33. COMMISSIONER OF INTERNAL REVENUE, vs. ENRON SUBIC POWER CORPORATION. [G.R. No. 166387. January 19, 2009.

] Facts: 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 (CTA). CTA granted Enron's petition and ordered the cancellation of its deficiency tax assessment for the year1996. 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. Issue/ Held: W/N the assessment notices sent by the CIR constitute a valid written notice under Section 228 of the NIRC and RR No. 12-99- NO Ratio: The advice of tax deficiency, given by the CIR to an employee of Enron, as well as the preliminary fiveday letter, were not valid substitutes for the mandatory notice in writing of the legal and factual bases of the assessment. Thesesteps were mere perfunctory discharges of the CIR's 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 ismarkedly different from the requirement of what such notice must contain. Just because the CIR issued an advice, apreliminary letter during the preassessment 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. 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 A notice of assessment is: [A] declaration of deficiency taxes issued to a [t]axpayer 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 [t]axpayer of this fact, and that the report of investigation submitted by the Revenue Officer conducting the audit shall be given due course. The formal letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state the fact, the law, rules and regulations or jurisprudence on which the assessment is based, otherwise the formal letter of demand and the notice of assessment shall be void.

34 35 35 G.R. No. 159694 January 27, 2006

COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. AZUCENA T. REYES, Respondent.

In 1993, Maria Tancino died leaving behind an estate worth P32 million. In 1997, a tax audit was conducted on the estate. Meanwhile, the National Internal Revenue Code (NIRC) of 1997 was passed. Eventually in 1998, the estate was issued a final assessment notice (FAN) demanding the estate to pay P14.9 million in taxes inclusive of surcharge and interest; the estates liability was based on Section 229 of the [old] Tax Code. Azucena Reyes, one of the heirs, protested the FAN. The Commissioner of Internal Revenue (CIR) nevertheless issued a warrant of distraint and/or levy. Reyes again protested the warrant but in March 1999, she offered a compromise and was willing to pay P1 million in taxes. Her offer was denied. She continued to work on another compromise but was eventually denied. The case reached the Court of Tax Appeals where Reyes was also denied. In the Court of Appeals, Reyes received a favorable judgment. ISSUE: Whether or not the formal assessment notice is valid. HELD: No. The NIRC of 1997 was already in effect when the FAN was issued. Under Section 228 of the NIRC, taxpayers shall be informed in writing of the law and the facts on which the assessment is made: otherwise, the assessment shall be void. In the case at bar, the FAN merely stated the amount of liability to be shouldered by the estate and the law upon which such liability is based. However, the estate was not informed in writing of the facts on which the assessment of estate taxes had been made. The estate was merely informed of the findings of the CIR. Section 228 of the NIRC being remedial in nature can be applied retroactively even though the tax investigation was conducted prior to the laws passage. Consequently, the invalid FAN cannot be a basis of a compromise, any proceeding emanating from the invalid FAN is void including the issuance of the warrant of distraint and/or levy.

36 Philippine Journalists Inc. v CIR G.R No. 162852December 15, 2004 Facts In 1995, the Bureau of Internal Revenue (BIR) issued Letter of Authority for two Revenue Officers to examine petitioners books of account and other accounting records for internal revenue taxes for the period January 1, 1994 to December 31, 1994.

In 1997, petitioners Comptroller, executed a "Waiver of the Statute of Limitation Under the National Internal Revenue Code (NIRC)". The document "waive[d] the running of the prescriptive period provided by Sections 223 and 224 and other relevant provisions of the NIRC and consent[ed] to the assessment and collection of taxes which may be found due after the examination at any time after the lapse of the period of limitations fixed by said Sections 223 and 224 and other relevant provisions of the NIRC, until the completion of the investigation. In 1998, Revenue Officer submitted his audit report recommending the issuance of an assessment and finding that petitioner had deficiency taxes. Subsequently, the Assessment Division of the BIR issued Pre-Assessment Notices which informed petitioner of the results of the investigation. Thus, BIR issued Assessment/Demand stating the deficiency taxes, inclusive of interest and compromise penalty

Issue Whether or not the Waiver of the Statute of Limitations is valid and binding on the petitioner Held: No. As found by the CTA, the Waiver of Statute of Limitations, signed by petitioners comptroller on September 22, 1997 is not valid and binding because it does not conform with the provisions of RMO No. 20-90. It did not specify a definite agreed date between the BIR and petitioner, within which the former may assess and collect revenue taxes. Thus, petitioners waiver became unlimited in time, violating Section 222(b) of the NIRC. The waiver document is being incomplete and defective, the three-year prescriptive period was not tolled or extended and continued to run until April 17, 1998. Consequently, the Assessment/Demand No. 33-1-000757-94 issued on December 9, 1998 was invalid because it was issued beyond the three (3) year period. In the same manner, Warrant of Distraint and/or Levy No. 33-06-046 which petitioner received on March 28, 2000 is also null and void for having been issued pursuant to an invalid assessment.

37 COMMISSIONER OF INTERNAL REVENUE VS. KUDOS METAL CORPORATIONWAIVER OF THE STATUTE OF LIMITATIONS

FACTS: CIR assessed Kudos Metal Corporation for taxable year 1998. A Waiver of the Statute of Limitations was executed on December 2001. The CTA issued a Resolution canceling the assessment notices issued against Petitioner for having been issued beyond the prescriptive period as the waiver purportedly failed to (a) have the valid officer execute the same (i.e., only the Assistant Commissioner signed it and not the CIR); (b) the date of acceptance was not indicated; (c) the fact of receipt by the taxpayer was not indicated in the original copy. ISSUE:

Has the CIRs right to assess prescribed?

HELD: YES. The requirements for a valid waiver as laid down in RMO 20-90 and RDAO No. 5-01 are mandatory to give effect to Section 222 of the Tax Code. Specifically, the flaws in the waiver executed by Kudos Metal were as follows: (a) there was no notarized written authority in favor of the signatory for the company; (b) there is no stated date of acceptance by the Commissioner or his representative; and (c) the fact of the receipt of the copy was not indicated in the original waivers.

Neither can it be said that by merely executing the waiver the taxpayer is already estopped from disputing an action by the CIR beyond the statutory 3-year period since the exception under the Suyoc case (i.e., when the delays were due to taxpayers acts) does not apply. Note: Requisites of a valid waiver: (i) acceptance date; (ii) expiry date; (iii) signed by authorized officer of taxpayer and BIR; (iv) notarized; (v) fact of receipt must be indicated in the copies

38 CIR VS CA AND CARNATION

In 1982, Carnation Phils., Inc., filed its Corporation Annual Income Tax Return for taxable year ending September 30, 1981; and its Manufacturers/Producers Percentage Tax Return for the quarter ending September 30, 1981. On October 13, 1986, March 16, 1987 and May 18, 1987, Carnation, through its Senior Vice President Jaime O. Lardizabal, signed three separate waivers of the Statute of Limitations under the National Internal Revenue Code. The waivers were not signed by the BIR Commissioner or any of his agents. On August 5, 1987, Carnation received BIRs letter of demand asking said corporation to pay their deficiency income tax and deficiency sales tax on undeclared sales, all for the year 1981. The demand letter was accompanied by assessment notices. Carnation disputed the assessments and requested a reconsideration and reinvestigation thereof. The protests were denied. Carnation appealed to the Court of Tax Appeals which nullified the assessments for having been issued beyond the five-year prescriptive period provided by law. On appeal, the Court of Appeals affirmed the decision of the Court of Tax Appeals. Hence, the present petition.

Issue : whether or not the three (3) waivers signed by the private respondent are valid and binding[6] as to toll the running of the prescriptive period for assessment and not bar the Government from issuing subject deficiency tax assessments.

Held : NO. The Supreme Court affirmed the decision of the Court of Appeals. The Court ruled that the waivers in question reveal that they are in no wise unequivocal, and therefore necessitates for its binding effect the concurrence of the Commissioner of Internal Revenue. Neither implied consent can be presumed nor can it be contended that the waiver required under Section 319 of the Tax Code is one which is unilateral nor can it be said that concurrence to such an agreement is a mere formality because it is the very signatures of both the Commissioner of the Internal Revenue, and the taxpayer which give birth to such a valid agreement. 39 40 BPI vs. CIR G.R. 139736 Chico-Nazario,J.: FACTS: On June 6 and 14, 1985, petitioner bank sold $500,000.00 to the Central Bank, for the total sale amount of $1M. BIR issued deficiency assessment for DST in the amount of 28,020.00 for the said sales. On October 20,1989, petitioner received the notice and consequently filed a protest in November 16,1989. Petitioner did not receive a reply but soon after, October 15, 1992, BIR issued a Warrant of distraint, and finally in August 13, 1997, BPI received a letter denying its request for reconsideration. Petitioner alleged prescription to CTA but the latter denied the same. CTA likewise ruled in the negative that the sales of currency by petitioner was not subject to DST. CA sustained first issue but reinstated the second. ISSUE: Whether or not the right to collect has prescribed; October 17, 2005

Request for reconsideration It will not suspend the running of the statute of limitations because reconsideration of tax assessment is limited to the evidence.

Request for reinvestigation will suspend the running of statute of limitations because it entails the reception and reevaluation of additional evidence. It will take more time.

RULING:

The period for the BIR to assess and collect an internal revenue tax is limited to three years by Section 203 of the Tax Code. This period is limited by Section 223 Exemptions a) in the 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 begun without assessment, at any time within 10 years after the discovery of the falsity, fraud or omission BPI executed no waiver of the Statute of Limitations, thus it did not suspend running of the prescription. Likewise, BPI requested for a reconsideration and suspension of the running of the statute of limitations shouldnt apply. The statute of limitations for collection against BPI had expired; none of the conditions from the statute of limitations on collection exists herein.

41 I (Far East Bank and Trust Co) vs. CIR G.R. 174492 Tinga, J.: FACTS: Following a pre-assessment notice on deficiency tax filed by respondent in 1986, the latter sent final demand to petitioner on April 7, 1989. Petitioner filed a protest and a waiver of the Statutes of Limitations was effected until December 31, 1994. On August 9, 2002, respondent issued a final decision on petitioners protest ordering the withdrawal and cancellation of the deficiency withholding tax assessment in the amount of P190,752,860.82 and considered the sane as close and terminated but the documentary stamp tax of P24,587,174.63 was reiterated. Thereafter petition for review was filed with CTA. The court denied the petition. ISSUE: Whether or not the collection of the deficiency DST is barred by prescription: RULING: In order to determine whether the prescriptive period for collecting the tax deficiency tolled by BPIs filing of the protest letters dated April 7, 1989. Section 320 of the Tax Code must be examined: The running of the Statute of Limitations on the making of assessment and the beginning of distraint or levy or a proceeding in court of collection shall be suspended for the period when the taxpayer requests for re-investigation which is granted by the Commissioner. In order to suspend the running of the prescriptive periods for assessment and collection, the request for re-investigation must be granted by CIR. There is nothing in this case March 7, 2008

which indicates, expressly or impliedly, that the CIR had granted the request for re-investigation filed by BPI. What is reflected is the silence and inaction of the CIR. Given the prescription of the Governments claim, we no longer deem it necessary to pass upon the validity of the assessment.

42 Estate of Vda. De Gabriel vs. CIR

During the lifetime of de Gabriel, the business affairs were managed by PHITRUST. When shedied the latter filed an income tax return but not inform the BIR that she was dead. IT was found that the there was still unpaid tax liability, and the CIR sent an assessment notice toPHILTURST. The CIR issued a levy on estate to enforce the tax liability. Heirs opposed it and filed a letterof protest. Cir said that it is final and executory. Lower court sais that the charge cannot beimposed due to lack of notice. CA reversed the ruling.

Facts Juliana Gabriel entered into a contract of agency with the Philippine Trust Company (PhilTrust) for the latter to manager her business affairs. In April 1979, Gabriel died. Two days after her death, PhilTrust filed the income tax return (ITR) of Gabriel. PhilTrust however did not mention therein that Gabriel already died. PhilTrust petitioned to be appointed as administrator of her estate but the probate court assigned an heir instead. Meanwhile, the Bureau of Internal Revenue (BIR) found that Gabriel has a tax deficiency in the amount of P318k. Eventually in November 1982, a final assessment notice (FAN) addressed to Gabriel was sent via registered mail to PhilTrust. At this point, the BIR was still uninformed about Gabriels death. PhilTrust did not answer the FAN and so a warrant of distraint and levy was issued against the property of Gabriel. The administrator of the estate protested the warrant on the ground that there was an invalid service of assessment. The Commissioner of Internal Revenue (CIR) maintained that there was a valid service because a) PhilTrust was the agent of Gabriel, and b) the tax code (of 1977) does not require that the assessment be actually received by the taxpayer; that all it requires is that the assessment be released, mailed, and sent to the taxpayer at the address stated in the ITR filed. ISSUE: Whether or not the CIR is correct. HELD: No. PhilTrust was no longer the agent of Gabriel when the FAN was issued in 1982. The contract of agency ceased when Gabriel died in 1979. Since the agency was extinguished, the estate of Gabriel cannot be bound by the mistakes and omission of PhilTrust i.e., failure to notify BIR of Gabriels death and failure to file an answer for the FAN issued. Anent the second argument of the CIR, although there is really no statutory requirement that the FAN should be actually received by the taxpayer, the same should be sent to the taxpayer. In

this case, it was sent to PhilTrust. Also, although there is no specific requirement that the taxpayer should receive the notice within the prescriptive period (so long as the FAN was made within such period), due process requires at the very least that such notice actually be received. An assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer.

43 same as 35

44 Same as 31 The issue on whether the BIR complied with the notice requirements under RR No. 12-85 is raised for the first time on appeal and should not be given due course. PNB, in another effort to block the collection of the deficiency withholding tax, this time raises doubts as to the validity of the deficiency withholding tax assessment issued against it on 16 January 1991. It submits that the BIR failed to comply with the notice requirements set forth in RR No. 12-85.[96] Whether or not the BIR complied with the notice requirements of RR No. 12-85 is a new issue raised by PNB only before this Court. Such a question has not been ventilated before the lower courts. For an appellate tribunal to consider a legal question, it should have been raised in the court below.[97] If raised earlier, the matter would have been seriously delved into by the CTA and the Court of Appeals.[98] B. The assessment against PNB had become final and unappealable, and therefore, enforceable. The CTA and the Court of Appeals declared as final and unappealable, and thus, enforceable, the assessment against PNB, dated 16 January 1991, since PNB failed to protest said assessment within the 30-day prescribed period. This Court, though, finds that the significant BIR assessment, as far as this case is concerned, should be the one issued by the BIR against PNB on 08 October 1986. The BIR issued on 08 October 1986 an assessment against PNB for its withholding tax liability on the interest earnings and/or yields from PNOCs money placements with the bank. It had 30 days from receipt to protest the BIRs assessment. [99] PNB, however, did not take any action as to the said assessment so that upon the lapse of the period to protest, the withholding tax assessment against it, dated 8 October 1986, became final and unappealable, and could no longer be disputed.[100] The courts may therefore order the enforcement of this assessment. It is the enforcement of this BIR assessment against PNB, dated 08 October 1986, that is in issue in the instant case. If the compromise agreement is valid, it would effectively bar the BIR from enforcing the

assessment and collecting the assessed tax; on the other hand, if the compromise agreement is void, then the courts can order the BIR to enforce the assessment and collect the assessed tax. As has been previously discussed by this Court, the BIR demand letter, dated 16 January 1991, is not a new assessment against PNB. It only demanded from PNB the payment of the balance of the withholding tax assessed against it on 08 October 1986. The same demand letter also has no substantial effect or impact on the resolution of the present case. It is already unnecessary and superfluous, having been issued by the BIR when CTA Case No. 4249 was already pending before the CTA. At best, the demand letter, dated 16 January 1991, constitute a useful reference for the courts in computing the balance of PNBs tax liability, after applying as partial payment thereon the amount previously received by the BIR from PNOC pursuant to the compromise agreement. IV 45 COMMISSIONER OF INTERNAL REVENUE, Petitioner, Present: G.R. No. 167560

YNARES-SANTIAGO, J., Chairperson, - versus AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

DOMINADOR MENGUITO, Respondent.

Promulgated: September 17, 2008

x----------------------------------------------------------x

Dominador Menguito and his wife are the owners of Copper Kettle Catering Services, Inc. (CKCSI). They also operate several restaurant branches in the Philippines. One such branch was the Copper Kettle Cafeteria Specialist (CKCS) in Club John Hay, Baguio City. The branch

was registered as a sole proprietorship. In September 1997, a formal assessment notice (FAN) was issued against the spouses and they were adjudged to pay P34 million in deficiency taxes for the years 1991 to 1993. The Bureau of Internal Revenue found that in order for CKCS to operate in Club John Hay, a contract was entered into by CKCSI and Club John Hay; hence, CKCS and CKCSI are one and the same. Mrs. Menguito then sent a letter to the BIR acknowledging receipt of the assessment notice. She asked for more time to sort the issue. Later, when Menguito eventually filed a protest, he denied, through his witness (Ma. Therese Nalda, CKCS employee), receiving the FAN; that the FAN was addressed to the wrong person because it was addressed to CKCSI not CKCS. He presented as evidence a photocopy of the articles of incorporation (AOI) of CKCSI. On the other hand, the Commissioner of Internal Revenue (CIR) presented proof of the due mailing of the FAN. It however was not able to prove that it issued a pre-assessment notice (PAN) or a post-assessment notice. ISSUE: Whether or not due process was observed by the Commissioner of Internal Revenue. HELD: Yes. The veil of corporate fiction is pierced because it was proven that CKCSI is actively managing CKCS. Further, CKCS is more known as CKCSI. Also, the photocopy of the AOI presented by Menguito is not a conclusive proof of the separate personality of CKCSI and CKCS. More importantly, Menguito and his wife are in estoppel because they already acknowledged the receipt of the FAN through the letter sent by Mrs. Menguito to the BIR. They cannot later on deny the receipt of the FAN. Worse, it should be Menguito who should be directly denying the receipt and not through an employee (Nalda) who was not even an employee of the spouses when the FAN was issued and received in 1997. It was only in 1998 that Nalda was employed by CKCS. Since Menguito did not legally deny the receipt of the FAN, the presumption that he actually received it still subsists. Further, based on the records, Menguito, in the stipulation of facts, acknowledged the receipt of the FAN. Anent the issue of the non-issuance of the PAN, the same is not vital to due process. The Supreme Court ruled that the strict requirement of proving that an assessment is sent and received by the taxpayer is only applicable to FANs and to PANs. The issuance of a valid formal assessment is a substantive prerequisite to tax collection, for it contains not only a computation of tax liabilities but also a demand for payment within a prescribed period, thereby signaling the time when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies therefor. A PAN or a post-assessment notice does not bear the gravity of a FAN. Neither notice contains a declaration of the tax liability of the taxpayer or a demand for payment thereof. Hence, the lack of such notices inflicts no prejudice on the taxpayer for as long as the latter is properly served a formal assessment notice.

NOTE: In the case of CIR vs Metro Star Superama (December 2010), the Supreme Court held that the due issuance of the PAN is part of due process. Hence, this superseded the ruling in this case as regards the issuance of PANs. (CIR vs Menguito is a September 2008 case).

In January 2001, a revenue officer was authorized to examine the books of accounts of Metro Star Superama, Inc. In April 2002, after the audit review, the revenue district officer issued a formal assessment notice against Metro Star advising the latter that it is liable to pay P292,874.16 in deficiency taxes. Metro Star assailed the issuance of the formal assessment notice as it averred that due process was not observed when it was not issued a preassessment notice. Nevertheless, the Commissioner of Internal Revenue authorized the issuance of a Warrant of Distraint and/or Levy against the properties of Metro Star. Metro Star then appealed to the Court of Tax Appeals (CTA Case No. 7169). The CTA ruled in favor of Metro Star. ISSUE: Whether or not due process was observed in the issuance of the formal assessment notice against Metro Star. HELD: No. It is true that there is a presumption that the tax assessment was duly issued. However, this presumption is disregarded if the taxpayer denies ever having received a tax assessment from the Bureau of Internal Revenue. In such cases, it is incumbent upon the BIR to prove by competent evidence that such notice was indeed received by the addresseetaxpayer. The onus probandi was shifted to the BIR to prove by contrary evidence that the Metro Star received the assessment in the due course of mail. In the case at bar, the CIR merely alleged that Metro Star received the pre-assessment notice in January 2002. The CIR could have simply presented the registry receipt or the certification from the postmaster that it mailed the pre-assessment notice, but failed. Neither did it offer any explanation on why it failed to comply with the requirement of service of the pre-assessment notice. The Supreme Court emphasized that the sending of a pre-assessment notice is part of the due process requirement in the issuance of a deficiency tax assessment, the absence of which renders nugatory any assessment made by the tax authorities. Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. But even so, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure.

46. 47 CIR vs. CA GR No. 119322 June 4, 1996 "Before one is prosecuted for willful attempt to evade or defeat any tax, the fact that a tax is due must first

be proved." FACTS: The CIR assessed Fortune Tobacco Corp for 7.6 Billion Pesos representing deficiency income, ad valorem and value-added taxes for the year 1992 to which Fortune moved for reconsideration of the assessments. Later, the CIR filed a complaint with the Department of Justice against the respondent Fortune, its corporate officers, nine (9) other corporations and their respective corporate officers for alleged fraudulent tax evasion for supposed non-payment by Fortune of the correct amount of taxes, alleging among others the fraudulent scheme of making simulated sales to fictitious buyers declaring lower wholesale prices, as allegedly shown by the great disparity on the declared wholesale prices registered in the "Daily Manufacturer's Sworn Statements" submitted by the respondents to the BIR. Such documents when requested by the court were not however presented by the BIR, prompting the trial court to grant the prayer for preliminary injuction sought by the respondent upon the reason that tax liabiliity must be duly proven before any criminal prosecution be had. The petitioner relying on the Ungab Doctrine sought the lifting of the writ of preliminary mandatory injuction issued by the trial court. ISSUE: Whose contention is correct? HELD: In view of the foregoing reasons, misplaced is the petitioners' thesis citing Ungab v. Cusi, that the lack of a final determination of Fortune's exact or correct tax liability is not a bar to criminal prosecution, and that while a precise computation and assessment is required for a civil action to collect tax deficiencies, the Tax Code does not require such computation and assessment prior to criminal prosecution. Reading Ungab carefully, the pronouncement therein that deficiency assessment is not necessary prior to prosecution is pointedly and deliberately qualified by the Court with following statement quoted from Guzik v. U.S.: "The crime is complete when the violator has knowingly and wilfully filed a fraudulent return with intent to evade and defeat a part or all of the tax." In plain words, for criminal prosecution to proceed before assessment, there must be a prima facie showing of a wilful attempt to evade taxes. There was a wilful attempt to evade tax in Ungab because of the taxpayer's failure to declare in his income tax return "his income derived from banana sapplings." In the mind of the trial court and the Court of Appeals, Fortune's situation is quite apart factually since the registered wholesale price of the goods, approved by the BIR, is presumed to be the actual wholesale price, therefore, not fraudulent and unless and until the BIR has made a final determination of what is supposed to be the correct taxes, the taxpayer should not be placed in the crucible of criminal prosecution. Herein lies a whale of difference between Ungab and the case at bar. 48 49 T he procedure for protesting an assessment under the Tax Code is found in Chapter III of Title VIII, which deals with remedies. Being procedural in nature, can its provision then be applied retroactively? The answer is yes. The general rule is that statutes are prospective. However, statutes that are remedial, or that do not create new or take away vested rights, do not fall under the general rule against the retroactive operation of statutes.[14] Clearly, Section 228 provides for the procedure in case an assessment is protested. The provision does not create new or take away vested rights. In both instances, it can surely be applied

retroactively. Moreover, RA 8424 does not state, either expressly or by necessary implication, that pending actions are excepted from the operation of Section 228, or that applying it to pending proceedings would impair vested rights. Second, the non-retroactive application of Revenue Regulation (RR) No. 12-99 is of no moment, considering that it merely implements the law.

A tax regulation is promulgated by the finance secretary to implement the provisions of the Tax Code.[15] While it is desirable for the government authority or administrative agency to have one immediately issued after a law is passed, the absence of the regulation does not automatically mean that the law itself would become inoperative.

At the time the pre-assessment notice was issued to Reyes, RA 8424 already stated that the taxpayer must be informed of both the law and facts on which the assessment was based. Thus, the CIR should have required the assessment officers of the Bureau of Internal Revenue (BIR) to follow the clear mandate of the new law. The old regulation governing the issuance of estate tax assessment notices ran afoul of the rule that tax regulations -- old as they were -- should be in harmony with, and not supplant or modify, the law.[16]

It may be argued that the Tax Code provisions are not self-executory. It would be too wide a stretch of the imagination, though, to still issue a regulation that would simply require tax officials to inform the taxpayer, in any manner, of the law and the facts on which an assessment was based. That requirement is neither difficult to make nor its desired results hard to achieve.

Moreover, an administrative rule interpretive of a statute, and not declarative of certain rights and corresponding obligations, is given retroactive effect as of the date of the effectivity of the statute.[17] RR 1299 is one such rule. Being interpretive of the provisions of the Tax Code, even if it was issued only onSeptember 6, 1999, this regulation was to retroact to January 1, 1998 -- a date prior to the issuance of the preliminary assessment notice and demand le

Tax laws are civil in nature.[22] Under our Civil Code, acts executed against the mandatory provisions of law are void, except when the law itself authorizes the validity of those acts.[23] Failure to comply with Section 228 does not only render the assessment void, but also finds no validation in any provision in the Tax Code. We cannot condone errant or enterprising tax officials, as they are expected to be vigilant and lawabiding. 50. G.R. No. 76281 September 30, 1991

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. WYETH SUACO LABORATORIES, INC. and THE COURT OF TAX APPEALS, respondents.

On December 16 and 17, 1974, the Commissioner of Internal Revenue (CIR) issued two assessment notices to Wyeth Suaco Laboratories, Inc. (Wyeth) asking the latter to pay about P2 million in taxes. On January 17, 1975, Wyeth filed its protest. In December 1979, Wyeths protest was denied. On January 18, 1980, Wyeth filed a petition for review with the Court of Tax Appeals (CTA) asking the said court to enjoin the CIR from enforcing the assessment on the ground that the governments right to collect the assessed taxes has already prescribed; that the CIR has 5 years from December 1974 (issuance of assessment) to collect but it never did and the right has already prescribed in December 1975. The CIR then issued a warrant of distraint/levy in February 1980. Meanwhile, the CIR filed its answer with the CTA. It averred that the running of the prescriptive period was suspended when Wyeth filed its protest; that such protest was a request for reinvestigation and reconsideration, hence, the suspension of the period of prescription. Wyeth however averred that it never requested for a reconsideration or a reinvestigation but rather its protest was a request for cancellation and withdrawal of the assessment, hence, the prescriptive period was never tolled. ISSUE: Whether or not the prescriptive period was suspended. HELD: Yes. What Wyeth asked was a request for a reconsideration and reinvestigation based on the letters it sent to the CIR, to wit: xxx We submit this letter as a follow-up to our protest filed with your office, through our tax advisers, Sycip, Gorres, Velayo & Co., on January 20 and February 10, 1975 regarding alleged deficiency on withholding tax at source of P3,178,994.15 and on percentage tax of P60,855.21, including interest and surcharges, on which we are seeking reconsideration. (emphasis supplied) xxx Further, the assessments issued in 1974 are not yet final. These assessments only became final in December 1979 when the CIR finally denied the protest filed by Wyeth. Hence, the warrant of distraint/levy issued by the CIR in February 1980 was issued well within the prescriptive period for the government to collect the assessed taxes.

51. [G.R. No. 140488. January 24, 2000] CIR vs. ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORP. Petitioner issued an assessment letter, dated April 12, 1985, against respondent demanding payment of delinquent taxes in the amount of P40,691,335.85 for the

year 1979. In response to the said assessment letter, respondent filed a letterprotest on May 13, 1985, which petitioner denied in a decision, dated May 23, 1990. Respondent appealed to the Court of Tax Appeals, which reversed the decision of petitioner. The Court of Tax Appeals held that petitioner could no longer enforce the assessment letter because of prescription. The Court of Appeals affirmed the decision of the Court of Tax Appeals. Petitioner alleges that, as respondent filed a letter-protest from the assessment letter, the period within which petitioner may collect delinquent taxes by distraint, levy, or court proceeding was suspended until the letter-protest was denied in May 23, 1990. Hence, petitioner can still enforce the assessment letter as prescription has not yet set in.

ISSUE: Whether or not the prescriptive period was suspended. The petition has no merit. Under the then 319 of the National Internal Revenue Code, petitioner may collect delinquent taxes by distraint, levy, or court proceeding within five years of the issuance of the assessment letter. In the instant case, the assessment letter was issued on April 12, 1985, but, on May 23, 1990, when petitioner denied the letter-protest of respondent, petitioner had not commenced any action to enforce the assessment letter. Under 319 of the National Internal Revenue Code, petitioner may collect delinquent taxes by distraint, levy, or court proceeding beyond the original five-year period only if he had entered into a written agreement with the taxpayer regarding an additional period for collection. However, the three waivers of the statute of limitation signed by Zoilo V. Castillo, Jr., the Senior Vice President and Assistant Treasurer of respondent, were not signed by petitioner. Revenue Memorandum Order No. 20-90 requires that waivers must be signed by the Commissioner of Internal Revenue or the revenue officer authorized by him as proof that the BIR has agreed to the waiver. It has been held that a taxpayer cannot set up the defense of prescription even if he has not previously waived it in writing, as when he requests the postponement of the collection.1 Colector of Internal Revenue vs. Suyoc Consolidated Mining Company, 104 Phil. 819 (1958). Significantly, in the instant case, respondent categorically stated in its letter-protest dated May 13, 1985 that it is not requesting for "reconsideration or reinvestigation or a plea for accommodation in any sense." Thus, the prescriptive period was not suspended, as there was nothing to prevent petitioner from collecting the delinquent taxes by distraint, levy, or court proceeding. Hence, the Court of Appeals correctly upheld the finding of the Court of Tax Appeals that petitioner can no longer enforce the assessment letter issued against respondent.

PRO-FORMA PROTEST LETTER REQUEST FOR COPY OF COMPUTATION IS NOT A PROTEST THAT SUSPENDS PRESCRIPTIVE PERIOD 52 G.R. No. 171251 March 5, 2012

LASCONA LAND CO., INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

In March 1998, the Commissioner of Internal Revenue (CIR) issued a formal assessment notice (FAN) to Lascona Land Co., Inc. (LLCI) demanding the latter to pay P753k in taxes. LLCI filed a timely protest on April 20, 1998. From said date (since no supporting document was required to be submitted), the CIR has 180 days to decide on the protest. However, the CIR promulgated its decision on March 3, 1999. LLCI received a copy of the decision on March 12, 1999. On April 12, 1999, LLCI appealed the decision to the Court of Tax Appeals (CTA). The CIR moved for the dismissal of the appeal on the ground that under a revenue regulation issued by the Bureau of Internal Revenue (RR No. 12-99), if the CIR or its representative failed to act on a protest within the 180-day period the taxpayer may appeal within 30 days from the lapse of the 180-day period to the CTA otherwise, the decision shall become final and executory; that LLCI failed to appeal within the said period hence the CTA has no jurisdiction over the case appealed by LLCI. ISSUE: Whether or not the CIR is correct. HELD: No. The revenue regulation is invalid. Under the law (Section 228 of the National Internal Revenue Code), a taxpayer has two remedies if the CIR failed to act on his protest within the 180-day period, to wit; 1) the taxpayer adversely affected by the decision may appeal to the CTA within 30 days from receipt of the decision, or 2) may appeal to the CTA within 30 days from the lapse of the one hundred eighty (180)-day period. Interpreting the above provision, the taxpayer has two options in case of inaction by the CIR. First is to appeal to the CTA within 30 days from the lapse of the 180 day period; or second, wait for the CIR to issue the decision and then appeal, if adverse, to the CTA within 30 days from the receipt of the decision by the taxpayer (because even if the CIR failed to decide on the case within the 180 day period, it can still decide on it and may even issue a favorable judgment to the taxpayer, hence it may be logical to wait and only appeal if the adverse decision is actually received).

In the case at bar, LLCI chose to wait for the CIR to decide on the case and it did not appeal within 30 days from the lapse of the 180-day period. LLCI received the adverse decision of the CIR on March 12, 1999. It appealed on April 12, 1999 which is still within the 30-day period to appeal to the CTA. The revenue regulation in question is invalid because in effect, it limited the remedy provided for by the law. Section 228 of the NIRC prevails over the said revenue regulation. The said revenue regulation cannot validly take away the option of the taxpayer to continue waiting, even after the lapse of the 180 day period, for the CIR to decide on the case and just appeal, within 30 days from receipt, if the CIRs ruling is adverse. It must however be noted that these two remedies are mutually exclusive. Lascona Land Co. v. CIR

The taxpayer has two options: Wait for the decision of the Commissioner on the protest and file the appeal to the CTA within 30 days from date of receipt of the denial of protest; or File appeal to the CTA within 30 days from lapse of the 180-day period. In other words, the assessment shall not become final and executory merely because the taxpayer chooses to wait for the decision of the Commissioner on his protest (CTA Case No. 5777, Jan 4, 2000). Decision of the CTA on the Lascona case was reversed by the CA, but CA ruling was appealed to SC, where it is still pending. NOTE: SC approved the Rules of Court for the CTA, authorizing the taxpayer to exercise either any of the two options based on the Lascona decision.

53 COMMISSIONER OF INTERNAL REVENUE vs. UNION

SHIPPING CORPORATION and THE COURT OF TAX APPEALS G.R. No. L-66160 May 21, 1990

a. Filing by the BIR of a civil suit for collection of the deficiency tax is considered a denial of the request for reconsideration. (Commissioner of Internal Revenue v. Union Shipping Corporation, 185 SCRA 547)

FACTS: In a letter dated December 27, 1974 petitioner assessed against Yee
Fong Hong, Ltd. and/or herein private respondent UnionShipping Corporation for deficiency income taxes due for the years1971 and 1972. Private respondent protested the assessment. Petitioner, without ruling on the protest, issued a Warrant of Distraint and Levy. In a letter, private respondent reiterated its request for reinvestigation. Petitioner,

again, without acting on the request for reinvestigation and reconsideration of the Warrant of Distraint and Levy, filed a collection suit against private respondent. In 1979, private respondent filed with respondent court a Petition for Review. The CTA ruled in favor of private respondent. Hence, this is a petition for review on certiorari

ISSUE: Whether or not the issuance of a warrant of distraint and levy is proof
of the finality of an assessment and is tantamount to an outright denial of a motion for reconsideration of an assessment.

HELD: The Supreme Court had already laid down the dictum that the
Commissioner should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment. There appears to be no dispute that petitioner did not rule on private respondent's motion for reconsideration but contrary to the above ruling of this Court, left private respondent in the dark as to which action of the Commissioner is the decision appealable to the Court ofTax Appeals. Had he categorically stated that he denies private respondent's motion for reconsideration and that his action constitutes his final determination on the disputed assessment, private respondent without needless difficulty would have been able to determine when his right to appeal accrues and the resulting confusion would have been avoided. 54 CIR v. ISABELA CULTURAL CORPORATION JULY 11, 2001 GR. 135210 The Final Notice Before Seizure cannot but be considered as the Commissioners decision disposing of the request forreconsideration filed by Isabela, who received no other response to its request. Not only was the Notice the only response received; its content and tenor supported the theory that it was the CIRs final act regarding the request for reconsideration. The very title expressly indicated that it was a final notice prior to seizure of property. The letter itself clearly stated that Isabela was being given this Last Opportunity to pay; otherwise, its properties would be subjectedto distraint and levy.Sec. 228 of NIRC states that a delinquent taxpayer may nevertheless directly appeal a disputed assessment, if itsrequest for reconsideration remains unacted upon 180 days after submission thereof. In this case, the period of 180days had already lapsed when Isabela filed its request for reconsideration on March 1990, without any action on thepart of the CIR. Jurisprudence dictates that a final demand

letter for payment of delinquent taxes may be considered a decision on adisputed or protested assessment
CIR v. Isabela Cultural Corporation Facts: In an investigation conducted in the 1986 books of account of Isabela, it preliminarily incurred a tax deficiency of P9,985,392.15, inclusive of increments. Upon protest by Isabelas counsel, the said preliminary assessment was reduced to the amount of P325,869.44. On February 23, 1990, Isabela received from CIR an assessment letter demanding payment of the amounts of P333,196.86 and P4,897.79 as deficiency income tax and expanded withholding tax inclusive of surcharge and interest, respectively, for the taxable period from January 1, 1986 to December 31, 1986. Isabela then filed a letter to CIR asking for reconsideration on the subject assessment. It even attached certain documents supporting its protest. On February 9, 1995, Isabela received from CIR a Final Notice Before Seizure. In said letter, CIR demanded payment of the subject assessment within ten (10) days from receipt thereof. Otherwise, failure on its part would constrain CIR to collect the subject assessment through summary remedies. Isabela considered said final notice of seizure as [petitioners] final decision. Hence, the instant petition for review filed with this Court on March 9, 1995. The CTA having rendered judgment dismissing the petition, Isabela filed the instant petition anchored on the argument that CIRs issuance of the Final Notice Before Seizure constitutes its decision on Isabelas request for reinvestigation, which Isabela may appeal to the CTA. CA reversed CTAs decision. CIR: Final Notice was a mere reiteration of the delinquent taxpayers obligation to pay the taxes due. It was supposedly a mere demand that should not have been mistaken for a decision on a protested assessment. Such decision, the commissioner contends, must unequivocably indicate that it is the resolution of the taxpayers request for reconsideration and must likewise state the reason therefor. Isabela: Final Notice Before Seizure should be considered as a denial of its request for reconsideration of the disputed assessment. The Notice should be deemed as petitioners last act, since failure to comply with it would lead to the distraint and levy of respondents properties, as indicated therein. Issue: Whether or not the Final Notice Before Seizure dated February 9, 1995 signed by Acting Chief Revenue Collection Officer Milagros Acevedo against ICC constitutes the final decision of the CIR appealable to the CTA. Held: No. In the normal course, the revenue district officer sends the taxpayer a notice of delinquent taxes, indicating the period covered, the amount due including interest, and the reason for the delinquency. If the taxpayer disagrees with or wishes to protest the assessment, it sends a

letter to the BIR indicating its protest, stating the reasons therefore, and submitting such proof as may be necessary. That letter is considered as the taxpayers request for reconsideration of the delinquent assessment. After the request is filed and received by the BIR, the assessment becomes a disputed assessment on which it must render a decision. That decision is appealable to the Court of Tax Appeals for review. Prior to the decision on a disputed assessment, there may still be exchanges between the commissioner of internal revenue (CIR) and the taxpayer. The former may ask clarificatory questions or require the latter to submit additional evidence. However, the CIRs position regarding the disputed assessment must be indicated in the final decision. It is this decision that is properly appealable to the CTA for review. In the light of the above facts, the Final Notice Before Seizure cannot but be considered as the commissioners decision disposing of the request for reconsideration filed by respondent, who received no other response to its request. Not only was the Notice the only response received; its content and tenor supported the theory that it was the CIRs final act regarding the request for reconsideration. The very title expressly indicated that it was a final notice prior to seizure of property. The letter itself clearly stated that respondent was being given this LAST OPPORTUNITY to pay; otherwise, its properties would be subjected to distraint and levy. Furthermore, Section 228 of the National Internal Revenue Code states that a delinquent taxpayer may nevertheless directly appeal a disputed assessment, if its request for reconsideration remains unacted upon 180 days after submission thereof. Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have become final. 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 (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 this case, the said period of 180 days had already lapsed when Isabela filed its request for reconsideration on March 23, 1990, without any action on the part of the CIR. In the instant case, the second notice received by Isabela verily indicated its nature that it was final. Unequivocably, therefore, it was tantamount to a rejection of the request for reconsideration. In the present case, CIR does not deny receipt of private respondents protest letter. As a matter of fact, it categorically relates the following in its Statement of Relevant Facts:
3. On March 23, 1990, respondent ICC wrote the CIR requesting for a reconsideration of the assessment on the ground that there was an error committed in the computation of interest and that there were expenses which were disallowed (Ibid., pp. 296-311).

4. On April 2, 1990, respondent ICC sent the CIR additional documents in support of its protest/reconsideration. The letter was received by the BIR on April 18, 1990. Respondent ICC further executed a Waiver of Statute of Limitation (dated April 17, 1990) whereby it consented to the BIR to assess and collect any taxes that may be discovered in the process of reinvestigation, until April 3, 1991 (Ibid., pp. 296-311). A copy of the waiver is hereto attached as Annex C.

55. PROTECTORS SERVICES, INC., V CA ET. AL. G.R. No 118176, April 12, 2000 Facts: Petitioner was assessed for deficiency percentage taxes including surcharges,penalties and interests thereon for the year 1983, 1984 and 1985. Petitioner filed a protest against the assessment claimingthat its gross receipts subject of percentage taxes shouldexclu de the salaries of the security guards as well as the employers share of SSS and State Insurance Fund and Medicare contributions. BIR Deputy Commissioner denied with finality the latters protest against the subject assessment holding that the salaries paid to security guards form part of the taxable gross receipts in the determination of the 3% and 4% contractors tax. Petitioner filed a petition for review before the Court of Tax Appeals (CTA) WHETHER THE COURT OF TAX APPEALS HAS JURISDICTION TO ACT ON THE PETITION FOR REVIEW FILED BEFORE IT The CTA has no jurisdiction to act on a petition for review filed by a taxpayer whose protest was earlier dismissed for having been filed out of time. If an assessment is not protested within 30 days from receipt, the taxpayer is no longer allowed to contest the correctness of the assessment by elevating the case to the CTA The pertinent provision of the National Internal Revenue Code of 1977 (NIRC 1977), concerning the period within which to file a protest before the CIR, reads: "Section 270. Protesting of assessment. --When the Commissioner of Internal Revenue or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings. Within a period to be prescribed by implementing regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by the implementing regulations within thirty (30) days from receipt of the assessment; otherwise, the assessment shall become final, and unappealable. If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision; otherwise, the decision shall become final, executory and demandable." 56.

CITIBANK, N.A. V CA October 10, 1997

Sunday, January 25, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Taxation

FACTS: Citibank is a foreign corporation doing business in the Philippines. In 1979 and 1980, its tenants withheld and paid to the Bureau of Internal Revenue its taxes on rents due to Citibank. This is pursuant to Section 1(c) of the Expanded Withholding Tax Regulations requiring lessee to withhold and remit to the BIR five percent (5%) of the rental due the lessor, by way of advance payment of the latters income liability. The lessor, Citibank asked for tax refund alleging that it is not liable for any income tax liability because its annual operation resulted in a net loss as shown in its income tax return filed at the end of the taxable year. The Court of Tax Appeals adjudged Citibanks entitlement to the tax refund sought for. The BIR Commissioner appealed to the Court of Appeals who reversed the CTAs decision. Hence, this petition for review on certiorari. ISSUE: Whether or not the lessor-Citibank is entitled to a refund on account of its loss in operations. HELD: The petition is meritorious. Petitioner is entitled to refund under Section 230 of the NIRC. In the present case, there is no question that the taxes were withheld legally by the tenants. However, the annual income tax returns of Citibank for tax years 1979 and 1980 undisputedly reflected the net losses it suffered. Taxes withheld do not remain legal and correct at the end of the taxable year if the taxpayer had sustained a loss in its annual operation

Where the income tax returns show that no income tax is payable to the government, is a creditable withholding tax, as contradistinguished from a final tax, refundable (or creditable) at the end of the taxable year?

Tax refunds, like tax exemptions, are construed strictly against the taxpayer. The mechanics of a tax refund is provided in Rev. Reg. No. 13-78

Prior to Rev. Reg. 12-94, the requisites for a refund were: (1) the income tax return for the previous year must show that income payment (rental in this case) was reported as part of the gross income; and (2) the withholding tax statement of the withholding tax agent must show that payment of the creditable withholding tax was made. However, even without this regulation, the commissioner may inspect the books of the taxpayer and reassess a taxpayer for deficiency tax payments under Sections 7, NIRC. We stress that what was required under Rev. Reg. 12-94 was only a submission of records but the verification of the tax return remained the function of the commissioner. Worth emphasizing are these uncontested facts: (1) the amounts withheld were actually remitted to the BIR and (2) the final adjusted returns which the BIR did not question showed that, for 1979 and 1980, no income taxes from petitioner were due. Hence, under the principle of solutio indebiti provided in Art. 2154, Civil Code, the BIR received something when there [was] no right to demand it, and thus the obligation to return arises. Heavily militating against Respondent Commissioner is the ancient principle that no one, not
[26] [27]

even the state, shall enrich oneself at the expense of another. Indeed, simple justice requires the speedy refund of the wrongly held taxes.

57. FAR EAST BANK AND TRUST COMPANY AS TRUSTEE OF VARIOUS RETIREMENT FUNDS, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE AND THE COURT OF APPEALS, respondents. G.R. No. 138919, May 2, 2006; Tinga, J.
This case hinges on a claim for refund of erroneously paid taxes due to the withholding of the final tax on interest income earned in 1993 by different employees trust managed by Far East Bank. The four claims for refund involving four quarters of 1993 were all filed with the BIR within two years from the date of remittance of the tax. The Commissioner denied the claims due to the failure of the trustee-bank to sufficiently substantiate the same. The petitioner did not appeal the denial to the CTA. However, on April 28,1995, the petitioner filed a Motion to Admit Supplemental Petition in CTA case No. 4848 (involving claim for refund for an earlier year) seeking to include in that case the tax refund claimed for the year 1993. The CTA denied the admission of the supplemental petition and advised the petitioner to instead file a separate petition for review to which it complied but only October 9, 1995. Issues: a) What evidentiary requirements must be complied to substantiate the claim for refund? b) Is the two-year prescriptive period under Section 229 of the Tax Code, tolled by the filing of a supplemental petition on a separate claim pending before the CTA?

The evidentiary requirements that need to be introduced are the documentary proof of transactions such as confirmation receipts and purchase orders that would ordinarily show the fact of purchase of treasury bills or money market placements by the various funds, together with their individual bank account numbers. These documents are the best evidence on the participation of the funds, and without them, there is no way for the Court to verify the actual involvement of the funds in the alleged investment in treasury bills and money market placements. Since the petitioner failed to submit these vital documents, the claim for refund must fail.

On the second issue, the SC said that the filing of the supplemental motion having been denied by the CTA has produced no judicial effect. The CTA acquired jurisdiction over the claim for refund for taxes paid by petitioner in 1993 only upon filing of the new Petition for Review on October 9, 1995 or more than two years from the date of payment of the taxes sought to be refunded. But even if the CTA allowed the filing of the supplemental petition on April 28, 1995, it will not alter the fact that taxes paid from January to April 27, 1993 are no longer available for refund for the right to file the claim has already prescribed.

An appeal from the decision of the Commissioner must be an independent action. It can not be done in the guise of supplementing a pending case in the CTA. Allowing this would run counter to the provisions of Section 229 of the NIRC which etched in stone the supervening event clause in pursuing a claim for refund.