TAX5.20 Luang v.

CIR

FACTS: The deficiency tax assessments issued against Luang originated from the computerized matching conducted
by the BIR on information provided by Luang’s suppliers against Luang’s declaration per VAT returns in which Luang
had under-declared his purchases by 99.6%. As a result, the BIR issued Letter Notice dated against Luang. An RR
provides that “if after review and evaluation …, it is determined that there exists sufficient basis to assess the taxpayer,
the said Office shall issue to the taxpayer, at least by registered mail, a PAN for the proposed assessment, showing in
detail the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based.

Issue: whether the notice by registered mail to Luang was sufficient to comply with the requirement of due process.

RULING: Yes. However, during the cross examination, the witness confirmed that he has no document or evidence
to prove that the PAN was actually received by Luang.
If taxpayer denied having assessment from the BIR, it is incumbent upon the BIR to probe competent
evidence that such notice was indeed received by the addressee. The onus probandi is therefore shifted to CIR. Failure
to strictly comply with notice requirements is tantamount to denial of due process.

TAX6.20 Next Mobile, Inc. v. CIR

FACTS: In 2002, petitioner filed with the BIR its ITR for 2001. Petitioner likewise filed its Monthly Remittance
Returns of EWHT.

In Sept. 2005, petitioner received from the BIR, a PAN for which petitioner filed a Reply.

In Oct. 2005, petitioner received DL and FAN demanding payment of deficiency taxes and increments for late
remittance of taxes withheld, and compromise penalty for taxable year 2001.

In Nov 2005, petitioner filed its protest against the DL and FAN and requested the reinvestigation of the assessments,
which was denied by the BIR.

Petitioner appealed to the CTA to Cancel Assessment as it was filed beyond the three-year prescriptive period.

ISSUE: Whether the FAN was issued within the 3-year prescriptive period

RULING: Yes. Internal revenue taxes must be assessed within three years counted from the period fixed by taw for
the filing of the tax return or the actual date of filing, whichever is later. Based on the date of filing of petitioner's ITR,
it is clear that the FLD and the FAN both dated October 17, 2005 were issued beyond the three-year prescriptive
period. Thus, such assessments were cancelled.

TAX7.20 Phil. Aerospace Development Corp. v. CIR

FACTS:

1. Petitioner is a GOCC) created and existing under the laws of the Philippines;
2. The CIR issued Assessment Notices for income tax, VAT, withholding of creditable VAT, EWT, and
compromise penalty for 2004;
3. On the same date, respondent issued (FAN) with attached Details of Discrepancies assessing petitioner in the
same amount;
4. Petitioner filed for the reinvestigation of the assessment. It was granted. But upon reinvestigation it still held
the petitioner liable to pay except for VAT;
5. The respondent upon non-payment of the petitioner issued a WLD against the petitioner;
6. Petitioner files before the CTA a petition for review praying for the suspension of any impending levy,
distraint, and/or sale of any property of the [respondent] during the pendency of the instant Petition and for
the cancellation of all deficiency tax assessments for the year 2004;
7. The CTA granted the petition for review and cancelled the tax deficiency made on the ground of failure to
provide the due process required because no PAN was given to the petitioner.
ISSUE: Whether or not the court erred in holding that petitioner’s right to due process was violated for failure to issue
the PAN.

RULING: No. same ruling with Luang

TAX8.20 Waterfront Cebu City Hotel v. CIR

RULING: The CTA ruled that the assessment income tax of 1.5 million due to excess tax credits would not give rise
to deficiency income tax considering that it does not affect or pertain to income or expense which would affect the
company’s income tax due for 2006, and Waterfront’s 8 million pesos overpayment in 2006is significantly higher that
the company’s tax assessment.

TAX9.20 United Distribution Management v. CIR

See book

TAX10.20 CIR v. Reyes

FACTS:
1. Tacino died leaving a house and lot. The BIR received a sworn statement for reward filed by an informer,
prompting it to conduct an investigation on the estate. Without the required preliminary findings, BIR issued
an LOA which was received by one of the heirs, Reyes.
2. The BIR issued FAN and demand letter against the estate for P14M.
3. Estate failed to pay the liability.
4. During the pendency of the case with the CTA, Reyes filed an application for compromise settlement. This
was denied by the CTA.
5. Upon appeal, the CA granted the petition saying that the assessment notice and demand letter should have
stated the facts and the law on which they are based; otherwise, they are deemed void.

ISSUE: Whether petitioner’s assessment against the estate is valid.

RULING: No. Taxpayers shall be informed in writing of the law and the facts on which the assessment is made,
otherwise, the assessment shall be void.

MAMALATEO: The presumption of correctness of assessment, being a mere presumption, cannot be made to rest
on another presumption.

TAX11.20 Benipayo v. CIR

No full text.

The presumption of correctness of assessment, being a mere presumption, cannot be made to rest on another
presumption.

TAX12.20 Republic v. Limaco & De Guzmans Commercial Co.

FACTS:
1. In 1946, Limaco & De Guzman Co. was engaged in the importation of cigarettes.
2. On 27 June 1946, the company filed with the Bureau of Customs entry of shipment of cigarettes. The tax is
6k.
3. The company paid the Bureau of Customs the tax with P1k in cash and P5k in a PNB Check on 15 July 1946.
4. The cigarettes were released to the company but the check bounced.
5. On 17 June 1948, the CIR demanded the payment of the deficiency specific tax. The amount remained
unpaid.
 6. On 15 April 1951, the company requested that action be deferred as it intends to settle the matter amicably
with the BIR.
7. The Republic filed a complaint for the forfeiture of the bonds, and the payment of the sum of P5k plus interest.
8. The company invoked the defense of estoppel and prescription.

ISSUE: Whether the action has prescribed

RULING: No. the assessment was made on 17 June 1948 (when a letter of demand was sent to the company) and not
on 15 June 1946 (the date of payment). Even assuming that the latter date is the date of assessment, the action is still
not barred by the statute of limitations as the statute was suspended when the company acknowledged the debt in
writing in April 1951, and requested the deferment of the judicial action to be taken by the Government towards the
collection of the obligation, so that the company could make representations with the COllector to settle the matter
amicably.

TAX13.20 Bautista and Tan v. Collector

No case online…

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.

TAX14.20 Republic v. Leonor dela Rama

FACTS:
1. The administrator, Eliseo Hervas, filed ITR of the estate for 1950 and P3Kwas assessed and paid by the estate
as income tax.
2. The BIR later claimed that it had found out that the estate received in 1950 cash dividends which was not
declared in the ITR. The BIR made an assessment as deficiency income tax against the estate P56K.
3. The CIR wrote a letter to Mrs. de la Rama-Osmeña informing her of the deficiency income tax and asking
payment thereof. Mrs. Osmena’s counsel sent a reply contending that Osmeña had no authority to represent
the estate, and that the assessment should be sent to Leonor de la Rama who was he administratrix of the
estate of her late father.
4. CIR sent a letter to Leonor de la Rama asking payment.
5. The deficiency income tax not having been paid, the Republic filed a complaint against the heirs of Esteban
de la Rama, seeking to collect from each heir his/her proportionate share in the income tax liability of the
estate.

ISSUE: WN the administrator can appeal the assessment to the CTA.

RULING: No. Administrator could not appeal the assessment to the CTA because he had not received said notice of
assessment.
As a rule, assessment is deemed made when notice is released or mailed to correct taxpayer. The exception
is when the taxpayer is an estate under administration; the notice of assessment must be sent to the administrator.
In the case at bar, notices were sent to persons other than the administrator; hence, they could not produce
any legal effect. Tax Court has no jurisdiction where notice of assessment was not sent to proper party.