UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW Tax 1

E2024 Professor Cabreros

Po v. CTA
G.R. No. 81446 – August 18, 1988
Second division | Sarmiento, J.

Topic: Functions of the BIR; Jurisdiction of the CTA

Doctrine:
The factual findings of the CTA are binding upon the SC and can only be disturbed on appeal if not supported
by substantial evidence.

FACTS OF THE CASE

A letter and a subpoena duces tecum were issued against Silver Cup for the production of accounting records
and related documents for examination due to a denunciation that the company was committing tax evasion.
Po Bien Sing did not produce the books of accounts as requested, prompting the team to enter the factory
bodega of Silvery Cup and seize cases of alcohol products. On the basis of the team’s report, the CIR assessed
Po Bien Sing deficiency income tax for 1966 to 1970 in the amount of around P7.1M and for deficiency
specific tax for January 2, 1964 to January 19, 1972 in the amount of around P5.5M. Petitioner, Po Bien Sing’s
widow, protested the deficiency assessments through letters, which were referred for investigation. The report
recommended the reiterating of the assessments in view of the taxpayer’s persistent failure to present the
books of accounts for examination, compelling the CTA to issue warrants of distraint and levy. Upon receiving
the warrants, petitioner viewed them as the CTA’s denial of her protest on the subject assessments. Hence,
her appeal.

ISSUE/S
W/N the assessments have valid and legal bases—YES.
• Settled is the rule that the factual findings of the CTA are binding upon the SC and can only be
disturbed on appeal if not supported by substantial evidence.
• Section 16(b) of the NIRC of 1977 as amended is specific on the power of the CIR to make
assessments. The rule on the "best evidence obtainable" applies when a tax report required by law for
the purpose of assessment is not available or when the tax report is incomplete or fraudulent.
o Po Bien Sing and petitioner’s persistent failure to present their books of accounts for
examination for the taxable years involved left the CIR no other legal option except to report
to the power conferred upon him under the said provision.
o The tax figures arrived at by the CIR are not arbitrary. The 50% surcharge has been imposed,
pursuant to Section 72 of the Tax Code and tax 1/2% monthly interest has likewise been
imposed pursuant to the provision of Section 51(d) of the Tax Code.
• Petitioner assails that these assessments are wrong. The Court said that tax assessments by tax
examiners are presumed correct and made in good faith. The taxpayer has the duty to prove otherwise.
In the absence of proof of any irregularities in the performance of duties, an assessment duly made by
a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed.
All presumptions are in favor of the correctness of tax assessments.
o The fraudulent acts detailed in the decision had not been satisfactorily rebutted by the
petitioner. There are clear indications on the part of the taxpayer to deprive the government of
the taxes due. In his sworn statement, the assistant factory superintendent stated that he was
entrusted labels to make false entries in the official register book of Silver Cup, which he did
under the direction of Po Bien Sing.
o The existence of fraud as found by the respondents cannot be lightly set aside absent substantial
evidence presented by the petitioner to counteract such finding. The findings of fact of the
respondent Court of Tax Appeals are entitled to the highest respect.
HELD
Petition denied; CTA decision affirmed.