Fuerte, Ma. Florence R.

JD 2 – PLM Law
Taxation II – Atty. Peter M. Manzano

1. Rohm Apollo Semiconductor Phil. versus

Commissioner of Internal Revenue
CTA E.B. No. 59 (CTA Case No. 6534) June 22, 2005
En Banc, Acosta P.J.

Facts: Rohm Apollo is a domestic corporation registered with the Securities and
Exchange Commission and Philippine Economic Zone Authority as an Ecozone
Export Enterprise. Further, it is registered with the Bureau of Internal Revenue as
a value added taxpayer.

On December 11, 2000, Rohm Apollo filed with the BIR an application for the
refund or credit of its unutilized input taxes incurred in July and August of 2000.
The BIR had not acted on the claim. Under the belief that it had a period of
two-years from September 30, 2000 (the end of the quarter when the
transactions were made) to file a judicial claim, taxpayer filed a petition for
review before the CTA on September 11, 2002.

Issue: Whether the right of Rohm Apollo to institute a judicial claim to CTA
already lapsed.

Decision: In deciding against the taxpayer, the Court reiterated its earlier
decisions that it is only the administrative claim that must be filed within the
two-year prescriptive period and that the 30-day period always applies,
whether there is denial or inaction on the part of the Commissioner.

Thus, from the filing of the administrative claim for refund on December 11,
2000, the BIR had a period of 120 days or until April 10, 2011 to act on the claim.
Since the BIR failed to do so, the taxpayer should have then treated the
inaction as denial of its claim. Taxpayer would then have had 30 days or until
May 10, 2001 to file a judicial claim with the CTA. Since the judicial claim was
filed only on September 11, 2002, the judicial claim was thus filed late. As the
30-day period is mandatory and jurisdictional, the CTA had no jurisdiction over
the taxpayer’s refund claim.

Petition for Review is DENIED due course for lack of merit.

2. Bank of the Philippine Islands versus Commissioner of Internal Revenue

 CTA Case No. 6593, August 31, 2004
Castañeda, J.

Facts: Petition seeks for the cancellation and withdrawal of the allegedly
erroneous deficiency documentary stamp tax assessment for its swap
transactions in the amount of Php24, 587,473.63 issued by CIR covering the
taxable years 1982-1986.

CIR issued a Pre-assessment notice (PAN) for 1982-1986 deficiency taxes. BPI
requested for the details of the amounts. Respondent issued
assessment/demand notices in which the petitioner protested. Respondent
issued a final decision ordering BPI to pay the amount of Php24, 587,473.63
within 30 days.

Issue: Whether collection for the deficiency of documentary stamp tax has
already prescribed

Decision: The running of the statute of limitations, which is the period during
which the commissioner is prohibited from making an assessment or beginning
distraint or levy or a proceeding in court, and for sixty days thereafter, may be
suspended under the following circumstances:
1. When taxpayer requests for a reinvestigation which is granted by the
commissioner.
2. Taxpayer cannot be located in the address given by him in the return
filed.
3. Warrant of distraint or levy is duly served upon the taxpayer and no
property is located.
4. Taxpayer is out of the Philippines.

Although the protest letters made in behalf of BPI by its counsel did not
categorically state or use the words “reinvestigation and reconsideration," the
same are to be treated as such based on the evidence on record which the
respondent granted the same. Thus, the prescriptive period is suspended and
only upon receipt by the BPI of the Decision on the protest that the period to
collect started to run again.

In sum, petitioner is still liable to pay the deficiency documentary stamp tax.
Petition is hereby DENIED for lack of merit.

3. Pier 8 Arrastre & Stevedoring versus Commissioner of Internal Revenue

 CTA Case No. 3789, August 1, 1991
Roaquin, J.

Facts: This is an appeal by Pier 8 from the denial of its protest against a
deficiency assessment on November 25, 1983 for income and business taxes
for tax year 1978. Petitioner protested the assessment on February 21, 1984
which was denied by the respondent on March 29, 1984, and received by
petitioner on May 23, 1984. The deficiency income tax arose from the
disallowance of certain claimed deductions or portions thereof.

Respondent claims that petitioner is estopped from assailing the assessment

for failure to present evidence during pre-assessment level. Respondent
considered it a waiver and the tax assessment would then be finalized without
any further notice to petitioner.

Issue: Whether non-presentment of evidence during pre-assessment level

constitutes a waiver to file a protest during final assessment.

Decision: The court disagrees with the respondent because it cannot be said
that the “proposed assessment” made pursuant to the investigation then
being conducted became the final assessment. In fact, assessment made at
that point is different from the final assessment on November 1983.

There being a different assessment, petitioner cannot be denied of the

opportunity to object to the new assessment. Petitioner even requested a
reinvestigation and in the absence of notice of denial of the respondent,
petitioner can safely assume that said request is being acted upon.

Based on Section 319-A of the 1977 Tax Code, failure of the taxpayer to
respond to the pre-assessment notice shall entitle the CIR to issue an
assessment based on his findings. However, the taxpayer is still entitled to file a
protest against the final assessment issued by filling a request for
reconsideration or reinvestigation, and in adverse decision of CIR on such
protest, petitioner has further remedy of appeal to CTA.

However, having failed to sustain the burden of demonstrating that the

respondent was wrong, the deficiency assessment is accordingly upheld. Thus,
the court ordered the petitioner to pay the subjected amount.

4. Commissioner of Internal Revenue versus Menguito

G.R. No. 167560, Sept. 17, 2008
 Third Division, Austria-Martinez, J.

Facts: Dominador Menguito and his wife are the owners of Copper Kettle
Catering Services, Inc. (CKCSI). They also operate several restaurant branches
in the Philippines. One such branch was the Copper Kettle Cafeteria Specialist
(CKCS) in Club John Hay, Baguio City. The branch was registered as a sole
proprietorship. In September 1997, a formal assessment notice (FAN) was issued
against the spouses and they were adjudged to pay P34 million in deficiency
taxes for the years 1991 to 1993. The Bureau of Internal Revenue found that in
order for CKCS to operate in Club John Hay, a contract was entered into by
CKCSI and Club John Hay; hence, CKCS and CKCSI are one and the same.

Mrs. Menguito then sent a letter to the BIR acknowledging receipt of the
assessment notice. She asked for more time to sort the issue. Later, when
Menguito eventually filed a protest, he denied receiving the FAN; that the FAN
was addressed to the wrong person because it was addressed to CKCSI not
CKCS.

Issue: Whether due process was observed by the Commissioner of Internal

Revenue.

Decision: Yes, The veil of corporate fiction is pierced because it was proven
that CKCSI is actively managing CKCS. Further, CKCS is more known as CKCSI.
More importantly, Menguito and his wife are in estoppel because they already
acknowledged the receipt of the FAN through the letter sent by Mrs. Menguito
to the BIR. They cannot later on deny the receipt of the FAN. Since Menguito
did not legally deny the receipt of the FAN, the presumption that he actually
received it still subsists. Further, based on the records, Menguito, in the
stipulation of facts, acknowledged the receipt of the FAN.

Anent the issue of the non-issuance of the PAN, the same is not vital to due
process. The Supreme Court ruled that the strict requirement of proving that an
assessment is sent and received by the taxpayer is only applicable to FANs and
to PANs. The issuance of a valid formal assessment is a substantive prerequisite
to tax collection, for it contains not only a computation of tax liabilities but also
a demand for payment within a prescribed period, thereby signaling the time
when penalties and interests begin to accrue against the taxpayer and
enabling the latter to determine his remedies therefor. A PAN or a post-
assessment notice does not bear the gravity of a FAN. Neither notice contains
a declaration of the tax liability of the taxpayer or a demand for payment
thereof. Hence, the lack of such notices inflicts no prejudice on the taxpayer
for as long as the latter is properly served a formal assessment notice.
5. Commissioner of Internal Revenue versus Metro Star Superama
G.R. No. 185371, Dec. 8, 2010
Second Division, Mendoza, J.
Facts: In January 2001, a revenue officer was authorized to examine the books
of accounts of Metro Star Superama, Inc. In April 2002, after the audit review,
the revenue district officer issued a formal assessment notice against Metro Star
advising the latter that it is liable to pay P292,874.16 in deficiency taxes. Metro
Star assailed the issuance of the formal assessment notice as it averred that
due process was not observed when it was not issued a pre-assessment notice.
Nevertheless, the Commissioner of Internal Revenue authorized the issuance
of a Warrant of Distraint and/or Levy against the properties of Metro Star.

Metro Star then appealed to the Court of Tax Appeals (CTA Case No. 7169).
The CTA ruled in favor of Metro Star.

Issue: Whether due process was observed in the issuance of the formal
assessment notice against Metro Star.

Decision: No, It is true that there is a presumption that the tax assessment was
duly issued. However, this presumption is disregarded if the taxpayer denies
ever having received a tax assessment from the Bureau of Internal Revenue.
In such cases, it is incumbent upon the BIR to prove by competent evidence
that such notice was indeed received by the addressee-taxpayer. The onus
probandi was shifted to the BIR to prove by contrary evidence that the Metro
Star received the assessment in the due course of mail. In the case at bar, the
CIR merely alleged that Metro Star received the pre-assessment notice in
January 2002. The CIR could have simply presented the registry receipt or the
certification from the postmaster that it mailed the pre-assessment notice, but
failed. Neither did it offer any explanation on why it failed to comply with the
requirement of service of the pre-assessment notice. The Supreme Court
emphasized that the sending of a pre-assessment notice is part of the due
process requirement in the issuance of a deficiency tax assessment,” the
absence of which renders nugatory any assessment made by the tax
authorities.

Taxes are the lifeblood of the government and so should be collected without
unnecessary hindrance. But even so, it is a requirement in all democratic
regimes that it be exercised reasonably and in accordance with the
prescribed procedure.

6. Commissioner of Internal Revenue versus Azucena Reyes

G.R. No. 159694 & 163581, Jan. 27, 2006
First Division, Panganiban, C.J.

Facts: In 1993, Maria Tancino died leaving behind an estate worth P32 million.
In 1997, a tax audit was conducted on the estate. Meanwhile, the National
Internal Revenue Code (NIRC) of 1997 was passed. Eventually in 1998, the
estate was issued a final assessment notice (FAN) demanding the estate to
pay P14.9 million in taxes inclusive of surcharge and interest; the estate’s
liability was based on Section 229 of the [old] Tax Code. Azucena Reyes, one
of the heirs, protested the FAN. The Commissioner of Internal Revenue (CIR)
nevertheless issued a warrant of distraint and/or levy. Reyes again protested
the warrant but in March 1999, she offered a compromise and was willing to
pay P1 million in taxes. Her offer was denied. She continued to work on another
compromise but was eventually denied. The case reached the Court of Tax
Appeals where Reyes was also denied. In the Court of Appeals, Reyes received
a favorable judgment.

Issue: Whether or not the formal assessment notice is valid.

Held: No. The NIRC of 1997 was already in effect when the FAN was issued.
Under Section 228 of the NIRC, taxpayers shall be informed in writing of the law
and the facts on which the assessment is made: otherwise, the assessment shall
be void. In the case at bar, the FAN merely stated the amount of liability to be
shouldered by the estate and the law upon which such liability is based.
However, the estate was not informed in writing of the facts on which the
assessment of estate taxes had been made. The estate was merely informed
of the findings of the CIR. Section 228 of the NIRC being remedial in nature can
be applied retroactively even though the tax investigation was conducted
prior to the law’s passage. Consequently, the invalid FAN cannot be a basis of
a compromise, any proceeding emanating from the invalid FAN is void
including the issuance of the warrant of distraint and/or levy.

7. Commissioner of Internal Revenue versus

Enron Subic Power Corporation
G.R. No. 166387, Jan. 19, 2009
First Division, Corona, J.

Facts: In 1997, Enron received a pre-assessment notice from the Bureau of

Internal Revenue (BIR). Enron allegedly had a tax deficiency of P2.8 million for
the year 1996. Enron filed a protest. In 1999, Enron received a final assessment
notice (FAN) from the BIR for the same amount of tax deficiency.

Enron however assailed the FAN because according to Enron the FAN is not
compliant with Section 228 of the NIRC which provides that the legal and
factual bases of the assessment must be contained in the FAN. The FAN issued
to Enron only contained the computation of its alleged tax liability.

The CIR admitted that the FAN did not contain the legal and factual bases of
the assessment however, the CIR insisted that the same has been substantially
complied with already because during the pre-assessment stage, the
representative of Enron has been advised of the said factual and legal bases
of the assessment.

Issue: Whether or not there is a valid final assessment notice issued to Enron.

Decision: No, A notice of assessment is a declaration of deficiency taxes issued

to a taxpayer who fails to respond to a Pre-Assessment Notice (PAN) within the
prescribed period of time, or whose reply to the PAN was found to be without
merit. The Notice of Assessment shall inform the taxpayer of this fact, and that
the report of investigation submitted by the Revenue Officer conducting the
audit shall be given due course.

The formal letter of demand calling for payment of the taxpayer’s deficiency
tax or taxes shall state the fact, the law, rules and regulations or jurisprudence
on which the assessment is based, otherwise the formal letter of demand and
the notice of assessment shall be void. The word “shall” is mandatory. The law
requires that the legal and factual bases of the assessment be stated in the
formal letter of demand and assessment notice. It cannot be substituted by
other notices or advisories issued or delivered to the taxpayer during the
preliminary stage.

CIR merely issued a formal assessment and indicated therein the supposed tax,
surcharge, interest and compromise penalty due thereon. Final Assessment
Notice did not provide Enron with the written bases of the law and facts on
which the subject assessment is based. CIR did not bother to explain how it
arrived at such an assessment. More so, they failed to mention the specific
provision of the Tax Code or rules and regulations which were not complied
with by Enron.
8. Australasia Cylinder Corporation versus
Commissioner of Internal Revenue
CTA Case No. 6014, Aug. 14, 2002
Castañeda, J.

Facts: Petitioner’s books of accounts were examined by the Revenue District

Office, after which petitioner was issued deficiency assessment for income tax.
Further, it issued Final Assessment Notice and Demand Letter.
Petitioner protested the assessment and claims that person who issued had no
legal authority to do so. Consequently, the assessment is procedurally and
substantially defective, thus invalid.

Issues: (1) Whether Revenue District Officer who issued the assessment notice
has authority to do so
(2) Whether the assessment is void for failure to inform the petitioner of the law
and the facts on which it is made

Decision: (1) According to Sec 6(A) of 1997 Tax Code, Commissioner or his duly
authorized representative has the power to make assessments and prescribe
additional requirements for tax administration and enforcement. Court ruled
that the Chief of Assessment Division who issued the assessment notice is a duly
authorized representative of the Commissioner.

(2) Court ruled that although Sec 228 of the Tax Code specifically requires that
the taxpayer be informed in writing of the laws and facts on which the
assessment is made, the same article did not specifically require that it must be
embodied in the assessment notice itself.

However, it shows that the demand letter, in which the respondent asserts to
contain necessary information, was devoid of factual and legal bases that
would enlighten anyone on why and how the assessment was reached. The
computation made by the respondent lacked any support and did not state
the basis either in fact or in law for the disallowances made.

Failure to comply with the requirements of Sec 228 of the Tax Code invalidates
the assessment notice issued.

9. Abbot Laboratories versus Commissioner of Internal Revenue

CTA Case No. 5718, Feb. 16, 2001

Facts: Petitioner filed its Corporate Annual Income Tax Return on March 15,
1995. On March 23 of the same year, petitioner received from the respondent
an Assessment Notice demanding payment for alleged deficiency income tax
liabilities for 1994 in the amount of Php19,901,770.75. Petitioner thereafter filed
a protest with BIR contesting said assessment based on non-compliance with
the requirements of Section 228 of Tax Code that “taxpayer shall be informed
in writing of the law and the facts o which the assessment is made”

Respondent contends that Sec 228 of the Tax Code must be liberally applied
in their favor.

Issues: Whether, in issuing the assessment notice against the petitioner,

respondent violated the requirements of Sec. 228 which makes it to be void

Decision: Court ruled in the affirmative. It must be borne in mind that taxes are
burdens, hence, of the State expect its taxpayers to observe fairness and
honesty in paying their taxes, so must it apply the same standard against itself.
Respondent has the bounden duty to inform the taxpayer not only of the law
but more importantly, the circumstances supporting the assessment. Taxation
must be exercised reasonably and in accordance with the prescribed
procedure.

Presumption of correctness and validity of an assessment holds true only if such

assessment is based on actual facts and not on mere presumptions.
Unfortunately, records show that the assessment did not pass this test as the
Respondent apparently expected the Court to conduct its own investigation
in his behalf.

Assessment against petitioner for alleged deficiency income tax is deemed

cancelled and withdrawn.

10. PNZ Marketing versus Commissioner of Internal Revenue

CTA Case No. 5726, Dec. 14, 2001
Saga, J.

Facts: Petitioner received formal assessment notice and demand letter from
herein respondent stating therein petitioner’s alleged deficiency income tax
liability for the year 1994 in the total amount of Php678,441.00. Petitioner duly
filed with BIR its protest, reiterating its disagreement to the subject income tax
assessment on the ground that it is in violation with Sec 228 of the Tax Code
requiring that the law and the facts upon which the assessment is made should
be clearly stated. As no action was undertaken by the respondent, petitioner
filed an appeal with CTA to toll the prescriptive period.

Issues: Whether the subject income tax assessment is void for failing to comply
with the requirements under Section 228 of the tax Code.

Decision: Sec 228 requires the respondent to inform the taxpayer in writing the
taxpayer in writing of the laws and the facts on which the assessment is made,
otherwise, assessment shall be void. It is incumbent upon the respondent to
show clearly the laws and the factual bases which led him to issue the said
deficiency income tax assessment in the first place. The strictness of this rule
runs parallel to the due process clause as it obliges the respondent not only to
law down the law from which the assessment is based but more importantly,
the surrounding circumstances supporting the assessment. For it is believed
that it is only through a detailed appraisal of its bases that the taxpayer may
be able to dispute the imposition or agree with it.

It shows on the records a successful attempt on respondent to comply with the

rules. The assessment notice, while vague at first glance is subsequently cured
by the demand letter which shows the legal and factual basis relied upon by
the respondent in issuing the assessment. The demand letter, as thus worded
contains the reasons why a deficiency income tax assessment was issued
against the petitioner. Court held that this explanation is sufficient to comply
with the requirements os Sec 228.

Fortunately, the presumption in favor of the correctness of the assessment has

been overcome by the Petitioner. It was established that the assessment
notice and demand letter. Neither did it submit any BIR records, which would
sufficiently substantiate the assessment.

Thus, the court ruled that the assessment issued is deemed cancelled and
withdrawn.

11. Sevilla versus Commissioner of Internal Revenue

CTA Case No. 6211, Oct. 4, 2004
Castañeda, J.

Facts: In 1989, Gerry Sevilla et al purchased 50,000 shares of stocks of the East
Esteban Realty Corporation for a total of P5.9 million. In 1993, Sevilla et al sold
the same 50,000 shares of stocks for P62 million. However, in paying the capital
gains tax therefor, Sevilla et al declared that they purchased the said stocks
for P59 million and so they only earned P3 million (note: these figures are
rounded for purposes of this digest). In September 1998, tax examiners were
able to determine that there was a deficiency in the tax paid for the sale of
said shares of stocks in 1993. In January 1999, the Commissioner of Internal
Revenue (CIR) ordered Gerry Sevilla et al to explain. In March 2000, the CIR
issued formal assessment notices (FAN) against Sevilla et al ordering them to
pay P33 million in deficiency taxes inclusive of penalties, surcharges, and
interests.

Sevilla et al assailed the FANs as they alleged that assuming that there was
really fraud on their part in the filing of their income tax returns, they can no
longer be made liable because the right of the government to make an
assessment has already prescribed. They insist that although in fraud cases the
government has 10 years from the discovery of fraud to make an assessment
(abnormal assessment) such discovery should have been made within three
years from the date of the filing of their returns. It is their theory that in order for
the ten year period to be applied, the discover should have been made within
three years from their filing of their return; that they filed their return in 1993; that
as such, that discovery of the fraud in 1998 was already made out of time; that
the subsequent assessment in 2000 is likewise out of time. In short, Sevilla et al
insist that what’s applicable is still the three year prescriptive period (normal
assessment).

Issue: Whether assessment is void for lack of due process

Decision: No, There is no legal basis for their contention. Nowhere in the law
does it state that the discovery of the fraud (or falsity or omission) should be
made within three years from the filing of the return (or last day of filing thereof).
In fact the law (Section 222 of the National Internal Revenue Code) is clear
that in case of a false or fraudulent return with intent to evade tax, the tax may
be assessed at any time within ten years after the discovery of falsity or fraud.
It does not say that it should be made within three years from the filing of the
return. The fraud was discovered in 1998 hence the making of the assessment
by the government in 2000 is well within the prescriptive period. Fraud is duly
proven in this case. Sevilla et al deliberately overstated the acquisition price of
said shares of stocks in an effort to reduce the capital gains tax. Such is a willful
evasion of their tax obligation.

12. FMF Development Corporation versus

Commissioner of Internal Revenue
CTA Case No. 6153, March 20, 2003
Castañeda, J.

Facts: FMF filed its Corporate Annual Income Tax Return for taxable year 1995
and declared a loss. BIR sent FMF pre-assessment notices informing it of its
alleged tax liabilities. FMF filed a protest against these notices with the BIR and
requested for a reconsideration/reinvestigation.

Petitioner was invited to an informal conference and was required to execute

a Waiver of the Statute of Limitations as requirement for reinvestigation. On
February 9, 1999, FMF President Enrique Fernandez executed a waiver of the
three-year prescriptive period for the BIR to assess internal revenue taxes,
hence extending the assessment period until October 31, 1999. The waiver was
accepted and signed by Revenue District Officer.

On October 18, 1999, FMF received amended pre-assessment notices from the
BIR by which they immediately filed a protest on November 3, 1999 but on the
same day, it received BIR's Demand Letter and Assessment Notice reflecting
FMF's alleged deficiency taxes. On November 24, 1999, FMF filed a letter of
protest on the assessment invoking the defense of prescription by reason of the
invalidity of the waiver. In its reply, the BIR insisted that the waiver is valid
because it was signed by the RDO, a duly authorized representative of
petitioner.

Issues: (1) Whether the Assessment notices are valid and in compliance with
Sec 228 of the Tax Code; and (2) Whether the Assessment Notice is already
barred by prescription

Decision: (1) Yes, the court ruled that it is sufficient to inform the petitioner of
the factual and legal basis of the assessment issued. Prior to the issuance of
the same, several informal conferences were held to afford the taxpayer the
opportunity to present his side and be informed of the deficiency assessment.
Thus, petitioner had prior knowledge of the cause of disallowances and/or
unaccounted income. The intrinsic validity of the assessment notice should be
given more weight rather than its form or extrinsic features.

(2) Yes, court ruled that right of respondent to assess petitioner had lapsed,
there being no valid extension of the three-year period. In order to have a valid
waiver, date of the acceptance of the Bureau should be indicated. Both date
of the execution by the taxpayer and the date of acceptance by the Bureau
should be before the expiration of the period of prescription. In the case at
bar, the subject waiver failed to state the date of acceptance by the
respondent. Thus, Assessment Notice issued is considered cancelled and
withdrawn.
13. Subic Power Corporation versus Commissioner of Internal Revenue
CTA Case No. 6059, May 8, 2003

Facts: This case involves tax deficiency assessments in the aggregate amount
of Php70,920,718.00, compromising of deficiency 5% income tax in the amount
of Php3,335,543.00 and deficiency expanded withholding tax in the amount of
Php67,585,175.00 covering the taxable year 1994.

Petitioner alleges that the assessments are void for failure on the part of the
respondent to provide the written bases of the law and the facts on which they
are made. Both the Preliminary assessment notice (PAN) and the final
assessment notices sent to the petitioner merely indicated the alleged basic
tax due, surcharge, interest and penalties thereon without any explanation as
to how the amounts were arrived at.

Respondent counters that prior to the issuance of the assessments, petitioner

was notified of the proposed deficiency assessments and the basis thereof
which petitioner protested. Hence, the requirement under Section 228 is
deemed to have been complied with.

Issues: Whether the requirement under Section 228 of the Tax Code, that the
taxpayer shall be informed of the law and the facts on which assessment is
made, has been compiled with

Decision: Court ruled that the assessment fully complied with Sec. 228 during
the preliminary stage, thus, the assessment for 5% deficiency tax is valid.

The respondent may not have have provided the specific provisions of law as
bases for the assessment but the law and/or regulation has a specific provision
for the withholding of 1% contractor’s tax and it also has particular provision for
the withholding of 5% tax on interest on foreign loans and 5% tax on
professional fees. By indicating the kind of taxes petitioner should have
withheld was enough. While the Court ruled that the mere filing of a protest
letter does not automatically mean that the requirement of Sec. 228 has not
been violated, if the taxpayer is able to intelligently argue its case and
elucidate the reasons for the assessment, then it cannot contradict itself by
asserting it was not informed.

Further, the requirement that an assessment should be in “writing” does not

exclusively mean written words. Figures are also writings and if the numerical
presentation is understandable enough, then there is not reason why we
should reject the same as adequate compliance with the law. In whatever
form, as ling as the taxpayer is informed of how the assessment was arrived at,
Sec. 228 has not been violated.

14. Phil. Mining Service Corporation versus

Commissioner of Internal Revenue
CTA Case No. 5725, July 25, 2002

Facts: The Petition for Review is an appeal for the cancellation and withdrawal
of the deficiency income tax, value-added tax and excise tax assessments
issued by the respondent against petitioner for the fiscal year ended April 30,
1995 in the aggregate amount of Php130,305,575.00.

Petitioner received from the respondent various assessment notices, all dated
April 06, 1998, assessing the petitioner for alleged deficiency income tax, value-
added tax, and excise tax for fiscal year ending April 30, 1995, without any
showing as to how said amounts were arrived and computed. Petitioner filed
a protest letter in such ground.

Issues: Whether there was non-compliance with Section 228 of the 1997 Tax
Code in the issuance of the assessments resulting to violation of petitioner’s
right to due process.

Decision: Court ruled that the requirement under Sec. 228 has been sufficiently
been complied with, thus, the assessment were valid.

Sec 228 of the 1997 Tax Code provides that, “The taxpayer shall be informed
on writing of the law and the facts on which the assessment is made, otherwise,
the assessment shall be void.” The taxpayer needs to know the nature of the
examiner’s findings in order to be able to refute the same and proved an
explanation regarding the proposed assessments.

Based on the facts, BIR sent a letter to the petitioner informing the latter that a
report of investigation on its income and business tax returns had been
submitted to RDO Arboleda for appropriate action. Attached thereto were the
report of investigation and the memorandum of RDO Meija recommending
the issuance of an assessment notice for alleged deficiency taxes. It includes
a detailed findings made by him, the facts and the law on which the
recommended assessments were based. The recommended assessments
were basically the same amounts that were finally assessed against the
petitioner. They differed only because of the period covered for the imposition
of interest charges. Moreover, the petitioner was able to effectively contest
the subject assessments and submit documents to support its claim that the
assessments were erroneous. Indeed, at the time the assessments were issued,
petitioner knew very well the law and the facts on which they were based,
thus, Sec. 228 were fully complied with.

15. Pilipinas Shell Petrolium Corporation versus

Commissioner of Internal Revenue
G.R. No. 172598, December 21, 2007

Facts: On April 22, 1998, the BIR sent a collection letter to PSPC for alleged
deficiency excise tax liabilities of PhP1,705,028,008.06 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 TDMs of both the Center and BIR, with the latter
also issuing the corresponding ATAPETs.
PSPC claims respondent violated RR 12-99 since no pre-assessment notice was
issued to PSPC before the November 15, 1999 assessment. Moreover, PSPC
argues that the November 15, 1999 assessment effectively deprived it of its
statutory right to protest the pre-assessment within 30 days from receipt of the
disputed assessment letter.

Issues: Whether or not the assessment dated 15 November 1999 is void

considering that it failed to comply with the statutory as well as regulatory
requirements in the issuance of assessments

Decision: Court ruled that the due process have indeed been violated. The
facts show that PSPC was not accorded due process before the assessment
was levied on it. Commissioner did not issue a notice for informal conference
and a preliminary assessment notice, as required. PSPC was merely informed
that it is liable for the amount of excise taxes it declared in its excise tax returns
for 1992 and 1994 to 1997 covered by the subject TCCs via the formal letter of
demand and assessment notice. For being formally defective, the November
15, 1999 formal letter of demand and assessment notice is void.

Paragraph 3.1.4 of Sec. 3, RR 12-99 pertinently provides, “The formal letter of

demand and assessment notice shall be issued by the Commissioner or his duly
authorized representative. The letter of demand calling for payment of the
taxpayer’s deficiency tax or taxes shall state the facts, the law, rules and
regulations, or jurisprudence on which the assessment is based, otherwise, the
formal letter of demand and assessment notice shall be void. The same shall
be sent to the taxpayer only by registered mail or by personal delivery.”

In short, respondent merely relied on the findings of the Center which did not
give PSPC ample opportunity to air its side. While PSPC indeed protested the
formal assessment, such does not denigrate the fact that it was deprived of
statutory and procedural due process to contest the assessment before it was
issued.