TAX13.18 CIR v.

Hanex Trading
FACTS: Hantex Trading Co is engaged in the sale of plastic products, it imports synthetic resin
and other chemicals for the manufacture of its products. It is required to file an Import Entry and
Internal Revenue Declaration (Consumption Entry) with the BOC under Section 1301 of the Tariff
and Customs Code. Lt. Vicente Amoto, Acting Chief of Counter-Intelligence Division of the
Economic Intelligence and Investigation Bureau (EIIB), received confidential information that the
respondent had imported synthetic resin amounting to P115,599,018.00 but only declared
P45,538,694.57. Thus, Hantex receive a subpoena to present its books of account which it failed
to do. The bureau cannot find original copies of the products imported since the originals were
eaten by termites. Thus, the Bureau relied on the certified copies of the respondent’s Profit and
Loss Statement for 1987 and 1988 on file with the SEC, the machine copies of the Consumption
Entries, Series of 1987. The case was submitted to the CTA which ruled that Hantex have tax
deficiency and is ordered to pay. The CA ruled that the income and sales tax deficiency
assessments issued by the petitioner were unlawful and baseless since the copies of the import
entries relied upon were not duly authenticated by the public officer charged with their custody,
nor verified under oath by the EIIB and the BIR investigators.

ISSUE: final assessment of the petitioner for deficiency income tax and sales tax for the latters
1987 importation of resins and calcium bicarbonate is based on competent evidence and the law

RULING: The CTA cancelled the deficiency assessments received by BIR because they were not
not verified with other externally sourced data to check the integrity of the information. While it
is true that tax assessments have the presumption of correctness and regularity, it is equally true
that it should not be based on mere presumptions, no matter how reasonable or logical it might be.

TAX13.19 BPI v. Commissioner

FACTS: Following a pre-assessment notice on deficiency tax filed by respondent in 1986, the
latter sent final demand to petitioner on April 7, 1989. Petitioner filed a protest and a waiver of the
Statutes of Limitations was effected until December 31, 1994. On August 9, 2002, respondent
issued a final decision on petitioner’s protest ordering the withdrawal and cancellation of the
deficiency withholding tax assessment in the amount of P190,752,860.82 and considered the sane
as close and terminated but the documentary stamp tax of P24,587,174.63 was reiterated.
Thereafter petition for review was filed with CTA. The court denied the petition.

ISSUE: Whether or not the collection of the deficiency DST is barred by prescription

RULING: When the deficiency assessments were sent to the old address (by the BIR by mail)
despite proper notification of the new address, the running of the 3 year prescriptive period to
assess was not suspended. The law on prescription being a remedial measure should be interpreted
in a way conclusive to bring about the beneficient purpose of affording protection to the taxpayer.

TAX13.20 Bautista and Tan v. Collector

FACTS: No case online…
ISSUE:
RULING: Assessment is deemed made when notice is released or mailed to correct taxpayer. An
assessment is deemed made when the notice to that effect is released, mailed or sent to the TP for
the purpose of giving effect to the assessment.

TAX13.21 Tan Guan v. Nable – no full text online. Only decision.

FACTS: Tan Guan seeks a review of a decision of the CTA upholding 23 assessments made by
the BIR. With respect to the assessment for P72,450, he maintains that the same was made on
January 21, 1953, whereas, the civil action for the recovery of said sum and that of P128,800 was
filed on May 7, 1958, or beyond the prescriptive period of five (5) years. Accordingly, from May
8, 1953 to May 7, 1958, when the civil action was commenced, less than five (5) years had
elapsed.

ISSUE: is the petitioner correct?

RULING: No. The period between the request for investigation or reconsideration and the revised
assessment must be subtracted from the total prescriptive period prescribed in Section 223 of the
NIRC. In this case, the running of said period was interrupted on February 9, 1953, when Padua,
acting on behalf of Imperial, appealed the disputed assessment to the conference staff.

TAX13.22 Lascona Land Co. v. Commissioner

FACTS: he Commissioner of Internal Revenue (CIR) issued an assessment against Lascona Land
Co., Inc. (Lascona) informing the latter of its alleged deficiency income tax for the year 1993 in
the amount of P753,266.56. Consequently, on April 20, 1998, Lascona filed a letter protest, but
was denied by Norberto R. Odulio, Officer-in-Charge (OIC), Regional Director, Bureau of Internal
Revenue, Revenue Region No. 8, Makati City. On April 12, 1999, Lascona appealed the decision
before the CTA. Lascona alleged that the Regional Director erred in ruling that the failure to appeal
to the CTA within thirty (30) days from the lapse of the 180-day period rendered the assessment
final and executory. The CIR, however, maintained that Lascona’s failure to timely file an appeal
with the CTA after the lapse of the 180-day reglementary period provided under Section 228 of
the National Internal Revenue Code (NIRC) resulted to the finality of the assessment.

ISSUE: Whether the subject assessment has become final, executory and demandable due to the
failure of petitioner to file an appeal before the CTA within thirty (30) days from the lapse of the
One Hundred Eighty (180)-day period pursuant to Section 228 of the NIRC.

RULING: The CTA ruled that taxpayer has the option to either:
1. appeal with the CTA within 30-day period after the laspse of the 180-day period
2. wait for the final decision of the Commissioner and file an appeal with the CTA within 30 days
after receipt of such decision.

TAX13.23 CIR v. Union Shipping Corp.

FACTS: In a letter dated December 27, 1974 herein petitioner Commissioner of Internal Revenue
assessed against Tee Fong Hong Ltd. and/or herein private respondent Union Shipping
Corporation, the total sum of Php583,155.22 as deficiency income taxes due for the years 1971
and 1972. Said letter was received on January 4, 1975, and in a letter dated January 10, 1975,
received by petitioner on January 13, 1975, private responded protested the assessment. Petitioner,
without ruling on the protest, issued a warrant of distraint and levy, which was served on private
respondent’s counsel, Clemente Celso, on November 25, 1976. In a letter dated November 27,
1976, received by petitioner on November 29, 1976, private respondent reiterated its request for
reinvestigation of the assessment and for the reconsideration of the summary collection thru the
warrant of distraint and levy. Petitioner again, without acting on the request for reinvestigation and
reconsideration of the warrant of distraint and levy, filed a collection suit before branch XXI of
the the CFI of Manila and docketed as civil case no. 120459 against private respondent. Summons
in the said collection case issued to private respondent on December 28, 1978.

ISSUE: Whether or not issuance of writ of distraint and levy is a proof of finality of an assessment.

RULING: The Commissioner did not rule on the MR and thus left respondent in the dark to which
action is appealable to the CTA. Had he categorically stated that he denies the MR and that his
action is final, the respondent would have been able to determine when his right to appeal accrues.
Under the circumstances, the commissioner of internal revenue, 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 private respondent received the summons on the civil suit for collection of
deficiency income on December 28, 1978 that the period of appeal commenced to run.

TAX13.24 Collector v. Pineda – No case online. Only based on bar question

FACTS: September 19, 1973, the BIR sent notice of assessment to respondent as forest charges
for the years 1970-1973. Respondent made partial payment on 1973 but he died on 1977. On 1979
the BIR filed in the testate estate proceedings a claim of the unpaid left by him. The administrator
opposed the claim on the ground of prescription.

ISSUE: Is the claim of the administrator valid?

RULING: Where an assessment was made, the tax may be collected within 5 years (now 3 years)
from the date of assessment.

MP: The fact that court action for collection of fixed tax was instituted more than 5 years after the
period to which it refers, does not affect either the validity of any revised assessment made or the
right to enforce it by court proceedings, where no return for said tax had been filed.

TAX13.25 Commissioner v. Ayala Securities

FACTS: yala Securities Corp. (Ayala) failed to file returns of their accumulated surplus so Ayala
was charged with 25% surtax by the Commissioner of internal Revenue. The CTA (Court of Tax
Appeals) reversed the Commissioner’s decision and held that the assessment made against Ayala
was beyond the 5-yr prescriptive period as provided in section 331 of the National Internal
Revenue Code. Commissioner now files a motion for reconsideration of this decision. Ayala
invokes the defense of prescription against the right of the Commissioner to assess the surtax.
Petitioner alleged that the assessment made by his office on the accumulated surplus of the
corporation as reflected on its income tax return for the taxable year 1955 has not as yet prescribed
and, further, that the respondent corporation's accumulation of surplus for the taxable year 1955
was improper as the retention of such surplus was availed of by the corporation to prevent the
imposition of the income tax upon the individual shareholders or members of the said corporation.
ISSUE: Whether or not the applicable provision of law to this case is Section 331 of the National
Internal Revenue Code, which provides for a five-year period of prescription of assessment from
the filing of the return, or Section 332(a) of the same Code which provides for a ten-year period
of limitation for the same purpose

RULING: The finding of the trial court as to its non-existence is final and cannot be reviewed,
unless clearly shown to be erroneous. Fraud is never lightly to be presumed because it is a serious
charge. raud is a question of fact that cannot be presumed, but must be sufficiently established. It
is never lightly presumed as it is a serious charge.

TAX13.26 Republic v. Lim de Yu

FACTS: Rita Lim de Yu filed her yearly income tax returns from 1948 through 1953. The BIR
assessed the taxes due on each return, and appellee paid them accordingly. On July 17, 1956 the
Bureau issued to appellee deficiency income tax assessments for the years 1945 to 1953, to which
she protested the assessments and requested a reinvestigation. On August 30, 1956 she signed a
"waiver" of the statute of limitations under the Tax Code as condition to the reinvestigation
requested. On July 18, 1958, the Bureau issued to her income tax assessment notices for the years
1948 to 1953. This last assessment covered not only the basic deficiency income taxes, but also
50% thereof as surcharge. Upon appellee's failure to pay, an action for collection was filed against
her on May 11, 1959. Trial court dismissed, and the Government appealed to the Court of Appeals,
which forwarded the case to this Court.

ISSUE: Whether or not the right to collect the deficiency has already prescribed

RULING: Yes. Well settled is the rule that prescription as a defense is waived if not seasonably
interposed. It is deemed waived by failure to allege it in the answer, failing to raise the issue on
prescription in the petition for review, or by acknowledgement of the obligation or renunciation of
the benefit of prescription already obtained.

TAX13.27 Republic v. Lopez

FACTS: On 6 December 1950 Lopez filed his income tax return for 1950, for which an assessment
was issued by the BIR on 13 November 1952 demanding payment of deficiency income tax.
Lopez, through counsel, in a communication dated 30 November 1952, requested for
reconsideration, which was eventually reduced 29 May 1954. Defendant manifested in his letter
of 1 July 1954 that he will settle the obligation by the end of the month but on 9 July 1955, pleaded
for another reinvestigation, which was granted by the BIR. As a result, an assessment was issued
demanding payment but Lopez did not pay, despite repeated demands. On 16 January and 11
February 1956, Lopez prayed for a third reinvestigation which was granted by the BIR in its letter
of 25 February 1956, provided he waives the statute of limitations. Instead of executing an
unconditional waiver, defendant imposed a deadline of 31 December 1957 within which the
government should finish the third reinvestigation. Ignoring the same, on 23 March 1960, the BIR
issued an assessment. For non-payment, a collection suit was filed with the court on 13 August
1960

ISSUE: Whether or not the time limit of 31 December 1957 is binding

RULING: Tax waivers are supposed to extend, not reduce, the prescriptive periods provided by
law. The Commissioner cannot validly agree to reduce the period to less than that granted by law
to the detriment of the state. It diminishes the government’s opportunity to collect taxes due to the
republic.

TAX13.28 Repbulc v. Ker & Co., Ltd

FACTS:
ISSUE:
RULING: