Bank of the Philippine Islands (BPI) v. Commissioner of Internal Revenue (CIR) Jan. 13, 2003 of the Aug.

Jan. 13, 2003 of the Aug. 9, 2002 Decision that the period to collect
G.R. No.174942 / MAR 7, 2008 / TINGA, J./TAX2 - TAX REMEDIES/A.SIETEREALES commenced to run again.
NATURE Petition for Review on Certiorari
PETITIONERS Bank of the Philippine Islands (BPI) ISSUES & RATIO.
RESPONDENTS Commissioner of Internal Revenue 1. W/N the collection of deficiency DST is barred by prescription. – YES.
The statute of limitations on assessment and collection of national internal revenue taxes was
SUMMARY. One paragraph, five to six sentences as much as possible. Make sure that what you shortened from 5 years to 3 years by B.P. 700. Thus, the CIR has 3 years from the date of
write is reciter-ready. actual filing of the tax return to assess a national internal revenue tax or to commence court
DOCTRINE. One paragraph, five to six sentences as much as possible. As much as possible proceedings for the collection thereof without an assessment.
please copy what the Court exactly said.
When the validly issues an assessment within the 3-year period, it has another 3 years within
FACTS. which to collect the tax due by distraint, levy, or court proceeding. The assessment of the tax
• BPI, the surviving bank after its merger with Far East Bank and Trust Company. is deemed made and the 3-year period for collection of the assessed tax begins to run on the
• CIR, thru then Revenue Service Chief Cesar M. Valdez, issued to BPI a pre-assessment notice date the assessment notice had been released, mailed, or sent to the tax payer.
(PAN) dated Nov. 26, 1986.
• BPI, in a letter dated Nov. 29, 1986, requested for the details of the amounts alleged in the As applied to the present case, the CIR had 3 years from the time he issued assessment
1982-1986 deficiency taxes mentioned in the PAN. notices to BPI on April 7, 1989 or until April 6, 1992 within which to collect the deficiency
• On April 7, 1989, CIR issued to BPI assessment/demand notices for deficiency withholding DST. However, it was only on Aug. 9, 2002 that the CIR ordered BPI to pay the deficiency.
tax at source and Documentary Stamp Tax (DST) involving the amounts of P190,752,860.82
and P24, 587, 174.63, respectively In order to suspend the running of prescriptive periods for assessment and collection, the
• On April 20, 1989, BPI field a protest on the demand/assessment notices. request for reinvestigation must be granted by the CIR. The burden of proof that the request
o On May 8, 1989, BPI filed a supplemental protest for reinvestigation had been actually granted shall be on the CIR. Such grant may be
• On March 12, 1993, BPI requested for an opportunity to present or submit additional expressed in its communications with the taxpayer or implied from the action of the CIR or
documentation on the Swap Transactions with the then Central Back. his authorized representative in response to the request for reinvestigation. There is nothing
o BPI submitted to the BIR, Swap Contracts with the Central Bank. in the records of this case which indicates, expressly or impliedly, that the CIR had granted
• BPI executed several Waivers of the Statutes of Limitations, the last of which was effective the request filed by BPI.
until Dec. 31, 1994.
• On Aug. 9, 2002, CIR issued a final decision on BPI’s protest ordering the withdrawal and
cancellation of the deficiency withholding tax assessment and considered the same as DECISION.
closed and terminated. Wherefore, the petition is GRANTED. CTA Decision is REVERSED and SET ASIDE.
o On the other hand, the deficiency DST assessment was reiterated and BPI was
ordered to pay the amount within 30 days from receipt order.
• BPI received a copy of the decision on Jan. 15, 2003.
• On Jan. 24, 2003, BPI filed a Petition for Review before the Court.
o The Court denied the petition.
• BPI filed a Motion for Reconsideration, which was denied.
• BPI filed with the Court En Banc a Motion for Extension of Time to File Petition for Review
praying for an extension of 15 days.
o Petition was granted.
• BPI then filed the instant Petition for Review
o BPI argues that the government’s right to collect the DST had already prescribed
because the CIR failed to issue any reply granting BPI’s request for
reinvestigation manifested in the protest letters. It was only through the Aug. 9,
2002 Decision ordering BPI to pay deficiency DST, or after the lapse of 13 years
that the CIR acted on the request.
o Office of the Solicitor General (OSG) filed its Comment and asserted that the
prescriptive period was tolled by the protest letters filed by BPI which were
granted and acted upon by the CIR. Thus, it was only upon BPI’s receipt of on

 CIR vs. Primetown Property Group
G.R. No. / AUG 26, 1992 / MALCOLM, J./SUBJECT-TOPIC/JCruz • EO 292 or the Administrative Code of 1987 was enacted. Section 31, Chapter VIII,
NATURE Petition for review
PETITIONERS COMMISSIONER OF INTERNAL REVENUE and ARTURO V. PARCERO in
Book I thereof provides:
his official capacity as Revenue District Officer of Revenue District No. 049 (Makati),
RESPONDENTS PRIMETOWN PROPERTY
“Sec. 31. Legal Periods. Year shall be understood to be twelve calendar
GROUP, INC.,.
months; month of thirty days, unless it refers to a specific calendar month in
which case it shall be computed according to the number of days the
DOCTRINE. specific month contains; day, to a day of twenty-four hours and; night from
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative sunrise to sunset. (emphasis supplied)”
Code of 1987 deal with the same subject matter the computation of legal periods. Under the
Civil Code, a year is equivalent to 365 days whether it be a regular year or a leap year. Under • A calendar month is a month designated in the calendar without regard to the
the Administrative Code of 1987, however, a year is composed of 12 calendar months. number of days it may contain. It is the period of time running from the beginning of
Needless to state, under the Administrative Code of 1987, the number of days is irrelevant. a certain numbered day up to, but not including, the corresponding numbered day of
the next month, and if there is not a sufficient number of days in the next month, then
FACTS. up to and including the last day of that month.
• Primetown Property Group, Inc., applied for the refund or credit of income tax respondent
paid in 1997. • To illustrate, one calendar month from December 31, 2007 will be from January 1,
• During the first quarter of 1997, respondent suffered losses amounting to P71,879,228 2008 to January 31, 2008; one calendar month from January 31, 2008 will be from
that year. February 1, 2008 until February 29, 2008.
• Nevertheless, respondent paid its quarterly corporate income tax and remitted creditable
withholding tax from real estate sales in the total amount of P26,318,398.32. Therefore, • Under the Administrative Code of 1987, a year is composed of 12 calendar months.
respondent was entitled to tax refund or tax credit. Needless to state, under the Administrative Code of 1987, the number of days is
• On May 13, 1999, revenue officer Elizabeth Y. Santos required respondent to submit irrelevant.
additional documents to support its claim. Respondent complied but its claim was not
acted upon. • We therefore hold that respondent's petition (filed on April 14, 2000) was filed on the
• On April 14, 2000, it filed a petition for review in the Court of Tax Appeals (CTA). last day of the 24th calendar month from the day respondent filed its final adjusted
• CTA: Dismissed the petition as it was filed beyond the two-year prescriptive period for return. Hence, it was filed within the reglementary period.
filing a judicial claim for tax refund or tax credit.
• CTA found that respondent filed its final adjusted return on April 14, 1998. Thus, its right
to claim a refund or credit commenced on that date.
• The two-year prescriptive period under S229 of the NIRC for the filing of judicial claims
was equivalent to 730 days. Because the year 2000 was a leap year, respondent's petition,
which was filed 731 days after respondent filed its final adjusted return, was filed beyond
the reglementary period. Hence denied.
• CA reversed and set aside the decision of the CTA. It ruled that Article 13 of the Civil
Code did not distinguish between a regular year and a leap year.

ISSUES & RATIO.

2. Whether the petition is barred by prescription for being filed beyond the 2 years
prescription - NO

DECISION. DENIED

 CIR vs. PHIL. GLOBAL
G.R. No. 167146/ OCT 31 2006 /Chico-Nazaro, J./Tax II – Tax Remedies/AAbalos
NATURE Petition for Review on Certiorari under R45
PETITIONERS Commissioner of Internal Revenue
RESPONDENTS Philippine Global Telecommunication
SUMMARY. PGlobal received an assessment notice for deficiency in income tax issued on April
14, 1994. PGlobal then filed letters of protest, saying such were invalid. CIR tried to collect 8
years after the assessment. Issue is WON the CIR’s right to collect has prescribed and the court
held in the affirmative. The 3-year period applies as there was a request for reconsideration
through letters of protest and not reinvestigation. Therefore the prescriptive period is NOT
tolled as reconsideration does not have the same effect as reinvestigation. BIR only had until
April 13, 1997 to collect the deficiency tax (they tried to collect on October 16, 2002).
DOCTRINE. The statute of limitations of actions for the collection of taxes is justified by the
need to protect law-abiding citizens from possible harassment.
FACTS.
• Respondent (PGLOBAL) is a corporation engaged in telecommunications. It filed its Annual
ITR for taxable year 1990 on April 15 1991.
• April 13 1992: CIR issued Letter of Authority 0002307 (LOA) which authorixed the BIR officials
to examine the books of account and other accounting records in connection with the
investigation of respondent’s 1990 income tax liability.
• April 22, 1992: BIR sent a letter to PGLOBAL requesting to present for examination certain
records and documents, but PGLOBAL failed to present any document.
• April 21, 1994: PGLOBAL received a Preliminary Assessment Notice1 for deficiency income
tax (P118, 271,672) inclusive of surcharge, interest, and compromise penalty, arising from
deductions that were disallowed for failure to pay the withholding tax and interest expenses
that were likewise disallowed. The next day, PGLOBAL received a FAN.2
• PGLOBAL filed 2 letters of protest 3 through 2 different law firms requesting for the
cancellation of the tax assessment, which they alleged was invalid for lack of factual and legal
basis.
• October 16, 20024: A final decision from the CIR was received DENYING the protest and
affirmed the assessment of the BIR. A petition for review was filed in the CTA.
• CTA: ruled on the primary issue of prescription and found it unnecessary to decide the issues
on the validity and propriety of the assessment. It decided that the protest letters filed by
PGLOBAL cannot constitute a request for reinvestigation, hence, they cannot toll the running
of the prescriptive period to collect the assessed deficiency income tax. Since 3 years have
lapsed from the decision, the CIR’s right to collect has prescribed. MR also denied.
ISSUES & RATIO.
1
Dated April 13, 1994
2
Formal Assessment notice for deficiency in income tax (118k)
3
May 6 1994 and on May 23, 1994
4
8 years after the assessment was presumably issued
Note: Focused on the main issue, but the court discussed in length many doctrines. Included in
notes what may be asked by sir.
3. WON CIR’s right to collect respondent’s alleged deficiency income tax is barred by
prescription – YES.
CIR’s right to collected the deficiency has prescribed because of the 3-year prescriptive
period.
The law prescribed a period of 3 years from the date the return was actually filed or from
the last date prescribed by law for the filing of such return, whichever came later, within which
the BIR may assess a national internal revenue tax. However, the law increased the prescriptive
period to assess or to begin a court proceeding for the collection without an assessment to 10
years when a false or fraudulent return was filed with the intent of evading the tax or when no
return was filed at all. In such cases, the 10-year period began to run only from the date of
discovery by the BIR of the falsity, fraud or omission.
The assessment, in this case, was presumably issued on 14 April 1994 since PGLOBAL did
not dispute the CIR’s claim. Therefore, the BIR had until 13 April 1997. However, as there was
no Warrant of Distraint and/or Levy served on the respondents nor any judicial proceedings
initiated by the BIR, 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. 6568 on 9 January 2003, which was
several years beyond the three-year prescriptive period. Thus, the CIR is now prescribed from
collecting the assessed tax.5
Purpose and rationale for the prescriptive period:
In the recent case Bank of the Philippine Islands v. Commissioner of Internal Revenue,
473 SCRA 205 (2005), this Court, in confirming these earlier rulings, pronounced that: Though
the statute of limitations on assessment and collection of national internal revenue taxes
benefits both the Government and the taxpayer, it principally intends to afford protection to
the taxpayer against unreasonable investigation. The indefinite extension of the period for
assessment is unreasonable because it deprives the said taxpayer of the assurance that he will
no longer be subjected to further investigation for taxes after the expiration of a reasonable
period of time.
In Commissioner of Internal Revenue v. B.F. Goodrich, this Court affirmed that the law on
prescription should be liberally construed in order to protect taxpayers and that, as a corollary,
the exceptions to the law on prescription should be strictly construed.
Instances when the running of the statute of limitations on the assessment and collection
of national internal revenue taxes could be suspended even in the absence of waiver:
Section 271 of the 1997 Tax Code:
xx when the taxpayer requests for a reinvestigation which is granted by the
Commissioner; 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 x x x
5
The three-year period for collection of the assessed tax began to run on the date the assessment
notice had been released, mailed or sent by the BIR.
 In this case, where the PGLOBAL merely filed 2 protest letters requesting for a Court did not suspend the running of the prescription period where the acts of the taxpayer did
reconsideration, and where the BIR could not have conducted a reinvestigation because no not prevent the government from collecting the tax.
new or additional evidence was submitted, the running of statute of limitations cannot be
interrupted. The tax which is the subject of the Decision issued by the CIR on 8 October 2002
affirming the Formal Assessment issued on 14 April 1994 can no longer be the subject of any
proceeding for its collection. Consequently, the right of the government to collect the alleged
deficiency tax is barred by prescription.6

DECISION.
Petition granted. CA and RTC decision reversed.

NOTES.
Revenue Regulations No. 12-85, the Procedure Governing Administrative Protests of
Assessment of the Bureau of Internal Revenue, defines the 2 types of protest:

Request for Reconsideration Request for Reinvestigation

re-evaluation of existing records; does not toll TOLLS the running of the prescription period
the running of the prescription period for the for collection of assessed tax.
collection of an assessed tax.

*Section 271 distinctly limits the suspension of the running of the statute of limitations to
instances when reinvestigation is requested by a taxpayer and is granted by the CIR.

Justification for exception

The Court, in sustaining for the first time the suspension of the running of the statute of
limitations in cases where the taxpayer requested for a reinvestigation, gave this justification: 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, for good reasons, 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.

This rationale is not applicable to the present case where the respondent did nothing to
prevent the BIR from collecting the tax. It did not present to the BIR any new evidence for its re-
evaluation. At the earliest opportunity, PGLOBAL insisted that the assessment was invalid and
made clear to the BIR its refusal to produce documents that the BIR requested. On the other
hand, the BIR also communicated to the respondent its unwavering stance that its assessment is
correct. Given that both parties were at a deadlock, the next logical step would have been for
the BIR to issue a Decision denying the respondent’s protest and to initiate proceedings for the
collection of the assessed tax and, thus, allow the respondent, should it so choose, to contest
the assessment before the CTA. Postponing the collection for eight long years could not
possibly make the taxpayer feel that the demand was not unreasonable or that no harassment
or injustice is meant by the Government. There was no legal, or even a moral, obligation
preventing the CIR from collecting the assessed tax. In a similar case, Cordero v. Gonda, the

6
See notes for difference between Request for Reconsideration and Reinvestigation

 RCBC v. CIR
G.R. No.168498 / APRIL 24, 2007 / YNARES-SANTIAGO, J./TAX REMEDIES/
NATURE: MOTION FOR RECONSIDERATION of a decision of the Supreme Court
PETITIONERS: RCBC
RESPONDENTS: CIR
SUMMARY
This case is a motion for reconsideration from the decision of the Supreme Court.
In the instant case, the Commissioner failed to act on the disputed assessment within
180 days from date of submission of documents. Thus, petitioner opted to file a petition for
review before the Court of Tax Appeals. Unfortunately, the petition for review was filed out of
time, i.e., it was filed more than 30 days after the lapse of the 180-day period. Consequently,
it was dismissed by the Court of Tax Appeals for late filing. Petitioner did not file a motion for
reconsideration or make an appeal; hence, the disputed assessment became final,
demandable and executory.
DOCTRINE.
The decisions, rulings or inaction of the Commissioner are necessary in order to vest
the Court of Tax Appeals with jurisdiction to entertain the appeal, provided it is filed within 30
days after the receipt of such decision or ruling, or within 30 days after the expiration of the
180-day period fixed by law for the Commissioner to act on the disputed assessments. This 30-
day period within which to file an appeal is jurisdictional and failure to comply therewith would
bar the appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain and
determine the correctness of the assessments. Such period is not merely directory but
mandatory and it is beyond the power of the courts to extend the same.
In case the Commissioner failed to act on the disputed assessment within the 180-
day period from date of submission of documents, a taxpayer can either: 1) file a petition for
review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period;
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. However, these options are mutually exclusive, and resort to one bars the application
of the other.
day period within which to file an appeal is jurisdictional and failure to comply therewith would
bar the appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain and
determine the correctness of the assessments. Such period is not merely directory but
mandatory and it is beyond the power of the courts to extend the same.
In case the Commissioner failed to act on the disputed assessment within the 180-day
period from date of submission of documents, a taxpayer can either: 1) file a petition for review
with the Court of Tax Appeals within 30 days after the expiration of the 180-day period; 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.
However, these options are mutually exclusive, and resort to one bars the application of the
other.
2. WON the petitioner can avail the second option after filing a petition for review before
the CTA– NO.
Based on the foregoing, petitioner can not now claim that the disputed assessment is
not yet final as it remained unacted upon by the Commissioner; that it can still await the final
decision of the Commissioner and thereafter appeal the same to the Court of Tax Appeals. This
legal maneuver cannot be countenanced. After availing the first option, i.e., filing a petition for
review which was however filed out of time, petitioner can not successfully resort to the second
option, i.e., awaiting the final decision of the Commissioner and appealing the same to the
Court of Tax Appeals, on the pretext that there is yet no final decision on the disputed
assessment because of the Commissioner’s inaction.
DECISION.
Petition denied. CTA’s decision was affirmed.
Note: The assessment involves: deficiency assessment for documentary stamp tax on
special savings accounts and gross onshore tax.

FACTS.
• RCBC received the final assessment notice on July 5, 2001. It filed a protest on July 20,
2001. As the protest was not acted upon, it filed a Petition for Review with the Court of Tax
Appeals (CTA) on April 30, 2002, or more than 30 days after the lapse of the 180-day period
reckoned from the submission of complete documents. The CTA dismissed the Petition for lack
of jurisdiction since the appeal was filed out of time.

ISSUES & RATIO.

1. WON the CTA lacks jurisdiction over the case. - YES
The decisions, rulings or inaction of the Commissioner are necessary in order to vest
the Court of Tax Appeals with jurisdiction to entertain the appeal, provided it is filed within 30
days after the receipt of such decision or ruling, or within 30 days after the expiration of the
180-day period fixed by law for the Commissioner to act on the disputed assessments. This 30-

 CIR V CITYTRUST BANKING CORPORATION
G.R. No.150812 / AUG. 22, 2006 / CORONA, J./TAX 2/ESTERA
NATURE Petition for Review on Certiorari, etc.
PETITIONERS CIR
RESPONDENTS Citytrust Banking Corporation
SUMMARY. On petition for review on certiorari before the SC, the CIR contended that Citytrust
is not entitled to the refund of Php13.3 million as alleged overpaid income taxes for 1984 and
1985. The CIR claims that the CA erred in not holding that payment by Citytrust of its deficiency
income tax was an admission of its tax liability and, thus, a bar to its entitlement to a refund of
income tax for the same taxable year. Due to the 1985 deficiency assessments, the CIR insists
that Citytrust is not entitled to any tax refund. ISSUE: Is Citytrust entitled to a tax refund despite
the 1985 deficiency tax assessments contained in Exhibit 5? In other words, should there be a
set-off or legal compensation of the taxes involved? HELD: No. In resolving this case, the CTA,
as affirmed by the SC, did not allow a set-off or legal compensation of the taxes involved. The
SC directed the CTA to conduct further proceedings for the reception of Citytrust’s evidence,
and the disposition of the present case. Thus, the evidence presented should pertain only to
the 1984 assessments which were the only assessments raised as a defense on appeal to the
CA and the SC. The assessments in Exhibit 5 of the CIR were never raised on appeal to the
higher courts. Hence, evidence related to said assessments should not be allowed. The CTA
has no jurisdiction to try an assessment case which was never appealed to it. In hearing a refund
case, the CTA cannot hear in the same case an assessment dispute even if the parties involved
are the same parties.
DOCTRINE. Because of the CTA’s recognized expertise in taxation, its findings are not
ordinarily subject to review specially where there is no showing of grave error or abuse on its
part.
FACTS.
• On May 28, 1991, CTA ordered the CIR to grant Citytrust Banking Corporation
(Citytrust) a refund in the amount of around Php13.3M, representing Citytrust’s
overpaid income taxes for 1984 and 1985.
• In its supplemental MR, the CIR alleged an additional ground: that Citytrust had
outstanding deficiency income and business tax liabilities of around Php4.5 million for
1984, thus, the claim for refund was not in order.
• CA: Affirmed the CTA’s ruling
• SC: On petition for review on certiorari to the Supreme Court (SC), however, the SC
ruled that there was an apparent contradiction between the claim for refund and the
deficiency assessments against Citytrust, and that the government could not be held
in estoppel due to the negligence of its officials or employees, especially in cases
involving taxes. For that reason, the case was remanded to the CTA for further
reception of evidence for Citytrust.
• CTA: One of the exhibits presented and offered by the CIR in the CTA hearings was a
letter dated 28 February 1995, signed by the CIR, where the CIR demanded the
following sums from Citytrust for 1984:
o deficiency income tax of around Php3.3 million
o deficiency gross receipts tax of around Php1.2 million
o deficiency fixed tax as real estate dealer of Php14,625
• Citytrust paid these deficiency tax liabilities. Thus, Citytrust considered all its
deficiency tax liabilities for 1984 fully settled.
• The CIR objected to Citytrust’s above allegation, arguing that Citytrust still had
unpaid deficiency income, business and withholding taxes for the year 1985, as
evidenced by Exhibit 5 of the CIR.
• The CTA set aside the CIR’s objections and granted the refund.
• CA affirmed the CTA’s decision
ISSUES & RATIO.
1. Whether Citytrust entitled to a tax refund despite the 1985 deficiency tax assessments
contained in Exhibit 5- NO
No. In resolving this case, the CTA, as affirmed by the SC, did not allow a set-off or legal
compensation of the taxes involved, reasoning:
In resolving this case, the CTA did not allow a set-off or legal compensation of the taxes
involved. The CTA reasoned:
Again, the BIR interposed objection to the grant of such refund. It alleged that there are
still deficiency income, business and withholding taxes proposed against petitioner for
1985. These assessments are contained in a Delinquency Verification Slip, dated June 5,
1990 , which was marked as Exh. "5" for respondent. Due to these deficiency
assessments, respondent insisted that petitioner is not entitled to any tax refund.
The CTA sets aside respondent's objection and grants to petitioner the refund of the
amount of P13,314,506.14 on several grounds.
First, respondent's position violates the order of the Supreme Court in directing the CTA
to conduct further proceedings for the reception of petitioner's evidence, and the
disposition of the present case. Although the Supreme Court did not specifically mention
what kind of petitioner's evidence should be entertained, the CTA is of the opinion that
the evidence should pertain only to the 1984 assessments which were the only
assessments raised as a defense on appeal to the Court of Appeals and the Supreme
Court. The assessments embodied in Exh."5" of respondent were never raised on appeal
to the higher courts. Hence, evidence related to said assessments should not be allowed
as this will lead to endless litigation.
Second, the CTA has no jurisdiction to try an assessment case which was never appealed
to it. With due respect to the Supreme Court's decision, it is the CTA's firm stand that in
hearing a refund case, the CTA cannot hear in the same case an assessment dispute even
if the parties involved are the same parties.
Records show that this Court made no previous direct ruling on Citytrust's alleged failure to
substantiate its claim for refund. Instead, the order of this Court addressed the apparent failure
of the Bureau of Internal Revenue, by reason of the mistake or negligence of its officials and
employees, to present the appropriate evidence to oppose respondent's claim. 17 In the earlier
case, we directed the joint resolution of the issues of tax deficiency assessment and refund due
to its particular circumstances.
The CTA complied with the Court's order to conduct further proceedings for the reception of
the CIR's evidence in CTA Case No. 4099. In the course thereof, Citytrust paid the assessed
deficiencies to remove all administrative impediments to its claim for refund. But the CIR
considered this payment as an admission of a tax liability which was inconsistent with Citytrust's
claim for refund.

There is indeed a contradiction between a claim for refund and the assessment of deficiency tax.
The CA pointed out that the case was remanded to the CTA for the reception of additional
evidence precisely to resolve the apparent contradiction.

Because of the CTA's recognized expertise in taxation, its findings are not ordinarily subject to
review specially where there is no showing of grave error or abuse on its part.

 CIR v. Acesite Hotel Corporation
G.R. No. 147295 / February 16, 2007/ VELASCO, JR., J. / TAX REMEDIES / DMendoza
NATURE Petition for Review on Certiorari under Rule 45 of the Rules of Court
PETITIONERS Commissioner of Internal Revenue
RESPONDENTS Acesite Hotel Corporation
SUMMARY. One paragraph, five to six sentences as much as possible. Make sure that what you
right is reciter-ready.
DOCTRINE. One paragraph, five to six sentences as much as possible. As much as possible
please copy what the Court exactly said.
FACTS.
• Acesite is the owner and operator of the Holiday Inn Manila Pavilion
Hotel along United Nations Avenue in Manila.
• It leases 6,768.53 square meters of the hotels premises to the
Philippine Amusement and Gaming Corporation [PAGCOR] for casino
operations.
• It also caters food and beverages to PAGCORs casino patrons through
the hotels restaurant outlets.
• For the period January (sic) 96 to April 1997, Acesite incurred VAT
amounting to P30,152,892.02 from its rental income and sale of food
and beverages to PAGCOR during said period.
• 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.
• Thus, PAGCOR paid the amount due to Acesite minus the
P30,152,892.02 VAT while the latter paid the VAT to the Commissioner
of Internal Revenue [CIR] as it feared the legal consequences of non-
payment of the tax.
• However, 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.
• On 21 May 1998, Acesite filed an administrative claim for refund with
the CIR but the latter failed to resolve the same.
• Thus on 29 May 1998, Acesite filed a petition with the Court of Tax
Appeals [CTA].
• CTA:
o 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, a tax exempt entity by virtue of
a special law. Accordingly, the amounts representing the
10% EVAT on its sales of food and services and gross rentals,
respectively from PAGCOR shall, as a matter of course, be
refunded to the petitioner for having been inadvertently
remitted to the respondent.
o Thus, taking into consideration the prescribed portion of
Petitioners claim for refund of P98,743.40, and considering
further the principle of solutio indebiti which requires the
return of what has been delivered through mistake,
Respondent must refund to the Petitioner the amount of
P30,054,148.64.
o The instant Petition for Review is partially
GRANTED. The Respondent is hereby ORDERED to
REFUND to the petitioner the amount of
P30,054,148.64 immediately.
• CA: ffirmed 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, the
transactions between respondent Acesite and PAGCOR were
effectively zero-rated because they involved the rendition of
services to an entity exempt from indirect taxes
ISSUES & RATIO.
4. WON PAGCORs tax exemption privilege includes the indirect tax of VAT to entitle Acesite
to zero percent (0%) VAT rate. – YES.
PAGCOR is exempt from payment of indirect taxes.
It is undisputed that P.D. 1869, the charter creating PAGCOR, grants the latter an
exemption from the payment of taxes. Section 13 of P.D. 1869 pertinently provides:
xxxx
(2) Income and other taxes. (a) Franchise Holder: No tax of any kind or form, income or
otherwise, as well as fees, charges or levies of whatever nature, whether National or Local,
shall be assessed and collected under this Franchise from the Corporation; nor shall any
form of tax or charge attach in any way to the earnings of the Corporation, except a
Franchise Tax of five (5%) percent of the gross revenue or earnings derived by the
Corporation from its operation under this Franchise.
(b) Others: The exemptions herein granted for earnings derived from the operations
conducted under the franchise specifically from the payment of any tax, income or
otherwise, as well as any form of charges, fees or levies, shall inure to the benefit of and
extend to corporation(s), association(s), agency(ies), 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 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. We are one with the CA
ruling that PAGCOR is also exempt from indirect taxes, like VAT, as follows:
Under the above provision [Section 13 (2) (b) of P.D. 1869], the term Corporation or
operator refers to PAGCOR. Although the law does not specifically mention PAGCORs
exemption from indirect taxes, PAGCOR is undoubtedly exempt from such taxes because
 the law exempts from taxes persons or entities contracting with PAGCOR in casino
operations. Although, differently worded, the provision clearly exempts PAGCOR from
indirect taxes. In fact, it goes one step further by granting tax exempt status to persons
dealing with PAGCOR in casino operations. The unmistakable conclusion is that PAGCOR
is not liable for the P30,152,892.02 VAT and neither is Acesite as the latter is effectively
subject to zero percent rate under Sec. 108 B (3). R.A. 8424.
Indeed, by extending the exemption to entities or individuals dealing with PAGCOR, the
legislature clearly granted exemption also from indirect taxes. It must be noted that the
indirect tax of VAT, as in the instant case, can be shifted or passed to the buyer,
transferee, or lessee of the goods, properties, or services subject to VAT. Thus, by
extending the tax exemption to entities or individuals dealing with PAGCOR in casino
operations, it is exempting PAGCOR from being liable to indirect taxes.
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, properties, or
services sold or leased, in which case it is computed as 1/11 of such value, or charged as
an additional 10% to the value. Verily, the seller or lessor has the option to follow either
way in charging its clients and customer. In the instant case, Acesite followed the latter
method, that is, charging an additional 10% of the gross sales and rentals. Be that as it
may, the use of either method, and in particular, the first method, does not denigrate the
fact that PAGCOR is exempt from an indirect tax, like VAT.
5. WON 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 – YES.
VAT exemption extends to Acesite.
Thus, while it was proper for PAGCOR not to pay the 10% VAT charged by Acesite, 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. Such exemption falls within the former Section 102
(b) (3) of the 1977 Tax Code, as amended (now Sec. 108 [b] [3] of R.A. 8424), which
provides:
(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).
The rationale for the exemption from indirect taxes provided for in P.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.
John Gotamco & Sons, Inc., where the absolute tax exemption of the World Health
Organization (WHO) upon an international agreement was upheld. 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, 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 contractors tax
may be shifted to the contractee WHO. Thus, the proviso in P.D. 1869, extending the
exemption to entities or individuals dealing with PAGCOR in casino operations, is clearly
to proscribe any indirect tax, like VAT, that may be shifted to PAGCOR.
Acesite paid VAT by mistake.
Considering the foregoing discussion, there are undoubtedly erroneous payments of the
VAT pertaining to the effectively zero-rate transactions between Acesite and PAGCOR.
Verily, Acesite has clearly shown that it paid the subject taxes under a mistake of fact, that
is, when it was not aware that the transactions it had with PAGCOR were zero-rated at the
time it made the payments. In UST Cooperative Store v. City of Manila, Court explained
that there is erroneous payment of taxes when a taxpayer pays under a mistake of fact, 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. Such payment is held to be not voluntary and, therefore, can
be recovered or refunded.
Moreover, it must be noted that aside from not raising the issue of Acesites compliance
with pertinent Revenue Regulations on exemptions during the proceedings in the CTA, it
cannot be gainsaid that Acesite should have done so as it paid the VAT under a mistake of
fact. Hence, petitioners argument on this point is utterly tenuous.
Solutio indebiti applies to the Government.
Tax refunds are based on the principle of quasi-contract or solutio indebiti and the
pertinent laws governing this principle are found in Arts. 2142 and 2154 of the Civil Code,
which provide, thus:
Art. 2142. Certain lawful, voluntary, 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.
Art. 2154. If something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises.
When money is paid to another under the influence of a mistake of fact, that is to say, on
the mistaken supposition of the existence of a specific fact, where it would not have been
known that the fact was otherwise, it may be recovered. 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.
The Government comes within the scope of solutio indebiti principle as elucidated in
Commissioner of Internal Revenue v. Firemans Fund Insurance Company, 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. It goes without saying that the
Government is not exempted from the application of this doctrine.

Action for refund strictly construed; Acesite discharged theburden of proof

Since an action for a tax refund partakes of the nature of an exemption, which cannot be
allowed unless granted in the most explicit and categorical language, it is strictly
construed against the claimant who must discharge such burden convincingly. In the
instant case, respondent Acesite had discharged this burden as found by the CTA and the
CA. Indeed, the records show that Acesite proved its actual VAT payments subject to
refund, as attested to by an independent Certified Public Accountant who was duly
commissioned by the CTA. On the other hand, petitioner never disputed nor contested
respondents testimonial and documentary evidence. In fact, petitioner never presented
any evidence on its behalf.

One final word. The BIR must release the refund to respondent without any unreasonable
delay. Indeed, 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.

DECISION.
The petition is DENIED for lack of merit and the November 17, 2000 Decision of the CA is
hereby AFFIRMED. No costs.

 ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORP v. CIR
G.R. No. 145526/ MARCH 16, 2007 / CJ CORONA /TAX REMEDIES
NATURE Petition for Certiorari, etc.

SUMMARY. Atlas failed to comply with the evidentiary requirements for tax credits / refunds.
SC ruled that when the petitioner bears the burden of proving the factual bases of their claims.
DOCTRINE. Failure to satisfy the documentary and evidentiary requirements for a claim for
refund/tax credit is fatal.

FACTS.
● Atlas presented to CIR applications for refund or tax credit of excess input taxes for the 2nd
(24M), 3rd (16.5M), and 4th (29.8M) quarters of 1992 on the theory that these were zero-rated
transactions (because they sold gold to the Central Bank, Copper Concentrates to PASAR,
and Pyrite to Philphos) resulting in refundable or creditable input taxes under Section 106(b)
of the 1986 Tax Code
● But because of CIR’s inaction and the imminent expiration of the two-year period for
beginning a court action for tax credit or refund, Atlas brought its claim to CTA by way of a
Petition for Review.
● CTA: Denied the petition on the ground of prescription and insufficiency of evidence
● CA ruled that the Action has not prescribed but sustained the denial of the petition on the
ground of insufficiency of evidence. Hence, Atlas filed this appeal by certiorari.

ISSUES & RATIO.

1. WON ATLAS’ ADMINISTRATIVE CLAIM FOR REFUND / TAX CREDIT MUST BE GRANTED? –
NO.
Atlas failed to satisfy the documentary and evidentiary requirements for an administrative
claim for refund / tax credit.

Atlas failed to comply with the evidentiary requirements for tax credits or refunds set forth in
the Revenue Regulations 3-887 and in CIA Circular 1-958.

It has always been the rule that those seeking tax refunds or credits bear the burden of proving
the factual bases of their claims and of showing, by words too plain to be mistaken, that the
legislature intended to entitle them to such claims. The rule, in this case, required petitioner to
(1) show that its sales qualified for zero-rating under the laws then in force and (2) present
sufficient evidence that those sales resulted in excess input taxes.

Both courts correctly observed that petitioner never submitted any of the invoices or receipts
required by the foregoing rules and held this omission to be fatal to its cause.

DECISION.
Petition DENIED.

7 A photocopy of the purchase invoice or receipt evidencing the value added tax paid shall be
submitted together with the application [for tax credit/refund of value-added tax paid]. The original
copy of the said invoice/receipt, however, shall be presented for cancellation prior to the issuance of
the Tax Credit Certificate or refund. x x x
8 submission of invoices or receipts showing the amounts of tax paid

 PHILIPPINE JOURNALISTS, INC. v. CIR
G.R. No.162852 / DEC 16, 2004 / YNARES-SANTIAGO, J./TAX 2-REMEDIES/LPerez
NATURE Petition for Review, .
PETITIONERS Philippine Journalists Inc.
RESPONDENTS Commissioner of Internal Revenue
SUMMARY. Upon failure of PJI to pay the assessment on despite demand, a Warrant of
Distraint and/or Levy was sent to it. In a Petition for Review with the Court of Tax Appeals, It
canceled the assessment. On appeal to the CA, it ruled that Only decisions of the BIR, denying
the request for reconsideration or reinvestigation may be appealed to the CTA. Mere
assessment notices which have become final after the lapse of the thirty (30)-day reglementary
period are not appealable. Thus, the CTA should not have entertained the petition at all. SC
ruled that the waiver is invalid because it was incomplete and defective.
DOCTRINE. A waiver of the statute of limitations under the NIRC, to a certain extent, is a
derogation of the taxpayers’ right to security against prolonged and unscrupulous
investigations and must therefore be carefully and strictly construed.
FACTS.
• The case arose from the Annual Income Tax Return filed by petitioner for the calendar year
ended December 31, 1994 which presented a net income of P30,877,387.00 and the tax due
of P10,807,086.00. After deducting tax credits for the year, petitioner paid the amount of
P10,247,384.00.
• On August 10, 1995, Revenue District Office No. 33 of the Bureau of Internal Revenue (BIR)
issued Letter of Authority to examine petitioners books of account and other accounting
records for internal revenue taxes for the period January 1, 1994 to December 31, 1994.
• From the examination, the petitioner was told that there were deficiency taxes, inclusive of
surcharges, interest and compromise penalty in the following amounts:
• Value Added Tax P 229,527.90
• Income Tax 125,002,892.95
• Withholding Tax 2,748,012.35
• _______________
• Total P 127,980,433.20
• In a letter, Revenue District Officer Jaime Concepcion invited petitioner to send a
representative to an informal conference for an opportunity to object and present
documentary evidence relative to the proposed assessment. Petitioners Comptroller, Lorenza
Tolentino, executed a Waiver of the Statute of Limitation Under the National Internal
Revenue Code (NIRC).
• The document waived the running of the prescriptive period provided by Sections 223 and
224 and other relevant provisions of the NIRC and consented 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, until the completion of the investigation.
• 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
P136,952,408.97.
• The Assessment Division of the BIR issued Pre-Assessment Notices which informed petitioner
of the results of the investigation. Thus, BIR Revenue Region No. 6, Assessment
Division/Billing Section, issued Assessment/Demand stating the following deficiency taxes,
inclusive of interest and compromise penalty:
• Income Tax P108,743,694.88
• Value Added Tax 184,299.20
• Expanded Withholding Tax 2,363,220.38
• _____________
• Total P111,291,214.46
• A Preliminary Collection Letter was sent by Deputy Commissioner Romeo S. Panganiban to
the petitioner to pay the assessment within ten (10) days from receipt of the letter. A Final
Notice Before Seizure was issued by the same deputy commissioner giving the petitioner ten
(10) days from receipt to pay. Petitioner received a copy of the final notice on November 24,
1999.
• By letters, petitioner asked to be clarified how the tax liability of P111,291,214.46 was
reached and requested an extension of thirty (30) days from receipt of the clarification within
which to reply.
• The BIR received a follow-up letter from the petitioner asserting that its (PJI) records do not
show receipt of Tax Assessment/Demand No. 33-1-000757-94. Petitioner also contested that
the assessment had no factual and legal basis. A Warrant of Distraint and/or Levy signed by
Deputy Commissioner Romeo Panganiban for the BIR was received by the petitioner.
• Petitioner filed a Petition for Review wit h the CTA. Petioner claims: (a) that no assessment or
demand was received from the BIR; (b) that the warrant of distraint and/or levy was without
factual and legal bases as its issuance was premature; (c) that the assessment, having been
made beyond the 3-year prescriptive period, is null and void; (d) that the issuance of the
warrant without being given the opportunity to dispute the same violates its right to due
process; 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.
• CTA: Granted the Petition. Declared the assessments cancelled, withdrawn and no force and
effect.
• CA: Reversed CTA decision.
ISSUES & RATIO.
6. WON the waiver is in accordance with RMO No. 20-90 to validly extend the three-year
prescriptive period under the NIRC. – NO.
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. 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. The waiver does not mean that the taxpayer relinquishes the
right to invoke prescription unequivocally particularly where the language of the document is
equivocal. For the purpose of safeguarding taxpayers from any unreasonable examination,
investigation or assessment, our tax law provides a statute of limitations in the collection of
taxes. Thus, the law on prescription, being a remedial measure, should be liberally construed
in order to afford such protection. As a corollary, the exceptions to the law on prescription
should perforce be strictly construed.
The waiver document is incomplete and defective and thus the three-year prescriptive period
was not tolled or extended and continued to run. Consequently, the Assessment/Demand
was invalid because it was issued beyond the three (3) year period. In the same manner,
Warrant of Distraint and/or Levy which petitioner received thereafter is also null and void for
having been issued pursuant to an invalid assessment.
 The NIRC, under Sections 203 and 222, 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. 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.

The waiver is also defective from the government side because it was signed only by a
revenue district officer, not the Commissioner, as mandated by the NIRC and RMO No. 20-
90. The waiver is not a unilateral act by the taxpayer or the BIR, but is a bilateral agreement
between two parties to extend the period to a date certain. The conformity of the BIR must
be made by either the Commissioner or the Revenue District Officer. This case involves taxes
amounting to more than One Million Pesos (P1,000,000.00) and executed almost seven
months before the expiration of the three-year prescription period. For this, RMO No. 20-90
requires the Commissioner of Internal Revenue to sign for the BIR.

Finally, the records show that petitioner was not furnished a copy of the waiver. Under RMO
No. 20-90, 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. It stated that the reason copies are
furnished is for a party to be notified of the existence of a document, event or proceeding.

7. WON CTA has appellate jurisdiction to entertain the validity of a warrant of distraint And/or
levy issued by the CIR.– YES.
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. 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 wording of the provision is clear and
simple. 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.

DECISION.
Petition granted. CA decision reversed. CTA decision reinstated

NOTES.
Put here important stuff that you think the prof might ask.
• The tax liability exceeds One Million Pesos (P1,000,000.00).

 CIR v KUDOS METAL CORP.
G.R. No. 178087 / May 5, 2010 / DEL CASTILLO, J./Tax Remedies/FEncarnacion
NATURE Petition for Review on Certiorari
PETITIONERS COMMISSIONER OF INTERNAL REVENUE
RESPONDENTS KUDOS METAL CORPORATION
SUMMARY. Subject is Kudos Metal Corp’s 1998 ITR. The company’s accountant executed a
Waiver of the Defense of Prescription. BIR issued PAN à Formal letter of demand w/
assessment notices à(Here, Kudos filed Protest. So…) BIR rendered final judgement and
requested for immediate payment (P25M++). CTA: (1) cancelled assessment notices bec. issued
beyond prescriptive period; (2) waiver n/a bec. incomplete. SC ruled that government’s right to
assess unpaid taxes of respondent prescribed.
DOCTRINE. An assessment notice issued after the three-year prescriptive period is no longer
valid and effective. 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. (But as in this case, the waiver must follow the rules or requirements as provided to be
valid.)
FACTS.
1. Kudos Metal Corporation filed its Annual Income Tax Return (ITR) for the taxable year 1998
on April 15, 1999.
2. BIR served upon respondent 3 Notices of Presentation of Records.
3. Respondent failed to comply with these notices, hence, the BIR issued a Subpeona Duces
Tecum dated September 21, 2006 (receipt of which was acknowledged by respondents
President, Mr. Chan Ching Bio, in a letter dated October 20, 2000.)
4. Pasco, respondent’s accountant, executed a Waiver of the Defense of Prescription, (which
was notarized on January 22, 2002, received by the BIR Enforcement Service on January 31,
2002 and by the BIR Tax Fraud Division on February 4, 2002, and accepted by the Assistant
Commissioner of the Enforcement Service, Percival T. Salazar (Salazar))
5. Followed by a second Waiver of Defense of Prescription executed by Pasco on February 18,
2003, (notarized on February 19, 2003, received by the BIR Tax Fraud Division on February 28,
2003 and accepted by Assistant Commissioner Salazar.)
6. BIR issued a Preliminary Assessment Notice (PAN) for the taxable year 1998 against resp.
7. Followed by a Formal Letter of Demand with Assessment Notices for taxable year 1998,
dated September 26, 2003 which was received by respondent on November 12, 2003.
8. Respondent challenged the assessments by filing its Protest on Various Tax Assessments on
December 3, 2003 and its Legal Arguments and Documents in Support of Protests against
Various Assessments on February 2, 2004.
9. BIR rendered a final Decision on the matter, requesting the immediate payment of the
following tax liabilities:
Kind of Tax Amount--
Income Tax P 9,693,897.85
VAT 13,962,460.90
EWT 1,712,336.76
Withholding Tax-Compensation 247,353.24
Penalties 8,000.00
Total P25,624,048.76
10. CTA, 2nd Div: Cancelled the assessment notices issued against respondent for having been
issued beyond the prescriptive period. 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. 20-90.
11. CTA, en banc: affirmed the cancellation of the assessment notices. MR denied.
ISSUES & RATIO.
1. WON government’s right to assess unpaid taxes of respondent prescribed. – YES.
Due to the defects in the waivers, the period to assess or collect taxes was not extended.
Consequently, the assessments were issued by the BIR beyond the three-year period and are
void.
Section 203 of the NIRC (*1997) 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, whichever comes later. Hence, an assessment notice issued after
the three-year prescriptive period is no longer valid and effective. (Exceptions however are
provided under Section 222 of the NIRC.)
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. RMO 20-90 issued on April 4, 1990 and RDAO 05-01 issued
on August 2, 2001 lay down the procedure for the proper execution of the waiver. A perusal of
the waivers executed by respondents accountant reveals the following infirmities:
1. The waivers were executed without the notarized written authority of Pasco to sign
the waiver in behalf of respondent.
2. The waivers failed to indicate the date of acceptance.
3. The fact of receipt by the respondent of its file copy was not indicated in the
original copies of the waivers.
DECISION.
Petition is DENIED. The assailed Decision dated March 30, 2007 and Resolution dated May 18,
2007 of the Court of Tax Appeals are hereby AFFIRMED.
NOTES.
***Additional (just in case): Estoppel does not apply in this case
We find no merit in petitioners claim that respondent is now estopped from claiming prescription
since by executing the waivers, it was the one which asked for additional time to submit the required
documents. In this case, the assessments were issued beyond the prescribed period. Also, there is no
showing that respondent made any request to persuade the BIR to postpone the issuance of the
assessments.
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, which the BIR must strictly follow.. Moreover, the BIR cannot hide behind the doctrine of
estoppel to cover its failure to comply with RMO 20-90 and RDAO 05-01, which the BIR itself issued.
 FISHWEALTH CANNING CORP. v. COMMISIONER OF INTERNAL REVENUE
G.R. No. 179343/ January 21, 2010/ Carpio-Morales J./Tax Remedies/Puno
NATURE Petition for Certiorari, etc.
PETITIONERS Fishwealth Canning Corporation
RESPONDENTS Commissioner of Internal Revenue
SUMMARY. CIR wanted to examine the IR taxes of Fishwealth for the year 1999, as such such
issued a letter of authority addressed to the latter. CIR found that it was liable for almost 2.4
million, this was subsequently paid. Later, CIR wanted to reinvestigate FIshwealth, this time it
issued a subpoena duces tecum to compel the latter to hand over its books and other records
to CIR but it did not comply. CIR issued a Final Assessment Notice showing liabilities
amounting to 67.6 million, Fishwealth protested. CIR, sent a Final Notice of Disputed
Assesment which denied FIshwealth’s protest, the latter also stated that if it disagreed, it can
appeal to the CTA within 30 days from reciept thereof.However, Fishwealth merely sought
reconsideration but was denied. After two months from receipt of the Final Decsiion ,CIR again
demanded the payment of its liabilities which constrained Fishwealth to finally filed a Petition
for Review (PetRev) with the CTA Divison which denied it for being filed out of time for not
following the reglementary period in Sec 228 of the Tax Code, CTA En Banc and SC. Affirmed
DOCTRINE. 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. Within sixty (60) days from filing of
the protest, all relevant supporting documents shall have been
submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted
upon within one hundred eighty (180) days from submission of
documents, 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, or from the lapse of the one hundred
eighty (180)-day period; otherwise, the decision shall become final,
executory and demandable.
FACTS.
• On May 16, 2000, the CIR , through a Letter of Authority (LOA), ordered the examination of
internal revenue taxes of Fishwealth for the year 1999. The investigation found that
Fishwealth was liable for almost P2.4 Million which represented income tax, VAT as well as
other deficiencies.. This was eventually settled
• On August 25, 2000, CIR sought to reinvestigate Fishwealth’s Book of Accounts and other
records of internal revenue taxes and as such, it issued a subpoena duces tecum to order
FIshwealth to submit the aforementioned documents. Fishwealth requested the cancellation
of subpoena as the said documents had already been the subject of investigation earlier
(Fact 1)
• For failure to obey the Subpoena, Fishwealth was charged with violation of Sec 5(C) and 266
of the Tax Code. This was subsequently dismissed.
• On August 6, 2003, CIR sent a Final Assessment Notice to Fishwealth which showed liabilities
amounting to 67.6 Million. Fishwealth protested
• On August 2, 2005 CIR issued a Final Decision on Disputed Assessment which effectively
denied Fishwealth’s protest and ordering it to pay its liabilities. FIshwealth received the
decision on August 4, 2005. CIR also added that if Fishwealth disagreed to its assessment, it
can appeal to the CTA within 30 days from receipt thereof
• FIshwealth instead filed a Letter of Reconsideration on September 1, 2005.
• When CIR again demanded payment of Fishwealth’s liabilities, the latter finally filed a
appealed to the CTA in October 20, 2005
• CTA Division: PetRev denied for being filed out of time. MR was denied. PetRev to CTA En
Banc
• CTA en Banc: PetRev denied for being filed out of time. Hence this appeal
ISSUES & RATIO.
8. WON Fishwealth’s Petition for Review was filed out of time– YES.
FIshwealth’s petition for review was filed out of time because of failure to comply with Sec
228 of the Tax Code..
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. Within sixty (60) days from filing of
the protest, all relevant supporting documents shall have been
submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted
upon within one hundred eighty (180) days from submission of
documents, 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, or from the lapse of the one hundred
eighty (180)-day period; otherwise, the decision shall become final,
executory and demandable.
Fishwealth received the denial of its protest through a Final Decision on Disputed Assessment
sent by the CIR on August 4, 2005. According to Sec 228, it had 30 days or until September 3,
2005 to file a PetRev to the CTA. It only did so on October 20, 2005. The Motion for
Reconsideration it filed after its petition was dismissed with the CTA Division does not toll the
30 day period prescribed in Sec. 228
DECISION.
WHEREFORE, the petition is DISMISSED..