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Asiatrust Development Bank v CIR

G.R. Nos. 201530 & 201680-81


April 19, 2017
J. Del Castillo

FACTS:
Petitioner Asiatrust Dev’t Bank, Inc. received 3 Formal Letters of Demand (FLD) with Assessment
Notices for deficiency revenue taxes in amounts of 131.9M, 83M and 144M for the years 1996-1998
in 2000.
Asiatrust protested the assessment notices. Due to the inaction of the CIR on the protest, Asiatrust
filed before the CTA a Petition for Review7 docketed as CTA Case No. 6209 praying for the
cancellation of the tax assessments for deficiency income tax, documentary stamp tax (DST) -
regular, DST - industry issue, final withholding tax, expanded withholding tax, and fringe benefits tax
issued against it by the CIR.
In 2001, new assessment notices for deficiency taxes in the amounts of 112M, 53M, 133M covering
the same years were issued. On the same day, Asiatrust partially paid said deficiency tax assessments
thus leaving the balances of 110M, 49M, and 124M.
CIR approved Asiatrust’s offer of compromise of DST and manifested during trial, that Asiatrust
availed of a tax abatement program fro its deficiency final withholding tax- trust assessments for
fiscal years ending ’96 and ’98 and that it paid 4.1M and 6M for the fiscal years respectively. It
availed of the provisions of the Tax Amnesty Law of 2007.

CTA division partially granted the petition declaring void the ’96 assessment for having been issued
beyond the 3year prescriptive period but affirmed the DST deficiency due to failure of Asiatrust to
present evidence. Total tax deficiency remained at 142M. On MR, CTA Division rendered an
Amended Decision finding that Asiatrust is entitled to the immunities and privileges granted in the
Tax Amnesty Law. However, it reiterated its ruling that in the absence of a termination letter from
the BIR, it cannot consider Asiatrust's availment of the Tax Abatement Program. Partial
reconsideration and MR was denied. CTA En Banc denied appeal of the BIR for failure to file a prior
MR.

ISSUE:
Whether or not Asiatrust correctly availed of the Tax Abatement?

HELD:
No, the petition is DENIED.

RATIO:

An application for tax abatement is considered approved only upon the issuance of a termination.
RR No. 15-06 prescribes the guidelines on the implementation of the one-time administrative
abatement of all penalties/surcharges and interest on delinquent accounts and assessments. Sec 4
provides that a taxpayer may avail of the program by:
1. Paying 100% of the basic tax assessment with an accredited agent bank or in its absence,
the revenue collection/ deputized treasurer of the RDO.
2. Penalties / surcharge and interest shall be cancelled by the concerned BIR Office
following existing rules and procedures.
3. The docket of the case shall be forwarded to the Office of the Commissioner, thru the
Deputy Commissioner for Operations Group for the issuance of a Termination
letter.
Without a termination letter, a tax assessment cannot be considered closed and terminated. Asiatrust
failed to present such letter to the BIR.
ISSUE:
Whether or not the CTA En Banc correctly denied appeal?

HELD:
Yes, the petition is GRANTED.

RATIO:
Section 1, Rule 8 of the Revised Rules of the CTA states:
“the petition for review of a decision or resolution of the Court in Division must be preceded by the
filing of a timely motion for reconsideration or new trial with the Division.”
Thus, in order for the CTA En Banc to take cognizance of an appeal via a petition for review, a timely
motion for reconsideration or new trial must first be filed with the CTA Division that issued the
assailed decision or resolution. Failure to do so is a ground for the dismissal of the appeal as the
word "must" indicates that the filing of a prior motion is mandatory, and not merely directory.

CASE DOCTRINE:
Q: Whether a letter of termination is necessary in abatement cases?

A: Yes. RR No. 15-06 prescribes the guidelines on the implementation of the one-time administrative
abatement of all penalties/surcharges and interest on delinquent accounts and assessments. Sec 4
provides that a taxpayer may avail of the program by:
1. Paying 100% of the basic tax assessment with an accredited agent bank or in its absence,
the revenue collection/ deputized treasurer of the RDO.
2. Penalties / surcharge and interest shall be cancelled by the concerned BIR Office
following existing rules and procedures.
3. The docket of the case shall be forwarded to the Office of the Commissioner, thru the
Deputy Commissioner for Operations Group for the issuance of a Termination
letter.
Without a termination letter, a tax assessment cannot be considered closed and terminated. Asiatrust
failed to present such letter to the BIR. (Asiatrust Development Bank v CIR, G.R. Nos. 201530 &
201680-81, April 19, 2017)

Q: Whether a prior MR/ Motion for new trial is necessary for the CTA En Banc to take cognizance
of an appeal?

A: Yes. Section 1, Rule 8 of the Revised Rules of the CTA states:


“the petition for review of a decision or resolution of the Court in Division must be preceded by the
filing of a timely motion for reconsideration or new trial with the Division.” (Asiatrust Development
Bank v CIR, G.R. Nos. 201530 & 201680-81, April 19, 2017)