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CIR V. ST. LUKES MEDICAL CENTER concerned. Such income from for-profit
The BIR assessed St. Luke’s for deficiency taxes activities, under the last paragraph of Section 30,
for 1998. St. Luke’s filed an administrative is merely subject to income tax, previously at the
protest with the BIR against the deficiency tax ordinary corporate rate but now at the
assessments. The BIR did not act on the protest preferential 10% rate pursuant to Section 27(B).
within the 180-day period under Section 228 of
the NIRC. Thus, St. Luke’s appealed to the TOLENTINO V. SECRETARY OF FINANCE
CTA. The BIR argued before the CTA that
Section 27(B) of the NIRC, which imposes a The Philippine Press Institute, Inc. (PPI)
10% preferential tax rate on the income of contends that by removing the exemption of
proprietary nonprofit hospitals, should be the press from the VAT while maintaining
applicable to St. Luke’s. The BIR claimed that those granted to others, the law discriminates
St. Luke’s was actually operating for profit in against the press. Is this contention correct?
1998 because only 13% of its revenues came
from charitable purposes. St. Luke’s maintained No. It would suffice to say that since the law
that it is a non-stock and non-profit institution granted the press a privilege, the law could take
for charitable and social welfare purposes under back the privilege anytime without offense to the
Section 30(E) and (G) of the NIRC. It argued Constitution. The reason is simple: by granting
that the making of profit per se does not destroy exemptions, the State does not forever waive the
its income tax exemption. exercise of its sovereign prerogative. Indeed, in
St. Luke’s is liable for deficiency income tax withdrawing the exemption, the law merely
in 1998 under Section 27(B) of the NIRC, subjects the press to the same tax burden to
which imposes a preferential tax rate of 10% which other businesses have long ago been
on the income of proprietary non-profit subject. The PPI asserts that it does not really
hospitals. matter that the law does not discriminate against
the press because “even nondiscriminatory
St. Luke’s is organized as a non-stock and non- taxation on constitutionally guaranteed freedom
profit charitable institution. However, this does is unconstitutional.” The Court was speaking in
not automatically exempt St. Luke’s from that case (Murdock v. Pennsylvania) of a license
paying taxes. Even if St. Luke’s meets the test of tax, which, unlike an ordinary tax, is mainly for
charity, a charitable institution is not ipso facto regulation. Its imposition on the press is
tax exempt. To be exempt from real property unconstitutional because it lays a prior restraint
taxes, Section 28(3), Article VI of the on the exercise of its right. The VAT is,
Constitution requires that a charitable institution however, different. It is not a license tax. It is
use the property “actually, directly and not a tax on the exercise of a privilege, much
exclusively” for charitable purposes. To be less a constitutional right. It is imposed on the
exempt from income taxes, Section 30(E) of the sale, barter, lease or exchange of goods or
NIRC requires that a charitable institution must properties or the sale or exchange of services
be “organized and operated exclusively” for and the lease of properties purely for revenue
charitable purposes. Likewise, to be exempt purposes. To subject the press to its payment is
from income taxes, Section 30(G) of the NIRC not to burden the exercise of its right any more
requires that the institution be “operated than to make the press pay income tax or subject
exclusively” for social welfare. In short, the last it to general regulation is not to violate its
paragraph of Section 30 provides that if a tax freedom under the Constitution
exempt charitable institution
conducts “any” activity for profit, such activity Chamber of Real Estate and Builders
is not tax exempt even as its not-for-profit Associations, Invc., (CREBA), on the other
activities remain tax exempt. St. Luke’s is a hand, asserts that R.A. No. 7716 (1) impairs
corporation that is not “operated exclusively” for the obligations of contracts, (2) classifies
charitable or social welfare purposes insofar as transactions as covered or exempt without
its revenues from paying patients are reasonable basis and (3) violates the rule that
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taxes should be uniform and equitable and political subdivision or instrumentality and in
that Congress shall “evolve a progressive doing so, a law is violated or some irregularity is
system of taxation”. Should the Expanded committed; and (2) the petitioner is directly
Value-Added Tax Law be declared affected by the alleged act.
unconstitutional based on the following
grounds? In the case, the proceeds from the Subject Loans
NO. had already been converted into public funds by
1. IT DOES NOT IMPAIR THE the Municipality’s receipt thereof. Funds coming
OBLIGATIONS OF CONTRACTS. It has been from private sources become impressed with the
held in an early case that even though such characteristics of public funds when they are
taxation may affect particular contracts, as it under official custody. Public plaza belongs to
may increase the debt of one person and lessen public dominion, Cacayuran need not to be a
the security of another, or may impose privy to the loans, as long as taxes are involved,
additional burdens upon one class and release people have a right to question the contracts
the burdens of another, still the tax must be paid entered into by the government.
unless prohibited by the Constitution, nor can it
be said that it impairs the obligation of any Generally, an ultra vires act is one committed
existing contract in its true legal sense. outside the object for which a corporation is
2. The sale of food items, petroleum, medical created as defined by the law of its organization
and veterinary services, etc., which are essential and therefore beyond the powers conferred upon
goods and services was already exempt under it by law.43 There are two (2) types of ultra
Section 103, pars. (b) (d) (1) of the NIRC before vires acts. There is a distinction between an act
the enactment of R.A. No. 7716. Petitioner is in utterly beyond the jurisdiction of a municipal
error in claiming that R.A. No. 7716 granted corporation and the irregular exercise of a basic
exemption to these transactions while subjecting power under the legislative grant in matters not
those of petitioner (sale on real property) to the in themselves jurisdictional. The former are ultra
payment of the VAT. vires in the primary sense and void; the latter,
3. Equality and uniformity of taxation mean that ultra vires only in a secondary sense which does
all taxable articles or kinds of property of the not preclude ratification or the application of the
same class be taxed at the same rate. The taxing doctrine of estoppel in the interest of equity and
essential justice.
power has the authority to make reasonable and
natural classifications for purposes of taxation. Applying these principles to the case at bar, it is
To satisfy this requirement it is enough that the clear that the Subject Loans belong to the first
statute or ordinance applies equally to all class of ultra vires acts deemed as void. Records
persons, firms, and corporations placed in disclose that the said loans were executed by the
similar situation. Furthermore, the Constitution Municipality for the purpose of funding the
does not really prohibit the imposition of conversion of the Agoo Plaza into a commercial
indirect taxes which, like the VAT, are center pursuant to the Redevelopment Plan.
regressive. What it simply provides is that However, the conversion of the said plaza is
Congress shall “evolve a progressive system of beyond the Municipality’s jurisdiction
taxation.” The constitutional provision has been considering the property’s nature as one for
interpreted to mean simply that “direct taxes are public use and thereby, forming part of the
. . . to be preferred [and] as much as possible, public dominion. Accordingly, it cannot be the
indirect taxes should be minimized.” The object of appropriation either by the State or by
mandate to Congress is not to prescribe, but private persons. Nor can it be the subject of
to evolve, a progressive tax system. lease or any other contractual undertaking.


Taxpayer is allowed to sue if: (1) public funds FERTPHIL CORP.
derived from taxation are disbursed by a
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President Ferdinand Marcos, exercising his imposed to give undue benefit to PPI
legislative powers, issued LOI No. 1465 which
provided, among others, for the imposition of a An inherent limitation on the power of taxation
capital recovery component (CRC) on the is public purpose. Taxes are exacted only for a
domestic sale of all grades of fertilizers in the public purpose. They cannot be used for purely
Philippines. Fertiphil paid P10 for every bag of private purposes or for the exclusive benefit of
fertilizer it sold in the domestic market to the private persons. The reason for this is simple.
Fertilizer and Pesticide Authority (FPA). After The power to tax exists for the general welfare;
the 1986 Edsa Revolution, FPA voluntarily hence, implicit in its power is the limitation that
stopped the imposition of the P10 levy. With the it should be used only for a public purpose. The
return of democracy, Fertiphil demanded from LOI expressly provided that the levy be imposed
PPI a refund of the amounts it paid under LOI to benefit PPI, a private company.
No. 1465, but PPI refused to accede to the
demand. It questioned the constitutionality of
LOI No. 1465 for being unjust, unreasonable,
oppressive, invalid and an unlawful imposition ANGELES UNIVERSITY FOUNDATION
that amounted to a denial of due process of vs. CITY OF ANGELES et. al
law.Fertiphil alleged that the LOI solely favored
PPI, a privately owned corporation, which used Petitioner is an educational institution and was
the proceeds to maintain its monopoly of the converted into a non-stock, non-profit education
fertilizer industry. foundation under the provisions of R.A. 6055,
Petitioner claimed that it is exempt from the
In its Answer, FPA, through the Solicitor payment of the building permit and locational
General, countered that the issuance of LOI No. clearance fees.
1465 was a valid exercise of the police power of
the State in ensuring the stability of the fertilizer Building permit fees are not charges on
industry in the country. property, they are not impositions from
which petitioner is exempt.
The imposition of the levy was an exercise by
the state of its taxation power The building permit fee is neither a tax nor a
charge on property. Based on Sections 102, 103
While it is true that the power of taxation can be and 104, the building permit fee is a regulatory
used as an implement of police power, the imposition on certain activities the owner may
primary purpose of the levy is revenue conduct either to build such structures or to
generation. If the purpose is primarily revenue, repair, alter, renovate or demolish the same. As
or if revenue is, at least, one of the real and to petitioner’s argument that the building permit
substantial purposes, then the exaction is fees collected by respondents are in reality taxes
properly called a tax. The P10 levy under LOI because the primary purpose is to raise revenues
No. 1465 is too excessive to serve a mere for the local government unit, the same does not
regulatory purpose. The levy, no doubt, was a hold water.
big burden on the seller or the ultimate
consumer. It increased the price of a bag of A charge of a fixed sum which bears no relation
fertilizer by as much as five percent. A plain at all to the cost of inspection and regulation
reading of the LOI also supports the may be held to be a tax rather than an exercise of
conclusion that the levy was for revenue the police power. In this case, the Secretary of
generation. The LOI expressly provided that Public Works and Highways who is mandated to
the levy was imposed "until adequate capital prescribe and fix the amount of fees and other
is raised to make PPI viable." charges that the Building Official shall collect in
The P10 levy is unconstitutional because it connection with the performance of regulatory
was not for a public purpose. The levy was functions, has promulgated and issued the
Implementing Rules and Regulations which
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provide for the bases of assessment of such fees. taxation, and it has been repeatedly held that
'inequalities which result from a singling out of
one particular class for taxation, or exemption
infringe no constitutional limitation.”
Batas Pambansa 135 was enacted. Sison, as
taxpayer, alleged that its provision (Section 1) LUNG CENTER V. QUEZON CITY
unduly discriminated against him by the The petitioner Lung Center of the Philippines is
imposition of higher rates upon his income as a a non-stock and non-profit entity established by
professional, that it amounts to class legislation, virtue of Presidential Decree No. 1823. It owns a
and that it transgresses against the equal piece of land, in the middle of which is a
protection and due process clauses of the hospital stands. A big space at the ground floor
Constitution as well as the rule requiring is being leased to private parties for canteen and
uniformity in taxation. small stores and to medical and to professional
practitioners. A big portion of the lot is being
BP 135 does not violate the due process and leased for commercial purposes to a private
equal protection clauses, and the rule on enterprise. In 1993, both land and the hospital
uniformity in taxation building were assessed for real property taxes in
On due process - it is undoubted that it may be the amount of about Php 4.5 Million. The
invoked where a taxing statute is so arbitrary petitioner avers that it is a charitable institution
that it finds no support in the Constitution. An within the context of Section 28(3), Article VI of
obvious example is where it can be shown to the 1987 Constitution. It asserts that its character
amount to the confiscation of property from as a charitable institution is not altered by the
abuse of power. Petitioner alleges arbitrariness fact that it admits paying patients and renders
but his mere allegation does not suffice and medical services to them, leases portions of the
there must be a factual foundation of such land to private parties, and rents out portions of
unconsitutional taint. the hospital to private medical practitioners from
On equal protection - it suffices that the laws which it derives income to be used for
operate equally and uniformly on all persons operational expenses.
under similar circumstances, both in the
privileges conferred and the liabilities imposed. Only those portions of the hospital used for
On the matter that the rule of taxation shall be patients whether paying or non-paying are
uniform and equitable - this requirement is met exempt from real property taxes. Those
when the tax operates with the same force and portions of its real property that are leased to
effect in every place where the subject may be private entities are not exempt from real
found." Also, the rule of uniformity does not call property taxes as these are not actually,
for perfect uniformity or perfect equality, directly and exclusively used for charitable
because this is hardly unattainable. When the purposes.
problem of classification became of issue, the The test whether an enterprise is charitable or
Court said: "Equality and uniformity in taxation not is whether it exists to carry out a purpose
means that all taxable articles or kinds of reorganized in law as charitable or whether it is
property of the same class shall be taxed the maintained for gain, profit, or private advantage.
same rate. The taxing power has the authority to As a general principle, a charitable institution
make reasonable and natural classifications for does not lose its character as such and its
purposes of taxation..." As provided by this exemption from taxes simply because it derives
Court, where "the differentation" complained of income from paying patients, whether out-
"conforms to the practical dictates of justice and patient, or confined in the hospital, or receives
equity" it "is not discriminatory within the subsidies from the government, so long as the
meaning of this clause and is therefore uniform." money received is devoted or used altogether to
Lutz v Araneta “It is inherent in the power to the charitable object which it is intended to
tax that a state be free to select the subjects of
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achieve; and no money inures to the private administrative claim - within the period of 120
benefit of the persons managing or operating the days from the submission of complete
institution. However, under the 1973 and 1987 documents, the taxpayer may resort to a judicial
Constitutions and Rep. Act No. 7160 in order to claim before the CTA. The judicial claim shall
be entitled to the exemption, the petitioner is be filed within a period of 30 days after the
burdened to prove, by clear and unequivocal receipt of respondent's decision or ruling or after
proof, that (a) it is a charitable institution; and the expiration of the 120-day period, whichever
(b) its real properties are ACTUALLY, is sooner.
charitable purposes. Aside from a specific exception to the
mandatory and jurisdictional nature of the
periods provided by the law, any claim filed in a
SILICON V CIR period less than or beyond the 120+30 days
Petitioner sought to recover the VAT it paid on provided by the NIRC is outside the jurisdiction
imported capital goods for the 2nd quarter of of the CTA.
2001. On 16 October 2001, it filed an The judicial claims of petitioner were filed
application for a tax credit/refund. beyond the 120+30 day period. Ruling No. DA-
489-03 certainly did not allow the filing of a
On 4 September 2002, petitioner also filed for a judicial claim long after the expiration of the
tax credit/refund of the VAT it had paid on 120+30 day period.
imported capital goods for the 3 rd and As things stood, the CTA had no jurisdiction to
4th quarters of 2001. act upon, take cognizance of, and render
Because of the continuous inaction by judgment upon the petitions for review filed by
respondent on the administrative claims of petitioner. For having been rendered without
petitioner for a tax credit/refund in the total jurisdiction, the decision of the CTA Second
amount of P25,041,116.22, the latter filed Division in this case - and consequently, the
separate petitions for review before the CTA. decision of the CTA En Banc - is a total nullity
that creates no rights and produces no effect.
The judicial claims of petitioner were filed
beyond the 120+30 day period. Ruling No. GJM PHIL MANUFACTURING INC V.
DA-489-03 certainly did not allow the filing of CIR
a judicial claim long after the expiration of GJM filed its Annual Income Tax Return for the
the 120+30 day period. year 1999. CIR found out that GJM had tax
deficiencies due to
The petitioner’s administrative claims were filed disallowances/understatements, therefore, CIR
well within the two-year period provided by law. had the right to assess GJM within the 3 year
Upon the filing of an administrative claim, prescriptive period under Sec. 203 of the NIRC
respondent is given a period of 120 days within or until April 15, 2003. On February 17, 2003,
which to (1) grant a refund or issue the tax credit CIR delivered the Preliminary Assessment
certificate for creditable input taxes; or (2) make Notice (PAN) to GJM. Subsequently, on April
a full or partial denial of the claim for a tax 14, 2003, the Formal Assessment Notice (FAN)
refund or tax credit. Failure on the part of were delivered by the CIR. GJM denied having
respondent to act on the application within the received any assessment from the BIR, thus,
120-day period shall be deemed a denial. such right of assessment by the latter has
The 120-day period begins to run from the date
of submission of complete documents The denial of GJM having received the
supporting the administrative claim. Whether Formal Assessment Notice (FAN) made such
respondent rules in favor of or against the right of assessment by the CIR prescribe
taxpayer - or does not act at all on the
While a mailed letter is deemed received by the
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addressee in the course of mail, this is merely a with the deposit of the amount claimed or the
disputable presumption subject to controversion, filing of the required bond is not simply
the direct denial of which shifts the burden to the confined to cases where prescription has set in.
sender to prove that the mailed letter was, in As explained by the Court, whenever it is
fact, received by the addressee. In the case at determined by the courts that the method
bar, CIR was not able to prove that GJM has employed by the Collector of Internal Revenue
received the FAN sent by them ergo their right in the collection of tax is not sanctioned by law,
to assess has prescribed. the bond requirement under Section 11 of R.A.
No. 1125 should be dispensed with. The purpose
of the rule is not only to prevent jeopardizing the
interest of the taxpayer, but more importantly, to
SPOUSES PACQUIAO V. CIR prevent the absurd situation wherein the court
It was found that Pacquiao failed to file his VAT would declare “that the collection by the
returns for the years 2008 and 2009. summary methods of distraint and levy was
Furthermore, he also failed to state his US violative of law, and then, in the same breath
sourced income for the year 2009. CIR issued a require the petitioner to deposit or file a bond as
letter of authority then a Notice of Initial a prerequisite for the issuance of a writ of
Assessment-Informal Conference. This process injunction.
continued until the FDDA was issued addressed
to Manny only, informing him that the CIR
found him liable for deficiency income tax and SAN ROQUE POWER CORP V. CIR
VAT for taxable years 2008 and 2009. The CIR San Roque Power Corp is a VAT-registered
proceeded to effect Warrants of Distraint and taxpayer which was granted by the BIR a zero-
Levy and Garnishment on the properties of the rating on its sales of electricity to National
petitioners, who in turn, questioned such Power Corporation (NPC). On Dec 22, 2005 and
collection process in the Court of Tax Appeals. Feb 27, 2006, the petitioner filed two separate
The CTA Second Division issued a decision administrative claims for refund of its alleged
ordering the CIR to desist from collecting on the unutilized input tax. Due to inaction of CIR, the
deficiency tax assessments against the petitioner filed petitions for review before the
petitioners considering that it was beyond the CTA: 1. On March 30, 2006, for its unutilized
petitioner’s net worth. CTA, however, still input VAT for the period Jan-March 2004; and
required the petitioners to deposit the same 2. On June 20, 2006, for the period April-Dec
amount of P3,298,514,894.35 or post a bond in 2004.
the amount of P4,947,772,341.53. This order In this case, the petitioner timely filed its
was then brought to the Supreme Court under administrative claims for refund/credit of its
Rule 65. unutilized input VAT within the 2 year
The CTA has ample authority to issue prescriptive period. However, the petitioner,
injunctive writs to restrain the collection of without waiting for the full expiration of the
tax and to even dispense with the deposit of 120-day periods and without any decision by the
the amount claimed or the filing of the CIR, immediately filed its petitions for review
required bond, whenever the method with the CTA on 30 March 2006, or a
employed by the CIR in the collection of tax mere ninety-eight (98) days for the first
jeopardizes the interests of a taxpayer for administrative claim; and on 20 June 2006, or
being patently in violation of the law. only one hundred thirteen (113) days for the
second administrative claim, from the
Such authority emanates from the jurisdiction submission of the said claims. In other words,
conferred to it not only by Section 11 of R.A. the judicial claims of the petitioner were
No. 1125, but also by Section 7 of the same law. prematurely filed as correctly found by the CTA
From all the foregoing, it is clear that the En Banc.
authority of the courts to issue injunctive writs The two judicial claims filed by the petitioner
to restrain the collection of tax and to dispense
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fell within the window period, thus, the CTA Supplemental Petition on October 7, 2008,
can take cognizance over them informing the CTA that it availed of the tax
amnesty under R.A. No. 9480. CEPHI
It was noted that BIR Ruling No. DA-489-03, afterwards submitted a Supplemental Formal
which provides that a taxpayer-claimant need Offer of Evidence, together with the documents
not wait for the lapse of the 120-day period relevant to its tax amnesty.
before it could seek judicial relief with the CTA
by way of Petition for Review is a general CEPHI is entitled to the immunities
interpretative rule issued by the CIR. Thus, and privileges of the tax amnesty
taxpayers can rely on this ruling from the time of program upon full compliance with
its issuance on 10 December 2003. In other the requirements of R.A. No. 9480.
words, the 120+30-day period is generally R.A. No. 9480 governs the tax amnesty program
mandatory and jurisdictional from the effectivity for national internal revenue taxes for the
of the 1997 NIRC on 1 January 1998, up to the taxable year 2005 and prior years. Subject to
present. By way of an exception, judicial certain exceptions, a taxpayer may avail of this
claims filed during the window period from program by complying with the documentary
10 December 2003 to 6 October 2010, need submissions to the Bureau of Internal Revenue
not wait for the exhaustion of the 120-day (BIR) and thereafter, paying the applicable
period.. amnesty tax.
Upon the taxpayer's full compliance with these
In this case, the two judicial claims filed by the requirements, the taxpayer is immediately
petitioner fell within the window period, thus, entitled to the enjoyment of the immunities and
the CTA can take cognizance over them. privileges of the tax amnesty program. 32 But
Moreover, we considered as insignificant the when: (a) the taxpayer fails to file a SALN and
failure of a taxpayer to invoke BIR Ruling No. the Tax Amnesty Return; or (b) the net worth of
DA-489-03 before the CTA. Our reason was that the taxpayer in the SALN as of December 31,
the said ruling is an official act emanating from 2005 is proven to be understated to the extent of
the BIR. We can take judicial notice of such 30% or more, the taxpayer shall cease to enjoy
issuance and its consistent application in past these immunities and privileges.
rulings of the Court relating to the timeliness of
judicial claims which makes it even more The implementing rules and regulations of R.A.
mandatory in taking cognizance of the same. No. 9480, as embodied in Department of
Finance (DOF) Department Order No. 29-07,
CIR V. COVANTA laid down the procedure for availing of the tax
CIR issued Formal Letters of Demand and amnesty. Considering that CEPHI completed the
Assessment Notices against CEPHI for requirements and paid the corresponding
deficiency value-added tax (VAT) and expanded amnesty tax, it is considered to have totally
withholding tax (EWT). CEPHI protested the complied with the tax amnesty program. As a
assessments by filing two (2) separate Letters of matter of course, CEPHI is entitled to the
Protest. However, the CIR issued another immediate enjoyment of the immunities and
Formal Letter of Demand and Assessment privileges of the tax amnesty program.
NoticE. The assessment lead to CEPHI filing a Nonetheless, the Court emphasizes that the
Letter of Protest on the MCIT assessment. immunities and privileges granted to taxpayers
under R.A. No. 9480 is not absolute. It is
The protests remained unacted upon. Thus, subject to a resolutory condition insofar as
CEPHI filed separate petitions before the CTA, the taxpayers' enjoyment of the immunities
seeking the cancellation and withdrawal of the and privileges of the law is concerned. These
deficiency assessments. On December 6, 2005, immunities cease upon proof that they
the CIR filed an answer. underdeclared their net worth by 30%.
After the parties' respective submission of their
fonnal offer of evidence, CEPHI filed a Unfortunately for the CIR, however, there is no
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such proof in CEPHI's case. The Court, thus, toll or extend the period of prescription.
finds it necessary to deny the present petition.
While tax amnesty is in the nature of a tax From the above disquisitions, it is clear that the
exemption, which is strictly construed against right of petitioner to assess respondent has
the taxpayer, the Court cannot disregard the already prescribed and respondent is not liable to
plain text of R.A. No. 9480. pay the deficiency tax assessment. The period of
collection has also prescribed. As held by the
Citytrust Bankin Corp (CBC) filed its Annual
Income Tax Returns for its Regular Banking
Unit, and Foreign Currency Deposit Unit for UNGAB V. CUSI
taxable year 1986 on April 15, 1987. CBC BIR Examiner Ben Garcia examined the income
executed Waivers of Statute of Limitations tax returns filed by Quirico P. Ungab, for the
under the NIRC. On March 4, 1991, CIR issued calendar year ending December 31, 1973. In the
a PAN against CBC for deficiency taxes, among course of his examination, he discovered that the
which is for deficiency income tax. The counsel petitioner failed to report his income derived
for CBC filed its protest. CIR issued a letter from sales of banana saplings. As a result, the
demanding payment of the deficiency taxes BIR District Revenue Officer at Davao City sent
within 30 days from receipt thereof. CBC filed a "Notice of Taxpayer" to the petitioner
its protest against the assessments. informing him that there is due from him
Consequently, on Sept 21, 2011, CIR issued a (Ungab) the amount of P104,980.81,
Warrant of Distraint and/or levy against representing income, business tax and forest
respondent BPI which prompted the latter to file charges for the year 1973 and inviting petitioner
a petition for review with CTA. to an informal conference where the petitioner,
The doctrine of estoppel cannot be applied in duly assisted by counsel, may present his
this case as an exception to the statute of objections to the findings of the BIR Examiner.
limitations on the assessment of taxes Upon receipt of the notice, the petitioner wrote
considering that there is a detailed procedure the BIR District Revenue Officer protesting the
for the proper execution of the waiver, which assessment, claiming that he was only a dealer
the BIR must strictly follow. As such, the or agent on commission basis in the banana
doctrine of estoppel cannot give validity to an sapling business and that his income. BIR
act that is prohibited by law or one that is Examiner Ben Garcia, however, was fully
against public policy. convinced that the petitioner had filed a
fraudulent income tax return so that he
Moreover, the BIR cannot hide behind the submitted a "Fraud Referral Report," to the Tax
doctrine of estoppel to cover its failure to Fraud Unit of the BIR. Consequently, the
comply with RMO 20-90 and RDAO 05-01, Special Investigation Division of the BIR found
which the BIR itself issued. xxx Having caused sufficient proof that the herein petitioner is
the defects in the waivers, the BIR must bear the guilty of tax evasion for the taxable year 1973
consequence. It cannot shift the blame to the and recommended his prosecution. Ungab filed a
taxpayer. To stress, a waiver of the statute of motion to quash the informations on the ground
limitations, being a derogation of the taxpayer's that his pending protest with the CIR has not yet
right to security against prolonged and been acted upon hence the assessment is not yet
unscrupulous investigations, must be carefully final and executory and therefore the trial court
and strictly construed. has no jurisdiction yet over the criminal cases.

Applying the said ruling in the case at bench, What is involved here is not the collection of
BPI is not estopped from raising the taxes where the assessment of the
invalidity of the subject Waivers as the BIR Commissioner of Internal Revenue may be
in this case caused the defects thereof. As reviewed by the Court of Tax Appeals, but a
such, the invalid Waivers did not operate to criminal prosecution for violations of the
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National Internal Revenue Code which is

within the cognizance of courts of first
While there can be no civil action to enforce
collection before the assessment procedures
provided in the Code have been followed, there
is no requirement for the precise computation
and assessment of the tax before there can be a
criminal prosecution under the Code.
Besides, it has been ruled that a petition for
reconsideration of an assessment may affect the
suspension of the prescriptive period for the
collection of taxes, but not the prescriptive
period of a criminal action for violation of law.
Obviously, the protest of the petitioner against
the assessment of the District Revenue Officer
cannot stop his prosecution for violation of the
National Internal Revenue Code. Accordingly,
the respondent Judge did not abuse his discretion
in denying the motion to quash filed by the