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Willful blindness doctrine by: Maridelle M.

MERE RELIANCE on another person in preparing, filing and paying income taxes is not a justification
for failure to file the right information on income taxes.
In People v. Gloria Kintanar (CTA EB Crim. No. 006, Dec. 3, 2010), Ms. Kintanar was charged with
failure to make or file her income tax returns (ITR), violating Section 255 of the 1997 National Internal
Revenue Code (NIRC), as amended. She claimed that she did not actively participate in the filing of
her joint ITR with her husband since she entrusted such duty to the latter who, in turn, hired an
accountant to perform their tax responsibilities. She testified that she did not know how much her tax
obligation was; nor did she bother to inquire or determine the facts surrounding the filing of her ITRs.
Despite several notices and subpoena received by the accused, only an unsupported protest letter made
by her husband was filed with the Bureau of Internal Revenue (BIR). The Court of Tax Appeals (CTA)
En Banc found her neglect or omission tantamount to deliberate ignorance or conscious avoidance.
As an experienced businesswoman, her reliance on her husband to file the required ITR without
ensuring its full compliance showed clear indication of deliberate lack of concern on her part to
perform her tax obligations. This ruling was sustained by the Supreme Court (SC) in 2012.
Based on the foregoing, the willful blindness doctrine was applied by the CTA, as sustained by SC on
cases where there is a natural presumption that the taxpayer knows his/her tax obligations under the law
considering the factual circumstances of the case, such as being a businesswoman or official of a
company. This case set a precedent that mere reliance on a representative or agent (i.e., accountant or
husband) is not a valid ground to justify any noncompliance in tax obligations. The taxpayer must
inquire, check and validate whether or not his/her representative or agent has complied with the
taxpayers tax responsibilities.
However, in the recent case of People v. Judy Ann Santos (CTA Crim. Case no. 012, Jan. 16, 2013), the
CTA Division seemed to have a change of heart and acquitted Ms. Santos despite having almost the
same circumstances as that of the case of Ms. Kintanar. In this case, Ms. Santos was accused of failure
to supply correct and accurate information in her ITR. She claimed that by virtue of trust, respect and
confidence, she has entrusted her professional, financial and tax responsibilities to her manager since
she was 12 years old. She participated and maintained her intention to settle the case, and thus provided
all the documents needed as well as payment of her taxes. The element of willfulness was not
established and the CTA found her to be merely negligent. The CTA also noted the intention of Ms.
Santos to settle the case, which negates any motive to commit fraud. This was affirmed by the SC in its
resolution issued April 2013.
Willful blindness is defined in Blacks Law Dictionary as deliberate avoidance of knowledge of a
crime, especially by failing to make a reasonable inquiry about suspected wrongdoing, despite being
aware that it is highly probable. A willful act is described as one done intentionally, knowingly and
purposely, without justifiable excuse.
Willful in tax crimes means voluntary, intentional violation of a known legal duty, and bad faith or
bad purpose need not be shown. It is a state of mind that may be inferred from the circumstances of the
case; thus, proof of willfulness may be, and usually is, shown by circumstantial evidence alone.
Therefore, to convict the accused for willful failure to file ITR or submit accurate information, it must

be shown that the accused was (1) aware of his/her obligation to file annual ITR or submit accurate
information, but that (2) he/she, or his/her supposed agent, nevertheless voluntarily, knowingly and
intentionally failed to file the required ret urns or submit accurate information. Bad faith or intent to
defraud need not be shown.
As can be observed in the first case, the accused knew that she had to timely file and supply correct and
accurate information of the joint ITR with the BIR in relation to the profession or the position she
holds. The knowledge was presumed based on the fact that Ms. Kintanar is an experienced
businesswoman, having been an independent distributor of a product for several years. However,
despite this knowledge, the CTA found that she voluntarily, knowingly and intentionally failed to fulfill
her tax responsibilities by not participating in the filing of the ITR and ensuring that everything was
filed correctly and accurately. As compared with the Santos case, which the SC affirmed, the element of
voluntarily, knowingly and intentionally was taken differently by the CTA in consideration of the
facts of the case. Ms. Santos fully entrusted her tax obligations and finances to her manager since she
was a child. It can be said that she is not an experienced manager of her finances and taxes since she
never handled such task, as compared with the situation of Ms. Kintanar, who is considered an
experienced businesswoman who manages her business as well as her financial and tax responsibilities
-- which is expected of somebody in her position (i.e., president and/or businessperson).
The concept of willful blindness doctrine is new in Philippine jurisprudence. The application of this
doctrine by the CTA in the said cases was guided by the appreciation of the facts and the pieces of
evidence produced by the prosecution and accused to prove the non-existence of willfulness. However,
defined and clear standards in its application must be done as guidance for future application. This is
necessary to avoid arbitrary application and to encourage proper use of the doctrine by both parties in
the case.
For the purpose of protest herein
Request for reconsideration-- refers to a plea for a reevaluation of an assessment on the basis of existing records without need
of additional evidence. It may involve both a question of fact or of law
or both.
Request for reinvestigationrefers to a plea for reevaluation of an assessment on the basis of newly-discovered evidence or
additional evidence that a taxpayer intends to present in the
investigation. It may also involve a question of fact or law or both.

The main difference between these two types of protests lies in the records or evidence to be examined
by internal revenue officers, whether these are existing records or newly discovered or additional
evidence. A re-evaluation of existing records which results from a request for reconsideration does not
toll the running of the prescription period for the collection of an assessed tax. Section 271 distinctly
limits the suspension of the running of the statute of limitations to instances when reinvestigation is
requested by a taxpayer


1. When does the audit process begin?The audit process commences with the issuance of a Letter of
Authority to a taxpayer who has been selected for audit.
2. What is a Letter of Authority? The Letter of Authority is an official document that empowers a
Revenue Officer to examine and scrutinize a Taxpayers books of accounts and other accounting
records, in order to determine the Taxpayers correct internal revenue tax liabilities.
3. Who issues the Letter of Authority? Letter of Authority, for audit/investigation of taxpayers under the
jurisdiction of National Office, shall be issued and approved by the Commissioner of Internal Revenue,
while, for taxpayers under the jurisdiction of Regional Offices, it shall be issued by the Regional
4. When must a Letter of Authority be served? A Letter of Authority must be served to the concerned
Taxpayer within thirty (30) days from its date of issuance, otherwise, it shall become null and void. The
Taxpayer shall then have the right to refuse the service of this LA, unless the LA is revalidated.
5. How often can a Letter of Authority be revalidated? A Letter of Authority is revalidated through the
issuance of a new LA. However, a Letter of Authority can be revalidated
Only once, for LAs issued in the Revenue Regional Offices or the Revenue District Offices; or
Twice, in the case of LAs issued by the National Office.
Any suspended LA(s) must be attached to the new LA issued (RMO 38-88).
6. How much time does a Revenue Officer have to conduct an audit?A Revenue Officer is allowed only
one hundred twenty (120) days from the date of receipt of a Letter of Authority by the Taxpayer to
conduct the audit and submit the required report of investigation. If the Revenue Officer is unable to
submit his final report of investigation within the 120-day period, he must then submit a Progress
Report to his Head of Office, and surrender the Letter of Authority for revalidation.
7. How is a particular taxpayer selected for audit?Officers of the Bureau (Revenue District Officers,
Chief, Large Taxpayer Assessment Division, Chief, Excise Taxpayer Operations Division, Chief, Policy
Cases and Tax Fraud Division) responsible for the conduct of audit/investigation shall prepare a list of
all taxpayer who fall within the selection criteria prescribed in a Revenue Memorandum Order issued
by the CIR to establish guidelines for the audit program of a particular year. The list of taxpayers shall
then be submitted to their respective Assistant Commissioner for pre-approval and to the Commissioner
of Internal Revenue for final approval. The list submitted by RDO shall be pre-approved by the
Regional Director and finally approved by Assistant Commissioner, Assessment Service (RMOs 64-99,
67-99, 18-2000 and 19-2000).
8. How many times can a taxpayer be subjected to examination and inspection for the same taxable
year? A taxpayers books of accounts shall be subjected to examination and inspection only once for a
taxable year, except in the following cases:
When the Commissioner determines that fraud, irregularities, or mistakes were committed by
When the Taxpayer himself requests a re-investigation or re-examination of his books of accounts;
When there is a need to verify the Taxpayers compliance with withholding and other internal revenue
taxes as prescribed in a Revenue Memorandum Order issued by the Commissioner of Internal Revenue.
When the Taxpayers capital gains tax liabilities must be verified; and

When the Commissioner chooses to exercise his power to obtain information relative to the
examination of other Taxpayers (Secs. 5 and 235, NIRC).
9. What are some of the powers of the Commissioner relative to the audit process?In addition to the
authority of the Commissioner to examine and inspect the books of accounts of a Taxpayer who is
being audited, the Commissioner may also:
Obtain data and information from private parties other than the Taxpayer himself (Sec.5, NIRC); and
Conduct inventory and surveillance, and prescribe presumptive gross sales and receipts (Sec. 6, NIRC).
10. What is a Notice for Informal Conference ?A Notice for Informal Conference is a written notice
informing a Taxpayer that the findings of the audit conducted on his books of accounts and accounting
records indicate that additional taxes or deficiency assessments have to be paid.
If, after the culmination of an audit, a Revenue Officer recommends the imposition of deficiency
assessments, this recommendation is communicated by the Bureau to the Taxpayer concerned during an
informal conference called for this purpose. The Taxpayer shall then have fifteen (15) days from the
date of his receipt of the Notice for Informal Conference to explain his side.
11. Within what time period must an assessment be made?An assessment must be made within three (3)
years from the last day prescribed by law for the filing of the tax return for the tax that is being
subjected to assessment or from the day the return was filed if filed late. However, in cases involving
tax fraud, the Bureau has ten (10) years from the date of discovery of such fraud within which to make
the assessment.
Any assessments issued after the applicable period are deemed to have prescribed, and can no longer be
collected from the Taxpayer, unless the Taxpayer has previously executed a Waiver of Statute of
12. What is "Jeopardy Assessment"? A Jeopardy Assessment is a tax assessment made by an authorized
Revenue Officer without the benefit of complete or partial audit, in light of the ROs belief that the
assessment and collection of a deficiency tax will be jeopardized by delay caused by the Taxpayers
failure to:
Comply with audit and investigation requirements to present his books of accounts and/or pertinent
records, or
Substantiate all or any of the deductions, exemptions or credits claimed in his return.
13. What is a Pre-Assessment Notice (PAN)? The Pre-Assessment Notice is a communication issued by
the Regional Assessment Division, or any other concerned BIR Office, informing a Taxpayer who has
been audited of the findings of the Revenue Officer, following the review of these findings.
If the Taxpayer disagrees with the findings stated in the PAN, he shall then have fifteen (15) days from
his receipt of the PAN to file a written reply contesting the proposed assessment.
14. Under what instances is PAN no longer required? A Preliminary Assessment Notice shall not be
required in any of the following cases, in which case, issuance of the formal assessment notice for the
payment of the taxpayers deficiency tax liability shall be sufficient:
When the finding for any deficiency tax is the result of mathematical error in the computation of the tax
appearing on the face of the tax return filed by the taxpayer; or
When a discrepancy has been determined between the tax withheld and the amount actually remitted by
the withholding agent; or
When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a
taxable period was determined to have carried over and automatically applied the same amount claimed

against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year; or
When the excise tax due on excisable articles has not been paid; or
When an article locally purchased or imported by an exempt person, such as, but not limited to,
vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to nonexempt persons.
15. What is a Notice of Assessment/Formal Letter of Demand?
A Notice of Assessment is a declaration of deficiency taxes issued to a Taxpayer who fails to respond to
a Pre-Assessment Notice within the prescribed period of time, or whose reply to the PAN was found to
be without merit. The Notice of Assessment shall inform the Taxpayer of this fact, and that the report of
investigation submitted by the Revenue Officer conducting the audit shall be given due course.
The formal letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state the
facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the
formal letter of demand and the notice of assessment shall be void.
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16. What is required of a taxpayer who is being audited?A Taxpayer who is being audited is obliged to:
Duly acknowledge his receipt of the appropriate Letter of Authority upon its presentation by the
Revenue Officer authorized to conduct the audit by affixing in the Letter of Authority the name of the
recipient and the date of receipt.
Present within a reasonable period of time, his books of accounts and other related accounting records
that may be required by the Revenue Officer; and
Submit the necessary schedules as may be requested by the Revenue Officer within a reasonable
amount of time from his (Taxpayers) receipt of the Letter of Authority.
17. What is the recourse of a Taxpayer who cannot submit the documents being required of him within
the prescribed period of time? If a Taxpayer, believing that he cannot present his books of accounts
and/or other accounting records, intends to request for more time to present these documents in order to
avoid the issuance of a Jeopardy Assessment, the Taxpayer may execute what is referred to as a Waiver
of the Statute of Limitations.
18. What is a Waiver of the Statute of Limitations? The Waiver of the Statute of Limitations is a signed
statement whereby the Taxpayer conveys his agreement to extend the period within which the Bureau
may validly issue an assessment for deficiency taxes. If a Taxpayer opts to execute a Waiver of the
Statute of Limitations, he shall likewise be, in effect, waiving his right to invoke the defense of
prescription for assessments issued after the reglementary period.
No Waiver of the Statute of Limitations shall be considered valid unless it is accepted by a duly
authorized Bureau official.
19. If a Taxpayer does not agree with the assessment made following an audit, can he protest this
Assessment?Yes, he can. A Taxpayer has the right to contest an assessment, and may do so by filing a
letter of protest stating in detail his reasons for contesting the assessment.
20. What are the characteristics of a valid protest? A protest is considered valid if it satisfies the
following conditions:
It is made in writing, and addressed to the Commissioner of Internal Revenue;

It contains the information, and complies with the conditions required by Sec. 6 of Revenue
Regulations No. 12-85; to wit:
a.) Name of the taxpayer and address for the immediate past three (3) taxable year.
b.) Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence
he intends to present if it is a request for investigation.
c.) The taxable periods covered.
d.) Assessment number.
e.) Date of receipt of assessment notice or letter of demand.
f.) Itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due,
which amount should be paid immediately upon the filing of the protest. For this purpose, the protest
shall not be deemed validly filed unless payment of the agreed portion of the tax is paid first.
g.) The itemized schedule of the adjustments with which the taxpayer does not agree.
h.) A statement of facts and/or law in support of the protest.
The taxpayer shall state the facts, applicable law, rules and regulations or jurisprudence on which his
protest is based, otherwise, his protest shall be considered void and without force and effect on the
event the letter of protest submitted by the taxpayer is accepted, the taxpayer shall submit the required
documents in support of his protest within sixty (60) days from date of filing of his letter of protest,
otherwise, the assessment shall become final, executory and demandable.
It is filed within thirty (30) days from the Taxpayers receipt of the Notice of Assessment and formal
Letter of Demand.
21. In the event the Commissioners duly authorized representative denies a Taxpayers protest, what
alternative course of action is open to the Taxpayer? If a protest filed by a Taxpayer be denied by the
Commissioners duly authorized representative, the Taxpayer may request the Commissioner for a
reconsideration of such denial and that his tax case be referred to the Bureaus Appellate Division. The
Appellate Division serves as a "Court", where both parties, i.e. the Revenue Officer on one hand, and
the Taxpayer on the other, can present testimony and evidence before a Hearing Officer, to support their
respective claims.
22. What recourse is open to a Taxpayer if his request for reconsideration is denied or his protest is not
Should the Taxpayers request for reconsideration be denied or his protest is not acted upon within 180
days from submission of documents by the Commissioner, the Taxpayer has the right to appeal with the
Court of Tax Appeals (CTA).
Any appeal must be done within thirty (30) days from the date of the Taxpayers receipt of the
Commissioners decision denying the request for reconsideration or from the lapse of the 180 day
period counted from the submission of the documents. (Sec. 228 of the Tax Code, as amended).
23. If the Taxpayer is not satisfied with the CTAs decision, can he appeal the decision to a higher
Court? Yes, he can. Decisions of the Court of Tax Appeals may be appealed with the Court of Appeals
within fifteen (15) days from the Taxpayers receipt of the CTAs decision. In the event that the
Taxpayer is likewise unsatisfied with the decision of the Court of Appeals, he may appeal this decision
with the Supreme Court.

24. Can a Taxpayer claim a refund or tax credit for erroneously or illegally collected taxes? Yes, he can.
The Taxpayer may file such a claim with the Commissioner of Internal Revenue (Sec.229, NIRC),
within two (2) years from the payment of the tax or penalty sought to be refunded. Failure of the
Taxpayer to file such a claim within this prescribed period shall result in the forfeiture of his right to
the refund or tax credit.
25. If a Taxpayer has filed a claim for refund and the Bureau has yet to render a decision on this claim,
can the Taxpayer elevate his claim to the CTA?
Yes, he can, if the two (2) year period stated above is about to end, and the Commissioner has yet to
render a decision on the claim. (Gibbs v. Collector, L-13453, February 29, 1960).
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26. What means are available to the Bureau to compel a Taxpayer to produce his books of accounts and
other records? A Taxpayer shall be requested, in writing, not more than two (2) times, to produce his
books of accounts and other pertinent accounting records, for inspection. If, after the Taxpayers receipt
of the second written request, he still fails to comply with the requirements of the notice, the Bureau
shall then issue him a Subpoena Duces Tecum.
27. What course of action shall the Bureau take if the Taxpayer fails to comply with the Subpoena
Duces Tecum?
If, after the Taxpayer fails, refuses, or neglects to comply with the requirements of the Subpoena Duces
Tecum, the Bureau may:
File a criminal case against the Taxpayer for violation of Section 5 as it relates to Sections 14 and 266,
of the NIRC, as amended; and/or
Initiate proceedings to cite the Taxpayer for contempt, under Section 3(f), Rule 71 of the Revised Rules
of Court.
28. What alternatives are open to Government for the collection of delinquent accounts?
Once an assessment becomes final and demandable, the Government may employ any, or all, of the
following remedies for the collection of delinquent accounts:
Distraint of personal property;
Levy of real property belonging to the Taxpayer;
Civil Action; and
Criminal Action.
29. What is "Distraint of Personal Property"? Distraint of personal property involves the seizure by the
Government of personal property - tangible or intangible - to enforce the payment of taxes, followed by
the public sale of such property, if the Taxpayer fails to pay the taxes voluntarily.
30. What is "Levy of Real Property"? Levy of real property refers to the same act of seizure, but in this
case of real property, and interest in or rights to such property in order to enforce the payment of taxes.
As in the distraint of personal property, the real property under levy shall be sold in a public sale, if the
taxes involved are not voluntarily paid following such levy.
31. In what time period must collection be made? Any internal revenue tax, which has been assessed
within the period prescribed shall be collected within three (3) years from date of assessment. However,

tax fraud cases may be collected by distraint or levy or by a court proceeding within five (5) years from
assessment of the tax or from the last waiver.
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18. What is a Waiver of the Statute of Limitations? The Waiver of the Statute of Limitations is a
signed statement whereby the Taxpayer conveys his agreement to extend the period within which
the Bureau may validly issue an assessment for deficiency taxes. If a Taxpayer opts to execute a
Waiver of the Statute of Limitations, he shall likewise be, in effect, waiving his right to invoke the
defense of prescription for assessments issued after the reglementary period.
No Waiver of the Statute of Limitations shall be considered valid unless it is accepted by a duly
authorized Bureau official.