Philippine Journalists Inc. v CIRG.R No.

162852December 15, 2004

Facts
:The Revenue District Office of the BIR issued a letter of authority for the examination of petitioner
Philippine Journalists books of accounts. From the examination, the petitioner was told that there were
deficiency taxes, in clusive of surcharges, interest and compromise penalty. Then, petitioner, through
itsComptroller, Lorenza Tolentino, executed a waiver of statute of limitationspursuant to Sec.223 and Sec.2
24 and consented to the assessment andcollection 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
224and other relevant provisions of the NIRC, until the completion of theinvestigation.Petitioner had a
deficiency of P136,952,408.97. On October 5, 1998, the Assessment Division of the BIR issued PreAssessment Notices which informed petitioner of the results of the investigation. A Final Notice Before
Seizure wassent to the petitioner but the latter merely questioned the amount of thedeficiency and how
the same was arrived. A Warrant of Distraint/Levy was received by petitioner for the deficiency. Petitioner
filed a Petition for Review with the CTA, contending that no assessment was received by him; that the
warrant of distraint/levy was issued prematurely; and that the assessment was made beyond the 3-year
period. Regarding the assessment, the CTA ruled that the assessment was sufficiently proven by the
receipts of the Post Master. As to the premature distraint/levy and the assessment made beyond the 3-year
period, the CTA ruled in favor of thepetitioner.
The waiver of statute of limitations by the petitioner was invalidwhich resulted in the lapse of the 3 year
period for assessment. Consequently, the petition was granted, declaring the order for payment of
deficiency tax null and void.
The CIR filed a motion for reconsideration but the same was denied.Undaunted, the CIR filed an appeal
with the CA. The CA reversed the ruling of the CTA, stating that the waiver of limitations was valid and
that the assessment notices was final and executory. Hence, this appeal.
Issue
: Whether or not the waiver of limitations was invalid, making theassessment beyond the 3 year period?
Held:
Yes, the court ruled that the waiver of limitation was invalid, making the assessment beyond the allowable
period of 3 years.
The waiver of thestatute of limitations is not a waiver of the right to invoke the defense of prescription as
erroneously held by the Court of Appeals. It is an agreement between the taxpayer and the BIR that the
period to issue an assessment and collect the taxes due is extended to a date certain. The waiver does not
mean that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where the
language of the document is equivocal. For the purpose of safeguarding taxpayers from any unreasonable
examination, investigation or assessment, our tax law provides a statute of limitations in the collection
of taxes.
Thus, the law on prescription, being a remedial measure, should beliberally construed in order to afford suc
h protection. As a corollary, theexceptions to the law on prescription should perforce be strictly construed.
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
formermay assess and collect revenue taxes.
Thus, petitioners waiver became unlimited in time, violating Section 222(b) of the NIRC.

People of the Philippines vs Sandiganbayan and Bienvenido Tan, Jr.

GR 152532 August 16,2005
In July 1987, Commissioner of Internal Revenue (CIR) Bienvenido Tan, Jr. issued an assessment against San
Miguel Corporation (SMC) demanding payment of P342 million in taxes. SMC filed a request for
reinvestigation. Tan granted the request and eventually he reduced the tax liability to P302 million. But in
October 1987, without any word from SMC, Tan referred the case to the Legal Service Division of the BIR.
Various BIR officials reviewed the case and they recommended that SMCs tax liability be reduced to P22
million (a significant reduction from the original P342 million). The reduction was justified by the BIR
officials on the ground that the tax examiners had made some errors in computing SMCs tax liability.
So SMC was demanded to pay P22 million but then SMC asked for a compromise of P10 million. Again, the
matter was referred to various BIR officials who agreed and recommended to Tan that he should accept the
compromise offer. Tan accepted the P10 million compromise offer. This resulted to a criminal case against
Tan for violation of the Anti-Graft and Corrupt Practices Act. Allegedly, his act of accepting the P10 million
compromise offer caused undue injury to the government and it gave SMC unwarranted benefits due to
the significantly reduced tax liability. The Sandiganbayan originally convicted Tan but it reversed its own
decision upon motion of Tan.
ISSUE: Whether or not Tan should have been convicted of the crime charged.
HELD: No. It was found by the Sandiganbayan that there was an improper computation in the tax liability
of SMC. The error basically imposed tax on top of another tax which if allowed would be unfair to the
taxpayer. It was therefore proper to have the tax be reduced from P302 million to P22 million.
But is it proper for Tan to accept the P10 million compromise by SMC?
Tan is well within his power to accept the P10 million compromise offer. This is actually abatement (not
compromise as termed by SMC). Tan is actually prudent to accept the P10 million offer so as to avoid a
protracted and costly litigation. Abatement is the diminution or decrease in the amount of tax imposed. It
refers to the act of eliminating or nullifying; of lessening or moderating. To abate is to nullify or reduce in
value or amount. The CIR has the power to abate or cancel the whole or any unpaid portion of a tax
liability, inclusive of increments, if its assessment is excessive or erroneous, or if the administration costs
involved do not justify the collection of the amount due. No mutual concessions need be made, because an
excessive or erroneous tax is not compromised; it is abated or canceled. Only correct taxes should be paid.
Further, Tan cannot be said to have acted in bad faith. He acted upon concurrence and recommendation of
the various BIR officials.
TFS Inc. vs CIR
GR 166829, 19 April 2010

FACTS:Petitioner TFS, engaged in the pawnshop business, received a Preliminary Assessment Notice for
deficiency VAT, EWT and compromise penalty for the taxable year 1998. It requested the BIR to withdraw
and set aside the assessments. However, CIR informed TFS that a Final Assessment Notice was issued. TFS
protested the FAN. There being no action taken by the CIR, TFS filed a Petition for Review with the CTA.
During trial, petitioner offered to compromise and to settle the assessment for deficiency EWT with the
BIR, leaving only the issue of VAT on pawnshops to be threshed out. Since no opposition was made by the
CIR to the Motion, the same was granted by the CTA but the latter rendered a Decision upholding the
assessment for the deficiency VAT for 1998, inclusive of 25% surcharge and 20% deficiency interest, plus
20% delinquency interest. The CTA ruled that pawnshops are subject to VAT under Section 108(A) of the
NIRC as they are engaged in the sale of services for a fee, remuneration or consideration.

TFS filed before the Court of Appeals a Motion for Extension of Time to File Petition for Review, but it was
dismissed by the CA for lack of jurisdiction in view of the enactment of RA 9282. TFS then filed a Petition
for Review with the CTA En Banc, but was dismissed for having been filed out of time. Hence, this petition.

ISSUES:
Whether the CTA en banc should have given due course to the petition for review and not strictly apply the
technical rules of procedure to the detriment of justice
Whether or not petitioner is subject to the 10% VAT

RULING:
Jurisdiction to review decisions or resolutions issued by the Divisions of the CTA is no longer with the CA
but with the CTA En Banc, as embodied in Section 11 of RA 9282. An appeal must be perfected within the
reglementary period provided by law; otherwise, the decision becomes final and executory. In the instant
case, RA 9282 took effect on April 23, 2004, while petitioner filed its Petition for Review on Certiorari with
the CA on August 24, 2004. By then, petitioners counsel should have been aware of and familiar with the
changes introduced by RA 9282. Petitioner likewise cannot validly claim that its erroneous filing of the
petition with the CA was justified by the absence of the CTA rules and regulations and the incomplete
membership of the CTA En Banc as these did not defer the effectivity and implementation of RA 9282.
However, the court overlooks such procedural lapse in the interest of substantial justice. Although a client
is bound by the acts of his counsel, including the latters mistakes and negligence, a departure from this
rule is warranted where such mistake or neglect would result in serious injustice to the client. Procedural
rules may thus be relaxed for persuasive reasons to relieve a litigant of an injustice not commensurate
with his failure to comply with the prescribed procedure.
Procedural rules can be disregarded because the court cannot, in conscience, allow the government to
collect deficiency VAT from petitioner considering that the government has no right at all to collect or to
receive the same. Besides, dismissing this case on a mere technicality would lead to the unjust enrichment
of the government at the expense of petitioner, which the court cannot permit. Technicalities should never
be used as a shield to perpetrate or commit an injustice.
Imposition of VAT on pawnshops for the tax years 1996 to 2002 was deferred. Petitioner is not liable for
VAT for the year 1998. Consequently, the VAT deficiency assessment issued by the BIR against petitioner
has no legal basis and must therefore be cancelled. In the same vein, the imposition of surcharge and
interest must be deleted.