Commissioner of Internal Revenue v.

Liquigaz Philippines Corporation void pursuant to Section 228 of the National Internal Revenue Code (NIRC) of
G.R. NO. 215534, April 18, 2016 1997, as implemented by Revenue Regulations (RR) No. 12-99.

FACTS: The CTA Division noted that unlike the PAN and the FLD, the FDDA issued did
Liquigaz Philippines Corp is a corporation duly organized and existing under not provided the details thereof, hence, Liquigaz had no way of knowing that
Philippine laws. On July 11, 2006, it received a copy of Letter of Authority, items were considered by the CIR in arriving at the deficiency assessments.
authorizing the investigation of all internal revenue taxed for taxable year This was especially true because the FDDA reflected a different amount from
2005. what was stated in the FLD. The CTA division explained that though the legal
bases for the EWT and FBT assessment were stated in the FDDA, the taxpayer
On April 9, 2008, Liquigaz received an undated letter purporting to be a Notice was not notified of the factual bases thereof, as required in Sec. 228 of the
of Informal Conference, as well as detailed computation of its supposed tax NIRC.
liability. On May 28, 2008, it received a copy of the Preliminary Assessment
Notice, dated May 20, 2008, together with the attached details of On the other hand, it upheld the WTC assessment against Liquigaz. It noted
discrepancies for the calendar year ending Dec. 31, 2005. Upon investigation, that the factual bases used in the FLD and the FDDA with regard thereto were
Liquigaz was initially assess with deficiency withholding tax liabilities, inclusive the same as the difference in the amount merely resulted from the use of a
of interest, in the aggregate amount of P 23,931,708.72. different tax rate.

Thereafter, on June 25, 2008, it received a Formal Letter of Demand, together The CTA division agreed with Liquigaz that the tax rate of 25.40% was more
with its attached details of discrepancies, for the calendar year ending Dec. 31, appropriate because it represents the effective tax compensation paid,
2005. The total deficiency withholding tax liabilities, inclusive of interest, computed based on the total withholding tax on compensation paid and the
under the Formal Letter of Demand was P 24,332,347.20 total taxable income for the taxable year 2005. It did not give credence to
Liquigaz’s explanation that the salaries account included accrued bonus, 13th
On July 25, 2008, Liquigaz filed its protest against the Final Letter of Demand month pay, de minimis benefits and other benefits and contributions which
and subsequently submitted its supporting documents on September 23, were not subject to withholding tax on compensation. The CTA Division relied
2008. On July 1, 2010, it received a copy of the Final Decision on Disputed on the report prepared by Maceda, Jr., the Court-commissioned independent
Assessment (FDDA) covering the tax audit for the calendar year ending Dec. accountant, which found that Liquigaz was unable to substantiate the
31, 2005. As reflected therein, the CIR still found Liquigaz liable for deficiency discrepancy found by the CIR on its withholding tax liability on compensation.
withholding tax liabilities, inclusive of interest, in the aggregate amount of P
22,380,025.19. Consequently, On July 29, 2010, Liquigaz filed its petition for
review before the CTA assailing the validity of the Final Decision on Disputed
Assessment.

ISSUE:
Whether or not the Final Decision on Disputed Assessment is void.

HELD:
The CTA Division partially granted Liquigaz's petition cancelling the EWT and
FBT assessments but affirmed with modification the WTC assessment. It ruled
that the portion of the FDDA relating to the EWT and the FBT assessment was
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro
 Commissioner of Internal Revenue v. Kepco Ilijan Corporation In opposition, respondent filed its Motion to Deny Due Course, arguing that
G.R. no. 199422, June 21, 2016 petitioner is not lawfully entitled to the annulment of judgment on the ground
that the CTA En Banc is bereft of jurisdiction to entertain annulment of
FACTS: judgments on the premise that the Rules of Court, RA 9282 and the Revised
For the 1st and 2nd quarters of the CY 2000, respondent filed its quarterly VAT Rules of the Court of Tax Appeals do not expressly provide a remedy on
returns with the BIR. It also filed the application for zero rated sales for annulment of judgments. The CTA En Banc dismissed the petition.
calendar year 2000 which was duly approved by the BIR. Thereafter,
respondent filed with the BIR its claim for refund in the amount of P ISSUE:
49,569,448.73 representing input tax incurred for the 1st and 2nd quarter of Whether or not the CTA has jurisdiction to take cognizance of the petitioner
the CY 2000 from its importation and domestic purchases of capital goods and for annulment of judgment.
services preparatory to its production and sales of electricity to the NAPOCOR.
HELD:
Petitioner did not act upon respondent’s claim for refund or issuance of tax Annulment of judgment, as provided for in Rule 47 of the Rules of Court, is
credit certificate for the 1st and 2nd quarters of the CY 2000. Consequently, based only on the grounds of extrinsic fraud and lack of jurisdiction. It is a
respondent filed a petitioner for review. recourse that presupposes the filing of a separate and original action for the
purpose of annulling or avoiding a decision in another case. Annulment is a
In the answer, petitioner alleged that following Special and Affirmative remedy in law independent of the case where the judgment sought to be
Defenses: 1) respondent is not entitled to the refund of the amounts prayed annulled is rendered. Annulment of judgment involves the exercise of original
for; 2) the petition was prematurely filed for respondent’s failure to exhaust jurisdiction, as expressly conferred on the CA by BP 129, sec. 9(2). It also
administrative remedies; 3) respondent failed to show that the taxes paid implies power by a superior court over a subordinate one, as provided for in
were erroneously or illegally collected; and 4) respondent has no cause of Rule 17 of the Rules of Court, wherein the appellate court may annul a decision
action. CTA rendered its Decision entitling respondent to a refund in the of the Regional Trial Court, or the latter court may annul a decision of the
amount of P443,447,184.50, representing unutilized input VAT on its domestic Municipal or Metropolitan Trial Court.
purchases and importation of capital goods for the 1st and 2nd quarters of 2000.
But the law and the rules are silent when it comes to a situation to the case at
There being no motion for reconsideration filed by the petitioner, the bar. The Divisions are not considered separate and distinct courts but are
abovementioned decision became final and executory and a corresponding divisions of one and the same court; there is no hierarchy of courts within the
Entry of Judgment was issued. Petitioner alleges that she learned only of the SC and the CA, for they each remain as one court notwithstanding that they
Decision and the subsequent issuance of the writ when the Office of the also work in divisions. The Supreme Court sitting En Banc is not an appellate
Deputy Commissioner for Legal and Inspection Group received a court vis-avis its divisions, and its exercises no appellate jurisdiction over the
Memorandum form the CTA recommending the issuance of a Tax Credit later.
Certificate in favor of the respondent in the amount of P 443,447,184.50.
Petitioner filed a petitioner for annulment of judgment with the CTA En Banc, Thus, the Revised Rules of the CTA and even the Rules of Court which apply
praying for the following reliefs: (1) that the Decision dated September 11, suppletorily thereto provide for no instance in which the en banc may reverse,
2009 of the CTA First Division in CTA Case No. 6412 be annulled and set aside; annul or void a final decision of a division. Verily, the Revised Rules of the CTA
(2) that the Entry of Judgment on October 10, 2009 and Writ of Execution on provide for no instance of an annulment of judgment at all.
February 16, 2010 be nullified; and (3) that the CTA First Division be directed
to re-open CTA Case No. 6412 to allow petitioner to submit her memoranda A direct petition for annulment of a judgment of the CTA to the Supreme
setting forth her substantial legal defenses. Court, meanwhile, is likewise unavailing, for the same reason that there is no
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro
identical remedy with the High Court to annul a final and executory judgment
of the Court of Appeals. RA No. 9282, Section l puts the CTA on the same level
as the Court of Appeals, so that if the latter's final judgments may not be
annulled before the Supreme Court, then the CTA's own decisions similarly
may not be so annulled. And more importantly, it has been previously
discussed that annulment of judgment is an original action, yet, it is not among
the cases enumerated in the Constitution over which the SC exercises original
jurisdiction. Nevertheless, there will be extraordinary cases, when the interest
of justice highly demands it, where final judgment of the CA, the CTA or any
other inferior court may still be vacated or subjected to the SC’s modification,
reversal annulment or declaration as void.

Instead, what remained as a remedy for the petitioner was to file for certiorari
under Rule 65, which could have been filed as an original action before the SC.
Certiorari is available when there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law, such as in the case at bar.
Since the petition below invoked the gross and palpable negligence of
petitioner's counsel which is allegedly tantamount to its being deprived of due
process and its day in court as party-litigant and, as it also invokes lack of
jurisdiction of the CTA First Division to entertain the petition filed by private
respondent since the same allegedly fails to comply with the reglementary
periods for judicial remedies involving administrative claims for refund of
excess unutilized input VAT under the National Internal Revenue Code (NJRC),
which periods it claims to be jurisdictional, then the proper remedy that
petitioner should have availed of was indeed a petition for certiorari under
Rule 65, an original or independent action premised on the public respondent
having acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction.
In any event, petitioner’s failure to avail of this remedy and mistake filing of
the wrong action are fatal to its case and renders and leaves the CTA’s decision
as indeed final and executory. By the time the instant petitioner for review was
filed by petitioner with this Court, more than 60 days have passed since the
petitioner’s allegedy discovery of its loss in the case as brought about by the
alleged negligence or fraud of its counsel.

VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro

 Commissioner of Internal Revenue v. Mirant Pagbilao Corporation toto the assailed amended decision and resolved the issues presented.
G.R. No. 180434, January 20, 2016
ISSUE:
FACTS: Whether or not the CTA had jurisdiction to entertain MPC’s judicial claim.
MPC is a duly-registered Philippine corporation and primarily engaged in the
generation and distribution of electricity to the NAPOCOR under a Build, HELD:
Operate, Transfer scheme. As such, it is registered with the BIR as a VAT It is well-settled that a court’s jurisdiction may be raised at any stage of the
taxpayer. The BIR approved MPC’s application for effective Zero-Rating for the proceedings, even on appeal. The reason is that jurisdiction is conferred by
construction and operation of its power plant. law, and lack of it affects the very authority of the court to take cognizance of
and to render judgment on the action. Even if a party did not raise the issue of
For taxable year 2000, the quarterly VAT returns filed by MPC showed an jurisdiction, the reviewing court is not precluded from ruling that it has no
excess input VAT paid on domestic purchases of goods, services and jurisdiction of the case. In this sense, dismissal for lack of jurisdiction may even
importation of goods in the amount of P 127,140,331.85. MPC filed before the be ordered by the court motu proprio.
BIR an administrative claim for refund of its input VAT covering the taxable
year of 2000. Thereafter, fearing that the period for filing a judicial claim for In the present case, compliance with the requirements on administrative
refund was about to expire, MPC proceeded to file a petitioner for review claims with the Cir, which are to precede judicial actions with the CTA,
before the CTA without waiting for the CIR’s action on the administrative indubitably impinge on the tax court’s jurisdiction. In CIR v. Aichi Forging
claim. Company of Asia, Inc., the Court ruled that the premature filing of a claim for
refund or credit of input VAT before the CTA warrants a dismissal, inasmuch
CTA 2nd Division rendered a Decision partially granting MPC’s claim for refund, as no jurisdiction is acquired by the tax court. Pertinent thereto are the
and ordering the CIR to grant a refund or a tax credit certificate, but only in provisions of Sec. 112 of the NIRC at the time of MPC’s filing of the
the reduced amount of P 118,749,001.55, representing MPC’s unutilized input administrative and judicial claims, and which prescribe the periods within
VAT incurred for the 2nd, 3rd and 4th quarters of taxable year 2000. Further, by which to file and resolve such claims.
virtue of NAPOCOR’s exemption from direct and indirect taxes, MPC’s sales of
services to NAPOCOR is subject to VAT at 0% rate. The Secretary of Finance Contrary to the specified periods, specifically those that are provided in the
even issued a Memorandum addressed to the CIR, espousing the Court’s ruling second paragraph of Section 112(D), MPC filed its petition for review with the
that purchases by NAPOCOR of electricity from independent power producers CTA on March 26, 2002, or a mere 15 days after it filed an administrative claim
are subject to VAT at 0% rate. for refund with the CIR on March 11, 2002. It then did not wait for the lapse
of the 120-day period expressly provided for by law within which the CIR shall
Undaunted, MPC filed a motion for partial reconsideration and new trial in grant or deny the application for refund.
view of the additional amount it sought to be approved. In an Amended
Decision, the CTA 2nd Division found that MPC is entitled to a modified amount It is indisputable that compliance with the 120-day waiting period is
of P 118,756,640.97 input VAT, upon allowing the amount of P 7,639.42 in mandatory and jurisdictional. The waiting period, originally fixed at 60 days
addition to the VAT input tax. However, MPC’s motion for new trial was only, was part of the provisions of the 1st VAT law. The waiting period was
denied. extended to 120 days effective the Tax Reform Act of 1997. Failure to comply
with the 120-day waiting period violates a mandatory provision of law. It
Meanwhile, the CIR filed a motion for reconsideration of the amended violates the doctrine of exhaustion of administrative remedies and renders the
decision. However, the CTA 2nd Division denied the motion. Thereafter, the CIR petitioner premature and thus without a cause of action, which the effect that
filed a petition for review before the CTA En Banc. CTA En Banc affirmed in the CTA does not acquire jurisdiction over the taxpayer’s petition.
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro
The Court explained further that the old rule that the taxpayer may file the
judicial claim, without waiting for the Commissioner’s decision if the 2-year
prescriptive period is about to expire, cannot apply because that rule was
adopted before the enactment of the 30-day period. The 30-day period was
adopted precisely to do away with the old rule, so that under the VAT System
the taxpayer will always have 30 days to file the judicial claim eve if the
Commissioner acts only on the 120th days, or does not act at all during the 120-
days period. With the 30-day period always available to the taxpayer, the
taxpayer can no longer file a judicial claim for refund or credit of input Vat
without waiting for the Commissioner to decide until the expiration of the 120-
day period.

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is
construed strictly against the taxpayer. One of the conditions for a judicial
claim of refund or credit under the VAT System is compliance with the 120+30
day mandatory and jurisdictional periods. Thus, strict compliance with the
120+30 day periods is necessary for such a claim to prosper, whether before,
during or after the effectivity of the Atlas doctrine, except for the period from
the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October
2010 when the Aichi doctrine was adopted, which again reinstated the 120+30
day periods as mandatory and jurisdictional.

Clearly, MPC’s failure to observe the mandatory 120-day period under the law
was fatal to its immediate filing of a judicial claim before the CTA. It rendered
the filing of the CTA petition premature, and barred the tax court from
acquiring jurisdiction over the same. Thus, the dismissal of the petition is in
order. Tax refunds or tax credits – just like tax exemptions – are strictly
construed against taxpayers, the latter having the burden to prove strict
compliance with the conditions for the grant of the tax refund or credit.

VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro

 San Roque Power Corporation v. Commissioner of Internal Revenue It was only in Aichi that the the SC directly tackled the 120-day period in Sec.
G.R. No. 203249, July 23, 2018 112 (d) of the NIRC and declared it to be mandatory and jurisdictional. In
particular, Aichi brushed side the contention that the non-observance of the
FACTS: 120-day period is not fatal to the filing of a judicial claim as long as both the
San Roque Power Corporation is a VAT-registered taxpayer which was granted administrative and judicial claims are filed within the 2-year prescriptive
by the BIR a zero-rating on its sales of electricity to NAPOCOR. Petitioner filed period provided in sec. 112 (a) of the NIRC.
two separate administrative claims for refund of its alleged unutilized input tax
for the period January to March 2004, and April to December 2004. Due to the Accordingly, a taxpayer can file a judicial claim 1) only within the 30 days after
inaction of respondent CIR, the petitioner filed petitioner for review before the Commissioner partially or fully denies the claim within the 120-day period,
the CTA for its unutilized input VAT for the period Jan to March 2004 or 2) only within 30 days from the expiration of the 120-day period if the
amounting to P 17,017,648.31 and for the unutilized input VAT for the period Commissioner does not act within such period. This is the rule of procedure
April to December 2004, amounting to P 14,959,061.57. beginning January 1, 1998 as interpreted in Aichi.

During the trial, the petitioner presented documentary and testimonial In this case, the petitioner timely filed its administrative claims for
evidence to prove its claim. On the other hand, respondent was deemed to refund/credit of its unutilized input VAT. However, the petitioner, without
have waived its right to present evidence due to its failure to appear in the two waiting for the full expiration of the 120-days period and without any decision
scheduled hearing on the presentation of evidence for the defense. In due by the CIR (1st Case: 98 days and 2nd case: 113 days), immediately filed its
course, the CTA partially granted the refund claim of the petitioner in the total petitioner for review with the CTA. In other words, the judicial claims of the
amount of P 29,932,505.18. the CIR moved for reconsideration but to no avail. petitioner were prematurely filed.
The CIR filed a petition for review with the CTA En Banc
The Court recognized an exception to the mandatory and jurisdictional nature
Among other issues, the CIR questioned the claimant’s judicial recourse to the of the 120+30-day period. It was noted that BIR Ruling No. DA-489-03, which
CTA as inconsistent with the procedure prescribed in Sec. 112 (D) of the NIRC. expressly stated that “A taxpayer-claimant need not wait for the lapse of the
The CIR asserted that the petitions for review filed with the CTA were 120-day period before it could seek judicial relief with the CTA by way of
premature, and thus, should be dismissed. The CTA En Banc ruled in favor of Petitioner for Review.” It is a general interpretative rule issued by the CIR
the CIR. pursuant to its power under Sec. 4 of the NIRC, hence, applicable to all
taxpayers. Thus, taxpayers can rely on this ruling from the time of its issuance
ISSUE: on Dec. 10, 2003. The conclusion is impelled by the principle of equitable
Whether or not the petitioner prematurely files a judicial claim. estoppel in sec. 246 of the NIRC which decrees that a BIR regulation or ruling
cannot adversely prejudice a taxpayer who in good faith relied on the BIR
HELD: regulation or ruling prior to its reversal.
Concerning the 120-day period in sec. 112 (d) of the NIRC, there was no
jurisprudential rule prior to Aichi interpreting such provision as permitting the In other words, the 120+ 30-day period is generally mandatory and
premature filing of a judicial claim before the expiration of the 120-day period. jurisdictional from the effectivity of the 1997 NIRC on 1 January 1998, up to
The alleged CTA decision that entertained the judicial claims despite their the present. By way of an exception, judicial claims filed during the window
prematurity are not to be relied upon because they are not final decision of period from 10 December 2003 to 6 October 2010 (Aichi’s Promulgation),
the Supreme Court worthy of according binding precedence. That Aichi was need not wait for the exhaustion of the 120-day period. The exception in San
yet to be promulgated at that time did not mean that the premature filing of Roque has been applied consistently in numerous decisions of this Court.
a petitioner for review before the CTA was a permissible act.
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro
In this case, the 2 judicial claims filed by the petitioner fell within the window
period, thus, the CTA can take cognizance over them.

The beneficiary of BIR Ruling No. DA-489-03 include those who did not
specifically invoke it. Thus, all, taxpayers can rely on the BIR Ruling from the
time of its issuance on Dec. 10, 2003 up to its reversal by SC in the case of Aichi
on Oct. 6, 2010, where the SC held that the 120+30-day periods are mandatory
and jurisdictional.

All told, the CTA jurisdiction over the judicial claims filed by the petitioner in
this case. The CTA En Banc, thus, erred in setting aside the decision of the CTA
Division on the ground of lack of jurisdiction. Consequently, the decision of the
CTA Division partially granting the claim for refund/ credit in favor of the
petitioner must be reinstated.

VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro

 Asian Transmission Corporation v. Commissioner of Internal Revenue execution of a valid waiver of the state of limitations; and pointed to CIR v.
G.R. No. 230861, September 19, 2018 Next Mobile Inc., to highlight the recognized exception to the strict application
of RMO 20-90 and RDAO 05-01.
FACTS:
ATC is a corporation duly organized and existing under Philippine Law. ATC is In CIR v. Next Mobile Inc., the Court declared that as general rule a waiver that
a manufacturer of motor vehicle transmission component parts and engines did not comply with the requisites for validity specified in RMO No. 20-90 and
of Mitsubishi vehicles. It was organized and registered with the SEC. ATC filed RDAO 01-05 was invalid and ineffective to extend the prescriptive period to
its Annual Information Return of Income Taxes Withheld on Compensation and assess the deficiency taxes. However, due to peculiar circumstances obtaining,
Final Withholding Taxes and Annual Information Return of Creditable Income the Court treated the case as an exception to the rule, and considered the
Taxed Withheld (Expanded)/ Income Payment Exempt from Withholding Tax, waivers concerned as valid for the following reasons:
respectively.
1. The parties in this case are in pari delicto or “in equal fault.” It
ATC received Letter of Authority where the CIR informed ATC that its revenue connotes that the two parties to a controversy are equally culpable or
officers from the Large Taxpayers Audit and Investigation Division II shall guilty and they shall have no action against each other. However,
examine its books of accounts and other accounting records for the taxable although the parties are in pari delicto, the Court may interfere and
year 2002. Thereafter, the CIR issued a Preliminary Assessment Notice to ATC. grant relief at the suit of one of them, where public policy requires its
Consequently, on various dates, ATC, through its Vice President for Personnel intervention, even though the result may be that a benefit will be
and Legal Affairs, Mr. Tax, executed several documents denominated as derived by one party who is in equal guilt with the other.
“Waiver of the Defense of Prescription Under the Statute of Limitations of the Here, to uphold the validity of the Waivers would be consistent with
National Internal Revenue Code”. the public policy embodied in the principle that taxes are the lifeblood
of the government, and their prompt and certain availability is an
Meanwhile, ATC availed of the Tax Amnesty Program under RA 9480. ATC imperious need. As between the parties, it would be more equitable
received a Formal Letter of Demand from the CIR for deficiency in the amount if petitioner’s lapses were allowed to pass and consequently uphold
of [WTC] P 62,977,798.02, [EWT] in the of P 9,916,910.51, [FWT] in the the waivers in order to support this principle and public policy.
amount of P 501,077.72. ATC filed its protest letter in raged thereto. 2. The Court has repeatedly pronounced that parties must come to court
with clean hands. Following the foregoing principle, respondent
Accordingly, ATC received the Final Decision on Disputed Assessment where should not be allowed to benefit from the flaws in its own waivers and
the CIR found ATC liable to pay deficiency tax in the amount of P successfully insist on their invalidity in order to evade its responsibility
75,696,616.75. Thus, ATC filed an appeal letter/request for reconsideration to pay taxes.
with the CIR. The CIR denied the same. The CTA rendered its decision granting
the petitioner for review of ATC. The CTA En Banc reverse and set aside the 3. Respondent is estopped from questioning the validity of its Waivers.
decision of the CTA in Division and holding that the waivers were valid. The application of estoppel in this case would promote the
administration of the law, prevent injustice and avert the
ISSUE: accomplishment of a wrong and undue advantage. Respondent
Whether or not there is a valid waiver of the Statute of Limitations. executed 5 waivers and delivered them to petitioner, one after the
other. It allowed petitioner to rely on them and did not raise any
HELD: objection against their validity until petitioner assessed taxes and
To be noted is that the CTA En Banc cited CIR v. Kudos Metal Corp, whereby penalties against it. Moreover, the application of estoppel is necessary
the Court reiterated that RMO 20-90 and RDAO 05-01 governed the proper to prevent the undue injury against it. Moreover, the application of
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro
 estoppel is necessary to prevent the undue injury that the government Moreover, the principle of estoppel was applicable. The execution of the
would suffer because of the cancellation of petitioner’s assessment of waivers was to the advantage of ATC because the waivers would provide to
respondent’s tax liabilities. ATC the sufficient time to gather and produce voluminous records for the
audit. It would really be unfair, therefore, were ATC to be permitted to assail
4. The Court cannot tolerate this highly suspicious situation. In this case, the waivers only after the final assessment proved to be adverse.
the taxpayer, on one hand, after voluntarily executing waivers,
insisted on their invalidity by raising the very same defects it cause. On
the other hand, the BIR miserably failed to exact from respondent
compliance with its rules. The BIR’s negligence in the performance of
its duties was so gross that it amounted to malice and bad faith.
Moreover, the BIR was so lax such that it seemed that it consented to
the mistakes in the Waivers. Such a situation is dangerous and open
to abuse by unscrupulous taxpayers who intend to escape their
responsibility to pay taxes by mere expedient of hiding behind
technicalities.

In this case, the CTA in Division noted that the 8 Waivers of ATC contained the
following defects:
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
BIR;
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.

The agree with the holding of the CTA En Banc that ATC's case was similar to
the case of the taxpayer involved in Commissioner of Internal Revenue v. Next
Mobile Inc. The foregoing defects noted in the waivers of ATC were not solely
attributable to the CIR. Indeed, although RDAO 01-05 stated that the waiver
should not be accepted by the concerned BIR office or official unless duly
notarized, a careful reading of RDAO 01-05 indicates that the proper
preparation of the waiver was primarily the responsibility of the taxpayer or
its authorized representative signing the waiver. Such responsibility did not
pertain to the BIR as the receiving party. Consequently, ATC was not correct in
insisting that the act or omission giving rise to the defects of the waivers
should be ascribed solely to the respondent CIR and her subordinates.

VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro

 Commissioner of Internal Revenue v. Bank of the Philippine Islands Afterwards, petitioner issued a Notice of Denial addressed to respondent,
G.R. No. 224327, June 11, 2018 requesting for the payment of CBC's deficiency Income Tax for taxable year
1986, within 15 days from receipt thereof, and petitioner issued another
FACTS: Letter addressed to respondent, denying the offer of compromise penalty, and
Citytrust Banking Corporation (CBC) filed its Annual Income Tax Returns for its requesting for the payment of the amount of P19,202,589.97, plus all
Regular Banking Unit, and Foreign Currency Deposit Unit for taxable year 1986. increments incident to delinquency, pursuant to Sections 248 (A) (3) and 249
Thereafter, CBC executed Waivers of the Statute of Limitations under the (C) (3) of the 1997 NIRC, as amended.
NIRC. Petitioner issued a Pre-Assessment Notice against CBC for deficiency
taxes, among which is for deficiency Income Tax for taxable year 1986 in the Consequently, petitioner issued a Warrant of Distraint and/or Levy against
total amount of P 19,202,589.97. The counsel for CBC filed its protest against respondent BPI which prompted the latter to file a Petition for Review with
the PAN. the CTA. The CTA granted the petitioner for review.

Petitioner issued a Letter, with attached Assessment Notices, demanding for According to the CTA Special 3rd Division, BPI can validly assail the Warrant of
the payment of the deficiency taxes within 30 days from receipt thereof. The Distraint and/or Levy, as its appellate jurisdiction is not limited to cases which
counsel for CBC filed its Protest against the assessments on May 27, 1991 and involve decisions of the Commissioner of Internal Revenue on matters relating
another Protest on Feb 27, 1992. to assessments or refunds. The Court further ruled that the Assessment
Notices, being issued only on May 6, 1991, were already issued beyond the
A Letter was again issued by petitioner requesting for the payment of CBC’s three-year period to assess, counting from April 15, 1987, when CBC filed its
Tax liabilities, within 10 days from receipt thereof. Annual Income Tax Returns for the taxable year 1986. The same Court also
held that the Waivers of Statute of Limitations executed on July 12, 1990 and
The counsel for CBC, issued a letter addressed to petitioner offering a November 8, 1990 were not in accordance with the proper form of a valid
compromise settlement on its deficiency Income Tax Assessment for Taxable waiver pursuant to RMO No. 20-90, thus, the waivers failed to extend the
year 1986, with an attached Application for Compromise Settlement/ period given to petitioner to assess.
Abatement of Penalties under RMO No. 45-93,20% of the subject assessment.
ISSUE:
Petitioner approved the earlier mentioned Application for Compromise 1. Whether or not the CTA did not acquire jurisdiction over the case for
Settlement of CBC, provided that 100% of its deficiency Income Tax respondent’s failure to contest the assessments made against it by the
Assessment for the year 1986 be paid within 15 days from receipt thereof. BIR within the period prescribed by law.
2. Whether or not respondent is not allowed to raise the defense of
The counsel for CBC issued a Letter addressed to petitioner, requesting for a prescription against the efforts of the government to collect the tax
reconsideration of the approved amount as compromise settlement, and assessed against it.
offering to pay the amount of P 1,600,000.00 as full and final settlement of the
subject assessment. The same counsel for CBC issued a Letter reiterating its HELD:
request for reconsideration and offering to increase its full and final 1. No. The CTA did not err in its ruling that it has jurisdiction over cases
settlement in the amount of P 3,200,000.00. asking for the cancellation and withdrawal of a warrant of distraint
and/or levy as provided under sec. 7 of RA 9282.
Petitioner disapproved the Application for Compromise Settlement of CBC.
The counsel of CBC issued Letter addressed to petitioner requesting for An assessment becomes final and unappealable if within 30 days from
reconsideration and officering to pay the increased amount of P 4,303,758.50. receipt of the assessment, the taxpayer fails to file his or her protest
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro
 requesting for reconsideration or reinvestigation as provided in sec. prove the receipt of the assessment by respondent would necessarily
299 of the NIRC. The CTA was correct in ruling that petitioner failed to lead to the conclusion that no assessment was issued.
prove that it sent a notice of assessment and that it was received by
respondent, thus: The February 5, 1992 Decision of the CIR which she 2. No. Petitioner cannot implore the doctrine of estoppel just to
insists to be the reckoning point to protest, was not proven to have compensate its failure to follow the proper procedure. The doctrine
been received by BPI when the latter denied its receipt. Thus, the of estoppel cannot be applied in this case as an exception to the statue
assessment notice dated May 6, 1991 should be deemed as the final of limitations on the assessment of taxes considering that there is a
decision of the CIR on the matter, in which BPI timely protested on detailed procedure for the proper execution of the waiver, which the
May 27, 1991. While a mailed letter is deemed received by the BIR must strictly follow. As such, the doctrine of estoppel cannot give
addressee in the ordinary course of mail, this is still merely a validity to an act that is prohibited by law or one that is against public
disputable presumption subject to controversion, and a direct denial policy.
of the receipt thereof shifts the burden upon the party favored by the
presumption to prove that the mailed letter was indeed received by Moreover, the BIR cannot hide behind the doctrine of estoppel to
the addressee. In the instant case, BPI denies receiving the assessment cover its failure to comply with RMO 20-90 and RDAO 05-01, which
notice, and the CIR was unable to present substantial evidence that the BIR itself issued. Having caused the defects in the waivers, the BIR
such notice was, indeed, mailed or sent before the BIR’s right to assess must beat the consequence. It cannot shift the blame to the taxpayer.
had prescribed and that said notice was received by BPI. As a matter To stress, a waiver of the statute of limitations, being a derogation of
of fact, there was an express admission on the part of the CIR that the taxpayer’s right to security against prolonged and unscrupulous
there was no proof that indeed the alleged Final Assessment Notice investigations, must be carefully and strictly construed.
was ever sent to or received by BPI.
Therefore, BPI is no estopped from raising the invalidity of the subject
Moreover, as correctly pointed out in the assailed Resolution, whether Waiver as the BIR in this case caused the defects thereof. As such, the
or not the Letter dated February 5, 1992 constitutes as the Final invalid Waivers did not operate to toll or extend the period of
Decision on the Disputed Assessment appealable under Section 229 prescription.
of the 1977 Tax Code, or whether the same was validly served and
duly received by BPI, are immaterial matters which will not cure the
nullity of the said Preliminary Assessment Notice and Assessment
Notices, as they were clearly made beyond the prescriptive period.

In the case of Nava v. CIR, the SC stressed on the importance of

proving the release, mailing or sending of the notice. While the SC
have held that an assessment is made when sent within the prescribed
period, even if received by the taxpayer after its expiration, this ruling
makes it more imperative that the release, mailing, or sending of the
notice be clearly and satisfactorily proved. Mere notations made
without the taxpayer’s intervention, notice, or control, without
adequate supporting evidence, cannot suffice; otherwise, the
taxpayer would be at the mercy of the revenue offices, without
adequate protection or defense. Thus, the failure of the petitioner to
VISAYA, Filouie C. | Taxation I | 3H | Atty. Cabaneiro