Professional Documents
Culture Documents
Facts:
Issue: Whether or not DCCCo is liable to pay the deficiency withholding taxes on
interest from savings and time deposits of its members for 1999
1 999 and 2000
Held:
DCCCo is correct invoking BIR Ruling No. 551-888 and BIR Ruling DA 591-2006
wherein the BIR ruled that cooperatives are not required to withhold the corresponding
tax on the interest from savings and time deposits of their members.
SC ruled that interpretations of administrative agencies in charge of enforcing a law are
entitled to great weight and consideration by the courts, unless such interpretations are in
a sharp conflict with the governing statute or the Constitution and other laws.
SC further held that cooperatives, including their members, deserve a preferential tax
treatment because of the vital role they play in the attainment of economic development
and social justice. Thus, although taxes are the lifeblood of the government, the State's
power to tax must give way to foster the creation and growth of cooperatives. To borrow
the words of Justice Isagani A. Cruz: "The power of taxation, while indispensable, is not
absolute and may be subordinated to the demands of social justice.
FACTS:
RCBC is private domestic commercial bank engaged in general banking operations.
In 1996, it received a Letter of Authority authorizing a special team to inspect its books
covering all revenue taxes from January 1994 to December 1995.
CIR issued Formal letter of demand in January 2000 which RCBC protested in
February 2000. In November 2000, RCB filed a petition for review with CTA. However,
RCBC received another formal letter of demand in December 2000. RCBC however paid all
tax deficiencies except the assessments for final tax on FCDU income and DST which
remained to be the subject of its petition for review. RCBC additionally assailed the validity
of the waivers on the ground that it lacked the signature of the CIR.
The CTA 1st division upheld the assessment and likewise the CTA en banc denied
RCBC’s petition.
petition.
ISSUE:
WON RCBC by paying the other tax assessments covered by the waiver is rendered
stopped from questioning the validity of said waivers;
HELD:
RCBC’s partial payment of the revised assessments issued within the extended
period impliedly admitted the validity of the waiver.
FACTS:
Preliminary Assessment Notice was issued against Allied Banking. The filed a
protest on the PAN. BIR denied the protest and demanded payment of the deficiency taxes
through the issuance of a formal letter of demand.
Portions of the formal letter of demand, which brought the dispute is quoted
hereunder:
“ It is requested that the above deficiency tax be paid immediately upon receipts hereof,
inclusive of penalties incident to delinquency. This is our final decision based on
investigation. If you disagree, you may appeal the final decision within 30 days from receipt
hereof, otherwise said deficiency tax assessment shall become final, executory and
demandable.”
demandable.”
Instead of filing a protest on the demand, Allied Banking appealed to CTA. BIR
argued that it was prematurely appealed.
ISSUE:
WON the Formal Letter of Demand issued by the BIR can be construed as a final
decision of the BIR, hence appealable to the CTA.
HELD:
SC found the foregoing tenor of the Formal Letter of Demand with Assessment
CTA.
Notices issued as BIR’s final decision which is appealable to the CTA.
BIR cannot dispute the appeal made by Allied Banking since it is now stopped from
its own pronouncements. A careful reading of the Formal Letter of Demand with
Assessment Notices leads the SC to agree with Allied Banking that the instant case is an
exception to the rule on exhaustion of administrative remedies, i.e., estoppel on the part of
the administrative agency concerned.