BPI v.
CIR Ruling:
Facts:
 CIR issued a PAN to BPI. It stated that BPI have
deficiency taxes for 1982-1986.
 BPI, in a letter, requested for the details of the alleged
deficiency taxes.
 CIR issued assessment/demand notices for deficiency
withholding tax and DST for 1982-1986.
 BPI filed a protest and thereafter a supplemental
protest.
 BPI requested for an opportunity to present or submit
additional documentation in connection with the
reinvestigation of the assessment.
 BPI executed several Waivers of the Statutes of
Limitations.
 CIR issued a final decision on BPI’s protest. It ordered
the withdrawal and cancellation of the deficiency
withholding tax assessment. However, the deficiency
DST assessment was reiterated.
o It ordered BPI to pay the amount within 30 days from
receipt of such order.
 BPI filed a petition for review before the CTA.
 CTA denied.
 BPI filed its Petition for Review with the CTA En Banc.
 The CTA ruled that BPI’s protest and supplemental
protest should be considered requests for
reinvestigation, which tolled the prescriptive period
provided by law to collect a tax deficiency by distraint,
levy, or court proceedings.
 BPI filed a Petition for Review with the SC.
o The government’s right to collect the DST had
already prescribed because the CIR failed to issue
any reply granting BPI’s request for reinvestigation.
It was only after the lapse of 13 years that the CIR
acted on the request, ordering BPI to pay deficiency
DST.
o CIR was not precluded from collecting the
deficiency within 3 years from the time the notice
of assessment was issued or even until the
expiration of the last waiver of the statute of
limitations signed by BPI.
 OSG, on behalf of CIR, asserted that the prescriptive
period was tolled by the protest letters filed by BPI,
which were granted and acted upon by the CIR. It was
only upon BPI’s receipt of the final decision that the
period to collect commenced to run again.
Issue:
Whether the collection of the deficiency DST is barred by
prescription. – YES.
The CIR had 3 years from the time he issued assessment
notices to BPI within which to collect the deficiency DST.
In order to suspend the running of the prescriptive periods
for assessment and collection, the request for
reinvestigation must be granted by the CIR. The burden of
proof that the request for reinvestigation had been actually
granted shall be on the CIR. There is nothing in the records
of this case which indicates, expressly or impliedly, that the
CIR had granted the request for reinvestigation filed by BPI.
It was only in his comment to the present petition that the
CIR argued for the first time that he had granted the request
for reinvestigation.
There is no evidence in this case that the CIR actually
conducted a reinvestigation upon the request of BPI or that
the latter was made aware of the action taken on its request.
Hence, there is no basis for the CTA’s ruling that the filing of
the request for reinvestigation tolled the running of the
prescriptive period for collecting the tax deficiency.
Neither did the waiver of the statute of limitations signed by
BPI suspend the prescriptive period. The CIR himself
contends that the waiver is void as it shows no date of
acceptance.
The records of this case do not disclose any effort on the part
of the BIR to collect the deficiency tax after the expiration of
the waiver until 8 years thereafter when it finally issued a
decision on the protest.
BPI’s letters of protest and submission of additional
documents, which were never acted upon, much less
granted, cannot be said to have persuaded the CIR to
postpone the collection of the deficiency DST.
The inordinate delay of the CIR in acting upon and resolving
the request for reinvestigation filed by BPI and in collecting
the DST allegedly due from the latter had resulted in the
prescription of the government’s right to collect the
deficiency.
RCBC v. CIR hence the disputed assessment became final, demandable and
executory. Thereafter, RCBC filed with the CTA a petition for
Facts:
relief from judgment. However, it failed to raise the issue of
 RCBC filed a petition for review with the CTA when its prescription therein. After its petition for relief from judgment
protest was not acted upon by the Commissioner. was denied by the CTA for lack of merit, RCBC filed a petition
 The CTA dismissed the petition because it was filed for review before the SC without raising the issue of
beyond the 30-day period following the lapse of 180 prescription. It is only in the instant MR that it raised the issue
days from RCBC’s submission of documents. of prescription, which is not allowed.
 RCBC filed a Petition for Relief from Judgment on the
ground of excusable negligence of its counsel’s
secretary who allegedly lost the CTA’s Resolution, which
then had become final and executory.
 The CTA Second Division denied the Petition for Relief
from Judgment.
 Upon denial of its MR, RCBC filed a Petition for Review
with the CTA En Banc, which affirmed the decision of the
CTA Second Division.
 RCBC filed a Petition for Review with the SC, which
affirmed the decision of the CTA En Banc.
 RCBC filed MR, reiterating its claim that its former
counsel’s failure to file petition for review with the CTA
within the reglementary period was excusable.

Issue:

Whether the assessment is already barred by prescription. –

The Court need not consider this issue as this cannot be raised
for the first time in this MR.

Ruling:

In the instant case, the Commissioner failed to act on the

disputed assessment within 180 days from date of submission
of documents. Thus, RCBC opted to file a petition for review
before the CTA. Unfortunately, the petition was filed out of
time (it was filed more than 30 days after the lapse of the 180-
day period). Consequently, it was dismissed by the CTA for late
filing. RCBC did not file a motion for reconsideration or make
an appeal; hence, the disputed assessment became final,
demandable and executory.

RCBC cannot now claim that the disputed assessment is not yet
final as it remained unacted upon by the Commissioner; that it
can still await the final decision of the Commissioner and
thereafter appeal the same to the CTA.

After availing the first option (filing a petition for review) which
was however filed out of time, RCBC cannot successfully resort
to the second option (awaiting the final decision of the
Commissioner and appealing the same to the CTA) on the
pretext that there is yet no final decision on the disputed
assessment because of the Commissioner’s inaction.

Lastly, RCBC is raising the issue of prescription for the first time
in the instant MR. Although the same was raised in the petition
for review, it was dismissed for late filing. No MR was filed
CIR v. KUDOS
Facts:
 Kudos filed its Annual ITR for the taxable year 1998.
 The BIR, pursuant to a Letter of Authority, served upon
Kudos 3 Notices of Presentation of Records.
 Kudos failed to comply with these notices.
 The BIR issued a Subpoena Duces Tecum.
 A review and audit of Kudos’ records then ensued.
 Kudos’ accountant executed 2 Waivers of the Defense
of Prescription.
 The BIR issued PAN for 1998 followed by a Formal Letter
of Demand with Assessment Notices.
 Kudos filed its protests.
 The BIR rendered a final decision requesting the
immediate payment of tax liabilities.
 Kudos filed a petition for review arguing that the BIR’s
right to assess taxes had prescribed.
 The CTA cancelled the assessment notices issued
against Kudo for having been issued beyond the
prescriptive period.
o The 1st waiver was incomplete and defective. As
such, the 3-year prescriptive period was not tolled
or extended and continued to run.
 The Assistant Commissioner is not the revenue
official authorized to sign the waiver, as the
case involves more than P1M. In this regard,
only the Commissioner is authorized.
 The date of acceptance was not indicated.
 The fact of receipt by the taxpayer of his file
copy was not indicated on the original copy.
 The CTA En Banc affirmed the cancellation of the
assessment notices.
o The Assistant Commissioner was authorized to sign
the waivers in tax fraud cases. The investigation of
the subject deficiency taxes was conducted by the
National Investigation Division, which was formerly
named the Tax Fraud Division. Thus, the subject
assessment is a tax fraud case.
o Nevertheless, the first waiver is still invalid based
on the 2nd and 3rd grounds stated by the CTA Second
Division.
o Assuming arguendo that the 1st waiver is valid, the
2nd waiver is invalid for being executed after the
expiration of the 1st period agreed upon.
Issue:
Whether the government’s right to assess the unpaid taxes of
Kudos had prescribed. – YES.
Ruling:
Due to the defects in the waivers, the period to assess or
collect taxes was not extended. Consequently, the
assessments were issued beyond the 3-year period and are
void.
Kudos’ waivers had the following infirmities:
1. They were executed by Kudos’ accountant without the
notarized authority to sign the waiver.
2. They did not indicate the date of acceptance.
3. The fact of receipt by Kudos of its file copy was not
indicated in the original copies of the waivers.
Requisites of a valid waiver:
1. The expiry date of the period agreed upon to
assess/collect the tax after the 3-year period of
prescription should be indicated.
2. The waiver must be signed by the taxpayer or his duly
authorized representative.
In case the authority is delegated by the taxpayer to a
representative, such delegation should be in writing and
duly notarized.
3. The waiver should be duly notarized.
4. The CIR or the revenue official authorized by him must
sign the waiver indicating that the BIR has accepted and
agreed to the waiver.
5. The BIR’s date of acceptance should be indicated.
6. Both the date of execution by the taxpayer and the date
of acceptance by the BIR should be before the
expiration of the period of prescription or before the
lapse of the period agreed upon in case a subsequent
agreement is executed.
7. Must be in 3 copies (original –attached to the docket;
copy for the taxpayer; copy for the BIR).
The fact of receipt by the taxpayer of his copy must be
indicated in the original copy.
There is no showing that Kudos made any request to persuade
the BIR to postpone the issuance of the assessments. The
doctrine of estoppel cannot be applied as an XPN to the statute
of limitations on the assessment of taxes considering that
there is a detailed procedure for the proper execution of the
waiver, which the BIR must strictly follow. The BIR cannot hide
behind the doctrine of estoppel to cover its failure to comply
with such procedure for the proper execution of the waiver.
As to the alleged delay of Kudos to furnish the BIR of the
required documents, this cannot be taken against Kudos.
Neither can the BIR use this as an excuse for issuing the
assessments beyond the 3-year period because with or
without the required documents, the CIR has the power to
make assessments based on the best evidence obtainable.
FISHWEALTH CANNING CORP. v. CIR 2005, hence, it was filed out of time. For MR of the denial of
the administrative protest does not toll the 30-day period to
Facts:
appeal to the CTA.
 The CIR, by Letter of Authority, ordered the examination On its contention that it has a meritorious case in view of the
of the internal revenue taxes for 1999 of Fishwealth. dismissal of the criminal case filed against it, the same fails. For
o The investigation disclosed that Fishwealth was the criminal complaint was instituted not to demand payment
liable for income tax, VAT, withholding tax but to penalize the taxpayer for violation of the Tax Code.
deficiencies and other miscellaneous deficiencies.
 Fishwealth eventually settled these obligations.
 CIR reinvestigated Fishwealth’s books and other records
covering the same period. It issued a subpoena duces
tecum requiring Fishwealth to submit its books.
 Fishwealth requested the cancellation of the subpoena
on the ground that the same set of documents had
previously been examined.
 As Fishwealth did not heed the subpoena, the CIR filed
a criminal complaint against it for violation of Secs. 5 (c)
and 266 of NIRC.
o The complaint was dismissed for insufficiency of
evidence.
 The CIR sent Fishwealth a FAN of income tax and VAT
deficiencies for 1999.
 Fishwealth contested this assessment by letter.
 The CIR issued a Final Decision on Disputed Assessment
denying Fishwealth’s letter of protest.
o It added that if Fishwealth disagreed, it may appeal
to the CTA within 30 days from date of receipt of
said decision, otherwise the deficiency income and
VAT assessments shall become final, executor and
demandable.
 Instead of appealing to the CTA, Fishwealth filed a Letter
of Reconsideration.
 By a Preliminary Collection Letter, the CIR demanded
payment of the tax liabilities.
 Fishwealth filed a Petition for Review before the CTA.
 The CTA dismissed the petition for having been filed out
of time.
 Fishwealth filed a petition for review before the CTA En
Banc.
 The CTA En Banc affirmed the decision of the CTA
division and ruled that the petition was filed out of time.

Issue:

Whether the petition for review was filed out time. – YES.

Ruling:

In the case at bar, Fishwealth’s administrative protest was

denied by Final Decision on Disputed Assessment issued by the
CIR. Fishwealth had 30 days to appeal such denial to the CTA.

Since Fishwealth received the denial of its protest on August 4,

2005, it had until September 3, 2005 to file a petition for
review before the CTA. It filed one, however, on October 20,
CIR v. CITYTRUST employees, to present the appropriate evidence to oppose
Citytrust’s claim.
Facts:
The CTA complied with the Court’s order to conduct further
 The CTA ordered the CIR to grant Citytrust a refund for proceedings for the reception of the CIR’s evidence. In the
the latter’s overpaid income taxes for 1984 and 1985. course thereof, Citytrust paid the assessed deficiencies to
 CIR filed MR alleging that the claim for refunds was not remove all administrative impediments to its claim for
in order because Citytrust had outstanding deficiency refund. But the CIR considered this payment as an admission
income and business tax liabilities for 1984. of a tax liability which was inconsistent with Citytrust’s claim
 The CTA denied the MR. for refund.
 The CA affirmed the CTA’s ruling.
 CIR filed a petition for review on certiorari before the Because of the CTA’s recognized expertise in taxation, its
SC. findings are not ordinarily subject to review specially where
 SC: there was an apparent contradiction between the there is no showing of grave error or abuse on its part.
claim for refund and the deficiency assessments against
Citytrust. The government could not be held in estoppel
due to the negligence of its officials or employees,
especially in cases involving taxes. It remanded the case
to the CTA for further reception of evidence.
 The CTA determined based on the exhibits presented
that the deficiency and gross receipts taxes had been
fully paid and the deficiency income tax was only
partially settled.
 Citytrust considered all its deficiency tax liabilities for
1984 fully settled, hence, it prayed that it be granted a
refund.
 CIR opposed alleging that Citytrust still had unpaid
deficiency income, business and withholding taxes for
1985.
 The CTA granted the refund.
o Although the SC did not specifically mention what
kind of evidence should be entertained, the CTA is
of the opinion that the evidence should pertain only
to the 1984 assessments which were the only
assessments raised as a defense on appeal to the
CA and SC. The CTA has no jurisdiction to try an
assessment case which was never appealed to it.
 The CA denied the CIR’s petition for review.
 CIR filed a petition for review on certiorari before the SC
contending that Citytrust is not entitled to the refund. It
argued that the payment by Citytrust of its deficiency
income tax was an admission of its tax liability and,
therefore, a bar to its entitlement to a refund of income
tax for the same taxable year.

Issue:

Ruling:

The Court uphold the findings and conclusion of the CTA and
the CA. The SC made no previous direct ruling on Citytrust’s
alleged failure to substantiate its claim for refund. Instead,
the order of the SC addressed the apparent failure of the BIR,
by reason of the mistake or negligence of its officials and
CIR v. ACESITE
Facts:
 Acesite, owner and operator of Holiday Inn Manila,
leases a portion of the hotel’s premises to PAGCOR for
casino operations. It also caters food and beverages to
PAGCOR’s casino patrons through the hotel’s restaurant
outlets.
 Acesite incurred VAT from its rental income and sale of
food and beverages to PAGCOR. It tried to shift the said
taxes to PAGCOR by incorporating it in the amount
assessed to PAGCOR.
 PAGCOR refused to pay the taxes on account of its tax-
exempt status.
o It paid the amount due to Acesite minus the VAT.
 Acesite paid the VAT to the CIR as it feared the legal
consequences of non-payment of the tax.
 Acesite belatedly arrived at the conclusion that its
transaction with PAGCOR was subject to zero rate as it
was rendered to a tax-exempt entity.
 Acesite filed an administrative claim for refund with the
CIR.
 CIR failed to resolve the claim.
 Acesite filed a petition with the CTA.
 The CTA ruled that Acesite is subject to 0% tax insofar as
its gross income from rentals and sales to PAGCOR, a
tax-exempt entity by virtue of a special law.
 The CA affirmed in toto the decision of the CTA holding
that PAGCOR was not only exempt from direct taxes but
was also exempt from indirect taxes like the VAT.
Consequently, the transactions between Acesite and
PAGCOR were effectively zero-rated because they
involved the rendition of services to an entity exempt
from indirect taxes.
While it was proper for PAGCOR not to pay the 10% VAT
charged by Acesite, the latter is not liable for the payment of it
as it is exempt in this particular transaction by operation of law
to pay the indirect tax.
There are undoubtedly erroneous payments of the VAT
pertaining to the effectively zero-rate transactions between
Acesite and PAGCOR.
Verily, Acesite has clearly shown that it paid the subject taxes
under a mistake of fact, that is, when it was not aware that the
transaction it had with PAGCOR were zero-rated at the time it
made the payments.
Tax refunds are based on the principle of quasi-contract or
solutio indebiti. When money is paid to another under the
influence of a mistake of fact, that is to say, on the mistaken
supposition of the existence of a specific fact, where it would
not have been known that the fact was otherwise, it may be
recovered. The government comes within the scope of solutio
indebiti principle.
Since an action for a tax refund partakes of the nature of an
exemption, which cannot be allowed unless granted in the
most explicit and categorical language, it is strictly construed
against the claimant who must discharge such burden
convincingly. Here, Acesite had discharged this burden when it
proved its actual VAT payments subject to refund, as attested
to by an independent CPA who was duly commissioned by the
CTA. On the other hand, the CIR never disputed nor contested
Acesite’s testimonial and documentary evidence.

Issue:

Whether PAGCOR’s tax exemption privilege include the

indirect tax of VAT to entitle Acesit to 0% VAT rate. – YES.

Ruling:

PAGCOR is also exempt from indirect taxes, like VAT. PD 1869,

the charter creating PAGCOR, grants the latter an exemption
from the payment of taxes. The law clearly gives PAGCOR a
blanket exemption to taxes with no distinction on whether the
taxes are direct or indirect.

By extending the exemption to entities or individuals dealing

with PAGCOR, the legislature clearly granted exemption also
from indirect taxes. The indirect tax of VAT can be shifted or
passed to the buyer, transferee, or lessee of the goods,
properties or services subject to VAT. Thus, by extending the
tax exemption to entities or individuals dealing with PAGCOR
in casino operations, it is exempting PAGCOR from being liable
to indirect taxes.
ATLAS v. CIR
Facts:
 Atlas presented to CIR applications for refund or tax
credit of excess input taxes for the 2nd, 3rd and 4th
quarters of 1992.
o Atlas attributed these claims to its sales of gold,
copper concentrates and pyrite on the theory that
these were zero-rated transactions resulting in
refundable or creditable input taxes.
 Due to CIR’s continuous inaction and the imminent
expiration of the 2-year period for beginning a court
action for tax credit or refund, Atlas brought its claims
to the CTA by way of a petition for review.
 The CTA denied Atlas’ claims on the grounds of
prescription and insufficiency of evidence.
 The CA reversed the CTA’s ruling on the matter of
prescription but affirmed the decision in all other
respects.
 Atlas filed an appeal by certiorari.
Issue:
Whether Atlas is entitled to refund. – NO because Atlas failed
to comply with the evidentiary requirements for claims for tax
credits or refunds.
Ruling:
Atlas insisted that the documentary requirements imposed
by RR 3-88 applied only to administrative claims for refund
or tax credit and should have no bearing in a judicial claim
for refund in the CTA. It argued that the summary and
certification of an independent CPA required by CTA Circular
1-95 constituted the principal evidence and rendered
superfluous the submission of VAT invoices and receipts.
A judicial claim for refund or tax credit in the CTA is by no
means an original action but rather an appeal by way of
petition for review of a previous, unsuccessful
administrative claim. Therefore, a petition has to convince
the appellate court that the quasi-judicial agency a quo did
not have any reason to deny its claims.
Here, it was necessary for Atlas to show the CTA not only
that it was entitled under substantive law to the grant of its
claims but also that it satisfied all the documentary and
evidentiary requirements for an administrative claim for
refund or tax credit.
Since it is crucial for a petition in a judicial claim for refund
or tax credit to show that its administrative claim should
have been granted in the first place, part of the evidence to
be submitted to the CTA must necessarily include whatever
is required for the successful prosecution of an
administrative claim.

The rule, in this case, required Atlas to:

1. Show that its sales qualified for zero-rating under the

laws then in force; and
2. Present sufficient evidence that those sales resulted in
excess input taxes.

CIR had approved Atlas’ applications for the zero-rating of its

sale prior to the transactions from which these claims arose.

However, while it had complied with the first requirement,

Atlas failed to comply with the evidentiary requirements for
claims for tax credits or refunds.

Revenue Regulations 3-88 required a photocopy of the

purchase invoice or receipt evidencing the VAT paid
together with the application for tax credit or refunds of VAT
paid. The original copy of the said invoice/receipt shall be
presented for cancellation prior to the issuance of the Tax
Credit Certificate.

CTA Circular 1-95 likewise required submission of invoices or

receipts showing the amount of tax paid.

Atlas never submitted any of the invoices or receipts

required by the foregoing rules. This omission is fatal to its
cause.