G.R. No.

L-41919-24 May 30, 1980
QUIRICO P. UNGAB, petitioner,
vs.
HON. VICENTE N. CUSI, JR., in his capacity as Judge of the Court of First Instance, Branch 1, 16TH Judicial District, Davao City, THE
COMMISSIONER OF INTERNAL REVENUE, and JESUS N. ACEBES, in his capacity as State Prosecutor, respondents.
CONCEPCION JR., J:
Petition for certiorari and prohibition with preliminary injunction and restraining order to annul and set aside the informations filed in Criminal Case
Nos. 1960, 1961, 1962, 1963, 1964, and 1965 of the Court of First Instance of Davao, all entitled: "People of the Philippines, plaintiff, versus
Quirico Ungab, accused;" and to restrain the respondent Judge from further proceeding with the hearing and trial of the said cases.
It is not disputed that sometime in July, 1974, BIR Examiner Ben Garcia examined the income tax returns filed by the herein petitioner, Quirico P.
Ungab, for the calendar year ending December 31, 1973. In the course of his examination, he discovered that the petitioner failed to report his
income derived from sales of banana saplings. As a result, the BIR District Revenue Officer at Davao City sent a "Notice of Taxpayer" to the
petitioner informing him that there is due from him (petitioner) the amount of P104,980.81, representing income, business tax and forest charges for
the year 1973 and inviting petitioner to an informal conference where the petitioner, duly assisted by counsel, may present his objections to the
findings of the BIR Examiner. 1 Upon receipt of the notice, the petitioner wrote the BIR District Revenue Officer protesting 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. BIR Examiner Ben Garcia, however, was fully convinced that the petitioner had filed a fraudulent income
tax return so that he submitted a "Fraud Referral Report," to the Tax Fraud Unit of the Bureau of Internal Revenue. After examining the records of
the case, the Special Investigation Division of the Bureau of Internal Revenue found sufficient proof that the herein petitioner is guilty of tax evasion
for the taxable year 1973 and recommended his prosecution: têñ.£îhqwâ£
(1) For having filed a false or fraudulent income tax return for 1973 with intent to evade his just taxes due the government
under Section 45 in relation to Section 72 of the National Internal Revenue Code;
(2) For failure to pay a fixed annual tax of P50.00 a year in 1973 and 1974, or a total of unpaid fixed taxes of P100.00 plus
penalties of 175.00 or a total of P175.00, in accordance with Section 183 of the National Internal Revenue Code;
(3) For failure to pay the 7% percentage tax, as a producer of banana poles or saplings, on the total sales of P129,580.35 to
the Davao Fruit Corporation, depriving thereby the government of its due revenue in the amount of P15,872.59, inclusive of
surcharge. 2
In a second indorsement to the Chief of the Prosecution Division, dated December 12, 1974, the Commissioner of Internal Revenue approved the
prosecution of the petitioner. 3
Thereafter, State Prosecutor Jesus Acebes who had been designated to assist all Provincial and City Fiscals throughout the Philippines in the
investigation and prosecution, if the evidence warrants, of all violations of the National Internal Revenue Code, as amended, and other related
laws, in Administrative Order No. 116 dated December 5, 1974, and to whom the case was assigned, conducted a preliminary investigation of the
case, and finding probable cause, filed six (6) informations against the petitioner with the Court of First Instance of Davao City, to wit: têñ.£îhqwâ£
(1) Criminal Case No. 1960 — Violation of Sec. 45, in relation to Sec. 72 of the National Internal-Revenue Code, for filing a
fraudulent income tax return for the calendar year ending December 31, 1973; 4
(2) Criminal Case No. 1961 — Violation of Sec. 182 (a), in relation to Secs. 178, 186, and 208 of the National Internal Revenue
Code, for engaging in business as producer of saplings, from January, 1973 to December, 1973, without first paying the annual
fixed or privilege tax thereof; 5
(3) Criminal Case No. 1962 — Violation of Sec. 183 (a), in relation to Secs. 186 and 209 of the National Internal Revenue
Code, for failure to render a true and complete return on the gross quarterly sales, receipts and earnings in his business as
producer of banana saplings and to pay the percentage tax due thereon, for the quarter ending December 31, 1973; 6
(4) Criminal Case No. 1963 — Violation of Sec. 183 (a), in relation to Secs. 186 and 209 of the National Internal Revenue
Code, for failure to render a true and complete return on the gross quarterly sales receipts and earnings in his business as
producer of saplings, and to pay the percentage tax due thereon, for the quarter ending on March 31, 1973; 7
(5) Criminal Case No. 1964 — Violation of Sec. 183 (a), in relation to Secs. 186 and 209 of the National Internal Revenue
Code, for failure to render a true and complete return on the gross quarterly sales, receipts and earnings in his business as
producer of banana saplings for the quarter ending on June 30, 1973, and to pay the percentage tax due thereon; 8
(6) Criminal Case No. 1965 — Violation of Sec. 183 (a), in relation to Secs. 186 and 209 of the National Internal Revenue
Code, for failure to render a true and complete return on the gross quarterly sales, receipts and earnings as producer of
banana saplings, for the quarter ending on September 30, 1973, and to pay the percentage tax due thereon. 9
On September 16, 1975, the petitioner filed a motion to quash the informations upon the grounds that: (1) the informations are null and void for
want of authority on the part of the State Prosecutor to initiate and prosecute the said cases; and (2) the trial court has no jurisdiction to take
cognizance of the above-entitled cases in view of his pending protest against the assessment made by the BIR Examiner. 10 However, the trial court
denied the motion on October 22, 1975. 11 Whereupon, the petitioner filed the instant recourse. As prayed for, a temporary restraining order was
issued by the Court, ordering the respondent Judge from further proceeding with the trial and hearing of Criminal Case Nos. 1960, 1961, 1962,
1963, 1964, and 1965 of the Court of First Instance of Davao, all entitled: "People of the Philippines, plaintiff, versus Quirico Ungab, accused."
The petitioner seeks the annulment of the informations filed against him on the ground that the respondent State Prosecutor is allegedly without
authority to do so. The petitioner argues that while the respondent State Prosecutor may initiate the investigation of and prosecute crimes and
violations of penal laws when duly authorized, certain requisites, enumerated by this Court in its decision in the case of Estrella vs.
Orendain, 12should be observed before such authority may be exercised; otherwise, the provisions of the Charter of Davao City on the functions
and powers of the City Fiscal will be meaningless because according to said charter he has charge of the prosecution of all crimes committed
within his jurisdiction; and since "appropriate circumstances are not extant to warrant the intervention of the State Prosecution to initiate the
investigation, sign the informations and prosecute these cases, said informations are null and void." The ruling adverted to by the petitioner reads,
as follows: têñ.£îhqwâ£
In view of all the foregoing considerations, it is the ruling of this Court that under Sections 1679 and 1686 of the Revised
Administrative Code, in any instance where a provincial or city fiscal fails, refuses or is unable, for any reason, to investigate or
prosecute a case and, in the opinion of the Secretary of Justice it is advisable in the public interest to take a different course of
action, the Secretary of Justice may either appoint as acting provincial or city fiscal to handle the investigation or prosecution
exclusively and only of such case, any practicing attorney or some competent officer of the Department of Justice or office of
any city or provincial fiscal, with complete authority to act therein in all respects as if he were the provincial or city fiscal
himself, or appoint any lawyer in the government service, temporarily to assist such city of provincial fiscal in the discharge of
his duties, with the same complete authority to act independently of and for such city or provincial fiscal provided that no such
appointment may be made without first hearing the fiscal concerned and never after the corresponding information has already
been filed with the court by the corresponding city or provincial fiscal without the conformity of the latter, except when it can be
patently shown to the court having cognizance of the case that said fiscal is intent on prejudicing the interests of justice. The
same sphere of authority is true with the prosecutor directed and authorized under Section 3 of Republic Act 3783, as
amended and/or inserted by Republic Act 5184. The observation in Salcedo vs. Liwag, supra, regarding the nature of the
power of the Secretary of Justice over fiscals as being purely over administrative matters only was not really necessary, as
indicated in the above relation of the facts and discussion of the legal issues of said case, for the resolution thereof. In any
event, to any extent that the opinion therein may be inconsistent herewith the same is hereby modified.
The contention is without merit. Contrary to the petitioner's claim, the rule therein established had not been violated. The respondent State
Prosecutor, although believing that he can proceed independently of the City Fiscal in the investigation and prosecution of these cases, first 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 National Internal Revenue Code, as amended, and other related laws,
graciously allowed the respondent State Prosecutor to conduct the investigation of said cases, and in fact, said investigation was conducted in the
office of the City Fiscal. 13
The petitioner also claims that the filing of the informations was precipitate and premature since the Commissioner of Internal Revenue has not yet
resolved his protests against the assessment of the Revenue District Officer; and that he was denied recourse to the Court of Tax Appeals.
The contention is without merit. 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. 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. têñ.£îhqwâ£
The contention is made, and is here rejected, that an assessment of the deficiency tax due is necessary before the taxpayer
can be prosecuted criminally for the charges preferred. The crime is complete when the violator has, as in this case, knowingly
and willfully filed fraudulent returns with intent to evade and defeat a part or all of the tax. 14
An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and evade the income tax.
A crime is complete when the violator has knowingly and willfuly filed a fraudulent return with intent to evade and defeat the
tax. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate
return, and the government's failure to discover the error and promptly to assess has no connections with the commission of
the crime. 15
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. 16 Obviously, the protest of the petitioner against the assessment of
the District Revenue Officer cannot stop his prosecution for violation of the National Internal Revenue Code. Accordingly, the respondent Judge did
not abuse his discretion in denying the motion to quash filed by the petitioner.
WHEREFORE, the petition should be, as it is hereby dismissed. The temporary restraining order heretofore issued is hereby set aside. With costs
against the petitioner.
SO ORDERED.
Barredo (Chairman), Aquino, Abad Santos and De Castro, JJ., concur.1äwph

[G.R. No. 128315. June 29, 1999]
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PASCOR REALTY AND DEVELOPMENT CORPORATION, ROGELIO A. DIO and
VIRGINIA S. DIO, respondents.
DECISION
PANGANIBAN, J.:
An assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when
penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served
on and received by the taxpayer. Accordingly, an affidavit, which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a
criminal complaint for tax evasion, cannot be deemed an assessment that can be questioned before the Court of Tax Appeals.
Statement of the Case
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court praying for the nullification of the October 30, 1996
Decision[1] of the Court of Appeals[2] in CA-GR SP No. 40853, which effectively affirmed the January 25, 1996 Resolution [3] of the Court of Tax Appeals[4] in CTA
Case No. 5271. The CTA disposed as follows:
“WHEREFORE, finding [the herein petitioner’s] ‘Motion to Dismiss’ as UNMERITORIOUS, the same is hereby DENIED. [The CIR] is hereby given a period of
thirty (30) days from receipt hereof to file her answer.”
Petitioner also seeks to nullify the February 13, 1997 Resolution[5] of the Court of Appeals denying reconsideration.
The Facts
As found by the Court of Appeals, the undisputed facts of the case are as follows:
“It appears that by virtue of Letter of Authority No. 001198, then BIR Commissioner Jose U. Ong authorized Revenue Officers Thomas T. Que, Sonia T. Estorco 
and Emmanuel M. Savellano to examine the books of accounts and other accounting records of Pascor Realty and Development Corporation. (PRDC) for the 
years ending 1986, 1987 and 1988. The said examination resulted in a recommendation for the issuance of an assessment in the amounts of P7,498,434.65 and 
P3,015,236.35 for the years 1986 and 1987, respectively.
“On March 1, 1995, the Commissioner of Internal Revenue filed a criminal complaint before the Department of Justice against the PRDC, its President Rogelio A.
Dio, and its Treasurer Virginia S. Dio, alleging evasion of taxes in the total amount of P10,513,671.00.  Private respondents PRDC, et. al. filed an Urgent Request 
for Reconsideration/Reinvestigation disputing the tax assessment and tax liability.
“On March 23, 1995, private respondents received a subpoena from the DOJ in connection with the criminal complaint filed by the Commissioner of Internal 
Revenue (BIR) against them.
“In a letter dated May 17, 1995, the CIR denied the urgent request for reconsideration/reinvestigation of the private respondents on the ground that no formal 
assessment has as yet been issued by the Commissioner.
“Private respondents then elevated the Decision of the CIR dated May 17, 1995 to the Court of Tax Appeals on a petition for review docketed as CTA Case No. 
5271 on July 21, 1995.  On September 6, 1995, the CIR filed a Motion to Dismiss the petition on the ground that the CTA has no jurisdiction over the subject 
matter of the petition, as there was no formal assessment issued against the petitioners.  The CTA denied the said motion to dismiss in a Resolution dated January 
25, 1996 and ordered the CIR to file an answer within thirty (30) days from receipt of said resolution.  The CIR received the resolution on January 31, 1996 but 
did not file an answer nor did she move to reconsider the resolution.
“Instead, the CIR filed this petition on June 7, 1996, alleging as grounds that:
‘Respondent Court of Tax Appeals acted with grave abuse of discretion and without jurisdiction in considering the affidavit/report of the revenue officer and the 
indorsement of said report to the secretary of justice as assessment which may be appealed to the Court of Tax Appeals;
Respondent Court of Tax Appeals acted with grave abuse of discretion in considering the denial by petitioner of private respondents’ Motion for Reconsideration 
as [a] final decision which may be appealed to the Court of Tax Appeals.’
“In denying the motion to dismiss filed by the CIR, the Court of Tax Appeals stated:
‘We agree with petitioners’ contentions, that the criminal complaint for tax evasion is the assessment issued, and that the letter denial of May 17, 1995 is the 
decision properly appealable to [u]s.  Respondent’s ground of denial, therefore, that there was no formal assessment issued, is untenable.
‘It is the Court’s honest belief, that the criminal case for tax evasion is already an assessment.  The complaint, more particularly, the Joint Affidavit of Revenue 
Examiners Lagmay and Savellano attached thereto, contains the details of the assessment like the kind and amount of tax due, and the period covered.
‘Petitioners are right, in claiming that the provisions of Republic Act No. 1125, relating to exclusive appellate jurisdiction of this Court, do not, make any mention
of ‘formal assessment.’ The law merely states, that this Court has exclusive appellate jurisdiction over decisions of the Commissioner of Internal Revenue 
on disputed assessments, and other matters arising under the National Internal Revenue Code, other law or part administered by the Bureau of Internal Revenue 
Code.
‘As far as this Court is concerned, the amount and kind of tax due, and the period covered, are sufficient details needed for an ‘assessment.’ These details are more
than complete, compared to the following definitions of the term as quoted hereunder. Thus:
‘Assessment is laying a tax. Johnson City v. Clinchfield R. Co., 43 S.W. (2d) 386, 387, 163 Tenn. 332. (Words and Phrases, Permanent Edition, Vol. 4, p. 446)
‘The word assessment when used in connection with taxation, may have more than one meaning. The ultimate purpose of an assessment to such a connection is to 
ascertain the amount that each taxpayer is to pay.  More commonly, the word ‘assessment’ means the official valuation of a taxpayer’s property for purpose of 
taxation.  State v. New York, N.H. and H.R. Co. 22 A. 765, 768, 60 Conn. 326, 325. (Ibid. p. 445)’
‘From the above, it can be gleaned that an assessment simply states how much tax is due from a taxpayer.  Thus, based on these definitions, the details of the tax 
as given in the Joint Affidavit of respondent’s examiners, which was attached to the tax evasion complaint, more than suffice to qualify as an 
assessment.  Therefore, this assessment having been disputed by petitioners, and there being a denial of their letter disputing such assessment, this Court 
unquestionably acquired jurisdiction over the instant petition for review.’”[6]
As earlier observed, the Court of Appeals sustained the CTA and dismissed the petition.
Hence, this recourse to this Court.[7]
Ruling of the Court of Appeals

The Court of Appeals held that the tax court committed no grave abuse of discretion in ruling that the Criminal Complaint for tax evasion filed by the
Commissioner of Internal Revenue with the Department of Justice constituted an “assessment” of the tax due, and that the said assessment could be the subject of
a protest. By definition, an assessment is simply the statement of the details and the amount of tax due from a taxpayer. Based on this definition, the details of the
tax contained in the BIR examiners’ Joint Affidavit, [8]which was attached to the criminal Complaint, constituted an assessment. Since the assailed Order of the
CTA was merely interlocutory and devoid of grave abuse of discretion, a petition for certiorari did not lie.
Issues
Petitioners submit for the consideration of this Court the following issues:
“(1)           Whether or not the criminal complaint for tax evasion can be construed as an assessment.
(2) Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted.
(3) Whether or not the CTA can take cognizance of the case in the absence of an assessment.” [9]
In the main, the Court will resolve whether the revenue officers’ Affidavit-Report, which was attached to the criminal Complaint filed with the Department
of Justice, constituted an assessment that could be questioned before the Court of Tax Appeals.
The Court’s Ruling
The petition is meritorious.
Main Issue: Assessment
Petitioner argues that the filing of the criminal complaint with the Department of Justice cannot in any way be construed as a formal assessment of private
respondents’ tax liabilities. This position is based on Section 205 of the National Internal Revenue Code [10] (NIRC), which provides that remedies for the
collection of deficient taxes may be by either civil or criminal action. Likewise, petitioner cites Section 223(a) of the same Code, which states that in case of
failure to file a return, the tax may be assessed or a proceeding in court may be begun without assessment.
Respondents, on the other hand, maintain that an assessment is not an action or proceeding for the collection of taxes, but merely a notice that the amount
stated therein is due as tax and that the taxpayer is required to pay the same. Thus, qualifying as an assessment was the BIR examiners’ Joint Affidavit, which
contained the details of the supposed taxes due from respondent for taxable years ending 1987 and 1988, and which was attached to the tax evasion Complaint
filed with the DOJ. Consequently, the denial by the BIR of private respondents’ request for reinvestigation of the disputed assessment is properly appealable to
the CTA.
We agree with petitioner. Neither the NIRC nor the revenue regulations governing the protest of assessments [11] provide a specific definition or form of an
assessment. However, the NIRC defines the specific functions and effects of an assessment. To consider the affidavit attached to the Complaint as a proper
assessment is to subvert the nature of an assessment and to set a bad precedent that will prejudice innocent taxpayers.
True, as pointed out by the private respondents, an assessment informs the taxpayer that he or she has tax liabilities. But not all documents coming from
the BIR containing a computation of the tax liability can be deemed assessments.
To start with, an assessment must be sent to and received by a taxpayer, and must demand payment of the taxes described therein within a specific
period. Thus, the NIRC imposes a 25 percent penalty, in addition to the tax due, in case the taxpayer fails to pay the deficiency tax within the time prescribed for
its payment in the notice of assessment. Likewise, an interest of 20 percent per annum, or such higher rate as may be prescribed by rules and regulations, is to be
collected from the date prescribed for its payment until the full payment.[12]
The issuance of an assessment is vital in determining the period of limitation regarding its proper issuance and the period within which to protest
it. Section 203[13]of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to file the return . Section
222,[14] on the other hand, specifies a period of ten years in case a fraudulent return with intent to evade was submitted or in case of failure to file a return. Also,
Section 228[15] of the same law states that said assessment may be protested only within thirty days from receipt thereof. Necessarily, the taxpayer must be certain
that a specific document constitutes an assessment. Otherwise, confusion would arise regarding the period within which to make an assessment or to protest the
same, or whether interest and penalty may accrue thereon.
It should also be stressed that the said document is a notice duly sent to the taxpayer. Indeed, an assessment is deemed made only when the collector of
internal revenue releases, mails or sends such notice to the taxpayer.[16]
In the present case, the revenue officers’ Affidavit merely contained a computation of respondents’ tax liability. It did not state a demand or a period for
payment. Worse, it was addressed to the justice secretary, not to the taxpayers.
Respondents maintain that an assessment, in relation to taxation, is simply understood to mean:
“A notice to the effect that the amount therein stated is due as tax and a demand for payment thereof.” [17]
“Fixes the liability of the taxpayer and ascertains the facts and furnishes the data for the proper presentation of tax rolls.” [18]
Even these definitions fail to advance private respondents’ case. That the BIR examiners’ Joint Affidavit attached to the Criminal Complaint contained
some details of the tax liabilities of private respondents does not ipso facto make it an assessment. The purpose of the Joint Affidavit was merely to support and
substantiate the Criminal Complaint for tax evasion. Clearly, it was not meant to be a notice of the tax due and a demand to the private respondents for payment
thereof.
The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the
commissioner was to file a criminal complaint for tax evasion, not to issue an assessment. Although the revenue officers recommended the issuance of an
assessment, the commissioner opted instead to file a criminal case for tax evasion. What private respondents received was a notice from the DOJ that a criminal
case for tax evasion had been filed against them, not a notice that the Bureau of Internal Revenue had made an assessment.
In addition, what private respondents sent to the commissioner was a motion for a reconsideration of the tax evasion charges filed, not of an assessment, as
shown thus:
“This is to request for reconsideration of the tax evasion charges against my client, PASCOR Realty and Development Corporation and for the same to be referred
to the Appellate Division in order to give my client the opportunity of a fair and objective hearing” [19]
Additional Issues: Assessment Not Necessary Before Filing of Criminal Complaint
Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment. This is incorrect, because Section 222 of the NIRC
specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case, proceedings in court may be
commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued
simultaneously. In Ungab v. Cusi,[20] petitioner therein sought the dismissal of the criminal Complaints for being premature, since his protest to the CTA had not
yet been resolved. The Court held that such protests could not stop or suspend the criminal action which was independent of the resolution of the protest in the
CTA. This was because the commissioner of internal revenue had, in such tax evasion cases, discretion on whether to issue an assessment or to file a criminal
case against the taxpayer or to do both.
Private respondents insist that Section 222 should be read in relation to Section 255 of the NIRC, [21] which penalizes failure to file a return. They add that a
tax assessment should precede a criminal indictment. We disagree. To reiterate, said Section 222 states that an assessment is not necessary before a criminal
charge can be filed. This is the general rule. Private respondents failed to show that they are entitled to an exception. Moreover, the criminal charge need only be
supported by a prima facie showing of failure to file a required return. This fact need not be proven by an assessment.
The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment
notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the
commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has
been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the
taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment. It must be stressed that a criminal
complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

WHEREFORE, the petition is hereby GRANTED.
likewise DISMISSED. No costs.
SO ORDERED.
Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
Romero (Chairman), J., abroad on official business.

LUCAS G. ADAMSON, THERESE
JUNE D. ADAMSON, and SARA
S. DE LOS REYES, in their capacities
as President, Treasurer and Secretary
of Adamson Management Corporation,
Petitioners,

The

assailed

Decision

is REVERSED and SET

ASIDE. CTA Case

No.

5271

is

G.R. No. 120935

- versus COURT OF APPEALS and
LIWAYWAY VINZONS-CHATO,
in her capacity as Commissioner
of the Bureau of Internal Revenue,
Respondents.
x-- - - - - - - - - - - - - - - - - - - - - - - - x
COMMISSIONER OF
G.R. No. 124557
INTERNAL REVENUE,
Petitioner,
Present:
-versus-

PUNO, C.J., Chairperson,
CARPIO,
CORONA,

COURT OF APPEALS, COURT
LEONARDO-DE CASTRO, and
OF TAX APPEALS, ADAMSON
BERSAMIN, JJ.
MANAGEMENT CORPORATION,
LUCAS G. ADAMSON, THERESE
JUNE D. ADAMSON, and SARA
Promulgated:
S. DE LOS REYES,
Respondents.
May 21, 2009
x--------------------------------------------------x
DECISION
PUNO, C.J.:
Before the Court are the consolidated cases of G.R. No. 120935 and G.R. No. 124557.
G.R. No. 120935 involves a petition for review on certiorari filed by petitioners LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and
SARA S. DE LOS REYES (private respondents), in their respective capacities as president, treasurer and secretary of Adamson Management Corporation (AMC)
against then Commissioner of Internal Revenue Liwayway Vinzons-Chato (COMMISSIONER), under Rule 45 of the Revised Rules of Court. They seek to
review and reverse the Decision promulgated on March 21, 1995 and Resolution issued on July 6, 1995 of the Court of Appeals in CA-G.R. SP No. 35488
(Liwayway Vinzons-Chato, et al. v. Hon. Judge Erna Falloran-Aliposa, et al.).
G.R. No. 124557 is a petition for review on certiorari filed by the Commissioner, assailing the Decision dated March 29, 1996 of the Court of Appeals
in CA-G.R. SP No. 35520, titled Commissioner of Internal Revenue v. Court of Tax Appeals, Adamson Management Corporation, Lucas G. Adamson, Therese
June D. Adamson and Sara S. de los Reyes. In the said Decision, the Court of Appeals upheld the Resolution promulgated on September 19, 1994 by the Court of
Tax Appeals (CTA) in C.T.A. Case No. 5075 (Adamson Management Corporation, Lucas G. Adamson, Therese Adamson and Sara de los Reyes v. Commissioner
of Internal Revenue).

1990. de los Reyes filed with the DOJ a motion to suspend proceedings on the ground of prejudicial question. without an accompanying assessment of the tax deficiency of private respondents. 12-85. which pointed out the tax deficiencies. and the tax deficiency amounts mentioned in her criminal complaint with the DOJ were given only to show the difference between the tax returns filed and the audit findings of the revenue examiner. Therese June D. Inc. the following events preceded G. but the trial court denied the motion on July 6. The appellate court held that.[1] On June 22. Therese June D. Adamson and Sara S. Adamson. She argued that the criminal complaints for tax evasion may proceed independently from the assessment cases pending before the CTA. Adamson and Sara S. WHETHER OR NOT THE FILING OF A CRIMINAL COMPLAINT SERVES AS AN IMPLIED ASSESSMENT ON THE TAX LIABILITY OF THE TAXPAYER. Lucas G. Adamson and Sara S. and there were still pending relevant Supreme Court and CTA cases. On October 15. Adamson. 1980. UNION SHIPPING CORP.21 was paid as capital gains tax for the transaction. 120935. Agcaoili found probable cause.R. Lucas G. The Motion for Reconsideration against the findings of probable cause was denied by the prosecutor. The events preceding G. as culled from the findings of the appellate court. 2. No. in relation to Section 100[5]. 94-1842 to 94-1846.00. Lucas G. and appealable to the CTA. L-46954. Inc. It further held that the said cases cannot proceed independently of the assessment case pending before the CTA.The facts. (G. 1982. AMC. and pendency of their letter-request for re-investigation with the Commissioner. On August 8. On September 19.96. AMC. WHETHER OR NOT THE FILING OF THE CRIMINAL INFORMATION FOR TAX EVASION IN THE TRIAL COURT IS PREMATURE BECAUSE THERE IS YET NO BASIS FOR THE CRIMINAL CHARGE OF WILLFULL INTENT TO EVADE THE PAYMENT OF A TAX. WHETHER OR NOT THERE WAS A VALID ASSESSMENT MADE BY THE COMMISSIONER IN THE CASE AT BAR. She contended that. 97 SCRA 877) TO THE CASE AT BAR. de los Reyes for violation of Sections 45 (a) and (d) [3]. in order to commence criminal action against the latter for tax evasion. CUSI (Nos. and it must be in accord with Section 6 of Revenue Regulation No. [10] Private respondents filed a Motion for Reconsideration. Lucas Adamson and AMC sold 131.R. After the preliminary investigation. 1993. Lucas G. July 20. de los Reyes. 1993. and acting thereupon. On April 29. Therese June D. No. 1990.363. [9] It ruled that private respondents filed false and fraudulent returns with intent to evade taxes. Initially. 1995. It ruled that the complaints for tax evasion filed by the Commissioner should be regarded as a decision of the Commissioner regarding the tax liabilities of Lucas G. Adamson and Sara S. FLOJO (No. L-41919-24. they filed the petition inG.R. On October 12. In parallel circumstances. 1993. follow: On June 20. as she had not yet issued a formal assessment of the tax liability of therein petitioners.242. Therese June D. de los Reyes were charged before the Regional Trial Court (RTC) of Makati. WHETHER OR NOT THE DOCTRINES LAID DOWN IN THE CASES OF YABES V. She maintained that she had not yet issued a formal assessment of tax liability. AMC sold to APAC Philippines.718.995. 120935 are the following: On October 22. another 229. Therese June D. with regard to the protest provided under Section 229 of the NIRC. 185 SCRA 547) ARE APPLICABLE TO THE CASE AT BAR. this time assailing the trial court’s lack of jurisdiction over the nature of the subject cases. 3. She averred that it was not a condition prerequisite that a formal assessment should first be given to the private respondents before she may file the aforesaid criminal complaints against them. Lucas G. 5. 1994 before the Commissioner could act on their letter-request. petitioner filed an Affidavit of Complaint with the Department of Justice. and 110[4]. It considered the criminal complaint filed by the Commissioner with the DOJ as an implied formal assessment. . 1994.897 common shares of stock in Adamson and Adamson. Adamson and Sara S. They invoked the grounds that there was yet no final assessment of their tax liability. the Commissioner filed with the Department of Justice (DOJ) her Affidavit of Complaint [2] against AMC. the trial court granted the Motion. Adamson and Sara S.[8] AMC. Therese June D. State Prosecutor Alfredo P. informing them of deficiencies on their payment of capital gains tax and Value Added Tax (VAT).360. May 21. the Commissioner filed a Petition for Review with the Court of Appeals assailing the trial court’s dismissal of the criminal cases. 1990. WHETHER OR NOT THE RESPONDENT HONORABLE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE IN UNGAB V. on the ground that it was premature. 66160. 1990. which has jurisdiction to determine the civil and criminal tax liability of the respondents therein. No. 4. de los Reyes. Adamson.R. 124557: On December 1. On October 10.[6] and for violation of Section 253[7]. and the filing of the criminal informations with the RTC as a denial of petitioners’ protest regarding the tax deficiency. On March 21. The Commissioner moved to dismiss the petition. Therese June D. the Commissioner issued a “Notice of Taxpayer” to AMC.789. in a criminal prosecution for tax evasion. 6. assessment of tax deficiency is not required because the offense of tax evasion is complete or consummated when the offender has knowingly and willfully filed a fraudulent return with intent to evade the tax. Adamson. No. The shares were valued at P7. Adamson.870 common shares of stock in AAI for P17. the CTA denied the Motion to Dismiss. raising the following issues: 1. 1994. de los Reyes filed a letter request for re-investigation with the Commissioner of the “Examiner’s Findings” earlier issued by the Bureau of Internal Revenue (BIR). The Commissioner repaired to the Court of Appeals on the ground that the CTA acted with grave abuse of discretion. the Court of Appeals reversed the trial court’s decision and reinstated the criminal complaints. (AAI) to APACHolding Limited (APAC). 115 SCRA 286) ANDCIR V. Adamson. there must first be a formal assessment issued by the Commissioner. Lucas G. P159. 1994. in relation to Section 252 (b) and (d) of the National Internal Revenue Code (NIRC). Adamson and Sara S. as penalized under Section 255. May 30. They filed a Motion to Dismiss or Suspend the Proceedings. They assailed the Commissioner’s finding of tax evasion against them. WHETHER OR NOT THE COURT OF TAX APPEALS HAS JURISDICTION OVER THE DISPUTE ON WHAT CONSTITUTES THE PROPER TAXES DUE FROM THE TAXPAYER. AMC paid the capital gains tax of P352. On March 15. 1994. 1995. A Motion for Reconsideration was however filed. pendency of a civil case with the Supreme Court. the trial court denied the motion. The notice contained a schedule for preliminary conference. 7. de los Reyes filed a Petition for Review with the CTA. WHETHER OR NOT AN ASSESSMENT IS REQUIRED UNDER THE SECOND CATEGORY OF THE OFFENSE IN SECTION 253 OF THE NIRC. Branch 150 in Criminal Case Nos.00. Thus. Adamson.

the Commissioner filed the petition for review under G. 124557 and G. LUCAS G. WHETHER OR NOT THE INSTANT PETITION SHOULD BE DISMISSED FOR FAILURE TO COMPLY WITH THE MANDATORY REQUIREMENT OF A CERTIFICATION UNDER OATH AGAINST FORUM SHOPPING. Private respondents filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability. It should also be stressed that the said document is a notice duly sent to the taxpayer. ADAMSON AND SARA S. an assessment informs the taxpayer that he or she has tax liabilities. This resulted in a recommendation for the issuance of an assessment in the amounts of P7. Clearly. confusion would arise regarding the period within which to make an assessment or to protest the same. which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a criminal complaint for tax evasion. No. not a notice that the Bureau of Internal Revenue had made an assessment. However. The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the commissioner was to file a criminal complaint for tax evasion. cannot be deemed an assessment that can be questioned before the Court of Tax Appeals. or such higher rate as may be prescribed by rules and regulations. Pascor Realty. and 3. However. is to be collected from the date prescribed for its payment until the full payment.The Court of Appeals sustained the CTA’s denial of the Commissioner’s Motion to Dismiss.[15] on the other hand. Accordingly. The Commissioner did not file an answer nor did she move to reconsider the resolution.00. LUCAS G. To start with. the taxpayer must be certain that a specific document constitutes an assessment. LUCAS G. THERESE JUNE D. Also. specifies a period of ten years in case a fraudulent return with intent to evade was submitted or in case of failure to file a return. and 4.498. WHETHER THERE IS BASIS FOR THE CRIMINAL CASES FOR TAX EVASION TO PROCEED AGAINST AMC. THERESE JUNE D. raising the following issues: 1. is simply understood to mean: “A notice to the effect that the amount therein stated is due as tax and a demand for payment thereof. as pointed out by the private respondents. But not all documents coming from the BIR containing a computation of the tax liability can be deemed assessments.513. To consider the affidavit attached to the Complaint as a proper assessment is to subvert the nature of an assessment and to set a bad precedent that will prejudice innocent taxpayers. ADAMSON AND SARA S. To enable the taxpayer to determine his remedies thereon. 120935 can be compressed into three: 1. The issues in G. The CTA denied the said motion to dismiss and ordered the Commissioner to file an answer within thirty (30) days. Otherwise. the Commissioner filed a criminal complaint before the DOJ against PRDC. Necessarily.[11] is relevant. It also signals the time when penalties and interests begin to accrue against the taxpayer. due process requires that it must be served on and received by the taxpayer. 1995. THERESE JUNE D. WHETHER THE COMMISSIONER HAS ALREADY RENDERED AN ASSESSMENT (FORMAL OR OTHERWISE) OF THE TAX LIABILITY OF AMC.”[19] Even these definitions fail to advance private respondents’ case. Section 203[14] of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to file the return. Section 228[16] of the same law states that said assessment may be protested only within thirty days from receipt thereof.R.R. [13] The issuance of an assessment is vital in determining the period of limitation regarding its proper issuance and the period within which to protest it. That the BIR examiners’ Joint Affidavit attached to the Criminal Complaint contained some details of the tax liabilities of private respondents does not ipso facto make it an assessment.R. an assessment is deemed made only when the collector of internal revenue releases. It did not state a demand or a period for payment. . the NIRC defines the specific functions and effects of an assessment. and its Treasurer Virginia S. Indeed. and must demand payment of the taxes described therein within a specific period. 2. then BIR Commissioner Jose U. the commissioner opted instead to file a criminal case for tax evasion. The purpose of the Joint Affidavit was merely to support and substantiate the Criminal Complaint for tax evasion.[17] In the present case. WHETHER OR NOT THE COURT OF TAX APPEALS HAS JURISDICTION TO ACT ON PRIVATE RESPONDENTS’ PETITION FOR REVIEW FILED WITH THE SAID COURT. an affidavit. Private respondents then elevated the Decision of the Commissioner to the CTA on a petition for review. Respondents maintain that an assessment. this Court reversed the Court of Appeals decision and the CTA order.434. True.35 for the years 1986 and 1987. Worse. No. not to the taxpayers. Dio. ADAMSON. 124557. Although the revenue officers recommended the issuance of an assessment. respectively. Likewise.015. or whether interest and penalty may accrue thereon. In this case. DE LOS REYES. Ong authorized revenue officers to examine the books of accounts and other accounting records of Pascor Realty and Development Corporation (PRDC) for 1986. but also a demand for payment within a prescribed period. Thus. as there was yet no formal assessment issued against the petitioners. The Commissioner denied the urgent request for reconsideration/reinvestigation because she had not yet issued a formal assessment. The Commissioner filed a Motion to Dismiss the petition on the ground that the CTA has no jurisdiction over the subject matter of the petition. et al. Dio. DE LOS REYES. ADAMSON.236. DE LOS REYES. We held: An assessment contains not only a computation of tax liabilities.” [18] “Fixes the liability of the taxpayer and ascertains the facts and furnishes the data for the proper presentation of tax rolls. Thus. Neither the NIRC nor the revenue regulations governing the protest of assessments [12] provide a specific definition or form of an assessment. the NIRC imposes a 25 percent penalty. 2. The case of CIR v. alleging evasion of taxes in the total amount of P10. mails or sends such notice to the taxpayer. in case the taxpayer fails to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. 3. in addition to the tax due. ADAMSON AND SARA S. it was not meant to be a notice of the tax due and a demand to the private respondents for payment thereof. in relation to taxation. No. WHETHER OR NOT THE CRIMINAL CASE FOR TAX EVASION IN THE CASE AT BAR CAN PROCEED WITHOUT AN ASSESSMENT. WHETHER THE COURT OF TAX APPEALS HAS JURISDICTION TO TAKE COGNIZANCE OF BOTH THE CIVIL AND THE CRIMINAL ASPECTS OF THE TAX LIABILITY OF AMC. an interest of 20 percent per annum. the revenue officers’ Affidavit merely contained a computation of respondents’ tax liability.671. its President Rogelio A. The Court of Appeals upheld the CTA order. not to issue an assessment. it was addressed to the justice secretary. 1987 and 1988. What private respondents received was a notice from the DOJ that a criminal case for tax evasion had been filed against them. ADAMSON. On March 1. and ordered the dismissal of the petition. an assessment must be sent to and received by a taxpayer. WHETHER OR NOT THE COMPLAINT FILED WITH THE DEPARTMENT OF JUSTICE CAN BE CONSTRUED AS AN IMPLIED ASSESSMENT. Instead.65 and P3. the Commissioner filed a petition for review of the CTA decision with the Court of Appeals. Section 222.

10. As Amended. Upon investigation of the examiners of the BIR. – The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal. but to penalize the taxpayer for violation of the Tax Code.-(a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return. 21. Republic Act No. said Section 222 states that an assessment is not necessary before a criminal charge can be filed. Under Republic Act No. In the cases at bar. Furthermore. Lucas G. She admits though that she wrote the recommendation letter[22] addressed to the Secretary of the DOJ recommending the filing of criminal complaints against AMC and the aforecited persons for fraudulent returns and tax evasion. Private respondents insist that Section 222 should be read in relation to Section 255 of the NIRC. Therese June D. It must be stressed that a criminal complaint is instituted not to demand payment. proceedings in court may be commenced without an assessment. Thereafter. Arguably. the gross disparity in the taxes due and the amounts actually declared by the private respondents constitutes badges of fraud. the applicability of Ungab v. that of the CTA. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. an assessment is a written notice and demand made by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed. there was a preliminary finding of gross discrepancy in the computation of the capital gains taxes due from the sale of two lots of AAI shares. by practice. If the commissioner is unsatisfied. In fine. 55A.Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment. the taxpayer is notified that a criminal case had been filed against him. discretion on whether to issue an assessment or to file a criminal case against the taxpayer or to do both. Jurisdiction. The first issue is whether the Commissioner’s recommendation letter can be considered as a formal assessment of private respondents’ tax liability. the criminal charge need not go through all these. a pre-assessment notice sent to the taxpayer. This is the general rule. p. Cusi[25] is evident to the cases at bar. Limited. The criminal charge is filed directly with the DOJ. thus: SEC. this Court ruled that there was no need for precise computation and formal assessment in order for criminal complaints to be filed against him. A written communication containing a computation by a revenue officer of the tax liability of a taxpayer and giving him an opportunity to contest or disprove the BIR examiner’s findings is not an assessment since it is yet indefinite. A crime is complete when the violator has knowingly and willfully filed a fraudulent return. first to APAC and then to APAC Philippines.05. This hoary principle still underlies Section 269 and related provisions of the present Tax Code. thus: An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and evade the income tax. Even a cursory perusal of the said letter would reveal three key points: 1. in such tax evasion cases. or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of Internal Revenue. [23] We rule that the recommendation letter of the Commissioner cannot be considered a formal assessment. The issuance of an assessment must be distinguished from the filing of a complaint. there is.[24] The next issue is whether the filing of the criminal complaints against the private respondents by the DOJ is premature for lack of a formal assessment. This fact need not be proven by an assessment. Sec. Section 269 of the NIRC (now Section 222 of the Tax Reform Act of 1997) provides: Sec. Moreover. [21] which penalizes failure to file a return. as herein provided (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. the Commissioner denied that she issued a formal assessment of the tax liability of AMC. penalties imposed in relation thereto. Adamson. In this seminal case. the rulings of the Commissioner are appealable to the CTA. In the context in which it is used in the NIRC. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. The Court held that such protests could not stop or suspend the criminal action which was independent of the resolution of the protest in the CTA. In Ungab v. 2. Here. They add that a tax assessment should precede a criminal indictment. de los Reyes. This is incorrect. a proceeding in court after the collection of such tax may be begun without assessment. Exceptions as to period of limitation of assessment and collection of taxes. the said recommendation letter served merely as the prima facie basis for filing criminal informations that the taxpayers had violated Section 45 (a) and (d). It quoted Merten’s Law of Federal Income Taxation. the private respondents had already filed the capital gains tax return and the VAT returns. refunds of internal revenue taxes. Adamson and Sara S. The examiners also found that the VAT had not been paid for VATliable sale of services for the third and fourth quarters of 1990. And For Other Purposes. in relation to Section 252 9(b) and (d) of the Tax Code. It was not addressed to the taxpayers. correspondingly. thus: SEC. When fraudulent tax returns are involved as in the cases at bar. That in a fraud assessment which has become final and executory. Cusi. We disagree. the criminal charge need only be supported by a prima facie showing of failure to file a required return. In contrast. This was because the commissioner of internal revenue had.” later expanded the jurisdiction of the Commissioner and. fees or other charges. . – The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner. We now go to the issue of whether the CTA has no jurisdiction to take cognizance of both the criminal and civil cases here at bar. as penalized under Section 255. the tax may be assessed. The letter was never mailed or sent to the taxpayers by the Commissioner. not that the commissioner has issued an assessment. an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. titled “An Act Amending the National Internal Revenue Code. since his protest to the CTA had not yet been resolved. and 110. subject to review by the Secretary of Finance. the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for collection thereof… The law is clear. 4. because Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case. and for violation of Section 253. at any time within ten years after the discovery of the falsity. Vol. and paid the taxes they have declared due therefrom.[20] petitioner therein sought the dismissal of the criminal Complaints for being premature. in relation to Section 100. 7. 8424. There was no demand made on the taxpayers to pay the tax liability. with intent to evade and defeat the tax. fraud or omission: Provided. To reiterate. and the government’s failure to discover the error and promptly to assess has no connections with the commission of the crime. 269. Private respondents failed to show that they are entitled to an exception. 1125 (An Act Creating the Court of Tax Appeals ) as amended. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return. Before an assessment is issued. or a proceeding in court after the collection of such tax may be begun without assessment. 3. Thus. nor a period for payment set therein.

however. Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction. refunds of internal revenue taxes. Any provision of law or the Rules of Court to the contrary notwithstanding. and jointly determined in the same proceeding by the CTA. or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner.R. However. Finally. we hold that contrary to private respondents’ stance. AFFIRMING the CA decision dated March 21. No. in their respective territorial jurisdiction. 1995. In the cases at bar. and ORDERING the dismissal of C.000. In G. in their respective jurisdiction. REVERSING and SETTING ASIDE the Decision of the Court of Appeals dated March 29. penalties in relation thereto. or in cases where the Commissioner has not acted within the period prescribed by the NIRC. 120935.[26] It provides: SEC. Jurisdiction. and no right to reserve the filling of such civil action separately from the criminal action will be recognized. Flojo are not applicable to the cases at bar. where the National Internal Revenue Code provides a specific period of action. fees or other charges. resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts. 5075. which set aside the Regional Trial Court’s Order dated August 8.The power to decide disputed assessments. the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action. they did not change the jurisdiction of the CTA to entertain an appeal only from a final decision or assessment of the Commissioner. however. xxx (b) Jurisdiction over cases involving criminal offenses as herein provided: (1) Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided. and REINSTATING Criminal Case Nos. Union Shipping Co. claimed is less than One million pesos (P1. 7. in their respected territorial jurisdiction. (3) Decisions. fees or other charges.00) or where there is no specified amount claimed shall be tried by the regular courts and the jurisdiction of the CTA shall be appellate. . No costs. (b) Over petitions for review of the judgments.00) shall be tried by the proper Municipal Trial Court. (c) Jurisdiction over tax collection cases as herein provided: (1) Exclusive original jurisdiction in tax collection cases involving final and executory assessments for taxes. penalties imposed in relation thereto. charges and penalties: Provided.T. the Commissioner already rendered an assessment of the tax liabilities of the delinquent taxpayers. refunds of internal revenue taxes.R. and Yabes v. Municipal Trial Courts and Municipal Circuit Trial Courts. claimed is less than One million pesos (P1. 124557. resolutions or orders of the Regional Trial Courts in tax cases originally decided by them. or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue.A. 7. Case No. The latest statute dealing with the jurisdiction of the CTA is Republic Act No. (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments. 1996.000. and 2.000. resolutions or orders of the Regional Trial Courts in tax collection cases originally decided by them. the Commissioner has not issued an assessment of the tax liability of private respondents. 1994. refunds of internal revenue taxes. fees or other charges. That collection cases where the principal amount of taxes and fees. (b) Over petitions for review of the judgments. Section 7 of the same Act is hereby amended to read as follows: Sec. subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. judgment is rendered: 1. penalties in relation thereto. for which reason the Court ruled that the filing of the civil suit for collection of the taxes due was a final denial of the taxpayers’ request for reconsideration of the tax assessment. 9282. the doctrines laid down in CIR v. in which case the inaction shall be deemed a denial. In these earlier cases. That offenses or felonies mentioned in this paragraph where the principal amount of taxes and fees. (2) Exclusive appellate jurisdiction in criminal offenses: (a) Over appeals from the judgments. premises considered. No. exclusive of charges and penalties.000. as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue. — The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal. the criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with. These laws have expanded the jurisdiction of the CTA. exclusive of charges and penalties. Metropolitan Trial Court and Regional Trial Court. orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. IN VIEW WHEREOF. 94-1842 to 94-1846 for further proceedings before the trial court. fees. resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial Courts. (2) Exclusive appellate jurisdiction in tax collection cases: (a) Over appeals from the judgments. In G. SO ORDERED.

162155 Present: PUNO. On December 15. G. PARCERO in his official capacity as Revenue District Officer of Revenue District No. Parcero of Revenue District No. 64782 and its February 9.[12] It invoked Section 229 of the National Internal Revenue Code (NIRC): Sec. Gilbert Yap. but such suit or proceeding may be maintained. J. it was not liable for income taxes. 1999. -..[8] Therefore. [10]Respondent complied but its claim was not acted upon. . Recovery of Taxes Erroneously or Illegally Collected. until a claim for refund or credit has been duly filed with the Commissioner.879. the CTA dismissed the petition as it was filed beyond the two-year prescriptive period for filing a judicial claim for tax refund or tax credit. while business was good during the first quarter of 1997. [4] he explained that the increase in the cost of labor and materials and difficulty in obtaining financing for projects and collecting receivables caused the real estate industry to slowdown. SP No. respondent paid its quarterly corporate income tax and remitted creditable withholding tax from real estate sales to the BIR in the total amount of P26. 2003 decision [2] of the Court of Appeals (CA) in CA-G.[3] On March 11. or of any sum alleged to have been excessively or in any manner wrongfully collected. respondent was entitled to tax refund or tax credit.. C.228 that year. revenue officer Elizabeth Y. 1999. 2007 x-----------------------------------------x DECISION CORONA. 2000. 2004 resolution denying reconsideration. applied for the refund or credit of income tax respondent paid in 1997. 2000. INC. Santos required respondent to submit additional documents to support its claim. Petitioners. 229.32.No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected. SANDOVAL-GUTIERREZ. [7] Nevertheless.[9] On May 13. -versus- PRIMETOWN PROPERTY GROUP. JJ. 049 (Makati) of the Bureau of Internal Revenue (BIR). respondent suffered losses amounting to P71.R. Chairperson.[6] According to Yap.. 049 (Makati). No. on April 14.COMMISSIONER OF INTERNAL REVENUE and ARTURO V. Thus. Respondent. because respondent suffered losses. whether or not such tax. or sum has been paid under protest or duress. Inc. Promulgated: August 28.318. vice chair of respondent Primetown Property Group.R. AZCUNA and GARCIA. In Yap's letter to petitioner revenue district officer Arturo V.J. it filed a petition for review[11] in the Court of Tax Appeals (CTA).: This petition for review on certiorari[1] seeks to set aside the August 1. penalty.398.[5] As a consequence. CORONA. or of any penalty claimed to have been collected without authority.

even without a claim therefor. was filed beyond the reglementary period. Book I of the Administrative Code of 1987. being the more recent law. one calendar month from December 31. under the Administrative Code of 1987. the corresponding numbered day of the next month. no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment : Provided. EO[27] 292 or the Administrative Code of 1987 was enacted. should be strictly construed against claimants. orders. one calendar month from January 31. A statute which is clear and explicit shall be neither interpreted nor construed. — All laws. 2008 to January 31.[26] However.[19] In other words.[16] Hence. to a day of twentyfour hours and. Chapter VIII. “night” from sunrise to sunset. 2007 will be from January 1. An implied repeal must have been clearly and unmistakably intended by the legislature.[21] Thus. days. such payment appears clearly to have been erroneously paid. notwithstanding the fact that a particular year is a leap year. decrees. days or nights. 13. and nights from sunset to sunrise. the CA reversed and set aside the decision of the CTA. the provision above only impliedly repealed all laws inconsistent with the Administrative Code of 1987. inconsistent with this Code are hereby repealed or modified accordingly. Book I of the Administrative Code of 1987 deal with the same subject matter — the computation of legal periods. however. then up to and including the last day of that month. (emphasis supplied) Thus. the two-year prescriptive period under Section 229 of the NIRC for the filing of judicial claims was equivalent to 730 days. [18] It ruled that Article 13 of the Civil Code did not distinguish between a regular year and a leap year. InNational Marketing Corporation v. and the last included. According to the CA: The rule that a year has 365 days applies. [13] The tax court applied Article 13 of the Civil Code which states: Art.In any case.” [29] To illustrate. “month” of thirty days. according to the CTA. Under the Civil Code. A repealing clause like Sec. months.[30] A law may be repealed expressly (by a categorical declaration that the law is revoked and abrogated by another) or impliedly (when the provisions of a more recent law cannot be reasonably reconciled with the previous one). 2003. are not favored. Book I thereof provides: Sec. this appeal. There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. but not including. it shall be understood that years are of three hundred sixty-five days each. we hold that Section 31. 31. .” [28] It is the “period of time running from the beginning of a certain numbered day up to.[17] On August 1. [22] Section 229 of the NIRC should be strictly applied against respondent inasmuch as it has been consistently held that the prescriptive period (for the filing of tax refunds and tax credits) begins to run on the day claimants file their final adjusted returns. In computing a period. [20] Petitioners moved for reconsideration but it was denied. Chapter VIII. 2008. [23] Hence. being in the nature of an exemption. refund or credit any tax. (emphasis supplied) A calendar month is “a month designated in the calendar without regard to the number of days it may contain. Repealing clause. 1999 to April 14. they shall be computed by the number of days which they respectively have. 2000 or within 730 days. Its basis. 27. 1999 and April 15. (emphasis supplied) The CTA found that respondent filed its final adjusted return on April 14. Article 13 of the Civil Code provides that when the law speaks of a year. governs the computation of legal periods.[25] we ruled that a year is equivalent to 365 days regardless of whether it is a regular year or a leap year. however. 2000 should still be counted as 365 days each or a total of 730 days. Book VII (Final Provisions) of the Administrative Code of 1987 states: Sec. [24] But how should the two-year prescriptive period be computed? As already quoted. Under the Administrative Code of 1987.[15] Respondent moved for reconsideration but it was denied. 2008. where on the face of the return upon which payment was made. and if there is not a sufficient number of days in the next month. the number of days is irrelevant. Tecson. Implied repeals. of thirty days. rules and regulation. is not. Legal Periods. — “Year” shall be understood to be twelve calendar months. The conclusion of the CA that respondent filed its petition for review in the CTA within the two-year prescriptive period provided in Section 229 of the NIRC is correct. however. 2008 will be from February 1. the first day shall be excluded. it filed an appeal in the CA. months. reckoned from the time respondent filed its final adjusted return. respondent's petition. Needless to state. 1998 to April 14. The rule is that the two-year prescriptive period is reckoned from the filing of the final adjusted return. That the Commissioner may. the claim should have been filed on or before April 13. or portions thereof. For this reason. the periods covered by April 15. a year is equivalent to 365 days whether it be a regular year or a leap year. “day”. in 1987. even if the year 2000 was a leap year. however. If the months are designated by their name. 1998. Section 31. a year is composed of 12 calendar months. 27 above is not an express repealing clause because it fails to identify or designate the laws to be abolished. of twenty-four hours. [32] Thus. Thus. [33] Both Article 13 of the Civil Code and Section 31. Because the year 2000 was a leap year.[31] Section 27. The test is whether the subsequent law encompasses entirely the subject matter of the former law and they cannot be logically or reasonably reconciled. its right to claim a refund or credit commenced on that date. Chapter VIII. it is understood to be equivalent to 365 days. 2008 until February 29. When the law speaks of years. unless it refers to a specific calendar month in which case it shall be computed according to the number of days the specific month contains. which was filed 731 days [14] after respondent filed its final adjusted return. Petitioners contend that tax refunds. Lex posteriori derogat priori.

1999 November 15.Applying Section 31. Parcero. 2000 March 15. 1999 August 15. 2000 We therefore hold that respondent's petition (filed on April 14. 1998 October 15. 1998 December 14. 1998 June 14. 1998 September 14. Commissioner of Internal Revenue and Arturo V.T.A. 1999 October 15. the petition is hereby DENIED. 1998 July 14. Accordingly. the two-year prescriptive period (reckoned from the time respondent filed its final adjusted return[34] on April 14. 1999 February 14. 1999 February 15. 1999 January 14. computed as follows: Year 1 Year 2 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month calendar month April 15. . 2000 to to to to to to to to to to to to to to to to to to to to to to to to May 14. Book I of the Administrative Code of 1987 to this case. 1999 June 15. 2000 February 15. 1998 May 15. Case No. 1999 November 14. 6113 entitled Primetown Property Group. 1998 June 15. 1999 April 14. 1998 August 14. The case is REMANDED to the Court of Tax Appeals which is ordered to expeditiously proceed to hear C. 1999 July 15. 2000 February 14. 2000) was filed on the last day of the 24 th calendar month from the day respondent filed its final adjusted return. 1999 April 15. 1998 January 15. 1998 August 15. Hence. SO ORDERED. 1999 December 15. No costs. 1999 May 14. 1998 December 15. 1999 May 15. 1998 July 15. 1998 January 14. 1998 November 14. 1999 December 14. 1999 March 15. 1999 August 14. 1999 January 15. 1999 September 15. 1998) consisted of 24 calendar months. Inc. 1999 July 14. 1999 June 14. 1998 October 14. 2000 March 14. v. 2000 April 14. 1999 March 14. 1998 November 15. it was filed within the reglementary period. 1999 October 14. 1999 September 14. 1998 September 15. Chapter VIII.

petitioner filed a supplemental protest. On April 7.. 1993.BANK OF THE PHILIPPINE ISLANDS (Formerly: Far East Bank and Trust Company). in a letter dated November 29. requested for the details of the amounts alleged as 1982-1986 deficiency taxes mentioned in the November 26. 1986. Respondent. JR. 1994. 1986.* TINGA. G. petitioner filed a protest on the demand/assessment notices. On April 20. COMMISSIONER OF INTERNAL REVENUE. 1989. Petitioner. assessment/demand notices FAS-1-82 to 86/89-000 and FAS 5-82 to 86/89-000 for deficiency withholding tax at source (Swap Transactions) and DST involving the amounts of P190. JJ. respondent issued to the petitioner.860. for the years 1982 to 1986. On March 12. No. . both of the Court of Tax Appeals (CTA or tax court). 1989. BIR Records). Petitioner executed several Waivers of the Statutes of Limitations. J. Respondent thru then Revenue Service Chief Cesar M. Attached to the letter dated June 17. the last of which was effective until December 31.82 and P24. petitioner requested for an opportunity to present or submit additional documentation on the Swap Transactions with the then Central Bank (page 240. is a corporation duly created and existing under the laws of the Republic of the Philippines with principal office at Ayala Avenue corner Paseo de Roxas Ave. issued to the petitioner a pre-assessment notice (PAN) dated November 26.versus - CARPIO MORALES.63.587. Swap Contracts with the Central Bank.752. 1986 PAN. 1994. Acting Chairperson. and VELASCO.. petitioner submitted to the BIR. 174942 Present: CARPIO. 1989. Valdez. 2008 x----------------------------------------------------------------------------x DECISION TINGA. in connection with the reinvestigation of the abovementioned assessment. The following undisputed facts are culled from the CTA decision: Petitioner. . which ruled that BPI is liable for the deficiency documentary stamp tax (DST) on its cabled instructions to its foreign correspondent bank and that prescription had not yet set in against the government. respectively.: The Bank of the Philippine Islands (BPI) seeks a review of the Decision[1] dated 15 August 2006 and the Resolution[2] dated 5 October 2006.. J. Petitioner.R. Promulgated: March 7. Makati City. AZCUNA. On May 8.174. the surviving bank after its merger with Far East Bank and Trust Company.

it was only upon BPI’s receipt on 13 January 2003 of the 9 August 2002 Decision that the period to collect commenced to run again. Wyeth Suaco Laboratories. IV. On March 9. the latter submitted additional documents pertaining to its SWAP transactions in support of its request for reinvestigation. On the other hand. are in the nature of a telegraphic transfer subject to DST under Section 195 of the Tax Code. 2005.587. BPI argues against the application of the Suyoc case on two points: first.[3] IS LIABLE FOR The CTA synthesized the foregoing issues into whether the collection of the deficiency DST is barred by prescription and whether BPI is liable for DST on its SWAP loan transactions. on January 24. THIS HONORABLE COURT ERRED IN HOLDING THAT THE 4 MARCH 1987 MEMORANDUM OF THE LEGAL SERVICE CHIEF DULY APPROVED BY THE BIR COMMISISONER VESTS NO RIGHTS TO PETITIONER. petitioner filed the instant Petition for Review. Suyoc Consolidated Mining Company. Inc. 2005. the same to be credited to the account of the Central Bank. 2002. petitioner filed a Petition for Review before the Court. I. Thereafter. On August 31. petitioner filed with the Court En Banc a Motion for Extension of Time to File Petition for Review praying for an extension of fifteen (15) days from March 10. II. the deficiency DST assessment in the amount of P24. THIS HONORABLE COURT OVERLOOKED THE SIGNIFICANCE OF THE WAIVER DULY AND VALIDLY AGREED UPON BY THE PARTIES AND EFFECTIVE UNTIL DECEMBER 31. Moreover. it never induced the CIR to postpone tax collection. SO ORDERED. 1994. On the first issue. 2004. second. Accordingly. V. advancing the following assignment of errors. It further held. on behalf of the CIR. as regards the second issue. The Office of the Solicitor General (OSG) filed a Comment[6] dated 1 June 2007. or even until the expiration on 31 December 1994 of the last waiver of the statute of limitations signed by BPI. Such action was allegedly communicated to BPI as. [4] (Wyeth Suacocase). ruled that BPI’s protest and supplemental protest should be considered requests for reinvestigation which tolled the prescriptive period provided by law to collect a tax deficiency by distraint. THIS TAX COURT ERRED IN HOLDING THAT THE COLLECTION OF ALLEGED DEFICIENCY TAX HAS NOT PRESCRIBED. or court proceeding. Petitioner’s motion was granted in a Resolution dated March 16.63 was reiterated and the petitioner was ordered to pay the said amount within thirty (30) days from receipt of such order. On March 28. In its Reply[8] dated 30 August 2007.63 representing deficiency documentary stamp tax for the period 1982-1986. 2005. BPI avers that the cabled instructions to its correspondent bank are not subject to DST because the National Internal Revenue Code of 1977 (Tax Code of 1977) does not contain a specific provision that cabled instructions on SWAP transactions are subject to DST. We grant the petition. The OSG cites the case of Collector of Internal Revenue v. applying the case of Commissioner of Internal Revenue v. warranting the conclusion that prescription had already set in. in fact. its request for reinvestigation was not categorically acted upon by the CIR within the three-year collection period after assessment. THIS HONORABLE COURT ERRED IN HOLDING THAT RESPONDENT DID NOT VIOLATE PROCEDURAL DUE PROCESS IN THE ISSUANCE OF ASSESSMENT NOTICE RELATIVE TO DOCUMENTARY STAMP DEFICIENCY.174. Section 318[9] of the Tax Code of 1977 provides: . that BPI’s cabled instructions to its foreign correspondent bank to remit a specific sum in dollars to the Federal Reserve Bank. petitioner filed a Motion for Reconsideration of the abovementioned Decision which was denied for lack of merit in a Resolution dated February 14. respondent issued a final decision on petitioner’s protest ordering the withdrawal and cancellation of the deficiency withholding tax assessment in the amount of P190. 2004. the dispositive portion of which is quoted hereunder: IN VIEW OF ALL THE FOREGOING. BPI maintains that it did not receive any communication from the CIR in reply to its protest letters.752.82 and considered the same as closed and terminated. 2005 or until March 25.174. Thus. 2005. BPI argues that the government’s right to collect the DST had already prescribed because the Commissioner of Internal Revenue (CIR) failed to issue any reply granting BPI’s request for reinvestigation manifested in the protest letters dated 20 April and 8 May 1989. plus 20% interest starting February 14. In its Petition for Review[5] dated 24 November 2006. that the CIR acted on the request for reinvestigation. 2003. the petition is hereby DENIED for lack of merit. It was only through the 9 August 2002 Decision ordering BPI to pay deficiency DST.860. It further claims that the CIR was not precluded from collecting the deficiency within three (3) years from the time the notice of assessment was issued on 7 April 1989. the tax court. On September 21. 2003 until the amount is fully paid pursuant to Section 249 of the Tax Code. 2003. petitioner is ORDERED to PAY the respondent the amount of P24.On August 9. III. asserting that the prescriptive period was tolled by the protest letters filed by BPI which were granted and acted upon by the CIR.. THIS HONORABLE COURT ERRED IN HOLDING THAT PETITIONER DOCUMENTARY STAMP TAX ON SWAP LOANS TRANSACTIONS FROM 1982 TO 1986. Petitioner received a copy of the said decision on January 15. 2005.587. et al. or after the lapse of more than thirteen (13) years. the Court rendered a Decision denying the petitioner’s Petition for Review. [7] (Suyoc case) in support of its argument that BPI is already estopped from raising the defense of prescription in view of its repeated requests for reinvestigation which allegedly induced the CIR to delay the collection of the assessed tax. levy. (March 25 was Good Friday).

after receiving the assessment notice of September 24. 20-90. Gancayco. the Collector gave appellee until April 1. Ablaza. also Republic v. the BIR Manufacturing Audit Division conducted a review and reinvestigation of the assessments. 1949. the records of this case do not disclose any effort on the part of the Bureau of Internal Revenue to collect the deficiency tax after the expiration of the waiver until eight (8) years thereafter when it finally issued a decision on the protest. the CIR had three (3) years from the time he issued assessment notices to BPI on 7 April 1989 or until 6 April 1992 within which to collect the deficiency DST. levy. [16] At any rate. In order to determine whether the prescriptive period for collecting the tax deficiency was effectively tolled by BPI’s filing of the protest letters dated 20 April and 8 May 1989 as claimed by the CIR. The assessment of the tax is deemed made and the three (3)-year period for collection of the assessed tax begins to run on the date the assessment notice had been released. However. shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty days thereafter. internal revenue taxes shall be assessed within five years after the return was filed. the request for reinvestigation did not suspend the running of the period for filing an action for collection. is that the prescriptive period was tolled by BPI’s request for reinvestigation. a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day: Provided. on October 23. and no property could be located. and the records and documents were not at all examined. thru its finance manager.[10] Thus. this Court similarly found that— x x x T]he defendant. expressly or impliedly. without any assertion that the same had been granted or at least acted upon. Moreover. Considering the given facts. Hence. There were no impediments on the part of the Collector to file the collection case from April 1. as reflected in the records. The Court said: In the case of Republic of the Philippines v. it was only on 9 August 2002 that the CIR ordered BPI to pay the deficiency. 1950 the then Collector of Internal Revenue issued a warrant of distraint and levy for the full amount of the assessment (Exh. . 1949. through the OSG. in respect of any deficiency. The CIR himself contends that the waiver is void as it shows no date of acceptance in violation of RMO No. there is no basis for the tax court’s ruling that the filing of the request for reinvestigation tolled the running of the prescriptive period for collecting the tax deficiency. the running of the statute of limitations will not be suspended.(Collector v.[11] As applied to the present case. private respondent Wyeth Suaco Laboratories. as he considered BPI’s letters of protest to be. The records further showed that the company. the request for reinvestigation must be granted by the CIR. “A”). sent letters seeking the reinvestigation or reconsideration of the deficiency tax assessments issued by the BIR. There is nothing in the records of this case which indicates.Sec. we need to examine Section 320[12] of the Tax Code of 1977. Commissioner of Internal Revenue. 320. within which to submit his evidence. this Court pronounced that— x x x The act of requesting a reinvestigation alone does not suspend the period. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected: Provided. asked for a reinvestigation thereof on October 11. His consistent stance invoking the Wyeth Suaco case. but there was followup of this warrant. Neither did the waiver of the statute of limitations signed by BPI supposedly effective until 31 December 1994 suspend the prescriptive period. and when the taxpayer is out of the Philippines. supra. or a member of his household with sufficient discretion. [Emphasis in the original][14] The Court went on to declare that the burden of proof that the request for reinvestigation had been actually granted shall be on the CIR.[13] the Court emphasized the rule that the CIR must first grant the request for reinvestigation as a requirement for the suspension of the statute of limitations. The records of the case showed that as a result of these protest letters. or court proceeding. it was only in his comment to the present petition that the CIR. In BPI v. in order to effect suspension. 1949 (Exh. the CIR has three (3) years from the date of actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for the collection thereof without an assessment. For the purposes of this section. That if the taxpayer informs the Commissioner of any change in address. Such grant may be expressed in its communications with the taxpayer or implied from the action of the CIR or his authorized representative in response to the request for reinvestigation.—Except as provided in the succeeding section. When it validly issues an assessment within the three (3)-year period. Inc.—The running of the statute of limitations provided in Sections 318 or 319 on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection. which the latter did one day before. communicated its inability to settle the tax deficiency assessment and admitted that it knew of the ongoing review and consideration of its protest. “D”). What is reflected in the records is the piercing silence and inaction of the CIR on the request for reinvestigation. the Collector ignored the request. when the warrant of distraint and levy is duly served upon the taxpayer. yet. taxpayer Gancayco requested for a thorough reinvestigation of the assessment against him and placed at the disposal of the Collector of Internal Revenue all the evidences he had for such purpose. there is no evidence in this case that the CIR actually conducted a reinvestigation upon the request of BPI or that the latter was made aware of the action taken on its request. In fact. which states: Sec. The request should first be granted. The statute of limitations on assessment and collection of national internal revenue taxes was shortened from five (5) years to three (3) years by Batas Pambansa Blg. 318. his authorized representative. 700. Period of limitation upon assessment and collection. Acebedo. Suyoc Consolidated. argued for the first time that he had granted the request for reinvestigation. Suspension of running of statute. that the CIR had granted the request for reinvestigation filed by BPI. when the taxpayer requests for a re-investigation which is granted by the Commissioner. There is no evidence that this request was considered or acted upon. it has another three (3) years within which to collect the tax due by distraint. and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. supra). (Emphasis supplied) The above section is plainly worded. 1949… In Republic of the Philippines v. As differentiated from the Wyeth Suaco case. Consequently. That this limitation shall not apply to cases already investigated prior to the approval of this Code. however. In order to suspend the running of the prescriptive periods for assessment and collection. mailed or sent to the taxpayer. In fact. [15] In the Wyeth Suaco case.

much less granted. petitioner Commissioner of Internal Revenue (CIR) assessed respondent Bank of the Philippine Islands’ (BPI’s) deficiency percentage and documentary stamp taxes for the year 1986 in the total amount of P129. In this case..215.. C.723.. Chairperson. levy or court proceeding in order to give the company every opportunity to prove its claim. 1995 and May 27.. but to take advantage of every opportunity to molest peaceful. filed a petition with the CTA claiming that the right of the government to collect the tax had already prescribed. When the case reached this Court. 134062 REVENUE. Without such a legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax agents.63: 1986 – Deficiency Percentage Tax Deficiency percentage tax Add: 25% surcharge 20% interest from 1-21-87 to 10-28-88 Compromise penalty TOTAL AMOUNT DUE AND COLLECTIBLE P 7. Petitioner. Promulgated: April 17.. No. not to determine the latter’s real liability. No pronouncement as to costs. PUNO. COMMISSIONER OF INTERNAL G... the petition is GRANTED.000... BPI’s letters of protest and submission of additional documents pertaining to its SWAP transactions.. The Collector also conducted several reinvestigations which eventually led to a reduced assessment. 1988.88 1.We also find the Suyoc case inapplicable. The inordinate delay of the CIR in acting upon and resolving the request for reinvestigation filed by BPI and in collecting the DST allegedly due from the latter had resulted in the prescription of the government’s right to collect the deficiency.. cannot be said to have persuaded the CIR to postpone the collection of the deficiency DST.441. are hereby REVERSED and SET ASIDE...372. Respondent. 2007 x.03 15.. SP No..[18] Given the prescription of the government’s claim.. 270.319. SANDOVAL-GUTIERREZ. 41025 which reversed and set aside the decision[3] and resolution[4] of the Court of Tax Appeals (CTA) dated November 16..656. SO ORDERED..: This is a petition for review on certiorari [1] of a decision[2] of the Court of Appeals (CA) dated May 29. In that case.. however.. The company.22 3.. law-abiding citizens.J.00 P12. the Collector of Internal Revenue refrained from collecting the tax by distraint. J.. In two notices dated October 28.488. in CTA Case No.13 1986 – Deficiency Documentary Stamp Tax Deficiency percentage tax P93.... several requests for reinvestigation and reconsideration were filed by Suyoc Consolidated Mining Company purporting to question the correctness of tax assessments against it. The Decision of the Court of Tax Appeals dated 15 August 2006 and its Resolution dated 5 October 2006...x DECISION CORONA..723. WHEREFORE. CORONA. by its own action. Ablaza:[17] The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to its citizens. The law on prescription being a remedial measure should be interpreted in a way conducive to bringing about the beneficent purpose of affording protection to the taxpayer within the contemplation of the Commission which recommend the approval of the law. Present: -versus- BANK OF THE PHILIPPINE ISLANDS.892..817... As this Court declared in Republic of thePhilippines v. and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers. 4715. JJ. As a result...... 1996. to the Government because tax officers would be obliged to act promptly in the making of assessment.40 .825. which were never even acted upon. AZCUNA and GARCIA. 1998 in CA-G...R.R..... the government was induced to delay the collection of taxes to make the company feel that the demand was not unreasonable or that no harassment or injustice was meant by the government. we no longer deem it necessary to pass upon the validity of the assessment. respectively.. we ruled that Suyoc could not set up the defense of prescription since.

it is important that the taxpayer be informed also as to what particular percentage tax the assessment refers to.215. It declared that the proper assessments were those contained in the May 8. xxx xxx xxx (emphasis supplied) . through counsel.430. we shall inform you of the taxpayer’s decision on whether to pay or protest the assessment.00 TOTAL AMOUNT DUE AND COLLECTIBLE P117. 1991 letter which provided the reasons for the claimed deficiencies. 1991 stating that: … although in all respects. BPI requested a reconsideration of the assessments stated in the CIR’s May 8. 1988. we are completely at a loss on how such assessment may be protested since your letter does not even tell the taxpayer what particular percentage tax is involved and how your examiner arrived at the deficiency. [11] In a decision dated November 16. he shall first notify the taxpayer of his findings. BPI filed a petition for review in the CTA.10 Compromise penalty 15. received by BPI on January 21. Within a period to be prescribed by implementing regulations. This petition raises the following issues: 1) whether or not the assessments issued to BPI for deficiency percentage and documentary stamp taxes for 1986 had already become final and unappealable and 2) whether or not BPI was liable for the said taxes. it held that BPI filed the petition for review in the CTA on time. 1996.[15] It ruled that the October 28. assuming it is on the subject of the BAP compromise. Said assessment has been based on return – (filed by you) – (as verified) – (made by this Office) – (pending investigation) – (after investigation). the CA reversed the tax court’s decision and resolution and remanded the case to the CTA [14] for a decision on the merits. — When the [CIR] or his duly authorized representative finds that proper taxes should be assessed. 1991.[12] It denied reconsideration in a resolution dated May 27.169. 1992. if it relates to documentary stamp tax on some other issue. Your “deficiency assessments” are no assessments at all. the taxpayer shall be required to respond to said notice. 1991.[9] This was denied in a letter dated December 12. On the other hand. replied as follows: 1. If the taxpayer fails to respond. We therefore request that the examiner concerned be required to state.[13] On appeal. xxx xxx xxx … this constitutes the final decision of this office on the matter. Protesting of assessment. why it is being assessed a deficiency. you are aware of the compromise forged between your office and the Bankers Association of the Philippines [BAP] on this issue and of BPI’s submission of its computations under this compromise. This is all the more so when the assessment involves astronomical amounts. and as to the percentage tax. the [CIR] shall issue an assessment based on his findings. 3. 2.843. [17] The CIR elevated the case to this Court. we should like to be informed about what those issues are.[8] On July 6.50.[10] On February 18. 1991. even in the briefest form. as in this case. As soon as this is explained and clarified in a proper letter of assessment. 1995. 12-85 and therefore not deserving of any rejoinder by this office as no valid issue was raised against the validity of our assessment… still we obliged to explain the basis of the assessments.[7] On June 27. As to the alleged deficiency percentage tax. 1991 letter. As to the alleged deficiency documentary stamp tax.Add: 25% surcharge 23. BPI.[5] Both notices of assessment contained the following note: Please be informed that your [percentage and documentary stamp taxes have] been assessed as shown above.000. why he believes the taxpayer has a deficiency documentary and percentage taxes. your letter failed to qualify as a protest under Revenue Regulations No. There is therefore no basis whatsoever for this assessment. 1992. the CTA dismissed the case for lack of jurisdiction since the subject assessments had become final and unappealable. You are requested to pay the above amount to this Office or to our Collection Agent in the Office of the City or Deputy Provincial Treasurer of xxx[6] In a letter dated December 10. 270. The CTA ruled that BPI failed to protest on time under Section 270 of the National Internal Revenue Code (NIRC) of 1986 and Section 7 in relation to Section 11 of RA 1125. 1988 notices were not valid assessments because they did not inform the taxpayer of the legal and factual bases therefor. BPI received a letter from CIR dated May 8. [16] Thus. The former Section 270[18] (now renumbered as Section 228) of the NIRC stated: Sec. even in the vaguest terms. The taxpayer is not informed. The very purpose of a deficiency assessment is to inform taxpayer why he has incurred a deficiency so that he can make an intelligent decision on whether to pay or to protest the assessment.

the petition for review filed by BPI in the CTA on February 18. RA 8424 has already amended the provision of Section 229 on protesting an assessment. the assessment shall be void. First. It insists that the NIRC. 1992. That a preassessment notice shall not be required in the following cases: xxx xxx xxx The taxpayer shall be informed in writing of the law and the facts on which the assessment is made. the final estate tax assessment notice. Protesting of Assessment. nothing less. [23] In CIR v. 1991 letter. In merely notifying BPI of his findings. The old requirement of merely notifying the taxpayer of the CIR's findings was changed in 1998 to informing the taxpayer of not only the law. Reyes was not informed in writing of the law and the facts on which the assessment of estate taxes had been made. Jurisprudence. the only requirement was for the CIR to “notify” or inform the taxpayer of his “findings.08 (as revised in November 1964) which was designed for the precise purpose of notifying taxpayers of the assessed amounts due and demanding payment thereof. [26] Everything considered. however. this is declaratory of what sound tax procedure is and a confirmation of what due process requires even under the former Section 270. then the correct assessments were in the May 8. received by BPI on June 27. [25] (emphasis supplied. as worded now (referring to Section 228). Reyes. He asserts that he used BIR Form No. as held by the CA. 1988 NOTICES VALID ASSESSMENTS? The first issue for our resolution is whether or not the October 28. RA 8424 was already in effect. otherwise.” According to BPI. He merely notified BPI of his findings. 1988 notices were invalid assessments. italics in the original) Accordingly. [22] BPI counters that due process demanded that the facts. The Court cannot read into the law what obviously was not intended by Congress.[24] we held that: In the present case. 1991.[20] The CIR argues that the CA erred in holding that the October 28. 1998. data and law upon which the assessments were based be provided to the taxpayer. 1991 letter. when the assessments were made pursuant to the former Section 270. BPI’s contention has no merit. otherwise. the CIR did not inform BPI in writing of the law and facts on which the assessments of the deficiency taxes were made. the amount the taxpayer was to pay and a demand for payment within a prescribed period. on the other hand. xxx                   xxx                   xxx (emphasis supplied)  Admittedly. The notice required under the old law was no longer sufficient under the new law. was also issued. Consequently. there was no doubt the October 28. [21] He contends that there was no law or jurisprudence then that required notices to state the reasons for assessing deficiency tax liabilities. consisting only of the computation of the tax liabilities and a demand for payment thereof within 30 days after receipt. 1992 would be well within the 30-day period provided by law. If they were not. 1988 notices sufficiently met the requirements of a valid assessment under the old law and jurisprudence. otherwise known as the Tax Reform Act of 1997. The present Section 228 of the NIRC provides: Sec. seasonably asked for a reconsideration of the findings which the CIR denied in hisDecember 12. specifically provides that: “[t]he taxpayer shall be informed in writing of the law and the facts on which the assessment is made. in its July 6. It was on February 12. that a preliminary assessment notice was issued against the estate. 228. That would be judicial legislation.” Nothing in the old law required a written statement to the taxpayer of the law and facts on which the assessments were based. otherwise. — When the [CIR] or his duly authorized representative finds that proper taxes should be assessed. he shall first notify the taxpayer of his findings: Provided. the assessment shall be void. simply required that the assessments contain a computation of tax liabilities. as well as demand letter. On April 22. The sentence . 1991 letter. 1998. 17.WERE THE OCTOBER 28. 1988 notices[19] were valid assessments. who had simply relied upon the provisions of former Section 229 prior to its amendment by [RA] 8424. the CIR relied on the provisions of the former Section 270 prior to its amendment by RA 8424 (also known as the Tax Reform Act of 1997). received by BPI on January 21. the assessment itself would be invalid. During those dates. She was merely notified of the findings by the CIR. but also of the facts on which an assessment would be made. BPI.

Assistant Manager of the Accounting Department of [BPI].] contrary to the allegations of its counsel[. xxx xxx xxx From all the foregoing discussions. the CA’s theory was that BPI was deprived of due process when the CIR failed to inform it in writing of the factual and legal bases of the assessments —even if these were not called for under the old law. 270. how can [BPI] and/or its counsel honestly tell this Court that they did not know anything about the assessments? Not only that. the CA explained: xxx. Comptroller of [BPI]. Such findings can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the [CTA].[t]he taxpayers shall be informed in writing of the law and the facts on which the assessment is made. otherwise.[27] The fact that the amendment was necessary showed that." Now. [28] Contrary to the submission of BPI.[31] In other words. the statute had an entirely different meaning. Indeed. there were two instances when an assessment became final and unappealable: (1) when it was not protested within 30 days from receipt and (2) when the adverse decision on the protest was not appealed to the CTA within 30 days from receipt of the final decision:[35] Sec.] was the testimony of Mr.”[32] We note. We disagree. the inserted sentence in the renumbered Section 228 was not an affirmation of what the law required under the former Section 270. 1988 notices were not valid assessments. We can now conclude that [BPI] was indeed aware of the nature and basis of the assessments.[29] Clearly. [34] Under the former Section 270. prior to the introduction of the amendment. and was given all the opportunity to contest the same but ignored it despite the notice conspicuously written on the assessments which states that "this ASSESSMENT becomes final and unappealable if not protested within 30 days after receipt.[33] The CA never disputed these findings of fact by the CTA: [T]his Court recognizes that the [CTA]. Evidently. it can be safely adduced that not only was [BPI] given the opportunity to discuss with the [CIR] when the latter issued the former a Pre-Assessment Notice (which [BPI] ignored) but that the examiners themselves went to [BPI] and "we talk to them and we try to [thresh] out the issues." Counsel resorted to dilatory tactics and dangerously played with time. Mr. present evidences as to what they need. and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority.[30] In ruling that the October 28. Unfortunately. He testified to the fact that he prepared worksheets which contain his analysis regarding the findings of the [CIR’s] examiner. the legislature saw the need to modify the former Section 270 by inserting the aforequoted sentence. San Pedro and that the same worksheets were presented to Mr. which by the very nature of its function is dedicated exclusively to the consideration of tax problems. To further buttress the fact that [BPI] indeed knew beforehand the assessments[. xxx xxx xxx . the legislature intended to insert a new provision regarding the form and substance of assessments issued by the CIR. the underlying reason for the law was the basic constitutional requirement that “no person shall be deprived of his property without due process of law. Protesting of assessment. The amendment introduced by RA 8424 was an innovation and could not be reasonably inferred from the old law. such strategy proved fatal to the cause of his client. what the CTA had to say: xxx xxx xxx From the foregoing testimony. has necessarily developed an expertise on the subject. the assessment shall be void was not in the old Section 270 but was only later on inserted in the renumbered Section 228 in 1997. however. Carlos Tan. Elementary concerns of due process of law should have prompted the [CIR] to inform [BPI] of the legal and factual basis of the former’sdecision to charge the latter for deficiency documentary stamp and gross receipts taxes. Jerry Lazaro.

stated that it was his “final decision … on the matter. . 1988 reply it sent to the CIR did not qualify as a protest since the letter itself stated that “[a]s soon as this is explained and clarified in a proper letter of assessment. The taxpayer has the duty to prove otherwise. the decision shall become final. the assessment shall become final and unappealable. 1991 response. from then on. consequently. Of greater import. in his May 8. 1992. The CIR. All presumptions are in favor of the correctness of tax assessments. BPI was. If the protest is denied in whole or in part. The rule of conduct would also obviate all desire and opportunity on the part of the taxpayer to continually delay the finality of the assessment — and. this rule of conduct would meet a pressing need for fair play.Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by the implementing regulations within thirty (30) days from receipt of the assessment. 1988 letter as a protest. 1991 to appeal but it did not. barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits. Be that as it may. we shall inform you of the taxpayer’s decision on whether to pay or protest the assessment. government cannot fulfill its mandate of promoting the general welfare and wellbeing of the people. the collection of the amount demanded as taxes — by repeated requests for recomputation and reconsideration. On the part of the [CIR]. the petition is hereby GRANTED. BPI must nevertheless be deemed to have failed to appeal the CIR’s final decision regarding the disputed assessments within the 30-day period provided by law. SP No. we cannot legally presume the existence of something which was never there. As a matter of fact. The inevitable conclusion is that BPI’s failure to protest the assessments within the 30-day period provided in the former Section 270 meant that they became final and unappealable. In the absence of proof of any irregularities in the performance of duties. BPI must now suffer the repercussions of its omission. Instead it filed a request for reconsideration and lodged its appeal in the CTA only on February 18.[38] Even if we considered the December 10. the CTA correctly dismissed BPI’s appeal for lack of jurisdiction. IMPLICATIONS OF A VALID ASSESSMENT Considering that the October 28. the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. The theory behind the exercise of the power to tax emanates from necessity. BPI should have protested the same within 30 days from receipt thereof.[39] (emphasis supplied) Either way (whether or not a protest was made). A principal attribute of sovereignty.[40] WHEREFORE. otherwise. without taxes. 1988 notices as valid or proper assessments. otherwise. regularity. the individual. Without needless difficulty. as amended. We have already declared that: … the [CIR] should always indicate to the taxpayer in clear and unequivocal language whenever his action on an assessment questioned by a taxpayer constitutes his final determination on the disputed assessment. BPI did not regard this letter as a protest against the assessments. The December 10.R. On the basis of his statement indubitably showing that the Commissioner's communicated action is his final decision on the contested assessment. the government can neither exist nor endure. [37] Not only that. BPI never deemed this a protest since it did not even consider the October 28. The May 29. we cannot absolve BPI of its liability under the subject tax assessments. this would encourage his office to conduct a careful and thorough study of every questioned assessment and render a correct and definite decision thereon in the first instance.”[36] Hence. way beyond the reglementary period. an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. 1988 notices were valid assessments. the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good. SO ORDERED. We realize that these assessments (which have been pending for almost 20 years) involve a considerable amount of money. 41025 is REVERSED and SET ASIDE. as contemplated by Sections 7 and 11 of [RA 1125]. The state will be deprived of the taxes validly due it and the public will suffer if taxpayers will not be held liable for the proper taxes assessed against them: Taxes are the lifeblood of the government. association or corporation adversely affected by the decision on the protest may appeal to the [CTA] within thirty (30) days from receipt of the said decision. executory and demandable. This would also deter the [CIR] from unfairly making the taxpayer grope in the dark and speculate as to which action constitutes the decision appealable to the tax court. and orderliness in administrative action. the taxpayer would be able to determine when his right to appeal to the tax court accrues. for without taxes. 1998 decision of the Court of Appeals in CA-G. Thus.” BPI therefore had 30 days from the time it received the decision on June 27. There arose a presumption of correctness when BPI failed to protest the assessments: Tax assessments by tax examiners are presumed correct and made in good faith. by its own declaration.

PHILIPPINE JOURNALISTS. and Azcuna. 162852 Petitioner. Davide.R. 2004 x ---------------------------------------------------------------------------------------.versus - COMMISSIONER OF INTERNAL REVENUE..x DECISION . JJ. Carpio. G. Ynares-Santiago. (Chairman). Respondent. Quisumbing. INC.. Promulgated: December 16. Present: .J. C. No. Jr.

1995. 2002. Petitioner also contested that the assessment had no factual and legal basis. at Journal Bldg. 1994 to December 31. Sanchez presented three identification cards.892. 1999. 1997.694. J.247. Panganiban to the petitioner to pay the assessment within ten (10) days from receipt of the letter. as to whether or not the Waiver of the Statute of Limitations is valid and binding on the petitioner is another question. until the completion of the investigation”. petitioner’s Comptroller.97.35 _______________ P 127. for if this court finds the same to be ineffective. Mr. 1999.46 was reached and requested an extension of thirty (30) days from receipt of the clarification within which to reply. (b) that the warrant of distraint and/or levy was without factual and legal bases as its issuance was premature. petitioner asked to be clarified how the tax liability of P111. Revenue District Office No. (Authorized Representative) on January 8. BIR Revenue Region No. petitioner paid the amount of P10. On November 10. Railroad St.748. 1997. a Final Notice Before Seizure [8] was issued by the same deputy commissioner giving the petitioner ten (10) days from receipt to pay.877. Incorporated (PJI) assailing the Decision [1] of the Court of Appeals dated August 5.387. Manila on December 15. Assessment Division/Billing Section.743.. On August 10.220. Thus. 1998 stating the following deficiency taxes. 76134 sent by the BIR. 2003.00. … However. Inc.384. 1994. the CTA rendered its decision. (c) that the assessment. Since the subject assessments were issued beyond the three-year prescriptive period. which ordered petitioner to pay the assessed tax liability of P111. Revenue Officer De Vera submitted his audit report recommending the issuance of an assessment and finding that petitioner had deficiency taxes in the total amount of P136.299.00. Jr. [10] Petitioner filed a Petition for Review [12] with the Court of Tax Appeals (CTA) which was amended on May 12. this Court rules in the affirmative.46 On March 16. Region No.[9] The BIR received a follow-up letter from the petitioner asserting that its (PJI) records do not show receipt of Tax Assessment/Demand No. respondent presented a certification issued by the Post Master of the Central Post Office.086. 1998. [5] The document “waive[d] the running of the prescriptive period provided by Sections 223 and 224 and other relevant provisions of the NIRC and consent[ed] to the assessment and collection of taxes which may be found due after the examination at any time after the lapse of the period of limitations fixed by said Sections 223 and 224 and other relevant provisions of the NIRC. 1997 for an opportunity to object and present documentary evidence relative to the proposed assessment. 1998.012. 87120 [4] for Revenue Officer Federico de Vera. a Preliminary Collection Letter was sent by Deputy Commissioner Romeo S. issued Assessment/Demand No. By letters dated November 26. Jr. On October 5.38 ______________ P111. 33-1-000757-94.88 184. 6.00 and the tax due of P10. Petitioner received a copy of the final notice on November 24.. 1998 addressed to Phil. Journalists.20 In a letter dated August 29. On March 28. 1999.408. Respondent also showed proof that in claiming Registered Letter No.[6] On July 2. Manila to the effect that Registered Letter No. inclusive of surcharges. having been made beyond the 3-year prescriptive period. 33-06-046 [11] signed by Deputy Commissioner Romeo Panganiban for the BIR was received by the petitioner.: This is a petition for review filed by Philippine Journalists. 1994 which presented a net income of P30. and Group Supervisor Vivencio Gapasin to examine petitioner’s books of account and other accounting records for internal revenue taxes for the period January 1.214. (d) that the issuance of the warrant without being given the opportunity to dispute the same violates its right to due process.807.433. 1999. Petitioner complains: (a) that no assessment or demand was received from the BIR.95 2. … .214. From the examination. 33 of the Bureau of Internal Revenue (BIR) issued Letter of Authority No. and (e) that the grave prejudice that will be sustained if the warrant is enforced is enough basis for the issuance of the writ of preliminary injunction. [2] The case arose from the Annual Income Tax Return filed by petitioner for the calendar year ended December 31. To disprove petitioner’s allegation of non-receipt of the aforesaid assessment notices. On May 14.980.291. a Warrant of Distraint and/or Levy No. the Assessment Division of the BIR issued Pre-Assessment Notices which informed petitioner of the results of the investigation. Manila was duly delivered to and received by a certain Alfonso Sanchez. then the assessments must necessarily fail.291. Revenue District Officer Jaime Concepcion invited petitioner to send a representative to an informal conference on September 15. it becomes imperative on our part to rule first on the validity of the waiver allegedly executed on September 22.[13] to wit: As to whether or not the assessment notices were received by the petitioner. the petitioner was told that there were deficiency taxes. 76134. On September 22. Lorenza Tolentino. 2004 which denied the Motion for Reconsideration.952.002. After deducting tax credits for the year.291.214. executed a “Waiver of the Statute of Limitation Under the National Internal Revenue Code (NIRC)”. 2000.363.90 125.527. inclusive of interest and compromise penalty: Income Tax Value Added Tax Expanded Withholding Tax Total P108. one of which is his company ID with herein petitioner.46 and the Resolution [3] dated March 31.20 2. 33-1-000757-94 [7] on December 9. 2000.YNARES-SANTIAGO. 1999. interest and compromise penalty in the following amounts: Value Added Tax Income Tax Withholding Tax Total P 229. 1997. is null and void. 6.

These grounds are merely formal in nature. 1998 to be time-barred. The period of prescription for the assessment of taxes may be extended provided that the extension be made in writing and that it be made prior to the expiration of the period of prescription.214. The said RMO even provides that the procedures found therein should be strictly followed. Thus. the memorandum order adds that the length of the extension be specified by indicating its expiration date. 33-06-046 is hereby declared NULL and VOID. the waiver must be executed in three (3) copies. Lorenza Tolentino. As to the allegation that Phil. Consequently. 2003. 1997 to be suffering from legal infirmities. Journalists was not furnished a copy of the waiver. in the total amount of P111. But this requirement does not apply in the instant case because what we have here is not an extension of the prescriptive period but a waiver thereof. finding the waiver executed by the petitioner on September 22. Journalists to be invalid for the following reasons: (1) it does not indicate a definite expiration date.[15] Petitioner’s Motion for Reconsideration was denied in a Resolution dated March 31. … … [T]he CTA found the waiver executed by Phil.[14] After the motion for reconsideration of the Commissioner of Internal Revenue was denied by the CTA in a Resolution dated August 2. 1998. WITHDRAWN and WITH NO FORCE AND EFFECT. denying the request for reconsideration or reinvestigation may be appealed to the CTA. It does not contain a definite expiration date. under pain of being administratively dealt with should non-compliance result to prescription of the right to assess/collect… Thus. WHEREFORE. Mere assessment notices which have become final after the lapse of the thirty (30)-day reglementary period are not appealable.46 for the year 1994 are hereby declared CANCELLED. the 02 August 2002 resolution and 14 May 2002 decision of the CTA are hereby SET ASIDE. This date could reasonably be understood as the same date of acceptance by the BIR since a different date was not otherwise indicated. To these requirements provided by law. the deficiency income. 2002. this requirement appears ridiculous. 2004.214. Journalist. 20-90. in view of all the foregoing. the taxpayer. 2002. this is the biggest flaw of the decision. In its decision dated August 5.46. was not furnished a copy of the waiver. Under RMO No. followed by the signature of the BIR’s authorized representative.291. the Court finds Assessment/Demand No. The date of acceptance by the BIR does not categorically appear in the document but it states at the bottom page that the BIR “accepted and agreed to:”…. Journalists executed was a renunciation of its right to invoke the defense of prescription. Warrant of Distraint and/or Levy No. When one waives the prescriptive period. Phil. 33-1-000757-94 issued on December 5. This is a valid waiver. the phrase indicating the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription should be filled up… … Secondly. Although the date of acceptance was not stated. Hence. the waiver failed to state the date of acceptance by the Bureau which under the aforequoted RMO should likewise be indicated… … Finally. the Court of Appeals disagreed with the ruling of the CTA. SO ORDERED. Likewise. SO ORDERED. this appeal on the following assignment of errors: . respondent failed to comply. through its comptroller. Journalists is ordered [to] pay its assessed tax liability of P111. rendering the same invalid and ineffective.291. What Phil. It is to be noted that under RMO No. petitioner was not furnished a copy of the waiver. the CTA should not have entertained the petition at all. 20-90. the second copy of which is for the taxpayer. the document was dated 22 September 1997. signed the waiver. This requirement could be reasonably construed from the rule on extension of the prescriptive period. the Warrant of Distraint and/or Levy issued pursuant thereto is considered null and void. and (3) Phil. the instant Petition for Review is hereby GRANTED.After carefully examining the questioned Waiver of the Statute of Limitations. These are the requirements for a valid extension of the prescriptive period. WHEREFORE. 20-90 is directed to all concerned internal revenue officers. it is no longer necessary to indicate the length of the extension of the prescriptive period since the person waiving may no longer use this defense. Accordingly. this Court considers the same to be without any binding effect on the petitioner for the following reasons: The waiver is an unlimited waiver. Again. These are two (2) very different things. to wit: … The petition for review filed on 26 April 2000 with CTA was neither timely filed nor the proper remedy. Only decisions of the BIR. Journalists. event or proceeding? … As regards the need for a definite expiration date. It is likewise required that the fact of receipt by the taxpayer of his/her file copy be indicated in the original copy. (2) it does not state the date of acceptance by the BIR. value-added and expanded withholding tax assessments issued by the respondent against the petitioner on December 9. Why would it need a copy of the document it knowingly executed when the reason why copies are furnished to a party is to notify it of the existence of a document. Respondent Phil. It bears stressing that RMO No. an appeal was filed with the Court of Appeals on August 12.

[20] Unreasonable investigation contemplates cases where the period for assessment extends indefinitely because this deprives the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of a reasonable period of time. thus invalidating the assessments issued by the BIR. RMO No. 1125. 1125. III. We agree with petitioner. This is not the first case where the CTA validly ruled on issues that did not relate directly to a disputed assessment or a claim for refund. Besides. the assessment notices became final and unappealable. – The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal. The second and fifth assigned errors both focus on Revenue Memorandum Circular No. The Honorable Court of Appeals gravely erred when it ruled that failure to comply with the provisions of Revenue Memorandum Order (RMO) No. Jurisdiction. or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of Internal Revenue. IV. the Act Creating the Court of Tax Appeals. It gives the CTA the jurisdiction to determine if the warrant of distraint and levy issued by the BIR is valid and to rule if the Waiver of Statute of Limitations was validly effected. The Honorable Court of Appeals gravely erred when it held that the assessment in question has became final and executory due to the failure of the Petitioner to protest the same. V. This directive shows that the RMO is not merely cover forms. The second part of the provision covers other cases that arise out of the NIRC or related laws administered by the Bureau of Internal Revenue. The Honorable Court of Appeals committed grave error when it HELD valid a defective waiver by considering the latter a waiver of the right to invoke the defense of prescription rather than an extension of the three year period of prescription (to make an assessment) as provided under Section 222 in relation to Section 203 of the Tax Code. Ablaza:[21] The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to its citizens. otherwise. to the Government because tax officers would be obliged to act promptly in the making of assessment. 20-90 is merely a formal defect that does not invalidate the waiver of the statute of limitations without stating the legal justification for such conclusion. refunds of internal revenue taxes. The Honorable Court of Appeals gravely erred when it ruled that the assessment notices became final and unappealable. II. and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers. The NIRC. Such assessment should be held void and non-existent. existing jurisprudence and outside of the purpose and intent for which they were enacted. v. (Emphasis supplied). As was held in Republic of the Phils. Since the petitioner did not file a request for reinvestigation or reconsideration within thirty (30) days. but to take advantage of every opportunity to molest peaceful. Without such a legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax agents. an expression of a public policy. David. The petitioner now argue that the case was brought to the CTA because the warrant of distraint or levy was illegally issued and that no assessment was issued because it was based on an invalid waiver of the statutes of limitations. The assessment issued is void and legally non-existent because the BIR has no power to issue an assessment beyond the three-year prescriptive period where there is no valid and binding waiver of the statute of limitation. The wording of the provision is clear and simple. in Commissioner of Internal Revenue v. 20-90 which are substantive in nature. was upheld by this Court. such right to assess cannot be validly granted after three years since it would arise from a violation of the mandatory provisions of Section 203 and would go against the vested right of the Petitioner to claim prescription of assessment. penalties imposed in relation thereto. Section 7(1) of Republic Act No. The appellate jurisdiction of the CTA is not limited to cases which involve decisions of the Commissioner of Internal Revenue on matters relating to assessments or refunds. not to determine the latter’s real liability. fees or other charges. would be rendered useless and nugatory. an interpretation that is contrary to law. Such ruling totally disregarded the mandatory requirements of Section 222(b) of the Tax Code and its implementing regulation. The Court of Appeals held that the requirements and procedures laid down in the RMO are only formal in nature and did not invalidate the waiver that was signed even if the requirements were not strictly observed. 7.[17] we upheld the jurisdiction of the CTA to act on a petition to invalidate and annul the distraint orders of the Commissioner of Internal Revenue. Respondent had no power to issue an assessment beyond the three year period under the mandatory provisions of Section 203 of the NIRC.I. provides for the jurisdiction of that special court: SEC. The first assigned error relates to the jurisdiction of the CTA over the issues in this case.[18] the decision of the CTA declaring several waivers executed by the taxpayer as null and void. InPantoja v. 20-90 (RMO No. under Sections 203 and 222. The Honorable Court of Appeals committed grave error in ruling that it is outside the jurisdiction of the Court of Tax Appeals to entertain the Petition for Review filed by the herein Petitioner at the CTA despite the fact that such case inevitably rests upon the validity of the issuance by the BIR of warrants of distraint and levy contrary to the provisions of Section 7(1) of Republic Act No. The RMO provides that violation thereof subjects the erring officer to administrative sanction.[19] provides for a statute of limitations on the assessment and collection of internal revenue taxes in order to safeguard the interest of the taxpayer against unreasonable investigation. as herein provided – (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. Also. The law on prescription being a remedial measure should be interpreted in a way conducive to bringing about the beneficent purpose of affording protection to the taxpayer within the contemplation of the Commission which recommend the approval of the law.[16] We find merit in the appeal. 20-90) on the requisites of a valid waiver of the statute of limitations. The Court of Appeals ruled that only decisions of the BIR denying a request for reconsideration or reinvestigation may be appealed to the CTA. law-abiding citizens. Section 203. (Emphasis supplied) . Court of Appeals.

000. as mandated by the NIRC and RMO No. thus: In the execution of said waiver. The phrase “but not after _________ 19___” should be filled up. We invalidated the subject waivers and ruled: Petitioner’s submission is inaccurate… … The Court of Appeals itself also passed upon the validity of the waivers executed by Carnation.000.00) and executed almost seven months before the expiration of the three-year prescription period. signed by petitioner’s comptroller on September 22.[25] dealt with waivers that were not signed by the Commissioner but were argued to have been given implied consent by the BIR. Thus.. 20-90 implements these provisions of the NIRC relating to the period of prescription for the assessment and collection of taxes. In the National Office 3. 1997 is not valid and binding because it does not conform with the provisions of RMO No. the Waiver of Statute of Limitations. 20-90 explains the rationale of a waiver: . Commissioner For tax cases involving more than P1M B. It did not specify a definite agreed date between the BIR and petitioner. The phrase “but not after __________ 19___” should be filled up… 2. In the Regional Offices 1. … Soon after the waiver is signed by the taxpayer. The following revenue officials are authorized to sign the waiver. As a corollary. The date of such acceptance by the Bureau should be indicated… 3. This form may be reproduced by the Office concerned but there should be no deviation from such form. The period agreed upon shall constitute the time within which to effect the assessment/collection of the tax in addition to the ordinary prescriptive period. This case involves taxes amounting to more than One Million Pesos (P1. [23] The waiver of the statute of limitations is not a waiver of the right to invoke the defense of prescription as erroneously held by the Court of Appeals. our tax law provides a statute of limitations in the collection of taxes. the exceptions to the law on prescription should perforce be strictly construed. The Revenue District Officer with respect to tax cases still pending investigation and the period to assess is about to prescribe regardless of amount. The waiver is also defective from the government side because it was signed only by a revenue district officer. A cursory reading of the Order supports petitioner’s argument that the RMO must be strictly followed. … 5. The case of Commissioner of Internal Revenue v. shall sign the waiver indicating that the Bureau has accepted and agreed to the waiver. petitioner’s waiver became unlimited in time. The waiver does not mean that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where the language of the document is equivocal. The waiver is not a unilateral act by the taxpayer or the BIR. (Emphasis supplied) As found by the CTA.RMO No. should be liberally construed in order to afford such protection. The conformity of the BIR must be made by either the Commissioner or the Revenue District Officer. investigation or assessment. The waiver must be in the form identified hereof. Thus. This indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription. as hereinafter provided. within which the former may assess and collect revenue taxes. Court of Appeals. The foregoing procedures shall be strictly followed. For the purpose of safeguarding taxpayers from any unreasonable examination. A. 20-90. 20-90. the following procedures should be followed: 1. violating Section 222(b) of the NIRC. observing thus: . the law on prescription. Any revenue official found not to have complied with this Order resulting in prescription of the right to assess/collect shall be administratively dealt with. For this. the Commissioner of Internal Revenue or the revenue official authorized by him. to a certain extent. It is an agreement between the taxpayer and the BIR that the period to issue an assessment and collect the taxes due is extended to a date certain. RMO No. but is a bilateral agreement between two parties to extend the period to a date certain. [24] RMO No. not the Commissioner. is a derogation of the taxpayers’ right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. being a remedial measure. (Emphasis supplied)[22] A waiver of the statute of limitations under the NIRC. 20-90 requires the Commissioner of Internal Revenue to sign for the BIR..

… What is more.[27] (Emphasis supplied) The other defect noted in this case is the date of acceptance which makes it difficult to fix with certainty if the waiver was actually agreed before the expiration of the three-year prescriptive period. The Decision of the Court of Appeals dated August 5. 2004 are REVERSED and SET ASIDE. no such written agreement concerning the said three waivers exists between the petitioner and private respondent Carnation. 2003 and its Resolution dated March 31. Ms. No. 14-98. 33 was only signed by the BIR Commissioner on January 16. Here. 33-06-046 null and void. It stated that the reason copies are furnished is for a party to be notified of the existence of a document. Section 319 of the Tax Code earlier quoted is clear and explicit that the waiver of the five-year [26] prescriptive period must be in writing and signed by both the BIR Commissioner and the taxpayer. Sarmiento’s transfer and assignment to RDO No. SO ORDERED. the instant petition for review is GRANTED. We agree with the CTA in holding “these ‘waivers’ to be invalid and without any binding effect on petitioner (Carnation) for the reason that there was no consent by the respondent (Commissioner of Internal Revenue). 2000 is also null and void for having been issued pursuant to an invalid assessment. [28] The Court of Tax Appeals noted in its decision that it is unlikely as well that Ms. is REINSTATED. 33 on such date. The flaw in the appellate court’s reasoning stems from its assumption that the waiver is a unilateral act of the taxpayer when it is in fact and in law an agreement between the taxpayer and the BIR. 1998. 20-90. When the petitioner’s comptroller signed the waiver on September 22. 1998 because “Revenue Officials normally have to conduct first an inventory of their pending papers and property responsibilities. Under RMO No. In the same manner. event or proceeding. 33-06-046 which petitioner received on March 28. Petitioner. The Court of Appeals held that the date of the execution of the waiver on September 22. Warrant of Distraint and/or Levy No. 1997. Sarmiento made the acceptance on January 16. G. Petitioner points out however that Revenue District Officer Sarmiento could not have accepted the waiver yet because she was not the Revenue District Officer of RDO No. 319 of the Tax Code is one which is unilateral nor can it be said that concurrence to such an agreement is a mere formality because it is the very signatures of both the Commissioner of Internal Revenue and the taxpayer which give birth to such a valid agreement. 2002.R. declaring Warrant of Distraint and/or Levy No. the waivers in question reveal that they are in no wise unequivocal. The Decision of the Court of Tax Appeals in CTA Case No. COMMISSIONER OF INTERNAL REVENUE. 33-1-000757-94 issued on December 9.We cannot go along with the petitioner’s theory. 178087 Present: . the Assessment/Demand No. 20-90 only after the taxpayer received a copy of the waiver accepted by the BIR.” … For sure. WHEREFORE. the three waivers signed by Carnation do not bear the written consent of the BIR Commissioner as required by law. 1998 was invalid because it was issued beyond the three (3) year period. and therefore necessitates for its binding effect the concurrence of the Commissioner of Internal Revenue…. the waiver must be executed in three copies with the second copy for the taxpayer. The Court of Appeals did not think this was important because the petitioner need not have a copy of the document it knowingly executed. There is compliance with the provision of RMO No. 1998 as shown by the Revenue Travel Assignment Order No. The waiver document is incomplete and defective and thus the three-year prescriptive period was not tolled or extended and continued to run until April 17. 6108 dated May 14.”[29] Finally. premises considered. On this basis neither implied consent can be presumed nor can it be contended that the waiver required under Sec. The requirement to furnish the taxpayer with a copy of the waiver is not only to give notice of the existence of the document but of the acceptance by the BIR and the perfection of the agreement. it was not yet complete and final because the BIR had not assented. the records show that petitioner was not furnished a copy of the waiver. 1997 could reasonably be understood as the same date of acceptance by the BIR. Consequently.

On August 25. 2003. Salazar (Salazar). 2003. respondent filed on August 27.712. This Petition for Review on Certiorari seeks to set aside the Decision[2] dated March 30.000.76 247. 2006. x x x[11] Petitioner moved for reconsideration but the CTA Second Division denied the motion in a Resolution[12] dated April 18. Petitioner in turn filed his Answer.693. hence. Chan Ching Bio. the three-year prescriptive period was not tolled or extended and continued to run. the BIR issued a Subpeona Duces Tecum dated September 21. Percival T. 2002. 2000. On June 22.962. 2007 denying the motion for reconsideration. 2002 and by the BIR Tax Fraud Division on February 4. Ruling of the Court of Tax Appeals. Third. 20-90. requesting the immediate payment of the following tax liabilities: Kind of Tax Income Tax VAT EWT Withholding Tax-Compensation Penalties Total Amount P 9.624. 2007 of the Court of Tax Appeals (CTA) affirming the cancellation of the assessment notices for having been issued beyond the prescriptive period and the Resolution[3] dated May 18. BRION. respondent Kudos Metal Corporation filed its Annual Income Tax Return (ITR) for the taxable year 1998. the CTA Second Division issued a Resolution [10] canceling the assessment notices issued against respondent for having been issued beyond the prescriptive period. and PEREZ. KUDOS METAL CORPORATION. as the tax case involves more than P1. 2005. ABAD. J. DEL CASTILLO. A review and audit of respondent’s records then ensued. Respondent challenged the assessments by filing its “Protest on Various Tax Assessments” on December 3. 2006. 2004 a Petition for Review[7] with the CTA.897.90 1. executed a Waiver of the Defense of Prescription. Thus: First. the BIR issued a Preliminary Assessment Notice for the taxable year 1998 against the respondent. 2005.. Promulgated: Respondent. therefore. In this regard.048.. On December 10. Second Division Believing that the government’s right to assess taxes had prescribed. As such.76 Ruling of the Court of Tax Appeals. 2004. Chairperson. Secondly. received by the BIR Tax Fraud Division on February 28.”[9] On October 4. Nelia Pasco (Pasco). 2002. 1999. 2003 and accepted by Assistant Commissioner Salazar. 2003 which was received by respondent onNovember 12. This was followed by a Formal Letter of Demand with Assessment Notices for taxable year 1998. the waiver failed to indicate the date of acceptance. JJ. Such date of acceptance is necessary to determine whether the acceptance was made within the prescriptive period. dated September 26. 1999. respondent filed an “Urgent Motion for Preferential Resolution of the Issue on Prescription. This was followed by a second Waiver of Defense of Prescription [5] executed by Pasco on February 18. received by the BIR Enforcement Service on January 31. the Assistant Commissioner is not the revenue official authorized to sign the waiver. Factual Antecedents On April 15. only the Commissioner is authorized to enter into agreement with the petitioner in extending the period of assessment. The requirement to furnish the taxpayer with a copy of the waiver is not only to give notice of the existence of the document but also of the acceptance by the BIR and the perfection of the agreement.85 13. notarized on February 19. [1] Exceptions extending the period to assess must. Pursuant to a Letter of Authority dated September 7. the fact of receipt by the taxpayer of his file copy was not indicated on the original copy. and accepted by the Assistant Commissioner of the Enforcement Service. 2003 and its “Legal Arguments and Documents in Support of Protests against Various Assessments” on February 2. 2003. 2001. 2003. May 5.353. En Banc . receipt of which was acknowledged by respondent’s President. Mr. 2010 x-------------------------------------------------------------------x DECISION DEL CASTILLO.336. It found the first Waiver of the Statute of Limitations incomplete and defective for failure to comply with the provisions of Revenue Memorandum Order (RMO) No. [4] which was notarized on January 22.00.460. 2004. the Bureau of Internal Revenue (BIR) served upon respondent three Notices of Presentation of Records.00 P25.: The prescriptive period on when to assess taxes benefits both the government and the taxpayer. in a letter dated October 20. the BIR rendered a final Decision[6] on the matter. J.[8] On April 11.000. The subject waiver is therefore incomplete and defective. respondent’s accountant.versus - CARPIO. be strictly construed.24 8.000. Respondent failed to comply with these notices.

Moreover. ACIR. it did not extend the prescriptive period to assess. the subject assessment is a tax fraud case. which provides in part as follows: A. the present recourse where petitioner interposes that: THE COURT OF TAX APPEALS EN BANC ERRED IN RULING THAT THE GOVERNMENT’S RIGHT TO ASSESS UNPAID TAXES OF RESPONDENT PRESCRIBED. assuming arguendo that the first waiver is valid. it found that the first waiver was still invalid based on the second and third grounds stated by the CTA Second Division. it finds that the Assistant Commissioner of the Enforcement Service is authorized to sign the waiver pursuant to RDAO No. the first waiver is still invalid based on the second and third grounds stated by the Court in Division. The waivers executed by respondent’s accountant did not extend the period within which the assessment can be made Petitioner does not deny that the assessment notices were issued beyond the three-year prescriptive period. Pertinent portions of the Decision read as follows: While the Court En Banc agrees with the second and third grounds for invalidating the first waiver. Issue Hence. the second waiver was executed after the expiration of the first period agreed upon. A perusal of the records reveals that the investigation of the subject deficiency taxes in this case was conducted by the National Investigation Division of the BIR. For National Office cases Designated Revenue Official 1. respondent led the government to believe that the “delay” in the process would not be utilized against it. who executed the same without any written authority from it. Although it ruled that the Assistant Commissioner was authorized to sign the waiver pursuant to Revenue Delegation Authority Order (RDAO) No. . the same could not have tolled the 3-year prescriptive period to assess. provided that it is executed prior to the expiration of the first period agreed upon. which was formerly named the Tax Fraud Division. Nevertheless. the second waiver is invalid for violating Section 222(b) of the 1997 Tax Code which mandates that the period agreed upon in a waiver of the statute can still be extended by subsequent written agreement. AS Based on the foregoing. Hence. respondent counters that the principle of equity comes into play only when the law is doubtful. the Assistant Commissioner. Legal Service 4. In the case at bar. 5-01. Thus. Hence. whichever comes later. As to the doctrine of estoppel by acquiescence relied upon by petitioner.[13] Petitioner sought reconsideration but the same was unavailing. an assessment notice issued after the three-year prescriptive period is no longer valid and effective.[14] Petitioner’s Arguments Petitioner argues that the government’s right to assess taxes is not barred by prescription as the two waivers executed by respondent. through its accountant. petitioner claims that respondent is estopped from adopting a position contrary to what it has previously taken. 2002. Section 203[15] of the National Internal Revenue Code of 1997 (NIRC) mandates the government to assess internal revenue taxes within three years from the last day prescribed by law for the filing of the tax return or the actual date of filing of such return. Petitioner insists that by acquiescing to the audit during the period specified in the waivers. Large Taxpayers Service 3.On appeal. the period agreed upon in the subject first waiver expired on December 31. effectively tolled or extended the period within which the assessment can be made. 05-01. respondent may no longer repudiate the validity of the waivers and raise the issue of prescription. Clearly. Thus. but claims that the period was extended by the two waivers executed by respondent’s accountant. Enforcement Service is authorized to sign waivers in tax fraud cases. the exceptions to the law on prescription must be strictly construed. Respondent’s Arguments Respondent maintains that prescription had set in due to the invalidity of the waivers executed by Pasco. ACIR. ACIR. in clear violation of RDAO No. 2003. which is not present in the instant case. Assessment Service (AS) For tax fraud and policy cases For large taxpayers cases other than those cases falling under Subsection B hereof For cases pending verification and awaiting resolution of certain legal issues prior to prescription and for issuance/compliance of Subpoena Duces Tecum For cases which are pending in or subject to review or approval by the ACIR. Our Ruling The petition is bereft of merit. Exceptions however are provided under Section 222[16] of the NIRC. the CTA En Banc affirmed the cancellation of the assessment notices. 2003 and was notarized on February 19. Consequently. As previously discussed. 2003 was executed on February 18. Assistant Commissioner (ACIR). The second waiver in the instant case which was supposed to extend the period to assess to December 31. In disputing the conclusion of the CTA that the waivers are invalid. Enforcement Service 2. 05-01.

The waiver must be signed by the taxpayer himself or his duly authorized representative. After inducing petitioner to delay collection as he in fact did. 2001 lay down the procedure for the proper execution of the waiver. 1952..S. 1990 and RDAO 05-01[18]issued on August 2. Estoppel does not apply in this case We find no merit in petitioner’s claim that respondent is now estopped from claiming prescription since by executing the waivers. but the government withheld action at the specific request of the plaintiff.[21] Conversely. which denial was appealed to the Conference Staff. As Mr. In Collector of Internal Revenue v. 2. the doctrine of estoppel is predicated on. and has its origin in. such delegation should be in writing and duly notarized. the original copy to be attached to the docket of the case. based on weighty reasons. 1955. lasted for several months. “The tax could have been collected. The waiver must be executed in three copies. vs. the period to assess or collect taxes was not extended. Suyoc Consolidated Mining Company. U. In case the authority is delegated by the taxpayer to a representative. The waivers were executed without the notarized written authority of Pasco to sign the waiver in behalf of respondent. and upon receipt of the letter respondent asked for a reinvestigation and reconsideration of the assessment. is justice according to natural law and right. the assessments were issued beyond the prescribed period. persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the Government. 588]. However. When it failed to pay the tax within the period extended. Due to the defects in the waivers. 647). The waiver must be in the proper form prescribed by RMO 20-90. 1953 to July 16. The fact of receipt by the taxpayer of his/her file copy must be indicated in the original copy to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement. 78 L. for the law says to him in effect “this is your own act. it must be stressed that in the said case. the assessment was finally reduced on July 26.We do not agree. the doctrine of estoppel cannot give validity to an act that is prohibited by law or one that is against public policy. This is the ruling which is now being questioned after a protracted negotiation on the ground that the collection of the tax has already prescribed. This case has no precedent in this jurisdiction for it is the first time that such has risen. Upon receipt of this assessment respondent requested for at least one year within which to pay the amount assessed although it reserved its right to question the correctness of the assessment before actual payment. several reinvestigations were made and a hearing was even held by the Conference Staff organized in the collection office to consider claims of such nature which. 3. In the case of a corporation. H. there is no showing that respondent made any request to persuade the BIR to postpone the issuance of the assessments. Consequently. 5. While we may agree with the Court of Tax Appeals that a mere request for reexamination or reinvestigation may not have the effect of suspending the running of the period of limitation for in such case there is need of a written agreement to extend the period between the Collector and the taxpayer. as the BIR was able to make an assessment within the prescribed period. ‘He who prevents a thing from being done may not avail himself of the nonperformance which he has himself occasioned. Section 222 (b) of the NIRC provides that the period to assess and collect taxes may only be extended upon a written agreement between the CIR and the taxpayer executed before the expiration of the three-year period. the waiver must be signed by any of its responsible officials. 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. which indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription. Stearns Co. Petitioner granted an extension of only three months. [22] As such.. When this request was denied. estoppel was applied as an exception to the statute of limitations on collection of taxes and not on the assessment of taxes. 1946 was made on February 11. 6.. broadly defined. [23] It . 1950 demanding payment of the tax as assessed. the assessments were issued by the BIR beyond the three-year period and are void. equity which. Supp. and executed by the taxpayer or his duly authorized representative. 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.” [Newport Co.”’ “(R. there are cases however where a taxpayer may be prevented from setting up the defense of prescription even if he has not previously waived it in writing as when by his repeated requests or positive acts the Government has been. Because of such requests. 1953. More important. that such an attitude or behavior should not be countenanced if only to protect the interest of the Government. the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form. 1947. U. respondent again requested for a reconsideration on April 25. The phrase “but not after ______ 19 ___”. The date of such acceptance by the BIR should be indicated. and as a result of these various negotiations. Justice Cardozo has said: “The applicable principle is fundamental and unquestioned. Or. 1955. the second copy for the taxpayer and the third copy for the Office accepting the waiver. which was denied on May 6. The doctrine of estoppel cannot be applied in this case as an exception to the statute of limitations on the assessment of taxes considering that there is a detailed procedure for the proper execution of the waiver. should be filled up. 2.[20] the doctrine of estoppel prevented the taxpayer from raising the defense of prescription against the efforts of the government to collect the assessed tax. And when such situation comes to pass there are authorities that hold. The waivers failed to indicate the date of acceptance. and therefore you are not damnified.S. vs. It is obvious from the foregoing that petitioner refrained from collecting the tax by distraint or levy or by proceeding in court within the 5-year period from the filing of the second amended final return due to the several requests of respondent for extension to which petitioner yielded to give it every opportunity to prove its claim regarding the correctness of the assessment. The appeal was heard by the Conference Staff from September 2. it was the one which asked for additional time to submit the required documents. petitioner sent respondent a letter on November 28. As we have often said. viz: It appears that the first assessment made against respondent based on its second final return filed on November 28. for good reasons. The plaintiff is now estopped and should not be permitted to raise the defense of the Statute of Limitations. there was a finding that the taxpayer made several requests or positive acts to convince the government to postpone the collection of taxes. to wit: 1.[19] A perusal of the waivers executed by respondent’s accountant reveals the following infirmities: 1. as the record shows. but there are several precedents that may be invoked in American jurisprudence. 34 F. The waiver should be duly notarized. as was aptly said. ed. which the BIR must strictly follow. However. Also. it is most unfair for respondent to now take advantage of such desistance to elude his deficiency income tax liability to the prejudice of the Government invoking the technical ground of prescription. (DC-WIS). 3. before signing the waiver. 4. RMO 20-90[17] issued on April 4. The fact of receipt by the respondent of its file copy was not indicated in the original copies of the waivers. in this case.

or to extend beyond them requirements of the transactions in which they originate.[26] WHEREFORE.[25] As to the alleged delay of the respondent to furnish the BIR of the required documents. the BIR must bear the consequence. the BIR failed to verify whether a notarized written authority was given by the respondent to its accountant. .[24] Simply put. the doctrine of estoppel must be sparingly applied. being a derogation of the taxpayer’s right to security against prolonged and unscrupulous investigations. the petition is DENIED. It cannot shift the blame to the taxpayer. the CIR has the power to make assessments based on the best evidence obtainable. As stated earlier. which the BIR itself issued. SO ORDERED. 2007 of the Court of Tax Appeals are hereby AFFIRMED. To stress.should be resorted to solely as a means of preventing injustice and should not be permitted to defeat the administration of the law. the BIR cannot hide behind the doctrine of estoppel to cover its failure to comply with RMO 20-90 and RDAO 05-01. Neither can the BIR use this as an excuse for issuing the assessments beyond the three-year period because with or without the required documents. a waiver of the statute of limitations. The assailed Decision dated March 30. this cannot be taken against respondent. or to accomplish a wrong or secure an undue advantage. and to indicate the date of acceptance and the receipt by the respondent of the waivers. 2007 and Resolution dated May 18. Moreover. must be carefully and strictly construed. Having caused the defects in the waivers.

2005. . 2003. and VILLARAMA.x DECISION CARPIO MORALES. it may appeal to the Court of Tax Appeals (CTA) “within thirty (30) days from date of receipt hereof. apprising it of its income tax and VAT liabilities in the amounts of “P15. petitioner filed a petition for review before the CTA En Banc [16] which. 2000. G. It filed one. 2007. 2005 issued by respondent and which petitioner received on August 4. As petitioner did not heed the subpoena. held that the petition before the First Division. Section 228 of the 1997 Tax Code provides that an assessment x x x may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. respectively. and demandable. “inclusive of penalties incident to delinquency.[5] Respondent thereafter issued a Final Decision on Disputed Assessment dated August 2. the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision.R. that the petition was filed out of time which argument the First Division of the CTA upheld and accordingly dismissed the petition. PUNO. hence. C. 2005. (underscoring supplied) In the case at bar. 2005 to file a petition for review before the CTA Division.[14] The Resolution denying its motion for reconsideration was received by petitioner on October 31. by Letter of Authority dated May 16.336. CARPIO MORALES. for the taxable year 1999. JJ. J.396.[18] petitioner arguing that the CTA En Banc erred in holding that the petition it filed before the CTA First Division as well as that filed before it (CTA En Banc) was filed out of time. 2005.75 for the taxable year 1999. 2005. petitioner’s administrative protest was denied by Final Decision on Disputed Assessment dated August 2. 179343 Present: . the assessment shall become final. it had until September 3. denying its letter of protest. petitioner a Final Assessment Notice of income tax and VAT deficiencies totaling P67. [9] drawing petitioner to file on October 20. 2010 x-------------------------------------------------.[12] Petitioner filed a Motion for Reconsideration [13] which was denied.[11] respondent argued.434. In his Answer.versus - COMMISSIONER OF INTERNAL REVENUE. all relevant supporting documents shall have been submitted. JR.597.”[6] and requesting the immediate payment thereof. LEONARDO-DE CASTRO. 2005. For a motion for reconsideration of the denial of the administrative protest does not toll the 30-day period to appeal to the CTA. 2003. Petitioner eventually settled these obligations on August 30. 2000.395.[2] On August 25. withholding tax deficiencies and other miscellaneous deficiencies. 2005.[4] which assessment petitioner contested by letter of September 23. value added tax (VAT).” Respondent added that if petitioner disagreed. which complaint was dismissed for insufficiency of evidence. Petitioner requested the cancellation of the subpoena on the ground that the same set of documents had previously been examined. or is not acted upon within one hundred eighty (180) days from submission of documents.[8] By a Preliminary Collection Letter dated September 6.[15] On November 21. executory. Respondent. as well as that before it. however.J. petitioner had 30 days to appeal respondent’s denial of its protest to the CTA. petitioner filed. (petitioner). Hence. a Letter of Reconsideration dated August 31. 2005. Within sixty (60) days from filing of the protest. 2005. Petitioner. 2006. the decision shall become final. Chairperson. 2000. it was filed out of time. or from the lapse of the one hundred eighty (180)-day period. which petitioner received on August 4. Since petitioner received the denial of its administrative protest on August 4.[1] ordered the examination of the internal revenue taxes for the taxable year 1999 of Fishwealth Canning Corp. otherwise.” [7] Instead of appealing to the CTA.. 2006. among other things. executory and demandable.88 representing income tax. If the protest is denied in whole or in part. the present petition. BERSAMIN. otherwise our said deficiency income and value-added taxes assessments shall become final. respondent reinvestigated petitioner’s books of accounts and other records of internal revenue taxes covering the same period for the purpose of which it issued a subpoena duces tecum requiring petitioner to submit its records and books of accounts. otherwise.[3] Respondent sent. The investigation disclosed that petitioner was liable in the amount of P2. on August 6. by Decision[17] of July 5.826.. No.905.24 and P63. Promulgated: January 21. on September 1. Under the above-quoted Section 228 of the 1997 Tax Code. The petition is bereft of merit. was filed out of time.: The Commissioner of Internal Revenue (respondent).FISHWEALTH CANNING CORPORATION. on October 20.40 [sic]. respondent demanded payment of petitioner’s tax liabilities.688. 2005 a Petition for Review[10] before the CTA. respondent thereafter filed a criminal complaint against petitioner for violation of Sections 5 (c) and 266 of the 1997 Internal Revenue Code.

On petitioner’s final contention that it has a meritorious case in view of the dismissal of the above-mentioned criminal case filed against it for violation of the 1997 Internal Revenue Code. . the petition is DISMISSED. but to penalize the taxpayer for violation of the Tax Code. Costs against petitioner.[20] WHEREFORE.[19] the same fails. SO ORDERED. For the criminal complaint was instituted not to demand payment.

vs.. Office of the Solicitor General Ambrosio Padilla and Solicitor Sumilang V. Ohnick. SUYOC CONSOLIDATED MINING COMPANY. Bernardo for petitioner. Velilla and Balongkita for respondents. respondents.G.R. L-11527 November 25. No. . ET AL. petitioner. 1958 THE COLLECTOR OF INTERNAL REVENUE.

1952 and P40 as compromise. 78 L. the case being assigned to another examiner. respondent again requested for a reconsideration on April 25.Idem. reserving its right to question the correctness of the assessment. On April 6.26. 588].289.96. 647). the company asked for a reconsideration and reinvestigation of the assessment. But the aim of the statute suggests a restraint upon its meaning. 791. it filed its third amended final return on the basis of the available records which to that date it had been able to reconstruct. 51 S. for the law says to him in effect "this is your own act. 1953. U.S. for good reasons. The Collector interposed the present petition for review." ' "(R. 1946. petitioner sent respondent a letter on November 28. was unable to file in 1942 its income tax return for the year 1941 due to the last war. If nothing more than this appeared. the Collector assessed against it the sum of P28. sec. 1952. When this request was denied. which must then be made in adherence to the statutory forms. United States. 1947.099. The assessment was made on February 11.438. there was to be no exercise in invitum of governmental power.50 as 5 per cent surcharge and P3. After the case was heard. such tax may be collected by distraint or levy or by a proceeding in court butonly if the same is begun (1) within five years after assessment or (2) within the period that may be agreed upon in writing between the Collector and the taxpayer before the expiration of the 5-year period [Section 332 (c). plus surcharge and interest up to December 31. 1947. The aim of that provision. Upon receipt of this assessment respondent requested for at least one year within which to pay the amount assessed although it reserved its right to question the correctness of the assessment before actual payment. 1951. After several other negotiations conducted at the request of respondent. 34 F. The limitation may have been postponed by force of a simple waiver.829. "The tax could have been collected. 1953 to July 16. persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the Government. which was denied on May 6. or so we now assume. While we may agree with the Court of Tax Appeals that a mere request for reexamination or reinvestigation may not have the effect of suspending the running of the period of limitation for in such case there is need of a written agreement to extend the period between the Collector and the taxpayer. but the government withheld action at the specific request of the plaintiff. 1946 was made on February 11. After inducing petitioner to delay collection as he in fact did. but the Collector made another assessment against the company in the sum of P33. tax liability to the prejudice of the Government invoking the technical ground of prescription. based on weighty reasons. On February 21. 791. the assessment was finally reduced by the Collector to P24. Ct. P1. or a total of P33. supra. 1955. U. chap. 1955 on the main ground that the right of the Government to collect the tax has already prescribed.S. Because of such requests. P20. the court rendered its decision upholding this defense and.414. We think it an unreasonable construction that .934. The Collector granted an extension of only three months from March 20. 1946. title 26. 609. 1946.80 as 1 per cent monthly interest from March 1." [Newport Co. 2609). which was granted. Its records having been lost or destroyed. This case has no precedent in this jurisdiction for it is the first time that such has risen. 1955. Justice Cardozo has said: "The applicable principle is fundamental and unquestioned. On the basis of the second final return filed by the company on November 28. sec. and the company was authorized to file its return for 1941 on the basis of the best evidence obtainable. As Mr. On November 28. and of this new assessment the company was notified on July 28. as was aptly said. see. This is the ruling which is now being questioned after a protracted negotiation on the ground that the collection of the tax has already prescribed. And when such situation comes to pass there are authorities that hold. H. an internal revenue tax shall be assessed within five years after the return is filed by the taxpayer and no proceeding in court for its collection shall be begun after the expiration of such period (Section 331. 506 (b) (c). S. The company filed three income tax returns for the calendar year ending December 31. title 26. Congress enacted Commonwealth Act No. which denial was appealed to the Conference Staff. 1062a. 852. The plaintiff is now estopped and should not be permitted to raise the defense of the Statute of Limitations. several reinvestigations were made and a hearing was even held by the Conference Staff organized in the collection office to consider claims of such nature which. 871. without surcharge and interest..96 as income tax. National Internal Revenue Code). plus P1. 852. it set aside the ruling of the Collector of Internal Revenue. and as a result of these various negotiations. 335. as we view it. It may have been postponed by deliberate persuasion to withhold official action. Revenue Act of 1928. ed. 1946. 1928 (chap. 1950. 1947. sec. 1941. 1945. 875. and therefore you are not damnified. a mining corporation operating before the war. To know whether liability has been barred by limitation it will not do to refer to the flight of time alone. a credit against a liability in respect of any taxable year shall be "void" if it has been made against a liability barred by limitation.S. the company requested the Collector of Internal Revenue to grant it an extension of time to file its return. Petitioner granted an extension of only three months. at L. On February 6.. 282 U. at L. The company failed to pay the tax within the period granted to it and so the Collector sent to it a letter on November 28. The law also provides that where an assessment of internal revenue tax is made within the above period. it filed a second final return on the basis of the records it has been able to reconstruct at that time. vs. U. 45 Stat. It appears that the first assessment made against respondent based on its second final return filed on November 28. It is obvious from the foregoing that petitioner refrained from collecting the tax by distraint or levy or by proceeding in court within the 5-year period from the filing of the second amended final return due to the several requests of respondent for extension to which petitioner yielded to give it every opportunity to prove its claim regarding the correctness of the assessment. accordingly. Under the law. but there are several precedents that may be invoked in American jurisprudence. it filed a tentative return as it had not yet completely reconstructed its records. 1947 within which to pay the amount assessed.. including an appeal to the Conference Staff created to act on such matters in the Bureau of Internal Revenue. Supp. was to invalidate such a credit if made by the Commissioner of his own motion without the taxpayer's approval or with approval failing short of inducement or request. 1946 to February 28.50 as surcharge. the Collector revised this last assessment and required the company to pay the sum of P28.894. vs.66. that such an attitude or behavior should not be countenanced if only to protect the interest of the Government. ed. Within the reglementary period. 870. and upon receipt of the letter respondent asked for a reinvestigation and reconsideration of the assessment. 270.414. 145. 'He who prevents a thing from being done may not avail himself of the nonperformance which he has himself occasioned.BAUTISTA ANGELO.289. 1950 demanding payment of the tax as assessed.C. 722 which extended the filing of tax returns for 1941 up to December 31. On April 18. 1947. the company asked for an extension of at least one year from February 28. The appeal was heard by the Conference Staff from September 2.C. 1952. After liberation. When it failed to pay the tax within the period extended. Stearns Co. there are cases however where a taxpayer may be prevented from setting up the defense of prescription even if he has not previously waived it in writing as when by his repeated requests or positive acts the Government has been. 1947. 1947. Cf.S. 1952. J. (DC-WIS). Or. 1955. On February 12. 1950 demanding payment of the tax due as assessed. which was granted until February 15. the assessment was finally reduced on July 26. Stange vs. U. it is most unfair for respondent to now take advantage of such desistance to elude his deficiency income.57 as interest up to April 30. 45 Stat.]. This new assessment was made on March 7.96 as income tax for 1941. lasted for several months. The following authorities cited in the brief of the Solicitor General are in point: The petitioner makes the point that by the Revenue Act of May 29. as the record shows. 75 L.: Suyoc Consolidated Mining Company. the company filed with the Court of Tax Appeals a petition for review of this assessment made on July 26.

U.S. 78 L. quoting West vs. Poor.. "He who prevents a thing from being done may not avail himself of the nonperformance which he has himself occasioned. the liability was still alive.) Wherefore.) . Tull. The request in its fair meaning reached forward into the future and prayed for the postponement of collection till the audits for later years had been completed in the usual course. Peck. 940.S. and Endencia. 274. (R. vs. 54. J. Societe des Ateliers (1919) A.would view the prohibition of the statute as over-riding the doctrine of estoppel (Randon vs. For purposes of reference I am listing below in chronological order. 42 N. February 11. In the meantime. the suspended collection might be effected by credit or by distraint or by other methods prescribed by law. ed. . further claims for refund and protests were filed. April 6. because of the last war. New Zealand Shipping Co. but the authorized representative of the Lattimores strenuously objected to the collection and urged the Commissioner to withhold collection. 54 S. which was after the statute had run on collection. 519. and they cannot now be heard to say that the collection was not timely.E. Bengzon. 1947 Respondent filed its amended final return". 457. This having been done. 1946. the decision appealed from is reversed. (Lattimore vs. The decision of the Collector of Internal Revenue rendered on July 26. Contr. C. 167. sometimes as a waiver. 127 N. Stearns Company vs. but reserving right to question its validity. 228 N. C. United States vs. Concepcion. 149 N.S. 64. Ed. vs. The label counts for little. conferences were held and consideration was given to the settlement of the controversy. 1947 Respondent asked for extension of time (one year) to pay the assessment.E. vs. 2 Williston. supra.E. Stearns Co. .. .. H. 784. 1926. 1. 263. ed. United States. November 28. 263. Acting upon an extension granted by Commonwealth Act 722 and by the Collector of Internal Revenue. 1955 is hereby affirmed. March 7. February 12. February 6. Swain vs. (Amount — P33. Tobey.099. Supp. the dates which are material and relevant for purposes of computation of the period of prescription. November 28. for the law says to him in effect "this is your own act. Reprint. Ct. Enough for present purposes that the disability has its roots in a principle more nearly ultimate than either waiver or estoppel. 13. 447.S. 291 U. vs. 12 F. 1952 Notice of 2nd assessment (Based on the amended final return) was sent to respondent. unaffected as yet by any statutory bar. 133 Eng. 228 N. R. 325. 1957. 127 N. 26 L. Sometimes the resulting disability has been characterized as an estoppel. concur. 19 L. when the statute had run on collection. Reyes. 491. Separate Opinions MONTEMAYOR. 402. February 21. L. J. February 14. 147 N. L. B. Congress surely did not mean that a credit was to be void if made by the Government in response to such prayer. Y.Y. 489. 2 Mann. & G. 46. The procedure carried out was that requested by plaintiffs. 493. dissenting: As stated in the majority opinion. and Imperator Realty Co. H. 447. Seamens. 895. It is admitted that these assessments were timely made in August 1923. 560. Imperator Realty Co. 44 N. 949. Emphasis supplied.26). 1947 Receipt of respondent said assessment. 1950 Petitioner demanded payment of tax assessed. 729. 254.E. the principle that no one shall be permitted to found any claim upon his own inequity or take advantage of his own wrong. supra. Blakeway. The Commissioner yielded to their request and postponed collection until August 19. which likewise was at a time when the statute had not ran on collection. He was given only three months from March 20. 647. Labrador." ' " Dolan vs.. it finally filed the first income tax return (tentative) on February 12. 13 L. J.Y. 1951 Respondent asked for reconsideration and reinvestigation of the assessment. Y. 1947 Notice of 1st assessment (Based on the final return sent to the respondent) (Amount of assessment —P33. 91.. 9 Wall. pending adjustment of the controversy between them and the Commissioner. Rogers.289. 689. 554. 102 U. 751. Upon the making of the assessment the Commissioner sought to make collection. 11 How. A suit may not be built on an omission induced by him who sues. 795) and invalidating a credit made at the taxpayer's request. Thomson vs.96). ed. the respondent Suyoc Consolidated Mining Company was unable to file in 1942 its income tax return for the year 1941. Paras. 6-H. No costs. JJ. 1946 Respondent filed its "final return". U. 1946 Respondent filed its "tentative return". Tull. sec. and therefore you are not damnified. Here at the time of the request. and the matter was not finally disposed of until 1926. The applicable principle is fundamental and unquestioned..

50 as surcharge. Suyoc asked for an extension of time of one year within which to make payment. 1955 had to be promulgated. — Except as provided in the succeeding section. The statute of limitations upon assessment and collection of national internal revenue taxes provided in Sections 331 and 332 of the Revenue Code may be suspended only "for the period during which the Collector of Internal Revenue is prohibited from making the assessment or beginning destraint or levy or a proceeding in court. and for sixty days thereafter. Suyoc asked for reconsideration and reinvestigation. Even granting that the first assessment made on February 11.April 18. (Now it is P24. It was only on November 28. has the effect of suspending the running of the statute of limitations. Umali to which I agree. — The running of the statute of limitations provided in section three hundred thirty-one or three hundred thirty-two on the making of "assessments and the beginning of distraint or levy or a proceeding in court for collection.) From whatever angle the case is viewed. shall be suspended for the period during which the Collector of Internal Revenue is prohibited from making the assessment or beginning distraint or levy or a proceeding in court. The assessment was in the amount of P33. Suspension of running of statute. Period of limitation upon assessment and collection. and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. 332 [c]. and while the same were pending consideration by respondent. a period of more than 8 years. the assessment was finally reduced on July 26. confined to the question of prescription. Exceptions as to period of limitation of assessment and collection of taxes. 1952 Petitioner revised the assessment made on March 7. it appears that the last and final assessment made by respondent covering the income tax due from petitioner for the year 1941 was made on July 26. but only if begun (1) within five years after the assessment of the tax. — . through Judge Roman M. 1947. but strange to say.96) It will be noticed that petitioner Collector made his first assessment based on the final return submitted by Suyoc on November 28. and the ruling contained in the majority opinion that the right of the Collector to collect the tax assessed by it has not prescribed." (Sec. on the theory that the assessment in this case was made within five years from the date the return was filed. therefore.099. Revenue Code.934. 333. (c) Where the assessment of any internal revenue tax has been made within the period of limitation above prescribed such tax may be collected by distraint or levy or by a proceeding in court.00 as compromise. Accordingly. When this case was called for hearing counsel for petitioner asked that the question of prescription be first resolved before hearing the case on the question involving the correctness of the assessment. 1947 up to the time the instant petition for review was filed on September 19. is the one to be considered in determining whether or not the assessment was made within the statutory period it follows that it must have to be considered also as the starting point from which the period within which the right to collect should be computed. and sixty day thereafter. 1955 to only P24. or from the date the amended final return' was filed on February 6. But it is insisted that the requests of petitioner for reconsideration of the assessment. 1952 after various negotiations. respondent having failed at any time from February 14. 1950). 331. The sole issue raised at this time for resolution of this Court is. Then on April 18.03. P20. To me. Provided. more than five years from the date the "amended return" was filed on November 28. that this limitation shall not apply to cases already investigated prior to the approval of this Code. 1952. the Collector should immediately have demanded payment or resorted to the administrative remedy of distraint and levy. internal revenue taxes shall be assessed within five years after the return was filed. has prescribed.000.289. had the effect of suspending the running of the statute of limitations. and P40. 1947. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. the Collector made a revised third assessment of P28. For purposes of reference. 1946.679. National Internal Revenue Code. but it was granted only three months from March 20. After several negotiations. to institute appropriate proceedings. 1952. that is. 1952 (Now it is P50. 1955. . (See Sec.414. For the purposes of this section a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. 1946. which all added up to the staggering amount of P50. 1947.26. I am reproducing with approval the pertinent portions of said decision: Petitioner filed the instant petition for review on the grounds that certain losses were improperly disallowed by respondent as deductions from its gross income. 1952. judicially or otherwise. we find that the right of the Government to collect the income tax assessed against petitioner for the year 1941 has prescribed. without surcharge. It is this last assessment which Suyoc appealed to the Court of Tax Appeals. that is to say. That a request for re-examination or reconsideration of an assessment does not suspend the running of the statute of limitations seems to be the prevailing opinion in the Bureau of Internal Revenue. without interest and without any amount as compromise. 333. in respect of any deficiency. 1950 that the Collector demanded payment on the basis of his assessment.96. the Collector made a second assessment of P33. After said deadline. The right of respondent to assess the tax has.) Nowhere does the law recognize that a simple request for reconsideration of an assessment. . After about a year. and that the right of the Government to collect the tax. which was larger than his first assessment by about P800.66. I am reproducing the pertinent sections of the National Internal Revenue Code: SEC. P1. 1947 to November 28. unaccompanied by any positive indication that the taxpayer is waiving his right to assert the defense of prescription. 332. the right of the Government to collect the tax assessed has prescribed. 1955.96 as income tax.438. for the collection of the tax. On April 6.438. or (2) prior to the expiration of any period for collection agreed upon in writing by the Collector of Internal Revenue and the taxpayer before the expiration of such five-year period.829. . the best argument against the contention of the Collector. 1947.697. at the same time reserving its right to question the validity of the assessment. and that the petitions or petitions filed by Suyoc for investigation and revision of the assessment extended the period of prescription. 1951. 1947. therefore.03) July 26. Upon the evidence submitted and admitted by the parties.57 as interest up to April 30. prescribed pursuant to Section 331 of the National Internal Revenue which requires that the assessment be made within five years from the date the return was filed. if any is due. including appeal to the conference staff created to act on such matters in the Bureau of Internal Revenue. far different from and much larger than the first and second assessment by almost P17. V-182 dated January 17. up to June 20. This may he inferred from the fact that General Circular No. on March 7. SEC. on February 11. the Collector did not act and allowed more than three years to pass (from June 20. 1955 Petitioner reduced the assessment of April 18. Paragraph 6 of said circular provides: . is the well written and reasoned decision (Resolution) of the Court of Tax Appeals. SEC.

Nothing short of this will effect said extension or suspension of the period of limitation. 1947. the Government has no one to blame but itself and its officials.66. increasing the same by substantial amounts and then decreasing the same substantially. I agree with counsel for Suyoc that it not applicable. the tax is in the meantime accumulating interest which the taxpayer eventually has to pay. for the Government for the purpose of expediting the collection of taxes. . that although the second waiver was not signed by the Commissioner. The taxpayer may make as many requests for revision or examination as he wishes. the taxpayer must sign a statement that he is waiving the period of prescription involved in the collection of the tax. Then on April 18. whether or not such assessment is well founded and reasonable so that he may either pay the amount of the assessment or contest its validity in court. but his actuations would seem to have been characterized by indecision and uncertainty. for the protection of the Government.S. It was given only three months. But when the Collector over a period of more than eight years kept changing his assessment.000 was reduced to P24. 1955. administrative by distraint and levy or judicial by court action. 1955. certainly not the taxpayer who did nothing but ask for revision of the assessment to obtain a correct figure while it finally got but too late. Why all this difference or differences in the amounts of the assessment? One could well imagine and understand that a first assessment more or less hastily prepared may be revised within a reasonable time.678. modify. the United States Supreme Court was constrained to hold that when the taxpayer not only signed waivers but had deliberately asked and persuaded the Commissioner to postpone collection. as the date of the assessment. the taxpayer and the Collector must sign an agreement to that effect. as evidenced by the very General Circular No. without pronouncement as to costs.96 as income tax for the year 1941 has prescribed. there is no necessity for the requirement that a taxpayer must sign a statement that he is waiving the periods of prescription' as a condition for the granting of the request for reinvestigation or re-examination. General Circular No. No such prohibition or inability to make assessment or begin the distraint is claimed for the Collector.438. It would surely be prejudicial to the interest of the taxpayer for the Government collecting agency to unduly delay the assessment and the collection because by the time that the collecting agency finally gets around to making the assessment or making the collection. without surcharge. 1950. either increasing it or decreasing it. until on July 26. and makes extensive quotation therefrom. Naturally. for one year within which to pay the assessment. Evidently. the decision appealed from is hereby set aside. 1947. Thereafter.. Then he increased this to P33.438. 1947) to November 28. he may know the amount of the assessment which he is required to pay. and what is more. Accordingly. accompanied by such additional documents and evidence supporting his protest. when Suyoc received notice of the first assessment (extended by the Collector to June 20. nothing short of such express written agreement to extend will suspend the running of the period. The very law clearly so states. but reserving its right to question the validity thereof. when the Collector demanded payment. The trouble with the actuations of the Collector in this case is that he would appear to have unduly delayed definite and affirmative action on the assessment and collection as shown by the wide gaps — first. he again increased this assessment to P50. either by filing an action for the refund. on the dead line. Mere petitions for revision or reinvestigation by the taxpayer cannot suspend the running of the period of prescription. he cannot invoke the benefit of prescription to the running of which he has contributed. Our law expressly and clearly provides that in order to suspend the period of prescription or to extend it. forgetting and failing up to the present time to institute proceedings. It will be observed that Suyoc made only one petition for extension. nevertheless. 1950 to March 7. as alleged by respondent.099. the right of the Collector. a period of more than three years from February 14. and equally important. H. 213: "(a) The taxpayer shall put the specific grounds of his protest in writing and under oath.03. so that for the protection of the Government. if already paid. First. V-182 obviously in line with Section 332 (c) of the Revenue Code which provides that the waiver of the taxpayer must be contained in an agreement in writing extending the five year period of limitation upon the right of the respondent to collect internal revenue taxes. True. V-182. 1947 or July 26. but this in no way can be regarded as an express agreement to extend the period. and at the same time utterly forgetting the period of prescription set by the law and also forgetting to protect the interest of the Government by requiring the taxpayer to agree expressly and in writing to extend the period of such prescription. and for the taxpayer so that within a reasonable time after filing his return. but the Collector need not act upon them to the prejudice of the Government. Not only was there undue delay on the part of the Collector. that is. 1947 or to make assessment within five years from February 6. revise or revive the assessment or reinvestigate the case cannot extend the period of prescription. then another period of about two years from November 28. I fully agree with the Court of Tax Appeals that whether we consider February 11.S.26. he should always keep an eye on the running of the period.829. so that the agency charged with the assessment and collection may not tarry too long or indefinitely to the prejudice of the interests of the Government which needs said taxes to run it. the taxpayer may then have lost his papers and books to support his claim and contest that of the Government. either to make collection within five years from February 11. Section 333 says that the running of the statute of limitations provided in Sections 331 and 332 shall be suspended only when the Collector is prohibited from making the assessment or beginning the distraint. And Section 332 (c) says that the period for collection may be extended only by express agreement in writing by the taxpayer and the Collector. after a wait of over eight years. he could enforce collection before it is too late. The majority opinion places much reliance on the case of R. Prescription in the assessment and in the collection of taxes is provided by the Legislature for the benefit of both the Government and taxpayer. After reading said case. FOR THE FOREGOING CONSIDERATIONS We are of the opinion that the right of the Government to collect from petitioner the sum of P24. has prescribed. I do not believe that a mere petition for revision or reinvestigation can be regarded as an agreement of the taxpayer to extend the period of prescription. (b) He shall pay one-half (1/2) of the total assessment and file a bond to guarantee the payment of the balance together with the penalties that shall have accrued at the time of final payment. without interest and without any amount as compromise. say a few months or even a year. Within thirty (30) days from the receipt of the deficiency tax assessment notice." (Emphasis supplied. under the old law. to collect. the taxpayer on several ocassions had requested him to withhold collection. he made an assessment in the amount of P33. and even if he does act upon said petitions. 54. and (c) He shall sign a statement that he is waiving the periods of prescription involved in the assessment and collection of the deficiency tax in question. Said circular among other things provides that in order that there be an extension of the period of prescription and presumably.. the taxpayer signed two waivers of the period of limitation. 1952 when he made the second assessment. or appeal the disputed assessment to the Court of Tax Appeals under the present law creating the Tax Court. U. and the Collector was well aware of the fact that a mere petition to amend. Stearns Company vs. 291 U.96. for the reason that in that case.6. it asked for revision and reconsideration of the different assessments made by the Collector. this sum of over P50. subject to the following requirements prescribed in paragraph 3 of Department Order No. 1952.) If a simple request for reinvestigation or re-examination of an assessment suspends the running of the statute of limitations. it never asked for any other extension. promulgated for the guidance of the Bureau of Internal Revenue. the taxpayer may request reinvestigation or reexamination of the assessment.

I dissent. then we have the time honored and well settled rule of statutory construction that tax laws should be interpreted liberally in favor of the taxpayer and strictly against the Government. this sound and salutary rule of liberal construction of tax laws in favor of the taxpayer has been evolved and laid down. to moderate this awesome and dangerous taxing power of the Legislature. Wigglesworth [1842]. beyond what the statutes expressly and clearly import. it is evident that to extend the period of limitation or prescription. x --------------------------------------------------------x CARPIO. and if said period of extension is to be further extended. 4 Law Ed. J. this Tribunal said: . ABAD. G. (U. and PEREZ. but assuming for a moment that there were any doubt about it. 52 Phil. until such time as it is good and ready to resume proceedings from where it left off. In every case of doubt. 19 Phil. in which case the rule is reversed. . and behold. the Supreme Court of the United States. this matter of the extension of the period of limitation is quite clear.: . BRION. let the taxpayer just ask. but for a mere re-examination or revision of the assessment. 2 Story. . However. and the collecting agency of the Government may then postpone and delay the collection indefinitely. vs. and in order to temper the rigor of tax laws.. said period has to be specific or fixed. 2010 DECISION DEL CASTILLO. concurs. It is the general rule in the interpretation of statutes levying taxes or duties not to extend their provisions beyond the clear import of the language used. 952. under the theory espoused by the majority. From all this. 461. 369. except in the matter of tax exemptions.R. Padilla. it will be noticed from Section 332(c) of the Internal Revenue Code that even If the taxpayer and the Collector agree to extend the period of limitation. The State of Maryland. said that the power to tax is the power to destroy. in the case of McCulloch vs. I believe that is not what the law and the Legislature contemplated. and if the taxpayer complains of the delay or invokes prescription. No. Collector of Customs. For the foregoing reasons.. Collector of Customs [1911]. a mere petition by the taxpayer for revision or re-examination of the assessment cannot and will not automatically extend the period of limitation.) Years ago. all the carefully prepared provisions of the tax law about prescription and statutory limitation are laid aside. Chairperson. JJ.. through Chief Justice Marshall.In connection with this extension of the period of prescription or limitation for the Government to collect taxes. Respondent. because burdens are not to be imposed. vs. J. an express agreement in writing to that effect. nor presumed to be imposed. another agreement has to be made again specifying the period of said further extension.versus - COMMISSIONER OF INTERNAL REVENUE. DEL CASTILLO. not for an extension of the time to pay or the Government to collect. S. Present: . Froehlich & Kuttner vs. . 175097 Petitioner. Naturally. To me. signed by the Collector and the taxpayer is necessary. 579. J. Promulgated: February 5. and lo. In the case of Manila Railroad Co. he is instantly met with and silenced by the done of estoppel. ALLIED BANKING CORPORATION. such statutes are construed most strongly against the Government and in favor of the citizen. Evidently.

respondent CIR filed his Answer. Issue Hence. the Motion to Dismiss is GRANTED. 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. Our Ruling The petition is meritorious. Finding no reversible error in the Resolutions dated October 12. 7062. which partly reads as follows: [8] It is requested that the above deficiency tax be paid immediately upon receipt hereof. the BIR wrote a Formal Letter of Demand with Assessment Notices to petitioner. In this case. Petitioner received the Formal Letter of Demand with Assessment Notices on August 30. 2006 of the CTA First Division.995. It ruled: Clearly. 16 SCRA 584..[16] Aggrieved. the instant case does not fall in any of the exceptions. 2004.[7] On July 16.296. you may appeal the final decision within thirty (30) days from receipt hereof.) WHEREFORE. [3] in relation to Rule 45 of the Rules of Court. [6] Petitioner received the PAN on May 18.[21] Section 7 of RA 9282 provides: Sec. 2004 can be construed as a final decision of the CIR appealable to the CTA under RA 9282. 7. 9282.. 167. as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. . penalties in relation thereto. although there are exceptions to the doctrine of exhaustion of administrative remedies.The key to effective communication is clarity. fees or other charges. 2004. where petitioner raises the lone issue of whether the Formal Letter of Demand dated July 16. the assessments did not become disputed assessments as subject to the Court’s review under Republic Act No. 2004 and filed a protest against it on May 27. Factual Antecedents On April 30. 22 SCRA 3). Assailed in this Petition for Review on Certiorari[2] under Section 12 of Republic Act (RA) No.[14] On October 12. As correctly pointed out by respondent.595. petitioner failed to file an administrative protest on the formal letter of demand with the corresponding assessment notices. 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. (See also Republic v. [1] Words must be carefully chosen in order to avoid any confusion that could adversely affect the rights and interest of the taxpayer. Liam Tian Teng Sons & Co. 2005 and February 1. 2006. he filed a Motion to Dismiss[13] on the ground that petitioner failed to file an administrative protest on the Formal Letter of Demand with Assessment Notices. 2004. 2005. otherwise said deficiency tax assessment shall become final. The Commissioner of Internal Revenue (CIR) as well as his duly authorized representative must indicate clearly and unequivocally to the taxpayer whether an action constitutes a final determination on a disputed assessment. petitioner moved for reconsideration but the motion was denied by the First Division in its Resolution dated February 1. It is the decision of the Commissioner of Internal Revenue on the disputed assessment that can be appealed to this Court (Commissioner of Internal Revenue vs. 2004. 2006.[12] On July 28.[18] The case was docketed as CTA EB No.[9] Proceedings before the CTA First Division On September 29. are the August 23. Inc.60 and Gross Receipts Tax (GRT) in the amount ofP38. executory and demandable. can take cognizance only of matters that are clearly within its jurisdiction. 2005. — The CTA shall exercise: Exclusive appellate jurisdiction to review by appeal. 9282. It emphasized that an administrative protest is an integral part of the remedies given to a taxpayer in challenging the legality or validity of an assessment.[17] Proceedings before the CTA En Banc On February 22. If you disagree. it is neither the assessment nor the formal demand letter itself that is appealable to this Court. According to the CTA En Banc. This is our final decision based on investigation. 2005. 2006 Resolution[5] denying petitioner’s Motion for Reconsideration. petitioner appealed the dismissal to the CTA En Banc.[20] The CTA En Banc declared that it is absolutely necessary for the taxpayer to file an administrative protest in order for the CTA to acquire jurisdiction. a disputed assessment is one wherein the taxpayer or his duly authorized representative filed an administrative protest against the formal letter of demand and assessment notice within thirty (30) days from date [of] receipt thereof.[11] On December 7. the CTA En Bancdenied the Petition for Review[19]as well as petitioner’s Motion for Reconsideration. inclusive of penalties incident to delinquency. the First Division of the CTA rendered a Resolution[15] granting respondent’s Motion to Dismiss. 2006 Decision[4] of the Court of Tax Appeals (CTA) and its October 17.76 on industry issue for the taxable year 2001. 2004. Villa. refunds of internal revenue taxes. the present recourse. The Petition for Review is hereby DISMISSED for lack of jurisdiction. Petitioner opposed the Motion to Dismiss on August 18. SO ORDERED. being a court of special jurisdiction. Hence. petitioner filed a Petition for Review[10] with the CTA which was raffled to its First Division and docketed as CTA Case No. 2004.050. or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue. (a) Jurisdiction.

Accordingly. the dismissal of the Petition for Review by the CTA was proper. Certificate of Deposits and related transactions pursuant to Sections 180 and 181 of NIRC. Pursuant to Section 228 of the NIRC.[24] (Emphasis supplied) . did not protest the final assessment notices. Please refer to Section 27(D)(3) and 28(A)(7) of the new Tax Code. the BIR issued a Formal Letter of Demand with Assessment Notices. or from the lapse of the one hundred eighty (180)-day period. the phrase “exempt from all taxes” was deleted. traded or transferred to non-exempt persons. The Formal Letter of Demand with Assessment Notices reads: Based on your letter-protest dated May 26. or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue. In response thereto. That the said assessment has already prescribed in accordance with the provisions of Section 203 of the Tax Code. executory and demandable. penalties in relation thereto. Veterans Backpay Commission. De Tan v. the taxpayer shall be required to respond to said notice. deficiency documentary stamp taxes was [sic] also assessed on Loan Agreements. you were assessed for deficiency gross receipts tax on onshore income from foreign currency transactions in accordance with the rates provided under Section 121 of the said Tax Code.. or (c) 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. the assessments covering GRT and DST for taxable year 2001 has not prescribed for [sic] simply because no returns were filed. otherwise. but not limited to. the wording of Section 28(A)(7)(b) discloses that there are no other taxes imposable upon FCDUs aside from the 10% Final Income Tax. he shall first notify the taxpayer of his findings: Provided. This is our final decision based on investigation. 2004. which may either be accepted or ignored by the office seeking the opinion. Within sixty (60) days from filing of the protest. the decision shall become final. executory and demandable. has been sold. Contrary to your allegation. vehicles. however. It states: SECTION 228. Section 228 of the National Internal Revenue Code (NIRC) provides for the procedure for protesting an assessment. If the protest is denied in whole or in part. The case is an exception to the rule on exhaustion of administrative remedies However. petitioner timely filed a protest after receiving the PAN. fees or other charges.[23] the respondent contended that before filing a petition with the court.(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments. and any aggrieved party has the court for recourse”. 2. the assessment shall be void. the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision. Instead. (Emphasis supplied) xxxx The word “decisions” in the above quoted provision of RA 9282 has been interpreted to mean the decisions of the CIR on the protest of the taxpayer against the assessments. With the implementation of the CTRP. Thus. it said. as amended. all relevant supporting documents shall have been submitted. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. you may appeal this final decision within thirty (30) days from receipt hereof. Petitioner. The 25% surcharge and 20% interest have been imposed pursuant to the provision of Section 248(A) and 249(b). The taxpayers shall be informed in writing of the law and the facts on which the assessment is made. in which case the inaction shall be deemed a denial. a careful reading of the Formal Letter of Demand with Assessment Notices leads us to agree with petitioner that the instant case is an exception to the rule on exhaustion of administrative remedies. such as. Bills Purchased. as amended. Within a period to be prescribed by implementing rules and regulations. In the case of Vda. Similarly. of the National Internal Revenue Code. i. petitioner should have first exhausted all administrative remedies by appealing to the Office of the President. or (d) When the excise tax due on excisable articles has not been paid. inclusive of penalties incident to delinquency. where the National Internal Revenue Code provides a specific period of action. It is requested that the above deficiency tax be paid immediately upon receipt hereof. otherwise said deficiency tax assessment shall become final. estoppel on the part of the administrative agency concerned.e. If you disagree. the assessment shall become final. That since the exemption of FCDUs from all taxes found in the Old Tax Code has been deleted. thus. However. “The opinions promulgated by the Secretary of Justice are advisory in nature. Protesting of Assessment. however. or (b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent. Likewise. – When the Commissioner or his duly authorized representative finds that proper taxes should be assessed. If the taxpayer fails to respond. In the instant case. the proper recourse of petitioner was to dispute the assessments by filing an administrative protest within 30 days from receipt thereof. The statement of the respondent in said case led the petitioner to conclude that only a final judicial ruling in her favor would be accepted by the Commission. we find the CIR estopped from claiming that the filing of the Petition for Review was premature because petitioner failed to exhaust all administrative remedies.[22] Corollary thereto. if we strictly apply the rules. otherwise. machineries and spare parts. capital equipment. or (e) When an article locally purchased or imported by an exempt person. we ruled that respondent was estopped from invoking the rule on exhaustion of administrative remedies considering that in its Resolution. otherwise. That a preassessment notice shall not be required in the following cases: (a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return. respectively. in this case. the Commissioner or his duly authorized representative shall issue an assessment based on his findings. or is not acted upon within one hundred eighty (180) days from submission of documents. refunds of internal revenue taxes. it filed a Petition for Review with the CTA. you alleged the following: 1. the three year prescriptive period has not lapsed.

. in a clear and unequivocal language. ruling. J. petitioner availed of the provisions of Revenue Regulations No. documentary stamp tax and value added tax.[30] Accordingly. Besides. Promulgated: March 15.... In this case.R.versus FAR EAST BANK & TRUST COMPANY (NOW BANK OF THE PHILIPPINE ISLANDS)... SO ORDERED. there is no reason to reinstate the Petition for Review in CTA Case No... [25] we considered the language used and the tenor of the letter sent to the taxpayer as the final decision of the CIR. We note. as implemented by Section 3 of BIR Revenue Regulations No. or “reconsideration”.. Collector of Internal Revenue.. Petitioner. WHEREFORE. and not the PAN. as evidenced by a Certificate of Availment dated November 21.... No. 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. Neither are we deviating from our pronouncement in St.. 30-2002 and its implementing Revenue Memorandum Order by submitting an offer of compromise for the settlement of the GRT..: Entitlement to a tax refund is for the taxpayer to prove and not for the government to disprove. J. respondent used the word “appeal” instead of “protest”.. Stephen’s Chinese Girl’s School v.. In Oceanic Wireless Network. The Petition for Review in CTA Case No. 7062. As aptly pointed out by petitioner. 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. 2010 DECISION DEL CASTILLO.. Nevertheless. however. Chairperson. BRION. 2006 Decision and the October 17.. 2006 Resolution of the Court of Tax Appeals are REVERSED and SET ASIDE. under Section 228 of the NIRC. JJ. The assailed August 23.... Moreover.. v. petitioner in appealing the Formal Letter of Demand with Assessment Notices to the CTA merely took the cue from respondent. “reinvestigation” and “reconsideration” refer to the administrative remedies a taxpayer may take before the CIR. 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.. x. What we are saying in this particular case is that. not from the date the assessment was issued. .. it cannot be denied that the word “appeal” under prevailing tax laws refers to the filing of a Petition for Review with the CTA..... As we see it then.It appears from 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... the petition is hereby GRANTED.[29] that the counting of the 30 days within which to institute an appeal in the CTA commences from the date of receipt of the decision of the CIR on the disputed assessment.[26] Viewed in the light of the foregoing..... 2007... the terms “protest”. for the years 1998-2003.. 173854 Present: CARPIO.. 7062 is hereby DISMISSED based solely on the Bureau of Internal Revenue’s acceptance of petitioner’s offer of compromise for the settlement of the gross receipts tax. DST and VAT for the period 1998-2003...-x G. To be clear.. we cannot blame 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. Inc. “reinvestigation”. we cannot ignore the fact that in the Formal Letter of Demand with Assessment Notices.. We have time and again reminded the CIR to indicate. ABAD. specifically the words “final decision” and “appeal”. . Respondent.. or inaction of the CIR. amending Section 11 of RA 1125.. and not the respondent who caused the confusion. 12-99..... DEL CASTILLO.. and PEREZ. Commissioner of Internal Revenue.... COMMISSIONER OF INTERNAL REVENUE.. while the term “appeal” refers to the remedy available to the taxpayer before the CTA. [28] It is the Formal Letter of Demand and Assessment Notice that must be administratively protested or disputed within 30 days.. Section 9 of RA 9282. Although there was no direct reference for petitioner to bring the matter directly to the CTA. we are not disregarding the rules of procedure under Section 228 of the NIRC. [27] likewise uses the term “appeal” when referring to the action a taxpayer must take when adversely affected by a decision.. respondent is now estopped from claiming that he did not intend the Formal Letter of Demand with Assessment Notices to be a final decision. any doubt in the interpretation or use of the word “appeal” in the Formal Letter of Demand with Assessment Notices should be resolved in favor of petitioner. records show that petitioner disputed the PAN but not the Formal Letter of Demand with Assessment Notices. that during the pendency of the instant case.

the amount of P12.239 Less: Prior year’s (1994) excess income tax credit Additional prior year’s excess income tax credit Creditable Taxes Withheld at Source Refundable Income Tax 12.921.645.086. 1996. 1994 together with attachments B Corporate Annual Income Tax Return covering income of respondent’s FCDU for the year ended December 31. The return for the CBU consolidated the respondent’s overall income tax liability for 1994.821.682.864][6] Pursuant to Section 69[7] of the old National Internal Revenue Code (NIRC).00 refundable income tax.157 CBU 5.203. which reflected a refundable income tax ofP12.484 3. 2006 Resolution[3] of the CA denying the motion for reconsideration.433.630 5.068 1.172. After the filing of petitioner’s Answer.R.319.728] 35% NIL Net Income Tax Rate Income Tax Due Thereon _______________________________________ Consolidated Tax Due for Both CBU and FCDU Operations P 5. respondent was compelled to bring the matter to the CTA on April 8. The CA found otherwise. 1995.443. Also assailed is the July 19.864 6. 2006 Decision[1] of the Court of Appeals (CA) in CA-G.423.942 Less: Creditable Taxes Withheld at Source Refundable Income Tax 2. respondent presented the following documents: Exhibits Nature and Description A Corporate Annual Income Tax Return covering income of respondent’s CBU for the year ended December 31.798.539 35% 5. one for its Corporate Banking Unit (CBU) and another for its Foreign Currency Deposit Unit (FCDU).911 35% [84.748.00.682.354 15. On May 17. respondent filed its 1995 Annual Income Tax Return.628 7.00 with the BIR.682.432. 1997via a Petition for Review docketed as CTA Case No.133][8] Out of the P17.798.321.024. which showed a total overpaid income tax in the amount ofP17.080. To prove its entitlement to a refund. Factual Antecedents On April 10.669 NIL _______________________________________ Consolidated Tax Due for Both CBU and FCDU Operations P 4.085 11.00. respondent opted to carry it over to the next taxable year.172.076.038 1. 1994. 56773 which reversed and set aside the October 4.497. detailed as follows: Gross Income Less: Deductions FCDU P16.133. 1999 Decision[2] of the Court of Tax Appeals (CTA) in CTA Case No.This Petition for Review on Certiorari assails the January 31. respondent filed a claim for refund of the amount of P13. 5487. As to the remainingP3.321.109. 5487. The CTA found that respondent Far East Bank & Trust Company failed to prove that the income derived from rentals and sale of real property from which the taxes were withheld were reflected in its 1994 Annual Income Tax Return.00 was carried over and applied against respondent’s income tax liability for the taxable year ending December 31.133.104. On April 15. only P13. 280 1.109.531.089] 35% Net Income Tax Rate Income Tax Due Thereon 4.443.239 [10.844.828.348. 1995.333 955.864.317.549 CBU 7.024 [P17. respondent filed with the Bureau of Internal Revenue (BIR) two Corporate Annual Income Tax Returns. 1995 together with attachments . [5] for the taxable year ending December 31. trial ensued.669 Less: Quarterly Income Tax Payments CBU -1st Quarter -2nd Quarter FCDU -1st Quarter -2nd Quarter 633. computed as follows: [4] Gross Income Less: Deductions FCDU P13.682.327. Due to the failure of petitioner Commissioner of Internal Revenue (CIR) to act on the claim for refund.283.397.864.719 11.00.00 was sought to be refunded by respondent. SP No.893 [P12. 1996.645. 1994 together with attachments C Corporate Annual Income Tax Return covering income of respondent’s CBU for the year ended December 31.

D Corporate Annual Income Tax Return covering income of respondent’s FCDU for the year ended December 31. 1999 by Atty. did not present any evidence. until a claim for refund or credit has been duly filed with the Commissioner. WHEREFORE.[11] Our Ruling We find that the respondent miserably failed to prove its entitlement to the refund. However. however. Issue The lone issue presented in this petition is whether respondent has proven its entitlement to the refund. That the Commissioner may. (Formerly Section 230 of the old NIRC) While the second and third requirements are found under Section 10 of Revenue Regulation No. — Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payer to the payee (BIR Form No. Claims for tax credit or refund. of the Urgent Motion to Admit Memorandum filed on April 27. 1999.1) showing the amount paid and the amount of tax withheld therefrom. 1999. even without a written claim therefor. In view. 1994 Letter claim for refund dated May 8. 6-85. or of any sum alleged to have been excessive or in any manner wrongfully collected. the motion was denied on December 16. whether or not such tax. 33 on May 17. Hence. respondent filed a Motion for New Trial based on excusable negligence. SO ORDERED. in view of the foregoing. x x x Furthermore. On October 20. this Court based its findings on the income tax returns and their supporting schedules prepared and reviewed by the [respondent] itself and which. no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided. Nonetheless. 1999. thus: [Respondent] is reminded that this case was originally submitted for decision as early as September 22. in ascertaining whether or not the income upon which the taxes were withheld were included in the returns of the [respondent]. as amended. Therefore. penalty. such payment appears clearly to have been erroneously paid. . AA to UU VV Certificates of Creditable Withholding Tax and Monthly Remittance Returns of Income Taxes Withheld issued by various withholding agents for the year ended December 31. It prayed that it be allowed to present additional evidence to support its claim for refund. CTA Records). Recovery of Tax Erroneously or Illegally Collected. 1995 together with attachments N to Z. 2) It must be shown on the return that the income received was declared as part of the gross income. or sum has been paid under protest or duress. 1743. and 3) The fact of withholding must be established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld. 1998 (p. this Court set aside its resolution of September 22. [respondent’s] Motion for New Trial is hereby DENIED for lack of merit. which reads: Section 10. 497. 1996[9] Petitioner. this time initiated by a third counsel coming from the same law firm. are enough to support the conclusion reached. 1998 and considered this case submitted for decision as of May 7. to Us. it took [respondent] another five months after it was represented by a new counsel and after a decision unfavorable to it was rendered before [respondent] realized that an additional material documentary evidence has to be presented by way of a new trial. refund or credit any tax. this present recourse. on the other hand. 1996 filed with the Revenue District Office No. however. It reasoned. The CA found that respondent has duly proven that the income derived from rentals and sale of real property upon which the taxes were withheld were included in the return as part of the gross income. Ruling of the Court of Tax Appeals On October 4. 1999 by the CTA. Louella Martinez. we grant the petition filed by the petitioner CIR for being meritorious. Manuel Salvador allegedly due to the latter counsel’s absences.[10] Ruling of the Court of Appeals On appeal. but such suit or proceeding may be maintained. or of any penalty claimed to have been collected without authority. A taxpayer claiming for a tax credit or refund of creditable withholding tax must comply with the following requisites: 1) The claim must be filed with the CIR within the two-year period from the date of payment of the tax. In any case. where on the face of the return upon which payment was made. the CA reversed the Decision of the CTA. who entered her appearance as collaborating counsel of Atty. — No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected. the CTA rendered a Decision denying respondent’s claim for refund on the ground that respondent failed to show that the income derived from rentals and sale of real property from which the taxes were withheld were reflected in its 1994 Annual Income Tax Return.[12] The two-year period requirement is based on Section 229 of the NIRC of 1997 which provides that: SECTION 229.

[respondent] Bank should.645. there was no showing that the Rental Income and Income from Sale of Real Property were included as part of the gross income appearing in Section A of the said return. sale of real property.A. and 5 of the Annual Income Tax Return of [respondent] for 1994 (Exhibit “A”). x x x and in the 1994 audited Financial Statements (FS) supporting [respondent’s] 1994 Annual Corporate Income Tax Return.433. the BIR found no false declaration in them because it did not allege any false declaration thereof in its Answer (to the petition for review) filed before x x x CTA.” Therefore. [16] Thus. the Supreme Court held that: “a refund claimant is required to prove the inclusion of the income payments which were the basis of the withholding taxes and the fact of withholding. 1996 and judicial claim for refund on April 8. noteworthy is the fact that during the hearing of the petition for review before the CTA. Power of the Commissioner to make assessment and prescribe additional requirements for tax administration and enforcement. respondent submitted Certificates of Creditable Tax Withheld at Source and Monthly Remittance Returns of Income Taxes Withheld. a perusal of respondent’s 1994 Annual Income Tax Return shows that the gross income was derived solely from sales of services. 1997 were well within the two-year period from the date of the filing of the return on April 10. the Commissioner shall examine it and assess the correct amount of tax. 32]. It noted that in respondent’s 1994 Annual Income Tax Return. a detailed proof of the truthfulness of each and every item in the income tax return is not required. [petitioner] Commissioner of the BIR submitted the case for decision “in view of the fact that he has no evidence to present nor records to submit relative to the case” x x x Thus. that is. the facts stated therein are true and correct. the Commissioner of the BIR is tasked to make an examination of returns and assess the correct amount of tax.” and “Interest Income” stated in the Schedule of Income (referred to as an attachment in Section C of Exhibit “A”. and 5 of Section C of [respondent’s] 1994 Annual Income Tax Return is due to the fact that [respondent] Bank already reported the subject rental income and income from sale of real property in the Schedule of Income under the headings “Other Income/Earnings. Presumably. The reason why the phrase “NOT APPLICABLE” was indicated in schedules 3. Nowhere in the Answer. There is no dispute that respondent complied with the first requirement. Moreover. Verily. However. the income derived fromrentals and sales of real property upon which the creditable taxes were withheld were not included in respondent’s gross income as . Consequently. respectively. p. if we are to look at Schedules 3. therefore. 1995 and April 15. Based on the foregoing. vs.[15] (Emphasis supplied) Between the decision of the CTA and the CA. and 5 of Section C of its 1994 Annual Income Tax Return (Exhibit “A”). In fact. hence. the phrase “NOT APPLICABLE” was printed on the schedules pertaining to rent. the tax court and the appellate court arrived at different factual findings. although it is a fact that [respondent] failed to indicate said income payments under the appropriate Schedules 3.” “Trust Income. The amount ofP17.” “Trust Income” and “Interest Income. The CTA ruled that: x x x the Certificates of Creditable Tax Withheld at Source submitted by [respondent] pertain to rentals of real property while the Monthly Remittance Returns of Income Taxes Withheld refer to sales of real property. x x x x x x The grant of a refund is founded on the assumption that the tax return is valid. 16. sale of real property and trust income. The CTA also declared that the certifications issued by respondent cannot be considered in the absence of the Certificates of Creditable Tax Withheld at Source. UU). Incidentally. [respondent] has failed to comply with two essential requirements for a valid claim for refund. In fact. the phrase “NOT APPLICABLE” was printed on the space provided for rent. however. the CA found thus: We disagree with x x x CTA’s findings.133. based on the entries in the return. respectively. In fact. N. We give credence to [respondent] Bank’s assertion that it reported the said income payments as part of its gross income when it included the same as part of the “Other Income. xxxx [Respondent] Bank’s various documentary evidence showing that it had satisfied all requirements under the Tax Code vis-à-vis the Bureau of Internal Revenue’s failure to adduce any evidence in support of their denial of the claim. the same cannot be given due course. In the case of Citibank. [respondent] Bank still complied with the second requirement that the income upon which the taxes were withheld are included in the return as part of the gross income. did the BIR dispute the amount of tax refund being claimed by [respondent] Bank as inaccurate or erroneous. Court of Appeals (280 SCRA 459).00 reflected as refundable income tax in [respondent] Bank’s Corporate Annual Income Tax Return for the year 1995 was not disputed by the BIR to be inaccurate because there were certain income not included in the return of the [respondent]. the BIR examined [respondent] Bank’s Corporate Annual Income Tax Returns for the years 1994 and 1995 when they were filed onApril 10. this leads Us to a conclusion that [respondent] Bank’s Corporate Annual Income Tax Returns submitted were accepted as regular and even accurate by the BIR. 4. 16 of the NIRC. 1996.00 was not illegally or erroneously collected. The CTA ruled that the income derived from rentals and sales of real property were not included in respondent’s gross income. be granted the present claim for refund.Respondent timely filed its claim for refund. [14] (Emphasis supplied) On the other hand. under Sec. 4. x x x” In the case at bench. Verily. As to the certifications issued by the [respondent] (Exh. But. the phrase “NOT APPLICABLE” was printed by [respondent]. 1995. the petition for review has no basis” [see Record. The filing of respondent’s administrative claim for refund on May 17. under the said schedules. 4. However. and trust income. (a) After a return is filed as required under the provision of this Code. the income of [respondent] coming from rent and sale of real property upon which the creditable taxes withheld were based were not duly reflected.109. the same cannot be considered in the absence of the requisite Certificates of Creditable Tax Withheld at Source. to wit: “Sec. x x x” which the [petitioner] Commissioner undeniably failed to do. as to the second and third requirements. However. it is the former’s that is based on the evidence and in accordance with the applicable law and jurisprudence. which pertain to rentals and sales of real property. To establish the fact of withholding. the reason given by the BIR (in its Answer to the petition for review) why the claimed tax refund should be denied was that “x x x the amount of P13.[13] Respondent failed to prove that the income derived from rentals and sale of real property were included in the gross income as reflected in its return.

 and MENDOZA. As correctly pointed out by the CTA. the CTA was not convinced that there was excusable negligence to justify the granting of a new trial. Since tax refunds partake of the nature of tax exemptions. The burden is on the taxpayer to prove its entitlement to the refund. In fact. There is nothing in the Schedule of Income to show that the income under the heading “Other Earnings” includes income from rentals and sales of real property. Respondent failed to present all the Certificates of Creditable Tax Withheld at Source.. No. Rather. JJ.: . 1999 Decision of the Court of Tax Appeals denying respondent’s claim for tax refund for failure to prove that the income derived from rentals and sale of real property from which the taxes were withheld were reflected in its 1994 Annual Income Tax Return. the burden of establishing the factual basis of a claim for a refund rests on the taxpayer. the CA erred in ruling that respondent complied with the second requirement. there is no automatic grant of a [21] tax refund.reflected in its return. It immediately granted the refund without first verifying whether the fact of withholding was established by the Certificates of Creditable Tax Withheld at Source as required under Section 10 of Revenue Regulation No. SO ORDERED. Since no income was reported. Accordingly. upon realizing its omission. Moreover. G. No documentary or testimonial evidence was presented by respondent to prove this.Chairperson. The assailed January 31.. To reiterate. Hence.[17] Respondent’s explanation that its income derived from rentals and sales of real properties were included in the gross income but were classified as “Other Earnings” in its Schedule of Income[18] attached to the return is not supported by the evidence. respondent’s claim must be denied. JR. for failing to prove its entitlement to a tax refund. J. The October 4. the fact that the petitioner failed to present any evidence or to refute the evidence presented by respondent does not ipso facto entitle the respondent to a tax refund. the petition is GRANTED.”[19] Unfortunately.versus - COMMISSIONER OF INTERNAL REVENUE. is REINSTATED and AFFIRMED. filed a motion for new trial on the ground of excusable negligence with the CTA. evidence in support of a claim must likewise be strictissimi scrutinized and duly proven. Petitioner. Respondent. it is incumbent upon the taxpayer to reflect in his return the income upon which any creditable tax is required to be withheld at the source. which are construed strictissimi juris against the taxpayer. As we have said. The CA likewise failed to consider in its Decision the absence of several Certificates of Creditable Tax Withheld at Source. It is not the duty of the government to disprove a taxpayer’s claim for refund.[22] WHEREFORE. . his failure to exercise such powers does not create a presumption in favor of the correctness of the returns. The taxpayer must still present substantial evidence to prove his claim for refund. it follows that no tax was withheld. Respondent knew that it had to present additional evidence showing the breakdown of the “Other Earnings” reported in its Schedule of Income attached to the return to prove that the income from rentals and sales of real property were actually included under the heading “Other Earnings. 6-85. 170257 Present: VELASCO. JR. SP No. RIZAL COMMERCIAL BANKING CORPORATION. Promulgated: September 7.x DECISION MENDOZA. 56773 and its July 19..R. the certifications (Exhibit UU) issued by respondent cannot be considered in the absence of the required Certificates of Creditable Tax Withheld at Source. VILLARAMA. ABAD.[20] And while the petitioner has the power to make an examination of the returns and to assess the correct amount of tax. respondent. PERALTA. 2006 Resolution are REVERSED and SET ASIDE. 2006 Decision of the Court of Appeals in CA-G.R. J. 2011 x --------------------------------------------------------------------------------------.

305.55 8.503.549. 2000. RCBC paid the following deficiency taxes as assessed by the BIR: [9] Particulars Deficiency Income Tax Deficiency Gross Receipts Tax 1994 ₱ 2.72 24.37 2.525.” THE FACTS Petitioner Rizal Commercial Banking Corporation (RCBC) is a corporation engaged in general banking operations.988.000.261.844.000.01 216.000.[7] On December 6.560.096.89 13.104.367.98 ₱ 4.963.131.040.706.675.539.553.495.000. RCBC received another Formal Letter of Demand with Assessment Notices dated October 20.366.20 34.75 220.05 223.485.63 300.12 53.This is a petition for review on certiorari under Rule 45 seeking to set aside the July 27.510.92 21.960.863.330.002.80 64.568.38 149.370.482.954.43 351.277. No.49 Disagreeing with the said deficiency tax assessment.00 300.08 1.381.83 315.949.41 5.953.92 1. following the reinvestigation it requested.573.826.20 34.746.000.58 ₱ 126.05 ₱ 303. 2000.000.178.659.99 ₱ 25.645.687.192.785.130.000.955..589.628.A.46 905.496.491.460.000.802.819.388.98 25.009.051.300.566.193.946.00 25.33 4.89 ₱ 2.95 505.31 113.226.508.00 143.716.864.238.640. 83 entitled “Rizal Commercial Banking Corporation v.503.17 Total ₱ 3.09 ₱ 2.047.84 1995 ₱ 722.748.605.869.44 300. authorizing a special audit team to examine the books of accounts and other accounting records for all internal revenue taxes fromJanuary 1.945.755.63 25.68 6.460.718.74 17.740.429.97 972. [3] On August 15.052.171.585.067.626.10 79.00 25.148.00 28.462.34 25.000.697.89 250.681.583.72 67.00 300.26 160.757.52 33.00 78.171. E.303.260.35 4.00 ₱ 443.488.02 240.322.66 351.10 61.203.131.429. RCBC received a Formal Letter of Demand together with Assessment Notices from the BIR for the following deficiency tax assessments:[6] Particulars Deficiency Income Tax 1995 (ST-INC-95-0199-2000) 1994 (ST-INC-94-0200-2000) Deficiency Gross Receipts Tax 1995 (ST-GRT-95-0201-2000) 1994 (ST-GRT-94-0202-2000) Deficiency Final Withholding Tax 1995 (ST-EWT-95-0203-2000) 1994 (ST-EWT-94-0204-2000) Deficiency Final Tax on FCDU Onshore Income 1995 (ST-OT-95-0205-2000) 1994 (ST-OT-94-0206-2000) Deficiency Expanded Withholding Tax 1995 (ST-EWT-95-0207-2000) 1994 (ST-EWT-94-0208-2000) Deficiency Documentary Stamp Tax 1995 (ST-DST1-95-0209-2000) 1995 (ST-DST2-95-0210-2000) 1994 (ST-DST3-94-0211-2000) 1994 (ST-DST4-94-0212-2000) TOTALS Basic Tax Interest Compromise Penalties Total ₱ 252.322.62 226.266. effectively extending the period of the Bureau of Internal Revenue (BIR) to assess up to December 31.804.47 188.365.44 ₱ 721.93 On the same day.496.718.150.695.866.130. 1995.890.872.269. RCBC executed two Waivers of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code covering the internal revenue taxes due for the years 1994 and 1995.041.926.435.075.96 207.690.000.55 599.T.561.105.745.947.058. which drastically reduced the original amount of deficiency taxes to the following: [8] Particulars Deficiency Income Tax 1995 (INC-95-000003) 1994 (INC-94-000002) Deficiency Gross Receipts Tax 1995 (GRT-95-000004) 1994 (GRT-94-000003) Deficiency Final Withholding Tax 1995 (FT-95-000005) 1994 (FT-94-000004) Deficiency Final Tax on FCDU Onshore Income 1995 (OT-95-000006) 1994 (OT-94-000005) Deficiency Expanded Withholding Tax 1995 (EWT-95-000004) 1994 (EWT-94-000003) Deficiency Documentary Stamp Tax 1995 (DST-95-000006) 1995 (DST2-95-000002) 1994 (DST-94-000005) 1994 (DST2-94-000001) TOTALS Basic Tax Interest Surcharge &/ Compromise Total ₱ 374.508. 2000.100.84 ₱ 164. 2000.90 ₱ 191.701.712. on January 27.80 348.45 1.78 59.47 713.08 5.222.18 4.B.335.29 460.035.672.291.037.90 81.236.051. it filed a petition for review before the CTA.000.22 4.97 424. 1997.965.73 749. 1996.634.535.68 512.42 2.200.696.15 112.610.170.707.38 12.733.900.000.477.348.207.00 9. 2005 Resolution [2] of the Court of Tax Appeals En Banc (CTA-En Banc) in C.903.63 161.291.240.807.04 6.22 409.03 671. 2000.26 331.819.52 667.32 362.00 1.96 138.36 520.945.61 3.058.39 367. 1994 to December 31.00 123.160.65 699.08 40.656.287.52 2.000.842.000. 133959 issued by then Commissioner of Internal Revenue (CIR) Liwayway VinzonsChato.506.640.59 81.368.052.026.064.971.72 297.901.07 463.11 6.[4] On January 23.28 74. It seasonably filed its Corporation Annual Income Tax Returns for Foreign Currency Deposit Unit for the calendar years 1994 and 1995.005.478.25 58. Much later on November 20.52 25.000.00 ₱ 4.392.050.00 300.55 7.00 25.21 2.428.972.738.055.155.949.415.00 25.01 .80 ₱ 1. 2000 and later submitted the relevant documentary evidence to support it.21 ₱ 12.322.042.28 ₱ 346.40 31. pursuant to Section 228 of the 1997 Tax Code. 2005 Decision [1] and October 26.083.589. RCBC received Letter of Authority No.[5] Subsequently.893. RCBC filed a protest on February 24. Commissioner of Internal Revenue.397.68 2.

83 21.093.938.938. upheld the assessment for deficiency final tax on FCDU onshore income and deficiency documentary stamp tax for 1994 and 1995 and ordered RCBC to pay the following amounts plus 20% delinquency tax:[15] Particulars 1994 1995 Total Deficiency Final Tax on FCDU Onshore Income Basic Interest Sub Total Deficiency Documentary Stamp Tax (Industry Issue) Basic Surcharge Sub Total TOTALS ₱ 22.44 672.62 ₱ 41.434.69 and not ₱171.268. [23] .05 31.510. that was primarily liable for the remittance of the said tax.583.41 ₱ 24. as such.10 40.194. in relation to the assessment of the deficiency documentary stamp tax on petitioner’s special savings account.810. Whether or not petitioner is liable for deficiency onshore tax for taxable year 1994 and 1995. It considered as closed and terminated the assessments for deficiency income tax.486.007.46 6.26 ₱ 74.498.13 ₱171.19 119. deficiency gross receipts tax.654. III.993.508. implying that it recognized the validity of the waivers.243.48 749.238. accepting and paying portions of the reduced assessment.725.666. RCBC bound itself to the new assessment.941. 2005.Deficiency Final Withholding Tax Deficiency Expanded Withholding Tax Deficiency Documentary Stamp Tax TOTALS 410.05 119. deficiency expanded withholding tax.434. however.842.527.192. refused to pay the following assessments for deficiency onshore tax and documentary stamp tax which remained to be the subjects of its petition for review:[10] Particulars Deficiency Final Tax on FCDU Onshore Income Basic Interest Sub Total Deficiency Documentary Stamp Tax Basic Surcharge Sub Total TOTALS 1994 1995 Total ₱ 34.92 ₱ 5.238.131.36 ₱ 81.[18] RCBC elevated the case to the CTA-En Banc where it raised the following issues: I.47 Unsatisfied.277.460. constituted by law as the withholding agent.026.490. It ruled that by receiving.08 ₱ 191.026.837.953. deficiency final withholding tax. in its assailed Decision.08 52.668.62 1. it held that petitioner’s special savings account was a certificate of deposit and.291.952. [11] As regards the deficiency FCDU onshore tax.947.43 ₱ 16.84 4. 221.093.842.13 ₱69.08 15.822.51 31.62 ₱ 31. the CTA-First Division substantially upheld its earlier ruling.429.64 ₱ 17.261.303.153.104.30 26.13 ₱ 287. RCBC filed its Motion for Reconsideration on January 21.96 RCBC.20 79.486.124.260. who was liable to pay the final tax on FCDU.330.760. Whether or not the right of the respondent to assess deficiency onshore tax and documentary stamp tax for taxable year 1994 and 1995 had already prescribed when it issued the formal letter of demand and assessment notices for the said taxable years.856.34 48. except for its inadvertence in the addition of the total amount of deficiency taxes.[22] Finally. denied the petition for lack of merit. 2004.356. Whether or not petitioner’s special savings account is subject to documentary stamp tax under then Section 180 of the 1993 Tax Code.30 10. however. [20] RCBC could not assail the validity of the waivers after it had received and accepted certain benefits as a result of the execution of the said waivers.84 4.56 ₱62.651.21 ₱ 21. [14] It.40 ₱ 9. 2005. arguing that: (1) the CTA erred in its addition of the total amount of deficiency taxes and the correct amount should only be ₱132.305.292.86 ₱ 115.260. it modified its earlier decision and ordered RCBC to pay the amount of ₱132.969. it would then follow that the tax should be imposed on RCBC as the payee-bank.08 ₱ 160.83 ₱ 52. was subject to documentary stamp tax. and not RCBC. As such.[16] In its Resolution[17] dated April 11.503.561.05 ₱ 96.30 10.863.330.300.324.261.330.753.040.009.460.480. it held that because the payor-borrower was merely designated by law to withhold and remit the said tax.707.093.881.993. (3) it was the payor-borrower as withholding tax agent.77 RCBC argued that the waivers of the Statute of Limitations which it executed on January 23. (2) the CTA erred in holding that RCBC was estopped from questioning the validity of the waivers.47.527.221.46 6. 1997 were not valid because the same were not signed or conformed to by the respondent CIR as required under Section 222(b) of the Tax Code.192.32 ₱ 15.947.312.753.040.314.492.28 ₱ 115. [21] As to the deficiency onshore tax.131.34 ₱ 235.802.428.052.713. it was the borrower.436.682.052.[19] The CTA-En Banc.174.36 ₱ 41.953.161.18 1.718.69 plus 20% delinquency tax.21 ₱ 24.822.78 714.300.492. and deficiency documentary stamp tax (not an industry issue) for 1994 and 1995.421.46 1. and (4) RCBC’s special savings account was not subject to documentary stamp tax.748.34 ₱ 17.843.330. RCBC contended that because the onshore tax was collected in the form of a final withholding tax.654.303.498.14 1. II.[12] On December 15.02 1.240.131. the First Division of the Court of Tax Appeals (CTA-First Division) promulgated its Decision[13] which partially granted the petition for review.30 119.067.104.

as withholding agent.[33] It is. then it should not have paid the reduced amount of taxes in the revised assessment. the deficiency tax shall be collected from the payor/withholding agent. and cannot be denied or disproved as against the person relying thereon.57(A) of Revenue Regulations No. it should be pointed out that RCBC erred in citing the abovementioned Revenue Regulations No. while the withholding agent simply acts as an agent or a collector of the government to ensure the collection of taxes. citing Section 2.[32] the Court has explained that the purpose of the withholding tax system is three-fold: (1) to provide the taxpayer with a convenient way of paying his tax liability. Hence. RCBC. 2009 Comment to the Manifestation. who is directly liable for the payment of onshore tax. as elucidated by this Court in the case ofCommissioner of Internal Revenue v. 2-98 obviously does not apply in this case. The deficiency withholding tax subject of this petition was supposed to have been withheld on income paid during the taxable years of 1994 and 1995. (2) to ensure the collection of tax. [28] RCBC further argues that the principle of estoppel cannot be applied against it because its payment of the other tax assessments does not signify a clear intention on its part to give up its right to question the validity of the waivers. indisputable that the withholding agent is merely a tax collector and not a taxpayer. which is mandated by law to be collected at source in the form of a final withholding tax. Court of Appeals.[25] THE ISSUES Thus. Inc. in case of his failure to withhold the tax or in case of under withholding. Before any further discussion. RCBC filed its Manifestation dated July 22. While awaiting the decision of this Court. through its partial payment of the revised assessments issued within the extended period as provided for in the questioned waivers. [24] In its November 17. Thus.[31] Liability for Deficiency Onshore Withholding Tax RCBC is convinced that it is the payor-borrower. v. RCBC is estopped from questioning the validity of the waivers. this petition. (Emphasis supplied) The petitioner is mistaken. is rendered estopped from questioning the validity of the said waivers with respect to the assessment of deficiency onshore tax. The payee is not required to file an income tax return for the particular income.[34] to wit: . Under Article 1431 of the Civil Code. only the following issues remain to be resolved by this Court: Whether petitioner.” A party is precluded from denying his own acts. can be held liable for deficiency onshore tax.161. 2009. In Chamber of Real Estate and Builders’ Associations. RCBC’s subsequent action effectively belies its insistence that the waivers are invalid. therefore. had been rendered moot and academic by its payment of the tax deficiencies on Documentary Stamp Tax (DST) on Special Savings Account (SSA) for taxable years 1994 and 1995 after the BIR approved its applications for tax abatement. as payee-bank.[27] THE COURT’S RULING Petitioner is estopped from questioning the validity of the waivers RCBC assails the validity of the waivers of the statute of limitations on the ground that the said waivers were merely attested to by Sixto Esquivias. [26] and Whether petitioner.Hence. RCBC immediately made payment on the uncontested taxes. 2-98 which states: (A) Final Withholding Tax. 2-98 because the same governs collection at source on income paid only on or after January 1. Under the withholding tax system. Revenue Regulations No. The liability for payment of the tax rests primarily on the payor as a withholding agent. impliedly admitted the validity of those waivers. upon receipt of the revised assessment. To hold otherwise and allow a party to gainsay its own act or deny rights which it had previously recognized would run counter to the principle of equity which this institution holds dear. [30] Estoppel is clearly applicable to the case at bench. and (3) to improve the government’s cashflow. relative to the DST deficiency assessment.[29] The Court disagrees. The CIR prayed that RCBC be considered to have withdrawn its appeal with respect to the CTA-En Banc ruling on its DST on SSA deficiency for taxable years 1994 and 1995 and that the questioned CTA decision regarding RCBC’s deficiency tax on FCDU Onshore Income for the same period be affirmed. Thus. the CIR pointed out that the only remaining issues raised in the present petition were those pertaining to RCBC’s deficiency tax on FCDU Onshore Income for taxable years 1994 and 1995 in the aggregate amount of ₱80. the payor is the taxpayer upon whom the tax is imposed. informing the Court that this petition.827. by paying the other tax assessment covered by the waivers of the statute of limitations. The Executive Secretary.56 plus 20% delinquency interest per annum. then Coordinator for the CIR. 2000. and that he failed to indicate acceptance or agreement of the CIR. as required under Section 223 (b) of the 1977 Tax Code. 1998. Had petitioner truly believed that the waivers were invalid and that the assessments were issued beyond the prescriptive period. The records show that on December 6. admissions or representations to the prejudice of the other party in order to prevent fraud and falsehood. the doctrine of estoppel is anchored on the rule that “an admission or representation is rendered conclusive upon the person making it. — Under the final withholding tax system the amount of income tax withheld by the withholding agent is constituted as a full and final payment of the income tax due from the payee on the said income.

[36] The CTA. the agent-payor becomes a payee by fiction of law. remains liable for the payment of tax as the taxpayer shares the responsibility of making certain that the tax is properly withheld by the withholding agent. The liability for the tax. the petition is DENIED. His (agent) liability is direct and independent from the taxpayer. pursuant to Section 24(e)(3) of the National Internal Revenue Code of 1993: Sec. [38] WHEREFORE. While the payor-borrower can be held accountable for its negligence in performing its duty to withhold the amount of tax due on the transaction. not a taxpayer. local commercial banks including branches of foreign banks that may be authorized by the Central Bank to transact business with foreign currency depository system units and other depository banks under the expanded foreign currency deposit system shall be exempt from all taxes. Rates of tax on domestic corporations. The Tax Code only makes the agent personally liable for the tax arising from the breach of its legal duty to withhold as distinguished from its duty to pay tax since: “the government’s cause of action against the withholding agent is not for the collection of income tax.R. The withholding agent is liable only insofar as he failed to perform his duty to withhold the tax and remit the same to the government. (Emphasis supplied) As a final note. JR. the withholding agent is the payor. 2007 THE COMMISIONER OF INTERNAL REVENUE. Respondent. thus: . That interest income from foreign currency loans granted by such depository banks under said expanded system to residents (other than offshore banking units in the Philippines or other depository banks under the expanded system) shall be subject to a 10% tax. Petitioner. In other words. remains with the taxpayer because the gain was realized and received by him. it is liable for payment of deficiency onshore tax on interest income derived from foreign currency loans. ACESITE (PHILIPPINES) HOTEL CORPORATION. 147295 February 16.” [35] (Emphases supplied) Based on the foregoing. the liability of the withholding agent is independent from that of the taxpayer.In the operation of the withholding tax system. offshore banking units in the Philippines. SO ORDERED. 2000 Decision 3 of the Court of Tax Appeals (CTA) in CTA Case No. has developed an expertise on the subject of taxation. the withholding agent is merely a tax collector. the payer is the taxpayer – he is the person subject to tax imposed by law. xxxx (e) Tax on certain incomes derived by domestic corporations xxxx (3) Tax on income derived under the Expanded Foreign Currency Deposit System. because the income tax is still imposed on and due from the latter.: The Case Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. its decisions shall not be lightly set aside on appeal. a separate entity acting no more than an agent of the government for the collection of the tax in order to ensure its payments. but for the enforcement of the withholding provision of Section 53 of the Tax Code. No.R. The Commissioner of Internal Revenue for Refund of VAT Payments. vs. which affirmed the January 3. Under the withholding system. compliance with which is imposed on the withholding agent and not upon the taxpayer. The former cannot be made liable for the tax due because it is the latter who earned the income subject to withholding tax. G. in the absence of any clear and convincing proof to the contrary. RCBC cannot evade its liability for FCDU Onshore Tax by shifting the blame on the payor-borrower as the withholding agent. – Income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with nonresidents. SP No. however.. unless this Court finds that the questioned decision is not supported by substantial evidence or there is a showing of abuse or improvident exercise of authority on the part of the Tax Court. The agent is not liable for the tax as no wealth flowed into him – he earned no income. upon recommendation of the Monetary Board to be subject to the usual income tax payable by banks: Provided. [37] As such. 5645 entitled Acesite (Philippines) Hotel Corporation v. however. 56816. except taxable income from such transactions as may be specified by the Secretary of Finance. as a specialized court dedicated exclusively to the study and resolution of tax problems. RCBC. DECISION VELASCO. assailing the November 17. so as to avoid any penalty that may arise from the non-payment of the withholding tax due. and the payee is the taxing authority. 24. 2000 Decision 2 of the Court of Appeals (CA) in CA-G. J. The Facts The facts as found by the appellate court are undisputed. As such. this Court has consistently held that findings and conclusions of the CTA shall be accorded the highest respect and shall be presumed valid. as the taxpayer and the one which earned income on the transaction.

205.02 from its rental income and sale of food and beverages to PAGCOR during said period.42 98. Thus.64) immediately.054. we have the instant petition with the following issues: (1) whether PAGCOR’s tax exemption privilege includes the indirect tax of VAT to entitle Acesite to zero percent (0%) VAT rate. Such tax shall be due and payable quarterly to the National .02 VAT while the latter paid the VAT to the Commissioner of Internal Revenue [hereafter. whether National or Local.148.1awphi1.739.743. Acesite filed an administrative claim for refund with the CIR but the latter failed to resolve the same.40 P30. Thus on 29 May 1998. in view of all the foregoing.743. nor shall any form of tax or charge attach in any way to the earnings of the Corporation.892.4 The Ruling of the Court of Appeals Upon appeal by petitioner.Acesite is the owner and operator of the Holiday Inn Manila Pavilion Hotel along United Nations Avenue in Manila. It leases 6. Acesite incurred VAT amounting to P30. the charter creating PAGCOR.53 square meters of the hotel’s premises to the Philippine Amusement and Gaming Corporation [hereafter. Petitioner is subject to zero percent tax pursuant to Section 102 (b)(3) [now 106(A)(C)] insofar as its gross income from rentals and sales to PAGCOR. PAGCOR paid the amount due to Acesite minus the P30.054.D. 1869. the CA affirmed the CTA’s determination by ruling that respondent Acesite was entitled to a refund of PhP 30. a tax exempt entity by virtue of a special law. as well as fees.64 computed as follows: Total amount per claim 30. income or otherwise. The Respondent is hereby ORDERED to REFUND to the petitioner the amount of THIRTY MILLION FIFTY FOUR THOUSAND ONE HUNDRED FORTY EIGHT PESOS AND SIXTY FOUR CENTAVOS (P30. The petition is devoid of merit.152.199.02 Less Prescribed amount (Exhs A. shall be assessed and collected under this Franchise from the Corporation.64 from petitioner.865. However. the transactions between respondent Acesite and PAGCOR were "effectively zerorated" because they involved the rendition of services to an entity exempt from indirect taxes. CIR] as it feared the legal consequences of non-payment of the tax.152.148. we answer in the affirmative. CTA] which was decided in this wise: As earlier stated. In resolving the first issue on whether PAGCOR’s tax exemption privilege includes the indirect tax of VAT to entitle Acesite to zero percent (0%) VAT rate. 13. as a matter of course.D. and (2) whether the zero percent (0%) VAT rate under then Section 102 (b)(3) of the Tax Code (now Section 108 (B)(3) of the Tax Code of 1997) legally applies to Acesite. – (a) Franchise Holder: No tax of any kind or form.net Thus. On 21 May 1998.768.94 February 1996 26. Accordingly. – xxxx (2) Income and other taxes. 1869 pertinently provides: Sec. & X-20) January 1996 P 2. Exemptions.148. Respondent must refund to the Petitioner the amount of P30. We will however discuss both issues together.026.054. It also caters food and beverages to PAGCOR’s casino patrons through the hotel’s restaurant outlets. PAGCOR is exempt from payment of indirect taxes It is undisputed that P.338. except a Franchise Tax of five (5%) percent of the gross revenue or earnings derived by the Corporation from its operation under this Franchise. X. grants the latter an exemption from the payment of taxes.152. be refunded to the petitioner for having been inadvertently remitted to the respondent.892. PAGCOR] for casino operations. and considering further the principle of ‘solutio indebiti’ which requires the return of what has been delivered through mistake. Acesite belatedly arrived at the conclusion that its transaction with PAGCOR was subject to zero rate as it was rendered to a tax-exempt entity. Section 13 of P. The Issues Hence. representing the 10% EVAT on its sales of food and services and gross rentals. taking into consideration the prescribed portion of Petitioner’s claim for refund of P98.40.892.054. the amounts of P21. the instant Petition for Review is partially GRANTED. Thus. Acesite tried to shift the said taxes to PAGCOR by incorporating it in the amount assessed to PAGCOR but the latter refused to pay the taxes on account of its tax exempt status. respectively from PAGCOR shall.64 vvvvvvvvvvvvvv WHEREFORE.78 and P8.413.148. SO ORDERED.04 March 1996 70.24. Acesite filed a petition with the Court of Tax Appeals [hereafter. charges or levies of whatever nature. the CA affirmed in toto the decision of the CTA holding that PAGCOR was not only exempt from direct taxes but was also exempt from indirect taxes like the VAT and consequently. For the period January (sic) 96 to April 1997.

Provided. fees or levies. Acesite paid VAT by mistake Considering the foregoing discussion. levies."7 Such payment is held to be not voluntary and. or individual(s) with whom the Corporation or operator has any contractual relationship in connection with the operations of the casino(s) authorized to be conducted under this Franchise and to those receiving compensation or other remuneration from the Corporation or operator as a result of essential facilities furnished and/or technical services rendered to the Corporation or operator. a value-added tax equivalent to 10% of gross receipts derived by any person engaged in the sale of services x x x. The unmistakable conclusion is that PAGCOR is not liable for the P30.892. the legislature clearly granted exemption also from indirect taxes. that may be shifted to PAGCOR. xxxx (b) Others: The exemptions herein granted for earnings derived from the operations conducted under the franchise specifically from the payment of any tax. xxxx (b) Transactions subject to zero percent (0%) rated. PAGCOR is undoubtedly exempt from such taxes because the law exempts from taxes persons or entities contracting with PAGCOR in casino operations. or national government authority. The manner of charging VAT does not make PAGCOR liable to said tax It is true that VAT can either be incorporated in the value of the goods. Although..D. as follows: Under the above provision [Section 13 (2) (b) of P.) Petitioner contends that the above tax exemption refers only to PAGCOR’s direct tax liability and not to indirect taxes. is clearly to proscribe any indirect tax. like the VAT. 8424. properties. as in the instant case. while it was proper for PAGCOR not to pay the 10% VAT charged by Acesite. the proviso in P. The rationale for the exemption from indirect taxes provided for in P. R. In the instant case. the first method. properties.— xxxx (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero (0%) rate (emphasis supplied).6 we explained that "there is erroneous payment of taxes when a taxpayer pays under a mistake of fact. City of Manila. transferee. that is. the latter is not liable for the payment of it as it is exempt in this particular transaction by operation of law to pay the indirect tax. Value-added tax on sale of services – (a) Rate and base of tax – There shall be levied. by extending the tax exemption to entities or individuals dealing with PAGCOR in casino operations. the seller or lessor has the option to follow either way in charging its clients and customer. the provision clearly exempts PAGCOR from indirect taxes. 108 B (3). or services subject to VAT.A. Acesite followed the latter method. like VAT. can be shifted or passed to the buyer. when it was not aware that the transactions it had with PAGCOR were zero-rated at the time it made the payments. Verily. (Emphasis supplied. Hence. it must be noted that aside from not raising the issue of Acesite’s compliance with pertinent Revenue Regulations on exemptions during the proceedings in the CTA. established or collected by any municipal.D. 1869 and the extension of such exemption to entities or individuals dealing with PAGCOR in casino operations are best elucidated from the 1987 case of Commissioner of Internal Revenue v. association(s). petitioner’s argument on this point is utterly tenuous. 1869. and such does not violate the rule that tax exemptions are personal because the manifest intention of the agreement is to exempt the contractor so that no contractor’s tax may be shifted to the contractee WHO. shall inure to the benefit of and extend to corporation(s). or charged as an additional 10% to the value. fees or assessments of any kind. VAT exemption extends to Acesite Thus. We disagree. 1869]. it cannot be gainsaid that Acesite should have done so as it paid the VAT under a mistake of fact. assessed and collected. the term "Corporation" or operator refers to PAGCOR.8 Moreover. does not denigrate the fact that PAGCOR is exempt from an indirect tax. (Emphasis supplied.) Indeed. like VAT. Such exemption falls within the former Section 102 (b) (3) of the 1977 Tax Code. as well as any form of charges. It must be noted that the indirect tax of VAT. A close scrutiny of the above provisos clearly gives PAGCOR a blanket exemption to taxes with no distinction on whether the taxes are direct or indirect. In fact.5 where the absolute tax exemption of the World Health Organization (WHO) upon an international agreement was upheld. it goes one step further by granting tax exempt status to persons dealing with PAGCOR in casino operations. John Gotamco & Sons. nature or description. Verily. differently worded. 8424). by extending the exemption to entities or individuals dealing with PAGCOR. income or otherwise. Acesite has clearly shown that it paid the subject taxes under a mistake of fact. like VAT. Thus. provincial. agency(ies). Inc. it is exempting PAGCOR from being liable to indirect taxes.A. or lessee of the goods.152. that is. In UST Cooperative Store v. therefore. the use of either method. Although the law does not specifically mention PAGCOR’s exemption from indirect taxes.D. extending the exemption to entities or individuals dealing with PAGCOR in casino operations. Thus. 108 [b] [3] of R. as amended (now Sec. We are one with the CA ruling that PAGCOR is also exempt from indirect taxes. that the following services performed in the Philippines by VAT-registered persons shall be subject to 0%. Be that as it may. in which case it is computed as 1/11 of such value. which provides: Section 102. Solutio indebiti applies to the Government . there are undoubtedly erroneous payments of the VAT pertaining to the effectively zero-rate transactions between Acesite and PAGCOR. or services sold or leased. and in particular.Government and shall be in lieu of all kinds of taxes.02 VAT and neither is Acesite as the latter is effectively subject to zero percent rate under Sec. as for the instance in a case where he is not aware of an existing exemption in his favor at the time the payment was made. can be recovered or refunded. We held in said case that the exemption of contractee WHO should be implemented to mean that the entity or person exempt is the contractor itself who constructed the building owned by contractee WHO. charging an additional 10% of the gross sales and rentals. levied.

and it was unduly delivered through mistake. respondents. If something is received when there is no right to demand it. one percent (1%) each to the local government units affected by the declaration of the zone in proportion to their population area. petitioner never presented any evidence on its behalf. and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.J. 163445 December 18. One final word.R." 10 Action for refund strictly construed. SP No. However. as attested to by an independent Certified Public Accountant who was duly commissioned by the CTA. local and national. C. no taxes. Indeed. 79329 declaring the Regional Trial Court (RTC) of Olongapo City. and other factors. 7227 creating the Subic Special Economic Zone (SSEZ) and extending a number of economic or tax incentives therein. and other municipalities contiguous to the base areas. G. gold. it is strictly construed against the claimant who must discharge such burden convincingly. the [SSEZ] shall be developed into a self-sustaining. BIR. THE REVENUE DISTRICT OFFICER. commercial. (emphasis supplied) . The BIR must release the refund to respondent without any unreasonable delay. INC.. No. It goes without saying that the Government is not exempted from the application of this doctrine. The ground upon which the right of recovery rests is that money paid through misapprehension of facts belongs in equity and in good conscience to the person who paid it. DECISION PUNO. where we held that: "Enshrined in the basic legal principles is the time-honored doctrine that no person shall unjustly enrich himself at the expense of another. industrial. Indeed. into and exported out of the [SSEZ]. 2154. Acesite discharged the burden of proof Since an action for a tax refund partakes of the nature of an exemption. three percent (3%) of the gross income earned by all businesses and enterprise within the [SSEZ] shall be remitted to the National Government. JR. (d) No exchange control policy shall be applied and free markets for foreign exchange. on the mistaken supposition of the existence of a specific fact. that is to say. capital and equipment. in his capacity as Commissioner of the Bureau of Internal Revenue (BIR). the obligation to return it arises.9 The Government comes within the scope of solutio indebiti principle as elucidated in Commissioner of Internal Revenue v. 2142 and 2154 of the Civil Code. Fireman’s Fund Insurance Company. Art. fair dealing is expected by our taxpayers from the BIR and this duty demands that the BIR should refund without any unreasonable delay what it has erroneously collected. securities and future shall be allowed and maintained in the [SSEZ]. exportation or removal of goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines.Tax refunds are based on the principle of quasi-contract or solutio indebiti and the pertinent laws governing this principle are found in Arts. Congress enacted Republic Act (R.) No. GUILLERMO L. and SUBIC BAY MOTORS CORPORATION. shall be imposed within the [SSEZ]. Special Economic Zone.: At bar is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals (CA) in CA-G. 12 WHEREFORE. In addition. the petition is DENIED for lack of merit and the November 17. (c) The provision of existing laws. Section 12 of the law provides: (a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent provisions of the Local Government Code.A. In case of conflict between national and local laws with respect to tax exemption privileges in the [SSEZ]. (b) The [SSEZ] shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within. respondent Acesite had discharged this burden as found by the CTA and the CA. HON. 275-0-2003.R. 2142. When money is paid to another under the influence of a mistake of fact. Branch 74. where it would not have been known that the fact was otherwise. BIR. In lieu of paying taxes. thus: Art.11 In the instant case. it may be recovered. The facts are undisputed. 2000 Decision of the CA is hereby AFFIRMED. THE REGIONAL DIRECTOR. petitioners. as well as provide incentives such as tax and duty-free importations of raw materials. which provide. PARAYNO. On the other hand. 2007 ASIA INTERNATIONAL AUCTIONEERS. the records show that Acesite proved its actual VAT payments subject to refund. vs. the same shall be resolved in favor of the latter. Region III. there is hereby established a development fund of one percent (1%) of the gross income earned by all business and enterprise within the [SSEZ] to be utilized for the development of municipalities outside the City of Olongapo and the Municipality of Subic. In fact. rules and regulations to the contrary notwithstanding. voluntary. Certain lawful. which cannot be allowed unless granted in the most explicit and categorical language. and OFFICE OF THE SOLICITOR GENERAL. petitioner never disputed nor contested respondent’s testimonial and documentary evidence. without jurisdiction over Civil Case No. No costs. SO ORDERED. financial and investment center to generate employment opportunities in and around the zone and to attract and promote productive foreign investments.

in case the winning bid price is lower than the total costs to import. based on the winning bid price. then CIR Guillermo L.5 to wit: II. Reg.] No.A. However. through the recommendation of then Commissioner of Internal Revenue (CIR) Liwayway Vinzons-Chato.—Pursuant to existing revenue issuances. For excise tax purposes. 32-2003. in case he/she is a non-resident citizen or alien. xxx B.] No. the customs duties. 12-973 was issued providing for the "Regulations Implementing Sections 12(c) and 15 of [R.That the total income generated by the consignee-seller from sources within the customs territory does not exceed thirty percent (30%) of the total income derived from all sources.4. In the event that the winning bidder shall bring the motor vehicles into the customs territory. 1999. The imported motor vehicles after its release from Customs custody are sold through public auction/negotiated sale by the consignee within or outside of the Freeport Zone: A. Subsequent sale/public auction of the motor vehicles 1. 7916 Allocating Two Percent (2%) of the Gross Income Earned by All Businesses and Enterprises Within the Subic. 1-95. as amended. The consignee- . the basis for the computation of the excise tax shall be the total costs plus ten percent (10%) thereof.That the consignee-seller is a duly registered enterprise entitled to such preferential tax rate as well as a registered taxpayer with the Bureau of Internal Revenue (BIR). provided that the importer-consignee is a registered enterprise within such freeport zone. Motor vehicles that are imported into the Freeport zones for exclusive use within the zones are. De Ocampo. Reg. 7227 and Sections 24(b) and (c) of [R. in cases where the consignee-auctioneer has already paid the VAT and excise tax on the motor vehicles before the registration thereof with LTO and the conduct of public auction. 7227.On January 24. the importer-consignee/auctioneer shall pay the value-added tax (VAT) and excise tax to the BOC before the registration thereof under its name with the LTO and/or the conduct of the public auction. The additional VAT and excise taxes shall be paid to the BIR before the auctioned motor vehicles are registered with the LTO. 2003.2. issued Revenue Memorandum Circular (RMC) No. 1-95. In case the consignee-seller is a registered enterprise and/or locator not entitled to the preferential tax treatment or if the same is entitled from such incentive but its total income from the customs territory exceeds thirty percent (30%) of its entire income derived from the customs territory and the freeport zone. [R. then Secretary of Finance Roberto F. The gross income earned by the consignee-seller from the public auction/negotiated sale of the imported vehicles shall be subject to the preferential tax rate of five percent (5%) in lieu of the internal revenue taxes imposed by the National Internal Revenue Code of 1997. should these motor vehicles be brought out into the customs territory without returning to the freeport zones. as a general rule. This was later amended by RMC No. provided that the following conditions are present: 1. In case the consignee-auctioneer is a registered enterprise and/or locator not entitled to the preferential tax treatment or if the same is entitled from such incentive but its total income from the customs territory exceeds 30% of its entire income derived from the customs territory and the freeport zone. otherwise known as the ‘Bases Conversion and Development Act of 1992’ Relative to the Tax Incentives Granted to Enterprises Registered in the Subic Special Economic and Freeport Zone. Rev. [o]therwise known as the Bases Conversion and Development Act of 1992." Subsequently.2 providing the "Rules and Regulations to Implement the Tax Incentives Provisions Under Paragraphs (b) and (c) of Section 12. the sales or income derived from the public auction/negotiated sale shall be subjected to the regular internal revenue taxes imposed by the Tax Code. exempt from customs duties. 31-2003 setting the "Uniform Guidelines on the Taxation of Imported Motor Vehicles through the Subic Free Port Zone and Other Freeport Zones that are Sold at Public Auction. the final withholding tax of 25%. xxx 1.A. For imported motor vehicles that are imported by persons that are not duly registered enterprises of the freeport zones. 1. Importation of motor vehicles into the freeport zones 1. No. in case he/she is a resident citizen or alien. Scenario One – The public auction is conducted by the consignee of the imported motor vehicles within the freeport zone xxx 1.] No. Reg. Rev. the income derived from the public auction shall be subjected to the regular internal revenue taxes imposed by the Tax Code. the following are the uniform tax treatments that are to be adopted on the different transactions involved in the importation of motor vehicles through the SSEFZ and other legislated Freeport zones that are subsequently sold through public auction: A. No. Poro Point Special Economic Zones and other Special Economic Zones under PEZA. Jr.A.] No. 7227. and other administrative and selling expenses. taxes and other charges. issued Revenue Regulations [Rev." The assailed portions of the RMC read: II. reconditioning/rehabilitation of the motor vehicles.5 In case the services of a professional auctioneer is employed for the public auction. or the expanded withholding tax of 20%.] No." On June 3. the winning bidder shall be deemed the importer thereof and shall be liable to pay the VAT and excise tax. xxx 3. 16-994 was issued "Amending [RR] No.A. the additional VAT and excise tax shall be paid by winning bidder resulting from the difference between the winning bid price and the value used by the consignee-auctioneer in payment of such taxes. Parayno. and other related Rules and Regulations to Implement the Provisions of paragraphs (b) and (c) of Section 12 of [R. Clark. 2. John Hay." On September 27. 1995. B. or that the same are intended for public auction within the freeport zones. shall be withheld by the consignee-auctioneer from the amount of consideration to be paid to the professional auctioneer and shall be remitted accordingly to the BIR. However. taxes and other charges shall be paid to the BOC before release thereof from its custody. Tax treatments on the transactions involved in the importation of motor vehicles through the SSEFZ and other legislated Freeport zones and subsequent sale thereof through public auction. if applicable.

1997 and September 27. Regional Director and Revenue District Officer submitted their joint "Opposition (To The Prayer for Preliminary Injunction and/or Temporary Restraining Order by Petitioners). 2. 2003. Let the writ issue upon the filing and approval by the court of an injunction bond in the amount of Php 1 Million.the regular courts of justice established under Batas Pambansa Blg. (AIAI) and Subic Bay Motors Corporation are corporations organized under Philippine laws with principal place of business within the SSEZ.13 Meantime. Camacho filed a Motion to Dismiss the case against him. 2004. Particularly. and Unconstitutional [RMC] No. 129 or the Court of Tax Appeals – is the proper court of jurisdiction to hear a case to declare Revenue Memorandum Circulars unconstitutional and against an existing law where the challenge does not involve the rate and figures of the imposed taxes.22 Petitioners contend that there were fatal procedural defects in respondents’ petition for certiorari with the CA. which allegedly contain some identical provisions as the questioned RMCs. Inc. They point out that the CA resolved the issue of jurisdiction without waiting for the lower court to first rule on the issue. Duncano sent a Preliminary Assessment Notice 18 to the President of AIAI.16 Consequently. 32-2003. petitioners filed their "First Amended Complaint to Declare Void. (1. BIR Regional Director and BIR Revenue District Officer also filed their joint Motion to Dismiss on the grounds that "[t]he trial court has no jurisdiction over the subject matter of the complaint" and "[a] condition precedent. Also. Rule 15 of the Rules of Court. the following tax treatment shall be observed: 1. Tambis sent a 10-Day Preliminary Notice 14 to the president of petitioner AIAI for unpaid VAT on auction sales conducted on June 6-8. whether the writ of preliminary injunction granted by the Court at Olongapo City was properly and legally issued. Nos. When public auction or negotiated sale is conducted within or outside of the freeport zone. 2003. 1999. SO ORDERED. the BIR Revenue District Officer of the SSEZ. Branch 74. the trial court issued its order15 granting the application for a writ of preliminary injunction.17 Meantime. The complaint was docketed as Civil Case No."8 Respondents CIR. the BIR Regional Director of Region III. petitioners’ application for the issuance of a writ of preliminary injunction is hereby GRANTED. has not been complied with. the respondents filed their Opposition. 1-95. The dispositive portion of the order states: WHEREFORE. praying for the nullification of RMC No. August 7. they question paragraphs II(A)(1) and (3). II(B)(1. said Civil Case No. without first filing a motion for reconsideration. BIR Revenue District Officer Rey Asterio L. Petitioners Asia International Auctioneers. Public respondent Regional Trial Court.4) and (1.2). 32-2003. Ultra Vires. 275-0-2003 and raffled to Branch 74. premises considered. Accordingly. Reg. that is.seller shall also observe the compliance requirements prescribed by the Tax Code. as per RMC No. The Office of the Solicitor General (OSG) submitted its "Comment (In Opposition to the Application for Issuance of a Writ of Preliminary Injunction). 31-2003 dated June 3. 2003 as per RMC No. They are engaged in the importation of mainly secondhand or used motor vehicles and heavy transportation or construction equipment which they sell to the public through auction. the dispositive portion of which states: WHEREFORE. respondents CIR. plus surcharge.10 Respondents CIR. this Petition for Review on Certiorari21 with an application for a temporary restraining order and a writ of preliminary injunction to enjoin respondents "from pursuing sending letters of assessments to petitioners. ANNULLED and SET ASIDE. 31-2003 and paragraphs II(A)(2) and (B) of RMC No."9 Then Secretary of Finance Jose Isidro N. [b] [W]hich Court. but without changing the cause of action in their First Amended Complaint. 32-2003. a Formal Letter of Demand19 was sent to the President of petitioner AIAI by the Officer-in-Charge of the BIR Office of the Regional Director. Thereafter. alleging that he is not a party to the suit and petitioners have no cause of action against him. 2003 and [RMC] No. Subsequently. To this. respondents did not file a motion for reconsideration of the trial court’s order granting the writ of preliminary injunction before filing the petition with the CA. and. respectively. Before a responsive pleading was filed."11 Petitioners filed their "Motion to Expunge from the Records the Respondents[’] Motion to Dismiss"12 for allegedly failing to comply with Section 4. [c] [D]ependent on an affirmative resolution of the second issue in favor of the regular courts of justice. 32-2003 dated June 5.20 Hence. On August 1. BIR Regional Director Danilo A. exhaustion of administrative remedies. 31-2003 for being unconstitutional and an ultra vires act. . The arguments are unmeritorious. the CA issued its assailed decision. necessarily. interest and compromise penalty. the petition is GRANTED. with Application for a Writ of Temporary Restraining Order and Preliminary Injunction" 6 to enjoin respondents from implementing the questioned RMCs while the case is pending. and the OSG filed with the CA a petition for certiorari under Rule 65 of the Rules of Court with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction to enjoin the trial court from exercising jurisdiction over the case. 1995. 2003. On March 31. 2003. petitioners filed their Second Amended Complaint 7 to include Rev. Excise Tax – The imposition of excise tax on public auction or negotiated sale shall be held in abeyance pending verification that the importer’s selling price used as a basis by the Bureau of Customs in computing the excise tax is correctly determined. of Olongapo City is hereby declared bereft of jurisdiction to take cognizance of Civil Case No. informing him of the VAT due from the company for the auction sales conducted on June 6-8.5) of RMC No." Petitioners raise the following issues: [a] [W]hether a petition for certiorari under Rule 65 of the New Rules is proper where the issue raised therein has not yet been resolved at the first instance by the Court where the original action was filed. 275-0-2003 is hereby DISMISSED and the assailed Order dated August 1. 12-97 and 16-99 dated January 24. SO ORDERED. Petitioners filed a complaint before the RTC of Olongapo City. 275-0-2003. Value Added Tax (VAT)/ Percentage Tax (PT) – VAT or PT shall be imposed on every public auction or negotiated sale.

the general rule of requiring a motion for reconsideration finds no application in a case where what is precisely being assailed is lack of jurisdiction of the respondent court. .] 7227" the RMCs issued by the CIR. the Supreme Court held that "[t]he questioned RMO No. filed a motion to dismiss on the ground of lack of jurisdiction. explained: We find no merit in this pretense.Jurisdiction is defined as the power and authority of a court to hear.25 There is thus no reason to preclude the CA from ruling on this issue even if allegedly. but the same was denied by petitioner CIR. penalties imposed in relation thereto. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. which imposed upon firearm holders the duty to pay an initial license fee of P15 and an annual fee of P10 for each firearm. as manager of the Philippine Rifle and Pistol Association. Blaquera31 is in point. which states: It is now settled that the filing of a motion for reconsideration is not always sine qua non before availing of the remedy of certiorari. 1125 (An Act Creating the Court of Tax Appeals).The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner. Leal.22 revolver or rifle." Rodriguez. 43-91 are actually rulings or opinions of the Commissioner implementing the Tax Code on the taxability of pawnshops. as amended. No.A. the administration of which is entrusted by law to the Bureau of Internal Revenue. The RTC denied the motion. Leal then filed a petition for prohibition with the RTC of San Mateo.29 Now.26 Hence. No.A. a duly accredited gun club. V-148 directs the officers charged with the collection of taxes and license fees to adhere strictly to the interpretation given by the defendant to the statutory provision above mentioned. No. refunds of internal revenue taxes." In reversing the CA. a decision of the Collector of Internal Revenue (now Commissioner of Internal Revenue) on the manner of enforcement of said statute. in CIR v. 84.. Rizal. Jurisdiction. 15-91 and RMC No.] No. The issuance of RMO No. try and decide a case. states: Sec. through the OSG. therefore. Petitioner filed a petition for certiorari and prohibition with the CA which dismissed the petition "for lack of basis. R. asked for a reconsideration of both RMO No. we agree with the ruling of the CA. Lending investors shall pay a tax equivalent to five (5%) per cent. fees or other charges. it is only too obvious that the nullification of General Circular No. as amended. even on appeal." the annual fee is reduced to P5 for each firearm. Subsequently. regardless of the class of firearms they have.23 The issue is so basic that it may be raised at any stage of the proceedings.34 viz: Section 4.24 In fact. as set forth in the circular. in finding this argument unmeritorious." The Court held that under R." Besides. such rulings of the CIR are appealable to the CTA." They claim that the challenge on the authority of the CIR to issue the RMCs does not fall within the jurisdiction of the Court of Tax Appeals (CTA). V-148 is merely a step preparatory to a claim for refund. the CIR issued RMC No.28 the haste with which the Solicitor General raised these issues before this Court becomes understandable. Respondent therein. the assailed revenue regulations and revenue memorandum circulars are actually rulings or opinions of the CIR on the tax treatment of motor vehicles sold at public auction within the SSEZ to implement Section 12 of R. No. 1125." the CIR issued Revenue Memorandum Order (RMO) No. plaintiff similarly contended that the action was not an appeal from a ruling of the CIR but merely an attempt to nullify General Circular No. No. seeking to prohibit petitioner CIR from implementing the revenue orders. 43-91 subjecting pawn tickets to documentary stamp tax. to the main issue: does the trial court have jurisdiction over the subject matter of this case? Petitioners contend that jurisdiction over the case at bar properly pertains to the regular courts as this is "an action to declare as unconstitutional. as amended) which states that "[d]ealers in securities shall pay a tax equivalent to six (6%) per centum of their gross income. They explain that they "do not challenge the rate. 1158 (The National Internal Revenue Code.A.27 And considering also the urgent necessity for resolving the issues raised herein. 466. courts may take cognizance of the issue even if not raised by the parties themselves. as a matter of right. hence.-. x x x (emphases supplied) We have held that RMCs are considered administrative rulings which are issued from time to time by the CIR.A. 7227 which provides that "exportation or removal of goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines. General Circular No. the CIR issued General Circular No. 15-91 imposing 5% lending investor’s tax on pawnshops based on their gross income and requiring all investigating units of the BIR to investigate and assess the lending investor’s tax due from them. Petitioners’ arguments do not sway. filed an action in the Court of First Instance (now RTC) of Manila for the nullification of the circular and the refund of P5. section 7 of which provides that the [CTA] "shall exercise exclusive appellate jurisdiction to review by appeal * * * decisions of the Collector of Internal Revenue in * * * matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue. V-148. Although the prayer for reimbursement has been eliminated from his amended complaint. as amended by R. with the exception that in case of "bona fide and active members of duly organized gun clubs and accredited by the Provost Marshal General. rather they challenge the authority of the respondent Commissioner to impose and collect the said taxes. where further delay could prejudice the interests of the government.A. 1125. structure or figures of the imposed taxes." They were issued pursuant to the power of the CIR under Section 4 of the National Internal Revenue Code. as herein provided— (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. V-148 which stated that "bona fide and active members of duly organized gun clubs and accredited by the Provost Marshal General… shall pay an initial fee of fifteen pesos and an annual fee of five pesos for each firearm held on license except caliber . 7. 43-91. it comes within the purview of [R. As such. it is plain from plaintiff’s original complaint that one of its main purposes was to secure an order for the refund of the sums collected in excess of the amount he claims to be due by way of annual fee from the gun club members. This case involves Commonwealth Act No. The same incorporates. subject to review by the Secretary of Finance. dissolving the Writ of Preliminary Injunction issued by the trial court and ordering the dismissal of the case before the trial court. Similarly. entitle the member to the reduced rates prescribed by law. In the case at bar. The licensee must be accredited by the Chief of Constabulary… [and] the firearm covered by the license of the member must be of the target model in order that he may be entitled to the reduced rates.A. owner and operator of Josefina’s Pawnshop. including ruling on the classification of articles of sales and similar purposes. As to respondents’ failure to file a motion for reconsideration. the same has not yet been resolved by the trial court. The CIR. not within the jurisdiction of the CTA.30 Rodriguez v. or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of Internal Revenue. 15-91 and RMC No. Inc." They were issued pursuant to the CIR’s power under Section 245 33 of the Tax Code "to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws.—The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal. void and against the provisions of [R. The Court. in behalf of the members who have paid under protest the regular annual fee ofP10.32 pursuant to Section 116 of Presidential Decree No." The General Circular further provided that "[m]ere membership in the gun club does not. 15-91 was an offshoot of the CIR’s finding that the pawnshop business is akin to that of "lending investors" as defined in Section 157(u) of the Tax Code. On the issue of jurisdiction. Pursuant to this. Josefina Leal. of their gross income.

or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner. SO ORDERED. concur. (emphases supplied) Petitioners point out that the CA based its decision on Section 7 of R. fees or other charges. Azcuna. refunds of internal revenue taxes. IN VIEW WHEREOF.. They argue that in the instant case. the petition is DENIED. Leonardo-de Castro. JJ. It is settled that the premature invocation of the court's intervention is fatal to one's cause of action. Sandoval-Gutierrez. there is no decision of the respondent CIR on any disputed assessment to speak of as what is being questioned is purely the authority of the CIR to impose and collect value-added and excise taxes. 36 Petitioners’ insistence for this Court to rule on the merits of the case would only prove futile.A. then such remedy must first be exhausted before the court’s power of judicial review can be sought. If a remedy within the administrative machinery can still be resorted to by giving the administrative officer every opportunity to decide on a matter that comes within his jurisdiction. Having declared the court a quo without jurisdiction over the subject matter of the instant case. Petitioners’ failure to ask the CIR for a reconsideration of the assailed revenue regulations and RMCs is another reason why the instant case should be dismissed. . Corona. penalties imposed in relation thereto. 35 The party with an administrative remedy must not only initiate the prescribed administrative procedure to obtain relief but also pursue it to its appropriate conclusion before seeking judicial intervention in order to give the administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to the court. 1125 that the CTA "shall exercise exclusive appellate jurisdiction to review by appeal…" decisions of the CIR.The power to decide disputed assessments. No. any further disquisition would beobiter dictum. subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.