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Cases Nos. 59-67 AND 87

CIR v GONZALES

Facts:

Records bear out that the assessment notice and Formal Letter of Demand

dated August 7, 2002 were duly served on L!"! on #ctober $, 2002% &rivate

res'ondents did not file a motion for reconsideration of the said assessment notice and

formal demand( neither did they a''eal to the !ourt of )a* A''eals within the

reglementary 'eriod which renders it final, e*ecutory and una''ealable% )he matter was

brought to the the De'artment of +ustice% )he ecretary of +ustice found that

'etitioner-s claim that there is yet no finality as to L!"!-s 'ayment of its $..7 ta*es

since the audit re'ort was still 'ending review by higher authorities, is unsubstantiated

and mis'laced% )he !A sustained the findings of the ecretary of +ustice%

/":

$% 1# the ta*'ayer may still assail the validity of the assessment which has

already become final, e*ecutory and una''ealable

2% )he 3onorable !ourt of A''eals erroneously sustained the findings of the

ecretary of +ustice who gravely abused his discretion by in4uiring into the

validity of a Final Assessment otice which has become final, e*ecutory and

demandable 'ursuant to ection 225 of the )a* !ode of $..7 for failure of

'rivate res'ondent to file a 'rotest against the same

RL/6:

$% o%

ection 225 of the /R!8$9'rovides the remedy to dis'ute a ta*

assessment within a certain 'eriod of time% /t states that an assessment

may be 'rotested by filing a re4uest for reconsideration or

reinvestigation within 0 days from recei't of the assessment by the

ta*'ayer% o such administrative 'rotest was filed by 'rivate

http://sc.judiciary.gov.ph/jurisprudence/2010/october2010/177279.htm#_ftn61http://sc.judiciary.gov.ph/jurisprudence/2010/october2010/177279.htm#_ftn61

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res'ondents see;ing reconsideration of the August 7, 2002 assessment

notice and formal letter of demand% &rivate res'ondents cannot

belatedly assail the said assessment, which they allowed to la'se into

finality, by raising issues as to its validity and correctness during the

'reliminary investigation after the

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means of a disguised 'rotest% /n the main, !ertiorari may not be used as

a substitute for a lost a''eal or remedy% )his ?udicial 'olicy becomes more

'ronounced in view of the absence of sufficient attac; against the

actuations of government%

ection 225 of the /R!8$9'rovides the remedy to dis'ute a ta*

assessment within a certain 'eriod of time% /t states that an assessment

may be 'rotested by filing a re4uest for reconsideration or reinvestigation

within 0 days from recei't of the assessment by the ta*'ayer% o such

administrative 'rotest was filed by 'rivate res'ondents see;ing

reconsideration of the August 7, 2002 assessment notice and formal letter

of demand% &rivate res'ondents cannot belatedly assail the said

assessment, which they allowed to la'se into finality, by raising issues as to

its validity and correctness during the 'reliminary investigation after the

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was mailed% /f recei't is denied, the

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informed in writing of the facts on which the assessment of estate ta*es had been

made% )he estate was merely informed of the findings of the !/R% ection 225 of the

/R! being remedial in nature can be a''lied retroactively even though the ta*

investigation was conducted 'rior to the law-s 'assage% !onse4uently, the invalid FA

cannot be a basis of a com'romise, any 'roceeding emanating from the invalid FA is

void including the issuance of the warrant of distraint andEor levy%

CIR v ENRON S"/# Po3e+ Co+*

FA!):

)he

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FLOUR DANIEL P'IL INC. v. CIR

FA!):

/n res'onse to the 'rotest filed by Flour Daniel &hil, the !/R rendered a Final Decision

on Dis'uted Assessment wherein res'ondent change it from "*'anded 1ithholding )a*

B"1)C to a Final 1ithholding )a* BF1)C of 2H% )hus, the 'etitioner argues that the

change in the classification of the assessed deficiency ta* shall be considered as new

assessment and hence it is not 'ro'er for the demanding a total ta* liability of about &$00 million% #n +uly 20, 200$ Bwithin the 0 day

'eriod from issuance of FA to file a 'rotestC, R!

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acted on the 'rotest% #n A'ril 0, 2002, R!

A''eals B!)AC%

ISSUE& 1hether or not R!

'ELD & o% nder the law, after the la'se of $50 days within which the !/R is su''osed

to rule on the 'rotest J yet the !/R did not, the ta*'ayer has 0 days from said la'se to

file an a''eal with the !)A% /n the case at bar, the 'rotest was filed on +uly 20, 200$%

From that date, R!

on A'ril 0, 2002 which was already beyond the 0 day 'eriod% /n such case, the

decision of the !/R indirectly denying the 'rotest by reason of inaction is already final

and e*ecutory and is no longer a''ealable%

COMMISSIONER OF INTERNAL REVENUE VS. FIRST EPRESS PANS'OP

COMPAN INC.

FA!):

!/R issued assessment notices against Res'ondent for deficiency income ta*, KA) and

documentary stam' ta* on de'osit on subscri'tion and on 'awn tic;ets% Res'ondent

filed its written 'rotest on the assessments% 1hen !/R did not act on the 'rotest during

the $50@day 'eriod, res'ondent filed a 'etition before the !)A%

/":

3as Res'ondent-s right to dis'ute the assessment in the !)A 'rescribed

3"LD:

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#% )he assessment against Res'ondent has not become final and una''ealable% /t

cannot be said that res'ondent failed to submit relevant su''orting documents that

would render the assessment final because when res'ondent submitted its 'rotest,

res'ondent attached all the documents it felt were necessary to su''ort its claim%

Further, !/R cannot insist on the submission of 'roof of D) 'ayment because such

document does not e*ist as res'ondent claims that it is not liable to 'ay, and has not

'aid, the D) on the de'osit on subscri'tion%

)he term relevant su''orting documents are those documents necessary to su''ort

the legal basis in dis'uting a ta* assessment as determined by the ta*'ayer% )he

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I"% )he assessment has become final% )he ?urisdiction of the !)A has been

e*'anded to include not only decision but also inactions and both are ?urisdictional such

that failure to observe either is fatal%

3owever, if there has been inaction, the ta*'ayer can choose between B$C file a &etition

with the !)A within 0 days from the la'se of the $50@day 'eriod #R B2C await the final

decision of the !/R and a''eal such decision to the !)A within 0 days after recei't of

the decision% )hese o'tions are mutually e*clusive and resort to one bars the

a''lication of the other% )hus, if 'etitioner belatedly filed an action based on inaction, it

can not subse4uently file another 'etition once the decision comes out%

LASCONA LAND INC v. CIR

/n arch $..5, the !ommissioner of /nternal Revenue B!/RC issued a formal

assessment notice BFAC to Lascona Land !o%, /nc% BLL!/C demanding the latter to 'ay

&7=; in ta*es% LL!/ filed a timely 'rotest on A'ril 20, $..5% From said date Bsince no

su''orting document was re4uired to be submittedC, the !/R has $50 days to decide on

the 'rotest% 3owever, the !/R 'romulgated its decision on arch , $...% LL!/

received a co'y of the decision on arch $2, $...% #n A'ril $2, $..., LL!/ a''ealed

the decision to the !ourt of )a* A''eals B!)AC% )he !/R moved for the dismissal of thea''eal on the ground that under a revenue regulation issued by the

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$C the ta*'ayer adversely affected by the decision may a''eal to the !)A within 0

days from recei't of the decision, or

2C may a''eal to the !)A within 0 days from the la'se of the one hundred eighty

B$50C@day 'eriod%

/nter'reting the above 'rovision, the ta*'ayer has two o'tions in case of inaction by the

!/R% First is to a''eal to the !)A within 0 days from the la'se of the $50 day 'eriod(

or second, wait for the !/R to issue the decision and then a''eal, if adverse, to the !)A

within 0 days from the recei't of the decision by the ta*'ayer Bbecause even if the !/R

failed to decide on the case within the $50 day 'eriod, it can still decide on it and may

even issue a favorable ?udgment to the ta*'ayer, hence it may be logical to wait and

only a''eal if the adverse decision is actually receivedC%

/n the case at bar, LL!/ chose to wait for the !/R to decide on the case and it did not

a''eal within 0 days from the la'se of the $50@day 'eriod% LL!/ received the adverse

decision of the !/R on arch $2, $...% /t a''ealed on A'ril $2, $... which is still within

the 0@day 'eriod to a''eal to the !)A%

)he revenue regulation in 4uestion is invalid because in effect, it limited the remedy

'rovided for by the law% ection 225 of the /R! 'revails over the said revenue

regulation% )he said revenue regulation cannot validly ta;e away the o'tion of the

ta*'ayer to continue waiting, even after the la'se of the $50 day 'eriod, for the !/R todecide on the case and ?ust a''eal, within 0 days from recei't, if the !/R-s ruling is

adverse%

/t must however be noted that these two remedies are mutually e*clusive%

87.U$/(e2 A/+/$es vs. Co11/ss/o$e+ o0 I$(e+$a Reve$"e

Facts:

/nternational airline, 'etitioner nited Airlines, filed a claim for income ta* refund%

&etitioner sought to be refunded the erroneously collected income ta* from in the

amount of P5:;88

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u'lifts of which did not originate in the &hili''ines% )he airlines ceased o'eration

originating form the &hili''ines since February 2$, $..5%

!ourt of tA* a''eals ruled the 'etitioner is not entitled to a refund because under the

/R!, income ta* on 6&< also includes gross revenue from carriage of cargoes from

the &hili''ines% And u'on assessment by the !)A, it was found out that 'etitioner

deducted items from its cargo revenues which should have entitled the government to

an amount of P$%> million, which is obviously higher than the amount the 'etitioner

'rayed to be refunded%

&etitioner argued that the 'etitioner-s su''osed under'ayment cannot offset his claim to

a refund as established by well@settled ?uris'rudence%

/ssue:

1hether or not 'etitioner is entitled to a refund

3"Ld:

&etitioner was correct in averring that his claim to a refund cannot be sub?ect to offsettingor, as it claimed the offsetting to be, a legal com'ensation under Se#. ;8>A?>=?>a?

@Pe(/(/o$e+s >s/1/a+? (a) +e0"$2 #a/1 ass"1es (,a( (,e (a) +e("+$ (,a( /( 0/e2 3as

#o++e#(. G/ve$ ,o3eve+ (,e 0/$2/$4 o0 (,e CTA (,a( *e(/(/o$e+ a(,o"4, $o( /ae

"$2e+ Se#. ;8>A?>=?>a? o0 (,e

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