CIR v.

COURT OF TAX APPEALS SECOND DIVISION

AND QL DEVELOPMENT, INC

Facts:

 Sometime in 2012 QLDI received a LOA covering taxable year 2010 for deficiency taxes. 2014, the CIR
served the (PAN) together with the Details of Discrepancies to QLDI.
 In 2014, the CIR sent out the (FAN) or FLD with Details of Discrepancies to QLDI.
 Despite receipt of the FAN/FLD, QLDI failed to file a protest within the 30-day period provided by law.
Subsequently, as there was no disputed assessment to speak of, as no protest was filed, the CIR issued a
Final Decision on Disputed Assessment11 (FDDA), which QLDI received on March 3, 2015.
 QLDI filed with the CIR a request for reconsideration dated 2015, which was denied by the CIR in its 2020
decision. Consequently, the CIR ordered QLDI to pay the deficiency taxes and the compromise penalty for
taxable year 2010.

Proceedings before the CTA Division

 QLDI filed a Petition for Review before the CTA Division, challenging the CIR's Decision. Particularly, QLDI
questioned the validity of the assessment against it, and the prescription of the CIR's right to collect taxes.
 QLDI alleged in its Motion that the CIR's right to collect taxes had already prescribed as early as December
12, 2019, or five years from the date of mailing/release/sending of the FAN/FLD on December 12, 2014.
 CTA Division held that the period within which the CIR may collect deficiency taxes had already lapsed.
Accordingly, the CTA Division cancelled the assessment for deficiency taxes against QLDI for taxable year
2010.

The CTA Division ruled that when an assessment is timely issued, the CIR has five years to collect the assessed
tax, reckoned from the date the assessment notice had been released, mailed, or sent by the Bureau of Internal
Revenue (BIR) to the taxpayer. Thus, in this case, the CIR had five years from December 12, 2014, or until
December 12, 2019, to collect the deficiency taxes. However, the CIR issued the BIR letters for the collection of
taxes on various dates in 2020, which were all beyond December 12, 2019. Accordingly, the CTA Division ruled
that the government's demand for payment of deficiency taxes was already barred by prescription.

Issue: whether the CIR's right to collect taxes had already prescribed.

Ruling: Yes. The CIR's right to collect taxes had prescribed. The three-year, and not the five-year, period applies
to this case.

In CIR v. United Salvage and Towage (Phils.), Inc., the Court held that in cases of assessments issued within the
three-year ordinary period, the CIR has another three years within which to collect taxes, thus:

The statute of limitations on assessment and collection of national internal revenue taxes was shortened from
five (5) years to three (3) years by virtue of Batas Pambansa Blg. 700.

Thus, petitioner has three (3) years from the date of actual filing of the tax return to assess a national internal
revenue tax or to commence court proceedings for the collection thereof without an assessment.

However, when it validly issues an assessment within the three (3)-year period, it has another three (3) years
within which to collect the tax due by distraint, levy, or court proceeding. The assessment of the tax is deemed
made and the three (3)-year period for collection of the assessed tax begins to run on the date the assessment
notice had been released, mailed or sent to the taxpayer.

Applying the foregoing ruling, the Court holds that the CTA Division erred when it applied the five-year period
to collect taxes. The five-year period for collection of taxes only applies to assessments issued within the
extraordinary period of 10 years in cases of false or fraudulent return or failure to file a return.

Here, given that the subject assessment was issued within the three-year ordinary prescriptive period to
assess, the CIR had another three years to initiate the collection of taxes by distraint or levy or court proceeding.
Accordingly, since the FAN/FLD was mailed on December 12, 2014, the CIR had another three years reckoned
 from said date, or until December 12, 2017, to enforce collection of the assessed deficiency taxes. Verily,
prescription had already set in when the CIR initiated its collection efforts only in 2020. The Court also notes that
regardless of which period to apply, i.e., five years as determined by the CTA Division or three years, the CIR's
collection efforts were, as they are, barred by prescription.

Issue: Whether issuance of FDDA effectively operated as a collection letter for the satisfaction of deficiency
tax liabilities.

The Court finds no merit in the CIR's assertion.

To reiterate, the CIR's collection efforts are initiated by distraint, levy, or court proceeding. The distraint and
levy proceedings are validly begun or commenced by the issuance of a warrant of distraint and levy and service
thereof on the taxpayer.

And a judicial action for the collection of a tax is initiated:

(a) by the filing of a complaint with the court of competent jurisdiction; or

(b) where the assessment is appealed to the CTA, by filing an answer to the taxpayer's petition for review
wherein payment of the tax is prayed for.

However, in this case no warrant of distraint and/or levy was served on QLDI, and no judicial proceedings
were initiated by the CIR within the prescriptive period to collect.

The Court has elaborated on the significance of adopting a statute of limitations on tax assessment and collection in
this wise:

The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and
to its citizens; to the Government because tax officers would be obliged to act promptly in the making of assessment,
and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against
unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers, not to determine the
latter's real liability, but to take advantage of every opportunity to molest peaceful, law-abiding citizens. Without such
legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for
inspection subject to harassment by unscrupulous tax agents. The law on prescription being a remedial measure
should be interpreted in a way conducive to bringing about the beneficient purpose of affording protection to the
taxpayer within the contemplation of the Commission which recommends the approval of the law.

The CTA has authority to enjoin the collection of taxes; requirements.

Pursuant to the foregoing, the CTA may enjoin the collection of taxes if such collection will jeopardize the interest of
the government or the taxpayer. In this regard, the Court ruled that the CTA has ample authority to issue injunctive
writs to restrain the collection of tax especially in cases where prescription has set in.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY

THE BUREAU OF INTERNAL REVENUE

VS. FIRST GAS POWER CORPORATION

Facts:

 Sometime in 2002 First Gas received a LOA from the petitioner authorizing the BIR representative to
examine the book of accounts and other accounting records of First Gas for all revenue taxes for the taxable
years 2000 and 2001.

 In 2003, First Gas received a Notice to Taxpayer from petitioner requesting it to appear for an informal
conference on 2003.

 Thereafter, in 2004, First Gas received PAN dated December 15, 2003 and January 28, 2004, wherein it
was assessed for the following deficiency taxes and penalties for the taxable years 2000 and 2001.

 In 2004, First Gas filed its Preliminary Reply to the PAN. Then in 2004, it received FAN) and FLD all dated
July 19, 2004, wherein it was assessed for the following deficiency taxes and penalties for the taxable years
2000 and 2001.

 Meanwhile, the record shows that First Gas, represented by Nestor H. Vasay, and the BIR, represented by
Celia C. King executed three (3) Waivers of the Defense of Prescription under the Statue of Limitations

 In 2004, First Gas filed a Letter of Protest before respondent which was not acted upon.

 Thus, in 2005, it filed a Petition for Review before the CTA to assail the FAN and Formal Letters of Demand

 The CTA Third Division granted the petition of First Gas cancelled and withdrawn.

 According to the CTA, the period to assess respondent for deficiency income tax for taxable year 2000 has
already prescribed because the Waivers issued to extend the period to assess were not valid, finding the
dates of acceptance by petitioner were not indicated in the Waivers. Thus, the FAN and the Formal Letter of
Demand, which assessed respondent for deficiency income tax for the taxable year 2000 are invalid
because they were issued beyond the three-year prescriptive period.

Issue: Whether the deficiency tax assessments for taxable years 2000 and 2001 issued by petitioner against
respondent are within the prescriptive period and therefore valid.

Ruling: No. The Court agrees with the CTA that the Waivers were defective; thus, petitioner's period to issue the FAN
and the Formal Letter of Demand for taxable year 2000 has already prescribed.

The period of limitation in the assessment and collection of taxes is governed by Section 203 of the National Internal
Revenue Code (NIRC), which provides:

SEC. 203. Period of Limitation Upon Assessment and Collection. - Except as provided in Section 222, internal
revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return,
and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of
such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three (3)-year
period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last
day prescribed by law for the filing thereof shall be considered as filed on such last day.

Meanwhile, Section 222(b) of the NIRC authorizes the extension of the original three-year prescriptive period upon
the execution of a valid waiver between the taxpayer and the BIR, provided: (1) the agreement was made before the
expiration of the three-year period, and (2) the guidelines in the proper execution of the waiver are strictly followed.

The Court agrees with the CTA that the Waivers are defective because the date of acceptance by petitioner is not
indicated therein.
 Person Who Signed the
Waiver Date of Waiver Period Extended
Waiver
First37 April 12, 2004 June 15, 2004 Celia C. King
Second38 June 14, 2004 August 15, 2004 Celia C. King
Third39 August 13, 2004 October 15, 2004 Celia C. King

Similarly in this case, the failure to indicate the date of acceptance by petitioner in the First Waiver means that the
same is defective, and therefore, the original three-year prescriptive period to assess the deficiency income tax of
respondent for the taxable year 2000 was never extended. Consequently, the two (2) subsequent waivers were also
invalid because the original period was not extended and had already lapsed on April 16, 2004, and there was no
period to extend anymore.

Petitioner's contention that the date of the notarization should be presumed as the date of acceptance is also
untenable. The CTA correctly observed that "the date of notarization cannot be regarded as the date of acceptance
for the same refers to different aspects, as the notary public is distinct from the Commissioner of [the] BIR who is
authorized by law to accept Waivers of the Statute of Limitations.

Thus, the invalidity of the First Waiver and the subsequent waivers resulted to the non-extension of the three-year
prescriptive period to assess respondent's deficiency income tax for the taxable year 2000. Accordingly, the FAN and
the Formal Letter of Demand, which assessed respondent for deficiency income tax for the taxable year 2000 is
invalid because it was issued beyond the three-year prescriptive period provided under Section 203 of the NIRC.

Petitioner's contention that respondent is now estopped from assailing the validity of the Waivers is also unavailing. In
Kudos Metal, the Court ruled that the doctrine of estoppel cannot be applied 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. Thus:

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. As we have often said, the doctrine of estoppel is predicated on, and has its origin in, equity
which, broadly defined, is justice according to natural law and right. As such, the doctrine of estoppel cannot give
validity to an act that is prohibited by law or one that is against public policy. It should be resorted to solely as a
means of preventing injustice and should not be permitted to defeat the administration of the law, or to accomplish a
wrong or secure an undue advantage, or to extend beyond the requirements of the transactions in which they
originate. Simply put, the doctrine of estoppel must be sparingly applied.

Issue: Whether respondent could raise the issue of prescription for the first time on appeal.

If the pleadings or the evidence on record show that the claim is barred by prescription, the court is mandated to
dismiss the claim even if prescription is not raised as a defense. In Heirs of Valientes v. Ramas, we ruled that the CA
may motu proprio dismiss the case on the ground of prescription despite failure to raise this ground on appeal. The
court is imbued with sufficient discretion to review matters, not otherwise assigned as errors on appeal, if it finds that
their consideration is necessary in arriving at a complete and just resolution of the case. More so, when the
provisions on prescription were enacted to benefit and protect taxpayers from investigation after a reasonable period
of time.

On whether the CTA can resolve an issue which was not raised by the parties, we rule in the affirmative.

The above section is clearly worded. On the basis thereof, the CTA Division was, therefore, well within its authority to
consider in its decision the question on the scope of authority of the revenue officers who were named in the LOA
even though the parties had not raised the same in their pleadings or memoranda. The CTA En Banc was likewise
correct in sustaining the CTA Division's view concerning such matter.

Issue: Whether FAN and FLD for taxable yr 2001 was valid.

Ruling. No. Court also agrees with the ruling of the CTA that the same were not valid because they failed to indicate a
definite due date for payment. However, the due date in each of the FAN was left blank. Clearly, the FAN did not
contain a definite due date and actual demand to pay. Accordingly, the FAN and the Formal Letter of Demand for
taxable year 2001 are not valid assessments.
ASIAN TRANSMISSION CORPORATION, PETITIONER,

VS. COMMISSIONER OF INTERNAL REVENUE,

Facts:

 On the strength of a (LOA) dated August 9, 2004, the (BIR) commenced its audit and investigation of ATC's
books of account and other accounting records pertaining to taxable year 2002.

 the Commissioner of Internal Revenue's (CIR) right to assess ATC for the relevant taxes was due to
prescribe in the first quarter of 2006. However, the Waivers' execution extended until December 31, 2018:
(a) the BIR's investigation period; and (b) the CIR's assessment period.

 Consequently, this allowed the CIR to serve a FLD on July 15, 2008 assessing ATC for deficiency
withholding tax on compensation (WTC), expanded withholding tax (EWT), and final withholding tax (FWT).

 In its administrative protest ATC raised only two main objections: first, the BIR violated ATC's right to due
process when it failed to indicate in the PAN and accompanying details of discrepancies "the surrounding
circumstances supporting the assessment that will allow the taxpayer the opportunity to dispute the
assessment and second, the BIR's details of discrepancies in the FLD, which set out to compute the
deficiency WTC, EWT, and FWT are erroneous and must be reconsidered.

 The CIR denied ATC's protest, and its subsequent request for reconsideration.

 Subsequently, the ATC proceeded to file a judicial protest before the CTA where it introduced the following
arguments: first, the LOA became invalid due to lack of revalidation; and second, the first, second, and third
Waivers were defective; thus, these did not validly extend the assessment period.

The Rulings of the CTA

At first instance, the CTA Second Division (CTA Division) ruled in ATC's favor and canceled the tax assessments
on account of prescription. It found that the subject Waivers were defective and, at the same time, that ATC was not
estopped from assailing the Waivers' validity.

However, on appeal at the CIR's instance, the CTA En Banc reinstated the assessments and remanded the case
to the CTA Division for further proceedings to determine ATC's tax liability.

Aggrieved, ATC assailed the CTA En Banc ruling before the Court.

Issue: Whether both parties are at fault and therefore

Ruling:

The Court recounted the defects found in the Waivers, viz.:

1. The notarization of the Waivers was not in accordance with the 2004 Rules on Notarial Practice;

2. Several waivers clearly failed to indicate the date of acceptance by the Bureau of Internal Revenue;

3. The Waivers were not signed by the proper revenue officer; and

4. The Waivers failed to specify the type of tax and the amount of tax due.
Stated differently, both parties were at fault. On the one hand, the BIR failed to observe the procedures in the
execution of a valid waiver. However, ATC was also remiss in its responsibility of preparing the waiver prior to
submission to and filing before the BIR.

Further, the Court explained that ATC benefited from the Waivers. They are estopped from assailing its validity. Thus,
the CTA En Banc was correct in applying the equitable principles of in pari delicto, unclean hands, and estoppel.

Motion for Reconsideration

ATC grounds the present motion on the following arguments: first, the Court focused solely on the first defect which
had been attributed to it and failed to address the issues arising from the three other defects which had been
attributed to the BIR. Second, the principles of in pari delicto, unclean hands, and estoppel do not apply with respect
to the second, third, and fourth defects. Third, all defects were attributable to the BIR, rendering them fatal to the
waivers' validity. A waiver is a bilateral agreement between the BIR and the taxpayer. When the tax authorities failed
to indicate properly their acceptance of the waivers executed by ATC, no valid agreement arose between the parties.

Court’s ruling:

If a waiver suffers from defects on account of both parties, the waiver's validity in relation to the timeliness of the
CIR's subsequent issuance of a tax assessment is not determined by a mere plurality of the defects committed
between the BIR and the taxpayer.

Verily, both parties in those cases contributed flaws to the waivers. However, the Court upheld the waivers as
effective because, although both parties caused separate defects, the taxpayer contested the waivers' validity only on
appeal.

A more circumspect appreciation of the relevant jurisprudence reveals that the taxpayer's contributory fault or
negligence coupled with estoppels will render effective an otherwise flawed waiver, regardless of the physical number
of mistakes attributable to a party.

In other words, while a waiver may have been deficient in formalities, the taxpayer's belated action on questioning its
validity tilts the scales in favor of the tax authorities.

In the present case, the Court considers the following:

First, it is no longer disputed that the subject defects were the result of both parties failure to observe diligence in
performing what is incumbent upon them, respectively, relative to the execution of a valid waiver, particularly the
requirements outlined in applicable BIR issuances. That the defects attributable to one party had been greater in
number cannot diminish the seriousness of the counter-party's fault or negligence.

Second, ATC issued eight successive Waivers over the course of four years (2004-2008). The Waivers had always
been marred by defects and, yet, ATC continued to correspond with the tax authorities and allowed them to proceed
with their investigation, as extended by the Waivers in question.

Third, when the CIR issued the FLD, ATC did not question the Waivers' validity. It raised this argument for the first
time in its appeal to the CTA, after obtaining an unfavorable CIR decision on their administrative protest.

That ATC acquiesced to the BIR's extended investigation and failed to assail the Waivers' validity at the earliest
opportunity gives rise to estoppel. Moreover, ATC's belated attempt to cast doubt over the Waivers' validity could only
be interpreted as a mere afterthought to resist possible tax liability.

Verily, it has been held that the doctrine of estoppel, as a bar to the statute of limitations protecting a taxpayer from
prolonged investigations must be applied sparingly.

However, the number of successive Waivers executed by ATC is telling. Certainly, no taxpayer may be allowed to
execute haphazard waivers deliberately, go through the motions that the waivers are effective, and lead the tax
authorities to believe that the assessment period has been extended, only to deny the validity thereof when it
becomes unfavorable to him. Otherwise, it would create a dangerous situation – "open to abuse by unscrupulous
taxpayers who intend to escape their responsibility to pay taxes by mere expedient of hiding behind technicalities."
GENOVEVA S. SUAREZ, PETITIONER,

VS. PEOPLE OF THE PHILIPPINES

AND THE BUREAU OF INTERNAL REVENUE,

Facts:

 City Prosecutor of Manila filed an Information against petitioner for violation of the Tax Code.

 Petitioner pleaded not guilty to the offense charged. During pre-trial, the prosecution and
defense stipulated that petitioner is the Executive Vice-President of 21st Century at the time
of the assessment.

 CIR issued FANs and FLDs to 21st Century, demanding payment for deficiency income tax,
improperly accumulated earnings tax, minimum corporate income tax, expanded withholding
tax, value-added tax, and compromise penalty, in the aggregate amount of P747,964.49 for
taxable year 2000.

 21st Century, represented by its Vice-President, John S. Suarez, filed a Protest against the FLDs and
requested the Bureau of Internal Revenue (BIR) for reinvestigation of the assessment issued against it.
However, on December 5, 2005, the case docket of 21st Century was forwarded to the Chief Collection
Division, for collection of the deficiency taxes because of 21st Century's failure to submit within 60 days from
date of protest supporting documents to refute the assessment.

 Revenue District Officer (RDO) issued the First Notice of Delinquent Account to 21st Century
requiring it to settle its tax deficiencies. The RDO warned 21st Century that in case of failure
to settle its tax obligations, the case shall be referred to the BIR legal division for appropriate
action.

 in a bid to prevent the seizure of 2st Century's properties, petitioner sent a Letter to the RDO
requesting additional time to secure the services of an external accountant to assist
21st Century in organizing its accounting records so that it could provide the BIR evidence
supporting its financial statements and income tax returns Petitioner also expressed her
willingness to settle 21st Century's tax liabilities, through compromise.

 Despite this, the CIR, on November 28, 2006, issued a WDL against 21st Century. BIR
issued a Warrant of Garnishment to Equitable-PCI Bank against the account of 21st Century,
to no avail.

 Thereafter trial was proceeded.

 The RTC was convinced that the prosecution clearly established the criminal and civil
liabilities of petitioner taking into consideration the testimonial and documentary evidence
presented by the prosecution.

 Aggrieved, petitioner filed a petition for review to the CTA.

 the CTA in Division issued its Decision affirming the conviction of petitioner. However, the
CTA in Division deleted the RTC's order for petitioner to pay the tax liabilities. Instead, it was
21st Century that was ordered to be civilly liable for the unpaid taxes.
Issue: whether petitioner, as the Executive Vice President of 21st Century, may be held criminally
liable for 21st Century's failure to pay its tax liabilities.
As discussed by the CTA En Banc in the assailed decision, the following elements must be established by the
prosecution to secure the conviction of petitioner in this case, to wit:

(1) That a corporate taxpayer is required under the NIRC to pay any tax, make a return, keep any record, or supply
correct and accurate information;

(2) That the corporate taxpayer failed to pay the required tax, make a return or keep the required record, or supply
the correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on
compensation, at the time or times required by law or rules and regulations; and

(3) That accused, as the employee responsible for the violation, willfully failed to pay such tax, make such return,
keep such record, or supply such correct and accurate information, or withhold or remit taxes withheld, or refund
excess taxes withheld on compensation, at the time or times required by law or rules and regulations.

There is no dispute about the presence of the first and second elements. It is the third element –
whether petitioner is a "responsible officer" of 21st Century who may be indicted and convicted of
failure to pay taxes and who willfully failed to pay such taxes – that is contentious.

A corporation is an artificial being created by fiction of law. By the corporation's nature as an abstract
being, it cannot be arrested and imprisoned; hence, it cannot be penalized for a crime punishable by
imprisonment. As early as 1930 in the case of People v. Tan Boon Kong the Court already held that
for crimes committed by a corporation, the responsible officers thereof would personally bear the
criminal liability. This is because a corporation can act only through its officers and agents.

In Ching v. Secretary of Justice the Court upheld the finding of probable cause and the filing of
Information for violation of Presidential Decree No. 115 or the Trust Receipts Law against petitioner
Ching as the one who signed the trust receipts, on behalf of the corporation.

In ABS-CBN v. Gozon (ABS-CBN) the Court discussed that although corporate officers may be held
liable for a crime committed under the Intellectual Property Code, their criminal liability stems from
their active participation in the commission of the wrongful act. Hence, in ABS-CBN, the Court
affirmed the finding of probable cause against two of GMA's executives for copyright infringement of
ABS-CBN's news footage because of their position as Head of News Operations and Program
Manager. However, the Court excluded from the filing of Information other GMA corporate officers
because:

Mere membership of the Board or being President per se does not mean knowledge, approval, and
participation in the act alleged as criminal. There must be a showing of active participation, not
simply a constructive one.

This same doctrine was reiterated in SEC v. Price Richardson Corporation where the Court stated
that to be criminally liable for the acts of a corporation, there must be a showing that its officers,
directors, and shareholders actively participated in or had the power to prevent the wrongful act.

In this case, petitioner's position as Executive Vice-President of 21st Century will not per se make
her liable for the failure of 21st Century to pay its tax liabilities. In the words of Section 253 of the
NIRC, petitioner must have been the employee or officer responsible for the violation.

Contrary to the conclusion arrived at by the RTC and CTA, petitioner's Letter to the BIR asking
for an extension of time to pay the tax liabilities of 21st Century, and signifying her intent as
representative of 21st Century to settle the tax liabilities of the corporation through compromise, is
not enough to pronounce her guilt beyond reasonable doubt. This single Letter does not suffice to
prove that petitioner has actively participated in, or has failed to prevent the violation by 21st Century
of the provisions of the NIRC.

As pointed out by petitioner, the prosecution, which has the burden of proving petitioner's guilt
beyond reasonable doubt, failed to introduce any evidence that would show that petitioner's duties
and responsibilities as Executive Vice-President of 21st Century allowed her to participate in
21st Century's failure to pay its tax liabilities. The records of the case is bereft of any evidence
showing that petitioner's acts and omissions caused 21st Century to violate the provisions of the
NIRC. The prosecution neither proved that it is within petitioner's power as Executive Vice-President
of 21st Century to prevent any such violation. Absent proof that petitioner had any direct and active
participation in the non-payment of 21st Century's tax liabilities, the Court cannot convict her of
violation of the provisions of the NIRC.

On another note, it cannot be said that petitioner's Letter to the BIR, expressing her willingness
to settle 21st Century's tax liabilities through compromise, may be received in evidence as an
implied admission of her guilt pursuant to Section 28 of Rule 130 of the 2019 Amendment to the
Revised Rules on Evidence. The same Rule provides for exceptions, such that, in criminal cases, an
offer of compromise for those involving quasi-offenses (criminal negligence) and those allowed by
law to be compromised, cannot be received in evidence as an implied admission of the accused's
guilt.

Section 204 of the NIRC which provides authority to the CIR to, among others, enter into a
compromise with taxpayers, explicitly states that "[a]ll criminal violations [of the NIRC] may be
compromised except: (a) those already filed in court, or (b) those involving fraud." Thus, the NIRC
itself allows compromise even for violations of its penal provisions.

Further, in San Miguel Corporation v. Kalalo involving a criminal case for violation of Batas
Pambansa Blg. 22, the Court held that the accused's act of sending the Offer of Compromise prior to
the filing of the criminal complaint was not made in the context of a criminal proceeding, and
therefore, cannot be considered as an implied admission of guilt. Here, petitioner's alleged letter to
the RDO expressing her willingness to settle the tax liabilities of 21st Century was sent on August
24, 2006. It was only on May 28, 2007 that the RDO issued a Memorandum recommending the filing
of proper case against 21st Century for failure to pay its delinquent tax liabilities, while the
Information was only filed on August 21, 2008 by the Office of the City Prosecutor of Manila. Thus,
petitioner's offer of compromise cannot be received in evidence as an implied admission of guilt.

In criminal cases, the overriding consideration is not whether the court doubts the innocence of
the accused but whether it entertains a reasonable doubt as to his guilt. If there exists even one iota
of doubt, this Court is under a longstanding legal injunction to resolve the doubt in favor of the
accused.