Saint Louis UniversityCase Digest: Taxation II EXTENT OF CONGRESS POWER RE: TAX ADMINISTRATIONABAKADA GURO PARTYLIST v. CESAR PURISIMAG.R. No. 166715August 14 2008

FACTS:Congress enacted R.A. 9335 which intends to encourage BIR and BOC officials and employees to exceed their revenue targets by providing a system of rewards and sanctions through the creation of a Rewards and incentives Funds and a Revenue Performance Evaluation Board. The law also includes a congressional oversight committee to approve or disapprove the implementing rules that the subject agencies will promulgate. Petitioners question the creation of this oversight committee on the ground that it violates the doctrine of separation of powers. While the legislative function is deemed accomplished and completed upon the enactment and approval of the law, the congressional oversight committee permits participation in the implementation and enforcement of the law.

ISSUE:Whether or not the legislative branch violated the doctrine of separation of powers.

RULING:To forestall the danger of congressional encroachment beyond the legislative sphere,the Constitution imposes two basic and related constraints on Congress. It may not vest itself, any of its committees or its members with either executive or judicial power. And, when it exercises its legislative power, it must follow the single, finely wrought and exhaustively considered, procedures specified under the constitution, including the procedure for enactment of laws and presentment. Thus, any post-enactment congressional measure such as this should be limited to scrutiny and investigation. In particular, congressional oversight must be confined to the following:(1) Scrutiny based primarily on Congress power of appropriation and budget hearings conducted in connection with it, its power to ask heads of departments to appear before and be heard by either of its Houses on any matter pertaining to their department and its power of confirmation and;(2) Investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct inquiries in aid of legislation.Administrative regulations enacted by administrative agencies to implement and interpret the law which they are entrusted to enforce have the force of law and entitled to respect. Such rules and regulations partakes the nature of a statute and are just as binding as if they have been written in the statute itself. As such, they have the force and effect of law and enjoy the presumption of constitutionality and legality until they are set aside with finality in an appropriate case by a competent court. Congress in the guise of assuming the role of an overseer may not pass upon their legality by sub-calculated balance of power established by the Constitution. In exercising discretion to approve or disapprove the IRR based on the determination of whether or not they confirmed with the provisions of R.A. 9335. Congress arrogated judicial power unto itself, a power exclusively vested in this Court by the Constitution.

EXTENT OF CONGRESS POWER RE: TAX ADMINISTRATIONBRITISH AMERICAN TOBACCO v. CAMACHOG.R. No. 163583August 20, 2008

FACTS:Section 145 of the NIRC provides for four tiers of tax rates based on the net retail price per pack of cigarettes. To determine the applicable tax rates of existing cigarette brands, a survey of the net retail prices per pack of cigarettes was conducted as of October 1, 1996.In lieu to this survey, the applicable tax rate of herein petitioner tax rate of herein petitioner was thus recommended. Aggrieved, petitioner filed before the RTC a petition for injunction. While the case is pending R.A. 9334 took effect and respondent commissioner assessed petitioner applying the said law.

ISSUE:Whether or not R.A. 8240 as amended by R.A.9334 created grossly discriminatory classification scheme between old and new brands.

RULING:Congress sought to. Among others, simplify the whole tax system for sin products to remove these potential areas of abuse and corruption from both the side of the taxpayer and the government. Without doubt, the classification freeze provision was an integral part of this overall plan. This is in line with one of the avowed objectives of the assailed law to simplify the tax administration and compliance with the tax laws that are about to unfold in order to minimize losses arising from inefficiencies and tax avoidance scheme, if not outright tax evasion. R.A. 9334 did not alter this classification freeze provision of R.A. 8240. On the contrary, Congress affirmed this freezing mechanism by clarifying the wording of the law. The Court thus reasonably conclude, as the deliberation on R.A. 9334 readily show, that the administrative concerns in tax administration, which moved Congress to enact the classification freeze provision in R.A. 8240, were merely continued by R.A. 9334. Indeed, administrative concerns may provide a legitimate, rational basis for legislative classification.

BIR ISSUANCES AND THE RULES RELEVANT THERETOCOMMISSIONER OF INTERNAL REVENUE v. BURROUGHS LIMITEDG.R. No. 66653June 19, 1986

FACTS: Burroughs Limited is a foreign corporation authorized to engage in trade or business in the Philippines through a branch office. In March 1979, said branch office applied with the Central Bank for authority to remit to its parent company abroad branch profit. It thus paid the 15% branch profit remittance tax, pursuant to Sec. 24 (b) (2) (ii). In a Bureau of Internal Revenue ruling dated January 21, 1980, the 15% branch profit tax shall be imposed on the branch profits actually remitted abroad and not on the total branch profits out of which the remittance is to be made. Thus, claiming that the 15% profit remittance tax should have been computed on the basis of the amount actually remitted and not on the amount before profit remittance tax private respondent filed on December 24, 1980, a written claim for the refund or tax credit regarding the overpaid branch profit remittance tax but such was denied.The Court of Tax Appeals on petition for review decided on the matter and rendered a decision ordering the Commissioner of Internal Revenue to grant the tax credit to Private Respondent. Petitioner argued that Memorandum Circular No. 8-82 dated March 17, 1982 had revoked and/or repealed the BIR ruling of January 21, 1980.

ISSUE:Whether the Memorandum Circular No. 8-82 dated March 17, 1982 can be given retroactive effect in the light of Section 327 of the National Internal Revenue Code.

RULING:Petitioner's aforesaid contention is without merit. What is applicable in the case at bar is still the Revenue Ruling of January 21, 1980 because private respondent Burroughs Limited paid the branch profit remittance tax in question on March 14, 1979. Memorandum Circular No. 8-82 dated March 17, 1982 cannot be given retroactive effect in the light of Section 327 of the National Internal Revenue Code.The prejudice that would result to private respondent Burroughs Limited by a retroactive application of Memorandum Circular No. 8-82 is beyond question for it would be deprived of the substantial amount overpaid by respondent. And, insofar as the enumerated exceptions are concerned, admittedly, Burroughs Limited does not fall under any of them.

BIR ISSUANCES AND THE RULES RELEVANT THERETOCOMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS AND FORTUNEG.R. No. 119761August 29, 1996

FACTS: Pursuant to R. A. No. 7654, the BIR issued Revenue Memorandum Circular No. 37-93 which in gist reclassified certain products of private respondent particularly HOPE, MORE and CHAMPION cigarettes as foreign manufactured products. Fortune requested a review, reconsideration and recall of RMC 37-93 which was subsequently denied by the BIR. Thus, a petition for review was filed with the CTA which decided in favor of Fortune explaining that the abovementioned brands were locally manufactured cigarettes since under R.A. 7654 they were still classified as locally manufactured cigarettes.

ISSUE:Whether or not RMC 37-93 valid interpretation of R.A. 7654.

RULING:The Court held that the hastily promulgated RMC 37-93 has fallen short of a valid and effective administrative issuance. It should be understandable that when an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself already prescribed. When, upon the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation adds to or increase the burden of those governed, it behooves the agency to accord at least to be duly inferred, before that new issuance is given, the force and effect of law. The BIR not simply interpreted the law; verily, it legislated under its quasi-legislative authority. The due observance of the requirements of notice, of hearing and publication should not have been then ignored.

BIR ISSUANCES AND THE RULES RELEVANT THERETOPHILIPPINE BANK OF COMMUNICATION v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 112024January 28, 1999

FACTS: PBCOM filed a claim for tax refund of the creditable taxes withheld by their lessees with the BIR. Pending the investigation, it filed a petition for review before the CTA. The court however, denied the request for tax refund or credit on the ground that it was filed beyond the two-year reglementary period. PBCOM argued that, in reliance to RMO No. 7-85, the prescriptive period for the tax refund or credit is not two years but ten (10).

ISSUE:Whether or not RMC No. 7-85 is valid when it changed the prescriptive period of two years to ten years.

RULING:When the Acting Commissioner of Internal Revenue issued RMC No. 7-85, changing the prescriptive period of two years to ten years on claims of excess quarterly income tax payments such circular created a clear inconsistency with the provision of Sec. 230 of 1977 NIRC. In so doing, the BIR did not simply interpret the law; rather it legislated guidelines contrary to the statute passed by Congress.Revenue memorandum circulars are considered administrative rulings and it is widely accepted that the interpretation upon a statute by the executive officers, whose duty is to enforce it, is entitled to great respect by the courts. Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with the law they seek to apply and implement

CASES THAT MAY BE DECIDED BY THE CIRCOMMISSIONER OF INTERNAL REVENUE v. JOSEFINA LEALG.R. No. 113459November 18, 2002

FACTS: Petitioner issued Revenue Memorandum Order No. 15-91 and Revenue Memorandum Circular 43-91 which imposed a 5% lending investors tax on pawnshops. Josefina Leal, being an owner and operator of a pawnshop, asked for reconsideration but the same was denied, hence, she filed a petition for prohibition with the RTC.Petitioner herein filed a Motion to Dismiss on the ground that RTC has no jurisdiction to review the questioned revenue orders and to enjoin their implementation. Petitioner contends that the subject revenue orders were issued pursuant to his power to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws Thus, the case falls within the exclusive appellate jurisdiction of the CTA pursuant to Section 7(1) of RA 1125.

ISSUE:Whether or not the RTC has jurisdiction over the case.

RULING:The Court ruled in the negative, Section 7(1) of R.A. 1125 explicitly laid down the jurisdiction of the CTA, which states that the CTA has exclusive appellate jurisdiction to review by appeal:Decisions of the Commissioner of internal revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters under the National Internal Revenue Code or other laws or part of the law administered by the Bureau of Internal Revenue

NATURE AND SCOPE OF LETTER OF AUTHORITYCOMMISSIONER OF INTERNAL REVENUE v. SONY PHILIPPINES INC.G.R. No. 178697November 17, 2010

FACTS: The CIR issued Letter of Authority to examine the books of accounts and other accounting records of Sony regarding revenue taxes for the period 1997 and unverified prior year. The respondent questioned the assessment of its books of accounts regarding January- March 1998 since it is beyond the coverage of the LOA.

ISSUE:Whether or not the LOA issued by the CIR is valid.

RULING:Based on Section 13 of the Tax Code, a Letter of Authority or LOA is the authority given to appropriate revenue officer assigned to perform assessment functions. It empowers or enables said revenue officer to examine the books of accounts and other accounting records of a taxpayer for the purpose of collecting the correct amount of tax.Clearly, there must be a grant of authority before any revenue officer can conduct an examination or assessment. Equally important is that the revenue officer so authorized must not go beyond the authority given. In the absence of such an authority, the assessment or examination is a nullity.The LOA, particularly the phrase and unverified prior year violated Section C of the Revenue Memorandum Order No. 43-90 which states:A Letter of Authority should cover a taxable period not exceeding one taxable year. The practice of issuing L/A covering audit of unverified prior years is hereby prohibited. If the audit of taxpayer shall include more than one taxable period, the other pertinent period shall be specifically indicated in the L/A.

SUMMON PERSONS, TAKE TESTIMONYFITNESS BY DESIGN v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 177982October 17, 2008

FACTS: Petitioner Corporation was assessed by the CIR for deficiency income taxes based on information disclosed by a former employee of petitioner. Petitioner questioned the manner of which the documents reached the BIR since they were submitted without its consent. That such act implies that BIR obtained the documents illegally and that the information received is false or malicious.

ISSUE:Whether or not Petitioner is correct.

RULING:Section 5 of the Tax Code Authorized the Commissioner, in ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance:(C) To summon the person liable for tax or required to file a return, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, to appear before the Commissioner or his duly authorized representatives at a time and place specified in the summons and to produce such books, papers, records or other data, and to give testimony.Thus, the law allows BIR access to all relevant or material records and date in the person of the taxpayer, and the BIR can accept documents which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed. To require the consent of the taxpayer would defeat the intent of the law to help the BIR assess and collect the correct amount of taxes.

RULES ON CONFIDENTIALITY OF TAX RETURNSBUREAU OF INTERNAL REVENUE v. OFFICE OF THE OMBUDSMANG.R. No. 115103April 11, 2002

FACTS: The Ombudsman issued a subpoena duces tecum to the legal department of the BIR to bring the complete case dockets of refunds granted to Limtuaco and La Tondena. The BIR refused to do so arguing that to allow such it would violate the rule on divulgence of trade secrets.

ISSUE:Whether the subpoena duces tecum violate trade secrets.

RULING:The court was not persuaded. The records do not show how production of the subpoenaed documents would necessarily contravene Sec 269(now 270) of the NIRC on unlawful divulgence of trade secrets and Sec. 277(now 278) of the same Code on procuring unlawful divulgence of trade secrets.The documents sought to be produced were only case dockets of the tax refunds granted to Limtuaco and La Tondena which are public records and the subpoena duces tecum were directed to the public officials who have the official custody of the said records.The court found no valid reason why the trade secrets of Limtuaco and La Tondena would be unnecessarily disclose of such official records, subject of the subpoena duces tecum, were to be produced by the petitioner BIR to respondent Office of the Ombudsman.

POWER TO MAKE A RETURNCOMMISSION OF INTERNAL REVENUE v. HANTEX TRADING CO., INC.G.R. No. 136975March 31, 2005

FACTS:Hantex Trading Co. INC. is a domestic corporation engaged in the sale of plastic products, it imports synthetic resin and other chemicals for the manufacture of its products. Under Section 1301 of the Tariff and Customs Code the Bureau of Customs requires Hantex to file an Import Entry and Internal Revenue Declaration. Lt. Vicente Amoto, Acting Chief of Counter-Intelligence Division of the Economic Intelligence and Investigation Bureau, received confidential information that the 1987 importations of the respondent were understated in its accounting records, based on photocopies of 77 Consumption Entries furnished by another informer. Acting on the said report, Jose T. Almonte, issued Mission Order No. 398-89 for the audit and investigation of the importations of Hantex for 1987. The IIPO issued subpoena duces tecumandad testificandumfor the president and general manager of the respondent. This however was refused by the respondents president contending that its books of account and records of importation of synthetic resin and calcium bicarbonate had been investigated repeatedly by the BIR on prior occasions. Due to the refusal of the respondent the IIPO secured certified copies of the Profit and Loss Statements for 1987 filed by the respondent with the SEC.However, the IIPO failed to secure certified copies of the respondents 1987 Consumption Entries from the Bureau of Customs. Only machine copies of the Consumption Entries, Series of 1987, submitted by the informer, as well as excerpts from the entries certified by Tomas and Danganan have been shown and became the basis of the tax liability of the respondent arising from the unreported sale. The EIIB Commissioner Almonte thereafter transmitted the entire docket of the case to the BIR and recommended the collection of the total tax assessment from the respondent. Respondent wrote the Commissioner of Internal Revenue protesting the assessment on the ground that the assessment has no factual as well as legal basis. It is also assailed by the respondent that the assessment of deficiency sales tax is also likewise baseless and unfounded.

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

RULING:The court rules that the best evidence obtainable under Section 16 of the 1977 NIRC, as amended, does not include mere photocopies of records or documents. Mere photocopies of the Consumption Entries have no probative weight if offered as proof of the contents thereof. The reason for this is that such copies are mere scraps of paper and are of no probative value as basis for any deficiency income or business taxes against a taxpayer.The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation. The petitioner is not required to compute such tax liabilities with mathematical exactness. Approximation in the calculation of the taxes due is justified. However, the rule does not apply where the estimation is arrived at arbitrarily and capriciously.The Supreme Court held that the computations of the EIIB and the BIR on the quantity and costs of the importations of the respondent for 1987 have no factual basis, hence, arbitrary and capricious. The presumption of the correctness of an assessment, being a mere presumption, cannot be made to rest on another presumption; the assessment must be based on facts.

POWER TO MAKE A RETURNCOMMISSIONER OF INTERNAL REVENUE v. EMBROIDERY AND GARMENTS INDUSTRIES INC.G.R. No. 96262March 22, 1999

FACTS: Acting upon a sworn report by an informer the on the basis of a sworn report of an informer, the Courts of First Instance of Manila and Bulacan issued search warrants for the seizure of certain documents from the offices of respondent Embroidery and Garments Industries (Phil.), Inc. in Manila and Bulacan. Armed with the warrants, agents of the Anti-Technical Smuggling Unit, Bureau of Internal Revenue, seized various business records and documents from respondent's offices.On January 4, 1966, petitioner assessed respondent the sum of P436,846.44, inclusive of 75% surcharge and penalty as advance sales tax for the years 1959 to 1961 and, on March 23, 1966, assessed deficiency income tax in the sum of P4,799,641.95, inclusive of 50% surcharge and 1/2% monthly interest for the years 1960 and 1961 which the respondent protested. Acting upon said protest the petitioner issued to respondent a revised assessment requiring the latter to pay the amount of P2,756,241.68, inclusive of 50% surcharge and 1/2% monthly interest as deficiency income tax for the years 1959 to 1961 as well as payment of advance sales tax and 75% surcharge corresponding to the same years.On January 7, 1971, respondent filed with the Bureau of Internal Revenue a protest disputing the revised assessments and requesting further investigation which was denied. Thus respondent filed with the Court of Tax Appeals a petition for review of the disputed tax assessments. The Court of Tax Appeals rendered decision finding respondent not liable for deficiency income tax and advance sales tax assessed against it, and accordingly, reversed the BIR decision. In its decision, the Court of Tax Appeals held that the assessments were doubtful validity as they were based on incompetent evidence which consist of an informant's report and the sworn statement of the disgruntled former general manager of respondent that in the years in question respondent sold all its dollar quotas to local Chinese textile traders at an overprice or premium on the dollar value of textile importation of 80% for suiting materials and 70.% for women's clothing materials and faked its invoices to reduce its costs of importation.

ISSUE: Whether or not the Court of Appeals erred in not holding that respondent is liable for deficiency income tax and advance sales tax.

RULING:The court finds that the issues raised by the petitioner in the petition for review oncertiorariof the decision of the Court of Appeals before the Supreme Court are clearly factual and must be resolved on the basis of the evidence adduced before the tax court. It is a fundamental rule that on appealviacertiorarifrom a decision of the Court of Appeals to the Supreme Court issues to be raised may only be questions of law, which must be distinctly set forth. The said case does not fall into the exemptions granted by law. Thus the Court affirmed the appealed decision of the Court of Appeals finding the respondent not liable for deficiency income tax and advance sales. The tax court ruled that the assessments must be based on actual facts and proved by competent evidence, not imposed based on unverified information supplied by an informant, or disputed presumptions.

FIXING OF REAL PROPERTY VALUES:COMMISSION OF INTERNAL REVENUE v. AQUAFRESH SEAFOODS, INC.G.R. No. 170389October 20, 2010

FACTS:Respondent Aquafresh Seafoods Inc. sold to Philips Seafoods, Inc. two parcels of land, located atBarrioBanica, RoxasCity. Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) were paid by the respondent and subsequently, Revenue District Officer Gil G. Tabanda issued Certificate Authorizing Registration No. 1071477.The Bureau of Internal Revenue (BIR), however, received a report that the lots sold were undervalued for taxation purposes. This prompted the Special Investigation Division (SID) of the BIR to conduct an ocular inspection over the properties. After the investigation, the SID concluded that the subject properties were commercial with a zonal value of Php2,000.00 per square meter.Two assessment notices were then given to the respondent concerning tax deficiencies in connection to the sale of the real properties. This however was protested by Aquafresh which was later on denied by the BIR. The case was then filed before the Court of Tax Appeal which rendered a decision in favor of the respondent contending that the existing Revised Zonal Values in the City of Roxas should prevail for purposes of determining respondent's tax liabilities.

ISSUE:Whether or not the Court of Tax Appeal En Banc committed grave error in applying the fair market value based on the Zonal Valuation of a residential land as tax base in the computation of Capital Gains Tax and Documentary Stamp Tax deficiencies of the respondent.

RULING: In determining the value of CGT and DST arising from the sale of a property, the power of the CIR to assess is subject to Section 6(E) of the NIRC. While the CIR has the authority to prescribe real property values and divide the Philippines into zones, the law is clear that the same has to be done upon consultation with competent appraisers both from the public and private sectors. It is undisputed that at the time of the sale of the subject properties found inBarrioBanica, Roxas City, the same were classified as "RR," or residential, based on the 1995 Revised Zonal Value of Real Properties. Petitioner, thus, cannot unilaterally change the zonal valuation of such properties to "commercial" without first conducting a re-evaluation of the zonal values as mandated under Section 6(E) of the NIRC. The petitioner's act of re-classifying the subject properties from residential to commercial cannot be done without first complying with the procedures prescribed by law. Petitioners reliance to Section 2 (a) of the Zonal Valuation Guidelines, to justify its action is untenable. In applying the predominant use of property as the basis for the computation of the Capital Gains and Documentary Stamp Taxes, it should be noted that it shall apply only when the real property is located in an area or zone where the properties are not yet classified and their respective zonal valuation are not yet determined. In this case the subject properties were already part of the 1995 Revised Zonal Value of Real Properties which classified the same as residential with a zonal value of Php650.00 per square meter; thus, Section 2 (a) clearly has no application.

NON-DELEGABLE POWERSREPUBLIC OF THE PHILIPPINES v. SALUD V. HIZONG.R. No. 130430December 13, 1999

FACTS:Sometime in July 1986, the BIR issued to respondent Hizon a deficiency income tax assessment of covering the fiscal year 1981-1982. More than three years later, respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. The BIR, in a letter and filed a case with the Regional Trial Court to collect the tax deficiency. The complaint was signed by Norberto Salud, Chief of the Legal Division, BIR Region 4, and verified by Amancio Saga, the Bureau's Regional Director in Pampanga.Respondent moved to dismiss the case on two grounds: (1) that the complaint was not filed upon authority of the BIR Commissioner as required by Sec 221 of the National Internal Revenue Code, and (2) that the action had already prescribed. Over petitioner's objection, the trial court, on August 28, 1997, granted the motion and dismissed the complaint.

ISSUE:Whether or not the institution of the civil case for collection of taxes was without the approval of the commissioner in violation of Section 221 of the National Internal Revenue Code.

RULING:There is no question that the National Internal Revenue Code explicitly provides that in the matter of filing cases in Court, civil or criminal, for the collection of taxes, the approval of the commissioner must first be secured. An action will not prosper in the absence of the commissioner's approval. Thus, in the instant case, the absence of the approval of the commissioner in the institution of the action is fatal to the cause of the plaintiff. The court finds that the complaint filed in this case was signed by the BIR's Chief of Legal Division for Region 4 and verified by the Regional Director, there was, therefore, compliance with the law. The refusal of the lower court to recognize RAO No. 10-95 and, by implication, RAO No. 5-83 which states that, Memoranda, circulars and orders emanating from bureaus and agencies whether in the purely public or quasi-public corporations are mere guidelines for the internal functioning of the said offices. They are not laws which courts can take judicial notice of is erroneous. The rule is that as long as administrative issuances relate solely to carrying into effect the provisions of the law, they are valid and have the force of law.The Commissioner's power to approve the filing of tax collection cases is not one of the exceptions found in Section 7 of the NIRC and thus therefore can be validly delegated by the BIR Commissioner.

AUTHORITY TO ABATE AND COMPROMISEPHILIPPINE NATIONAL OIL COMPANY v. COURT OF APPEALSG.R. No. 109976April 26, 2005

FACTS:Private respondent Tirso B. Savellano submitted a sworn statement informing the Bureau of Internal Revenue that Philippine National Bank had failed to hold the 15% final tax on interest earnings and/or yields from the money placements of Philippine National Oil Company (PNOC) with the said bank, in violation of Presidential Decree (P.D.) No. 1931. P.D. No. 1931 withdrawing all tax exemptions of government-owned and controlled corporations.BIR then requested PNOC to settle its tax liability which the PNB failed to withhold. PNOC replied in a letter offering BIR a compromise by setting off its tax liability claim against a claim for tax refund from NAPOCOR, then pending with the BIR. The BIR replied to this letter stating that the proposed set off was not possible as the claim was premature since it was still pending. Another offer was made by PNOC proposing a compromise by paying 30% of the basic tax in accordance with the provisions of E.O.44. The BIR Commissioner Tan accepted the compromise thus PNOC was able to pay its tax liability equivalent to 30% of the total tax on interest earnings and/or yields from its money placement with PNB. Savellano was then paid the informers reward through 4 installments. Savellano through a counsel demands the full payment of his informers reward which the BIR replied to that he was already paid the equivalent of 15% of the amount paid by PNOC in pursuant to a compromise agreement. An agreement which was further explained by Commissioner Tan to be in accordance with the provisions of E.O. 44 RMO no. 39-86 and RMO no. 4-87. Savellano was prompted to file a case claiming that BIR Commissioner Tan acted "with grave abuse of discretion and/or whimsical exercise of jurisdiction" in entering into a compromise agreement that resulted in "a gross and unconscionable diminution" of his reward. He prays for the for the enforcement and collection of the total tax assessment against taxpayer PNOC and/or withholding agent PNB; and the payment to him by the BIR Commissioner of the 15% informer's reward on the total tax collected.Subsequently, the new BIR Commissioner, Jose U. Ong, in a letter to PNB, demanded that PNB pay deficiency withholding tax on the interest earnings and/or yields from PNOC's money placements. Which was protested by PNB but the BIR denied PNB's protest on the ground that it was filed out of time and, thus, the assessment had already become final.The Petitions for Review on Certiorari filed separately by PNOC and PNB was then consolidated since they involved identical parties and factual background, and the resolution of related, if not exactly, the same issues.

ISSUE:Whether or not PNOC could not apply for a compromise under E.O. No. 44 because its tax liability was not a delinquent account or a disputed assessment as of 31 December 1985.

RULING:E.O. No. 44 granted the BIR Commissioner or his duly authorized representatives the power to compromise any disputed assessment or delinquent account pending as of 31 December 1985, upon the payment of an amount equal to 30% of the basic tax assessed.The disputed assessments or delinquent accounts that the BIR Commissioner could compromise under E.O. No. 44 are defined under Revenue Regulation (RR) No. 17-86 are delinquent account which refers to the amount of tax due on or before December 31, 1985 from a taxpayer who failed to pay the same within the time prescribed for its payment arising from (1) a self assessed tax, whether or not a tax return was filed, or (2) a deficiency assessment issued by the BIR which has become final and executory and disputed assessment. Although it is clear that the self-assessing system governs Philippine internal revenue taxes. The dissenting opinion itself defines self-assessed tax as, "a tax that the taxpayer himself assesses or computes and pays to the taxing authority", neither PNOC nor PNB, the taxpayer and the withholding agent, respectively, conducted self-assessment in this case. There is no showing that in the absence of the tax assessment issued by the BIR against them, that PNOC and/or PNB would have voluntarily admitted their tax liabilities. It has been held by the court that PNOC and PNB cannot validly avail of a compromise under E.O. No. 44 thus the compromise agreement entered into by PNOC and former BIR Commissioner Tan is with no legal effect.

AUTHORITY TO ABATE AND COMPROMISEPEOPLE OF THE PHILIPPINES v. SANDIGANBAYAN and BIENVENIDO A. TAN JR.G.R. No. 152532August 16, 2005FACTS: Pursuant to Letter of Authority No. ATD-035-STO dated January 2, 1986 and Memorandum of Authority dated March 3, 1986, an investigation was conducted by Bureau of Internal Revenue (BIR) examiners on the ad valorem and specific tax liabilities of San Miguel Corp. (SMC) covering the period from January 1, 1985 to March 31, 1986. It was found out in the investigation that SMC have a deficiency amounting to more than Php 300,000,000.00. SMC protested the assessment on the ground that the said tax deficiency was already paid and the computation of the ad valorem tax deficiency was erroneous since the BIR examiners disallowed the deduction of the price differential (cost of freight from brewery to warehouse) and ad valorem tax. The tax liabilities was then reduced and pursuant to this the SMC, in a letter dated August 31, 1988 thru a certain Avendano offered the amount ofP10,000,000.00 for the settlement of the assessment.The offer was then accepted by former BIR Commissioner Bienvenido A. Tan Jr. who was charged with "having wilfully, unlawfully and criminally caused undue injury to the government by effecting a compromise of the tax liabilities" of SMC amounting toP302,051,048.93 for onlyP10,000,000, a "compromise that is grossly disadvantageous to the government." In no uncertain terms, the assailed Resolution of the Sandiganbayan acquitted him of violating Section 3(e) of Republic Act No. 3019 (the Anti-Graft Law).

ISSUE:Whether or not the acceptance of Php 10,000,000.00 as allegedly a compromise is gross and therefore illegal.

RULING:The Sandiganbayan did not gravely abuse its discretion when it upheld private respondents acceptance of SMCs compromise offer ofP10 million. Although it has been repeatedly said that the offer by SMC was in a form of compromise the court held that what was entered into by the parties was not a compromise but was abatement. The disallowance on deducting the price differential and ad valorem tax will result to a higher base for taxes and this is erroneous because a tax cannot be impose on another tax. Thus, no mutual concessions need be made,because an excessive or erroneous tax is not compromised; it is abated or cancelled. Ultimately it should be noted that only correct and proper taxes should be paid.

ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. HON. RAUL M. GONZALEZG.R. No. 177279October 13, 2010

FACTS:The Tax Fraud Division (TFD), National Office, conducted a fraud investigation for all internal revenue taxes to ascertain/determine the tax liabilities of respondent L. M. Camus Engineering Corporation (LMCEC) for the taxable years 1997, 1998 and 1999. The audit and investigation against LMCEC was precipitated by the information provided by an "informer" that LMCEC had substantial under declared income. It was discovered that LMCEC filed fraudulent tax returns with substantial under declarations of taxable income. Petitioner thus assessed the company of total deficiency taxes amounting The Preliminary Assessment Notice (PAN) was received by LMCEC on February 22, 2001. Assessment notices together with a formal letter of demand were then sent to LMCEC through personal service on October 1, 2002 but was refused so the revenue officers resorted to constructive service in accordance with Section 3, Revenue Regulations (RR) No. 12-9911.One of the ground raise by the LMCEC in its protest is that the assessment was invalid for not bearing serial numbers and should be shown to have been validly served by an Affidavit of Constructive Service executed and sworn to by the revenue officers who served the same. Petitioner on its answer stated that the lack of control number in the assessment notice is a mere office requirement in the Assessment Service for the purpose of internal control and monitoring; hence, the unnumbered assessment notices should not be interpreted as irregular or anomalous.

ISSUE:Whether or not the lack of control number in a formal letter of demand or assessment shall render the said document as invalid.

RULING:A notice of assessment as define in the tax laws is a declaration of deficiency taxes issued to a taxpayer who fails to respond to a Pre-Assessment Notice (PAN) within the prescribed period of time, or whose reply to the PAN was found to be without merit. It shall state the fact, the law, rules and regulations or jurisprudence on which the assessment is based; otherwise the formal letter of demand and the notice of assessment shall be void.The control number is not one of those required by law to be placed a valid notice of assessment. The Formal Letter of Demand dated August 7, 2002 contains not only a detailed computation of LMCECs tax deficiencies but also details of the specified discrepancies, explaining the legal and factual bases of the assessment making such a valid notice of assessment. Pursuant to Section 6(B) of the NIRC (third party information) and in accordance with the procedure laid down in RMC No. 23-2000 the investigating revenue officers resorted to the "Best Evidence Obtainable" for the proper determination of the companys internal revenue tax liabilities. Thus what is controlling in the determination of a valid notice of assessment is not the formality of placing a control number but the contents of the said assessment notice.

ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. ENRON SUBIC POWERCORPORATIONG.R. No. 166387January 19, 2009

FACTS:The Bureau of Internal Revenue, through a preliminary five-day letter,informed it of a proposed assessment of an alleged deficiency income tax. Enron disputed the proposed deficiency assessment in its first protest letter which was unresolved prompting Enron to file a petition for review on Court of Tax Appeals (CTA) arguing that the deficiency tax assessment disregarded the provisions of Section 228 of the National Internal Revenue Code (NIRC), as amended, and Section 3.1.4 of Revenue Regulations (RR) No. 12-99by not providing the legal and factual bases of the assessment.The CTA in its resolution granted Enrons petition and ordered the cancellation of its deficiency tax assessment for the year 1996. This was affirmed by the Court of Appeals ruling that the audit working papers did not substantially comply with Section 228 of the NIRC and RR No. 12-99 because they failed to show the applicability of the cited law to the facts of the assessment.The CIR now argues before the Supreme Court that respondent was informed of the legal and factual bases of the deficiency assessment against it.

ISSUE:Whether or not the issued Notice of Assessment by the CIR to Enron followed the legal requirements of law thus rendering it valid.

RULING: It has been clearly provided in Section 228 of the NIRC that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the assessment is void. The formal letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state the fact, the law, rules and regulations or jurisprudence on which the assessment is based. In the present case, the CIR merely issued a formal assessment and indicated there in the supposed tax, surcharge, interest and compromise penalty due. The Revenue Officers of the the CIR in the issuance of the Final Assessment Notice did not provide Enron with the written bases of the law and facts on which the subject assessment is based. The CIR likewise failed to mention the specific provision of the Tax Code or rules and regulations which were not complied with by Enron.The court rules that the advice of tax deficiency, given by the CIR to an employee of Enron, as well as the preliminary five-day letter, are not valid substitutes for the mandatory notice in writing of the legal and factual bases of the assessment. These steps are mere perfunctory discharges of the CIRs duties in correctly assessing a taxpayer. Therefore, due to the lack of the formal requisites provided by law the notice of assessment issued by CIR to Enron is invalid.

ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. BANK OF THE PHILIPPINE ISLANDSG.R. No. 134062April 17, 2007

FACTS:Petitioner Commissioner of Internal Revenue (CIR) issued two notice of assessment to respondent Bank of the Philippine Islands (BPI) for its deficiency percentage and documentary stamp taxes for the year 1986. Both notices of assessment contained the following note:Please be informed that your [percentage and documentary stamp taxes have] been assessed as shown above. Said assessment has been based on return (filed by you) (as verified) (made by this Office) (pending investigation) (after investigation). You are requested to pay the above amount to this Office or to our Collection Agent in the Office of the City or Deputy Provincial Treasurer of xxxBPI through its counsel sent a reply stating that the deficiency assessments issued by CIR are no assessments at all because it did not follow with the mandatory requirements of law and that the taxpayer is not informed, even in the vaguest terms, why it is being assessed a deficiency. The letter likewise include the statement As soon as this is explained and clarified in a proper letter of assessment, we shall inform you of the taxpayers decision on whether to pay or protest the assessment.The CIR replied through a letter stating that the letter sent by BPI does not qualify as a protest, not deserving of any rejoinder by the office as no valid issue was raised against the validity of the assessment but still the CIR explained the basis of the assessments.

ISSUE:Whether or not the assessments issued to BPI for deficiency percentage and documentary stamp taxes for 1986 is valid.

RULING:Admittedly, the CIR did not inform BPI in writing of the law and facts on which the assessments of the deficiency taxes were made. He merely notified BPI of his findings, consisting only of the computation of the tax liabilities and a demand for payment thereof within 30 days after receipt because the CIR relied on the provisions of the former Section 270 prior to its amendment by RA 8424 (also known as the Tax Reform Act of 1997). Accordingly, when the assessments were made pursuant to the former Section 270, the only requirement was for the CIR to "notify" or inform the taxpayer of his "findings." Nothing in the old law required a written statement to the taxpayer of the law and facts on which the assessments were based. The court likewise rule that BPI, being fully aware of the valid assessment failed to protest the assessments within the 30-day period provided in the former Section 270 rendering the assessment final and unappealable. BPI was, from then on, barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits.

ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. PASCOR REALTY AND DEVELOPMENT CORPORATIONG.R. No. 128315 June 29, 1999

FACTS:Pursuant to a Letter of Authority BIR Commissioner Jose U. Ong authorized Revenue Officers Thomas T. Que, Sonia T. Estorco and Emmanuel M. Savellano to examine the books of accounts and other accounting records of Pascor Realty and Development Corporation which examination resulted in a recommendation for the issuance of an assessment for tax liabilities. On March 1, 1995, the Commissioner of Internal Revenue filed a criminal complaint before the Department of Justice against the PRDC. The CIR denied the urgent request for reconsideration/reinvestigation of the private respondents on the ground that no formal assessment has yet been issued by the Commissioner. Private respondents then elevated the Decision of the CIR to the Court of Tax Appeals. The CTA in it resolution stated that it agrees with petitioners' contentions, that the criminal complaint for tax evasion is the assessment issued, and that the letter denial is the decision properly appealable to it. Respondent's ground of denial, therefore, that there was no formal assessment issued, is untenable.The Court of Appeals in its decision held that the tax court committed no grave abuse of discretion in ruling that the Criminal Complaint for tax evasion filed by the Commissioner of Internal Revenue with the Department of Justice constituted an "assessment" of the tax due, and that the said assessment could be the subject of a protest.

ISSUE:Whether or not the criminal complaint for tax evasion can be construed as an assessment.

RULING: The court agrees with the petitioner that indeed no exact definition of assessment has been provided for in law, likewise in NIRC however, the NIRC defines the specific functions and effects of an assessment. The court rules that not all documents coming from the BIR containing a computation of the tax liability can be deemed assessments. An assessment must be sent to and received by a taxpayer, and must demand payment of the taxes described therein within a specific period. The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the commissioner was to file a criminal complaint for tax evasion, not to issue an assessment. Although the revenue officers recommended the issuance of an assessment, the commissioner opted instead to file a criminal case for tax evasion.Thus, what private respondents received was a notice from the DOJ that a criminal case for tax evasion had been filed against them, not a notice that the Bureau of Internal Revenue had made an assessment which they could validly protest.

ASSESSMENTCOMMISSIONER OF INTERNAL REVENUEv. AZUCENA T. REYESG.R. No. 159694 and 163581January 27, 2006

FACTS:Maria C. Tancinco died, leaving a residential lot and an old house thereon. On the basis of a sworn information-for-reward filed by a certain Raymond Abad, Revenue District Office No. 50 conducted an investigation on the decedents estate. Without the required preliminary findings being submitted, it issued Letter of Authority No. 132963 for the regular investigation of the estate tax case. Azucena Reyes, one of the decedents heirs, received the Letter of Authority. Meanwhile, the NationalInternalRevenue Code (NIRC) of 1997 was passed. Subsequently, the Bureau of Internal Revenue issued a final estate tax assessment notice and a demand letter, inclusive of surcharge and interest based on the old Tax Code. Reyes protested the assessment to no avail. After protesting the warrant issued, Reyes offered a compromise but the same was also denied.

ISSUE:Is there a valid assessment against the estate?

RULING:No. The NIRC of 1997 was already in effect when the assessment was issued. Under the said Code,taxpayers shall be informed in writing of the law andthe factson which the assessment is made, otherwise, the assessment shall be void. The assessment merely stated the amount of liability to be shouldered by the estate and the law upon which such liability is based. However, the estate was not informed in writing of the facts on which the assessment of estate taxes had been made. The estate was merely informed of the findings of the CIR. Section 228 of the NIRC being remedial in nature can be applied retroactively even though the taxinvestigationwas conducted prior to the lawspassage. Consequently, the invalid assessment notice cannot be a basis of a compromise, any proceeding emanating from the invalid assessment is void including the issuance of the Warrant of Distraint and/or levy.

STATUTE OF LIMITATION ON ASSESSMENT OF INTERNAL REVENUE TAXESPHILIPPINE JOURNALISTS, INC. v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 162852December 16, 2004

FACTS:After the examination of Philippine Journalists, Inc.s (PLJI) books, said corporation was found to allegedly have deficiency income taxes for the calendar year 1994 based on its income tax return. When invited to an informal conference, PLJIs representative executed a waiver of the statute of limitation in relation to the payment of the deficiency. On December of 1998, a final notice with demand was given to PLJI. Despite the waiver it previously executed, PLJI questioned the validity of the assessment stating that it was issued more than three years from the payment of the deficient taxes.

ISSUE:Is the waiver of the statute of limitations valid and binding on PLJI?

RULING:No. The National Internal Revenue Code prescribes a specific form for such waivers. Under the law, the waiver must state the specific length of time for the waiver to be effective. It is not a complete waiver of the right to invoke the defense of prescription; instead it is an agreement between the taxpayer and the BIR to settle the tax liability within a certain amount of time. In the instant case, the waiver did not state the date within which it is to be effective, this made it a complete waiver of the right in contravention to law. Thus, the waiver is void and prescription has already set in.

STATUTE OF LIMITATION ON ASSESSMENT OF INTERNAL REVENUE TAXESCOMMISSIONER OF INTERNAL REVENUE v. KUDOS METAL CORPORATIONG.R. No. 178087May 5, 2010

FACTS:Kudos Metal Corporation filed its income tax return for 1998 on April 1999. Subsequently the BIR issued three notices of Presentation of Records to Kudos to no avail. The BIR eventually issued a subpoena ducestecum to secure the records for review and audit. On December 2001, Kudos through its accountant executed a waiver of defense of prescription. This was followed by a second waiver executed on February 2003. After the investigation, a final letter of demand and notice of assessment was eventually issued on September 2003 and received by Kudos on November of the same year. Kudos protested the assessment and raised the prescription of BIRs right to issue an assessment for the year 1998.

ISSUE/S: Are the waivers valid and binding on Kudos?Is Kudos estopped from questioning the assessment?

RULING:No. The waivers are not valid and binding since they do not conform with the prescribed form provided for by law. The court pointed out that: 1) the waivers were executed without the notarized written authority of the accountant to sign the waiver in behalf of respondent, 2) the waivers failed to indicate the date of acceptance, and 3) the fact of receipt by the respondent of its file copy was not indicated in the original copies of the waivers. Thus it could not be determined whether or not such waivers were received within the three year period before prescription sets in.Estoppel cannot apply in the present case. It cannot be used to give validity to an act prohibited by law. The law is clear as to when the BIR may issue assessments and in this case it issued them outside of the three year period. There is no showing that Kudos convinced the CIR to delay assessment, which fault lies with the CIR.

STATUTE OF LIMITATION ON ASSESSMENT OF INTERNAL REVENUE TAXESCOMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALSG.R. No. 115712February 25, 1999

FACTS:On January 15, 1982, Carnation Phils. Inc. (Carnation), filed its Corporation Annual Income Tax Return for taxable year ending September 30, 1981; and its Manufacturers/Producers Percentage Tax Return for the quarter ending September 30, 1981.On October 13, 1986, March 16, 1987 and May 18, 1987, Carnation, through its Senior Vice President Jaime O. Lardizabal, signed three separate "waivers of the Statute of Limitations Under the National Internal Revenue Code". These waivers were not signed by the BIR commissioner or any of his agents. On August 1987, Carnation received the BIRs letter of demand for the payment of deficiency taxes in relation to its 1981 income tax return. Carnation protested on the basis of prescription.

ISSUE:Are the unsigned waivers valid and binding?

RULING:No. The tax code is clear on the requirement that waivers should be in writing and signed by the commissioner or his representatives as it is an agreement between the BIR and the taxpayer. Waiver of the statute of limitations under the NIRC, to a certain extent, is a derogation of the taxpayers right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. As such, the BIR cannot claim that it impliedly consented to the agreement without signing it. Thus, the running of the prescriptive period was not tolled and the BIR can no longer issue its assessment.

STATUTE OF LIMITATION ON ASSESSMENT OF INTERNAL REVENUE TAXESRIZAL COMMERCIAL BANKING CORPORATION v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 170257September 7, 2011

FACTS:Rizal Commercial Banking Corporation(RCBC)filed its Corporation Annual Income Tax Returns for Foreign Currency Deposit Unit for the calendar years 1994 and 1995.On August 15, 1996, RCBC received Letter of Authority issued by CIR for the examination the books of accounts and other accounting records for all internal revenue taxes from January 1, 1994 to December 31, 1995. On January 23, 1997, RCBC executed two Waivers of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code covering the internal revenue taxes due for the years 1994 and 1995, effectively extending the period of the Bureau of Internal Revenue (BIR) to assess up to December 31, 2000. Subsequently, on January 27, 2000, RCBC received a Formal Letter of Demand together with Assessment Notices from the BIR for the deficiency tax assessments. RCBC filed a protest on February 24, 2000 and later submitted the relevant documentary evidence to support it. Much later on November 20, 2000, it filed a petition for review before the CTA, pursuant to Section 228 of the 1997 Tax Code. On December 6, 2000, RCBC received another Formal Letter of Demand with Assessment Notices dated October 20, 2000, following the reinvestigation it requested, which drastically reduced the original amount of deficiency taxes. On the same day, RCBC paid the deficiency taxes as assessed by the BIR however, it refused to pay the assessments for deficiency onshore tax and documentary stamp tax which remained to be the subjects of its petition for review. RCBC argued that the waivers of the Statute of Limitations which it executed on January 23, 1997 were not valid because the same were not signed or conformed to by the respondent CIR as required under Section 222(b) of the Tax Code.

ISSUE:Is RCBC estopped from questioning the validity of the waivers it executed?

RULING: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. Since there is no prescription, RCBC cannot escape its liability for the deficiency taxes assessed.

INSTANCES WHERE THE RUNNING OF THE PRESCRIPTIVE PERIOD IS SUSPENDEDREPUBLIC OF THE PHILIPPINES v. SALUD V. HIZONG.R. No. 130430December 13, 1999

FACTS:The BIR issued an income tax deficiency assessment to the respondent. The latter, not responding to assessment, was served notices of Levy/Distraint but the BIR no longer acted upon the attachment. After 3 years, the respondent asked for reconsideration regarding the deficiency but the same was denied. Hence, the respondent moved for dismissal based on the ground that: 1.the assessment was not filed upon the authority of the Commissioner since the complaint was not signed by the Commissioner and 2.the action for collection was barred by the 3-year prescription period. The court granted the respondents motion and dismissed the case.

ISSUE: Is the action for collection was barred by prescription?

RULING:Yes. The Court ruled that the assessment, although filed with the authority of the Commissioner, was barred by prescription. Petitioner argued that respondents request for reinvestigation of her tax deficiency assessment on November 3, 1992 effectively suspended the running of the period of prescription such that the government could still file a case for tax collection. The court does not agree with the petitioner. The request for reconsideration was not filed within the 30 day period hence no request for reconsideration was actually made. So, the period for prescription was not suspended. Consequently, the action is barred by the 3 year prescription period.

INSTANCES WHERE THE RUNNING OF THE PRESCRIPTIVE PERIOD IS SUSPENDEDBANK OF THE PHILIPPINE ISLANDS v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 139736October 17, 2005

FACTS:The BIR issued an Assessment for a deficiency of Documentary Stamp Tax (DST). The petitioner filed a protest letter, requesting for reconsideration with BIR however the latter did not reply. Instead, BIR issued a warrant for Distraint/levy against petitioner BPI. The petitioner did not hear from BIR until September 11, 1997 when then Commissioner LiwaywayVinzons-Chado, denied its request for reconsideration. Subsequently, the petitioner filed a petition for review with the CTA, raising the defense of prescription. The CTA denied the petition and held that the period of prescription had not yet prescribed nonetheless; it held that the petitioner was not liable for the deficiency of DST. On appeal, the CA reversed the ruling of CTA on the issue of DST tax and held that the petitioner was indeed liable for DST.

ISSUE:Is the right of the respondent to collect from petitioner BPI is barred by prescription?

RULING: Yes.The Court ruled that the period to collect has already prescribed. The BIR has three years, counted from the date of actual filing of the return or from the last date prescribed by law for the filing of such return, whichever comes later, to assess a national internal revenue tax or to begin a court proceeding for the collection thereof without an assessment. In case of a false or fraudulent return with intent to evade tax or the failure to file any return at all, the prescriptive period for assessment of the tax due shall be 10 years from discovery by the BIR of the falsity, fraud, or omission. When the BIR validly issues an assessment, within either the three-year or ten-year period, whichever is appropriate, then the BIR has another three years after the assessment within which to collect the national internal revenue tax due thereon by distraint, levy, and/or court proceeding.The assessment of the tax is deemed made and the three-year period for collection of the assessed tax begins to run on the date the assessment notice had been released, mailed or sent by the BIR to the taxpayer. In their Decisions, both the CTA and the Court of Appeals found that the filing by petitioner BPI of a protest letter suspended the running of the prescriptive period for collecting the assessed DST. This Court, however, takes the opposing view, and, based on the succeeding discussion, concludes that there is no valid ground for suspending the running of the prescriptive period for collection of the deficiency DST assessed against petitioner BPI. The statute of limitations on assessment and collection of taxes is for the protection of the taxpayer and, thus, shall be construed liberally in his favor.

INSTANCES WHERE THE RUNNING OF THE PRESCRIPTIVE PERIOD IS SUSPENDEDBANK OF THE PHILIPPINE ISLANDS v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 174942March 7, 2008

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 petitioners 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:Is the collection of the deficiency DST is barred by prescription?

RULING:In order to determine whether the prescriptive period for collecting the tax deficiency tolled by BPIs filing of the protest letters dated April 7, 1989. Section 20 of the Tax Code must be examined: The running of the Statute of Limitations on the making of assessment and the beginning of distraint or levy or a proceeding in court of collection shall be suspended for the period when the taxpayer requests for re-investigation which is granted by the Commissioner. In order to suspend the running of the prescriptive periods for assessment and collection, the request for re-investigation must be granted by CIR. There is nothing in this case which indicates, expressly or impliedly, that the CIR had granted the request for re-investigation filed by BPI. What is reflected is the silence and inaction of the CIR. Given the prescription of the Governments claim, we no longer deem it necessary to pass upon the validity of the assessment.

PROCESS OF ASSESSMENTESTATE OF THE LATE JULIANA DIEZ VDA. DE GABRIEL v. COMMISSIONER OF INTERNAL REVENUEG.R. No. 155541January 27, 2004

FACTS:During the lifetime of the decedent Juliana De Gabriel, her business affairs were managed by the Philippine Trust Company (PhilTrust). The decedent died on April 3, 1979 but two days after her death, PhilTrust filed her income tax return for 1978 not indicating that the decedent had died. The BIR conducted an administrative investigation of the decedents tax liability and found a deficiency income tax for the year 1997 in the amount of P318,233.93. Thus, in November 18, 1982, the BIR sent by registered mail a demand letter and assessment notice addressed to the decedent c/o PhilTrust, Sta. Cruz, Manila, which was the address stated in her 1978 income tax return. On June 18, 1984, respondent Commissioner of Internal Revenue issued warrants of distraint and levy to enforce the collection of decedents deficiency income tax liability and serve the same upon her heir, Francisco Gabriel. On November 22, 1984, Commissioner filed a motion to allow his claim with probate court for the deficiency tax. The Court denied BIRs claim against the estate on the ground that no proper notice of the tax assessment was made on the proper party. On appeal, the CA held that BIRs service on PhilTrust of the notice of assessment was binding on the estate as PhilTrust failed in its legal duty to inform the respondent of antecedents death. Consequently, as the estate failed to question the assessment within the statutory period of thirty days, the assessment became final, executory, and incontestable.

ISSUE:Is the respondents claim for collection filed beyond the 5 year prescriptive period?

RULING: Yes.The respondents claim was beyond the prescribed period. There was no assessment served on the estate as to the alleged underpayment of tax. Absent this assessment, no proceeding could be initiated in court for collection of said tax; therefore, it could not have become final, executory and incontestable. Respondents claim for collection filed with the court only on November 22, 1984 was barred for having been made beyond the five-year prescriptive period set by law.

PROCESS OF ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. AZUCENA T. REYESG.R. No. 159694 January 27, 2006

FACTS:Maria C. Tancinco died, leaving a residential lot and an old house thereon. The Revenue District Office conducted an investigation on the decedents estate and it issued a Return Verification Order but without the required preliminary findings being submitted. It issued Letter of Authority for the regular investigation of the estate tax case. The BIR, issued a preliminary assessment notice against the estate in the amount ofP14,580,618.67. On May 10, 1998, the heirs of the decedent received a final estate tax assessment notice and a demand letter, both dated April 22, 1998, for the amount ofP14,912,205.47, inclusive of surcharge and interest. The Commissioner of Internal Revenue issued a preliminary collection letter to Reyes, followed by a Final Notice before Seizure. Subsequently, a Warrant of Distraint and/or Levy was served upon the estate, followed by Notices of Levy on Real Property and Tax Lien against it. Reyes protested the notice of levy. However, the heirs proposed a compromise settlement but it was rejected by the CIR. As the estate failed to pay its tax liability within the deadline, the BIR notified Reyes that the subject property would be sold at public auction. Reyes filed a protest with the BIR 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.

ISSUE:Whether or not the assessment against the estate is valid.

RULING:No. The 2nd paragraph of Sec. 228 of NIRC is clear and mandatory insofar as taxpayers shall be informed in writing of the law and the facts on which the assessment is made, otherwise the assessment shall be void. In this case, Reyes was not informed in writing of the law and the facts on which the assessment of estate taxes had been made. She was merely notified of the findings by the CIR. 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. On February 12, 1998, a preliminary assessment notice was issued against the estate and on April 22, 1998, the final estate tax assessment notice and demand letter, was also issued. During those dates, RA 8424 was already in effect. Thus, the CIR should have required the assessment officers of the BIR to follow the clear mandate of the new law.Aside from that, to proceed heedlessly with tax collection without first establishing a valid assessment is evidently violative of the cardinal principle in administrative law that the taxpayer be accorded due process. A void assessment bears no valid fruit.

PROCESS OF ASSESSMENTPHILIPPINE NATIONAL OIL COMPANY v. COURT OF APPEALSG.R. No. 109976 April 26, 2005

FACTS:BIR's first letter was addressed to PNOC, requesting it to settle its tax liability. The BIR subsequently sent another letter, to PNB, as withholding agent, demanding payment of the tax it had failed to withhold on the interest earnings and/or yields from PNOC's money placements. PNOC wrote the BIR three succeeding letters offering to compromise its tax liability. PNB, on the other hand, did not act on the demand letter it received. The BIR and PNOC eventually reached a compromise agreement on 22 June 1987. Private respondent Savellano questioned the validity of the compromise agreement because the reduced amount of tax collected from PNOC, by virtue of the compromise agreement, also proportionately reduced his informer's reward. Private respondent Savellano then requested the BIR Commissioner to review and reconsider the compromise agreement. Acting on the request of private respondent Savellano, the new BIR Commissioner declared the compromise agreement to be without basis and issued the demand letter, against PNB, as the withholding agent for PNOC to pay deficiency withholding tax on the interest earnings and/or yields from money placement. This BIR letter was received by PNB on February 6, 1991, and was protested by it through a letter, dated April 11, 1991. The BIR denied PNB's protest on the ground that it was filed out of time and, thus, the assessment had already become final.PNB appealed to the Department of Justice the BIR assessment, dated 16 January 1991, for deficiency withholding tax alleging that its appeal to the DOJ was sanctioned under P.D. No. 242, which provided for the administrative settlement of disputes between government offices, agencies, and instrumentalities, including government-owned and controlled corporations.

ISSUE:Whether or not the assessment against PNB become final and unappealable.

RULING:In this case, the Court finds that the significant BIR assessment, should be the one issued by the BIR against PNB on October 8, 1986.The BIR issued on October 8, 1986 an assessment against PNB for its withholding tax liability on the interest earnings and/or yields from PNOC's money placements with the bank. It had 30 days from receipt to protest the BIR's assessment.PNB, however, did not take any action as to the said assessment so that upon the lapse of the period to protest, the withholding tax assessment against it, dated October 8, 1986, became final and unappealable, and could no longer be disputed. The courts may therefore order the enforcement of this assessment.The BIR demand letter, dated January 16, 1991, is not a new assessment against PNB. It only demanded from PNB the payment of the balance of the withholding tax assessed against it on October 8, 1986. The same demand letter also has no substantial effect or impact on the resolution of the present case. At best, the demand letter, dated January 16, 1991, constitute a useful reference for the courts in computing the balance of PNB's tax liability, after applying as partial payment thereon the amount previously received by the BIR from PNOC pursuant to the compromise agreement.

PROCESS OF ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. DOMINADOR MENGUITOG.R. No. 167560September 17, 2008

FACTS:Dominador Menguito is engaged in the restaurant and/or cafeteria business. BIR Baguio received information that respondent has undeclared income from Texas Instruments and Club John Hay, prompting the BIR to conduct investigation. Spouses Dominador and Jeanne Menguito were informed by the Assessment Division of the said office that they have under declared sales. This was followed by a Preliminary Ten Day Letter informing respondent that in the investigation of his 1991, 1992 and 1993 income, business and withholding tax case, it was found out that there is deficiency income and percentage tax. On September 2, 1997, assessments were issued. These were protested by Ms. Jeanne Menguito, on the ground that the 40% deduction allowed on their computed gross revenue, is unrealistic. Ms. Jeanne Menguito requested for a period of thirty days within which to coordinate with the BIR regarding the contested assessment. BIR Baguio replied, informing the Spouses Menguito that the source of assessment was not through the disallowance of claimed expenses but on data received from Club John Hay and Texas Instruments Phils., Inc.

ISSUE:Whether or not the taxpayers right to due process is violated for non-issuance of a post-reporting notice and pre-assessment notice.

RULING:The stringent requirement that an assessment notice be satisfactorily proven to have been issued and released or, if receipt thereof is denied, that said assessment notice have been served on the taxpayer, applies only to formal assessments prescribed under Section 228 of the NIRC, but not to post-reporting notices or pre-assessment notices. The issuance of a valid formal assessment is a substantive prerequisite to tax collection, for it contains not only a computation of tax liabilities but also a demand for payment within a prescribed period, thereby signalling the time when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies therefore. Due process requires that it must be served on and received by the taxpayer. A post-reporting notice and pre-assessment notice do not bear the gravity of a formal assessment notice. The post-reporting notice and pre-assessment notice merely hint at the initial findings of the BIR against a taxpayer and invites the latter to an "informal" conference or clarificatory meeting. Neither notice contains a declaration of the tax liability of the taxpayer or a demand for payment thereof. Hence, the lack of such notices inflicts no prejudice on the taxpayer for as long as the latter is properly served a formal assessment notice.

PROCESS OF ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. METRO STAR SUPERAMA, INC.G.R. No. 185371 December 8, 2010

FACTS:The Regional Director of BIR issued Letter of Assessment for Revenue Officer to examine Metro Stars book of account. Due to failure of the latter to present the records, a subpoena duces tecum was issued BIR. A preliminary 15-day letter was issued to Metro Star wherein the BIR stated that a post audit review was held and it was ascertained that there was deficiency value-added and withholding taxes due from petitioner. Metro Star received Formal Letter of Demand assessing from Revenue District assessing them for deficiency value-added and withholding taxes for 1999. Metro Star filed a petition for review with the CTA alleging that the corporation did not received a Pre-Assessment Notice, thus claiming that such assessment made by the BIR was not accorded due process.

ISSUE:Whether or not the taxpayers right to due process is violated for non-issuance of a pre-assessment notice.

RULING:The sending of a Pre-Assessment Notice to taxpayer to inform him of the assessment made is but part of the "due process requirement in the issuance of a deficiency tax assessment," the absence of which renders nugatory any assessment made by the tax authorities. The use of the word "shall" in subsection 3.1.2 describes the mandatory nature of the service of a PAN. The persuasiveness of the right to due process reaches both substantial and procedural rights and the failure of the CIR to strictly comply with the requirements laid down by law and its own rules is a denial of Metro Stars right to due process. Thus, for its failure to send the Pre-Assessment Notice stating the facts and the law on which the assessment was made as required by Section 228 of R.A. No. 8424, the assessment made by the CIR is void.The case of CIR v. Menguito cannot be applied to this case because the issue therein was the non-compliance with the provisions of R. R. No. 12-85 which sought to interpret Section 229 of the old tax law. RA No. 8424 has already amended the provision of Section 229 on protesting an assessment. The old requirement of merely notifying the taxpayer of the CIRs findings was changed in 1998 to 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. The regulation then, on the other hand, simply provided that a notice be sent to the respondent in the form prescribed, and that no consequence would ensue for failure to comply with that form.

GOVERNING PRINCIPLES CONCERNING ASSESSMENTCOMMISSIONER OF INTERNAL REVENUE v. HON. RAUL M. GONZALEZG.R. No. 177279 October 13, 2010

FACTS:The BIR National Office conducted a fraud investigation for all internal revenue taxes to determine the tax liabilities of L. M. Camus Engineering Corporation for the taxable years 1997, 1998 and 1999 due to the information provided by an informer that it had substantial under declared income for the said period. It was discovered that LMCEC filed fraudulent tax returns with substantial under declarations of taxable income. Petitioner thus assessed the company. The Preliminary Assessment Notice was received by LMCEC on February 22, 2001 and on October 1, 2002 an assessment notice together with a formal letter of demand was sent to LMCEC through personal service but was refused so the revenue officers resorted to constructive service. LMCEC in its protest raised that the assessment was invalid for not bearing serial numbers and should be shown to have been validly served by an Affidavit of Constructive Service executed and sworn to by the revenue officers who served the same. Petitioner on its answer stated that the lack of control number in the assessment notice is a mere office requirement in the Assessment Service for the purpose of internal control and monitoring therefore the unnumbered assessment notices should not be interpreted as irregular or anomalous.ISSUE:Whether or not the control number must be indicated in the notice of assessment to be valid.

RULING:The formality of a control number in the assessment notice is not a requirement for its validity but rather the contents thereof which should inform the taxpayer of the declaration of deficiency tax against said taxpayer. Both the formal letter of demand and the notice of assessment shall be void if the former failed to state the fact, the law, rules and regulations or jurisprudence on which the assessment is based, which is a mandatory requirement under Section 228 of the NIRC. Section 228 of the NIRC provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the assessment is void.The Formal Letter of Demand dated August 7, 2002 contains not only a detailed computation of LMCECs tax deficiencies but also details of the specified discrepancies, explaining the legal and factual bases of the assessment. It also reiterated that in the absence of accounting records and other documents necessary for the proper determination of the companys internal revenue tax liabilities, the investigating revenue officers resorted to the "Best Evidence Obtainable" as provided in Section 6(B) of the NIRC (third party information) and in accordance with the procedure laid down in RMC No. 23-2000 dated November 27, 2000.

NECESSITY OF ASSESSMENT BEFORE FILING OF CRIMINAL COMPLAINTQUIRICO P. UNGAB v. HON. VICENTE N. CUSI, JR.G.R. No. L-41919-24May 30, 1980

FACTS:BIR Examiner Ben Garcia examined the income tax returns filed by Quirico P. Ungab, for the calendar year ending December 31, 1973. In the course of his examination, he discovered that the petitioner failed to report his income derived from sales of banana saplings. As a result, the BIR District Revenue Officer sent a "Notice of Taxpayer" to the petitioner informing him that there is due from him the amount of P104,980.81, representing income, business tax and forest charges for the year 1973 and inviting petitioner to an informal conference where the petitioner may present his objections to the findings of the BIR Examiner. Upon receipt of the notice, the petitioner wrote the BIR District Revenue Officer protesting the assessment, claiming that he was only a dealer or agent on commission basis in the banana sapling business and that his income, as reported in his income tax returns for the said year, was accurately stated. BIR Examiner Ben Garcia, however, was fully convinced that the petitioner had filed a fraudulent income tax return so that he submitted a "Fraud Referral Report," to the Tax Fraud Unit of the Bureau of Internal Revenue. After examining the records of the case, the Special Investigation Division of the Bureau of Internal Revenue found sufficient proof that the herein petitioner is guilty of tax evasion for the taxable year 1973 and recommended his prosecution.

ISSUE:Whether or not assessment is necessary before filing a criminal complaint.

RULING:What is involved here is not the collection of taxes where the assessment of the Commissioner of Internal Revenue may be reviewed by the Court of Tax Appeals, but a criminal prosecution for violations of the NIRC which is within the cognizance of courts of first instance. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code.An assessment of a deficiency is not necessary to a criminal prosecution for wilfull attempt to defeat and evade the income tax. A crime is complete when the violator has knowingly and wilfully filed a fraudulent return with intent to evade and defeat the tax. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return, and the government's failure to discover the error and promptly to assess has no connections with the commission of the crime.

NECESSITY OF ASSESSMENT BEFORE FILING OF CRIMINAL COMPLAINTCOMMISSIONER ON INTERNAL REVENUE v. COURT OF APPEALSG.R. No. 119322June 4, 1996

FACTS:In a letter of August 13, 1993 which was received by Fortune on August 24, 1993, the Commissioner assessed against Fortune the total amount of P7,685,942,221.66 representing deficiency income, ad valorem and value-added tax for the year 1992 with the request that the said amount be paid within thirty (30) days upon receipt thereof. Fortune on September 17, 1993 moved for reconsideration of the assessments.On September 7, 1993, the Commissioner of Internal Revenue filed a complaint with the Department of Justice against respondent Fortune, its corporate officers, nine other corporations and their respective corporate officers for alleged fraudulent tax evasion for supposed non-payment by Fortune of the correct amount of income tax, ad valorem tax and value-added tax for the year 1992.

ISSUE:Whether or not assessment is necessary before filing a criminal complaint.

RULING:Before one is prosecuted for wilful attempt to evade or defeat any tax under Sections 253 and 255 of the Tax code, the fact that a tax is due must first be proved.For criminal prosecution to proceed before assessment, there must be a prima facie showing of a wilful attempt to evade taxes. In this case the registered wholesale price of the goods, approved by the BIR, is presumed to be the actual wholesale price, therefore, not fraudulent and unless and until the BIR has made a final determination of what is supposed to be the correct taxes, the taxpayer should not be placed in the crucible of criminal prosecution.

NECESSITY OF ASSESSMENT BEFORE FILING OF CRIMINAL COMPLAINTCOMMISSIONER OF INTERNAL REVENUE v. PASCOR REALTY AND DEVELOPMENT CORPORATIONG.R. No. 128315June 29, 1999

FACTS:The CIR authorized certain BIR officers to examine the books of accounts and other accounting records of Pascor Realty and Development Corp. (PRDC) for 1986, 1987 and 1988. The examination resulted in recommendation for the issuance of an assessment of P7,498,434.65 and P3,015,236.35 for 1986 and 1987, respectively. The Commissioner filed a criminal complaint for tax evasion against PRDC, its president and treasurer before the DOJ. Private respondents filed immediately an urgent request for reconsideration on reinvestigation disputing the tax assessment and tax liability. The Commissioner denied private respondents request for reconsideration/reinvestigation on the ground that no formal assessment has been issued which the latter elevated to the CTA on a petition for review. The Commissioners motion to dismiss on the ground of the CTAs lack of jurisdiction denied by CTA and ordered the Commissioner to file an answer. Instead of complying with the order of CTA, Commissioner filed a petition with the CA alleging grave abuse of discretion and lack of jurisdiction on the part of CTA for considering the affidavit/report of the revenue officers and the endorsement of said report as assessment which may be appealed to the CTA. The CA sustained the CTA decision and dismissed the petition.

ISSUE:Whether or not assessment is necessary before filing a criminal complaint.

RULING:Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case, proceedings in court may be commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. To reiterate, said Section 222 states that an assessment is not necessary before a criminal charge can be filed. This is the general rule. Private respondents failed to show that they are entitled to an exception. Moreover, the criminal charge need only be supported by aprima facieshowing of failure to file a required return. This fact need not be proven by an assessment.The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

NECESSITY OF ASSESSMENT BEFORE FILING OF CRIMINAL COMPLAINTCOMMISSIONER OF INTERNAL REVENUE v. HON. RAUL M. GONZALEZG.R. No. 177279October 13, 2010

FACTS:The BIR National Office conducted a fraud investigation for all internal revenue taxes to determine the tax liabilities of L. M. Camus Engineering Corporation for the taxable years 1997, 1998 and 1999 due to the information provided by an informer that it had substantial under declared income for the said period. LMCEC failed to comply with the subpoena duces tecum issued in connection with the tax fraud investigation, hence, a criminal complaint was instituted by the BIR for violation of Section 266 of the NIRC against LMCEC, Luis M. Camus and Lino D. Mendoza, the latter two were sued in their capacities as President and Comptroller, respectively. Camus and Mendoza assail the validity of the complaint and further aver that the company had already undergone a series of routine examinations for the years 1997, 1998 and 1999 for under the NIRC, only one examination of the books of accounts is allowed per taxable year. The Chief State Prosecutor, the Secretary of Justice and the Court of Appeals dismissed the complaint instituted by the BIR. Hence, this petition was filed before the Supreme Court.

ISSUE:Whether or not assessment is necessary before filing a criminal complaint.

RULING:An assessment of a tax deficiency is not necessary to a criminal prosecution for tax evasion. The crime is complete when the taxpayer has knowingly and wilfully filed a fraudulent return with intent to evade and defeat the tax. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return and the governments failure to discover the error and to promptly assess the same has no connection with the commission of the crime.

RETROACTIVE EFFECT: PROCEDURES IN SEC. 228 OF THE NIRCCOMMISSIONER OF INT