CASE # 9 KABALIKAT PARA SA MAUNLAD NA BUHAY INC VS CIR

GR NOS. 217530-31 / 2173536-37 / 217802 ; FEB 10, 2020

PONENTE: HENRI JEAN PAUL B. INTING

FACTS:

1) Kabalikat is a non-stock, non-profit civic organization

2) The BIR confirmed Kabalikat’s status as civic organization as well as its exemption from
the payment of income tax through BIR Ruling No. S-30-071-2001
3) In 2006 pursuant to RA 8425 or the Social Reform and Poverty Alleviation Act, Kabalikat
amended its Articles of Incorporation to expressly provide micro-financing services to
small cottages scale and the disadvantaged such as the farmers and the fishermen.
4) BIR, through its Regional Director Jaime Santiago issued Preliminary Assessment Notices
against Kabalikat for its unpaid taxes for the taxable year 2006.
5) Kabalikat filed a position letter dated November 9, 2009 for the cancellation and
withdrawal of the assessed amounts
6) On December 28, 2009, Kabalikat executed a Waiver of the Defense of Prescription by
virtue of the Statute of Limitations to extend the assessment period for its 2006 unpaid
taxes until December 31, 2010
7) The CIR, through its RD Guaballa issued Final Assessment Notices and a Formal Letter of
Demand against Kabalikat
8) Kabalikat in turn filed a letter of protest dated December 22, 2010 to oppose the FAN
and FLD.
9) However, the CIR failed to act on its protest
10) Thus on September 15, 2011, Kabalikat filed a Petition for Review before the CTA.

ISSE: Whether the CTA En Banc err when it denied outright the parities respective positions due
solely for formal and procedural infirmity

RESOLUTION:
Yes, the CTA En Banc erred when it refused to consider the circumstances sufficient to rectify
the parties respective mistakes.
1) The present case involves taxes amounting to about 91M.
2) The parties face significant financial loss form the assessments final ajudication
3) If cancelled, the government stands to lose revenues from taxation, its lifeblood
4) On the other hand, if upheld, Kabalikat, a nonstock, non profit civic organization
generally exempt from tax shall suffer the onerous obligation of settling the assessment.

Therefore, the more prudent course of action would have been to afford petitioners time to
remedy their oversight which they already have.

As such, the case is remanded to CTA En Banc to proceed in hearing the parties appeals on the
merits.