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
Assuming that the CTA-EB, as an exception to the
Petition for Review and subsequently, general rule, allowed and treated petitioner’s
a Petition for Review with CTA-EB Petition for Review as a special civil action for
regarding the denial of her MTQ.
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, strictly by the notices, present his case and adduce supporting
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.
The presentation of PANs as evidence of the
W/N
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
serves as basis for the taxpayer to answer the
technical
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
W/N CIR, who had simply relied upon the
the Expanded provisions of former Section 229 prior to its
Withholding amendment by [RA] 8424, otherwise known as
Tax (EWT) the Tax Reform Act of 1997 which required
Assessment that the taxpayer should be informed not only
issued by of the law, but also of the facts on which an
assessment would be made; otherwise, the
petitioner
against the assessment itself would be invalid. It is clear
respondent that the assailed deficiency tax assessment for
for taxable the EWT in 1994disregarded the provisions of
year 1994 Section 228 of the Tax Code, as amended, as
was without well as Section 3.1.4 of Revenue Regulations
Petitioner moved to reconsider the aforesaid any factual No. 12-99 by not providing the legal and
ruling but was denied and the CTA En Banc and legal factual bases of the assessment. Hence, the
affirmed the decision with modification. basis? formal letter of demand and the notice of
assessment issued relative thereto are void.
 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
In 2009, Philamlife offered to sell its shareholdings difference between the book value and the
in PhilamCare through competitive bidding. selling price in the sales transaction is taxable
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
104,259,330 based on the prevailing exchange rate laws should be given a reasonable
at the time of the sale, to STI Investments, Inc., the interpretation which does not defeat the very
highest bidder. purpose for which they were passed.
R.A. No. 1125 creating the Court of Tax
Months later, Philamlife was informed that it Appeals did not grant it blanket authority to
needed 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
limited its authority to those matters
On January 4, 2012, Philamlife requested a ruling enumerated therein.
to confirm that the sale was not subject to donor’s Republic Act No. 1125 is a complete law by
tax, pointing out: that the transaction cannot attract itself and expressly enumerates the matters
donor’s tax liability since there was no donative which the Court of Tax Appeals may
intent and no taxable donation; a sale for less than consider; such enumeration excludes all
an adequate consideration is not subject to donor’s others by implication. Expressio unius est
tax; and that donor’s tax does not apply to sale of exclusio alterius.
shares sold in an open bidding process. 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
exclusive jurisdiction over appealed tax cases
As determined by the Commissioner, the selling to the CTA, it can reasonably be assumed
price of the shares thus sold was lower than their that the law intended to transfer also such
book value based on the financial statements of power as is deemed necessary, if not
PhilamCare as of the end of 2008. As such, CIR indispensable, in aid of such appellate
held that donor’s tax became imposable on the jurisdiction. There is no perceivable reason
price difference pursuant to Sec. 100 of the NIRC. 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

then Ministry of Tourism (now DOT) through the
Philippine Tourism Authority (PTA), pursuant to E.O. No.
46 dated 4 September 1986.
In a letter, DutyFree sought a clarification of its
exemption from the expanded withholding tax under
Whether or not CTA erred in
R.R. No. 6-94.
dismissing petitioner’s
It argued that as a tax-exempt establishment under E.O. petition?
No. 46, it should not be subjected to the 1.1/2%
expanded withholding taxes (EWT) on certain income The SC has no jurisdiction.
payments that were withheld by credit card companies in
compliance with R.R. No. 6-94. Any party adversely affected by
any ruling, order or decision of
In response, BIR issued BIR Ruling No. 136-95 on 6
the Court of Tax Appeals may
September 1995 which states that E.O. No. 93 dated 17
appeal therefrom to the Supreme
December 1986 withdrew all the tax and duty incentives
Court by filing with the said Court
granted to petitioner. Hence, BIR denied the request for
a notice of appeal and with the
refund of petitioner.
Supreme Court a petition for
Petitioner requested a reconsideration, but BIR denied review, within thirty days from the
the request through BIR Ruling No. 38-2002 and ruled date he receives notice of said
that DutyFree, as a division of PTA, was now subject to ruling, order or decision.
income tax.
A party adversely affected by a
This prompted petitioner to file an appeal with the
resolution of a Division of the
Department of Finance (DOF), however, DOF affirmed
CTA on a motion for
the ruling.
reconsideration or new trial, may
Meanwhile, petitioner received several assessment file a petition for review with the
notices from BIR for deficiency income tax and VAT from CTA En Banc.
1999-2002 worth P1.4B. A petition for review was filed
with the CTA. In sum, this Court has no
jurisdiction to review the Decision
CTA Special First Division ruled that petitioner was not a
and Resolution rendered by the
tax-exempt entity as PDs No. 1177 and 1931 withdrew
Special First Division of the CTA.
PTA’s exemption under Section 1 of PD No. 1400, but
Thus, the instant Petition must
the Fiscal Incentives Review Board restored some tax
fail.
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 its petition.
PNB vs. CIR
ISSUE RULING
PNB filed its petition with the CTA En Banc four days
beyond the extended period granted to it to file such
petition. PNB argues that it was filed on time since it
was mailed on the last day of the extended period, which
was on December 23, 2005. It has been established that a
pleading filed by ordinary mail or by private
messengerial service is deemed filed on the day it is
actually received by the court, and not on the day it was
mailed or delivered to the messengerial service
It is worthy to note that PNB already asked for an
additional period of 15 days within which to file its
petition for review with the CTA En Banc. This period
expired on December 23, 2005.Knowing fully well that
W/N December 23, 2005 not only fell on a Friday, followed
This Court by three consecutive non-working days, but also
should require belonged to the busiest holiday season of the year, PNB
the CTA En should have exercised more prudence and foresight in
Banc to give due filing its petition.
course to C.T.A.
E.B. No. 145 It is, however, curious why PNB chose to risk the
despite PNBs holiday traffic in an effort to personally file its petition
failure to comply with the CTA En Banc, when it already filed a copy to
with the formal the other party, the CIR, viaregistered
requirements of mail.[37] Considering the circumstances, it would have
the Revised been more logical for PNB to send its petition to the
Rules of the CTA En Banc on the same occasion it sent a copy to the
Court of Tax CIR, especially since that day was already the last day
Appeals and the given to PNB to file its petition. Moreover, PNB offered
Rules of Court in no justification as to why it sent its petition via ordinary
filing a petition mail instead of registered mail. Service by ordinary mail
for review with is allowed only in instances where no registry service
the CTA En exists.
Banc?
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 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.
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.
UNGAB vs. CUSI
ISSUE RULING
No. The respondent State Prosecutor sought
permission from 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.
WON the
What is involved here is not the collection of
petitioner is
taxes where the assessment of the
correct?
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.
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
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.
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
Section 7 of RA 9282 expressly provides that the CTA exercises
exclusive appellate jurisdiction to review by appeal decisions of
the CIR in cases involving disputed assessments. The CTA,
being a court of special jurisdiction, can take cognizance only of
matters that are clearly within its jurisdiction. Under section
7(a), par. 1of RA 9282, the CTA shall exercise exclusive
appellate jurisdiction to review by appeal on decisions of the
Whether the Commissioner of Internal Revenue in cases involving disputed
Formal assessments.
Letter of
Demand RA 9282 has been interpreted to mean the decisions of the CIR
dated July on the protest of the taxpayer against the assessments. Corollary
thereto, Section 228 of the National Internal Revenue Code
16,
(NIRC) provides for the procedure for protesting an assessment
2004 can be
in which the taxpayers shall be informed in writing of the law
construed as and the facts on which the assessment is made; otherwise, the
a final assessment shall be void . Within a period to be prescribed by
decision of implementing rules and regulations, the taxpayer shall be
the CIR required to respond to said notice. If the taxpayer fails to
appealable respond, the Commissioner or his duly authorized representative
to the CTA shall issue an assessment based on his findings. Petitioner
under RA timely filed a protest after receiving the PAN. However, did not
protest the final assessment notices. Instead, it filed a Petition
9282?
for Review with 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
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.
In its Supplemental Petition for Review,
respondent seeks to be fully credited of the
payments it made to cover the deficiency. The period for CIR to assess and collect an internal revenue tax is limited only
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.
WON the right to assess by the CIR has already prescribed?
to 3 years by Section 203 of the NIRC of 1997. This is to safeguard the
CTA in Division granted respondent’s
petition for the cancellation and setting
aside of the subject FLD/AN dated on
the ground that petitioner’s right to
assess respondent for the deficiency
taxes covering taxable year 1998 was
already barred by prescription.
CTA in Division explained that the
Waivers of Statute of Limitations
executed by the parties, for the
purpose of justifying the extension of
period to assess respondent, the
subject waivers, particularly the First
and Second Waivers dated 20 July
2001 and 4 April 2002,respectively,
failed to strictly comply and conform
with the provisions of Revenue
Memorandum Order (RMO) No. 20-
90. The CTA En Banc affirmed the
decision in toto.
interests of taxpayers from unreasonable investigation by not indefinitely
extending the period of assessment and depriving the taxpayer of the assurance
that it will no longer be subjected to further investigation for taxes after the
expiration of reasonable period of time. The XPN: when it is agreed by the
taxpayer and the Commissioner in writing.
The law on prescription should be liberally construed in order to afford such
protection.
The waiver of the Statute of Limitations, RMO No. 20-90 and Revenue
Delegation Authority Order (RDAO) No. 05-01 provides that:
• The waiver must be in the proper form prescribed by RMO 20-90.
• The waiver must be signed by the taxpayer himself or his duly authorized
representative.
• The waiver should be duly notarized.
• The CIR or the revenue official authorized by him must sign the waiver
indicating that the BIR has accepted and agreed to the waiver. Both the date of
execution by the taxpayer and date of acceptance by the Bureau 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.
• 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
who died in 1993 leaving a residential lot and WON whether the assessment against the
old house in Dasma Village. Without submitting estate is valid; and, second, whether the
a preliminary finding report, an LOA was issued compromise entered into is also valid?
and received by Reyes, one of the heirs on 14
March 1997. No. Under the present provisions of the Tax Code
and pursuant to elementary due process,
On 12 Feb 1998, a PAN was issued against the taxpayers must be informed in writing of the law
estate, and a FAN as well as demand letter and the facts upon which a tax assessment is
was issued on 22 April 1998 for the based; otherwise, the assessment is void. Being
assessment of P14.9M for estate tax of the invalid, the assessment cannot in turn be used as
estate of Maria Tancinco. a basis for the perfection of a tax compromise.
This was clear and mandatory under Section 228.
On March 11, 1999, the heirs proposed a
compromise settlement of P1M. Reyes was not informed in writing of the law and
the facts on which the assessment of estate taxes
Due to failure to pay tax on the deadline, BIR had been made. She was merely notified of the
notified on June 6, 2000 that the subject findings by the CIR, who had simply relied upon
property would be sold at public auction. the provisions of former Section 22913 prior to its
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 the tax function of correctly assessing a taxpayer.
to 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
Medicard was ordered by the CTA to pay CIR a
VAT deficiency of P220,234,609.48, plus 20%
interest per annum from January 25, 2007. W/N the absence of the LOA is fatal?
Finding some discrepancies between
Medicard’s ITR and VAT returns, the CIR
informed Medicard and issued a Letter Notice.
A Preliminary Assessment Notice (PAN) was
issued for VAT deficiency.
A Formal Assessment Notice (FAN) was
received by Medicard on Jan. 4, 2008, for
alleged VAT deficiency for tax year 2006,
amounting to P196,614,476.99.
Medicard raised the issue of lack of LOA on the have underreported sales/receipts per data generated
part of the revenue officer who conducted the
examination.
The CIR posits that the LN is enough
compliance with the LOA requirement, arguing administrative and criminal remedies, particularly
that the use of computers to detect
discrepancies dispenses with the LOA
requirement.
The CIR argued that the amounts earmarked
and paid by Medicaid to medical service
providers form part of gross receipts for VAT
purposes.
The CTA En Banc sided with the CIR.
RULING
Yes. The absence of the LOA violated MEDICARD’s
right to due process.
A LOA is the authority given to the appropriate revenue
officer assigned to perform assessment functions. In the
absence of such an authority, the assessment or
examination is a nullity.
The LN cannot replace the LOA required under the law
even if the same was issued by the CIR himself. Under
RR No. 12-2002, LN is issued to a person found to
under the relief system. Upon receipt of the LN, a
taxpayer may avail of the BIR's Voluntary Assessment
and Abatement Program. If a taxpayer fails or refuses
to avail of the said program, the BIR may avail of
closure, criminal action, or audit and investigation.
Since the law specifically requires an LOA and RMO
No. 32-2005 requires the conversion of the previously
issued LN to an LOA, the absence thereof cannot be
simply swept under the 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-
payment of deficiency corporate income tax for
the year 1979, amounting to P2,369,085.46 in W/N the reinstatement is proper, for the offence has
violation of the Tax Code. prescribed?
MeTC dismissed the information for lack of
jurisdiction, subsequently denying their MR. No. The shortened period of 3 years prescription under
B.P. Big. 700 is not applicable to Tupaz. B.P. 700,
effective April 5, 1984, specifically states that the
SP Molon filed two informations before the shortened period of 3 years shall apply to assessments
RTC for the same alleged non-payment, raffled and collections beginning taxable year 1984.
at Branch 105 and Branch 86.
Assessments made on or before April 5, 1984 are
Hon. Ulep ordered the prosecution to withdraw governed by the 5-year period if the taxes assessed
the information in Br. 86 after the discovery that cover taxable years prior to Jan. 1, 1984.
the cases were identical.
The deficiency under consideration is for taxable year
The prosecutor withdrew the information, but 1979. The income tax return was filed in April 1980.
filed a motion to reinstate the same eventually. Hence, the July 16, 1984 tax assessment was issued
Hon. Ulep granted the motion. within the prescribed period of five years from the last
Tupaz filed this petition alleging that Hon. Ulep day of filing, or from the date the return is filed,
committed grave abuse of discretion in whichever comes later.
reinstating information because the offence has
prescribed, and such reinstatement exposed
Tupaz to double jeopardy.
 MARCOS vs. CA
FACTS RULING

In 1989, former President Ferdinand Marcos Whether or not the BIR has authority to collect
died in Honolulu, Hawaii, USA. by the summary remedy of levying upon, and
sale of real properties of the decedent, estate tax
On June 27, 1990, a Special Tax Audit Team deficiencies, without the cognition and authority
was created to conduct investigations and of the court sitting in probate over the supposed
examinations of the tax liabilities and will of the deceased?
obligations of the late president, as well as that
of his family, associates and “cronies.” Yes. The approval of the court, sitting in probate, or
as a settlement tribunal over the deceased is not a
The investigation disclosed that the Marcoses
mandatory requirement in the collection of estate
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
pertinent remedial laws that implies the necessity of
several income tax returns covering the years the probate or estate settlement court’s approval of
1982 to 1986, -all in violation of the NIRC, and the state’s claim for estate taxes, before the same can
thereby caused the preparation and filing of the be enforced and collected. If there is any issue as to
Estate Tax Return for the estate of the late the validity of the BIR’s decision to assess the estate
president, the Income Tax Returns of the taxes, this should have been pursued through the
Spouses Marcos for the years 1985 to 1986, proper administrative and judicial avenues provided
and the Income Tax Returns of petitioner for by law and that by protesting of assessment
Ferdinand ‘Bongbong’ Marcos II for the years provided in Section 229 of the NIRC.
1982 to 1985. Apart from failing to file the required estate tax
return within the time required for the filing of the
BIR then issued deficiency tax assessments to same, petitioner, and the other heirs never
the Marcoses. questioned the assessments served upon them,
The CIR avers that copies of the deficiency estate allowing the same to lapse into finality, and prompting
and income tax assessments were all personally and the BIR to collect the said taxes by levying upon the
constructively served upon Mrs. Imelda Marcos and properties left by President Marcos. The mere fact
that the decedent has pending cases involving ill-
Bongbong Marcos.
gotten wealth does not affect the enforcement of tax
The deficiency tax assessments were not assessments over the properties indubitably included
protested within 30 days from service of said in his estate. It is not the Department of Justice which
assessments. is the government agency tasked to determine the
amount of taxes due upon the subject estate, but the
Thereafter, the BIR Commissioner issued Bureau of
twenty-two notices of levy on real property Internal Revenue, whose determinations and
against certain parcels of land owned by the assessments are presumed correct and made in good
Marcoses—to satisfy the alleged estate tax and faith. The taxpayer has the duty of proving otherwise.
deficiency income taxes of Spouses Marcos. In the absence of proof of any irregularities in the
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.
CIR vs. PRIMETOWN PROPERTY
FACTS
March 11, 1999, Gilbert Yap, Vice Chair of
Primetown Property Group, Inc. applied for
refund or credit of income tax respondents
paid in 1997.
The CTA found that respondent filed its
final adjusted return on April 14, 1998.
Thus, its right to claim a refund or credit
commenced on that date.
According to the CTA, the two-year
prescriptive period under Section 229 of the
NIRC for the filing of judicial claims was
equivalent to 730 days. Because the year
2000 was a leap year, respondent's
petition, which was filed 731 days after
respondent filed its final adjusted return,
was filed beyond the reglementary period.
On appeal, the CA reversed and set aside the
decision of the CTA. It ruled that Article 13 of
the Civil Code did not distinguish between a
regular year and a leap year.
performance of official duties, an 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.
RULING
Whether or not the counting of the 2-year
prescriptive period for filing claim of refund is
governed by the Civil Code?
The counting of 2-year period for filing claim for
refund is no longer in accordance with Art. 13 of
the Civil Code but under Sec 31 of EO 227 - The
Administrative Code of 1987.
As between the Civil Code, which provides that a
year is equivalent to 365 days, and the
Administrative Code of 1987, which states that a
year is composed of 12 calendar months, it is the
latter that must prevail being the more recent law,
following the legal maxim, Lex posteriori derogat
priori.
In the case at bar, there are 24 calendar months in 2
years. For a Final Corporate ITR filed on Apr 14,
1998, the counting should start from Apr 15, 1998
and end on Apr 14, 2000. The procedure is:
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.
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 Central Bank, for
the total sale amount of $1M.
BIR issued deficiency assessment for DST
in the amount of 28,020.00 for the said sales.
On October 20,1989, petitioner received the
notice and consequently filed a protest in
November 16,1989. Petitioner did not
receive a reply but soon after, October 15,
1992, BIR issued a Warrant of distraint, and
finally in August 13, 1997, BPI received a
letter denying its request for reconsideration.
Petitioner alleged prescription to CTA but
the latter denied the same.
CTA likewise ruled in the negative that the
sales of currency by petitioner was not
subject to DST. CA sustained first issue but
reinstated the second.
Whether or not the right to collect has
prescribed?
The period for the BIR to assess and collect an
internal revenue tax is limited to three years by
Section 203 of the Tax Code.
This period is limited by Section 223 XPNS:
a) in the case of a false or fraudulent return
with intent to evade tax or of failure to file a
return, the tax may be assessed, or a proceeding
in court for the collection of such tax may be
begun without assessment, at any time within
10 years after the discovery of the falsity, fraud
or omission…
BPI executed no waiver of the Statute of
Limitations, thus it did not suspend running of
the prescription. Likewise, BPI requested for a
reconsideration and suspension of the running
of the 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
Alberto Benipayo is the owner of the Lucena
Theater in Lucena, Quezon.
In 1953, the internal revenue agent
investigated Benipayo’s tax liability for the
period of August 1952 to September 1953.
The examiner recommended a deficiency tax
assessment in the sum of P11,193.45
inclusive of 25% surcharge plus a suggested
compromise penalty of P900.00 based on the
conclusion that Benipayo sold 2 tax-free 20c
ticlets fraudulently in order to avoid
payment of amusement tax prescribed by
Section 260 of the Tax Code (based on a
reverse ratio of adult to children; 3:1 in 1949
to 1951, and 1:3 for period in question; and
average attendance for the past years).
Benipayo protested, claiming that the
findings of the examiners are mere
presumptions and conclusions, devoid of
findings of fact of alleged fraudulent
practices by him.
RULING
Whether there is evidence in the record to
show Benipayo committed the alleged act to
cheat or defraud the Government?
No. An assessment fixes and determines the tax
liability of a taxpayer. In order to stand the test
of judicial scrutiny, the assessment must be
based on actual facts. The presumption of
correctness of assessment, being a mere
presumption, cannot be made to rest on another
presumption, no matter how reasonable or
logical such may be; i.e. that the circumstances
in 1952 and 1953 are presumed to be the same
as those existing in 1949 to 1951, and July
1955. There are no substantial facts to support
the assessment in question. Neither was there
any proof of the fraud allegedly committed.
Fraud is a serious charge, and to be sustained, it
must also be supported by clear and convincing
proof.
 BIR vs. CA & SPS. MANLY
FACTS RULING

Antonio Manly is stockholder and EVP of Standard

Realty Corp., a family owned corporation, while at the
same time engaged in rental business. His wife, herein co
accused is a housewife.
On April 27, 2005, the BIR issued LOA No. 2001
00012387 authorizing its revenue officers to
investigate respondent spouses for internal revenue
tax liabilities for the year 2003 and prior years.

On June 6, 2005, BIR issued a letter to respondents WON the issuance of a deficiency tax assessment is a
requiring them to submit documentary evidence. prerequisite to the filing of criminal case for tax
evasion?

The Spouses failed to comply. The revenue officers The petition is meritorious.
executed a joint affidavit purporting to the declared
annual income of the spouses for the years 1998-
No, an issuance of an assessment is not a prerequisite
2003. In the said affidavit, it was alleged that
to the filing of criminal case for tax evasion.
despite the modest income declared, the spouses
were able to acquire valuable properties such as the
log house in Tagaytay City, a Toyota Rav 4 and a 1. Tax evasion is deemed complete when the
Toyota Prado. violator has knowingly and willfully filed
fraudulent return with intent to evade and
defeat a part or all of the tax. An assessment of
The revenue officers recommended the filing of the tax deficiency is not required in a criminal
criminal cases against the respondents, for failing to prosecution for tax evasion. However, the fact
supply the correct and accurate information in their that a tax is due must be proved before one can
ITRs. be prosecuted for tax evasion.
The State Prosecutor recommended for the filing of
criminal charges against respondents: 3 counts of 2. Since the underdeclaration of the income is
violation of Sec. 254 (attempt to evade or defeat more than 30% (133.24%), it constitutes prima
tax), 3 counts of violation of Sec. 255 (failure to facie evidence of false or fraudulent return.
supply correct and accurate information), and 3
counts of violation of Sec. 255 (failure to pay 3. The amount of tax due was specifically alleged in
the complaint.
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 assessed BPI’s

deficiency percentage and documentary stamp taxes for
year 1996, amounting to P129,488,656.63.
W/N the assessments issued to BPI for 1986 had
On Dec 10, 1988, BPI replied, requesting for details already become final and executory?
on the assessments made.
In merely notifying BPI of his findings, CIR relied on
the provisions of the former Sec. 270 prior to its
On June 27, 1991, BPI received a letter from CIR as amendment by RA 8424. The sentence “the taxpayer
to their final decision. shall be informed in 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 denied. 270 but was only later on inserted in the renumbered
Sec. 228 in 1997.

Tax assessments by tax examiners are presumed correct

and made in good faith. The taxpayer has the duty to
prove otherwise.

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.
On appeal, CA reversed the decision and remanded
it to the CTA for decision on the merits.
CTA ruled that the Oct. 28, 1988 notices were not
valid assessments because they did not inform the
taxpayer of the legal and factual basis thereof.
CTA held that BPI filed a petition for review on
time.
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.
W/N BPI is liable for said taxes?
Yes. Whether or not a protest was made, the liability of
BPI cannot be absolved. The assessments which have
been pending for almost 20 years involve a
considerable amount of money. Be that as it may, we
cannot legally presume the existence of something
which was never there. The state 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 notice
corporation duly organized and
requirements prescribed under Section 228 of the National Internal
existing by virtue of the laws of
Revenue Code of 1997 and Revenue Regulations (R.R.) No. 12-99
the Republic of the Philippines.
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 shall
of accounts and other first notify the taxpayer of his findings except for the exceptions
accounting records for income expressly stated in the law. The taxpayers shall be informed in
tax and other internal revenue writing of the law and the facts on which the assessment is made;
taxes for the taxable year otherwise, the assessment shall be void. Within a period to be
1999. prescribed by implementing rules and regulations, the taxpayer
shall be required to respond to said notice. Indeed, Section 228 of
On November 8, 2001, the Tax Code clearly requires that the taxpayer must first be
Revenue District Officer issued informed that he is liable for deficiency taxes through the sending of
a Preliminary 15-day Letter, a PAN. He must be informed of the facts and the law upon which
stating that a post audit review the assessment is made. The law imposes a substantive, not merely
was held and it was a formal, requirement. To proceed heedlessly with tax collection
ascertained that there was without first establishing a valid assessment is evidently violative of
deficiency value-added and the cardinal principle in administrative investigations—that
withholding taxes due from taxpayers should be able to present their case and adduce
petitioner in the amount of P supporting evidence. This is also confirmed under the provisions
292,874.16. R.R. No. 12-99 of the BIR providing for the due process requirement
in the issuance of a deficiency tax assessment. It is clear that the
Final Notice of Seizure and
sending of a PAN to taxpayer to inform him of the assessment made
Warrant of Distraint were sent
is but part of the “due process requirement in the issuance of a
to the petitioner demanding the
deficiency tax assessment,” the absence of which renders nugatory
payment of the deficiency tax.
any assessment made by the tax authorities. The use of the word
“shall” in describes the mandatory nature of the service of a PAN.
The persuasiveness of the right to due process reaches both
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.
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.