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WARRIORS’ NOTES 20_21 | TAXATION | 1

WARRIOR NOTES IN
TAXATION

i. Basic Principles of Taxation in the Constitution

1. All revenues and assets of nonstock, non-profit educational institutions, used actually,
directly and exclusively for educational purposes shall be exempt from taxes and duties.
(Section 4, Article XIV, 1987 Phil Constitution) Thus, when a non-stock, non-profit educational
institution proves that it uses its revenues actually, directly, and exclusively for educational
purposes, it shall be exempted from income tax, VAT, and LBT. On the other hand, when it
also shows that it uses its assets in the form of real property for educational purposes, it shall
be exempted from RPT. (Commissioner of Internal Revenue v. De La Salle University, Inc., G.R.
Nos. 196596, 198841 & 198941, [November 9, 2016], 799 PHIL 141-211)

2. By the Tax Code's clear terms, a proprietary educational institution is entitled only to the
reduced rate of 10% corporate income tax. The reduced rate is applicable only if: (1) the
proprietary educational institution is non-profit and (2) its gross income from unrelated trade,
business or activity does not exceed 50% of its total gross income.||| (Commissioner of
Internal Revenue v. De La Salle University, Inc., G.R. Nos. 196596, 198841 & 198941,
[November 9, 2016], 799 PHIL 141-211)

3. Taxation is the rule, exemption is the exception. Accordingly, statutes granting tax
exemptions must be construed in strictissimi juris against the taxpayer and liberally in favor
of the taxing authority. ||| (La Suerte Cigar and Cigarette Factory v. Court of Appeals, G.R. Nos.
125346, 136328-29, 144942, 148605, 158197 & 165499, [November 11, 2014])

4. Prolonged practice of the Bureau of Internal Revenue in not collecting the specific tax on
stemmed leaf tobacco cannot validate what is otherwise an erroneous application and
enforcement of the law. The government is never estopped from collecting legitimate taxes
because of the error committed by its agents.||| (La Suerte Cigar and Cigarette Factory v. Court
of Appeals, G.R. Nos. 125346, 136328-29, 144942, 148605, 158197 & 165499, [November 11,
2014])

5. The contention that the cigarette manufacturers are doubly taxed because they are paying
the specific tax on the raw material and on the finished product in which the raw material was
a part is also devoid of merit. For double taxation in the objectionable or prohibited sense to
exist, "the same property must be taxed twice, when it should be taxed but once." "[B]oth
taxes must be imposed on the same property or subject-matter, for the same purpose, by
the same . . . taxing authority, within the same jurisdiction or taxing district, during the same
taxing period, and they must be the same kind or character of tax." At all events, there is no
constitutional prohibition against double taxation in the Philippines. (La Suerte Cigar and
Cigarette Factory v. Court of Appeals, G.R. Nos. 125346, 136328-29, 144942, 148605, 158197
& 165499, [November 11, 2014])

6. Under Section 4 of the 1997 National Internal Revenue Code, interpretative rulings are
reviewable by the Secretary of Finance. The remedy within the administrative machinery must
be resorted to first and pursued to its appropriate conclusion before the court's judicial power
can be sought. Nonetheless, jurisprudence allows certain exceptions to the rule on
exhaustion of administrative remedies.

The question involved is purely legal, namely: (a) the interpretation of the 20-lender rule in
the definition of the terms public and deposit substitutes under the 1997 National Internal
Revenue Code; and (b) whether the imposition of the 20% final withholding tax on the PEACe
Bonds upon maturity violates the constitutional provisions on non-impairment of contracts
and due process. Judicial intervention is likewise urgent with the impending maturity of the
 WARRIORS’ NOTES 20_21 | TAXATION | 2

PEACe Bonds on October 18, 2011.||| (Banco De Oro v. Republic, G.R. No. 198756, [January
13, 2015], 750 PHIL 349-413)

7. We find merit on the claim of petitioners-intervenors RCBC, RCBC Capital, and CODE-NGO
for prospective application of our Decision.||| The previous interpretations given to an
ambiguous law by the Commissioner of Internal Revenue, who is charged to carry out its
provisions, are entitled to great weight, and taxpayers who relied on the same should not be
prejudiced in their rights. Hence, this Court's construction should be prospective; otherwise,
there will be a violation of due process for failure to accord persons, especially the parties
affected by it, fair notice of the special burdens imposed on them.||| (Banco De Oro v.
Republic, G.R. No. 198756 (Resolution), [August 16, 2016])

8. In Ang Tibay v. The Court of Industrial Relations, this Court observed that although quasi-
judicial agencies "may be said to be free from the rigidity of certain procedural
requirements[,it] does not mean that it can, in justiciable cases coming before it, entirely
ignore or disregard the fundamental and essential requirements of due process in trials and
investigations of an administrative character."|||The Ang Tibay safeguards were subsequently
"simplified into four basic rights," as follows: AcICHD
(a) [T]he right to notice, be it actual or constructive, of the institution of the
proceedings that may affect a person's legal right; (b) reasonable opportunity
to appear and defend his rights and to introduce witnesses and relevant
evidence in his favor; (c) a tribunal so constituted as to give him reasonable
assurance of honesty and impartiality,and one of competent jurisdiction; and
(d) a finding or decision by that tribunal supported by substantial evidence
presented at the hearing or at least ascertained in the records or disclosed to
the parties.
(Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 &
201418-19, [October 3, 2018])

9. Private establishments that issue senior citizen discounts are entitled to a return of the
discounts they extended. However, the legislature, in the exercise of its police power, watered
down their reimbursements to a tax deduction from what used to be a tax credit.
Nonetheless, whether through a tax credit or a tax deduction, there is no arguing that
business establishments are still entitled to recoup some of the discounts they issued to
senior citizens.||| As a tax-exempt entity, the Silliman University Cooperative could not have
availed of a tax deduction to offset a portion of the senior citizen discounts it issued to its
clients, whether member or non-member. Thus, to insist that it was nevertheless mandated
to issue a 20% discount would have been confiscatory and a deprivation of private property
without due process of law.||| (Estoconing v. People, G.R. No. 231298, [October 7, 2020])

ii. Income Tax

1. Self-employed individuals and/or professionals whose gross sales/receipts and other

operating income do not exceed P3,000,000.00 and not VAT registered shall have the option
to avail of an eight percent (8%) tax on gross sales or gross receipts and other non-operating
income in excess of Two hundred fifty thousand pesos (P250,000) in lieu of the graduated
income tax rates (0-35%) under Subsection (A)(2)(a) of this Section and the percentage tax
(1%/3%) under Section 116 of this Code. [Sec. 24(A)(2)(b), NIRC]

Unless the taxpayer signifies the intention to elect the 8% income tax rate in the 1st Quarter
Percentage (April 25) and/or Income Tax Return (May 15), or on the initial quarter return of
the taxable year after the commencement of a new business/practice of profession, the
taxpayer shall be considered to have availed of the graduated rates.
 WARRIORS’ NOTES 20_21 | TAXATION | 3

2. The 8% gross income tax option is not available if the business is subject to Other Percentage
Tax under Section 25 of the Tax Code (e.g., day/night clubs), as well as, when an individual
earns a partner’s distributive share from a general professional partnership.
3. For mixed income earner, the same options are available provided the gross sales/receipts
do not exceed P3,000,000.00 and is not a VAT-registered. If 8% is availed of, the total tax due
shall be the sum of: (1) tax due from compensation using graduated tax rate (0-35%); and (2)
tax due from self-employment/practice of profession, resulting from 8% with the total of
gross sales/receipts and other non-operating income. (The P250,000 is no longer deducted
as it is deemed accounted for under compensation income.)

4. An offline international air carrier selling passage tickets in the Philippines, through a general
sales agent, is a resident foreign corporation doing business in the Philippines. As such, it is
taxable under Section 28 (A) (1), and not Section 28 (A) (3) of the 1997 National Internal
Revenue Code, subject to any applicable tax treaty to which the Philippines is a signatory.
Pursuant to Article 8 of the Republic of the Philippines-Canada Tax Treaty, Air Canada may
only be imposed a maximum tax of 1 1/2 % of its gross revenues earned from the sale of its
tickets in the Philippines.||| (Air Canada v. Commissioner of Internal Revenue, G.R. No. 169507,
[January 11, 2016], 776 PHIL 119-166)

5. Strictly construed, Section 13 (2) (b) of Presidential Decree No. 1869 means that the Philippine
Amusement and Gaming Corporation (PAGCOR)'s income tax exemptions only extend to
entities or individuals in a contractual relationship with PAGCOR in connection with its casino
operations. A PAGCOR licensee authorized to operate its own casino does not fall within the
purview of Section 13 (2) (b). Its income from its casino operations, therefore, is not tax-
exempt. ||| (Thunderbird Pilipinas Hotels and Resorts, Inc. v. Commissioner of Internal
Revenue, G.R. No. 211327, [November 11, 2020])

6. In sum, these rulings pronounced that to be able to determine whether the financial
assets, i.e., debt instruments and securities are deposit substitutes, the "20 or more individual
or corporate lenders" rule must apply. Moreover, the determination of the phrase "at any one
time" for purposes of determining the "20 or more lenders" is to be determined at the time
of the original issuance. Such being the case, the PEACe Bonds were not to be treated as
deposit substitutes.||| (Banco De Oro v. Republic, G.R. No. 198756, [January 13, 2015], 750
PHIL 349-413)

7. Under Sections 24 (B) (1), 27 (D) (1), and 28 (A) (7) of the 1997 National Internal Revenue
Code, a final withholding tax at the rate of 20% is imposed on interest on any currency bank
deposit and yield or any other monetary benefit from deposit substitutes and from trust funds
and similar arrangements. Under the 1997 National Internal Revenue Code, Congress
specifically defined "public" to mean "twenty (20) or more individual or corporate lenders at
any one time." Hence, the number of lenders is determinative of whether a debt instrument
should be considered a deposit substitute and consequently subject to the 20% final
withholding tax. (Banco De Oro v. Republic, G.R. No. 198756, [January 13, 2015], 750 PHIL
349-413)

8. Should there have been a simultaneous sale to 20 or more lenders/investors, the PEACe
Bonds are deemed deposit substitutes within the meaning of Section 22 (Y) of the 1997
National Internal Revenue Code and RCBC Capital/CODE-NGO would have been obliged to
pay the 20% final withholding tax on the interest or discount from the PEACe Bonds. Further,
the obligation to withhold the 20% final tax on the corresponding interest from the PEACe
Bonds would likewise be required of any lender/investor had the latter turned around and
sold said PEACe Bonds, whether in whole or part, simultaneously to 20 or more lenders or
investors.||| We note, however, that under Section 24 223 of the 1997 National Internal
Revenue Code, interest income received by individuals from long-term deposits or
investments with a holding period of not less than five (5) years is exempt from the
final tax.(Banco De Oro v. Republic, G.R. No. 198756, [January 13, 2015], 750 PHIL 349-413)
 WARRIORS’ NOTES 20_21 | TAXATION | 4

9. The "gains" contemplated in Section 32 (B) (7) (g) refers to: (1) gain realized from the trading
of the bonds before their maturity date, which is the difference between the selling price of
the bonds in the secondary market and the price at which the bonds were purchased by the
seller; and (2) gain realized by the last holder of the bonds when the bonds are redeemed at
maturity, which is the difference between the proceeds from the retirement of the bonds and
the price at which such last holder acquired the bonds. For discounted instruments, like the
zero-coupon bonds, the trading gain shall be the excess of the selling price over the book
value or accreted value (original issue price plus accumulated discount from the time of
purchase up to the time of sale) of the instruments.||| (Banco De Oro v. Republic, G.R. No.
198756, [January 13, 2015], 750 PHIL 349-413)

10. Due process requires that taxpayers be sufficiently informed of the factual basis for the
allegation of fraud in the filing of their tax returns. Assessments must be based on facts and
not mere presumptions. A taxable partnership has a separate juridical personality from its
partners and is liable for income taxation. Without clear and convincing proof that the
taxpayers received taxable income personally, or through the partnership, no intention to
evade payment of taxes may be inferred.||| (Commissioner of Internal Revenue v. Spouses
Magaan, G.R. No. 232663, [May 3, 2021])

iii. Value-added Tax

1. The following may avail of refund for excess input VAT:

a. Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may,
within two (2) years after the close of the taxable quarter when the sales were made,
apply for the issuance of a tax credit certificate or refund of creditable input tax due or
paid attributable to such sales, except transitional input tax, to the extent that such input
tax has not been applied against output tax. [Sec. 112(a), NIRC]
b. A person whose registration has been cancelled due to retirement from or cessation
of business, or due to changes in or cessation of status under Section 106(C) of this
Code may, within two (2) years from the date of cancellation, apply for the issuance
of a tax credit certificate for any unused input tax which may be used in payment of his
other internal revenue taxes. [Sec. 112(b), NIRC]

Only administrative claim is required to fall within the 2-year period. Judicial remedy may be
pursued beyond said period.

2. For a judicial claim for Value Added Tax (VAT) refund to prosper, the claim must not only be
filed within the mandatory 120+30-day periods (now 90+30 days). The taxpayer must also
prove the factual basis of its claim and comply with the 1997 National Internal Revenue
Code (NIRC) invoicing requirements and other appropriate revenue regulations.
Input VAT payments on local purchases of goods or services must be substantiated
with VAT invoices or official receipts, respectively.

Strict compliance with substantiation and invoicing requirements is necessary

considering VAT's nature and VAT system's tax credit method, where tax payments are based
on output and input taxes and where the seller's output tax becomes the buyer's input tax
that is available as tax credit or refund in the same transaction. It ensures the proper collection
of taxes at all stages of distribution, facilitates computation of tax credits, and provides
accurate audit trail or evidence for BIR monitoring purposes. (Team Energy Corp. v.
Commissioner of Internal Revenue, G.R. Nos. 197663 & 197770, [March 14, 2018])

3. A zero-rated taxpayer is entitled to claim as refund or tax credit the input VAT from its
domestic purchases or importation of capital goods used for its trade or business. However,
if the acquisition cost exceeds P1,000,000.00, the claim becomes subject to the rule on
 WARRIORS’ NOTES 20_21 | TAXATION | 5

amortization of its input VAT credit over the useful life span of the capital goods.||| (Taganito
Mining Corp. v. Commissioner of Internal Revenue, G.R. No. 216656, [April 26, 2021])

4. A claim for unutilized input value-added tax is in the nature of a tax exemption. Thus, strict
adherence to the conditions prescribed by the law is required of the taxpayer. 62 Refunds
need to be proven and their application raised in the right manner as required by law. Here,
noncompliance with the 120+30-day periods (Train Law – 90 +30 days) is fatal to the
taxpayer's judicial claim.||| (Steag State Power, Inc. v. Commissioner of Internal Revenue, G.R.
No. 205282 (Resolution), [January 14, 2019])

5. The thirty (30)-day period provided in Section 112 of the 1997 National Internal Revenue
Code to appeal the decision of the Commissioner of Internal Revenue or its inaction is
statutorily provided. Failure to comply is a jurisdictional error. The window of exemption
created in Commissioner of Internal Revenue v. San Roque Power Corporation is limited to
premature filing of the judicial remedy. It does not cure lack of jurisdiction due to late
filing.||| (CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue,
G.R. No. 203928, [July 22, 2015], 764 PHIL 595-607)

c. Donor’s Tax

1. The computation of donor’s tax is on a cumulative basis over a period of one calendar year.
2. The donor’s tax return shall be filed within thirty (30) days after the date the gift is made or
completed and the tax due thereon shall be paid at the same time that the return is filed. The
return shall be filed and taxes are paid to an AAB, RDO, or Revenue Collection Officer having
jurisdiction over the place where the donor is domiciled at the time of transfer, or if there be
no legal residence in the Philippines, with the Office of the Commissioner.
3. Where property, other than real property referred to in Section 24(D) (Capital Asset subject
to 6% Capital Gains Tax) is transferred for less than an adequate and full consideration in
money or money’s worth, then the amount by which the fair market value of the property
exceeded the value of the consideration shall be deemed a gift and subject to donor’s tax.
However, sale, exchange, or transfer of property made in the ordinary course of business (a
transaction which is bona fide, at arm’s length, and free from any donative intent) will be
considered as made for an adequate and full consideration in money or money’s worth.
(Section 100, NIRC)
4. Any contribution in cash or in kind to any candidate, political party or coalition of parties for
campaign purposes, shall be governed by the Election Code, as amended.[Sec. 99(B), NIRC]
Under the Omnibus Election Code, contributions in cash or in kind to any candidates, political
parties, or party-list groups are exempt from the imposition of Donor’s Tax. Only those
donations or contributions that have been utilized/spent during the campaign period as set
by the COMELEC are exempt from donor’s tax. Donations utilized before or after the
campaign period are subject to donor’s tax and not deductible as political contribution on
the part of the donor.

d. Remedies

a. jurisdiction of courts

1. In Commissioner of Internal Revenue v. Leal, citing Rodriguez Blaquera, this court

emphasized the jurisdiction of the Court of Tax Appeals over rulings of the Bureau of Internal
Revenue. In exceptional cases, however, this court entertained direct recourse to it when
"dictated by public welfare and the advancement of public policy, or demanded by the
broader interest of justice, or the orders complained of were found to be patent nullities, or
the appeal was considered as clearly an inappropriate remedy."||

The nature and importance of the issues raised to the investment and banking industry with
regard to a definitive declaration of whether government debt instruments are deposit
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substitutes under existing laws, and the novelty thereof, constitute exceptional and
compelling circumstances to justify resort to this court (SC) in the first instance.||| (Banco De
Oro v. Republic, G.R. No. 198756, [January 13, 2015], 750 PHIL 349-413)

2. We agreed that interpretative rulings of the Bureau of Internal Revenue are reviewable by the
Secretary of Finance under Section 4 41 of the National Internal Revenue Code. However, we
held that because of the special circumstances availing in this case — namely: the question
involved is purely legal; the urgency of judicial intervention given the impending maturity of
the PEACe Bonds; and the futility of an appeal to the Secretary of Finance as the latter
appeared to have adopted the challenged Bureau of Internal Revenue rulings — there was
no need for petitioners to exhaust all administrative remedies before seeking judicial
relief. (Banco De Oro v. Republic, G.R. No. 198756 (Resolution), [August 16, 2016])

b. prescription

1. The three (3)-year prescriptive period under Section 203 of the 1997 National Internal
Revenue Code to assess and collect internal revenue taxes is extended to 10 years in cases of
(1) fraudulent returns; (2) false returns with intent to evade tax; and (3) failure to file a return,
to be computed from the time of discovery of the falsity, fraud, or omission. (Banco De Oro
v. Republic, G.R. No. 198756, [January 13, 2015], 750 PHIL 349-413)

2. Estoppel applies against a taxpayer who did not only raise at the earliest opportunity its
representative's lack of authority to execute two (2) waivers of defense of prescription, but
was also accorded, through these waivers, more time to comply with the audit requirements
of the Bureau of Internal Revenue. Nonetheless, a tax assessment served beyond the
extended period is void. (Commissioner of Internal Revenue v. Transitions Optical Philippines,
Inc., G.R. No. 227544, [November 22, 2017])

3. Thus, the period to assess and collect taxes may be extended upon the Commissioner and
the taxpayer's written agreement, executed before the expiration of the three (3)-year
period. Indeed, a Waiver of the Defense of Prescription is a bilateral agreement between a
taxpayer and the Bureau of Internal Revenue to extend the period of assessment and
collection to a certain date. "The requirement to furnish the taxpayer with a copy of the waiver
is not only to give notice of the existence of the document but of the acceptance by the
[Bureau of Internal Revenue] and the perfection of the agreement." |The Bureau of Internal
Revenue could not hide behind the doctrine of estoppel to cover its failure to comply with
its own procedures. "[A] waiver of the statute of limitations [is] a derogation of the taxpayer's
right to security against prolonged and unscrupulous investigations [and thus, it] must be
carefully and strictly construed. (Commissioner of Internal Revenue v. Avon Products
Manufacturing, Inc., G.R. Nos. 201398-99 & 201418-19, [October 3, 2018])

4. For the ten-year period under Section 222 (a) to apply, it is not enough that fraud is alleged
in the complaint, it must be established by clear and convincing evidence. In Commissioner
of Internal Revenue v. B.F. Goodrich Phils., Inc., 48 the Court emphasized that the Bureau of
Internal Revenue must show that the return was filed fraudulently with intent to evade
payment. The taxpayers may have erred in reporting their tax liability when they recorded the
assailed transactions in the wrong year, but such error stemmed from the wrong application
of the law and is not an indication of their intent to evade payment. If there were really an
intent to evade payment, taxpayers would not have reported and subsequently paid the
income tax, albeit in the wrong year. (Republic v. GMCC United Development Corp., G.R. No.
191856, [December 7, 2016], 802 PHIL 432-450)

c. remedies against assessment notices

1. Citysuper had admitted receiving the Final Letter of Demand and Assessment Notices on
April 24, 2015, which meant that Citysuper had until May 24, 2015 to file its protest. It
 WARRIORS’ NOTES 20_21 | TAXATION | 7

allegedly filed a protest on April 29, 2015, but the protest letter only had the assessment
notices attached, and stated that Citysuper was still compiling supporting documents.
Nowhere in Citysuper's April 29, 2015 letter did it state the assessment notice's date and the
applicable law, rules and regulations, or jurisprudence on which its protest was based. ||| With
no protest, the Commissioner said, the assessment became final — depriving the Court
of Tax Appeals of jurisdiction, which only pertained to disputed assessments.

Section 228 of the National Internal Revenue Code is clear. The administrative protest must
be filed not only within the stated period, but also "in such form and manner as may be
prescribed by implementing rules and regulations." Citysuper's April 29, 2015 letter did not
comply with the three requirements of Revenue Regulations No. 18-2013.

In Commissioner of Internal Revenue v. Villa {130 Phil. 3 (1968) [Per J. Bengzon, En Banc]}, this
Court held that the Court of Tax Appeals' jurisdiction was over the Commissioner of Internal
Revenue's decision on the protest against an assessment, and not the assessment itself. Thus,
the period to invoke judicial review must be counted from receipt of the Commissioner's
decision on the disputed assessment.

When a taxpayer files a petition for review before the Court of Tax Appeals without validly
contesting the assessment with the Commissioner of Internal Revenue, the appeal is
premature and the Court of Tax Appeals has no jurisdiction. (Commissioner of Internal
Revenue v. Court of Tax Appeals-Third Division, G.R. No. 239464, [May 10, 2021])

2. To avail of the extraordinary period of assessment in Section 222 (a) of the National Internal
Revenue Code, the Commissioner of Internal Revenue should show that the facts upon which
the fraud is based is communicated to the taxpayer. The burden of proving that the facts
exist in any subsequent proceeding is with the Commissioner. Furthermore, the Final
Assessment Notice is not valid if it does not contain a definite due date for payment by the
taxpayer.

Providing the taxpayer with the factual and legal bases for the assessment is crucial before
proceeding with tax collection. Tax collection should be premised on a valid assessment,
which would allow the taxpayer to present his or her case and produce evidence for
substantiation. (Commissioner of Internal Revenue v. Fitness by Design, Inc., G.R. No. 215957,
[November 9, 2016], 799 PHIL 391-420)

3. Tax assessments issued in violation of the due process rights of a taxpayer are null and void.
While the government has an interest in the swift collection of taxes, the Bureau of Internal
Revenue and its officers and agents cannot be overreaching in their efforts, but must
perform their duties in accordance with law, with their own rules of procedure, and always
with regard to the basic tenets of due process.

The 1997 National Internal Revenue Code, also known as the Tax Code, and revenue
regulations allow a taxpayer to file a reply or otherwise to submit comments or arguments
with supporting documents at each stage in the assessment process. Due process requires
the Bureau of Internal Revenue to consider the defenses and evidence submitted by the
taxpayer and to render a decision based on these submissions. Failure to adhere to these
requirements constitutes a denial of due process and taints the administrative proceedings
with invalidity.(Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., G.R.
Nos. 201398-99 & 201418-19, [October 3, 2018])

4. The Notice of Informal Conference and the Preliminary Assessment Notice are a part of due
process. They give both the taxpayer and the Commissioner the opportunity to settle the
case at the earliest possible time without the need for the issuance of a Final Assessment
Notice. However, this purpose is not served in this case because of the Bureau of Internal
Revenue's inaction or failure to consider Avon's explanations.
 WARRIORS’ NOTES 20_21 | TAXATION | 8

It is true that the Commissioner is not obliged to accept the taxpayer's explanations, as
explained by the Court of Tax Appeals. However, when he or she rejects these explanations,
he or she must give some reason for doing so. He or she must give the particular facts upon
which his or her conclusions are based, and those facts must appear in the record.||| Indeed,
the Commissioner's inaction and omission to give due consideration to the arguments and
evidence submitted before her by Avon are deplorable transgressions of Avon's right to
due process.||| In Ang Tibay, this Court similarly ruled that "[n]ot only must the party be
given an opportunity to present his case and to adduce evidence tending to establish the
rights which he asserts but the tribunal must consider the evidence presented."||| The
presumption of regularity in the performance of the Commissioner's official duties cannot
stand in the face of positive evidence of irregularity or failure to perform a duty.

The Commissioner's total disregard of due process rendered the identical Preliminary
Assessment Notice, Final Assessment Notices, and Collection Letter null and void, and of
no force and effect.||| This Court has, in several cases, declared void any assessment that
failed to strictly comply with the due process requirements set forth in Section 228 of
the Tax Code and Revenue Regulations No. 12-99. (Commissioner of Internal Revenue v.
Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 & 201418-19, [October 3, 2018])

5. Two (2) options of the taxpayer, i.e.,to (1) file a petition for review before the Court
of Tax Appeals within 30 days after the expiration of the 180-day period; or (2) to await the
final decision of the Commissioner on the disputed assessment and appeal this final
decision to the Court of Tax Appeals within 30 days from receipt of it, "are mutually
exclusive and resort to one bars the application of the other."|||

In this case, Avon opted to wait for the final decision of the Commissioner on its protest
filed on May 9, 2003. This Court holds that the Collection Letter dated July 9, 2004
constitutes the final decision of the Commissioner that is appealable to the Court
of Tax Appeals. The Collection Letter dated July 9, 2004 demanded from Avon the payment
of the deficiency tax assessments with a warning that should it fail to do so within the
required period, summary administrative remedies would be instituted without further
notice. The Collection Letter was purportedly based on the May 27, 2004 Memorandum of
the Revenue Officers stating that Avon "failed to submit supporting documents within 60-
day period." This Collection Letter demonstrated a character of finality such that there can
be no doubt that the Commissioner had already made a conclusion to deny Avon's request
and she had the clear resolve to collect the subject taxes. (Commissioner of Internal
Revenue v. Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 & 201418-19, [October
3, 2018])