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1. Philippine American Life and General Insurance v. Sec.

of Finance

Facts:

Philam Life owned a class A shares in Philam Care. The former wants to
divest itself of its interests in the health maintenance organization industry,
offered to sell its shareholdings in Philam Care through competitive bidding.
Petitioner’s Class A shares were sold based on the prevailing exchange rate
at the time of the sale, to STI Investments, Inc., who emerged as the
highest bidder.

After the sale was completed and the necessary documentary stamp and
capital gains taxes were paid, Philamlife filed an application for a certificate
authorizing registration/tax clearance with the BIR to facilitate the transfer
of the shares. It was informed that it needed to secure a BIR ruling in
connection with its application due to potential donor’s tax liability. In
compliance, it requested a ruling to confirm that the sale was not subject to
donor’s tax, pointing out, in its request, the following: that the transaction
cannot attract donor’s tax liability since there was no donative intent and,
ergo, no taxable donation, and that the shares were sold at their actual fair
market value and at arm’s length; that as long as the transaction conducted
is at arm’s length––such that a bonafide business arrangement of the
dealings is done in the ordinary course of business––a sale for less than an
adequate consideration is not subject to donor’s tax; and that donor’s tax
does not apply to sale of shares sold in an open bidding process.

However, respondent CIR denied Philamlife’s request

Sec. of Finance affirmed the ruling of the Commissioner. Petitioner appealed
to the CA where the latter dismissed the appeal for lack of jurisdiction
holding that it is the CTA that has jurisdiction.

As summary of the arguments of the parties:

1. Petitioners: The ruling of the Commissioner is subject to review by the
Secretary under Sec. 4 of the NIRC, and that of the Secretary to the
CA via Rule 43;
2. Respondents: The ruling of the Commissioner is subject to review by
the Secretary under Sec. 4 of the NIRC, and that of the Secretary to
the Office of the President before appealing to the CA via a Rule 43
petition; and
3. CA: The ruling of the Commissioner is subject to review by the CTA.

Held:

Sec. 7. Jurisdiction. - The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein
provided:

1. Decisions of the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue taxes,
fees or other charges, penalties in relation thereto, or other matters
arising under the National Internal Revenue or other laws administered
by the Bureau of Internal Revenue. (emphasis supplied)

Even though the provision suggests that it only covers rulings of the
Commissioner, We hold that it is, nonetheless, sufficient enough to include
appeals from the Secretary’s review under Sec. 4 of the NIRC.

The power of the CTA includes that of determining whether or not
there has been grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the RTC in issuing an
interlocutory order in cases falling within the exclusive appellate
jurisdiction of the tax court. It, thus, follows that the CTA, by
constitutional mandate, is vested with jurisdiction to issue writs of
certiorari in these cases.

Indeed, in order for any appellate court to effectively exercise its appellate
jurisdiction, it must have the authority to issue, among others, a writ of
certiorari. In transferring exclusive jurisdiction over appealed tax cases to
the CTA, it can reasonably be assumed that the law intended to transfer also
such power as is deemed necessary, if not indispensable, in aid of such
appellate jurisdiction. There is no perceivable reason why the transfer should
only be considered as partial, not total.

It is now within the power of the CTA, through its power of certiorari, to rule
on the validity of a particular administrative rule or regulation so long as it is
within its appellate jurisdiction. Hence, it can now rule not only on the
propriety of an assessment or tax treatment of a certain transaction,
but also on the validity of the revenue regulation or revenue
memorandum circular on which the said assessment is based.

The price difference is subject to donor’s tax

Petitioner’s substantive arguments are unavailing. The absence of donative
intent, if that be the case, does not exempt the sales of stock transaction
from donor’s tax since Sec. 100 of the NIRC categorically states that the
amount by which the fair market value of the property exceeded the value of

the consideration shall be deemed a gift. Thus, even if there is no actual
donation, the difference in price is considered a donation by fiction of law.

2. BDO v. RP

Facts:

3. CIR vs. Aichi Forging Co. of Asia, Inc.

Facts:

Respondent, a VAT registered entity filed on September 30, 2004 a claim for
refund/credit of input VAT for the period July 1, 2002 to September 30, 2002 in
the total amount of P3,891,123.82 with the petitioner (CIR), through the
Department of Finance (DOF) One-Stop Shop Inter-Agency Tax Credit and Duty
Drawback Center. On petition for review before CTA, the latter partialy granted
the petition and order the CIR to issue certificate of tax credit/refund to
respondent.

Dissatisfied, petitioner filed a Motion for Partial Reconsideration,[15] insisting that
the administrative and the judicial claims were filed beyond the two-year period to
claim a tax refund/credit provided for under Sections 112(A) and 229 of the
NIRC. He reasoned that since the year 2004 was a leap year, the filing of the
claim for tax refund/credit on September 30, 2004 was beyond the two-year
period, which expired on September 29, 2004.[16] He cited as basis Article 13 of
the Civil Code,[17] which provides that when the law speaks of a year, it is
equivalent to 365 days. In addition, petitioner argued that the simultaneous filing
of the administrative and the judicial claims contravenes Sections 112 and 229 of
the NIRC.[18] According to the petitioner, a prior filing of an administrative claim is
a condition precedent[19] before a judicial claim can be filed.

Issue:

WON respondents judicial and administrative claims for input tax refund/credit
were filed within the two-year prescriptive period provided in Sections
112(A) and 229 of the NIRC.

Held:

Unutilized input VAT must be claimed
within two years after the close of the
taxable quarter when the sales were
made

if after the 120-day period the CIR fails to act on the application for tax refund/credit. from the date of the submission of the complete documents in support of the application [for tax refund/credit]..In Commissioner of Internal Revenue v. It is clear that Sec. Inc. 2004. the two-year period to file a claim for tax refund/credit for the period July 1. the taxpayer’s recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. 2002 expired on September 30. 112 (A) of the NIRC. applies to the instant case. In view of the foregoing. In case of full or partial denial by the CIR. the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days. Hence. Mirant Pagbilao Corporation. we find that the CTA En Banc erroneously applied Sections 114(A) and 229 of the NIRC in computing the two-year prescriptive period for claiming refund/credit of unutilized input VAT. which provides that a year is equivalent to 365 days. Primetown Property Group. within which to grant or deny the claim. Applying this to the present case. Thus. However. and theAdministrative Code of 1987.[44] where we ruled that Section 112(A) of the NIRC is the applicable provision in determining the start of the two-year period for claiming a refund/credit of unutilized input VAT. Lex posteriori derogat priori.[49] we said that as between the Civil Code. To be clear. it is the latter that must prevail following the legal maxim. the two-year period should be reckoned from the close of the taxable quarter when the sales were made. respondents administrative claim was timely filed. The administrative claim was timely filed In Commissioner of Internal Revenue v. The filing of the judicial claim was premature Section 112(D) of the NIRC clearly provides that the CIR has 120 days. 2002 to September 30. which states that a year is composed of 12 calendar months. and that Sections 204(C) and 229 of the NIRC are inapplicable as both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes. and not to the other actions which refer to erroneous payment of taxes. Section 112 of the NIRC is the pertinent provision for the refund/credit of input VAT. providing a two-year prescriptive period reckoned from the close of the taxable quarter when the relevant sales or transactions were made pertaining to the creditable input VAT. .

Mindanao II alleged. CIR v. third. Mindanao II filed with the Bureau of Internal Revenue (BIR) an application for the refund or credit of accumulated unutilized creditable input taxes.9 In support of the administrative claim for refund or credit. Mindanao II Geothermal Facts: Mindanao II. that it is registered with the BIR as a value-added taxpayer10 and all its sales are zero-rated under the EPIRA law. CIR v. which states that the CIR has 120 days from the submission of complete documents in support of the application filed in accordance with Subsections (A) and (B) within which to decide on the claim.7 Mindanao II filed its Quarterly VAT Returns for the second.11 It further stated that for the second. third and fourth quarters of taxable year 2004 on the following dates:8 Date filed Quarter Taxable Year Original Amended 26 July 2004 12 July 2005 2nd 2004 22 October 2004 12 July 2005 3rd 2004 25 January 2005 12 July 2005 4th 2004 On 6 October 2005. the administrative and the judicial claims were simultaneously filed on September 30. This is apparent in the first paragraph of subsection (D) of the same provision. Obviously. 4.In this case. among others. San Roque Power Corp Facts: 5. the premature filing of respondents claim for refund/credit of input VAT before the CTA warrants a dismissal inasmuch as no jurisdiction was acquired by the CTA. partnership engaged in the business of power generation and sale of electricity to the National Power Corporation (NAPOCOR)6 and is accredited by the Department of Energy. respondent did not wait for the decision of the CIR or the lapse of the 120-day period. For this reason. 2004. In fine. we find the filing of the judicial claim with the CTA premature. The phrase within two (2) years x x x apply for the issuance of a tax credit certificate or refund refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA. and fourth quarters of .

did not file an appeal within the 30-day period.167. The input taxes had not been applied against output tax. Apparently. since the appeal to the CTA was filed only on 21 July 2006. it is only the administrative claim for refund of input value-added tax (VAT) that must be filed within the two-year prescriptive period. Held: Value-added tax. CIR filed a Motion for Partial Reconsideration.taxable year 2004. remained unresolved on 3 February 2006.84. however. the judicial claim need not fall within the two-year prescriptive period. claiming inaction on the part of the CIR and that the two-year prescriptive period was about to expire.” The phrase “within two (2) years x x x apply for the issuance of a tax credit certificate or refund” refers to applications for refund/credit filed with the Commissioner of Internal Revenue (CIR) and not to appeals made to the Court of Tax Appeals (CTA). Mindanao II believed that a judicial claim must be filed within the two-year prescriptive period provided under Section 112(A) and that such time frame was to be reckoned from the filing of its Quarterly VAT Returns for the second. third. which were directly attributable to the zero-rated sales. and fourth quarters of taxable year 2004.. however. the latter affirmed the ruling of the CTA second division. prescriptive period for judicial and administrative claims. Mindanao II.005. When is the reckoning period the 2-year prescriptive period. Issue: WON Mindanao II’s claim for refund was filed on time. refund of input value-added tax. The CTA division ruled against CIR. on 21 July 2006. Mindanao II. This is apparent in the first paragraph of subsection (D) of the same provision which states that the CIR . Under Section 112 of the National Internal Revenue Code (NIRC). Subsection (A) of the said provision states that “any VAT-registered person whose sales are zero-rated may. The administrative claim. within two years after the close of the taxable quarter when the sales were made.19 pointing out that prescription had already set in. On appeal to CTA en banc. it paid input VAT in the aggregate amount of P7. apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. filed a Petition for Review with the CTA. which was way beyond the last day to appeal – 5 March 2006. Thus.

Prior to the Atlas doctrine. Commissioner of Internal Revenue vs. G. refund of input value-added tax.has “120 days from the submission of complete documents in support of the application filed in accordance with Subsections (A) and (B)” within which to decide on the claim. prescriptive period. Mindanao II Geothermal Partnership. 2014. The Mirant ruling. Mirant Pagbilao Corporation. which refers to the period for interposing an appeal with the CTA. In this case. No.R. Section 112(D) of the NIRC speaks of two periods: the period of 120 days. The taxpayer can file the appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period. refund of input value-added tax. 2008 in the case of Commissioner of Internal Revenue vs. Mindanao II Geothermal Partnership. No. 2007 until its abandonment on September 12. thus applying Section 112(A) in computing the two-year prescriptive period in claiming refund or credit of input VAT. refund of input value-added tax. the two-year prescriptive period for claiming refund or credit of input VAT should be governed by Section 112(A) following the verba legis rule. prescriptive period. should be effective only from its promulgation on June 8. Thus. and the period of 30 days. January 15. adopted the verba legis rule. 2014. Commissioner of Internal Revenue vs. The 30 day period applies not only to instances of actual denial by the CIR of the claim for refund or tax credit. January 15. which abandoned the Atlas doctrine. prescriptive period. Value-added tax. The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the date of payment of the output VAT. which serves as a waiting period to give time for the CIR to act on the administrative claim for refund or credit. reckoning point for two-year prescriptive period. Value-added tax. Commissioner of Internal Revenue. G. The 30-day . 30- day period also applies to appeals from inaction. the claim for refund was filed on October 6. 191498. or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period Value-added tax. 191498. it is covered by the rule prior to the advent of either Atlas or Mirant. which held that claims for refund or credit of input VAT must comply with the two-year prescriptive period under Section 229.R. The doctrine in the case of Atlas Consolidated Mining and Development Corporation vs. 30- day period to appeal is mandatory and jurisdictional. exception. Therefore. the proper reckoning date as provided in Section 112(A) of the NIRC is the close of the taxable quarter when the relevant sales were made. but to cases of inaction by the CIR as well. 2005.

prescriptive periods to file VAT refund. 2003 declared that a taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of petition for review. 120+30 Day Period 1. is both mandatory and jurisdictional. Thus. 2010. However. (San Roque) B. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. (San Roque) 3. We summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code. Bureau of Internal Revenue (BIR) Ruling No. within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day period. The law states that a taxpayer affected may. appeal the decision or the unacted claim with the CTA. or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period. there is an exception to this rule. The 30-day period always applies. 2003 until its reversal by the Supreme Court on October 6. taxpayers can rely on the BIR ruling from the time of its issuance. . Taxation. The only other rule is the Atlas ruling. in cases of premature filing. 2. The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period. Two-Year Prescriptive Period 1.period to appeal to the CTA. whether there is a denial or inaction on the part of the CIR. . However. late filing is absolutely prohibited even during the time when the BIR ruling was in force. as follows: A. which applied only from 8 June 2007 to 12 September 2008. San Roque Power Corporation. December 10. The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made. It is only the administrative claim that must be filed within the two- year prescriptive period. as provided in the case of Commissioner of Internal Revenue vs. DA-489-03 dated December 10. when the 120+30 day periods were held to be mandatory and jurisdictional. (Aichi) 2.

its right to claim a refund or credit commenced on that date. The CTA found that respondent filed its final adjusted return on April 14. Facts: Respondent applied for the refund or credit of income tax respondent paid in 1997 explaining 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. Thus. (San Roque) 5. Therefore. As an exception to the general rule. Thus. DA-489-03 was in force. respondent paid its quarterly corporate income tax and remitted creditable withholding tax from real estate sales. Primetown Property Group Inc. Late filing is absolutely prohibited. DA-489-03 was still in force. respondent suffered losses that year. 3. the two-year prescriptive period under Section 229 of the NIRC for the filing of judicial claims was equivalent to 730 days. CIR vs. according to the CTA. even during the time when BIR Ruling No. (Aichi and San Roque) 4. on April 14. when BIR Ruling No. respondent was entitled to tax refund or tax credit . 1998. was filed beyond the reglementary period. premature filing is allowed only if filed between 10 December 2003 and 5 October 2010. Respondent was required to submit additional documents to support its claim. 2000. 2000. Held: . Thus. Respondent complied but its claim was not acted upon. As a general rule. the 3 0-day period to appeal is both mandatory and jurisdictional. Thus. Because the year 2000 was a leap year. it was not liable for income taxes. respondent's petition. Nevertheless. it filed a petition for review in the Court of Tax Appeals (CTA). which was filed 731 days after respondent filed its final adjusted return. Issue: How should the 2-year prescriptive period be counted. As a consequence. (San Roque) 6. 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. On December 15. while business was good during the first quarter of 1997.

under the Administrative Code of 1987. 2000) was filed on the last day of the 24th calendar month from the day respondent filed its final adjusted return. the two-year prescriptive period (reckoned from the time respondent filed its final adjusted return[34] on April 14. Chapter VIII. It. There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. accordingly. Denying that it received a Preliminary Assessment Notice (PAN) and claiming that it was not accorded due process. Chapter VIII. Under the Administrative Code of 1987. The rule is that the two-year prescriptive period is reckoned from the filing of the final adjusted return. being the more recent law. Lex posteriori derogat priori. Chapter VIII. a year is composed of 12 calendar months. The CTA-Second Division opined that [w]hile there [is] a disputable presumption that a mailed letter [is] deemed received by the addressee in the ordinary course of mail. dated January 16. 2002. Book I of the Administrative Code of 1987 deal with the same subject matter the computation of legal periods. we hold that Section 31. Book I of the Administrative Code of 1987 to this case. Metro Star Superama Inc Facts: CIR assessed respondent Metro Star Superama. Metro Star filed a petition for review with the CTA. it was filed within the reglementary period. Needless to state. Book I of the Administrative Code of 1987.[5] It also found that there was no clear showing that Metro Star actually received the alleged PAN. ruled that the Formal Letter of . 7. CIR vs. Applying Section 31. Hence. a direct denial of the receipt of mail shifts the burden upon the party favored by the presumption to prove that the mailed letter was indeed received by the addressee. Inc. governs the computation of legal periods. (Metro Star) of deficiency value-added tax and withholding tax for the taxable year 1999. For this reason. Both Article 13 of the Civil Code and Section 31. however. Under the Civil Code. 1998) We therefore hold that respondent's petition (filed on April 14. the number of days is irrelevant. a year is equivalent to 365 days whether it be a regular year or a leap year.

The facts to be proved to raise this presumption are (a) that the letter was properly addressed with postage prepaid. it is incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. What is essential to prove the fact of mailing is the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by the Petitioner or its authorized representative. The onus probandi was shifted to respondent to prove by contrary evidence that the Petitioner received the assessment in the due course of mail. should have submitted to the Court a certification issued by the Bureau of Posts and any other pertinent document which is executed with the intervention of the Bureau of Posts.Demand datedApril 3. He must be informed of the facts and the law upon which the assessment is made.R. not merely a formal. 2002. It is an elementary rule enshrined in the 1987 Constitution that no person shall be deprived of property without due process of law. To proceed heedlessly with tax collection without first establishing a valid assessment is evidently violative of the cardinal principle in administrative investigations . 2003 were void. Section 228 of the Tax Code clearly requires that the taxpayer must first be informed that he is liable for deficiency taxes through the sending of a PAN. . 12-99 tantamount to a denial of due process Held: Jurisprudence is replete with cases holding that if the taxpayer denies ever having received an assessment from the BIR. as well as the Warrant of Distraint and/or Levy dated May 12. and (b) that it was mailed. requirement.) No. It is well-settled that a void assessment bears no fruit.that taxpayers should be able to present their case and adduce supporting evidence. Respondent at the very least. as Metro Star was denied due process Issue: WON failure to strictly comply with notice requirements prescribed under Section 228 of the National Internal Revenue Code of 1997 and Revenue Regulations (R. And if said documents cannot be located. The law imposes a substantive. Indeed.

thus: xxxx Subject: LASCONA LAND CO. the said assessment notice has become final. Consequently.. INC. Lascona filed a letter protest. a taxpayer can either: . Bureau of Internal Revenue.266. please be informed that while we agree with the arguments advanced in your letter protest. but was denied by Norberto R..56.8. 8. In view of the foregoing. 1993 Deficiency Income Tax Madam. Makati City. (Lascona) informing the latter of its alleged deficiency income tax for the year 1993 in the amount of P753. 1999. Inc. Regional Director. CIR. Revenue Region No. please advise your client to pay its 1993 deficiency income tax liability in the amount of P753. we regret. executory and demandable.56. however.. Inc. Odulio. 1998. that we cannot give due course to your request to cancel or set aside the assessment notice issued to your client for the reason that the case was not elevated to the Court of Tax Appeals as mandated by the provisions of the last paragraph of Section 228 of the Tax Code. Issue: Whether the subject assessment has become final.266. Anent the 1993 tax case of subject taxpayer. CIR Facts: (CIR) issued Assessment Notice No.[12] the Court has held that in case the Commissioner failed to act on the disputed assessment within the 180-day period from date of submission of documents. Lascona Land Co. 0000047-93-407[5] against Lascona Land Co. on April 20. executory and demandable due to the failure of petitioner to file an appeal before the CTA within thirty (30) days from the lapse of the One Hundred Eighty (180)-day period pursuant to Section 228 of the NIRC Held: In RCBC v. which reads. By virtue thereof. in his Letter[6] dated March 3. Officer-in-Charge (OIC). vs.

executory and demandable.050. Allied Banking Corp vs. 2004. or (2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision these options are mutually exclusive and resort to one bars the application of the other. (1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period.76 on industry issue for the taxable year 2001. If you disagree.[6] Petitioner received the PAN onMay 18.[7] On July 16. when the law provided for the remedy to appeal the inaction of the CIR.60 and Gross Receipts Tax (GRT) in the amount of P38. the BIR wrote a Formal Letter of Demand with Assessment Notices to petitioner.296. 2004. 2004 and filed a protest against it on May 27. 9. you may appeal the final decision within thirty (30) days from receipt hereof. as in Section 228. otherwise said deficiency tax assessment shall become final.995. which partly reads as follows:[8] It is requested that the above deficiency tax be paid immediately upon receipt hereof. CIR Facts: (BIR) issued a Preliminary Assessment Notice (PAN) to petitioner Allied Banking Corporation for deficiency Documentary Stamp Tax (DST) in the amount of P12. Issue: WON the Formal Letter of Demand can be construed as a final decision of the CIR appealable to the CTA under RA 9282 Held: The case is an exception to the .595. it did not intend to limit it to a single remedy of filing of an appeal after the lapse of the 180-day prescribed period. inclusive of penalties incident to delinquency. This is our final decision based on investigation. 2004. Therefore. Petitioner received the Formal Letter of Demand with Assessment Notices on August 30.

Moreover. we cannot ignore the fact that in the Formal Letter of Demand with Assessment Notices.rule on exhaustion of administrative remedies In the instant case.e. and not the PAN. if we strictly apply the rules. Instead. the proper recourse of petitioner was to dispute the assessments by filing an administrative protest within 30 days from receipt thereof. in a clear and unequivocal language. however. i. We have time and again reminded the CIR to indicate. 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. In this case. respondent is now estopped from claiming that he did not intend the Formal Letter of Demand with Assessment Notices to be a final decision. under Section 228 of the NIRC. petitioner timely filed a protest after receiving the PAN. However. Nevertheless. Section 9 of RA 9282. Although there was no direct reference for petitioner to bring the matter directly to the CTA. did not protest the final assessment notices. reinvestigation. while the term appeal refers to the remedy available to the taxpayer before the CTA. records show that petitioner disputed the PAN but not the Formal Letter of Demand with Assessment Notices. or reconsideration. It is the Formal Letter of Demand and Assessment Notice that must be administratively protested or disputed within 30 days. Thus. respondent used the word appeal instead of protest. Pursuant to Section 228 of the NIRC. the terms protest. As aptly pointed out by petitioner. it filed a Petition for Review with the CTA. estoppel on the part of the administrative agency concerned. Petitioner. the dismissal of the Petition for Review by the CTA was proper. it cannot be denied that the word appeal under prevailing tax laws refers to the filing of a Petition for Review with the CTA.[26] Viewed in the light of the foregoing. reinvestigation and reconsideration refer to the administrative remedies a taxpayer may take before the CIR. the BIR issued a Formal Letter of Demand with Assessment Notices. In response thereto. amending .. 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. 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.

The waiver is also defective from the government side because it was signed only by a revenue district officer. The waiver is not a unilateral act by the taxpayer or the BIR. the law on prescription. 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. vs. Besides. 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. Phil. the exceptions to the law on prescription should perforce be strictly construed. not the Commissioner. Kudos Metal Corp.[27] likewise uses the term appeal when referring to the action a taxpayer must take when adversely affected by a decision. but is a bilateral agreement between two parties to extend the period to a date certain. For the purpose of safeguarding taxpayers from any unreasonable examination. Inc. 11.Section 11 of RA 1125. CIR vs. and not the respondent who caused the confusion. The waiver does not mean that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where the language of the document is equivocal. . Thus. our tax law provides a statute of limitations in the collection of taxes. should be liberally construed in order to afford such protection. being a remedial measure. or inaction of the CIR. 20-90. 10. to a certain extent. investigation or assessment. is a derogation of the taxpayers right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. CIR Facts: Held: A waiver of the statute of limitations under the NIRC. As a corollary. petitioner in appealing the Formal Letter of Demand with Assessment Notices to the CTA merely took the cue from respondent.[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. Journalists. As we see it then. ruling. as mandated by the NIRC and RMO No.

On August 25. Issue: WON the right of the government to assess respondent has prescribed. The CTA division in its resolution cancelled the assessment notices issued against respondent for having been issued beyond the prescriptive period. 2003. whichever comes later. The (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. 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. Believing that the governments right to assess taxes had prescribed. A review and audit of respondent’s records then ensued. 20-90. hence. respondent Petition for Review[7] with the CTA. Hence. which was notarized and received by the BIR Enforcement Service and by the BIR Tax Fraud Division and followed by a second Waiver of Defense of Prescription. Respondent failed to comply with these notices.Facts: Kudos Metal Corporation filed its Annual (ITR) for the taxable year 1998. Exceptions however are provided under Section 222[16] of the NIRC. Held: Yes. Pursuant to a Letter of Authority. Respondent’s accountant executed a Waiver of the Defense of Prescription. RMO 20- . the BIR issued a Subpeona Duces Tecum receipt of which was acknowledged by respondents President in a letter. the BIR issued a Preliminary Assessment Notice for the taxable year 1998 against the respondent. This was followed by a Formal Letter of Demand with Assessment Notices for taxable year 1998. an assessment notice issued after the three-year prescriptive period is no longer valid and effective. the (BIR) served upon respondent three Notices of Presentation of Records. 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. Respondent challenged the assessments by filing its Protest on Various Tax Assessments.

Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed. The 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. which indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription. the second copy for the taxpayer and the third copy for the Office accepting the waiver. The waiver must be signed by the taxpayer himself or his duly authorized representative. and executed by the taxpayer or his duly authorized representative. Consequently. duly notarized. the period to assess or collect taxes was not extended. 2001 lay down the procedure for the proper execution of the waiver. should be filled up. 4. 6. the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form. to wit: 1. the assessments were issued by the BIR beyond the three-year period and are void. before signing the waiver. such delegation should be in writing and duly notarized.90[17] issued on April 4. the original copy to be attached to the docket of the case. the waiver must be signed by any of its responsible officials. In case the authority is delegated by the taxpayer to a representative. The waiver must be in the proper form prescribed by RMO 20- 90. The phrase but not after ______ 19 ___. The date of such acceptance by the BIR should be indicated.[19] Due to the defects in the waivers. 1990 and RDAO 05-01[18] issued on August 2. The waiver should be duly notarized. In the case of a corporation. 2. The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver. . The waiver must be executed in three copies. However. 5. 3.

the (CIR) issued Letter of Authority authorizing the appropriate (BIR) officials to examine the books of account and other accounting records of respondent.[23] It should be resorted to solely as a means of preventing injustice and should not be permitted to defeat the administration of the law. the CTA rendered a Decision in favor of respondent. filed its Annual ITR for taxable year 1990. respondent received a Formal Assessment Notice. is justice according to natural law and right. It decided that the protest letters filed by the respondent cannot constitute a request for reinvestigation. Then. equity which. hence. 22 April 1994. but respondent failed to present any document. the CIRs right to collect the same has prescribed in conformity with Section 269 of the National Internal Revenue Code of 1977 . As we have often said. since more than three years had lapsed from the time the Assessment Notice was issued in 1994. Thus. or to accomplish a wrong or secure an undue advantage.[22] As such.[24] Simply put. the doctrine of estoppel is predicated on.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. broadly defined. in connection with the investigation of respondent’s 1990 income tax liability. CIR vs. On 1994. After due notice and hearing. The CTA ruled on the primary issue of prescription and found it unnecessary to decide the issues on the validity and propriety of the assessment. or to extend beyond them requirements of the transactions in which they originate. the doctrine of estoppel cannot give validity to an act that is prohibited by law or one that is against public policy. Respondent filed a formal protest letter. which the BIR must strictly follow. The BIR sent a letter to respondent requesting the latter to present for examination certain records and documents. On the following day. interest. and compromise penalty. and has its origin in. a corporation engaged in telecommunications. On 13 April 1992. Phil Global Communications Facts: Respondent. they cannot toll the running of the prescriptive period to collect the assessed deficiency income tax. Respondent filed a Petition for Review with the CTA. the doctrine of estoppel must be sparingly applied. respondent received a Preliminary Assessment Notice deficiency income tax inclusive of surcharge. More than 8 years after the assessment was presumably issued. respondent’s counsel received from the CIR a Final Decision dated 8 October 2002 denying the respondents protest against Assessment Notice.

The law prescribed a period of three years from the date the return was actually filed or from the last date prescribed by law for the filing of such return. If the BIR issued this assessment within the three-year period or the ten- year period. as there was no Warrant of Distraint and/or Levy served on the respondents nor any judicial proceedings initiated by the BIR. the law increased the prescriptive period to assess or to begin a court proceeding for the collection without an assessment to ten years when a false or fraudulent return was filed with the intent of evading the tax or when no return was filed at all. A re-evaluation of existing records which results from a request for reconsideration does not toll the running of the prescription period for the collection of an assessed tax. Held: Yes. mailed or sent by the BIR The assessment. was presumably issued on 14 April 1994 since the respondent did not dispute the CIRs claim. the law provided another three years after the assessment for the collection of the tax due thereon through the administrative process of distraint and/or levy or through judicial proceedings. whichever was applicable. the BIR had until 13 April 1997. [14] In such cases.However.Issue: WON CIR’s right to collect respondent’s alleged deficiency income tax is barred by prescription under Section 269(c) of the Tax Code of 1977. the earliest attempt of the BIR to collect the tax due based on this assessment was when it filed its Answer in CTA Case No. .[15] The three-year period for collection of the assessed tax began to run on the date the assessment notice had been released. Request for Reconsideration and Request for Reinvestigation Distinguished The main difference between these two types of protests lies in the records or evidence to be examined by internal revenue officers. the ten-year period began to run only from the date of discovery by the BIR of the falsity. whichever came later. the CIR is now prescribed from collecting the assessed tax. within which the BIR may assess a national internal revenue tax. in this case. which was several years beyond the three-year prescriptive period. 6568 on 9 January 2003. The Court provided a clear-cut rationale in the case of Bank of the Philippine Islands v. Therefore. Section 271 distinctly limits the suspension of the running of the statute of limitations to instances when reinvestigation is requested by a taxpayer and is granted by the CIR. whether these are existing records or newly discovered or additional evidence.[13] However. Thus. fraud or omission.

and when added to the cost of the goods sold to the buyer. this justifies why the former can suspend the running of the statute of limitations on collection of the assessed tax. The excise tax on petroleum products is the direct liability of the manufacturer/producer. Silkair filed with the (BIR) a written application for the refund of excise taxes it claimed to have paid on its purchases of jet fuel from Petron Corporation from January to June 2000. In the present case. 2001. will take more time than a reconsideration of a tax assessment.Commissioner of Internal Revenue[22] explaining why a request for reinvestigation. Silkair vs. is an online international air carrier operating the Singapore-Cebu-Davao-Singapore and vice versa routes. The CIRs allegation that there was a request for reinvestigation is inconceivable since respondent consistently and categorically refused to submit new evidence and cooperate in any reinvestigation proceedings. a reinvestigation. CTA on its answer claimed that Petitioner failed to prove that the sale of the petroleum products was directly made from a domestic oil company to the international carrier.[ As the BIR had not yet acted on the application as of December 26. On December 19. a corporation organized under the laws of Singapore which has a Philippine representative office. Silkair filed a Petition for Review before the CTA. CTA denied Silkair’s claim holding that since the excise tax was imposed upon Petron Corporation as the manufacturer of petroleum products. 2001. the separate letters of protest dated 6 May 1994 and 23 May 1994 are requests for reconsideration. while the latter cannot. which will be limited to the evidence already at hand. it is no longer a tax but part of the price which the buyer has to pay to obtain the article. interrupts the running of the statute of limitations on the collection of the assessed tax: Undoubtedly. CIR Facts: Silkair. . any claim for refund of the subject excise taxes should be filed by Petron Corporation as the taxpayer contemplated under the law. which entails the reception and evaluation of additional evidence. and not a request for reconsideration.

without a clear showing of legislative intent.. But far from providing PLDT comfort. the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production. it must not be enlarged by construction. Macaraig. an indirect tax is the statutory taxpayer. The exemption granted under Section 135 (b) of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and Singapore cannot. or seek a refund of. Even if Petron Corporation passed on to Silkair the burden of the tax. Jr. In Commissioner of Internal Revenue v. Statutes granting tax exemptions must be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Philippine Long Distance Telephone Company. Petron Corporation.Issue: WON Silkair may claim refund for the excise taxes it paid which was passed on to it by Petron. [43] and if an exemption is found to exist. Thus. unless the exempting statute. Macaraig. be construed as including indirect taxes. PAL vs. is the statutory taxpayer which is entitled to claim a refund based on Section 135 of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and Singapore. is so couched as to include indirect tax from the exemption. the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another. Held: No. CIR Facts: . not Silkair. Jr. the correct lesson of Maceda being that an exemption from all taxes excludes indirect taxes. viz: It may be so that in Maceda vs. like NPCs charter. Maceda in fact supports the case of herein petitioner. Section 130 (A) (2) of the NIRC provides that [u]nless otherwise specifically allowed. the Court held that an exemption from all taxes granted to the National Power Corporation (NPC) under its charter includes both direct and indirect taxes. Since excise tax is an indirect tax the proper party to question..[41] this Court clarified the ruling in Maceda v. the additional amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a purchaser.

denied PAL’s petition because it is not the statutory taxpayer that may seek refund of the excise taxes it paid. Held: Yes. the latter must be allowed to claim a tax refund even it if it is not considered as the statutory taxpayer under the law. an exemption from both direct and indirect taxes. however. PAL received from Caltex an Aviation Billing Invoice reflecting therein the related excise taxes on PAL’s purchased aviation fuel. Caltex paid the excise tax. and (b) things imported. Under Section 129 of NIRC excise taxes are imposed on two (2) kinds of goods. not the party who merely bears its economic burden. Caltex sold to PAL a fuel for the latter’s domestic operations. including those which are passed on to it by the seller and/or importer thereof. Due to CIR’s inaction. However. In which case. Hence. . PAL filed a petition for review with the CTA on July 25. 2006. fuel and oil. the instant petition. CTA. PAL sent a letter-request to CIR seeking for a refund of the excise taxes passed on to it by Caltex claiming that under PD 1590 it conferred upon it certain tax exemption privileges on its purchase and/or importation of aviation gas. this rule will not apply to instances where the law clearly grants the party to which economic burden of the tax is shifted.This is a petition made by PAL on the order denying its claim for refund of the excise taxes imposed on its purchase of petroleum products from Caltex Phils. Issue: WON PAL has legal personality to file a claim for refund of the excise taxes passed on to it by Caltex. namely: (a) goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition. it a general rule that it is the statutory taxpayer which has the legal personality to file a claim for refund. Thus.

Evidently. and is entitled to receive income from PMC-Phil. it is observed that the propriety of a tax refund claim is hinged on the kind of exemption which forms its basis. in any way. PAL’s franchise grants it an exemption from both direct and indirect taxes on its purchase of petroleum products. then the statutory taxpayer is regarded as the proper party to file the refund claim. as PMC-U.. the court disagrees holding that the tax exemption withdrawn by virtue of LOI 1483 refers only to PAL’s tax exemptions on passed on excise tax costs due from the seller. From 1974-77.S. 1977 PMC-Phil..USA.A. Therefore. is the sole shareholder or stockholder of PMC Phil. tasking the amount of excise taxes it paid or would be liable to pay to the government on to the purchase price. the said petroleum products are in the nature of things imported and thus beyond the coverage of LOI 1483. In addition. Procter and Gamble (P&G) Phil.A. PMC-Phil paid its income tax and remitted dividends to PMC- USA. On the claim by CIR that the tax exemption of PAL has been withdrawn by LOI 1483. On the other hand. notwithstanding the fact that it is not the statutory taxpayer as contemplated by law. a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. & CTA Facts: PMC-Phil is a subsidiary company of PMC.With the foregoing. As such PMC-U. invoking the tax-sparing credit provision in the . Manufacturing Corp. in the form of dividends. if not rents or royalties. If the law confers an exemption from both direct or indirect taxes. Considering PAL’s tax exemption privileges on imported goods. manufacturer/producer of locally manufactured/produces goods for domestic sale and does not. In this case.A. The records disclose that Caltex imported aviation fuel from abroad and merely re-sold the same to PAL.S. PAL is allowed to claim a tax refund on the excise taxes imposed and due thereon. In July. PAL is endowed with the legal standing to file the subject tax refund claim. if the exemption conferred only applies to direct taxes. CIR v. owns wholly or by 100% the voting stock of PMC Phil.S. pertain to any of PAL’s tax privileges concerning imported goods. the former has a legal personality separate and distinct from PMC-U.

S. It is wholly-owned subsidiary of the Glaro S. Furthermore. But due to inaction of the latter.A. Ltd.S. which grants the prayer of the PMC Phil for the refund of the amount representing the overpaid withholding tax at source. (2) to present the income tax return of its mother company for 1975 when the dividends were received. the private respondent failed: (1) to show the actual amount credited by the U.A. on the dividends received from private respondent. CIR v. allows as tax credit the "deemed paid" 20% Philippine Tax on such dividends Held: To Our mind there is nothing in the aforecited provision that would justify tax return of the disputed 15% to the private respondent. S. Wander filed its withholding tax return for the second quarter and remitted to its parent company dividends on which 35% withholding tax thereof was withheld and paid to the BIR. Thereafter. is the proper party to claim the refund (2) Whether or not the U. PMC Phil filed a petition before the CTA. with respect to the dividend taxes paid by PMC-U.A. Facts: Wander is a domestic corporation organized under Philippine laws. Wander Phils. a Swiss corporation not engaged in trade or business in the Philippines. Wander filed with the Appellate Division of the Internal Revenue a claim for refund and/or tax credit contending that it is liable only to 15% withholding . the private respondent failed to meet certain conditions necessary in order that the dividends received by the non- resident parent company in the United States may be subject to the preferential 15% tax instead of 35%. government credited the 20% tax deemed paid in the Philippines. Hence. this instant petition. and (3) to submit any duly authenticated document showing that the U. as ably argued by the petitioner. filed its claim to the CIR. government against the income tax due from PMC-U.S..tax code as the withholding agent of the Philippine government. Issue: (1) Whether or not PMC-Phil. Among other things.S.

Issue/Ruling: (1) Whether or not Wander is the proper party to claim the refund. (2) Whether or not Switzerland allows as tax credit the "deemed paid" 20% Philippine Tax on such dividends. 369 and 778. subject to the condition that the country in which the non-resident foreign corporation is domiciled shall allow a credit against the tax due from the non- resident foreign corporation taxes deemed to have been paid in the Philippines equivalent to 20% which represents the difference between the regular tax (35%) on corporations and the tax (15%) dividends. nevertheless. the latter ruled against CIR and ordered the latter to refund Wander. While it may be true that claims for refund are construed strictly against the claimant. and not on the basis of 35% which was withheld and paid to and collected by the government. On appeal to CTA. Accordingly. the tax shall be 15% of the dividends received. and Yes. CIR v. the fact that Switzerland did not impose any tax or the dividends received by Glaro from the Philippines should be considered as a full satisfaction of the given condition. Pascor Realty Facts: A letter of authority was issued to authorizing the revenue officer to examine the books of account and other accounting records of Pascor Realty Dev’t . as amended by Presidential Decree Nos. NLRC). In the instant case. plus penalties consisting of surcharge and interest (Section 54. Wander is the proper entity who should for the refund or credit of overpaid withholding tax on dividends paid or remitted by Glaro.tax in accordance with Section 24 (b) (1) of the Tax Code. Wander may be assessed for deficiency withholding tax at source. as the Philippine counterpart. Wander claims that full credit is granted and not merely credit equivalent to 20%. The dividends received from a domestic corporation liable to tax. Switzerland did not impose any tax on the dividends received by Glaro. Therefore.

Private respondents PRDC. True. the Joint Affidavit of Revenue Examiners Lagmay and Savellano attached thereto. But not all documents coming from the BIR containing a computation of the tax liability can be deemed assessments. as pointed out by the private respondents. CTA denied the MtD holding that the criminal case filed is already 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. 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. Hence. No. the instant petition. and the period covered. and must demand payment of the taxes described . the NIRC defines the specific functions and effects of an assessment. as there was no formal assessment issued against the petitioners. and there being a denial of their letter disputing such assessment. To start with. this assessment having been disputed by petitioners. Instead of issuing an assessment CIR filed a criminal complaint before the DOJ against the PRDC alleging evasion of taxes. contains the details of the assessment like the kind and amount of tax due. Private respondents then elevated the Decision of the CIR to the CTA. The complaint. filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability. this Court unquestionably acquired jurisdiction over the instant petition for review. CIR filed a Motion to Dismiss the petition on the ground that the CTA has no jurisdiction over the subject matter of the petition. Issue/Ruling: (1) Whether or not the criminal complaint for tax evasion can be construed as an assessment. more particularly. an assessment informs the taxpayer that he or she has tax liabilities. Neither the NIRC nor the revenue regulations governing the protest of assessments[11] provide a specific definition or form of an assessment. The said examination resulted in a recommendation for the issuance of an assessment. However. an assessment must be sent to and received by a taxpayer.and Corp. Therefore.

Worse. in such tax evasion cases. (2) Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted. Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. Thereafter. by practice. The issuance of an assessment must be distinguished from the filing of a complaint. It did not state a demand or a period for payment. the NIRC imposes a 25 percent penalty. It should also be stressed that the said document is a notice duly sent to the taxpayer. The criminal charge is filed directly with the DOJ. mails or sends such notice to the taxpayer. This is incorrect. in addition to the tax due. 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. a pre-assessment notice sent to the taxpayer. the criminal charge need not go through all these. In the present case. the revenue officer’s Affidavit merely contained a computation of respondent’s tax liability. proceedings in court may be commenced without an assessment. No. it was addressed to the justice secretary. there is. In contrast. Indeed. If the commissioner is unsatisfied. in case the taxpayer fails to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. Furthermore. 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. the taxpayer is notified that a criminal case had been . Thus. discretion on whether to issue an assessment or to file a criminal case against the taxpayer or to do both. an assessment is deemed made only when the collector of internal revenue releases. an interest of 20 percent per annum. 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. therein within a specific period. Before an assessment is issued. or such higher rate as may be prescribed by rules and regulations. not to the taxpayers. Likewise. is to be collected from the date prescribed for its payment until the full payment. This was because the CIR had.

Subsequently.[6] and for violation of Section 253[7]. de los Reyes. Lucas G. Lucas G. Lucas Adamson vs. Adamson and Sara S. Adamson and Sara S. (AAI) to APAC Holding Limited (APAC). Inc. Adamson. and pendency of their letter-request for re-investigation with the Commissioner Issue: WON Commissioners recommendation letter can be considered as a formal assessment of private respondent’s tax liability. Therese June D. Therese June D. as penalized under Section 255. . Commissioner filed with the DOJ an Affidavit of Complaint against AMC. Adamson. not that the commissioner has issued an assessment.[8] AMC. The notice contained a schedule for preliminary conference. Therese June D. pendency of a civil case with the Supreme Court. but to penalize the taxpayer for violation of the Tax Code. filed against him. de los Reyes for violation of Sections 45 (a) and (d)[3]. Lucas G. and 110[4]. CA Facts: Lucas Adamson and AMC sold a common shares of stock in Adamson and Adamson. Adamson. Then the same transaction was entered and CGT is also paid. informing them of deficiencies on their payment of capital gains tax and Value Added Tax (VAT). CIR issued a Notice of Taxpayer to AMC. Thereafter. Adamson and Sara S. It must be stressed that a criminal complaint is instituted not to demand payment. in relation to Section 100[5]. in relation to Section 252 (b) and (d) of the National Internal Revenue Code (NIRC). it paid a capital gains tax for the transaction. de los Reyes filed with the DOJ a motion to suspend proceedings on the ground of prejudicial question.

WON the filing of the criminal complaints against the private respondents by the DOJ is premature for lack of a formal assessment. and 110. in relation to Section 252 9(b) and (d) of the Tax Code. Held: In the context in which it is used in the NIRC. a proceeding in court after the collection of such tax may be begun without assessment. the said recommendation letter served merely as the prima facie basis for filing criminal information that the taxpayers had violated Section 45 (a) and (d). It was not addressed to the taxpayers. 3. 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 . 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. When fraudulent tax returns are involved as in the cases at bar. and paid the taxes they have declared due therefrom. There was no demand made on the taxpayers to pay the tax liability. Upon investigation of the examiners of the BIR. In fine. Even a cursory perusal of the said letter would reveal three key points: 1. The law is clear. in relation to Section 100. The letter was never mailed or sent to the taxpayers by the Commissioner. and for violation of Section 253. as penalized under Section 255. nor a period for payment set therein. Here. 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 examiners findings is not an assessment since it is yet indefinite. 2. the private respondents had already filed the capital gains tax return and the VAT returns.[23] We rule that the recommendation letter of the Commissioner cannot be considered a formal assessment.

Considering that the complaint and its annexes all showed that the suit is a simple civil action for collection and not a tax evasion case. Camus Engineering Corporation (LMCEC) for the taxable years 1997. The audit and investigation against LMCEC was precipitated by the information provided by an informer that LMCEC had substantial underdeclared income for the said period. a criminal complaint was instituted by the Bureau of Internal Revenue (BIR) against LMCEC. M. 1998 and 1999. Gonzales Facts: Pursuant to letter of authority CIR conducted a fraud investigation for all internal revenue taxes to ascertain/determine the tax liabilities of respondent L. assessment notices together with a formal letter of demand were sent to LMCEC through personal service. In this seminal case. the gross disparity in the taxes due and the amounts actually declared by the private respondents constitutes badges of fraud. They also assail as invalid the assessment notices which bear no serial numbers and should be shown to have been validly served by an Affidavit of Constructive Service executed and sworn to by the revenue officers who served the same. . Since the company and its representatives refused to receive the said notices and demand letter. Joint affidavit of the matter of tax evasion was filed to the DOJ. first to APAC and then to APAC Philippines.shares. Revenue Regulations (RR) No. In view of the above findings. For failure to comply with the subpoena duces tecum issued in connection with the tax fraud investigation. Camus and Mendoza filed a Joint Counter-Affidavit contending that LMCEC cannot be held liable whatsoever for the alleged tax deficiency which had become due and demandable. the Department of Justice (DOJ) is not the proper forum for BIRs complaint. Thus. this Court ruled that there was no need for precise computation and formal assessment in order for criminal complaints to be filed against him. The examiners also found that the VAT had not been paid for VAT-liable sale of services for the third and fourth quarters of 1990. Arguably. 12-99. Limited. CIR v. the revenue officers resorted to constructive service in accordance with Section 3. Cusi[25] is evident to the cases at bar. the applicability of Ungab v.

A notice of assessment is: [A] declaration of deficiency taxes issued to a [t]axpayer who fails to respond to a Pre-Assessment Notice (PAN) within the prescribed period of time. As we held in Ungab v. No. if any had been issued.S. respectively. Held: Yes. or whose reply to the PAN was found to be without merit. For the crime of tax evasion in particular. No. The Notice of Assessment shall inform the [t]axpayer of this fact.S.[41] [t]he crime is complete when the [taxpayer] has x x x knowingly and willfully filed [a] fraudulent [return] with intent to evade and defeat x x x the tax. is irrelevant. the law. Jr. Cusi. 00-956 is not determinative of the issue as to whether probable cause exists to charge the private respondents with the crimes of attempt to evade or defeat tax and willful failure to supply correct and accurate information and pay tax defined and penalized under Sections 254 and 255. 1998 and 1999. No. 00-956 involves a separate offense and hence litis pendentia is not present considering that the outcome of I.[44] .Issue: WON LMCEC and its corporate officers may be prosecuted for violation of Sections 254 (Attempt to Evade or Defeat Tax) and 255 (Willful Failure to Supply Correct and Accurate Information and Pay Tax). The formal letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state the fact. respondent Secretary erred in holding that petitioner committed forum shopping when it filed the present criminal complaint during the pendency of its appeal from the City Prosecutors dismissal of I. compliance by the taxpayer with such subpoena.S. It is clear that I. 00-956 involving the act of disobedience to the summons in the course of the preliminary investigation on LMCECs correct tax liabilities for taxable years 1997. otherwise the formal letter of demand and the notice of assessment shall be void. and that the report of investigation submitted by the Revenue Officer conducting the audit shall be given due course. Thus. rules and regulations or jurisprudence on which the assessment is based..

As it is. . the law. rules and regulations or jurisprudence on which the assessment is based. the formality of a control number in the assessment notice is not a requirement for its validity but rather the contents thereof which should inform the taxpayer of the declaration of deficiency tax against said taxpayer. Both the formal letter of demand and the notice of assessment shall be void if the former failed to state the fact. which is a mandatory requirement under Section 228 of the NIRC.