TAXATION II

REMEDIES

1. SMI-Ed Phil Technology Inc., vs Commissioner of Internal Revenue

GR No. 175410 – November 12, 2014
Facts:
 SMI-Ed Philippines is a PEZA-registered corporation. However, SMI-Ed Philippines "failed
to commence operations even after its registration or even after it constructed buildings and
purchased machineries and equipment.
 Its factory was temporarily closed and later it sold its buildings and some of its installed
machineries and equipment to Ibiden Philippines, Inc., another PEZA-registered enterprise.
After requesting the cancellation of its PEZA registration and amending its articles of
incorporation to shorten its corporate term, SMI-Ed Philippines filed an administrative claim
for the refund.
 Since BIR did not act on SMI-Ed Philippines’ claim, it prompted the latter to file a petition for
review before the Court of Tax Appeals which was denied. Later, the CTA second division
found that since SMI-Ed Philippines had not commenced operations, it was not entitled to
the incentives of either the income tax holiday or the 5% preferential tax rate. Payment of
the 5% preferential tax was erroneous.
Issue:
 Whether or not the determination of the Court of Tax Appeals was necessary to settle the
question regarding the tax consequence of the sale of the properties.
 Whether or not Petitioner is liable to pay any tax.
Held:
 The term "assessment" refers to the determination of amounts due from a person obligated
to make payments. In the context of national internal revenue collection, it refers the
determination of the taxes due from a taxpayer under the National Internal Revenue Code
of 1997. The power and duty to assess national internal revenue taxes are lodged with the
BIR.
 Only the presumed gain from the sale of petitioner’s land and/or building may be subjected
to the 6% capital gains tax. The income from the sale of petitioner’s machineries and
equipment is subject to the provisions on normal corporate income tax. However, the BIR
did not make a deficiency assessment for this declaration. Since more than a decade have
lapsed from the filing of petitioner's return, the BIR can no longer assess petitioner for
deficiency capital gains taxes.

2. Commissioner of Internal Revenue vs Fitness by Design Inc.,

GR No. 215957 – November 09, 2016
Facts:
 Fitness filed its Annual Income Tax Return for the taxable year of 1995. Later, Fitness
received a copy of the Final Assessment Notice. The Final Assessment Notice assessed
that Fitness had a tax deficiency.
 Fitness filed a protest to the Final Assessment Notice since accordingly the Commissioner's
period to assess had already prescribed. Further, the assessment was without basis since
the company was only incorporated on May 30, 1995.
 In its Answer, the Commissioner posited that the Warrant of Distraint and/or Levy was
issued in accordance with law. The Commissioner claimed that its right to assess had not
yet prescribed because the 1995 Income Tax Return filed by Fitness was false and
fraudulent for its alleged intentional failure to reflect its true sales.
 The Final Assessment Notice cannot be considered as a final deficiency assessment
because it deprived respondent of due process when it failed to reflect its fixed tax
liabilities. Moreover, it also gave respondent an indefinite period to pay its tax liabilities.
Issue:
 Whether or not the Final Assessment Notice issued against respondent Fitness by Design,
Inc. is a valid assessment.
Held:
 The assessment process starts with the filing of tax return and payment of tax by the
taxpayer. The initial assessment evidenced by the tax return is a self-assessment of the
taxpayer. The tax is primarily computed and voluntarily paid by the taxpayer without need of
any demand from government. If tax obligations are properly paid, the Bureau of Internal
Revenue may dispense with its own assessment.
 After filing a return, the Commissioner or his or her representative may allow the
examination of any taxpayer for assessment of proper tax liability. The failure of a taxpayer
to file his or her return will not hinder the Commissioner from permitting the taxpayer's
examination. The Commissioner can examine records or other data relevant to his or her
inquiry in order to verify the correctness of any return, or to make a return in case of
noncompliance, as well as to determine and collect tax liability. The indispensability of
affording taxpayers sufficient written notice of his or her tax liability is a clear definite
requirement.
 Section 3 of Revenue Regulations No. 12-99, requires a notice for informal conference. The
revenue officer who audited the taxpayer's records shall state in his or her report whether
the taxpayer concurs with his or her findings of liability for deficiency taxes. If the taxpayer
does not agree, based on the revenue officer's report, the taxpayer shall be informed in
writing of the discrepancies in his or her payment of internal revenue taxes for Informal
Conference. The informal conference gives the taxpayer an opportunity to present his or
her side of the case.
 The taxpayer is given 15 days from receipt of the notice of informal conference to respond.
If the taxpayer fails to respond, he or she will be considered in default. The revenue officer
endorses the case with the least possible delay to the Assessment Division of the Revenue
Regional Office or the Commissioner or his or her authorized representative. The
Assessment Division of the Revenue Regional Office or the Commissioner or his or her
authorized representative is responsible for the appropriate review and issuance of a
deficiency tax assessment, if warranted.
 If, after the review conducted, there exists sufficient basis to assess the taxpayer with
deficiency taxes, the officer 'shall issue a preliminary assessment notice showing in detail
the facts, jurisprudence, and law on which the assessment is based. The taxpayer is given
15 days from receipt of the pre-assessment notice to respond. If the taxpayer fails to
respond, he or she will be considered in default, and a formal letter of demand and
assessment notice will be issued.
 The formal letter of demand and assessment notice shall state the facts, jurisprudence, and
law on which the assessment was based; otherwise, these shall be void. Further, such
demand must indicate the definite amount of tax to be paid and the due date for the
payment. Without the definite amount or the date when the tax must be paid, it is not a valid
demand and is therefore an invalid assessment.
 The word "shall" in Section 228 of the National Internal Revenue Code and Revenue
Regulations No. 12-99 means the act of informing the taxpayer of both the legal and factual
bases of the assessment is mandatory. The law requires that the bases be reflected in the
formal letter of demand and assessment notice. This cannot be presumed. Otherwise, the
express mandate of Section 228 and Revenue Regulations No. 12-99 would be nugatory.
The requirement enables the taxpayer to make an effective protest or appeal of the
assessment or decision.

3. Philippine National Oil Company vs Court of Appeals

GR No. 109976 – April 26, 2005
Facts:
 Through his sworn statement, private respondent Savellano informed the BIR that PNB had
failed to withhold the 15% final tax on interest earnings and/or yields from the money
placements of PNOC with the said bank. BIR requested PNOC to settle its liability for taxes
on the interests earned by its money placements with PNB and which PNB did not withhold.
Later, PNOC wrote the BIR and made an offer to compromise its tax liability. PNOC
proposed to set-off its tax liability against a claim for tax refund/credit of the National Power
Corporation (NAPOCOR), then pending with the BIR.
 Later, the BIR sent a demand letter to PNB, as withholding agent, for the payment of the
final tax on the interest earnings and/or yields from PNOC's money placements with the
bank and on the same date, the BIR also mailed a letter to PNOC informing it of the
demand letter sent to PNB.
 PNOC, in another letter, reiterated its proposal to settle its tax liability through the set-off of
the said tax liability against NAPOCOR'S pending claim for tax refund/credit. The BIR
replied that the proposal for set-off was premature since NAPOCOR's claim was still under
process.
Issue:
 Whether or not PNOC's tax liability could not be considered a delinquent account since it
was not self-assessed.
Held:
 Where tax liabilities are self-assessed, the compromise payment shall be computed based
on the tax return filed by the taxpayer. On the other hand, where the BIR already issued an
assessment, the compromise payment shall be computed based on the tax due on the
assessment notice.

4. Commissioner of Internal Revenue v Liquigaz Philippines Corporation

GR No. 215534 – April 18, 2016
Facts:
 Liquigaz received an undated letter purporting to be a Notice of Informal Conference (NIC),
as well as the detailed computation of its supposed tax liability. Subsequently, it received a
copy of the Preliminary Assessment Notice (PAN) together with the attached details of
discrepancies for the calendar year. Thereafter, it received a Formal Letter of Demand
(FLD)/Formal Assessment Notice (FAN), together with its attached details of discrepancies,
for the calendar year.
 Liquigaz filed its protest against the FLD/FAN and subsequently submitted its supporting
documents. However, it received a copy of the FDDA covering the tax audit under an LOA
for the calendar year. As reflected in the FDDA, the CIR still found Liquigaz liable for
deficiency withholding tax liabilities, inclusive of interest. Consequently, Liquigaz filed its
Petition for Review before the CTA Division assailing the validity of the FDDA issued by the
CIR. The CTA Division noted that unlike the PAN and the FLD/FAN, the FDDA issued did
 not provide the details thereof, hence, Liquigaz had no way of knowing what items were
considered by the CIR in arriving at the deficiency assessments.
Issue:
 Whether or not there was a valid final decision on disputed assessment.
Held:
 Under Section 228 of the NIRC, a taxpayer shall be informed in writing of the law and the
facts on which the assessment is made, otherwise, the assessment shall be void. However,
a void FDDA does not ipso facto render the assessment void. a decision of the CIR on a
disputed assessment differs from the assessment itself. Hence, the invalidity of one does
not necessarily result to the invalidity of the other—unless the law or regulations otherwise
provide. The taxpayer may then appeal the decision on the disputed assessment or the
inaction of the CIR. As such, the FDDA is not the only means that the final tax liability of a
taxpayer is fixed, which may then be appealed by the taxpayer. Under the law, inaction on
the part of the CIR may likewise result in the finality of a taxpayer's tax liability as it is
deemed a denial of the protest filed by the latter, which may also be appealed before the
CTA.

5. Commissioner of Internal Revenue vs Ayala Securities Corporation

L-29485 – March 31, 1976
Facts:
 Respondent Ayala Securities Corporation, a domestic corporation organized and existing
under the laws of the Philippines, filed its income tax returns with the office of the petitioner
for its fiscal year which ended on September 30, 1955. Attached to its income tax return
was the audited financial statements of the respondent corporation as of September 30,
1955, showing a surplus. The income tax due on the return of the respondent corporation
was duly paid for within the time prescribed by law.
 Later, Petitioner advised the respondent corporation of the assessment on its accumulated
surplus reflected on its income tax return for the fiscal year which ended September 30,
1955. The respondent corporation, on the other hand, in a letter dated April 19, 1961,
protested against the assessment on its retained and accumulated surplus pertaining to the
taxable year 1955 and sought reconsideration thereof for the reasons (1) that the
accumulation of the surplus was for a bona fide business purpose and not to avoid the
imposition of income tax on the individual shareholders, and (2) that the said assessment
was issued beyond the five-year prescriptive period. Eventually, respondent corporation
received a letter dated February 18, 1963, from Office of herein petitioner calling the
attention of the respondent corporation to its outstanding and unpaid tax and thereby
requesting for the payment.
 Believing the aforesaid letter to be a denial of its protest, the herein respondent corporation
filed with the Court of Tax Appeals a Petition for Review of the assessment. After trial the
Court of Tax Appeals rendered its decision cancelling the assessment and declaring it of no
force and effect.
Issue:
 Whether or not the instant case falls within the jurisdiction of the respondent Court of Tax
Appeals.
 Whether or not the applicable provision of law to this case is Section 331 of the National
Internal Revenue Code, which provides for a five-year period of prescription of assessment
from the filing of the return.
Held:
 The applicable provision of law in this case is Section 331 of the National Internal Revenue
Code which provides that except as provided in the succeeding section, internal revenue
 taxes shall be assessed within five years after the return was filed, and no proceeding in
court without assessment for the collection of such taxes shall be begun after the expiration
of such period. For the purposes of this section, a return filed before the last day prescribed
by law for the filing thereof shall be considered as filed on such last day.
 Fraud is a question of fact and the circumstances constituting fraud must be alleged and
proved in the court below. The finding of the trial court as to its existence and non-
existence is final and cannot be reviewed here unless clearly shown to be erroneous. Under
Section 46(d) of the National Internal Revenue Code, the Ayala Securities Corporation
designated September 30, 1955, as the last day of the closing of its fiscal year, and under
Section 46(b) the income tax returns for the said corporation shall be filed on or before the
fifteenth (15th) day of the fourth (4th) month following the close of its fiscal year. The Ayala
Securities Corporation could, therefore, file its income tax returns on or before January 15,
1956. The assessment by the Commissioner of Internal Revenue shall be made within five
(5) years from January 15, 1956, or not later than January 15, 1961, in accordance with
Section 331 of the National Internal Revenue Code herein above-quoted. As the
assessment issued on February 21, 1961, which was received by the Ayala Securities
Corporation on March 22, 1961, was made beyond the five-year period prescribed under
Section 331 of said Code, the same was made after the prescriptive period had expired
and, therefore, was no longer binding on the Ayala Securities Corporation.

6. Basilan Estates vs Commissioner of Internal Revenue

GR No. L-22492 – September 05, 1967
Facts:
 Petitioner filed on March 24, 1954 its income tax returns for 1953. On February 26, 1959,
the Commissioner of Internal Revenue, per examiners' report, assessed Basilan Estates,
Inc., a deficiency income tax and a 25% surtax on unreasonably accumulated profits. On
non-payment of the assessed amount, a warrant of distraint and levy was issued but the
same was not executed because Basilan Estates, Inc. succeeded in getting the Deputy
Commissioner of Internal Revenue to order the Director of the district in Zamboanga City to
hold execution and maintain constructive embargo instead. Because of its refusal to waive
the period of prescription, the corporation's request for reinvestigation was not given due
course, and a notice was eventually served to the corporation that the warrant of distraint
and levy would be executed.
 The assessment of the deficiency tax was made on February 26, 1959; but the petitioner
claims that it never received notice of such assessment or if it did, it received the notice
beyond the five-year prescriptive period. The notice of assessment shows the assessment
to have been made on February 26, 1959, well within the five-year period. On the right side
of the notice is also stamped "Feb. 26, 1959" — denoting the date of release, according to
Bureau of Internal Revenue practice.
Issue:
 Whether or not the assessment was made beyond the prescriptive period.
Held:
 Under Section 331 of the Tax Code requiring five years within which to assess deficiency
taxes, the assessment is deemed made when notice to this effect is released, mailed or
sent by the Collector to the taxpayer and it is not required that the notice be received by the
taxpayer within the aforementioned five-year period.

7. Medicard Philippines Inc., vs Commissioner of Internal Revenue

GR No. 222743 – April 5, 2017
Facts:
 Upon finding some discrepancies between MEDICARD's Income Tax Returns (ITR) and
VAT Returns, the CIR informed MEDICARD and, in lieu of an LOA, an LN was issued to
MEDICARD informing it of the discrepancies between its ITRs and VAT Returns and this
procedure is authorized under a Revenue Memorandum Order. Subsequently, the CIR also
issued a Preliminary Assessment Notice (PAN) against MEDICARD for deficiency VAT. A
Memorandum was likewise issued recommending the issuance of a Formal Assessment
Notice (FAN) against MEDICARD. Later, MEDICARD received CIR's FAN for alleged
deficiency VAT inclusive of penalties.
 Consequently, the CIR issued a Tax Verification Notice authorizing Revenue Officer
Romualdo Plocios to verify the supporting documents of MEDICARD's Protest. MEDICARD
also submitted additional supporting documentary evidence in aid of its Protest.
Subsequently, MEDICARD received CIR's Final Decision on Disputed Assessment denying
its protest.
Issue:
 Whether or not the absence of the LOA is fatal.
Held:
 An LOA is the authority given to the appropriate revenue officer assigned to perform
assessment functions. It empowers or enables said revenue officer to examine the books of
account and other accounting records of a taxpayer for the purpose of collecting the correct
amount of tax. An LOA is premised on the fact that the examination of a taxpayer who has
already filed his tax returns is a power that statutorily belongs only to the CIR himself or his
duly authorized representatives. Unless authorized by the CIR himself or by his duly
authorized representative, through an LOA, an examination of the taxpayer cannot
ordinarily be undertaken. The absence of an LOA violated MEDICARD's right to due
process

8. Commissioner of Internal Revenue vs GJM Philippines Manufacturing

GR No. 202695 – February 29, 2016
Facts:
 GJM filed its Annual Income Tax Return and thereafter, its parent company, Warnaco (HK)
Ltd., underwent bankruptcy proceedings, resulting in the transfer of ownership over GJM
and its global affiliates. Consequently, GJM informed the Revenue District Officer regarding
the cancellation of its registered address in Makati, and the transfer of its tax registration in
another address in Cavite.
 Later, the Bureau of Internal Revenue (BIR) sent a letter of informal conference informing
GJM that the report of investigation on its income and business tax liabilities had been
submitted. The report disclosed that GJM was still liable for an income tax deficiency and
the corresponding interest, as well as for the compromise penalty.
 Subsequently, the Bureau of Internal Revenue (BIR) issued a Pre-Assessment Notice and
Details of Discrepancies against GJM and it issued an undated Assessment Notice,
indicating a deficiency income tax assessment. Later, the BIR issued a Preliminary
Collection Letter requesting GJM to pay said income tax deficiency for the taxable year.
Said letter was addressed to GJM's former address in Makati. Consequently, although the
BIR sent a Final Notice Before Seizure to GJM's address in Cavite, the latter claimed that it
did not receive the same.
Issue:
 Whether or not the BIR is under the obligation to prove that GJM did, in fact, received the
Final Notice.
Held:
 If the taxpayer denies having received an assessment from the BIR, it then becomes
incumbent upon the latter to prove by competent evidence that such notice was indeed
received by the addressee.
 To prove the fact of mailing, it is essential to present the registry receipt issued by the
Bureau of Posts or the Registry return card which would have been signed by the taxpayer
or its authorized representative. And if said documents could not be located, the CIR should
have, at the very least, submitted to the Court a certification issued by the Bureau of Posts
and any other pertinent document executed with its intervention. The BIR's failure to prove
GJM's receipt of the assessment leads to no other conclusion but that no assessment was
issued. Consequently, the government's right to issue an assessment for the said period
has already prescribed.

9. Barcelon Roxas Securities Inc., vs Commissioner of Internal Revenue

GR No. 157064 – August 7, 2006
Facts:
 After petitioner filed its Annual Income Tax Return, an audit investigation conducted by the
Bureau of Internal Revenue (BIR), respondent Commissioner of Internal Revenue (CIR)
issued an assessment for deficiency income tax. This assessment was covered by a
Formal Assessment Notice, which, respondent alleges, was sent to petitioner through
registered mail. However, petitioner denies receiving the formal assessment notice.
 Petitioner was served with a Warrant of Distraint and/or Levy to enforce collection of the
deficiency income tax. Petitioner filed a formal protest against the Warrant of Distraint
and/or Levy, requesting for its cancellation. Subsequently, petitioner received a letter from
the respondent denying the protest with finality.
Issue:
 Whether or not respondent’s right to assess petitioner’s alleged deficiency income tax is
barred by failure to properly serve the Notice.
Held:
 Jurisprudence is replete with cases holding that if the taxpayer denies ever 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. The onus probandi was
shifted to respondent to prove by contrary evidence that the Petitioner received the
assessment in the due course of mail. The Supreme Court has consistently held that while
a mailed letter is deemed received by the addressee in the course of mail, this is merely a
disputable presumption subject to controversion and a direct denial thereof shifts the
burden to the party favored by the presumption to prove that the mailed letter was indeed
received by the addressee (Republic vs. Court of Appeals, 149 SCRA 351).
 The facts to be proved to raise this presumption are (a) that the letter was properly
addressed with postage prepaid, and (b) that it was mailed. Once these facts are proved,
the presumption is that the letter was received by the addressee as soon as it could have
been transmitted to him in the ordinary course of the mail. But if one of the said facts fails to
appear, the presumption does not lie. In the instant case, Respondent utterly failed to
discharge this duty. No substantial evidence was ever presented to prove that the
assessment notice or other supposed notices subsequent thereto were in fact issued or
sent to the taxpayer.

10. Fishwealth Canning Corp., vs Commissioner of Internal Revenue

GR No. 179343 – January 21, 2010
Facts:
 On August 25, 2000, respondent reinvestigated petitioners books of accounts and other
records of internal revenue taxes covering the taxable year 1999 for the purpose of which it
issued a subpoena duces tecum requiring petitioner to submit its records and books of
accounts. Petitioner requested the cancellation of the subpoena on the ground that the
same set of documents had previously been examined.
 As petitioner did not heed the subpoena, respondent thereafter filed a criminal complaint
against petitioner. Respondent sent, on August 6, 2003, petitioner a Final Assessment
Notice of income tax and VAT deficiencies for the taxable year 1999, which assessment
petitioner contested by letter of September 23, 2003.
 Respondent thereafter issued a Final Decision on Disputed Assessment dated August 2,
2005, which petitioner received on August 4, 2005, denying its letter of protest, apprising it
of its income tax and VAT liabilities for the taxable year 1999, and requesting the immediate
payment thereof, inclusive of penalties incident to delinquency.
 Instead of appealing to the CTA, petitioner filed, on September 1, 2005, a Letter of
Reconsideration dated August 31, 2005. By a Preliminary Collection Letter dated
September 6, 2005, respondent demanded payment of petitioners tax liabilities, drawing
petitioner to file on October 20, 2005 a Petition for Review before the CTA.
Issue:
 Whether or not petitioner’s appeal before the CTA was filed out of time.
Held:
 Since petitioner received the denial of its administrative protest on August 4, 2005, it had
until September 3, 2005 to file a petition for review before the CTA Division. It filed one,
however, on October 20, 2005, hence, it was filed out of time. For a motion for
reconsideration of the denial of the administrative protest does not toll the 30-day period to
appeal to the CTA.

11. Commissioner of Intetnal Revenue vs Asalus Corporation

GR No. 221590 – February 22, 2017
Facts:
 Respondent Asalus Corporation received a Notice of Informal Conference from the Bureau
of Internal Revenue (BIR). It was in connection with the investigation conducted by
Revenue Officer Fidel M. Bañares II (Bañares) on the Value-Added Tax (VAT) transactions
of Asalus. Consequently, Asalus filed its Letter-Reply questioning the basis of Bañares'
computation for its VAT liability.
 Petitioner Commissioner of Internal Revenue (CIR) issued the Preliminary Assessment
Notice (PAN) finding Asalus liable for deficiency VAT, inclusive of surcharge and interest.
Asalus filed its protest against the PAN but it was denied by the CIR.
 Later, Asalus received the Formal Assessment Notice (FAN) stating that it was liable for
deficiency VAT. Consequently, it filed its protest against the FAN. Thereafter, Asalus filed a
supplemental protest stating that the deficiency VAT assessment had prescribed.
Subsequently, Asalus received the Final Decision on Disputed Assessment (FDDA)
showing VAT. As a result, it filed a petition for review before the CTA Division.
 The CTA Division ruled that the VAT assessment issued had prescribed and consequently
deemed invalid. It opined that the ten (10)-year prescriptive period was inapplicable as
neither the FAN nor the FDDA indicated that Asalus had filed a false VAT return warranting
the application of the ten (10)-year prescriptive period. It explained that it was only in the
PAN where an allegation of false or fraudulent return was made.
 CIR asserts that there was substantial understatement in Asalus' income, which exceeded
30% of what was declared in its VAT returns as appearing in its quarterly VAT returns; and
the underdeclaration was supported by the judicial admission of its lone witness that not all
 the membership fees collected from members applying for healthcare services were
reported in its VAT returns. Thus, the CIR concludes that there was prima facie evidence of
a false return.
Issue:
 Whether or not petitioner's right to assess respondent for its deficiency VAT had already
prescribed.
Held:
 Under Section 248(B) of the NIRC, there is a prima facie evidence of a false return if there
is a substantial underdeclaration of taxable sales, receipt or income. The failure to report
sales, receipts or income in an amount exceeding 30% what is declared in the returns
constitute substantial underdeclaration. A prima facie evidence is one which that will
establish a fact or sustain a judgment unless contradictory evidence is produced. Applied in
this case, the audit investigation revealed that there were undeclared VA Table sales more
than 30% of that declared in Asalus' VAT returns.
 Generally, internal revenue taxes shall be assessed within three (3) years after the ,last day
prescribed by law for the filing of the return, or where the return is filed beyond the period,
from the day the return was actually filed. Section 222 of the NIRC, however, provides for
exceptions to the general rule. It states that in the case of a false or fraudulent return with
intent to evade tax or of failure to file a return, the assessment may be made within ten (10)
years from the discovery of the falsity, fraud or omission.
 Applied in this case, the audit investigation revealed that there were undeclared VA Table
sales more than 30% of that declared in Asalus' VAT returns. Moreover, Asalus' lone
witness testified that not all membership fees, particularly those pertaining to medical
practitioners and hospitals, were reported in Asalus' VAT returns. The testimony of its
witness, in trying to justify why not all of its sales were included in the gross receipts
reflected in the VAT returns, supported the presumption that the return filed was indeed
false precisely because not all the sales of Asalus were included in the VAT returns.
 Hence, the CIR need not present further evidence as the presumption of falsity of the
returns was not overcome. Asalus was bound to refute the presumption of the falsity of the
return and to prove that it had filed accurate returns. Its failure to overcome the same
warranted the application of the ten (10)-year prescriptive period for assessment under
Section 222 of the NIRC. To require the CIR to present additional evidence in spite of the
presumption provided in Section 248(B) of the NIRC would render the said provision inutile.

12. Commissioner of Internal Revenue vs Fitness by Design Inc.,

GR No. 215957 – November 09, 2016
Facts:
 On April 11, 1996, Fitness filed its Annual Income Tax Return. On June 9, 2004, Fitness
received a copy of a Final Assessment Notice which assessed that Fitness had a tax
deficiency. Fitness filed a protest to the Final Assessment because accordingly, the
Commissioner's period to assess had already prescribed.
 The Commissioner claimed that its right to assess had not yet prescribed under Section
222(a) of the National Internal Revenue Code. Because the 1995 Income Tax Return filed
by Fitness was false and fraudulent for its alleged intentional failure to reflect its true sales,
Fitness' respective taxes may be assessed at any time within 10 years from the discovery
of fraud or omission. The alleged fraudulent return was discovered through a tip from a
confidential informant.
Issue:
 Whether or not the right of the Commissioner to assess Fitness has already prescribed.
Held:
 The prescriptive period in making an assessment depends upon whether a tax return was
filed or whether the tax return filed was either false or fraudulent. When a tax return that is
neither false nor fraudulent has been filed, the Bureau of Internal Revenue may assess
within three (3) years, reckoned from the date of actual filing or from the last day prescribed
by law for filing. However, in case of a false or fraudulent return with intent to evade tax or
of failure to file a return, the tax may be assessed, or a proceeding in court for the collection
of such tax may be filed without assessment, at any time within ten (10) years after the
discovery of the falsity, fraud or omission.
 Fraud is a question of fact that should be alleged and duly proven. The willful neglect to file
the required tax return or the fraudulent intent to evade the payment of taxes, considering
that the same is accompanied by legal consequences, cannot be presumed. Fraud entails
corresponding sanctions under the tax law. Therefore, it is indispensable for the
Commissioner of Internal Revenue to include the basis for its allegations of fraud in the
assessment notice.

13. Bank of the Philippine Islands vs Commissioner of Internal Revenue

GR No. 174942 – March 7, 2008
Facts:
 Respondent thru its Revenue Service Chief, issued to the petitioner a pre-assessment
notice (PAN). Consequently, Petitioner requested for the details of the amounts alleged as
1982-1986 deficiency taxes mentioned in said PAN. Later, respondent issued to the
petitioner, assessment/demand notices to which petitioner filed a protest and a
supplemental protest.
 Subsequently, petitioner requested for an opportunity to present (reinvestigation) or submit
additional documentation. Eventually, respondent issued a final decision on petitioner’s
protest ordering the withdrawal and cancellation of the deficiency withholding tax
assessment and considered the same as closed and terminated. On the other hand, the
deficiency DST assessment was reiterated and the petitioner was ordered to pay the said
amount within thirty (30) days from receipt of such order.
Issue:
 Whether or not the collection of the deficiency is barred by prescription.
Held:
 In order to suspend the running of the prescriptive periods for assessment and collection,
the request for reinvestigation must be granted by the CIR. There is a difference between a
request for reconsideration and a request for reinvestigation. A mere request for
reinvestigation without corresponding action on the part of the CIR will not interrupt the
running of the period. The request must be granted by the CIR.
 There is nothing in the records of this case which indicates, expressly or impliedly, that the
CIR had granted the request for reinvestigation filed by BPI. What is reflected in the records
is the piercing silence and inaction of the CIR on the request for reinvestigation, as he
considered BPI’s letters of protest to be.
 BPI’s protest and supplemental protest should be considered requests for reinvestigation
which tolled the prescriptive period provided by law to collect a tax deficiency by distraint,
levy, or court proceeding.

14. Commissioner of Internal Revenue vs United Salvage and Towage

GR No. 197515 – July 02, 2014
Facts:
 In the course of respondent’s operations, petitioner found respondent liable for deficiency
income tax, withholding tax, value-added tax (VAT) and documentary stamp tax (DST).
 Particularly, petitioner, through BIR officials, issued demand letters with attached
assessment notices for withholding tax on compensation (WTC) and expanded withholding
tax (EWT). Consequently, USTP filed administrative protests against the EWT
assessments. Later, USTP appealed by way of Petition for Review before the Court
alleging that the assessments are void and the right of the government to assess and
collect deficiency taxes from it has prescribed on account of the failure to issue a valid
notice of assessment within the applicable period.
 Petitioner argues that while the final assessment notice and demand letter on EWT was
issued on January 9, 1996, the five (5)-year prescriptive period to collect was interrupted
when respondent filed its request for reinvestigation on March 14, 1997 which was granted
by petitioner on January 22, 2001. Thus, the period for tax collection should have begun to
run from the date of the reconsidered or modified assessment.
Issue:
 Whether or not petitioner’s right to collect the EWT has not yet prescribed.
Held:
 The request for reinvestigation should be granted or at least acted upon in due course
before the suspension of the statute of limitations may set in. The rule is that the CIR must
first grant the request for reinvestigation as a requirement for the suspension of the statute
of limitations. The act of requesting a reinvestigation alone does not suspend the period.
The request should first be granted, in order to effect suspension.

15. Petronila Tupaz vs Hon. Benedicto Ulep

GR No. 127777 – October 01, 1999
Not done
Facts:
 Petitioner was charged with nonpayment of deficiency corporate income tax which tax
return was filed in April 1980. On July 16, 1984, the Bureau of Internal Revenue (BIR)
issued a notice of assessment. Petitioner contends that the July 16, 1984 assessment was
made out of time. Petitioner avers that while Sections 318 and 319 of the NIRC of 1977
provide a five (5) year period of limitation for the assessment and collection of internal
revenue taxes, Batas Pambansa Blg. 700, enacted on February 22, 1984, amended the two
sections and reduced the period to three (3) years. As provided under B.P. Blg. 700, the
BIR has three (3) years to assess the tax liability, counted from the last day of filing the
return, or from the date the return is filed, whichever comes later. Since the tax return was
filed in April 1980, the assessment made on July 16, 1984 was beyond the three (3) year
prescriptive period.
 The Solicitor General, in his comment, maintains that the prescriptive period for
assessment and collection of petitioner's deficiency corporate income tax was five (5)
years. The Solicitor General asserts that the shortened period of three (3) years provided
under B.P. Blg. 700 applies to assessments and collections of internal revenue taxes
beginning taxable year 1984. Since the deficiency corporate income tax was for taxable
year 1979, then petitioner was still covered by the five (5) year period. Thus, the July 16,
1984 tax assessment was made within the prescribed period.
Issue:
 Whether or not the action against the offense of non-payment has prescribed..
Held:
 The offense has not prescribed. Petitioner was charged with failure to pay deficiency
income tax after repeated demands by the taxing authority. In Lim, Sr. v. Court of Appeals,
we stated that by its nature the violation could only be committed after service of notice and
demand for payment of the deficiency taxes upon the taxpayer. Hence, it cannot be said
 that the offense has been committed as early as 1980, upon filing of the income tax return.
This is so because prior to the finality of the assessment, the taxpayer has not committed
any violation for non-payment of the tax. The offense was committed only after the finality of
the assessment coupled with taxpayer's willful refusal to pay the taxes within the allotted
period. In this case, when the notice of assessment was issued on July 16, 1984, the
taxpayer still had thirty (30) days from receipt thereof to protest or question the assessment.
Otherwise, the assessment would become final and unappealable. As he did not protest,
the assessment became final and unappealable on August 16, 1984. Consequently, when
the complaint for preliminary investigation was filed with the Department of Justice on June
8, 1989, the criminal action was instituted within the five (5) year prescriptive period.

16. China Banking Corporation vs City Treasurer of Manila

GR No. 204117 – July 01, 2015
Facts:
 On the basis of the reported income of CBC, it was assessed by the City Treasurer of
Manila consisting of local business tax, business permits, and other fees. CBC paid under
protest on the ground that it is not liable of said additional business tax and the imposition
of business tax under Section 21constitutes double taxation.
 The City acknowledged receipt of CBC's payment under protest of the assessed amount
and further informed CBC that she will await for respondent’s formal protest.
 Respondent CBC wrote a letter-reply to respondent's Letter reiterating that respondent
already protested the additional assessment under Section 21 of the Manila Revenue
Code. In the same Letter, respondent averred that considering that respondent received the
Letter four days after the deadline to decide and petitioner did not even resolve the protest,
petitioner formally demanded the refund representing the business tax collected under
Section 21 of the Manila Revenue Code.
 CBC asserts that it filed the proper written protest but for lack of any action from the City
Treasurer, it was prompted to file its petition for review with the RTC. The petitioner insists
on the invalidity of the City Treasurer’s assessment. It pointed out that the basis of the
assessment had been declared unconstitutional, and that the Office of the Mayor of Manila
even directed the City Treasurer to cease and desist from assessing and imposing Section
21 of the said ordinances.
 For her part, the City Treasurer filed her Memorandum where she contended that CBC
never filed a formal letter of protest to state the grounds for its objection while admitting that
it had paid the assessed amount under protest. She claimed that CBC simply filed a petition
for review with the RTC without filing a formal letter of protest. Without a formal letter of
protest, the City Treasurer argued that its claim for refund should be dismissed because the
Local Government Code stated that no case or proceeding shall be maintained in any court
for recovery of any tax, fee or charged erroneously or illegally collected until a written claim
for refund has been filed with the local treasurer.
Issue:
 Whether or not CBC was able to file the proper written protest.
Held:
 Under the current state of law, there can be no doubt that the law does not prescribe any
formal requirement to constitute a valid protest. To constitute a valid protest, it is sufficient if
what has been filed contains the spontaneous declaration made to acquire or keep some
right or to prevent an impending damage. Accordingly, a protest is valid so long as it states
the taxpayer’s objection to the assessment and the reasons therefor.
 In this case, the Court finds that the City Treasurer’s contention that CBC was not able to
properly protest the assessment to be without merit. The Court is of the view that CBC was
 able to properly file its protest against the assessment of the City Treasurer when it filed its
letter questioning the imposition while paying the assessed amount.

17. Allied Banking Corporation vs Commissioner of Internal Revenue

GR No. 175097 – February 05, 2010
Facts:
 The Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice (PAN) to
petitioner Allied Banking Corporation for deficiency. Petitioner received the PAN on May 18,
2004 and filed a protest against it on May 27, 2004. On July 16, 2004, the BIR wrote a
Formal Letter of Demand with Assessment Notices to petitioner requesting that the above
deficiency tax be paid immediately upon receipt. And that if petitioner disagrees, it may
appeal the final decision within thirty (30) days from receipt, otherwise said deficiency tax
assessment shall become final, executory and demandable. Petitioner received the Formal
Letter of Demand with Assessment Notices on August 30, 2004.
 Petitioner then filed a Petition for Review with the CTA. The CTA En Banc declared that it is
absolutely necessary for the taxpayer to file an administrative protest in order for the CTA to
acquire jurisdiction. It emphasized that an administrative protest is an integral part of the
remedies given to a taxpayer in challenging the legality or validity of an assessment.
According to the CTA En Banc, although there are exceptions to the doctrine of exhaustion
of administrative remedies, the instant case does not fall in any of the exceptions.
Issue:
 Whether or not the dismissal by the CTA was proper.
Held:
 If the protest is denied in whole or in part, or is not acted upon within one hundred eighty
(180) days from submission of documents, the taxpayer adversely affected by the decision
or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the
said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the
decision shall become final, executory and demandable.
 In the instant case, petitioner timely filed a protest after receiving the PAN. In response
thereto, the BIR issued a Formal Letter of Demand with Assessment Notices. Pursuant to
Section 228 of the NIRC, the proper recourse of petitioner was to dispute the assessments
by filing an administrative protest within 30 days from receipt thereof. Petitioner, however,
did not protest the final assessment notices. Instead, it filed a Petition for Review with the
CTA. Thus, if we strictly apply the rules, the dismissal of the Petition for Review by the CTA
was proper.
 However, a careful reading of the Formal Letter of Demand with Assessment Notices leads
us to agree with petitioner that the instant case is an exception to the rule on exhaustion of
administrative remedies, i.e., estoppel on the part of the administrative agency concerned.
 In this case, records show that petitioner disputed the PAN but not the Formal Letter of
Demand with Assessment Notices. Nevertheless, we cannot blame petitioner for not filing a
protest against the Formal Letter of Demand with Assessment Notices since the language
used and the tenor of the demand letter “It appears from the foregoing demand letter that
the CIR has already made a final decision on the matter and that the remedy of petitioner is
to appeal the final decision within 30 days” indicate that it is the final decision of the
respondent on the matter. The Court has time and again reminded the CIR to indicate, in a
clear and unequivocal language, whether his action on a disputed assessment constitutes
his final determination in order for the taxpayer concerned to determine when his or her
right to appeal to the tax court accrues. Viewed in the light of the foregoing, respondent is
now estopped from claiming that he did not intend the Formal Letter of Demand with
Assessment Notices to be a final decision.
 18. Lascona Land Co., vs Commissioner of Internal Revenue
GR No. 171251 – March 05, 2012
Facts:
 The Commissioner of Internal Revenue (CIR) issued an Assessment Notice against
Lascona Land Co., Inc. (Lascona) informing the latter of its alleged deficiency income tax.
Consequently, Lascona filed a letter protest, but was denied by Norberto R. Odulio, Officer-
in-Charge (OIC), Regional Director, Bureau of Internal Revenue considering that the
request to cancel or set aside the assessment notice issued was not elevated to the Court
of Tax Appeals as mandated by the Tax Code; and by virtue thereof, the said assessment
notice has become final, executory and demandable.
 Later, Lascona appealed the decision before the CTA. Lascona alleged that the Regional
Director erred in ruling that the failure to appeal to the CTA within thirty (30) days from the
lapse of the 180-day period rendered the assessment final and executory.
 The CIR, however, maintained that Lascona's failure to timely file an appeal with the CTA
after the lapse of the 180-day reglementary period provided under Section 228 of the
National Internal Revenue Code (NIRC) resulted to the finality of the assessment.
Issue:
 Whether or not the subject assessment has become final, executory and demandable due
to the failure of petitioner to file an appeal before the CTA within thirty (30) days from the
lapse of the One Hundred Eighty (180)-day period.
Held:
 The taxpayer has two options, either: (1) 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
Commissioner on the disputed assessment and appeal such final decision to the CTA
within 30 days after the receipt of a copy of such decision, these options are mutually
exclusive and resort to one bars the application of the other.
 Considering that Lascona opted to await the final decision of the Commissioner on the
protested assessment, it then has the right to appeal such final decision to the Court by
filing a petition for review within thirty days after receipt of a copy of such decision or ruling,
even after the expiration of the 180-day period fixed by law for the Commissioner of Internal
Revenue to act on the disputed assessments. The option is granted to the taxpayer; hence,
the CIR cannot state that the appeal to the CTA is late if the taxpayer chooses to wait for
the final decision, even if it is beyond the 180-day period.

19. Winebrenner & Iñigo Insurance Brokers, Inc., vs Commissioner of Internal Revenue
GR No. 206526 – January 28, 2015
Facts:
 About two years after filing its Annual ITR (2003), petitioner applied for the administrative
tax claim/refund claiming entitlement to the refund of its excess or unutilized Creditable
Withholding Tax (CWT) for that year. There being no action taken on the said claim, a
petition for review was filed by petitioner before the CTA. In Its Decision, the CTA Division
partially granted petitioner’s claim for refund of excess and unutilized CWT.
 Petitioner filed a Motion for Partial Reconsideration praying that an amended decision be
issued granting the entirety of its claim for refund. Respondent Commissioner of Internal
Revenue (CIR) also moved for reconsideration, praying for the denial of the entire amount
of refund because petitioner failed to present the quarterly Income Tax Returns (ITRs) for
CY 2004. To the CIR, the presentation of the 2004 quarterly ITRs was indispensable in
proving petitioner’s entitlement to the claimed amount because it would prove that no carry-
over of unutilized and excess CWT for the four (4) quarters of CY 2003 to the succeeding
 four (4) quarters of CY 2004 was made. In the absence of said ITRs, no refund could be
granted. In the CIR’s view, this was in accordance with the irrevocability rule under Section
76 of the NIRC.
 Consequently, the CTA-Division reversed itself. In an Amended Decision, it denied the
entire claim of petitioner. It reasoned out that petitioner should have presented as evidence
its first, second and third quarterly ITRs for the year 2004 to prove that the unutilized CWT
being claimed had not been carried over to the succeeding quarters. Aggrieved, petitioner
elevated the case to the CTA En Bancpraying for the reversal of the Amended Decision of
the CTA Division.
 Later, the CTA-En Banc affirmed the Amended Decision of the CTA-Division. It stated that
before a cash refund or an issuance of tax credit certificate for unutilized excess tax credits
could be granted, it was essential for petitioner to establish and prove, by presenting the
quarterly ITRs of the succeeding years, that the excess CWT was not carried over to the
succeeding taxable quarters considering that the option to carry over in the succeeding
taxable quarters could not be modified in the final adjustment returns (FAR). Because
petitioner did not present the first, second and third quarterly ITRs for CY 2004, despite
having offered and submitted the Annual ITR/FAR for the same year, the CTA-En Banc
stated that the petitioner failed to discharge its burden, hence, no refund could be granted.
Issue:
 Whether or not the original Decision of the CTA should be affirmed.
Held:
 The Court recognizes, as it always has, that the burden of proof to establish entitlement
to refund is on the claimant taxpayer. Being in the nature of a claim for exemption refund
is construed in strictissimi juris against the entity claiming the refund and in favor of the
taxing power. This is the reason why a claimant must positively show compliance with
the statutory requirements provided for under the NIRC in order to successfully
pursue one’s claim. As implemented by the applicable rules and regulations and as
interpreted in a vast array of decisions, a taxpayer who seeks a refund of excess and
unutilized CWT must:
1) File the claim with the CIR within the two year period from the date of payment of the
tax;
2) Show on the return that the income received was declared as part of the gross income;
and
3) Establish the fact of withholding by a copy of a statement duly issued by the payor to the
payee showing the amount paid and the amount of tax withheld.
 There is no question that those who claim must not only prove its entitlement to the
excess credits, but likewise must prove that no carry-over has been made in cases
where refund is sought. However, proving that no carry-over has been made does
not absolutely require the presentation of the quarterly ITRs. Requiring that the ITR or
the FAR of the succeeding year be presented to the BIR in requesting a tax refund has no
basis in law and jurisprudence.
 First, Section 76 of the Tax Code does not mandate it. The law merely requires the
filing of the FAR for the preceding – not the succeeding – taxable year. Second,
Section 5 of RR 12-94, amending Section 10(a) of RR 6-85, merely provides that
claims for refund of income taxes deducted and withheld from income payments
shall be given due course only (1) when it is shown on the ITR that the income
payment received is being declared part of the taxpayer’s gross income; and (2)
when the fact of withholding is established by a copy of the withholding tax
statement, duly issued by the payor to the payee, showing the amount paid and the
income tax withheld from that amount. The logic in not requiring quarterly ITRs of the
 succeeding taxable years to be presented remains true to this day. What Section 76
requires, just like in all civil cases, is to prove the prima facie entitlement to a claim,
including the fact of not having carried over the excess credits to the subsequent quarters
or taxable year. It does not say that to prove such a fact, succeeding quarterly ITRs are
absolutely needed.
 The means of ascertainment of a fact is best left to the party that alleges the same. The
Court’s power is limited only to the appreciation of that means pursuant to the prevailing
rules of evidence. To stress, what the NIRC merely requires is to sufficiently prove the
existence of the non-carryover of excess CWT in a claim for refund.
 An annual ITR contains the total taxable income earned for the four (4) quarters of a
taxable year, as well as deductions and tax credits previously reported or carried
over in the quarterly income tax returns for the subject period. It goes without saying
that the annual ITR (including any other proof that may be sufficient to the Court) can
sufficiently reveal whether carry over has been made in subsequent quarters even if
the petitioner has chosen the option of tax credit or refund in the immediately 2003
annual ITR. The total taxable income contains the combined income for the four quarters of
the taxable year, as well as the deductions and excess tax credits carried over in the
quarterly income tax returns for the same period.
 It must be remembered that taxes computed in the quarterly returns are mere estimates. It
is the annual ITR which shows the aggregate amounts of income, deductions, and credits
for all quarters of the taxable year. It is the final adjustment return which shows whether a
corporation incurred a loss or gained a profit during the taxable quarter. Thus, the
presentation of the annual ITR would suffice in proving that prior year’s excess credits were
not utilized for the taxable year in order to make a final determination of the total tax due.
The presentation of the quarterly ITRs of the subsequent year is not mandatory on the part
of the claimant to prove its claims.
 The absence of any amount written in the Prior Year excess Credit – Tax Withheld
portion of petitioner’s 2004 annual ITR clearly shows that no prior excess credits
were carried over in the first four quarters of 2004. And since petitioner was able to
sufficiently prove that excess tax credits in 2003 were not carried over to taxable
year 2004 by leaving the item "Prior Year’s Excess Credits" as blank in its 2004
annual ITR, then petitioner is entitled to a refund. At best, the existence of quarterly
ITRs would have the effect of strengthening a proven fact. And as such, may only be
considered corroborative evidence, obviously not indispensable in character.
 Once the requirements laid down by the NIRC have been met, a claimant should be
considered successful in discharging its burden of proving its right to refund.
Thereafter, the burden of going forward with the evidence, as distinct from the general
burden of proof, shifts to the opposing party, that is, the CIR.
 The CIR espouses the view that it must be given ample opportunity to investigate the
veracity of the claims. Yet, nothing was produced during trial to destroy the prima facie right
of the petitioner by counterchecking the claims with the quarterly ITRs the CIR has on its
file. To the Court, it seems that the CIR languished on its duties to ascertain the veracity of
the claims and just hoped that the burden would fall on the petitioner’s head once the issue
reaches the courts.
 The CIR has the equally important responsibility of contradicting petitioner’s claim by
presenting proof readily on hand once the burden of evidence shifts to its side. Claims for
refund are civil in nature and as such, petitioner, as claimant, though having a heavy
burden of showing entitlement, need only prove preponderance of evidence in order to
recover excess credit in cold cash.
 Failure to present the quarterly ITRs and AFR to support its contention against the
grant of a tax refund to a claimant is certainly fatal. However, the verification process
is not incumbent on any claimant for that matter; but is the duty of the CIR to verify
whether the excess income taxes have been carried over. Should there be a possibility
that a claimant may have violated the irrevocability rule and thereafter claim twice from its
credits, no one is to be blamed but the CIR for not discharging its burden of evidence to
destroy a claimant’s right to a refund.
 The CTA, which by the very nature of its functions of dedicating itself exclusively to
the consideration of the tax problems has necessarily developed an expertise on the
subject. It being the case, the Court partly grants this petition to the extent of reinstating
the April 23, 2010 original decision of the CTA Division.

20. Republic of the Philippines vs Marsman Development Company

GR No. L-18956 – April 27, 1972
Facts:
 An investigation was conducted on the business operation and activities of the Respondent,
leading to the discovery that certain taxes were due from it on logs produced from its
concession. Later, the Deputy Collector of Internal Revenue demanded the payment of
forest charges due, and a surcharge. After further investigation another assessment was
sent to the defendant corporation by the Bureau of Internal Revenue demanding from it
deficiency sales tax, forest charges, surcharges and penalties. Another assessment was
addressed to the defendant corporation for the payment of 25% surcharge for discharging
lumber without permit.
 The first acknowledgment by the defendant corporation of its receipt of assessment
contained in the letter was the letter of the defendant corporation under the signature of its
counsel, Atty. Pedro L. Moya wherein it is requested that said defendant be furnished with
an itemized statement of the said taxes and wherein notice is served of its intention to
question the validity and the legality of the assessments and to appear before the
Conference Staff of the Bureau of Internal Revenue in connection with the said tax.
 In reply, the Bureau of Internal Revenue wrote Atty. Moya a letter informing him that before
the case may be acted upon by the Conference Staff, it was necessary that the defendant
corporation comply within 10 days from date of said letter requiring, among others, that
requests for reinvestigation or re-examination of tax assessments shall be made in writing
under oath of the taxpayer concerned, specifying the ground or grounds relied upon for the
revision of the assessment and accompanied by such documents and other documents
relied upon in support of the request; and that, as a general rule, the revision will be granted
only upon payment of one-half of the total assessments and upon filing of a bond to
guarantee the payment of the balance of the tax.
Issue:
 Whether or not the lower court erred in declaring that the notices of the commissioner of
internal revenue were the "assessments," and that the same became final and executory.
Held:
 It may be stated that regardless of what might have been alleged in appellee's pleadings
and memoranda, the facts proven by evidence, which are not alleged to have been
objected to as varying supposed judicial admissions, unmistakably show that when Atty.
Pedro L. Moya acknowledged receipt on behalf of appellant corporation of the Bureau of
Internal Revenue's assessments requesting at the same time for a reinvestigation before
the Conference Staff, he was informed that his request for investigation would not be given
due course unless his client priorly complied within ten (10) days requiring that requests for
 reinvestigation or re-examination of tax assessments should be made in writing and under
oath of the taxpayer concerned, specifying the ground or grounds relied upon for the
requested revision and accompanied by the documents relied upon, in support of the
request, as well as by the payment of one-half of the total assessments, plus a bond to
guarantee payment of the balance, but appellants failed to comply with said conditions.
 It is plain that His Honor committed no error in holding that the period to question the tax
assessments herein involved had already expired when the Commissioner of Internal
Revenue initiated this suit against defendants. Defendant corporation aknowledged receipt
of the said assessments and, in fact, it requested for a reinvestigation before the
Conference Staff, but when the Bureau demanded compliance with the prerequisites
aforementioned of such reinvestigation, the corporation failed to comply. The corporation
did ask for exemption, but when this request was denied, again there was no compliance.
In view of such non-compliance, in its letter, the Bureau unequivocally warned the
corporation that should it fail further to comply, within five days from receipt thereof, the
assessments would be considered final. Still no compliance came. Subsequent follow-up
letters brought no better results.
 Appellant Corporation, by its own omission, made it impossible for the Bureau of Internal
Revenue to act on its motion for reconsideration. Not that it would have otherwise mattered,
for it has been held that the mere filing of such a motion does not suspend the running of
the period for the collection of the tax, which implies that any assessment made by the
Bureau is supposed to be final and executory, insofar as the taxpayer is concerned, unless
revised by the Bureau in accordance with law and regulations, but it is to be emphasized
that a taxpayer cannot delay the collection of taxes by the simple expedient of barely asking
for clarification or reconsideration, very often unnecessary and unwarranted, without doing
anything to comply with the statutory and reglementary requirements for the reconsideration
of the assessment made against him.
 Since it does not appear, however, that appellant corporation had filed any return in relation
to the taxes herein involved, and it was incumbent upon appellants to show that such a
return had been submitted, the pertinent provision applicable herein is Section 332 (a)
which provides that in case of a false or fraudulent return or of a failure to file a return, the
tax may be assessed at anytime within ten years after the discovery of the falsity, fraud or
omission. The assessments made were all within the aforecited 10-year period for the
assessment of the tax. Even if the Court were to consider, as appellants suggest, the fact
brought out in their brief but not found by the trial court that what are being sought to be
collected are deficiency taxes, thereby implying a return must have been filed, nothing can
he gained by appellants, for in order that the filing of a return may serve as the starting
point of the period for the making of an assessment, the return must be as substantive
complete as to include the needed details on which the full assessment may be made, and
appellants have not shown that such was the nature of the return they would infer had been
filed by the corporation.
 In order that the filing of a return may serve as the starting point of the period for the
making of an assessment, the return must be substantially complete as to include
the needed details on which the full assessment may be made.

21. Republic of the Philippines vs Court of Appeals

GR No. L-38540 – April 30, 1987
Facts:
 In a demand letter, the Commissioner of Internal Revenue assessed private respondent
deficiency taxes. Later, Petitioner reiterated its demand upon private respondent for
payment of said amount. Private respondent did not contest the assessment in the Court of
 Tax Appeals. On the theory that the assessment had become final and executory, petitioner
filed a complaint for collection of the said amount against private respondent. However, for
failure to serve summons upon private respondent, the complaint was dismissed, without
prejudice. On motion, the order of dismissal was set aside, at the same time giving
petitioner sixty (60) days within which to serve summons upon private respondent.
 For failure anew to serve summons, the Court issued an order dismissing Case without
prejudice. The order of dismissal later became final. Subsequently, the complaint against
private respondent for collection of the same tax was refiled, but the same was erroneously
docketed with the same case previously dismissed without prejudice. Without correcting
this error, another complaint was filed. The Court a quo rendered a decision against the
private respondent. On appeal to the respondent Court of Appeals, the decision was
reversed. Petitioner, Republic of the Philippines, filed a motion for reconsideration which
was likewise denied by said Court.
Issue:
 Whether or not the Court of Appeals erred in not holding that private respondent failed to
rebut the presumption that the letter assessment having been duly directed and mailed was
received in the regular course of the mail and that official duty has been regularly
performed.
Held:
 As correctly observed by the respondent court in its appealed decision, while the contention
of petitioner is correct that a mailed letter is deemed received by the addressee in the
ordinary course of mail, stilt this is merely a disputable presumption, subject to
controversion, and a direct denial of the receipt thereof shifts the burden upon the party
favored by the presumption to prove that the mailed letter was indeed received by the
addressee.
 Appellee contends that the notice was released and mailed to the appellant by the BIR
under the signature of the Chief, Records Section, Office; that since the original thereof was
not returned to the appellee, the presumption is that the appellant received the mailed
notice. But this being merely a mere disputable presumption, the same is subject to
controversion, and a direct denial of the receipt thereof shifts the burden upon the party
favored by the presumption to prove that the mailed letter was received by the addressee.
 Appellee, however, argues that since notice was released and mailed and the fact of its
release was admitted by the appellant the admission is proof that he received the mailed
notice of assessment. We do not think so. It is true the Court a quo made such a finding of
fact, but as pointed out by the appehant in its brief, and as borne out by the records, no
such admission was ever made by the appellant in the answer or in any other pleading, or
in any declaration, oral or documentary before the trial court. We note that the appellee has
not met this challenge, and after a review of the records, we find appeflant's assertion well-
taken. Petitioner, on the other hand, has not adduced proof that private respondent had in
fact received the demand letter of 16 July 1955, it can not be assumed that private
respondent received said letter.
 Under Section 7 of Republic Act No. 1125, the assessment is appealable to the Court of
Tax Appeals within thirty (30) days from receipt of the letter. The taxpayer's failure to appeal
in due time, as in the case at bar, makes the assessment in question final, executory and
demandable. Thus, private respondent is now barred from disputing the correctness of the
assessment or from invoking any defense that would reopen the question of its liability on
the merits.
 In a suit for collection of internal revenue taxes, as in this case, where the assessment has
already become final and executory, the action to collect is akin to an action to enforce a
 judgment. No inquiry can be made therein as to the merits of the original case or the
justness of the judgment relied upon.
 If the taxpayer makes a direct denial of receipt of a mailed demand letter, such denial
shifts the burden to the Government to prove that such letter was indeed received by
the taxpayer.

22. Gonzalo Nava vs Commissioner of Internal Revenue

GR No. L-19470 – January 30, 1975
Facts:
 Nava filed his income tax return for the year 1950, and, on the same date, he was assessed
by respondent Commissioner based solely on said return. Nava paid one-half of the tax
due. Subsequently, Nava offered his backpay certificate to pay said balance, but
respondent refused the offer. Later, he requested the respondent to hold in abeyance the
collection of said balance until the question of whether or not he was entitled to pay the
same out of his backpay shall have been decided, but this was also rejected by the latter.
This rejection was followed by two more letters or notices demanding payment of the
balance.
 After investigation of petitioner's 1950 income tax return, respondent Collector issued a
deficiency income tax assessment notice requiring petitioner to pay the balance plus a 50%
surcharge. Several notices of this revised assessment are alleged to have been issued to
the taxpayer, but Nava claims to have learned of it for the first time. More than five years
since the original tax return was filed, and testified to that effect in the court. Nava called
attention to the fact that more than six years had elapsed, protested the assessment, and
contended that it was a closed issue. The Director insisted upon his demand that the new
assessment be paid. Nava asked for reconsideration, and later was informed that
reinvestigation would be granted provided the taxpayer waived the statute of limitations, a
condition that was rejected. Thereupon, the reconsideration of the assessment was denied
by the Collector's letter. Nava filed a petition for review with the Court of Tax Appeals. The
latter reduced the deficiency to and cancelled the 50% surcharge.
 The Court of Tax Appeals ruled that the assessment had not prescribed. The fact that
petitioner admitted receipt of the "second final notice" without protest is an indication that he
received the previous notices, and assuming that petitioner received the income tax
assessment notice in due course of mail, the assessment was made within the five-year
period, and even granting that the ten-year period applicable to fraud cases does not apply
to this case.
Issue:
 Whether or not the enforcement of the tax assessment has prescribed.
Held:
 Petitioner Nava denied having received the original copy of said notice. The Revenue
Commissioner, on the other hand, presented a witness Mr. Pablo Sangil, an employee clerk
of the B.I.R who attempted to establish that the original copy thereof was actually issued or
sent on March 30, 1955. This witness, however, disclaimed having personal knowledge of
its issuance or release on said date either by mail or personal delivery because, according
to him, he was assigned in the income tax section of the Bureau of Internal Revenue in
October, 1956 only. Insofar as the testimony of this witness is concerned, he only declared
as to the fact that there appears in his record book a note (Exhibit "10") that a letter dated
March 15, 1957 was mailed by special delivery with return card to Gonzalo P. Nava. He
admitted, however, that he was not the one who prepared such entry in the record book.
What was the nature of the letter does not appear; at any rate, it was mailed beyond the 5-
year limitation period.
 Although witness Sangil testified as to the meaning of the dates, his testimony cannot be
given much credence because those supposed notices were sent on or before August 25,
1956 at the latest, and, as hereinabove pointed out, the witness was assigned in the
income tax section of the Bureau of Internal Revenue since October, 1956 only.
 Thus, contrary to the finding of the Court of Tax Appeals, respondent utterly failed to prove
by substantial evidence that the assessment notice dated March 30, 1955 and the other
supposed written demand letters or notices subsequent thereto were in fact issued or sent
to taxpayer Nava. The presumption that a letter duly directed and mailed was received in
the regular course of mail cannot be applied to the case at bar.
 Deficiency income tax assessments cannot be enforced where the tax collector
cannot prove that said assessments were served on the taxpayer.

23. Jose Aznar vs Court of Tax Appeals

GR No. L-20569 – August 23, 1974
Facts:
 The late Matias H. Aznar who is the predecessor in interest of herein petitioner, filed his
income tax returns on the cash and disbursement basis. The Commissioner of Internal
Revenue having his doubts on the veracity of the reported income of one obviously wealthy,
pursuant to the authority granted him by Section 38 of the National Internal Revenue Code,
caused B.I.R. Examiner Honorio Guerrero to ascertain the taxpayer's true income for said
years by using the net worth and expenditures method of tax investigation. The assets and
liabilities of the taxpayer were ascertained and it was discovered that his net worth had
increased every year, which increases in net worth was very much more than the income
reported. The findings clearly indicated that the taxpayer did not declare correctly the
income reported in his income tax returns.
 Based on the above findings of Examiner Guerrero, respondent Commissioner, in his letter,
notified the taxpayer of the assessed tax delinquency plus compromise penalty. The
taxpayer requested a reinvestigation which was granted for the purpose of verifying the
merits of the various objections of the taxpayer to the deficiency income tax assessment.
After the reinvestigation, another deficiency assessment reducing the amount superseded
the previous assessment and notice thereof was received by Matias H. Aznar. In
determining the unreported income, the respondent Commissioner of Internal Revenue
resorted to the networth method.
 Later, Respondent Commissioner placed the properties of Matias H. Aznar under distraint
and levy to secure payment of the deficiency income tax in question. Matias H. Aznar filed
his petition for review of the case with the Court of Tax Appeals. With a subsequent petition
immediately thereafter to restrain respondent from collecting the deficiency tax by summary
method, the latter petition being granted without requiring petitioner to file a bond.
 Upon review, the Supreme Court set aside the C.T.A. resolution and required the petitioner
to deposit with the Court of Tax Appeals the amount demanded by the Commissioner of
Internal Revenue. In a decision signed by the presiding judge and the two associate judges
of the Court of Tax Appeals, the lower court concluded that the tax liability of the late Matias
H. Aznar for the year 1946 to 1951, inclusive should be P227,691.77.
Issue:
 Whether or not the Commissioner of Internal Revenue correctly assessed the deficiency
income taxes of the late Matias H. Aznar as fraudulent.
Held:
 Petitioner's contention is that the provision of law applicable to this case is the period of five
years limitation upon assessment and collection from the filing of the returns provided for in
See. 331 of the National Internal Revenue Code. He argues that since the 1946 income tax
 return could be presumed filed before March 1, 1947 and the notice of final and last
assessment was received by the taxpayer on March 2, 1955, a period of about 8 years had
elapsed and the five year period provided by law (Sec. 331 of the National Internal
Revenue Code) had already expired. Respondents, on the other hand, are of the firm belief
that regarding the prescriptive period for assessment of tax returns, Section 332 of the
National Internal Revenue Code should apply because, as in this case, "(a) In the case of a
false or fraudulent return with intent to evade tax or of a failure to file a return, the tax may
be assessed, or a proceeding in court for the collection of such tax may be begun without
assessment, at any time within ten years after the discovery of the falsity, fraud or omission.
 Petitioner argues that Sec. 332 of the NIRC does not apply because the taxpayer did not
file false and fraudulent returns with intent to evade tax, while respondent Commissioner of
Internal Revenue insists contrariwise, with respondent Court of Tax Appeals concluding that
the very "substantial under declarations of income for six consecutive years eloquently
demonstrate the falsity or fraudulence of the income tax returns with an intent to evade the
payment of tax.
 The Court dispensed with these controversial arguments on facts, although they do not
deny that the findings of facts by the Court of Tax Appeals, supported as they are by very
substantial evidence, carry great weight, by resorting to a proper interpretation of Section
332 of the NIRC. The Court believes that the proper and reasonable interpretation of said
provision should be that in the three different cases of (1) false return, (2) fraudulent return
with intent to evade tax, (3) failure to file a return, the tax may be assessed, or a proceeding
in court for the collection of such tax may be begun without assessment, at any time within
ten years after the discovery of the (1) falsity, (2) fraud, (3) omission. The Court stands that
the law should be interpreted to mean a separation of the three different situations of false
return, fraudulent return with intent to evade tax, and failure to file a return is strengthened
immeasurably by the last portion of the provision which segregates the situations into three
different classes, namely falsity, fraud and "omission. That there is a difference between
false return and fraudulent return cannot be denied. While the first merely implies
deviation from the truth, whether intentional or not, the second implies intentional or
deceitful entry with intent to evade the taxes due. The importance lies in the
application of the penalty surcharge. Actual fraud, not constructive, is subject to the
50% surcharge. For the surcharge to apply, it must be intentional fraud, consisting of
deception wilfully and deliberately done or resorted to in order to induce another to
give up some legal right.
 The ordinary period of prescription of 5 years within which to assess tax liabilities under
Sec. 331 of the NIRC should be applicable to normal circumstances, but whenever the
government is placed at a disadvantage so as to prevent its lawful agents from proper
assessment of tax liabilities due to false returns, fraudulent return intended to evade
payment of tax or failure to file returns, the period of ten years provided for in Sec. 332 (a)
NIRC, from the time of the discovery of the falsity, fraud or omission even seems to be
inadequate and should be the one enforced. There being undoubtedly false tax returns
in this case, We affirm the conclusion of the respondent Court of Tax Appeals that
Sec. 332 (a) of the NIRC should apply and that the period of ten years within which to
assess petitioner's tax liability had not expired at the time said assessment was
made.

24. Commissioner of Internal Revenue vs Enron Subic Power Corp.

GR No. 166387 – January 19, 2009
Facts:
 Enron, a domestic corporation registered with the Subic Bay Metropolitan Authority as a
freeport enterprise filed its annual income tax return. It indicated a net loss. Subsequently,
the Bureau of Internal Revenue, through a preliminary five-day letter, informed it of a
proposed assessment of an alleged P2,880,817.25 deficiency income tax. Enron disputed
the proposed deficiency assessment in its first protest letter.
 Later, Enron received from the CIR a formal assessment notice requiring it to pay the
alleged deficiency income tax of P2,880,817.25 for the taxable year 1996. Enron protested
this deficiency tax assessment. Due to the non-resolution of its protest within the 180-day
period, Enron filed a petition for review in the Court of Tax Appeals. It argued that the
deficiency tax assessment disregarded the provisions of Section 228 of the National
Internal Revenue Code, as amended, and Section 3.1.4 of Revenue Regulations No. 12-99
by not providing the legal and factual bases of the assessment. Enron likewise questioned
the substantive validity of the assessment.
 In a decision, the CTA granted Enrons petition and ordered the cancellation of its deficiency
tax assessment. The CTA reasoned that the assessment notice sent to Enron failed to
comply with the requirements of a valid written notice under Section 228 of the NIRC and
RR No. 12-99. The CIRs motion for reconsideration of the CTA decision was denied in a
resolution.
 CIR appealed the CTA decision to the CA but the CA affirmed it. The CA held 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 filed a motion for reconsideration but this was deemed abandoned
when he filed a motion for extension to file a petition for review in this Court.
Issue:
 Whether or not the Respondent was validly informed of the legal and factual bases of the
deficiency assessment against it.
Held:
 The well-established doctrine that as a matter of practice and principle, the Court will not
set aside the conclusion reached by an agency, like the CTA, especially if affirmed by the
CA. By the very nature of its function, it has dedicated itself to the study and consideration
of tax problems and has necessarily developed an expertise on the subject, unless there
has been an abuse or improvident exercise of authority on its part, which is not present
here.
 A notice of assessment 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. The Notice of Assessment shall inform the
taxpayer of this fact, and that the report of investigation submitted by the Revenue Officer
conducting the audit shall be given due course.
 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.
 It is clear from the foregoing that a taxpayer must be informed in writing of the legal and
factual bases of the tax assessment made against him. The use of the word shall in these
legal provisions indicates the mandatory nature of the requirements laid down therein. The
CIR merely issued a formal assessment and indicated therein the supposed tax, surcharge,
interest and compromise penalty due thereon. 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 did not bother to explain
how it arrived at such an assessment. Moreso, he failed to mention the specific provision of
the Tax Code or rules and regulations which were not complied with by Enron.
 Both the CTA and the CA concluded that the deficiency tax assessment merely itemized
the deductions disallowed and included these in the gross income. It also imposed the
preferential rate of 5% on some items categorized by Enron as costs. The legal and factual
bases were, however, not indicated.
 CIR insists that an examination of the facts shows that Enron was properly apprised of its
tax deficiency. During the pre-assessment stage, the CIR advised Enrons representative of
the tax deficiency, informed it of the proposed tax deficiency assessment through a
preliminary five-day letter and furnished Enron a copy of the audit working paper allegedly
showing in detail the legal and factual bases of the assessment.
 However, the advice of tax deficiency, given by the CIR to an employee of Enron, as
well as the preliminary five-day letter, were not valid substitutes for the mandatory
notice in writing of the legal and factual bases of the assessment. These steps were
mere perfunctory discharges of the CIRs duties in correctly assessing a taxpayer.
The requirement for issuing a preliminary or final notice, as the case may be, informing a
taxpayer of the existence of a deficiency tax assessment is markedly different from the
requirement of what such notice must contain. Just because the CIR issued an advice, a
preliminary letter during the pre-assessment stage and a final notice, in the order required
by law, does not necessarily mean that Enron was informed of the law and facts on which
the deficiency tax assessment was made.
 The law requires that the legal and factual bases of the assessment be stated in the formal
letter of demand and assessment notice. Thus, such cannot be presumed.
 The Court notes that the old law merely required that the taxpayer be notified of the
assessment made by the CIR. This was changed in 1998 and the taxpayer must now be
informed not only of the law but also of the facts on which the assessment is made. Such
amendment is in keeping with the constitutional principle that no person shall be deprived of
property without due process. In view of the absence of a fair opportunity for Enron to be
informed of the legal and factual bases of the assessment against it, the assessment in
question was void.

25. Butuan Sawmill vs Court of Tax Appeals

GR No. L-20601 – February 28, 1966
Facts:
 Petitioner sold logs to Japanese firms. Upon investigation by the Bureau of Internal
Revenue, it was ascertained that no sales tax return was filed by the petitioner and neither
did it pay the corresponding tax on the sales. On the basis of agent Antonio Mole's report
respondent, determined against petitioner representing sales tax, surcharge and
compromise penalty on its sales tax, surcharge and compromise penalty on its sales of
logs, and in consequence of a reinvestigation, respondent amended the amount of the
previous assessment. Subsequent requests for reconsideration of the amended
assessment having been denied, petitioner filed the instant petition.
 Later, the lower court upheld the legality and correctness of the amended assessment of
the sales tax and surcharge, ruling that the sales in question, in the light of our previous
decisions, were domestic or "local" sales, and, therefore, subject to sales tax under the
provision of the Tax Code; and that the assessment thereof was made well within the ten-
year period prescribed by the same Code, since petitioner herein omitted to file its sales tax
returns for the years 1951, 1952 and 1953, and this omission was discovered only on
September 17, 1957. The imposition of the compromise penalty was, however, eliminated
therefrom for want of agreement between the taxpayer and the Collector (now
Commissioner) of Internal Revenue. A motion to reconsider said decision having been
denied, petitioner herein interposed the present appeal before this Court.
Issue:
 Whether or not the assessment thereof was made within the prescriptive period provided by
law therefor.
Held:
 Petitioner herein insists that the circumstances enumerated in the above finding, which this
Court had, in previous decisions, considered as determinative of the place of transfer of
ownership of the logs sold, for purposes of taxation, are not in themselves evidentiary
indications to show that the parties intended the title of the logs to pass to the Japanese
buyers in Japan. Thus, it points out that the "FOB" feature of the sales contract was made
only to fix its price and not to fix the place of delivery; that the requirement of certification of
quality, quantity, and measurement specifications of the logs by local authorities was done
to comply with local laws, rules, and regulations, and was not a part of the sales
arrangement; that the payment of freight by the Japanese buyers is not an uncommon
feature of "FOB" shipments; and that the payment of prices by means of irrevocable letters
of credit is but a common established business practice to secure payment of the price to
the seller. It also insists that, even assuming that the "FOB" feature of the disputed sales
determines the situs of transfer of ownership, the same is merely a prima facie presumption
which yields to contrary proof such as that the logs were made deliverable to the "order of
the shipper" and the logs were shipped at the risk of the shipper, which circumstances, if
considered, would negate the above implications. Hence, petitioner herein contends that
the disputed sales were consummated in Japan, and, therefore, not subject to the taxing
jurisdiction of our Government.
 It is clear that said export sales had been consummated in the Philippines and were,
accordingly, subject to sales tax therein.
 The specification in the bill of lading to the effect that the goods are deliverable to the order
of the seller or his agent does not necessarily negate the passing of title to the goods upon
delivery to the carrier is clear from the second part of paragraph 2 of Article 1503 of the
Civil Code of the Philippines.
 it has been a settled rule that in petitions to review decisions of the Court of Tax Appeals,
only questions of law may be raised and may be passed upon by this Court; and it having
been found that there is no proof to substantiate the foregoing contention of petitioner, the
same should also be ruled as devoid of merit.
 Since petitioner filed its income tax returns for the years 1951, 1952 and 1953, and the
assessment was made in 1957 only, it further contends that the assessment of the sales
tax corresponding to the years 1951 and 1952 has already prescribed for having been
made outside the five-year period prescribed in Section 331 of the Tax Code and should,
therefore, be deducted from the assessment of the deficiency sales tax made by
respondent.
 The above contention has already been raised and rejected as not meritorious in a previous
case decided by this Court. Thus, we held that an income tax return cannot be considered
as a return for compensating tax for purposes of computing the period of prescription under
Section 331 of the Tax Code, and that the taxpayer must file a return for the particular tax
required by law in order to avail himself of the benefits of Section 331 of the Tax Code;
otherwise, if he does not file a return, an assessment may be made within the time stated in
Section 332(a) of the same Code.
 It being undisputed that petitioner failed to file a return for the disputed sales
corresponding to the years 1951, 1952 and 1953, and this omission was discovered
only on September 17, 1957, and that under Section 332(a) of the Tax Code
assessment thereof may be made within ten (10) years from and after the discovery
 of the omission to file the return, it is evident that the lower court correctly held that the
assessment and collection of the sales tax in question has not yet prescribed.
 If the taxpayer files the wrong return, it as though he filed no return at all. This true
even if all the necessary information was reflected in the erroneous return. In
situations like this, the 10-year prescriptive period will apply.