REMEDIES

1. Adamson vs. CIR

Petitioner was issued a deficiency assessment for sales of shares
of stock. It filed a protest with request for reinvestigation.
Meanwhile, the CIR filed with the DOJ a complaint for tax evasion
against petitioners. The latter filed a petition for review with the
CTA. CIR filed a motion to dismiss contending that it has not yet
made a final assessment on the tax liability of the petitioners.
CTA denied the motion saying that the filing of the complaint was
deemed an assessment on the part of the CIR and a deemed
denial of petitioners protest.

reward. The CIR earlier denied the reward saying that there was
no basis for the assessment of deficiency income tax since under
the law only 25% of the dividends received by a domestic
corporation is taxable.
Doctrines:
1.

2.

Doctrines:
1.

2.

3.

An assessment is a written notice and demand made by

the BIR on the taxpayer for settlement of due tax
liability that is there definitely set and fixed. A written
communication containing computation by a revenue
office of the tax liability of a taxpayer and giving him
opportunity to contest the BIR examiners findings is
not an assessment since the same is yet indefinite. The
recommendation of the CIR cannot be considered
formal assessment as it was not addressed to the
taxpayers, there was no demand for payment on the
tax liability and the same was never mailed or sent to
the taxpayers. The said recommendation letter served
merely as prima facie basis for the filing of criminal
information against the petitioners.
An assessment of a deficiency is not necessary to a
criminal prosecution for willful attempt to defeat and
evade the payment of taxes. The crime is complete
when the violator has knowingly and willfully 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 promptly to assess has no
connection with the commission of the crime.
The jurisdiction of the CTA to entertain an appeal is
limited to a final decision or assessment of the CIR or in
case where the CIR has not acted within the period
prescribed by the NIRC. In the case at bar, the CIR has
not issued an assessment of the tax liability of
petitioners thus the CTA has no jurisdiction of both the
criminal and civil cases.

The CTA has jurisdiction over disputed assessments.

The question of WON to impose a deficiency tax
assessment comes within the purview of disputed
assessments and other matters arising under the NIRC
which is within the jurisdiction of the CTA.
Since the CIR is charged with the administration of
revenue laws, which is the primary responsibility of the
executive branch of the government, mandamus may
not lie against the CIR to compel him to impose a tax
assessment not found by him to be due and proper for
that would be tantamount to usurpation of executive
functions. Mandamus only lies to enforce the
performance of a ministerial act or duty, and not to
control the performance of a discretionary power.

4. Bonifacia Sy vs. CTA

The late Po Bien Sing was the sole proprietor of Silver Cup,
engaged in the manufacture and sale of compounded liquors,
alcohols and other ingredients. The SOF directed the FinanceBIR-NBI team to conduct an investigation of Silver Cup on the
basis of a charge for tax evasion. Despite issuance of a subpoena
duces tecum, Po Bien Sing did not produce his books of accounts
as requested prompting the investigation team to seize products
of Silver Cup and on the basis thereof, Silver Cup was assessed
with deficiency income and specific taxes.
Doctrines:
1.
2.

Tax assessments by BIR examiners are presumed

correct and made in good faith. All presumptions are in
favor of the correctness of tax assessments.
The best evidence obtainable applies when a tax report
required by law for the purpose of assessment is not
available or when the tax report is incomplete or
fraudulent. In the instant case, the persistent failure of
the late Po Bien Sing and herein petitioner to present
their books of accounts for examination left the CIR no
other legal options except to render an assessment
based on the best evidence obtainable.

2. RCBC vs. CIR

5. Capital Steel Corp. vs. Phividec Industrial Authority

BIR issued DAN on petitioner for deficiency Gross Onshore Tax

and DST. On July 20, 2001, RCBC filed a protest. Since the same
was not acted upon by the CIR, RCBC filed a petition for review
with the CA on April 30, 2002.

This case involves dispute as to the basis for determining the

value of the properties owned by Capitol Steel which is the
subject to an expropriation case filed by Phividec. According to
Capitol Steel, the basis should be that determined by the
Technical Committee on Real Property Valuation (TCRPV) of the
BIR which fixes the value of the property at P700 per square
meter. On the other hand, Phividec claims that the basis should
be DO No. 40-97 fixing the zonal values of the properties at P300
and P500 per square meter respectively.

Doctrine: If the protest is denied in whole or in part or is not

acted upon within 180 days from submission of documents, the
taxpayer may appeal to the CTA within 30 days from receipt of
the said decision or within 30 days from the lapse of the 180-day
period, otherwise the decision shall become final, executory and
demandable.
o
o
o
o

July 20, 2001 RCBC filed protest with request for

reinvestigation/reconsideration.
September 18, 2001 deadline for submission of
relevant supporting documents (60 days)
March 17, 2002 last of the 180-day period within
which the CIR will render a decision (180 days)
April 16, 2002 last day of filing an appeal with the CTA
(30 days)

Thus when RCBC filed its petition for review with the CTA on April
30, 2002, the same is outside the 30 day period.

Doctrine: While the law grants the CIR the power to determine
the power to determine zonal values, including the power to
delegate to the Assistant Commissioner the authority to approve
and sign the TCRPV resolutions involving requests for revaluation
of established zonal values of real properties, the same is for the
purpose of computing internal revenue taxes.
Admittedly, the revaluation was not sought by petitioner for the
purpose of computing any internal revenue taxes in order to
secure the appropriate clearances from the BIR but for the
purpose of computing the provisional valuation of the properties
sought to be expropriated.

3. Meralco Securities Corp. vs. Hon. Savellano

Thus, the valuation under DO No. 40-97 prevails over the

revaluation under the TRCPV resolutions.

Maniago filed a case for mandamus before the CFI against the
CIR to compel the latter to assess and collect deficiency taxes
from Meralco Securities and to pay Maniago his informers

Moreover, to allow the owner of the properties to be expropriated

recourse to a case to case reevaluation when it disagrees with
the zonal valuation by the BIR, would cause delay to government

infrastructure projects and leave the determination of provisional

values of expropriated properties to the property owner and the
TCRPB, without participation of the expropriating agency.

i.
ii.
iii.
iv.

Sent to and received by the taxpayer

Must demand payment of taxes described therein
Within a specific period
Deemed made only when the CIR releases, mails or
sends such notice to the taxpayer.

6. CIR vs. Sony Philippines

The CIR issued Letter of Authority 19734 authorizing revenue
officers to examine Sonys books of accounts and other records
regarding revenue taxes for the period 1997 and unverified prior
years. The CIR insists that the LOA should be understood to
mean the fiscal year ending March 31, 1998.
Doctrine: A letters of authority is the authority given to the
appropriate revenue officer to examine the books of account and
other records of a taxpayer for purposes of collecting the correct
amount of tax. The revenue officer must no go beyond the
authority given. LOA 19734 covered the period 1997 and
unverified prior years. The CIR went beyond the scope of the
authority granted under the LOA because the deficiency VAT
assessment they arrived as based on records from January to
March 1998. If the CIR wanted to include the year 1998 in the
investigation, it should have done so by including it in the LOA.
Under RMO No 43-90, a LOA should cover a taxable period not
exceeding one taxable year. If the audit shall include more than
one taxable period, the other periods or years shall be
specifically indicated in the LOA.
7. CIR vs. Kudos Metal Corp.
o
o
o
o
o
o
o

April 15, 1999 Kudos Metal filed its ITR for the taxable
year 1998.
April 15, 2002 deadline for making an assessment
December 10, 2001 The accountant of Kudos Metal
executed a waiver of the defense of prescription
February 18, 2003 a second waiver is execute by
Kudos accountant
November 12, 2003 Kudos received FAN from the BIR
for deficiency income tax.
June 22, 2004 BIR rendered a decision denying the
protest.
August 27, 2004 Kudos filed a petition for review with
the CTA.

Doctrine: As a general rule, assessments must be made within 3

years from the last day of filing a return prescribed by law or
from the date of actual filing in case filed beyond the last day. An
exception to the rule is when the taxpayer and the BIR executes
a waiver for the assessment or collection of taxes thus extending
the period thereof beyond the 3-year prescriptive period.
The waivers executed by respondents accountant, for failure to
comply with the requirements for a valid waiver under RMO 2090 and RDAO 05-01, did not extend the period within which the
assessment can be made. The waivers had the following
infirmities
1.
2.
3.

The waivers are executed without being duly notarized

The waivers failed to indicate the date of acceptance.
The fact of receipt by the respondent of its file copy was
not indicated in the original copies of the waivers.

Consequently, the assessments were issued by the BIR beyond

the three-year prescriptive period and are void.
8. CIR vs. Pascor Realty
Pascor was assessed for deficiency taxes. Consequently, a
criminal complaint for tax evasion was filed against it by the CIR
before the DOJ. Pascor filed a request for
reconsideration/reinvestigation disputing the assessment which
the CIR denied on the basis that there was no formal assessment
yet. Pascor appealed to the CTA contending that the filing of the
criminal complaint amounted to an assessment. Both the CTA
and later the CA agreed with Pascor.
Doctrines:
1. To be a valid assessment, it must be:

In the present case, the revenue officers Affidavit merely

contained a computation of Pascors tax liability. It did not state a
demand or period of payment. Worse, it was addressed to the
SOJ, not to the taxpayer. Hence, it is not an assessment. The
purpose of the Joint Affidavit was merely to support and
substantiate the criminal complaint for tax evasion against the
taxpayer filed with the DOJ.
2. In cases where a false or fraudulent return is submitted or in
cases of failure to file a return, proceedings in court may be
commenced without an assessment. The civil and criminal
aspects of the case may be pursued simultaneously. The issuance
of an assessment must be distinguished from the filing of a
complaint. A criminal complaint need not undergo the processes
of an assessment. It is filed directly with the DOJ. It is not
instituted to demand payment but to penalize the taxpayer for
violation of the Tax Code. In tax evasion cases, the CIR has
discretion on whether to issue an assessment or to file a criminal
case against the taxpayer or both. Moreover, the criminal charge
need only be supported by a prima facie showing of failure to file
a required return. It need not be proven by an assessment.
9. Republic vs. de la Rama
The estate of the late Esteban de la Rama was made the subject
of a special proceeding. The executor-administrator filed income
tax returns for the taxable year 1950. The BIR later on assessed
the estate for deficiency income tax for cash dividends received
by the De la Rama Steamship Company Inc. Collector of internal
revenue demanded payment thereof from Lourdes de la Rama
and later on Leonor de la Rama, neither of whom are
administrators of the estate.
Doctrines:
1.

2.

If the notice was not sent to the taxpayer for purpose

of giving effect to the assessment, said notice cannot
produce any effect. The notice of assessment was sent
at the time special proceedings of the estate of Esteban
de la Rama were still taking place, at which time Eliseo
Hervas was still the duly appointed administrator.
According to RA 1125, the CTA has jurisdiction by
appeal decisions of the Collector of Internal Revenue in
cases involving disputed assessments and such
disputed assessments must be appealed by the person
adversely affected by the decision within 30 days after
receipt thereof. In the instant case, the person
adversely affected is the administrator of the estate
and notice should have been sent to him. As he had not
received the notice, he could not have appealed the
assessment to the CTA within the 30 day period. Hence
the assessment did not fall within the exclusive
jurisdiction of the CTA.

10. CIR vs. Acosta

Acosta and her husband filed their Joint Income Tax Return for
the taxable year 1996. Acosta subsequently filed an Amended
Return in 1997 indicating overpayment of income tax. In 1999,
Acosta filed a petition for review with the CTA. CIR moved to
dismiss the petition for failure of Acosta to file a mandatory
written claim for refund with the CIR. The CA ultimately ruled
that the filing by respondent of an amended return was sufficient
compliance with the requirement of a written claim for refund.
Doctrine:
1. Under the 1997 NIRC particularly Sec. 204(C) thereof, an
amended return filed showing overpayment shall be considered
as a written claim for credit or refund. However under Section
230 of the old Tax Code (1977 NIRC), a written claim for refund or
credit must be filed with the CIR within 2 years from date of
payment regardless of any supervening event. In this case, the
applicable law is still the old Tax Code since the claim for refund

pertains to the 1996 compensation of Acosta. The 1997 NIRC only

took effect of January 1, 1998. A written claim for refund must be
filed with the CIR to afford the CIR an opportunity to correct the
action of a subordinate officer and to notify the government that
such taxes have been questioned.
2. Sec. 204(C) of the new Tax Code cannot be given retroactive
effect. Tax laws are generally prospective in application. Further,
at the time Acosta filed her amended return, the 1997 NIRC was
not yet in effect hence the filing of an amended return cannot be
considered a written claim for refund.
11. Ungab vs. Cusi
Petitioner failed to report his income derived from sales of
banana saplings as a result of which a notice of taxpayer was
issued against him. Later on, he was invited to an informal
conference. He filed a protest saying that he was only an agent
on commission basis. CIR later on recommended the filing of tax
evasion cases against petitioner as a result of which 6
informations for tax evasions were filed against him with the CFI.
He filed a motion to quash the informations on the ground that
the CFI has no jurisdiction since there was still a pending protest
against the assessment filed with the BIR. Hence the filing of the
informations is premature.
Doctrine: What is involved in this case is not the collection of
taxes where the assessment of the CIR may be reviewed by the
CTA but a criminal prosecution for violations of the NIRC which is
within the jurisdiction of the CFIs (now the RTCs/MTCs). There is
no requirement for precise computation and assessment of the
tax before there can be a criminal prosecution under the NIRC.
The crime is complete when the violator, has, as in this case,
knowingly and willfully filed fraudulent returns with intent to
evade and defeat a part of all of the tax. The governments
failure to discover the error and promptly assess has no
connection with the commission of the crime. Petitions for
reconsideration (I think this should be reinvestigation) of an
assessment may affect the suspension of the prescriptive period
for collection of taxes but not prescriptive period for a criminal
action for violation of the NIRC.
12. CIR vs. Estate of Benigno Toda
CIC authorized Benigno Toda Jr., its President and majority
stockholder to sell two parcels of land. Toda sold the properties
for P100million to Altonaga. In turn, Altonaga sold the same
properties on the same day to RMI for P200million. The two
transactions were evidenced by a deed of absolute sale notarized
on the same day by the same notary public. For the sale of the
property to RMI, Altonaga paid CGT of P10million. In 1990, CIC
filed its annual ITR for the year 1989. Toda subsequently sold all
his shares in CIC to Choa. Later on, Toda died. BIR sent
assessment notice to CIC for deficiency income tax for the year
1989. CIC filed a protest alleging that the assessment should be
directed against the old CIC and not against the new CIC which is
composed of an entirely different set of SHs. The estate of Toda
also which was assessed with deficiency income tax filed a
petition for review with the CTA alleging that the right of the CIR
to assess CIC had already prescribed. CIR argued that the two
transactions constituted a single sale. The additional gain of
P100m was taxed at the rate of 5% as CGT of Altonaga instead of
the rate of 35% corporate income tax of CIC. The ITR was filed by
CIC with intent to evade payment of the tax this false or
fraudulent. Since the falsity or fraud was only discovered by the
BIR on March 8, 1991, the assessment issued on 9 January 1995
was well within the prescriptive period of 10 years from
discovery of the fraud or falsity.
Doctrines:
1.

2.

The case is one of tax evasion. Altonagas sole purpose

of acquiring and transferring the properties was to
create a tax shelter. Altonaga neither had control nor
ownership of the properties. The sale was merely a
sham, a ploy, calculated to misled the BIR.
In cases of fraudulent and false returns with intent to
evade tax and failure to file a return, the period within
which to assess the tax is 10 years from discovery of
the fraud, falsification or omission. The false return was

filed on April 15, 1990 and the falsity was discovered

only on March 8, 1991. The assessment on January 9,
1995 for the 1989 deficiency income tax of CIC was well
within the prescriptive period.
13. CIR vs. Hambrecht and Quist Philippines
o

o
o
o

January 8, 1993 notice of assessment for deficiency

income and EWT for the year 1989 was sent to
Hambrecht. (By this time, Hambrecht transferred its
business address)
February 18, 1993 receipt by BIR of Hambrecht notice
to change of business address.
December 3, 1993 Hambrecht filed a protest with
request for reinvestigation with the BIR.
November 7, 2001 -- Hambrecht received the decision
of the CIR denying its protest on the ground that it was
filed beyond the 30-day reglementary period to file a
protest from date of receipt of the assessment notice.

CTA held that CIR failed to collect the assessed taxes within the
prescriptive period. CIR argues that its right to collect the
deficiency tax was suspended by respondents request for
reinvestigation.
Doctrines:
1.

2.

The appellate jurisdiction of the CTA is not limited to

cases which involve decisions of the CIR on matters
relating to assessments or refunds. It also extends to
other cases that arise out of the NIRC or related laws
administered by the BIR. The issue of the BIRs right to
collect taxes may be considered as covered by the term
other matters over which the CTA has jurisdiction. The
validity of the assessment itself is separate and distinct
from the issue of whether the right of the CIR to collect
the tax has prescribed. The issue of prescription, being
a matter provided under the NIRC, is within the
jurisdiction of the CTA.
Two requisites must concur before the period to enforce
collection may be suspended: (1) that the taxpayer
requested reinvestigation and (2) the CIR grants such
request.
In this case, there is no indication that the CIR acted
upon the protest on the ground that the assessment
had already become final and executory because no
protest was filed within 30 days from receipt of the
notice. There is nothing to indicate that the CIR
conducted a reinvestigation. In fact, it was only 8 years
from the filing of the protest when a final decision of
denial was rendered by the CIR.

14. CIR vs. Metro Star Superama

A warranty of distraint and/or levy was issued against respondent
for non-payment of assessed deficiency VAT and withholding tax.
Respondent insists that it did not receive a PAN thus it was not
accorded due process. CIR alleged that a PAN was issued and
that due process was accorded respondent since it received a
FAN.
Doctrine: If the taxpayer denies having received an assessment
from the BIR, it is incumbent upon the latter to prove by
competent evidence that such notice was indeed received by the
addressee. While a mailed letter is deemed received by the
addressee in the course of mail, this is merely a presumption
subject to controversion. CIR failed to discharge its duty of
presenting evidence to show that Metro Star indeed received the
PAN. It could have presented the registry receipt of certification
from the postmaster indicating the mailing of the PAN but it did
not. No explanation was offered for failure to comply with the
requirement of service of PAN. The requirement of a PAN is not
merely a formal requirement but a substantive one.
15. CIR vs. Enron Subic Power Corp.
FAN was issued by the CIR on Enron Corp. which was assailed by
the corporation in a petition for review with the CTA for failing to
state the legal and factual basis of the assessment. CA and CTA

ruled in favor of Enron. CIR claims that Enron was properly

notified because during the pre-assessment state, CIR advised
Enron of its tax deficiency and sent a preliminary five-day letter
with a copy of the audit working paper showing the detail of the
assessment.
Doctrine: The law mandates that the taxpayer shall be informed
in writing of the law and the facts on which the assessment is
made otherwise the same is void. The advice of tax deficiency
given by the CIR as well as the preliminary five-day letter were
not valid substitutes for mandatory notice in writing of the legal
and factual bases of the assessment. The FAN should contain the
legal and factual bases upon which the assessment is made. The
law requires that the taxpayer shall be informed, not merely
notified.
16. CIR vs. Isabela Corp.
An assessment was sent to ICC for deficiency income tax in the
taxable year 1986. The assessment was protested by ICC. It
received a Final Notice Before Seizure from the BIR demanding
payment of the taxes. ICC considered said notice of seizure as
the BIRs final decision of its request for reconsideration. Hence it
filed a petition for review with the CTA.
Doctrines:
1.

2.

A final letter of demand from the BIR demanding

immediate payment of assessed deficiency tax is
tantamount to a denial of the TPs request for
reconsideration. Such letter amounts to a final decision
appealable to the CTA, the Final Notice of Seizure could
be considered the CIRs decision denying the protest.
In case of inaction by the CIR within the 180-day period
after filing of the protest (in case of reconsideration),
the taxpayer may appeal directly to the CTA within 30
days from the lapse of said period. In this case, the
period of 180 days already lapsed when ICC filed its
request for reconsideration on March 23, 1990, without
action on the part of the CIR.

17. CIR vs. Philippine Global Inc. (2006)

BIR issued FAN on Phil. Global. The latter filed 2 letters of protest.
It was only 8 years later when a final decision was rendered by
the BIR on the protest.
Doctrine: The law strictly limits the suspension of the running of
the 3 year prescriptive period, within which to collect the tax, to
protests wherein the taxpayer requests for reinvestigation.
Consequently, a protest with request for reconsideration does not
toll the prescriptive period.

3005. It had until September 3, 2005 to file the petition for

review with the CTA. Instead it filed a motion for reconsideration
of said decision with the CIR on September 1, 2005. The petition
for review was filed out of time.
19. Lascona Land Co., Inc. vs. CIR
CIR issued an assessment notice against petitioner to which the
latter filed a letter of protest on April 20, 1998. RD ruled that
since Lascona did not elevate the case to the CTA, the said
assessment notice has become final, executory and demandable.
Lascona appealed the decision to the CTA which nullified the
assessment. CA, however, reversed the CTA.
Doctrine: In case of inaction of the CIR on the protested
assessment, the taxpayer has two option (1) to file a petition
for review with the CTA within 30 days after the expiration of the
180-day period or (2) await the final decision of the CIR and
appeal such decision to the CTA within 30 days after receipt of a
copy of such decision. These options are mutually exclusive and
resort to one bars the application of the other.
Since Lascona opted to await the final decision of the CIR on the
protest, then it has the right to appeal to the CTA by filing a
petition for review within 30 days after receipt of a copy of the
deicision even after expiration of the 180-day period. Thus, when
it appealed before the CTA on April 12, 1999, after it received the
decision of the CIR on March 12, 1999, the appeal was timely
filed within the 30-day period from receipt of the decision.
20. CIR vs. Primetown Property Group (2007)
Respondent filed its adjusted return on April 14, 1998 and
thereafter filed a claim for tax refund or tax credit. Since its claim
was not acted upon by the BIR, it filed a petition for review with
the CTA on April 14, 2000. The tax court denied the petition
saying that its claim for refund or credit had already prescribed
considering that it was filed beyond the 2-year period under Sec.
229 of the NIRC. CTA said that under the Civil Code, a year has
365 days. Since 2000 is a leap year, thus respondent had 730
days from April 14, 1998 to file the claim but since it filed its
petition for review only 731 days thereafter, the same was
already filed beyond the reglementary period.
Doctrine: Under the Administrative Code, a year is understood
to be 12 calendar months. Applying the Administrative Code, it
being a more recent law than the Civil Code, the 2-year
prescriptive period consisted of 24 calendar months.
The petition was filed on time when respondent filed the same on
April 14, 2000, the last day of the 24th calendar month.
21. CIR vs. Smart Communication, Inc. (2010)

The reason is that a reinvestigation entails the reception and

evaluation of additional evidence thus it will take more time than
a reconsideration of a tax assessment, which is already limited to
the evidence at hand.
In this case, respondent received the FAN on April 14, 1994.
Therefore the BIR had until April 13, 1997 within which to collect
the tax. The earliest attempt of the BIR to collect the tax due was
when it filed its Answer with the CTA on January 9, 2003, which is
beyond the 3-prescriptive period.
18. Fishwealth Canning Corp. vs. CIR (2010)
BIR issued FAN against Fishwealth. The latter filed a protest with
the CIR which was denied. Fishwealth received the decision of
denial on August 4, 2005 and filed a motion for reconsideration
of said decision on September 1, 2005. Consequently, it also filed
a petition for review with the CTA on October 20, 2005. CIR
argues that the petition was filed out of time.
Doctrine: A motion for reconsideration of the denial of the
administrative protest does not toll the 30-day period to appeal
to the CTA.
In the case at bar, petitioners administrative protest was denied
by final decision, which was received by Fishwealth on August 4,

Smart Communication entered into 3 agreements with Prism, a

non-resident Malaysian Corporation. Smart withheld payments to
Prism represent 25% royalty tax under the RP-Malaysian Tax
Treaty. Smart filed an administrative claim for refund with the
BIR saying that its payments to Prism were not royalties but
business profits and thus not taxable since Prism does not have a
permanent establishment in the Philippines. CIR said that the
proper party to claim the refund was Prism, not Smart.
Doctrine: The person entitled to claim a tax refund, under
Section 204 and 209 of the NIRC, is the taxpayer. However, if the
taxpayer does not file a claim for refund, the withholding agent
may file a claim. First, he is considered a taxpayer under the
NIRC as he is personally liable for the withholding tax as well as
deficiency assessments, surcharges, and penalties, should the
amount of tax withheld be finally found less than the amount
which should have been withheld. Second, as an agent of the
taxpayer, his authority to file the necessary income tax return
and to remit the tax withheld to the government impliedly
includes the authority to file a claim for refund and to bring an
action for recovery of such claim.
22. Aguinaldo Industries vs. CIR (2010)

Petitioner filed two separate ITRs. After investigation, the BIR

examiners found that the amount derived from the sale of the
Muntinlupa property was deducted from its gross income as part
of selling expenses. They recommended that such deduction be
disallowed. Petitioner asserted that the claim should be allowed
because it was paid as bonus to its officers pursuant to its bylaws thus not taxable.
Doctrine: Interest and surcharges on deficiency taxes are
imposable upon failure of the taxpayer on the date fixed in the
law for the payment thereof, which was under Section 51 of the
(old) Tax Code, the 15th day of the 5th month (now 4th month)
following the close of the fiscal year for taxpayers who follow the
fiscal year basis. A deficiency tax indicates non-payment of the
correct tax, and such deficiency exists not only from the
assessment thereof but from the very time the taxpayer failed to

pay the correct tax when it should have been paid and the
imposition thereof is mandatory even in the absence of fraud or
willful failure to pay the tax in full.
23. Michel J. Lhuiller Pawnshop vs. CIR
Petitioner was assessed with payment of deficiency documentary
stamp tax.
Doctrine: Penalties and surcharge may not be imposed if the
taxpayer was in good faith and honestly believed that it is not
subject to pay tax because of the erroneous interpretation of the
BIR on the laws involved.