CIR v REYES and REYES vs CIR GR Nos.

159694, 163581

Facts: Decedent Tancinco left a 1,292 squaremeter residential lot and an old house thereon. The heirs of the decedent received a final estate tax assessment notice and a demand letter, both dated April 22, 1998,for the amount of P14,912,205.47, in clusive of surcharge and interest. The CIR i ssued a preliminary collection letter to Reyes, followed by a Fi nal Notice Before Seizure. Subsequently, a Warrant of Distraint and/or Levy was served upon the estate. Reyes initially protested the notice of levy but then theheirs proposed a compromise settlement of P1,000,000.00. The CIR rejected Reyess offer, pointing outthat since the estate tax is a charge on the estate and not on the heirs, the latters financial incapacity isimmaterial as, in fact, the gross value of the estate amounting to P32,420,360.00 is more than sufficient tosettle the tax liability. As the estate failed to pay its tax liability within the deadline, BIR notified Reyesthat the subject property would be sold at public auction on August 8, 2000. Reyes filed a protest with theBIR Appellate Division. Assailing the scheduled auction sale, she asserted that the assessment, letter of demand, and the whole tax proceedings against the estate are void ab initio. She offered to file thecorresponding estate tax return and pay the correct amount of tax without surcharge or interest.

NO. The 2nd paragraph of Sec. 228 of NIRC is clear and mandatory insofar as taxpayers shall be informedin writing of the law and the facts on which the assessment is made, otherwise the assessment shall bevoid. RA 8424 has already amended the provisions of Sec. 229 of NIRC on protesting an assessment. Theold requirement of merely notifying the taxpayer of the CIRs findings was changed in 1998 of informingthe taxpayer of not only the law, but also of the facts on which an assessment would be made, otherwise,the assessment itself would be invalid. Being invalid, the assessment canot be in turn be used as a basisfor the perfection of a tax compromise.Hence, it is premature to declare the compromise on the tax liability of the estate perfected andconsummated considering that the tax assessment is void. While administrative agencies, like the BIR,were not bound by procedural requirements, they were still required by law and equity to observesubstantive due process. The reason behind this requirement, said the CA, was to ensure that taxpayerswould be duly apprised of -- and could effectively protest -- the basis of tax assessments against them.7Since the assessment and the demand were void, the proceedings emanating from them were likewisevoid, and any order emanating from them could never attain finality.

Summary: The 2nd paragraph of Sec. 228 of NIRC is clear and mandatory. The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise the assessment shall be void. RA 8424 has already amended the provisions of Sec. 229 of NIRC on protesting an assessment. The old requirement of merely notifying the taxpayer of the CIRs findings was changed in 1998 of informing the taxpayer of not only the law, but also of the facts on which an assessment would be made, otherwise, the assessment itself would be invalid.

Issue: WON the assessment in this case can be used as a basis for the perfection of a tax compromise againstthe.

Ruling:

CIR v FIRST EXPRESS PAWNSHOP COMPANY, INC.

taxpayer is deemed to have submitted all supporting documents at the time of filing of its protest, the 180-day period likewise started to run on that same date.

Facts: CIR issued assessment notices against Respondent for deficiency income tax, VAT and documentary stamp tax on deposit on subscription and on pawn tickets. Respondent filed its written protest on the assessments. When CIR did not act on the protest during the 180-day period, respondent filed a petition before the CTA.

SURIGAO ELECTRIC v CTA 57 SCRA 523

Facts: Petitioner Surigao Electric Co., grantee of a legislative electric franchise, contested a warrant of distraintand levy to enforce the collection from "Mainit Electric" of a deficiency franchise tax plus surcharge. Thereafter the Commissioner, by letter dated April 2, 1961, advised the petitioner to take up the matter with the General Auditing Office, enclosing a copy of the 4th Indorsement of the Auditor General dated November 23, 1960. This indorsement indicated that the petitioner's liability for deficiency franchise tax for the period from September 1947 to June 1959 was P21,156.06, excluding surcharge. Subsequently, ina letter to the Auditor General dated August 2, 1962, the petitioner asked for reconsideration of theassessment, admitting liability only for the 2% franchise tax in accordance with its legislative franchiseand not at the higher rate of 5% imposed by Sec. 259 of the NIRC, which latter rate the Auditor Generalused as basis in computing the petitioner's deficiency franchise tax. An exchange of correspondence between the petitioner, on the one hand, and the Commissioner and the Auditor General, on the other,ensued, all on the matter of the petit ioner's liability for deficiency franchise tax. The controversyculminated in a revised assessment dated April 29, 1963 in the amount of P11,533.53, representing the petitioner's deficiency franchise-tax and surcharges thereon for the period from April 1, 1956 to June 30,1959. The petitioner then requested a recomputation of the revised assessmen t in a letter to theCommissioner dated June 6, 1963. The Commissioner, however,

Issue: Has Respondents right to dispute the assessment in the CTA prescribed?

Held: NO. The assessment against Respondent has not become final and unappealable. It cannot be said that respondent failed to submit relevant supporting documents that would render the assessment final because when respondent submitted its protest, respondent attached all the documents it felt were necessary to support its claim. Further, CIR cannot insist on the submission of proof of DST payment because such document does not exist as respondent claims that it is not liable to pay, and has not paid, the DST on the deposit on subscription. The term "relevant supporting documents" are those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR can only inform the taxpayer to submit additional documents and cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit. Since the

in a letter dated June 28, 1963 deniedthe requestfor recomputation.Petitioner appealed to the CTA which was subsequently dismised on the ground that the appeal was filed beyond the thirty-day period of appeal provided by Sec. 11 of Republic Act 1125.

requested a reconsideration or cancellation of the same in a letter to the BIR Commissioner. Acting in behalf of the BIR Commissioner, then Chief of the BIR Accounts Receivable and Billing Division, Mr. Severino B. Buot, reiterated the tax assessments while denying petitioners request for reinvestigation. Said letter likewise requested petitioner to pay within 10 days from receipt thereof, otherwise the case shall be referred to the Collection Enforcement Division of the BIR National Office for the issuance of a warrant of distraint and levy without further notice. Upon petitioners failure to pay the subject tax assessments within the prescribed period, the Assistant Commissioner for Collection, acting for the Commissioner of Internal Revenue, issued the corresponding warrants of distraint and/or levy and garnishment. Petitioner filed a Petition for Review with the Court of Tax Appeals (CTA) to contest the issuance of the warrants to enforce the collection of the tax assessments. The CTA dismissed the petition for lack of jurisdiction. Petitioner filed a Motion for Reconsideration arguing that the demand letter cannot be considered as the final decision of the Commissioner of Internal Revenue on its protest because the same was signed by a mere subordinate and not by the Commissioner himself. With the denial of its motion for reconsideration, petitioner consequently filed a Petition for Review with the Court of Appeals contending that there was no final decision to speak of because the Commissioner had yet to make a personal determination as regards the merits of petitioners case. The Court of Appeals denied the petition.

Issue: WON the petitioner's appeal to the CTA was time-barred.

Ruling: YES. To sustain the petitioner's contention that the Commissioner's letter of June 28, 1963 denying its request for further amendment of the revised assessment constitutes the ruling appealable to the tax court and that the thirty-day period should, therefore, be counted from July 16, 1963, the day it received theJune 28, 1963 letter, would, in effect, leave solely to the petitioner's will the determination of the commencement of the statutory thirty-day period, and place the petitioner and for that matter, anytaxpayer in a position, to delay at will and on convenience the finality of a tax assessment. This absurd interpretation espoused by the petitioner would result in grave detriment to the inte rests of the Government, considering that taxes constitute its life-blood and their prompt and certain availability is an imperative need.

OCEANIC WIRELES v CIR, CTA and CA GR NO. 148380, December 9, 2005

Facts: On March 17, 1988, petitioner received from the Bureau of Internal Revenue (BIR) deficiency tax assessments for the taxable year 1984 in the total amount of P8,644,998.71. Petitioner filed its protest against the tax assessments and

Issue:

Whether the demand letter for tax deficiency issued and signed by a subordinate officer who was acting in behalf of the CIR is deemed final and executory and subject to an appeal to the CTA.

Commissioner to delegate the powers vested in him under the pertinent provisions of the Code to any subordinate official with the rank equivalent to a division chief or higher, except the following:

Held: YES. A demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment. The determination on whether or not a demand letter is final is conditioned upon the language used or the tenor of the letter being sent to the taxpayer. In this case, the letter of demand, unquestionably constitutes the final action taken by the Bureau of Internal Revenue on petitioners request for reconsideration when it reiterated the tax deficiency assessments due from petitioner, and requested its payment. Failure to do so would result in the issuance of a warrant of distraint and levy to enforce its collection without further notice. In addition, the letter contained a notation indicating that petitioners request for reconsideration had been denied for lack of supporting documents. The demand letter received by petitioner verily signified a character of finality. Therefore, it was tantamount to a rejection of the request for reconsideration. This now brings us to the crux of the matter as to whether said demand letter indeed attained finality despite the fact that it was issued and signed by the Chief of the Accounts Receivable and Billing Division instead of the BIR Commissioner. The general rule is that the Commissioner of Internal Revenue may delegate any power vested upon him by law to Division Chiefs or to officials of higher rank. He cannot, however, delegate the four powers granted to him under the National Internal Revenue Code (NIRC) enumerated in Section . As amended by Republic Act No. 8424, Section 7 of the Code authorizes the BIR

(a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance; (b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; (c) The power to compromise or abate under Section 204(A) and (B) of this Code, any tax deficiency: Provided, however, that assessments issued by the Regional Offices involving basic deficiency taxes of five hundred thousand pesos (P500,000) or less, and minor criminal violations as may be determined by rules and regulations to be promulgated by the Secretary of Finance, upon the recommendation of the Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, heads of the Legal, Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer, as members; and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept. It is clear from the above provision that the act of issuance of the demand letter by the Chief of the Accounts Receivable and Billing Division does not fall under any of the exceptions that have been mentioned as non-delegable.

Thus, the authority to make tax assessments may be delegated to subordinate officers. Said assessment has the same force and effect.

Facts: In a letter dated December 27, 1974 petitioner assessed against Yee Fong Hong, Ltd. and/or herein private respondent UnionShipping Corporation for deficiency income taxes due for the years 1971 and 1972. Private respondent protested the assessment. Petitioner, without ruling on the protest, issued a Warrant of Distraint and Levy. In a letter, private respondent reiterated its request for reinvestigation. Petitioner, again, without acting on the request for reinvestigation and reconsideration of the Warrant of Distraint and Levy, filed a collection suit against private respondent. In 1979, private respondent filed with respondent court a Petition for Review. The CTA ruled in favor of private respondent. Hence, this is apetition for review on certiorari Issue: Whether or not the issuance of a warrant of distraint and levy is proof of the finality of an assessment and is tantamount to an outright denial of a motion for reconsideration of an assessment. Held: The Supreme Court had already laid down the dictum that the Commissioner should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment. There appears to be no dispute that petitioner did not rule on private respondent's motion for reconsideration but contrary to the above ruling of this Court, left private respondent in the dark as to which action of the Commissioner is the decision appealable to the Court ofTax Appeals. Had he categorically stated that he denies private respondent's motion for reconsideration and that his action constitutes his final determination on the disputed assessment, private respondent without needless difficulty would have been able to determine when his right to appeal accrues and the resulting confusion would have been avoided.

Summary: The general rule is that the CIR Commissioner may delegate any power vested upon him by law to Division Chiefs or to officials of higher rank. He cannot, however, delegate the four powers granted to him under Sec. 7 of NIRC. Sec. 7 Authority of the Commissioner to Delegate Power The Commissioner may delegate the power vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. Provided, however, that the following powers of the Commissioner shall not be delegated: a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance; b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; c) The power to compromise or abate; d) The power to assign or reassign internal revenue officers to establishment where articles subject to excise tax are produce and kept. The authority to make tax assessments may be delegated to subordinate officers. Said assessment has the same force and effect as that issued by the Commissioner himself, if not reviewed or revised by the latter such as in the case.

CIR v UNION SHIPPING CORPORATION and CA G.R. No. L-66160 May 21, 1990

Summary: There appears to be no dispute that CIR did not rule on Union Shippings motion for reconsideration but contrary to the ruling of the Court, left Union Shipping in the dark as to which action of the Commissioner is the decision appealable to CTA. Had he categorically stated that he denies Union Shippings motion for reconsideration and that his action constitutes his final determination of the disputed assessment, Union Shipping without needless difficulty would have been able to determine when his right to appeal accrues and the resulting confusion would have been avoided. Under the circumstances, CIR, not having clearly signified his final action on the disputed assessment, legally the period to appeal has not commenced to run. Thus, it was only when Union Shipping received the summons on the civil suit for collection of deficiency income on December 1978 that the period to appeal commenced to run. The request for reinvestigation and reconsideration was in effect considered denied by CIR when the latter filed a civil suit for collection of deficiency income. So that when Union Shipping filed an appeal with the CTA, it consumed a total of only 13 days, well within the 30 day period to appeal.

due to the failure of ICC to withhold 1% ewithholding tax on its claimed deduction for security services. ICC sought a reconsideration of the assessments. Having received a final notice of assessment, it brought the case to CTA, which held that it is unappealable, since the final notice is not a decision. CTAs ruling was reversed by CA, which was sustained by SC, and case was remanded to CTA. CTA rendered a decision in favor of ICC. Itruled that the deductions for professional and security services were properly claimed, it said that even if services were rendered in 1984 or 1985, the amount is not yet determined at that time. Hence it is a proper deduction in 1986. It likewise found that it is the BIR which overstate the interest income, when it applied compounding absent any stipulation. Petitioner appealed to CA, which affirmed CTA, hence the petition.

Issue: Whether or not the expenses for professional and security services are deductible.

Held: No. One of the requisites for the deductibility of ordinary and necessary expenses is that it must have been paid or incurred during the taxable year. This requisite is dependent on the method of accounting of the taxpayer. In the case at bar, ICC is using the accrual method of accounting. Hence, under this method, an expense is recognized when it is incurred. Under a Revenue Audit Memorandum, when the method of accounting is accrual, expenses not being claimed as deductions by a taxpayer in the current year when they are incurred cannot be claimed in the succeeding year. The accrual of income and expense is permitted when the all-events test has

CIR vs. ISABELA CULTURAL CORP.

Facts: Isabela Cultural Corporation (ICC), a domestic corporation received an assessment notice for deficiency income tax and expanded withholding tax from BIR. It arose from the disallowance of ICCs claimed expense for professional and security services paid by ICC; as well as the alleged understatement of interest income on the three promissory notes due from Realty Investment Inc. The deficiency expanded withholding tax was allegedly

been met. This test requires: 1) fixing of a right to income or liability to pay; and 2) the availability of the reasonable accuratedetermination of such income or liability. The test does not demand that the amount of income or liability be known absolutely, only that a taxpayer has at its disposal the information necessary to compute the amount with reasonable accuracy. From the nature of the claimed deductions and the span of time during which the firm was retained, ICC can be expected to have reasonably known the retainer fees charged by the firm. They cannot give as an excuse the delayed billing, since it could have inquired into the amount of their obligation and reasonably determine the amount.

YABES v JUDGE FLOJO and REPUBLIC

Facts: In May 1962, Doroteo Yabes received an assessment notice from the Commissioner of Internal Revenue (CIR) demanding him to pay P15k in taxes. Doroteo filed a protest within the prescribed period. The protest was initially denied in September 1962 however, a few days after the denial, the CIR advised Doroteo to execute a waiver of the statute of limitations (SOL) and to allow the CIR to hold in abeyance the ruling of his case until a similar case (Cirilo Constantino Case) which involves exactly the same issue would be decided by the Court of Tax Appeals (CTA). Doroteo complied but while waiting for the CTA to decide that case, Doroteo died. The CTA finally decided the Constantino Case but the same was appealed to the Supreme Court (SC). And so the CIR asked the successors-in-interest of Doroteo, Elpidio and Severino Yabes, to execute another waiver while waiting for the SC decision. The waiver was duly executed and it extended the period of prescription within which the CIR may collect the assessed tax to December 31, 1970. The Constantino Case was decided by the SC in February 1970. On December 4, 1970, before the lapse of the extended period (12/31/70), the CIR filed a tax collection suit against the estate of Doroteo Yabes with the Court of First Instance (CFI) of Cagayan. Elpidio et al received the summons on January 20, 1971. Elpidio et al then filed an appeal with the CTA on February 12, 1971. At the same time, Elpidio et al filed a motion to dismiss (MTD) the collection suit with CFI Cagayan on the ground that the filing of the collection suit is a denial by the CIR of the protest; that

Summary: The Final Notice Before Seizure cannot but be considered as the Commissioners decision disposing of the request for reconsideration filed by Isabela, who received no other response to its request. Not only was the Notice the only response received; its content and tenor supported the theory that it was the CIRs final act regarding the request for reconsideration. The very title expressly indicated that it was a final notice prior to seizure of property. The letter itself clearly stated that Isabela was being given this Last Opportunity to pay; otherwise, its properties would be subjected to distraint and levy. Sec. 228 of NIRC states that a delinquent taxpayer may nevertheless directly appeal a disputed assessment, if its request for reconsideration remains unacted upon 180 days after submission thereof. In this case, the period of 180 days had already lapsed when Isabela filed its request for reconsideration on March 1990, without any action on the part of the CIR. Jurisprudence dictates that a final demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment.

such denial is appealable to the CTA; that CFI Cagayan therefore has no jurisdiction over the case. However, Judge Napoleon Flojo of CFI Cagayan denied the MTD.

Issue: Whether or not CFI Cagayan has jurisdiction over the case.

Held: No. The CTA acquired exclusive jurisdiction over the case when Elpidio et al appealed. But was the appeal filed on time? Yes. The formal assessment notice (FAN) is considered to have been formally made when the tax collection suit was filed on December 4, 1970. The FAN is considered received by Elpidio et al when they received the summons on January 20, 1971. From there, they have 30 days to file an appeal with the CTA. They filed their appeal on February 12, 1971 well within the 30 day period to appeal. Instead of dismissing, is it okay for CFI Cagayan to hold in abeyance the tax collection suit while the CTA decide on the appeal? No, because it has no jurisdiction. It cannot wait for the CTA to decide, it must dismiss the case. So what will happen to the collection suit? In this case, the Supreme Court ordered that the complaint of the CIR in the collection suit be transferred to the CTA as a counterclaim to the appeal filed by Elpidio et al.

of the case, what may be considered as final decision or assessment of the Commissioner is the filing of the complaint for collection in the CFI. The summons of which was served on Yabes on January 20, 1971, and that therefore the appeal with the CTA was filed on time. The dismissal of the complaint is not sufficient. The ends of justice would best be served by considering the complaint filed in the Civil case not only as a final notice of assessment but also as a counterclaim in the CTA case, in order to avoid multiplicity of suits, as well as to expedite the settlement of the controversy between the parties. The 2 case involves the same parties, the same subject matter and the same issue, which is the liability of the heirs of Yabes for commercial brokers fixed and percentage taxes due from Yabes. Wherefore, the petition is granted and the writs prayed for are issued. The question orders are annulled and set aside and the complaint in the Civil case should be dismissed, the same to be transferred to the CTA to be considered therein as a counterclaim in the CTA case. The TRO is made permanent.

FISHWEALTH CANNING CORP v CIR GR No. 179343, January 21, 2010

Facts: The CIR, by Letter of Authority dated May 16, 2000, ordered the examination of the internal revenue taxes for the taxable year 1999 of Fishwealth. The investigation disclosed that petitioner was liable in the amount of P2,395,826.88 representing income tax, value added tax (VAT), withholding tax deficiencies and other miscellaneous deficiencies. Petitioner eventually settled these obligations on August 30, 2000. The CIR then reinvestigated petitioners books of accounts and other records of internal revenue taxes covering the same period for the purpose of which it issued a subpoena duces tecum requiring

Summary: There is no reason for the Court to disagree from or reverse the CTAs conclusion that under the circumstances

petitioner to submit its records and books of accounts. As petitioner did not heed the subpoena, respondent thereafter filed a criminal complaint against petitioner for violation of Sections 5 (c) and 266 of the 1997 Internal Revenue Code, which complaint was dismissed for insufficiency of evidence. Respondent sent, on August 6, 2003, petitioner a FAN of income taxand VAT deficiencies totaling P67,597,336.75 for the taxable year 1999, which assessment petitioner contested by letter of September 23, 2003. Respondent thereafter issued a Final Decision on Disputed Assessment dated August 2, 2005, which petitioner received on August 4, 2005, denying its letter of protest, apprising it of its income tax and VAT liabilities in the amounts of "P15,396,905.24 and P63,688,434.40 [sic], respectively, for the taxable year 1999," and requesting the immediate payment thereof. Instead of appealing to the CTA, petitioner filed a Letter of Reconsideration with the CIR. By a Preliminary Collection Letter dated September 6, 2005, respondent demanded payment of petitioners tax liabilities. Thus, petitioner filed on October 20, 2005 a Petition for Review before the CTA. In his Answer, respondent argued, among other things, that the petition was filed out of time which argument the First Division of the CTA upheld and accordingly dismissed the petition. Petitioner filed a Motion for Reconsideration which was denied. The Resolution denying its motion for reconsideration was received by petitioner on October 31, 2006. On November 21, 2006, petitioner filed a petition for review before the CTA En Banc which, by Decision of July 5, 2007, held that the petition before the First Division, as well as that before it, was filed out of time. Issue: Whether or not the Letter of Reconsideration filed with the CIR tolled the period to appeal with the CTA.

Held: NO. Section 228 of the 1997 Tax Code provides that an assessment: x x x may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filingof the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. (underscoring supplied) In the case at bar, petitioners administrative protest was denied by Final Decision on Disputed Assessment dated August 2, 2005 issued by respondent and which petitioner received on August 4, 2005. Under the above-quoted Section 228 of the 1997 Tax Code, petitioner had 30 days to appeal respondents denial of its protest to the CTA. Since petitioner received the denial of its administrative protest on August 4, 2005, it had until September 3, 2005 to file a petition for review before the CTA Division. It filed one, however, on October 20, 2005, hence, it was filed out of time. For a motion for reconsideration of the denial of the administrative protest does not toll the 30-day period to appeal to the CTA.

Second Digest

Facts:

Petitioner was assessed for income tax, Value Added Tax and withholding tax. After Court of Tax Appeals issued a Final Decision on Disputed Assessment, Petitioner filed a Letter of Reconsideration with the CIR instead of appealing the same to the Court of Tax Appeals within 30 days. The CIR then issued a Preliminary Collection Letter which prompted the Petitioner to file its Petition with the Court of Tax Appeals. CIR argued that the Petition with the Court of Tax Appeals was filed out of time.

Can the Formal Letter of Demand be construed as the final decision of the CIR appealable to the CTA under Republic Act 9282?

Held: YES. This is considered an exception to the general rule on exhaustion of administrative remedies since the CIR is considered estopped from claiming the same principle applies in its case. The tenor of the demand letter is clear that the CIR had already made a final decision and that the remedy of the Petitioner was to appeal the same within 30 days of receipt. This can be gleaned from the use of the terms final decision and appeal which were deemed unequivocal language pointing to the finality of the decision. While the Court cited the rules relative to (a) protesting the FAN and not the PAN and (b) counting the 30 day period to appeal to the CTA from receipt of the decision of the CIR and not issuance of the assessment, this particular case was deemed a clear exception in view of the CIRs own actions.

Issue: Did the filing of a Reconsideration toll the running of the 30-day period to appeal to the Court of Tax Appeals?

Held: NO. A Motion for Reconsideration of the denial of the administrative protest does not toll the 30-day period to appeal to the Court of Tax Appeals.

ALLIED BANKING CORPORATION v CIR

RCBC v CIR

Facts: Allied Banking Corporation received a PAN from the BIR which it timely disputed. In response, the BIR issued a Formal Letter of Demand with Assessment Notices. Instead of protesting the FAN, the petitioner filed a Petition for Review with the CTA. The CTA dismissed the Petition stating that it is neither the assessment nor the formal demand letter itself that is appealable before it but instead it should be the decision of the CIR on the disputed assessment

Facts: RCBC received the final assessment notice on July 5, 2001. It filed a protest on July 20, 2001. As the protest was not acted upon, it filed a Petition for Review with the Court of Tax Appeals (CTA) on April 30, 2002, or more than 30 days after the lapse of the 180-day period reckoned from the submission of complete documents. The CTA dismissed the Petition for lack of jurisdiction since the appeal was filed out of time.

Issue: Issue: (1) Has the action to protest the assessment judicially prescribed?

(2) Whether a taxpayer, by paying the other tax assessments covered by a Waiver of the Statute of Limitations, is consider estopped from questioning the validity of the said waiver (on the basis that the CIR did not sign it) with respect to the other covered but unsettled assessments?

Facts: In March 1998, the Commissioner of Internal Revenue (CIR) issued a formal assessment notice (FAN) to Lascona Land Co., Inc. (LLCI) demanding the latter to pay P753k in taxes. LLCI filed a timely protest on April 20, 1998. From said date (since no supporting document was required to be submitted), the CIR has 180 days to decide on the protest. However, the CIR promulgated its decision on March 3, 1999. LLCI received a copy of the decision on March 12, 1999. On April 12, 1999, LLCI appealed the decision to the Court of Tax Appeals (CTA). The CIR moved for the dismissal of the appeal on the ground that under a revenue regulation issued by the Bureau of Internal Revenue (RR No. 12-99), if the CIR or its representative failed to act on a protest within the 180day period the taxpayer may appeal within 30 days from the lapse of the 180day period to the CTA otherwise, the decision shall become final and executory; that LLCI failed to appeal within the said period hence the CTA has no jurisdiction over the case appealed by LLCI.

Held:

(1) YES. The assessment has become final. The jurisdiction of the CTA has been expanded to include not only decision but also inactions and both are jurisdictional such that failure to observe either is fatal. However, if there has been inaction, the taxpayer can choose between (1) file a Petition with the CTA within 30 days from the lapse of the 180-day period OR (2) await the final decision of the CIR and appeal such decision to the CTA within 30 days after receipt of the decision. These options are mutually exclusive and resort to one bars the application of the other. Thus, if petitioner belatedly filed an action based on inaction, it can not subsequently file another petition once the decision comes out. (2) YES. RCBC is considered estopped through its partial payment of the revised assessments within the extended period provided in the said waivers. Thus, it had impliedly admitted the validity of the said waivers. Had it believed that the waiver was invalid and that the period to assess had effectively prescribed, RCBC could have refused to make any payment based on any assessment against it

Issue: Whether or not the CIR is correct.

Held: NO. The revenue regulation is invalid. Under the law (Section 228 of the National Internal Revenue Code), a taxpayer has two remedies if the CIR failed to act on his protest within the 180-day period, to wit; 1) the taxpayer adversely affected by the decision may appeal to the CTA within 30 days from receipt of the decision, or 2) may appeal to the CTA within 30 days from the lapse of the one hundred eighty (180)-day period. Interpreting the above provision, the taxpayer has two options in case of inaction by the CIR. First is to appeal to

LASCONA LAND CO. v CIR

the CTA within 30 days from the lapse of the 180 day period; or second, wait for the CIR to issue the decision and then appeal, if adverse, to the CTA within 30 days from the receipt of the decision by the taxpayer (because even if the CIR failed to decide on the case within the 180 day period, it can still decide on it and may even issue a favorable judgment to the taxpayer, hence it may be logical to wait and only appeal if the adverse decision is actually received). In the case at bar, LLCI chose to wait for the CIR to decide on the case and it did not appeal within 30 days from the lapse of the 180-day period. LLCI received the adverse decision of the CIR on March 12, 1999. It appealed on April 12, 1999 which is still within the 30-day period to appeal to the CTA. The revenue regulation in question is invalid because in effect, it limited the remedy provided for by the law. Section 228 of the NIRC prevails over the said revenue regulation. The said revenue regulation cannot validly take away the option of the taxpayer to continue waiting, even after the lapse of the 180 day period, for the CIR to decide on the case and just appeal, within 30 days from receipt, if the CIRs ruling is adverse. It must however be noted that these two remedies are mutually exclusive.

first, he may appeal to the CTA within 30 days from the lapse of the 180-day period; or second, he may wait until the Commissioner decides on his protest before he elevates his case. The court believes that the taxpayer was given this option so that in case his protest is not acted upon within the 180-day period, he may be able to seek immediate relief and need not wait for an indefinite period of time for the Commissioner to decide. But if he chooses to wait for a positive action on the part of the Commissioner, then the same could not result in the assessment becoming final, executory and demandable.

Summary: Lascona argues that its failure to appeal to the CTA within 30 days from the lapse of the 180-day period did not make the assessment final and executory simply because CIR did not act upon the protest within the 180-day period. In such a situation, Lascona contends that it had the option to appeal to the CTA or to continue with the proceedings on its protest in the administrative level. Once a decision is rendered by the Commissioner on the protest, the 30-day period to appeal from receipt of the decision is mandatory. In case of inaction, Sec. 228 of the Tax Code merely gave the taxpayer an option: