JUDY ANN SANTOS vs.

PEOPLE
FACTS RULING

2002 - Juday only declared an income Whether or not a resolution of the CTA division
of P8M derived from her TF from ABS- denying a MTQ was a proper subject of an
CBN. It was confirmed, however, that appeal to CTA-EB?
she earned at least P14M not only
from ABS-CBN but also from her No. The amendments introduced by Republic Act
movies and product endorsements. No. 9282 to Republic Act No. 1125 elevated the
rank of the CTA to a collegiate court, with the same
Non-declaration of 84.18% of the rank as the CA, and increased the number of its
income was considered a substantial members to one Presiding Justice and five
underdeclaration which constitutes Associate Justices. The CTA is now allowed to sit
prima facie evidence of false or en banc or in two Divisions with each Division
fraudulent return. consisting of three Justices.
A criminal complaint was filed against
According to Section 1, Rule 41 of the Revised
her for violation of Section 248(B), 254 Rules of Court, governing appeals from the RTCs
and 255. to the CA, an appeal may be taken only from a
Juday filed a Motion to Quash (MTQ) judgment or final order that completely disposes of
which was denied by the CTA. the case or of a matter therein when declared by
Her Motion for the Rules to be appealable. Said provision, thus,
Reconsideration/reinvestigation was explicitly states that no appeal may be taken from
also denied. an interlocutory order.

Motion for Extension of Time to File
Petition for Review and subsequently,
a Petition for Review with CTA-EB
regarding the denial of her MTQ.
Assuming that the CTA-EB, as an exception to the
general rule, allowed and treated petitioner’s
Petition for Review as a special civil action for
certiorari, it would still be dismissible for lack of
merit.
 CIR vs. UNITED SALVAGE AND TOWAGE INC.
FACTS
Respondent is engaged in the business
of sub-contracting work for service
contractors engaged in petroleum
operations in the Philippines.
During the taxable years in question, it
had entered into various contracts
and/or sub-contracts with several
petroleum service contractors, such as
Shell Philippines Exploration, etc. for
the supply of service vessels.
January 29, 1998 and October 24, 2001 -
USTP filed administrative protests against the
1994 and 1998 Expanded Withholding Tax
(EWT) assessments. USTP also appealed by
way of Petition for Review alleging, that the
Notices of Assessment are bereft of any facts,
law, rules and regulations or jurisprudence;
thus, the assessments are void and the right of
the government to assess and collect
deficiency taxes from it has prescribed on
account of the failure to issue a valid notice of
assessment within the applicable period.
While the case is pending, USTP moved to
withdraw the aforesaid Petition because it
availed of the benefits of the Tax Amnesty
Program under RA 9480.
It was held by CTA-Special First Division that
the Preliminary Assessment Notices (PANs) for
deficiency EWT for taxable years 1994 and
1998 were not formally offered.
As regards the Final Assessment Notices
(FANs) for deficiency EWT for taxable years
1994 and 1998, it was held that the same do
not show the law and the facts on which the
assessments were based.
Said assessments were, therefore, declared
void for failure to comply with Section 228 of
the 1997 National Internal Revenue Code (Tax
Code).
From the foregoing, the only remaining valid
assessment is for taxable year 1992.
ISSUE RULING
Yes. Under Section 8 of Republic Act (R.A.) No.
1125, the CTA is categorically described as a
court of record. As such, it shall have the power
to promulgate rules and regulations for the
conduct of its business, and as may be needed,
for the uniformity of decisions within its
jurisdiction.
No evidentiary value can be given the pieces of
evidence submitted by the BIR, as the rules on
documentary evidence require that these
documents must be formally offered before the
CTA.
W/N The presentation of PANs as evidence of the
the Court of taxpayer’s liability is not mere procedural
Tax Appeals technicality. It is a means by which a taxpayer is
is governed informed of his liability for deficiency taxes. It
strictly by the serves as basis for the taxpayer to answer the
technical notices, present his case and adduce supporting
rules of evidence. The petitioner merely alleged that the
evidence? existence and due execution of the PANs were
duly tackled by petitioner’s witnesses but such is
not sufficient to seek exception from the general
rule requiring a formal offer of evidence. The
Supreme Court held that the 1994 and 1998
PANs for EWT deficiencies were not duly
identified by testimony and were not incorporated
in the records of the case, as required by
jurisprudence.
In the present case, Reyes was not informed
in writing of the law and the facts on which the
assessment of estate taxes had been made.
She was merely notified of the findings by the
CIR, who had simply relied upon the
W/N
provisions of former Section 229 prior to its
the
amendment by [RA] 8424, otherwise known as
Expanded
the Tax Reform Act of 1997 which required that
Withholdin
the taxpayer should be informed not only of
g Tax the law, but also of the facts on which an
(EWT) assessment would be made; otherwise, the
Assessmen assessment itself would be invalid. It is clear
t issued by that the assailed deficiency tax assessment for
petitioner the EWT in 1994disregarded the provisions of
against the Section 228 of the Tax Code, as amended, as
respondent well as Section 3.1.4 of Revenue Regulations
Petitioner moved to reconsider the aforesaid for taxable No. 12-99 by not providing the legal and
ruling but was denied and the CTA En Banc year 1994 factual bases of the assessment. Hence, the
affirmed the decision with modification. was formal letter of demand and the notice of
without assessment issued relative thereto are void.
any
factual
and legal
basis?
 PH AMERICAN LIFE & INSURANCE CO. vs. SECRETARY OF FINANCE
FACTS RULING

The Philippine American Life and General Whether or not the sales of shares sold
Insurance Company (Philamlife) used to own less than an adequate consideration is
498,590 Class A shares in Philam Care Health subject to donor’s tax?
Systems, Inc. (PhilamCare), representing 49.89%
of the latter's outstanding capital stock. Yes. The Commissioner ruled that the
difference between the book value and the
In 2009, Philamlife offered to sell its shareholdings selling price in the sales transaction is taxable
in PhilamCare through competitive bidding. donation subject to a 30% donor’s tax under
Section 99(B) of the NIRC.
Reviews by the Secretary of Finance
on September 24, 2009, Philamlife’s Class A pursuant to Sec. 4 of the NIRC are
shares were sold for USD 2,190,000, or PhP appealable to the CTA It is axiomatic that laws
104,259,330 based on the prevailing exchange rate should be given a reasonable interpretation
at the time of the sale, to STI Investments, Inc., the which does not defeat the very purpose for
highest bidder. which they were passed.
R.A. No. 1125 creating the Court of Tax
Months later, Philamlife was informed that it needed Appeals did not grant it blanket authority to
to secure a BIR ruling in connection with its decide any and all tax disputes. Defining such
application due to potential donor’s tax liability. special court’s jurisdiction, the Act necessarily
On January 4, 2012, Philamlife requested a ruling limited its authority to those matters
to confirm that the sale was not subject to donor’s enumerated therein.
tax, pointing out: that the transaction cannot attract Republic Act No. 1125 is a complete law by
donor’s tax liability since there was no donative itself and expressly enumerates the matters
intent and no taxable donation; a sale for less than which the Court of Tax Appeals may consider;
an adequate consideration is not subject to donor’s such enumeration excludes all others by
tax; and that donor’s tax does not apply to sale of implication. Expressio unius est exclusio
shares sold in an open bidding process. alterius.
Indeed, in order for any appellate court to
CIR denied Philamlife’s request through BIR Ruling effectively exercise its appellate jurisdiction, it
No. 015-12. must have the authority to issue, among
others, a writ of certiorari. In transferring
As determined by the Commissioner, the selling exclusive jurisdiction over appealed tax cases
price of the shares thus sold was lower than their to the CTA, it can reasonably be assumed
book value based on the financial statements of that the law intended to transfer also such
PhilamCare as of the end of 2008. As such, CIR power as is deemed necessary, if not
held that donor’s tax became imposable on the indispensable, in aid of such appellate
price difference pursuant to Sec. 100 of the NIRC. jurisdiction. There is no perceivable reason
why the transfer should only be considered as
partial, not total.
 DUTY FREE vs. BIR
FACTS RULING

DutyFree is a merchandising system established by the Whether or not CTA erred in

then Ministry of Tourism (now DOT) through the dismissing petitioner’s
Philippine Tourism Authority (PTA), pursuant to E.O. No. petition?
46 dated 4 September 1986.
The SC has no jurisdiction.
In a letter, DutyFree sought a clarification of its
exemption from the expanded withholding tax under Any party adversely affected by
R.R. No. 6-94. any ruling, order or decision of
It argued that as a tax-exempt establishment under E.O. the Court of Tax Appeals may
No. 46, it should not be subjected to the 1.1/2% appeal therefrom to the Supreme
expanded withholding taxes (EWT) on certain income Court by filing with the said Court
payments that were withheld by credit card companies in a notice of appeal and with the
compliance with R.R. No. 6-94. Supreme Court a petition for
review, within thirty days from the
In response, BIR issued BIR Ruling No. 136-95 on 6 date he receives notice of said
September 1995 which states that E.O. No. 93 dated 17 ruling, order or decision.
December 1986 withdrew all the tax and duty incentives
granted to petitioner. Hence, BIR denied the request for A party adversely affected by a
refund of petitioner. resolution of a Division of the
Petitioner requested a reconsideration, but BIR denied CTA on a motion for
the request through BIR Ruling No. 38-2002 and ruled reconsideration or new trial, may
that DutyFree, as a division of PTA, was now subject to file a petition for review with the
income tax. CTA En Banc.

This prompted petitioner to file an appeal with the In sum, this Court has no
Department of Finance (DOF), however, DOF affirmed jurisdiction to review the Decision
the ruling. and Resolution rendered by the
Special First Division of the CTA.
Meanwhile, petitioner received several assessment Thus, the instant Petition must
notices from BIR for deficiency income tax and VAT from fail.
1999-2002 worth P1.4B. A petition for review was filed
with the CTA.
CTA Special First Division ruled that petitioner was not a
tax-exempt entity as PDs No. 1177 and 1931 withdrew
PTA’s exemption under Section 1 of PD No. 1400, but
the Fiscal Incentives Review Board restored some tax
incentives to petitioner, decreasing the tax deficiencies
to P1B.
Petitioner directly appealed to the SC under Rule 45 of
the Rules of Court maintaining that the CTA gravely
erred in dismissing the former’s Petition for Review and
requiring it to pay deficiency taxes and interests.
 CIR vs. ANTONIO GUERRERO
FACTS
Antonio G. Guerrero was a dealer of logs in
1949-1950 which he used to sell to Aparri
Lumber Company.
On April 2, 1954, the CIR made an
assessment and demands, requiring
Guerrero to pay the sum of Php4,014.91,
representing fixed and percentage taxes
and forests charges, as well as surcharges
and penalties, in connection with his
business transactions with the company.
Upon Guerrero’s requests, the matter was
submitted to the conference staff of the
Bureau of Internal Revenue (BIR), which,
thereafter recommended that the
assessment be increased to Php5,139.17.
In addition to, the sums of Php20 and
Php100 as compromise penalties in
extrajudicial settlement of his penal
liabilities under Sections 208 and 209 of the
NIRC should be reiterated.
That another sum of Php50 as compromise
penalty for his violation of the bookkeeping
regulations should be imposed against the
taxpayer, he having admitted during the
hearing of this case that he did not keep
books of accounts of his timber business.
This recommendation was approved by the
CIR who accordingly made the
corresponding reassessment upon receipt
of notice which Guerrero requested a
rehearing before the conference staff.
RULING
Whether or not reassessment by the BIR is
proper?
No. The foregoing circumstances clearly indicate that
the logs involved in said reassessment were obtained
from illegal sources, and that the forest charges due
thereon had not been paid. Since these charges “are
lieu on the products and collectible from whomsoever
is in possession” thereof, unless he can show that he
has the required auxiliary and official invoice and
discharge permit – which Guerrero has not shown – it
follows that he is bound to pay the aforementioned
forest charges and surcharges, in the sum of Php
3,775.66.
At this juncture, it may not be amiss to advert to a
problem of semantics arising from the operation of
Section 1588 of the Revised Administrative Code, the
counterpart of which is is now section 315 of the
NIRC, pursuant to which:
Every internal revenue tax on property or on any
business or occupation, and every tax on resources
and receipts, and any increment to any of them
incident to delinquency, shall constitute a lien
superior to all other charges or liens not only on the
property itself upon which such tax may be imposed
but also upon the property used in any business or
occupation upon which the tax is imposed and upon
all property rights therein.
The enforcement of this lien by the CIR has often
induced the parties adversely affected thereby to
 Instead of acting on this request, the CIR
Director issued an Assessment of Distraint
and Levy against the properties of
Guerrero, in order to effect the collection of
his tax liability under said reassessment. On
June 8, 1956, Guerrero filed with the CTA
the corresponding petition for review.
Subsequently, said court affirmed the CIR
recommendation. Hence, these appeals.
raise the question whether a given charge is a tax or
not, on the theory that there would be no lien if said
question were decided in the negative. In connection
therewith, said parties had tended to distinguish
between taxes, on the one hand – as burdens
imposed upon persons and/or properties, by way of
contributions to the support of the government, in
consideration of general benefits derived from its
operation – and license fees – charged in the
exercise of the regulatory authority of the state,
under its police power – and other charges – for
specific things or special or particular benefits
received from the government – on the other hand.

FACTS
On February 8, 2001, PNB filed with CIR a
claim for refund in the amount of
₱6,028,594.00, which were payments
made in excess of its income tax liability
for 1998
As BIR did not act upon PNBs claim for refund,
PNB filed a Petition for Review with the CTA
Division and prayed that it be refunded or
issued a tax credit certificate in the amount of
₱6,028,594.00, representing creditable taxes
withheld from PNBs income for the taxable year
1998.
CIR alleged that PNBs claim for refund/tax
credit is subject first to an investigation and that
it failed to establish its right to a refund.
After PNB had rested its case, the CIR
manifested that he would not be
presenting evidence. The parties were
thereafter required to submit their
memoranda.
On May 19, 2003, the BIR issued in PNBs favor
Tax Credit Certificate No. SN 023837 for
₱4,154,353.42, leaving a balance of
₱1,874,240.58 out of PNBs total claim of
₱6,028,594.00. PNB then informed the CTA
Division of such tax credit certificate, and
manifested that its acceptance was without
prejudice to recovering the balance of its total
claim.
CIR filed a Motion, asking that he be allowed to
present evidence on PNBs excluded claim. The
CIR argued that the amount of ₱1,874,240.58
was disallowed because it was not remitted to
the BIR, as verified by its Regional Accounting
Division.
The CTA Division held that payments of
withholding taxes for a certain taxable
year were creditable to the payees
income tax liability as determined after it
had filed its income tax returns the
following year.
PNB filed a partial appeal by Petition for
Review under Section 18 of Republic Act
No. 9282 before the CTA En Banc, to
review and modify the CTA Divisions
August 11, 2005 Decision. This petition
was received by the CTA En Banc on
December 27, 2005, four days beyond the
additional 15 days granted to PNB to file
PNB vs. CIR
ISSUE RULING
W/N PNB filed its petition with the CTA En Banc
This Court four days beyond the extended period
should granted to it to file such petition. PNB argues
require the that it was filed on time since it was mailed
CTA En Banc on the last day of the extended period, which
to give due was on December 23, 2005. It has been
course to established that a pleading filed by ordinary
C.T.A. E.B. mail or by private messengerial service is
No. 145 deemed filed on the day it is actually
despite PNBs received by the court, and not on the day it
failure to was mailed or delivered to the messengerial
comply with service
the formal
requirements It is worthy to note that PNB already asked
of the for an additional period of 15 days within
Revised Rules which to file its petition for review with the
of the Court CTA En Banc. This period expired on
of Tax December 23, 2005.Knowing fully well that
Appeals and December 23, 2005 not only fell on a Friday,
the Rules of followed by three consecutive non-working
Court in filing days, but also belonged to the busiest
a petition for holiday season of the year, PNB should have
review with exercised more prudence and foresight in
the CTA En filing its petition.
Banc?
It is, however, curious why PNB chose to risk
the holiday traffic in an effort to personally
file its petition with the CTA En Banc, when it
already filed a copy to the other party, the
CIR, viaregistered mail.[37] Considering the
circumstances, it would have been more
logical for PNB to send its petition to the
CTA En Banc on the same occasion it sent a
copy to the CIR, especially since that day
was already the last day given to PNB to file
its petition. Moreover, PNB offered no
justification as to why it sent its petition via
ordinary mail instead of registered
mail. Service by ordinary mail is allowed only
in instances where no registry service exists.
This Court agrees with the CTA En Banc that
PNB has not demonstrated any cogent
reason for this Court to take an exception
and excuse PNBs blatant disregard of the
basic procedural rules in a petition for
review. Furthermore, the timely perfection of
an appeal is a mandatory requirement. One
cannot escape the rigid observance of this
rule by claiming oversight, or in this case,
lack of foresight. Neither can it be trifled with
as a mere technicality to suit the interest of a
party. Verily, the periods for filing petitions
for review and for certiorari are to be
its petition.
CTA En Banc issued a Resolution denying due
course and consequently dismissing PNBs
petition for the Petition For Review was filed
four (4) days late on December 27, 2005, the
reglementary deadline for the timely filing of
such petition being December 23, 2005.
FACTS
BIR Examiner Ben Garcia
examined the income tax returns
filed by petitioner Quirico Ungab
for failure to file his income
derived from banana saplings.
BIR District Revenue Officer
informed Ungab the due of
P104,980.81 representing
income, business tax and forest
charges for the year 1973.
Ungab protested the
assessment, claiming that he
was only a dealer or agent on
commission basis in the banana
sapling business and that his
income, as reported in his
income tax returns for the said
year, was accurately stated.
Special Investigation Division of
the BIR found sufficient proof that
the herein petitioner is guilty of
tax evasion for the taxable year
1973 and recommended his
prosecution. CIR approved the
prosecution.
observed religiously. Just as the losing party
has the privilege to file an appeal within the
prescribed period, so does the winner have
the right to enjoy the finality of the decision.
UNGAB vs. CUSI
ISSUE RULING
WON the No. The respondent State
petitioner is Prosecutor sought permission from
correct? the City Fiscal of Davao City before
he started the preliminary
investigation of these cases, and
the City Fiscal, after being shown
Administrative Order No. 116,
dated December 5, 1974,
designating the said State
Prosecutor to assist all Provincial
and City fiscals throughout the
Philippines in the investigation and
prosecution of all violations of the
NIRC.
What is involved here is not the
collection of taxes where the
assessment of the Commissioner of
Internal Revenue may be reviewed
by the Court of Tax Appeals, but a
criminal prosecution for violations
of the National Internal Revenue
Code which is within the
cognizance of courts of first
instance.
State Prosecutor found probable
cause and filed 6 informations.
Ungab contended that the
Informations were null and void
for want of authority on the part
of the State Prosecutor and the
trial court has no jurisdiction to
take cognizance of the case.
While there can be no civil action
to enforce collection before the
assessment procedures provided
in the Code have been followed,
there is no requirement for the
precise computation and
assessment of the tax before there
can be a criminal prosecution
under the Code.
Besides, it has been ruled that a
petition for reconsideration of an
assessment may affect the
suspension of the prescriptive
period for the collection of taxes,
but not the prescriptive period of a
criminal action for violation of law.
Obviously, the protest of the
petitioner against the assessment
of the District Revenue Officer
cannot stop his prosecution for
violation of the NIRC.

FACTS
On April 30, 2004, the Bureau of
Internal Revenue (BIR) issued a
Preliminary Assessment Notice
(PAN) to petitioner Allied
Banking Corporation for
deficiency Documentary Stamp
Tax (DST) in the amount
of P12,050,595.60 and Gross
Receipts Tax (GRT) in the
amount of P38,995,296.76 on
industry issue for the taxable
year 2001.
Petitioner received the PAN
on May 18, 2004 and filed a
protest against it on May 27,
2004.
On July 16, 2004, the BIR
wrote a Formal Letter of
Demand with Assessment
Notices to petitioner which was
received by the latter on August
30, 2004.
With regard to this demand,
petitioner filed a Petition for
Review.
ALLIED BANKING CORP. vs. CIR
ISSUE RULING
Whether the Section 7 of RA 9282 expressly provides that the
Formal CTA exercises exclusive appellate jurisdiction to
Letter of review by appeal decisions of the CIR in cases
involving disputed assessments. The CTA, being a
Demand
court of special jurisdiction, can take cognizance
dated July only of matters that are clearly within its
16, jurisdiction. Under section 7(a), par. 1of RA 9282,
2004 can be the CTA shall exercise exclusive appellate
construed as jurisdiction to review by appeal on decisions of the
a final Commissioner of Internal Revenue in cases
decision of involving disputed assessments.
the CIR
RA 9282 has been interpreted to mean the
appealable
decisions of the CIR on the protest of the taxpayer
to the CTA against the assessments. Corollary thereto, Section
under RA 228 of the National Internal Revenue Code (NIRC)
9282? provides for the procedure for protesting an
assessment in which the taxpayers shall be
informed in writing of the law and the facts on
which the assessment is made; otherwise, the
assessment shall be void . Within a period to be
prescribed by implementing rules and regulations,
the taxpayer shall be required to respond to said
notice. If the taxpayer fails to respond, the
Commissioner or his duly authorized representative
shall issue an assessment based on his findings.
Petitioner timely filed a protest after receiving the
PAN. However, did not protest the final assessment
notices. Instead, it filed a Petition for Review with
On the other hand, CIR filed a
Motion to Dismiss on the ground
that petitioner failed to file an
administrative protest on the
Formal Letter of Demand with
Assessment Notices which was
granted by the Court.
Petitioner moved for
reconsideration but was denied.
CIR vs. STANDARD CHARTERED BANK
FACTS
In 2004, Standard Chartered Bank
received a Formal Letter of Demand
alleging a deficiency income tax, final
income tax, withholding tax compensation,
final withholding tax and increments for
taxable year 1998 in the aggregate amount
of P33,326,211.37.
In 2005, respondent filed a Motion for
Leave of Court to Serve Supplemental
Petition, with attached Supplemental
Petition for Review, in view of the alleged
payments made by respondent.
the CTA.
In this case, the Supreme Court held that it cannot
blame the petitioner for not filing a protest against
the Formal Letter of Demand with Assessment
Notices since the language used and the tenor of
the demand letter indicate that it is the final
decision of the respondent on the matter. It further
held that the CIR is to indicate, in a clear and
unequivocal language, whether his action on a
disputed assessment constitutes his final
determination thereon in order for the taxpayer
concerned to determine when his or her right to
appeal to the tax court accrues. In the foregoing,
respondent is now estopped from claiming that he
did not intend the Formal Letter of Demand with
Assessment Notices to be a final decision. The
foregoing demand letter that the CIR has already
made a final decision on the matter and that the
remedy of petitioner is to appeal the final decision
within 30 days.
in this particular case is, the Formal Letter of
Demand with Assessment Notices which was not
administratively protested by the petitioner can be
considered a final decision of the CIR appealable to
the CTA because the words used, specifically the
words final decision and appeal, taken together led
petitioner to believe that the Formal Letter of
Demand with Assessment Notices was in fact the
final decision of the CIR on the letter-protest it filed
and that the available remedy was to appeal the
same to the CTA.
RULING
WON Standard Chartered Bank is estopped from
questioning the validity of the waivers of the Statute of
Limitations executed by its representatives in view of
the partial payments it made on the deficiency taxes?
Although respondent paid the deficiency WTC and FWT
assessments, it did not waive the defense of prescription as
regards the remaining tax deficiencies, it being on record that
respondent continued to raise the issue of prescription.
In fine, considering the defects in the First and Second Waivers,
the period to assess or collect deficiency taxes for the taxable
year 1998 was never extended. Consequently, the Formal
Letter of Demand and Assessment Notices dated 24 June 2004
for deficiency income tax, FCDU, and EWT in the aggregate
amount of P33,076,944.18, including increments, were issued
by the BIR beyond the three-year prescriptive period and are
 therefore void.

In its Supplemental Petition for Review, WON the right to assess by the CIR has already
respondent seeks to be fully credited of the prescribed?
payments it made to cover the deficiency.
The period for CIR to assess and collect an internal revenue tax
is limited only to 3 years by Section 203 of the NIRC of 1997.
CTA in Division granted respondent’s This is to safeguard the interests of taxpayers from
petition for the cancellation and setting unreasonable investigation by not indefinitely extending the
aside of the subject FLD/AN dated on period of assessment and depriving the taxpayer of the
the ground that petitioner’s right to assurance that it will no longer be subjected to further
assess respondent for the deficiency investigation for taxes after the expiration of reasonable period
taxes covering taxable year 1998 was of time. The XPN: when it is agreed by the taxpayer and the
already barred by prescription. Commissioner in writing.

The law on prescription should be liberally construed in order to

afford such protection.
CTA in Division explained that the The waiver of the Statute of Limitations, RMO No. 20-90 and
Waivers of Statute of Limitations Revenue Delegation Authority Order (RDAO) No. 05-01 provides
executed by the parties, for the that:
purpose of justifying the extension of • The waiver must be in the proper form prescribed by RMO 20-
period to assess respondent, the 90.
subject waivers, particularly the First • The waiver must be signed by the taxpayer himself or his duly
and Second Waivers dated 20 July authorized representative.
2001 and 4 April 2002,respectively, • The waiver should be duly notarized.
failed to strictly comply and conform • The CIR or the revenue official authorized by him must sign
with the provisions of Revenue the waiver indicating that the BIR has accepted and agreed to
Memorandum Order (RMO) No. 20- 90. the waiver. Both the date of execution by the taxpayer and date
The CTA En Banc affirmed the decision of acceptance by the Bureau should be before the expiration of
in toto. the period of prescription or before the lapse of the period
agreed upon in case a subsequent agreement is executed.
• The waiver must be executed in three copies.
The waivers in question were defective and did not validly
extend the original three-year prescriptive period for it was
signed by the Assistant Commissioner instead if the
Commissioner of Internal Revenue; the date of acceptance was
not indicated; the First and Second Waivers of Statute of
Limitations did not specify the kind and amount of the tax due;
and the tenor of the Waiver of the Statute of Limitations signed
by petitioner’s authorized representative failed to comply with
the prescribed requirements of RMO No. 20-90.
 CIR vs. REYES
FACTS RULING

By virtue of a sworn affidavit for reward by one

Abad, an investigation was conducted by BIR
on the estate of the deceased Maria Tancinco WON whether the assessment against the
who died in 1993 leaving a residential lot and estate is valid; and, second, whether the
old house in Dasma Village. Without submitting compromise entered into is also valid?
a preliminary finding report, an LOA was issued
and received by Reyes, one of the heirs on 14No. Under the present provisions of the Tax Code
March 1997. and pursuant to elementary due process,
taxpayers must be informed in writing of the law
On 12 Feb 1998, a PAN was issued against the and the facts upon which a tax assessment is
estate, and a FAN as well as demand letter based; otherwise, the assessment is void. Being
was issued on 22 April 1998 for the invalid, the assessment cannot in turn be used as
assessment of P14.9M for estate tax of the a basis for the perfection of a tax compromise.
estate of Maria Tancinco. This was clear and mandatory under Section 228.

On March 11, 1999, the heirs proposed a Reyes was not informed in writing of the law and
compromise settlement of P1M. the facts on which the assessment of estate taxes
had been made. She was merely notified of the
Due to failure to pay tax on the deadline, BIR
findings by the CIR, who had simply relied upon
notified on June 6, 2000 that the subject
the provisions of former Section 22913 prior to its
property would be sold at public auction.
amendment by Republic Act (RA) No. 8424,
otherwise known as the Tax Reform Act of 1997.
CIR filed a motion saying CTA has no
jurisdiction since the assessment against the To be simply informed in writing of the
estate is already final and executory; and that investigation being conducted and of the
the petition was filed out of time. recommendation for the assessment of the estate
taxes due is nothing but a perfunctory discharge of
CTA – Ruled in favour of CIR ordering Reyes to the tax function of correctly assessing a taxpayer.
pay the estate tax amounting to 19M. CTA The act cannot be taken to mean that Reyes
ratiocinated that there can only be a perfected already knew the law and the facts on which the
and consummated compromise of the estate’s assessment was based. It does not at all conform
tax liability if the NEB has approved Reyes’ to the compulsory requirement under Section 228.
application for compromise in accordance with Moreover, the Letter of Authority received by
RR No. 6-2000, as implemented by RMO No. respondent on March 14, 1997 was for the sheer
42-2000. purpose of investigation and was not even the
requisite notice under the law.
CA – Partly granted petition. SC – Affirmed,
petition w/o merit.
 RCBC vs. CIR
FACTS
RCBC received the final assessment notice on
July 5, 2001. It filed a protest on July 20, 2001.
As the protest was not acted upon, it filed a
Petition for Review with the Court of Tax
Appeals (CTA) on April 30, 2002, or more than
30 days after the lapse of the 180-day period
reckoned from the submission of complete
documents.
The CTA dismissed the Petition for lack of
jurisdiction since the appeal was filed out of
time.
RULING
Has the action to protest the assessment
judicially prescribed?
YES. The assessment has become final. The
jurisdiction of the CTA has been expanded to
include not only decision but also inactions and
both are jurisdictional such that failure to observe
either is fatal.
However, if there has been inaction, the taxpayer
can choose between (1) file a Petition with the
CTA within 30 days from the lapse of the 180-day
period OR (2) await the final decision of the CIR
and appeal such decision to the CTA within 30
days after receipt of the decision. These options
are mutually exclusive and resort to one bars the
application of the other. Thus, if petitioner
belatedly filed an action based on inaction, it can
not subsequently file another petition once the
decision comes out.
 MEDICARD vs. CIR
FACTS RULING

Medicard was ordered by the CTA to pay CIR a W/N the absence of the LOA is fatal?
VAT deficiency of P220,234,609.48, plus 20%
interest per annum from January 25, 2007. Yes. The absence of the LOA violated
MEDICARD’s right to due process.
Finding some discrepancies between
Medicard’s ITR and VAT returns, the CIR A LOA is the authority given to the
informed Medicard and issued a Letter Notice. appropriate revenue officer assigned to
A Preliminary Assessment Notice (PAN) was perform assessment functions. In the
issued for VAT deficiency. absence of such an authority, the
assessment or examination is a nullity.
A Formal Assessment Notice (FAN) was
received by Medicard on Jan. 4, 2008, for The LN cannot replace the LOA required
alleged VAT deficiency for tax year 2006, under the law even if the same was issued
amounting to P196,614,476.99. by the CIR himself. Under RR No. 12-2002,
Medicard raised the issue of lack of LOA on the LN is issued to a person found to have
part of the revenue officer who conducted the underreported sales/receipts per data
examination. generated under the relief system. Upon
receipt of the LN, a taxpayer may avail of
The CIR posits that the LN is enough the BIR's Voluntary Assessment and
compliance with the LOA requirement, arguing Abatement Program. If a taxpayer fails or
that the use of computers to detect refuses to avail of the said program, the BIR
discrepancies dispenses with the LOA may avail of administrative and criminal
requirement. remedies, particularly closure, criminal
action, or audit and investigation. Since the
The CIR argued that the amounts earmarked law specifically requires an LOA and RMO
and paid by Medicaid to medical service
No. 32-2005 requires the conversion of the
providers form part of gross receipts for VAT
previously issued LN to an LOA, the absence
purposes.
thereof cannot be simply swept under the
The CTA En Banc sided with the CIR. rug, as the CIR would have it. In fact,
Revenue Memorandum Circular No. 40-2003
considers an LN as a notice of audit or
investigation only for the purpose of
disqualifying the taxpayer from amending
his returns.

The revenue officers not having authority to

examine MEDICARD in the first place, the
assessment issued by the CIR is inescapably
void.
 PETRONILA TUPAZ vs. ULEP
FACTS RULING

On June 1990, SP Molon, Jr. filed with MeTC-

QC an information against Tupaz for non- W/N the reinstatement is proper, for
payment of deficiency corporate income tax for the offence has prescribed?
the year 1979, amounting to P2,369,085.46 in
violation of the Tax Code. No. The shortened period of 3 years
prescription under B.P. Big. 700 is not
MeTC dismissed the information for lack of applicable to Tupaz. B.P. 700, effective April
jurisdiction, subsequently denying their MR. 5, 1984, specifically states that the
shortened period of 3 years shall apply to
SP Molon filed two informations before the RTC assessments and collections beginning
for the same alleged non-payment, raffled at taxable year 1984.
Branch 105 and Branch 86.
Assessments made on or before April 5,
Hon. Ulep ordered the prosecution to withdraw
1984 are governed by the 5-year period if
the information in Br. 86 after the discovery that
the taxes assessed cover taxable years prior
the cases were identical.
to Jan. 1, 1984.
The prosecutor withdrew the information, but
filed a motion to reinstate the same eventually. The deficiency under consideration is for
Hon. Ulep granted the motion. taxable year 1979. The income tax return
was filed in April 1980. Hence, the July 16,
Tupaz filed this petition alleging that Hon. Ulep 1984 tax assessment was issued within the
committed grave abuse of discretion in prescribed period of five years from the last
reinstating information because the offence has day of filing, or from the date the return is
prescribed, and such reinstatement exposed filed, whichever comes later.
Tupaz to double jeopardy.
 MARCOS vs. CA
FACTS RULING

In 1989, former President Ferdinand Marcos
died in Honolulu, Hawaii, USA.
On June 27, 1990, a Special Tax Audit Team
was created to conduct investigations and
examinations of the tax liabilities and
obligations of the late president, as well as that
of his family, associates and “cronies.”
The investigation disclosed that the Marcoses
failed to file a written notice of the death of the taxes. There is nothing in the Tax Code, and in the
decedent, an estate tax returns, as well as
several income tax returns covering the years
1982 to 1986, -all in violation of the NIRC, and the state’s claim for estate taxes, before the same
thereby caused the preparation and filing of the can be enforced and collected. If there is any issue
Estate Tax Return for the estate of the late
president, the Income Tax Returns of the
Spouses Marcos for the years 1985 to 1986,
and the Income Tax Returns of petitioner
Ferdinand ‘Bongbong’ Marcos II for the years
1982 to 1985.
BIR then issued deficiency tax assessments to same, petitioner, and the other heirs never
the Marcoses.
The CIR avers that copies of the
deficiency estate and income tax
assessments were all personally and
constructively served upon Mrs. Imelda
Marcos and Bongbong Marcos.
The deficiency tax assessments were not
protested within 30 days from service of said
assessments.
Thereafter, the BIR Commissioner issued
twenty-two notices of levy on real property
against certain parcels of land owned by the
Marcoses—to satisfy the alleged estate tax and
deficiency income taxes of Spouses Marcos.
Whether or not the BIR has authority to collect
by the summary remedy of levying upon, and
sale of real properties of the decedent, estate tax
deficiencies, without the cognition and authority
of the court sitting in probate over the supposed
will of the deceased?
Yes. The approval of the court, sitting in probate, or
as a settlement tribunal over the deceased is not a
mandatory requirement in the collection of estate
pertinent remedial laws that implies the necessity of
the probate or estate settlement court’s approval of
as to the validity of the BIR’s decision to assess the
estate taxes, this should have been pursued through
the proper administrative and judicial avenues
provided for by law and that by protesting of
assessment provided in Section 229 of the NIRC.
Apart from failing to file the required estate
tax return within the time required for the filing of the
questioned the assessments served upon them,
allowing the same to lapse into finality, and
prompting the BIR to collect the said taxes by levying
upon the properties left by President Marcos. 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. 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
Now, Bongbong Marcos questions the
actuations of the respondent Commissioner of
Internal Revenue in assessing, and collecting
through the summary remedy of Levy on Real
Properties, estate and income tax
delinquencies upon the estate and properties of
his father, despite the pendency of the
proceedings on probate of the will of the late
president.
assessment will not be disturbed.
Lastly, it was held that the assessment of an
inheritance tax does not directly involve the
administration of a decedent’s estate, although it
may be viewed as an incident to the complete
settlement of an estate, and, under some statutes, it
is made the duty of the probate court to make the
amount of the inheritance tax a part of the final
decree of distribution of the estate. It is not against
the property of decedent, nor is it a claim against
the estate as such, but it is against the interest or
property right which the heir, legatee, devisee, etc.,
has in the property formerly held by decedent.

CIR vs. PRIMETOWN PROPERTY

FACTS RULING

March 11, 1999, Gilbert Yap, Vice Chair of Whether or not the counting of the 2-
Primetown Property Group, Inc. applied for year prescriptive period for filing claim of
refund or credit of income tax respondents refund is governed by the Civil Code?
paid in 1997.
The counting of 2-year period for filing
The CTA found that respondent filed its final
claim for refund is no longer in
adjusted return on April 14, 1998. Thus, its
accordance with Art. 13 of the Civil Code
right to claim a refund or credit commenced
but under Sec 31 of EO 227 - The
on that date.
Administrative Code of 1987.
According to the CTA, the two-year
prescriptive period under Section 229 of the As between the Civil Code, which
NIRC for the filing of judicial claims was provides that a year is equivalent to 365
equivalent to 730 days. Because the year days, and the Administrative Code of
2000 was a leap year, respondent's 1987, which states that a year is
petition, which was filed 731 days after composed of 12 calendar months, it is
respondent filed its final adjusted return, the latter that must prevail being the
was filed beyond the reglementary period. more recent law, following the legal
maxim, Lex posteriori derogat priori.
On appeal, the CA reversed and set
aside the decision of the CTA. It ruled In the case at bar, there are 24 calendar
that Article 13 of the Civil Code did months in 2 years. For a Final Corporate
not distinguish between a regular year ITR filed on Apr 14, 1998, the counting
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.
should start from Apr 15, 1998 and end
on Apr 14, 2000. The procedure is:
1st month -Apr 15, 1998 to May 14, 1998
…. 24th month - Mar 15, 2000 to Apr 14,
2000.
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 24th calendar
month from the day respondent filed its
final adjusted return. Hence, it was filed
within the reglementary period
 BPI vs. CIR
FACTS RULING

On June 6 and 14, 1985, petitioner

bank sold $500,000.00 to the Whether or not the right to collect
Central Bank, for the total sale has prescribed?
amount of $1M.
The period for the BIR to assess and
BIR issued deficiency assessment collect an internal revenue tax is
for DST in the amount of 28,020.00 limited to three years by Section 203
for the said sales. of the Tax Code.
On October 20,1989, petitioner
received the notice and This period is limited by Section 223
consequently filed a protest in XPNS:
November 16,1989. Petitioner did a) in the case of a false or fraudulent
not receive a reply but soon after, return with intent to evade tax or of
October 15, 1992, BIR issued a failure to file a return, the tax may be
Warrant of distraint, and finally in assessed, or a proceeding in court for
August 13, 1997, BPI received a the collection of such tax may be
letter denying its request for begun without assessment, at any
reconsideration. time within 10 years after the
discovery of the falsity, fraud or
Petitioner alleged prescription to omission…
CTA but the latter denied the same.
BPI executed no waiver of the Statute
CTA likewise ruled in the negative
of Limitations, thus it did not suspend
that the sales of currency by
running of the prescription. Likewise,
petitioner was not subject to DST.
BPI requested for a reconsideration
CA sustained first issue but
and suspension of the running of the
reinstated the second.
statute of limitations shouldn’t apply.
The statute of limitations for
collection “against BPI had expired;
none of the conditions from the
statute of limitations on collection
exists herein.”

Request for reconsideration

It will not suspend the running of the statute of limitations because
reconsideration of tax assessment is limited to the evidence.
Request for reinvestigation
It will suspend the running of statute of limitations because it entails the reception
and re-evaluation of additional evidence. It will take more time.
 CIR vs. BENIPAYO
FACTS RULING

Alberto Benipayo is the owner of

the Lucena Theater in Lucena, Whether there is evidence in the
Quezon. record to show Benipayo
In 1953, the internal revenue agent committed the alleged act to
investigated Benipayo’s tax liability cheat or defraud the
for the period of August 1952 to Government?
September 1953.
No. An assessment fixes and
The examiner recommended a determines the tax liability of a
deficiency tax assessment in the taxpayer. In order to stand the test of
sum of P11,193.45 inclusive of 25% judicial scrutiny, the assessment must
surcharge plus a suggested be based on actual facts. The
compromise penalty of P900.00 presumption of correctness of
based on the conclusion that assessment, being a mere
Benipayo sold 2 tax-free 20c ticlets presumption, cannot be made to rest
fraudulently in order to avoid on another presumption, no matter
payment of amusement tax how reasonable or logical such may
prescribed by Section 260 of the be; i.e. that the circumstances in
Tax Code (based on a reverse ratio 1952 and 1953 are presumed to be
of adult to children; 3:1 in 1949 to the same as those existing in 1949 to
1951, and 1:3 for period in 1951, and July 1955. There are no
question; and average attendance substantial facts to support the
for the past years). assessment in question. Neither was
Benipayo protested, claiming that there any proof of the fraud allegedly
the findings of the examiners are committed. Fraud is a serious charge,
mere presumptions and and to be sustained, it must also be
conclusions, devoid of findings of supported by clear and convincing
fact of alleged fraudulent practices proof.
by him.
 BIR vs. CA & SPS. MANLY
FACTS RULING
Antonio Manly is stockholder and EVP of WON the issuance of a deficiency tax assessment is a
Standard Realty Corp., a family owned prerequisite to the filing of criminal case for tax
corporation, while at the same time engaged evasion?
in rental business. His wife, herein co
accused is a housewife.
The petition is meritorious.
On April 27, 2005, the BIR issued LOA No.
2001 00012387 authorizing its revenue No, an issuance of an assessment is not a prerequisite
officers to investigate respondent to the filing of criminal case for tax evasion.
spouses for internal revenue tax liabilities
for the year 2003 and prior years. 1. Tax evasion is deemed complete when the
On June 6, 2005, BIR issued a letter to violator has knowingly and willfully filed
respondents requiring them to submit fraudulent return with intent to evade and
documentary evidence. defeat a part or all of the tax. An assessment of
the tax deficiency is not required in a criminal
The Spouses failed to comply. The prosecution for tax evasion. However, the fact
revenue officers executed a joint affidavit that a tax is due must be proved before one can
purporting to the declared annual income be prosecuted for tax evasion.
of the spouses for the years 1998-2003.
In the said affidavit, it was alleged that 2. Since the underdeclaration of the income is
despite the modest income declared, the more than 30% (133.24%), it constitutes prima
spouses were able to acquire valuable
facie evidence of false or fraudulent return.
properties such as the log house in
Tagaytay City, a Toyota Rav 4 and a
3. The amount of tax due was specifically alleged
Toyota Prado.
in the complaint.
The revenue officers recommended the
filing of criminal cases against the
respondents, for failing to supply the
correct and accurate information in their
ITRs.
The State Prosecutor recommended for
the filing of criminal charges against
respondents: 3 counts of violation of Sec.
254 (attempt to evade or defeat tax), 3
counts of violation of Sec. 255 (failure to
supply correct and accurate information),
and 3 counts of violation of Sec. 255
(failure to pay
On July 27, 2009, Justice Secretary Agnes
Devanadera reversed the resolution of
the State Prosecutor. She found no willful
failure to pay or attempt to evade or
defeat the tax on the part of the
respondent spouses. She also pointed to
the BIR’s failure to issue a deficiency tax
assessment against respondents is a
prerequisite to the filing of criminal case
for tax evasion.
BIR filed a petition for certiorari before
the CA, however, the petition was
dismissed.
 CIR vs. BPI
FACTS RULING
In two notices dated Oct. 28, 1988, CIR W/N the assessments issued to BPI for
assessed BPI’s deficiency percentage and 1986 had already become final and
documentary stamp taxes for year 1996, executory?
amounting to P129,488,656.63.

On Dec 10, 1988, BPI replied, requesting In merely notifying BPI of his findings, CIR
for details on the assessments made. relied on the provisions of the former Sec.
270 prior to its amendment by RA 8424. The
On June 27, 1991, BPI received a letter sentence “the taxpayer shall be informed in
from CIR as to their final decision. writing of the law and the facts in which the
assessment is made” was not in the old Sec.
BPI sought for reconsideration, which was 270 but was only later on inserted in the
denied. renumbered Sec. 228 in 1997.

Tax assessments by tax examiners are

BPI filed a petition for review with the
CTA, but was dismissed for lack of
jurisdiction since the assessments have
become final and unappealable.
The CTA ruled that BPU failed to protest
on time under Sec. 270 of the NIRC and
Sec. 7 in relation to Sec. 11 of RA 1125.
presumed correct and made in good faith.
The taxpayer has the duty to prove
otherwise.
In the absence of proof of any irregularities
in the performance of duties, an assessment
duly made by BIR examiners and approved
by his superior officers will not be disturbed.
All presumptions are in favour if the
correctness of tax assessments.

On appeal, CA reversed the decision and W/N BPI is liable for said taxes?
remanded it to the CTA for decision on
the merits. Yes. Whether or not a protest was made, the
liability of BPI cannot be absolved. The
CTA ruled that the Oct. 28, 1988 notices assessments which have been pending for
were not valid assessments because they almost 20 years involve a considerable
did not inform the taxpayer of the legal amount of money. Be that as it may, we
and factual basis thereof. cannot legally presume the existence of
CTA held that BPI filed a petition for something which was never there. The state
review on time. will be deprived of taxes validly due, and
the public will suffer if taxpayers will not be
held liable for the proper taxes assessed
against them.
 CIR vs. METRO STAR SUPREMA
FACTS RULING

Petitioner is a domestic Whether or not the failure to strictly comply with

corporation duly organized and notice requirements prescribed under Section 228
existing by virtue of the laws of of the National Internal Revenue Code of 1997 and
the Republic of the Philippines. Revenue Regulations (R.R.) No. 12-99 tantamount
to a denial of due process?
On January 26, 2001, Regional
Director of Revenue Region Yes. Section 228 of the Tax Code states that in protesting of
issued a Letter of Authority No. assessment or when the Commissioner or his duly authorized
to examine petitioner’s books representative finds that proper taxes should be assessed, he
of accounts and other shall first notify the taxpayer of his findings except for the
accounting records for income exceptions expressly stated in the law. The taxpayers shall be
tax and other internal revenue informed in writing of the law and the facts on which the
taxes for the taxable year assessment is made; otherwise, the assessment shall be void.
1999. Within a period to be prescribed by implementing rules and
On November 8, 2001, regulations, the taxpayer shall be required to respond to said
Revenue District Officer issued notice. Indeed, Section 228 of the Tax Code clearly requires that
a Preliminary 15-day Letter, the taxpayer must first be informed that he is liable for deficiency
stating that a post audit review taxes through the sending of a PAN. He must be informed of the
was held and it was facts and the law upon which the assessment is made. The law
ascertained that there was imposes a substantive, not merely a formal, requirement. To
deficiency value-added and proceed heedlessly with tax collection without first establishing a
withholding taxes due from valid assessment is evidently violative of the cardinal principle in
petitioner in the amount of P administrative investigations—that taxpayers should be able to
292,874.16. present their case and adduce supporting evidence. This is also
confirmed under the provisions R.R. No. 12-99 of the BIR
Final Notice of Seizure and providing for the due process requirement in the issuance of a
Warrant of Distraint were sent deficiency tax assessment. It is clear that the sending of a PAN to
to the petitioner demanding the taxpayer to inform him of the assessment made is but part of the
payment of the deficiency tax. “due process requirement in the issuance of a deficiency tax
assessment,” the absence of which renders nugatory any
assessment made by the tax authorities. The use of the word
Denying that it received a
Preliminary Assessment Notice
(PAN) and claiming that it was
not accorded due process,
Metro Star filed a petition for
review with the CTA which was
granted. The CIR sought for
reconsideration but was
denied. Hence, this petition.
“shall” in describes the mandatory nature of the service of a PAN.
The persuasiveness of the right to due process reaches both
substantial and procedural rights and the failure of the CIR to
strictly comply with the requirements laid down by law and its own
rules is a denial of Metro Star’s right to due process. The
Supreme Court has consistently held that while a mailed letter is
deemed received by the addressee in the course of mail, this is
merely a disputable presumption subject to controversion and a
direct denial thereof shifts the burden to the party favored by the
presumption to prove that the mailed letter was indeed received
by the addressee. The failure of the respondent to prove receipt of
the assessment by the Petitioner leads to the conclusion that no
assessment was issued. Thus, for its failure to send the PAN
stating the facts and the law on which the assessment was made
as required by Section 228 of R.A. No. 8424, the assessment
made by the CIR is void.