Apr 14, 2000. The procedure is 1
st
month -Apr 15, 1998 to
May 14, 1998 . 24
th
month - Mar 15, 2000 to Apr 14, 2000. National Marketing v. Tecson, 139 Phil 584 (1969) is
no longer controlling. The 2-year period should start to run from filing of the final adjusted return.
We therefore hold that respondent's petition (filed on April 14, 2000) was filed on the last day of the 24
th
calendar
month from the day respondent filed its final adjusted return. Hence, it was filed within the reglementary period

18. CIR vs. Reyes and Reyes vs. CIR
GR Nos. 159694 & 163581

Facts: Decedent Tancinco left a 1,292 square-meter residential lot and an old house thereon. The heirs of the
decedent received a final estate tax assessment notice and a demand letter, both dated April 22, 1998, for the
amount of P14,912,205.47, inclusive of surcharge and interest. The CIR issued a preliminary collection letter to
Reyes, followed by a Final Notice Before Seizure. Subsequently, a Warrant of Distraint and/or Levy was served
upon the estate. Reyes initially protested the notice of levy but then the heirs proposed a compromise settlement
of P1,000,000.00. The CIR rejected Reyess offer, pointing out that since the estate tax is a charge on the estate
and not on the heirs, the latters financial incapacity is immaterial as, in fact, the gross value of the estate
amounting to P32,420,360.00 is more than sufficient to settle the tax liability. As the estate failed to pay its tax
liability within the deadline, BIR notified Reyes that the subject property would be sold at public auction on August
8, 2000. Reyes filed a protest with the BIR Appellate Division. Assailing the scheduled auction sale, she asserted
that the assessment, letter of demand, and the whole tax proceedings against the estate are void ab initio. She
offered to file the corresponding estate tax return and pay the correct amount of tax without surcharge or interest.

Issue: WON the assessment in this case can be used as a basis for the perfection of a tax compromise.

Held: NO. The 2
nd
paragraph of Sec. 228 of NIRC is clear and mandatory insofar as taxpayers shall be informed in
writing of the law and the facts on which the assessment is made, otherwise the assessment shall be void. RA 8424
has already amended the provisions of Sec. 229 of NIRC on protesting an assessment. The old requirement of
merely notifying the taxpayer of the CIRs findings was changed in 1998 of informing the taxpayer of not only the
law, but also of the facts on which an assessment would be made, otherwise, the assessment itself would be
invalid. Being invalid, the assessment canot be in turn be used as a basis for the perfection of a tax compromise.

Hence, it is premature to declare the compromise on the tax liability of the estate perfected and consummated
considering that the tax assessment is void. While administrative agencies, like the BIR, were not bound by
procedural requirements, they were still required by law and equity to observe substantive due process. The
reason behind this requirement, said the CA, was to ensure that taxpayers would be duly apprised of -- and could
effectively protest -- the basis of tax assessments against them.7 Since the assessment and the demand were void,
the proceedings emanating from them were likewise void, and any order emanating from them could never attain
finality.

20. CIR vs. First Express Pawnshop Company, Inc.
G.R. Nos. 172045-46; June 16 2009

Facts: CIR issued assessment notices against Respondent for deficiency income tax, VAT and documentary stamp
tax on deposit on subscription and on pawn tickets. Respondent filed its written protest on the assessments. When
CIR did not act on the protest during the 180-day period, respondent filed a petition before the CTA.

Issue: Has Respondents right to dispute the assessment in the CTA prescribed?

Held: NO. The assessment against Respondent has not become final and unappealable. It cannot be said that
respondent failed to submit relevant supporting documents that would render the assessment final because when
respondent submitted its protest, respondent attached all the documents it felt were necessary to support its
claim. Further, CIR cannot insist on the submission of proof of DST payment because such document does not exist
as respondent claims that it is not liable to pay, and has not paid, the DST on the deposit on subscription.

The term "relevant supporting documents" are those documents necessary to support the legal basis in disputing a
tax assessment as determined by the taxpayer. The BIR can only inform the taxpayer to submit additional
documents and cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer
will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit.
Since the taxpayer is deemed to have submitted all supporting documents at the time of filing of its protest, the
180-day period likewise started to run on that same date.

21. CIR vs. Enron Subic Power Corp
GR No. 166387; January 19, 2009

Facts: The BIR assessed Enron which countered by filing a Petition for Review with the CTA stating that the
assessment disregarded the provisions of the Tax Code and of RR No. 12-99, when the assessment failed to provide
the legal and factual bases of the assessment. The CTA and CA ruled that the assessment notice must not only
refer to the supporting revenue laws or regulations for the assessment but must also justify their applicability to
the factual milieu of the assessment.

Issue: Is the disputed assessment valid?

Held: NO. The assessment is not valid. Although the revenue examiners discussed their findings with Respondents
representative during the pre-assessment stage, the same, together with the Preliminary Five-Day Letter and
Petitioners Annex G, were not sufficient to comply with the procedural requirement of due process. The Tax Code
provides that a taxpayer shall be informed (and not merely notified as was the requirement before) in writing of
the law and the facts on which the assessment is made; otherwise, the assessment shall be void. The use of the
word shall indicates the mandatory nature of the requirement.

22. TFS Inc. v. CIR
G.R. No. 166829; April 19, 2010

Facts: The CTA rendered a Decision upholding the assessment issued against petitioner in the amount of
P11,905,696.32, representing deficiency VAT for the year 1998, inclusive of 25% surcharge and 20% deficiency
interest, plus 20% delinquency interest from February 25, 2002 until full payment, pursuant to Sections 248 and
249(B) of the National Internal Revenue Code of 1997 (NIRC). The CTA ruled that pawnshops are subject to VAT
under Section 108(A) of the NIRC as they are engaged in the sale of services for a fee, remuneration or
consideration.

Petitioner filed before the Court of Appeals a Petition for Review but it was dismissed by the CA for lack of
jurisdiction in view of the enactment of Republic Act No. 9282 (RA 9282).

Realizing its error, petitioner filed a Petition for Review with the CTA En Banc. The petition, however, was
dismissed for having been filed out of time. Petitioner filed a Motion for Reconsideration but it was denied.
Issues: (1) Whether the Honorable court of Tax Appeal en banc should have given due course to the petition for
review and not strictly applied the technical rules of procedure to the detriment of justice; (2) Whether or not
petitioner is subject to the 10% VAT.

Held: (1) The petition is meritorious. Jurisdiction to review decisions or resolutions issued by the Divisions of the
CTA is no longer with the CA but with the CTA En Banc. This rule is embodied in Section 11 of RA 9282.
In the instant case, we are constrained to disregard procedural rules because we cannot in conscience allow the
government to collect deficiency VAT from petitioner considering that the government has no right at all to collect
or to receive the same. Besides, dismissing this case on a mere technicality would lead to the unjust enrichment of
the government at the expense of petitioner, which we cannot permit. Technicalities should never be used as a
shield to perpetrate or commit an injustice.

(2) Petitioner disputes the assessment made by the BIR for VAT deficiency in the amount of P11,905,696.32 for
taxable year 1998 on the ground that pawnshops are not included in the coverage of VAT.

We agree. x x x Since petitioner is a non-bank financial intermediary, it is subject to 10% VAT for the tax years
1996 to 2002; however, with the levy, assessment and collection of VAT from non-bank financial intermediaries
being specifically deferred by law, then petitioner is not liable for VAT during these tax years. But with the full
implementation of the VAT system on non-bank financial intermediaries starting January 1, 2003, petitioner is
liable for 10% VAT for said tax year. And beginning 2004 up to the present, by virtue of R.A. No. 9238, petitioner is
no longer liable for VAT but it is subject to percentage tax on gross receipts from 0% to 5%, as the case may be.

Guided by the foregoing, petitioner is not liable for VAT for the year 1998. Consequently, the VAT deficiency
assessment issued by the BIR against petitioner has no legal basis and must therefore be cancelled. In the same
vein, the imposition of surcharge and interest must be deleted.



Posted by lem Onitsuaf at 9:23 PM
Email ThisBlogThis!Share to TwitterShare to FacebookShare to Pinterest
No comments:
Post a Comment
Newer Post Older Post Home
Subscribe to: Post Comments (Atom)
Followers
Blog Archive
2014 (6)
2013 (2)
2012 (4)
o October (3)
o January (1)
Digested Cases in Taxation
2011 (7)
About Me

lem Onitsuaf
A fourth year student of law, a correctional officer and a certified security professional
View my complete profile
Popular Posts
Digested Cases in Taxation
1. CIR V PASCOR REALTY & DEVT CORP et. al. GR No. 128315, June 29, 1999
Facts: The CIR authorized certain BIR officers to...
Digested Cases in Taxation
1. Chamber of Real Estate and Builders Associations, Inc., v. The Hon. Executive
Secretary Alberto Romulo, et al G.R. No. 160756...
Criminal Law Reviewer (Art. 1-113)
Criminal Law Reviewer (Art. 1-113) Criminal Law is that branch of public substantive
law which defines offenses and prescribes their p...
Election Law Doctrines
A. Election Law 1. Suffrage The right of suffrage is not at all absolute. The
exercise of the right is subject to existing ...
Donor's Tax
Donors Tax A. Nature of Donors Tax LLadoc v. CIR (14 SCRA 292) A gift tax is
not a property tax, but an excise tax impos...
Essentials of Physical Security
Essential of Physical Security By Melencio S. Faustino Introduction
...
Whether or not Chan Robles, Arellano Lawphil, UST Repository of laws and other
Philippines social networks repository of laws can be compelled to remove the names of
the persons mentioned therein on the ground of privacy
Whether or not Chan Robles, Arellano Lawphil, UST Repository of laws and other
Philippines social networks repository of laws can be com...
Estel v. Diego on estoppel and mandatory allegations in an action for forcible enrty
Estel v. Diego G.R. No. 174082; January 16, 2012 Facts. Petitioner contends that since
respondents failed to allege the lo...
Shoplifting: Control and Investigation
SHOPLIFTING: CONTROL AND INVESTIGATION By Melencio S. Faustino I.
Introduction Recent data on shoplifting incident in m...
Election Law
ELECTION LAW SUFFRAGE The right to vote in the election of officers
chosen by the people and in the determination o...
Popular Posts
Digested Cases in Taxation
1. CIR V PASCOR REALTY & DEVT CORP et. al. GR No.
128315, June 29, 1999 Facts: The CIR authorized certain BIR officers
to...
Digested Cases in Taxation
1. Chamber of Real Estate and Builders Associations, Inc., v. The
Hon. Executive Secretary Alberto Romulo, et al G.R. No. 160756...
Criminal Law Reviewer (Art. 1-113)
Criminal Law Reviewer (Art. 1-113) Criminal Law is that branch of
public substantive law which defines offenses and prescribes their p...
Election Law Doctrines
A. Election Law 1. Suffrage The right of suffrage is not at all
absolute. The exercise of the right is subject to existing ...
Donor's Tax
Donors Tax A. Nature of Donors Tax LLadoc v. CIR (14 SCRA
292) A gift tax is not a property tax, but an excise tax impos...
Pages
Home
Total
Pageviews
9,715
Essentials of Physical Security
Essential of Physical Security By Melencio S. Faustino Introduction
...
Whether or not Chan Robles, Arellano Lawphil, UST Repository of
laws and other Philippines social networks repository of laws can be
compelled to remove the names of the persons mentioned therein on
the ground of privacy
Whether or not Chan Robles, Arellano Lawphil, UST Repository of
laws and other Philippines social networks repository of laws can be
com...
Estel v. Diego on estoppel and mandatory allegations in an action for
forcible enrty
Estel v. Diego G.R. No. 174082; January 16, 2012 Facts. Petitioner
contends that since respondents failed to allege the lo...
Shoplifting: Control and Investigation
SHOPLIFTING: CONTROL AND INVESTIGATION By Melencio
S. Faustino I. Introduction Recent data on shoplifting incident in
m...
Election Law
ELECTION LAW SUFFRAGE The right to vote in the
election of officers chosen by the people and in the determination o...
Follow by Email



Simple template. Template images by luoman. Powered by Blogger.