Section 228 states that if the protest is not acted upon within

CIR vs. FIRST EXPRESS PAWNSHOP 180 days from submission of documents, the taxpayer
GR No. 172045-46, June 16, 2009 adversely affected by the inaction may appeal to the CTA
Digest by: AME Altiso within 30 days from the lapse of the 180-day period.
Respondent, having submitted its supporting documents on
the same day the protest was filed, had until 31 July 2002 to
FACTS: wait for petitioner’s reply to its protest. On 28 August 2002 or
First Express Pawnshop (respondent) received the tax within 30 days after the lapse of the 180-day period counted
assessment on 3 January 2002 for the deficiency among from the filing of the protest as the supporting documents
others, of the documentary stamp tax (DST) on deposit on were simultaneously filed, respondent filed a petition before
subscription. the CTA.
Respondent has complied with the requisites in disputing an
On 1 February 2002, respondent filed its written protest on assessment pursuant to Section 228 of the Tax Code.
the above assessments and attached the General Hence, the tax assessment cannot be considered as final,
Information Sheet (GIS) and Balance Sheet as of 31 executory and demandable.
December 1998. Respondent explained that it received ISSUE: whether respondent is liable to pay ₱12,328.45 as
₱800,000 as a deposit with the possibility of applying the DST on deposit on subscription of capital stock? NO.
same as payment for the future issuance of capital stock. In
a letter dated 12 March 2002, petitioner requested Held:
respondent to present proof of payment of DST on Sections 175 and 176 of the Tax Code contemplate a
subscription. In a letter-reply, respondent stated that it could subscription agreement in order for a taxpayer to be liable to
not produce any proof of DST payment because it was not pay the DST. A subscription contract is defined as any
required to pay DST under the law considering that the contract for the acquisition of unissued stocks in an existing
deposit on subscription was an advance made by its corporation or a corporation still to be formed. 43 A stock
stockholders for future subscription, and no stock certificates subscription is a contract by which the subscriber agrees to
were issued. take a certain number of shares of the capital stock of a
corporation, paying for the same or expressly or impliedly
Since petitioner did not act on the protest during the 180-day promising to pay for the same.
period, respondent filed a petition before the CTA on 28
August 2002. Clearly, the deposit on stock subscription as reflected in
respondent’s Balance Sheet as of 1998 is not a subscription
Petitioner now claims that the assessment has become final, agreement subject to the payment of DST. There is no
executory and demandable, hence, unappealable since ₱800,000 worth of subscribed capital stock that is reflected
respondent has not allegedly submitted any relevant in respondent’s GIS. The deposit on stock subscription is
supporting documents pursuant to Section 228 of the Tax merely an amount of money received by a corporation with a
Code which states that, an assessment may be protested by view of applying the same as payment for additional
filing a request for reconsideration or reinvestigation within issuance of shares in the future, an event which may or may
30 days from receipt of the assessment by the taxpayer. not happen. The person making a deposit on stock
Within 60 days from filing of the protest, all relevant subscription does not have the standing of a stockholder and
supporting documents shall have been submitted; he is not entitled to dividends, voting rights or other
otherwise, the assessment shall become final. prerogatives and attributes of a stockholder. Hence,
respondent is not liable for the payment of DST on its
deposit on subscription for the reason that there is yet no
subscription that creates rights and obligations between the
ISSUE: Whether the rule on finality of assessments subscriber and the corporation.
prescribed under Section 228 of the Tax Code applies? NO.

Held:
We reject petitioner’s view that the assessment has become
final and unappealable. It cannot be said that respondent
failed to submit relevant supporting documents that would
render the assessment final because when respondent
submitted its protest, respondent attached the GIS and
Balance Sheet. Further, petitioner cannot insist on the
submission of proof of DST payment because such
document does not exist as respondent claims that it is not
liable to pay, and has not paid, the DST on the deposit on
subscription.
The term "relevant supporting documents" should be
understood as those documents necessary to support the
legal basis in disputing a tax assessment as determined by
the taxpayer. The BIR can only inform the taxpayer to submit
additional documents. The BIR cannot demand what type of
supporting documents should be submitted. Otherwise, a
taxpayer will be at the mercy of the BIR, which may require
the production of documents that a taxpayer cannot
submit.1awphi1
After respondent submitted its letter-reply stating that it could
not comply with the presentation of the proof of DST
payment, no reply was received from petitioner.
 that it took the respondent Commissioner a period of more
DAYRIT vs. CRUZ & VERA than one (1) year and five (5) months, from October 7, 1972
GR No. L-39910, September 26, 1988 to March 14, 1974, before finally instituting the action for
Digest by: AME Altiso collection. Under the circumstances of the case, the act of
the Commissioner in filing an action for allowance of the
Facts: claim for estate and inheritance taxes, may be considered as
Petitioners are the legitimate children and heirs of the an outright denial of petitioners' request for reconsideration.
deceased spouses Marta J. Teodoro who died intestate on
July 1, 1965 and Don Toribio Teodoro who died testate on From the date of receipt of the copy of the Commissioner's
August 30, 1965. Thereafter, the heirs of the deceased filed letter for collection of estate and inheritance taxes against
separate estate and inheritance tax returns for the estates of the estates of the late Teodoro spouses, petitioners must
the late spouses with the Bureau of Internal Revenue.  contest or dispute the same and, upon a denial thereof, the
petitioners have a period of thirty (30) days within which to
On August 9,1972, the respondent Commissioner of Internal appeal the case to the Court of Tax Appeals. 16 This they
Revenue issued the following deficiency estate and failed to avail of .
inheritance tax assessments which was received by
petitioner Dayrit on August 14, 1972. In a letter dated Tax assessments made by tax examiners are presumed
October 7, 1972, **** petitioners through counsel, asked correct and made in good faith. A taxpayer has to prove
for a reconsideration of the said assessments alleging otherwise.17 Failure of the petitioners to appeal to the Court
that the same are contrary to law and not supported by of Tax Appeals in due time made the assessments in
sufficient evidence. 4 In the same letter, petitioners question, final, executory and demandable.18
requested a period of thirty (30) days within which to submit
their position paper in support of their claim but it was not Issue: Whether CFI has jurisdiction and not the CTA?
submitted. YES.

Meanwhile, on October 16, 1972, Presidential Decree (P.D) Ruling:

No. 23, entitled "Proclaiming Tax Amnesty Subject to Certain The assessments having become final and executory, the
Conditions," was issued by then President Ferdinand E. CFI properly acquired jurisdiction. 19 Neither is there merit in
Marcos. Claiming the tax amnesty, in a tax return dated petitioners' claim that the exclusive jurisdiction of the Court
March 31, 1973, petitioner Cecilia Teodoro-Dayrit declared of Tax Appeals (CTA) applies in the case. The aforesaid
an additional amount of P3,655,595.78 as part of the estates exclusive jurisdiction of the CTA arises only in cases of
of the Teodoro spouses, for additional valuation over and disputed tax assessments. 20 As noted earlier, petitioners'
above the amount declared in the previous return for estates letter dated October 7, 1972 asking for reconsideration of the
and inheritance taxes of the said late spouses. 5  Pursuant to questioned assessments cannot be considered as one
the BIR’s tax acceptance orders, the estates and heirs of the disputing the assessments because petitioners failed to
deceased spouses Teodoro paid amounting to a total of substantiate their claim that the deficiency assessments are
P285,046.68. contrary to law. Petitioners asked for a period of thirty (30)
days within which to submit their position paper but they
On March 14, 1974, respondent Commissioner of Internal failed to submit the same nonetheless. Hence, petitioners'
Revenue filed a motion for Allowance of Claim against letter for a reconsideration of the assessments is nothing but
the estates of spouses Teodoro and for an order of payment a mere scrap of paper.
of taxes in S.P. No. C-113 with the then Court of First
Instance of Rizal, Branch XII, praying that petitioner Dayrit Issue: Whether the absence of a decision on their
be ordered to pay the Bureau of Internal Revenue the sum of request for reconsideration/reinvestigation of the
P6,470,396.81 plus surcharges and interest  assessments is a bar to granting the claim for
collection? NO.
Petitioners filed two (2) separate oppositions alleging that
the estate and inheritance taxes sought to be collected have In Republic vs. Lim Tian Teng Son & Co., Inc., 21 this Court
already been settled in accordance with the provisions of had occasion to rule that a decision on a request for
P.D. No. 23, as amended by P.D. No. 67, that at any rate, reinvestigation is not a condition precedent to the filing of an
the assessments have not become final and executory, that action for collection of taxes already assessed. This Court
the Court of First Instance (CFI) lacks jurisdiction over the ruled that "nowhere in the Tax Code is the Collector of
subject of the case as it is under the exclusive jurisdiction of Internal Revenue required to rule first on a taxpayer's
the CTA and that the absence of a decision on their request request for reconsideration before he can go to court for the
for reconsideration of the assessments is a bar to granting purpose of collecting the tax assessed. On the contrary,
the claim for collection. Section 305 of the same Code withheld from all courts,
except the Court of Tax Appeals under Republic Act No.
1125, 22 the authority to restrain the collection of any national
Issue: Whether the tax assessments against the estates internal revenue tax, fee or charge, thereby indicating the
are final? YES. legislative policy to allow the Collector of Internal Revenue
much latitude on the speedy and prompt collection of taxes."
Ruling:
In petitioners' motion for reconsideration of the The requirement for the Commissioner to rule on disputed
aforementioned assessments, petitioners requested then assessments before bringing an action for collection is
Commissioner Misael P. Vera for a period of thirty (30) days applicable only in cases where the assessment was actually
from October 7, 1972 within which to submit a position paper disputed, adducing reasons in support thereto. In the present
that would embody their grounds for reconsideration. case where the petitioners did not actually contest the
However, no position paper was ever filed. 15 Such failure to assessments by stating the basis thereof, the respondent
file a position paper may be construed as abandonment of Commissioner need not rule on their request.
the petitioners' request for reconsideration. The court notes
Taxes are the lifeblood of the nation through which the pursuant to said decree. Thus, if at all, it is only the estates
government agencies continue to operate and with which the in the amount of P3,655,595.78 declared pursuant to P.D.
State effects its functions for the welfare of its constituents. No. 67 that is covered, upon payment of 10% of the said
We cannot tolerate taxpayers hampering expedient amount within the period prescribed under P.D. No. 23,
collection of taxes by their failure to act within a reasonable which was up to June 30, 1973. Considering that there has
period. No government could exist if all litigants were been partial compliance with the said requirement by
permitted to delay the collection of its taxes. 27 Thus, this the payment of P285,046.68, petitioner may claim the
Court ruled earlier that a suit for the collection of internal benefit of amnesty for said declared amount upon
revenue taxes, as in this case, where the assessment has payment of the balance of 10% thereof required to be
already become final and executory, the action to collect is paid.
akin to an action to enforce the judgment. No inquiry can be
made therein as to the merits of the original case or the
justness of the judgment relied upon.

TAX AMNESTY:
Issue: The main issue in this petition is whether an
estate may avail of tax amnesty under Presidential
Decree No. 23 where there is already an existing
assessment made prior to the issuance of the said
decree on the basis of the submitted estate and
inheritance tax returns by merely filing separate estate
tax returns of an undeclared and untaxed income over
and above the original amount of the estate declared.
NO.

Considering that P.D. No. 23 was issued on October 16,

1972, the court rules that the said decree embraces only
those income declared in pursuance thereof within the
taxable year 1972. The time frame cannot be stretched to
include declarations made prior to the issuance of the said
decree or those made outside of the time frame as
envisioned in the said decree. Thus, the estates of the
Teodoro spouses which have been declared separately
sometime in the 1960's are clearly outside the coverage of
the tax amnesty provision.

Petitioners argue, however, that even if a notice of deficiency

assessment had already been issued, the estates may still
avail of tax amnesty if the basis of such deficiency
assessment is either the failure to file a return or the
omission of items of taxable income for a return already filed
or the under declaration of said return, citing P.D. No. 67 and
Section 4 of BIR Revenue Regulation No. 8-72.

There is no merit in this contention. Even if P.D. No. 67, as

an amendment to P.D. 23, enlarges the coverage of tax
amnesty to include wealth such as earnings, receipts, gifts,
bequests or any other acquisitions from any source
whatsoever, said decree reiterates the need of voluntary
disclosure on the part of the taxpayer filing the return in
order to avail of the tax amnesty. The only noticeable
departure from P.D. No. 23 is the extension of the date for
the filing of the return from March 31, 1972 to March 31,
1973. Thus, this Court finds that the same policy observed in
the issuance of P.D. No. 23, governs P.D. No. 67. In addition
thereto, it gives the tax evaders who failed to avail of the
provisions of P.D. No. 23 a chance to reform themselves. An
examination of both decrees does not show that taxpayers
availing of the tax amnesty in accordance with P.D. No. 67,
are entitled to blanket coverage of declarations made prior to
the issuance of said decrees.

Petitioners argue that the estates of their parents declared

for estate tax valuation sometime in the 1960's can avail of
the tax amnesty when petitioners declared an additional
amount of the estates over and above that which was
previously declared. A reading of P.D. No. 67 reveals that
tax amnesty is extendible only to those declarations made
 petition for review was filed out of time. It was dismissed.
The taxpayer appealed to this Court.
ADVERTISING ASSOCIATES vs. CA
GR No. L-59758, December 26, 1984 Issue: Whether the petition for review was filed on time?
Yes.
Digest by: AME Altiso
Ruling:
Facts:
We hold that the petition for review was filed on time. The
The Commissioner required Advertising Associates to pay
reviewable decision is that contained in Commissioner
P297,927.06 and P84,773.10 as contractor's tax for 1967-
Plana's letter of May 23, 1979 and not the warrants of
1971 and 1972, respectively, including 25% surcharge on its
distraint.
income from billboards and neon signs. The basis of the
assessment is the fact that the taxpayer's articles of
No amount of quibbling or sophistry can blink the fact
incorporation provide that its primary purpose is to engage in
that said letter, as its tenor shows, embodies the
general advertising business. Its income tax returns indicate
Commissioner's final decision within the meaning of
that its business was advertising.
section 7 of Republic Act No. 1125. The Commissioner
said so. He even directed the taxpayer to appeal it to the
Advertising Associates alleged that it sold in 1949 its
Tax Court. That was the same situation in St. Stephen's
advertising agency business to Philippine Advertising
Association and St. Stephen's Chinese Girl's School vs.
Counsellors, that its business is limited to the making,
Collector of Internal Revenue, 104 Phil. 314, 317-318.
construction and installation of billboards and electric signs
and making and printing of posters, signs, handbills, etc. It
The directive is in consonance with this Court's dictum that
contends that it is a media company, not an advertising
the Commissioner should always indicate to the taxpayer in
company.
clear and unequivocal language what constitutes his final
determination of the disputed assessment. That procedure is
Advertising Associates contested the assessments in its
demanded by the pressing need for fair play, regularity and
'letters of June 25, 1973 (for the 1967-71 deficiency taxes)
orderliness in administrative action (Surigao Electric Co., Inc.
and March 7, 1974 (for the 1972 deficiency). The
vs. Court of Tax Appeals, L-25289, June 28, 1974, 57 SCRA
Commissioner reiterated the assessments in his letters of
523).
July 12 and September 16,1974 (p. 3, Rollo).
Issue: Whether petitioner is a business agent and an
The taxpayer requested the cancellation of the assessments
independent contractor, not a media company? YES.
in its letters of September 13 and November 21, 1974 (p. 3,
Rollo). Inexplicably, for about four years there was no
As already stated, it considers itself a media company, like a
movement in the case. Then, on March 31, 1978, the
newspaper or a radio broadcasting company, but not an
Commissioner resorted to the summary remedy of issuing
advertising agency in spite of the purpose stated in its
two warrants of distraint, directing the collection enforcement
articles of incorporation. It argues that its act of leasing its
division to levy on the taxpayer's personal properties as
neon signs and billboards does not make it a business agent
would be sufficient to satisfy the deficiency taxes (pp. 4, 29
or an independent contractor. It stresses that it is a mere
and 30, Rollo). The warrants were served upon the taxpayer
lessor of neon signs and billboards and does not perform
on April 18 and May 25, 1978.
advertising services.
More than a year later, Acting Commissioner Efren I. Plana
But the undeniable fact is that neon signs and billboards are
wrote a letter dated May 23, 1979 in answer to the requests
primarily designed for advertising. We hold that the
of the taxpayer for the cancellation of the assessments and
petitioner is a business agent and an independent
the withdrawal of the warrants of distraint (Annex C of
contractor as contemplated in sections 191 and 194(v).
Petition, pp. 31-32, Rollo).
25% SURCHARGE SHOULD BE ELIMINATED
He justified the assessments by stating that the rental
However, in view of the prior rulings that the taxpayer is not
income of Advertising Associates from billboards and neon
a business agent nor an independent contractor and in view
signs constituted fees or compensation for its advertising
of the controversial nature of the deficiency assessments,
services. He requested the taxpayer to pay the deficiency
the 25% surcharge should be eliminated.
taxes within ten days from receipt of the demand; otherwise,
the Bureau would enforce the warrants of distraint. He
Issue: Whether collection of tax had already prescribed?
closed his demand letter with this paragraph:
NO.
This constitutes our final decision on the matter. If you
Ruling:
are not agreeable, you may appeal to the Court of Tax
Petitioner's last contention is that the collection of the tax
Appeals within 30 days from receipt of this letter.
had already prescribed. Section 332 of the 1939 Tax Code,
now section 319 of the 1977 Tax Code, Presidential Decree
Advertising Associates received that letter on June 18, 1979.
No. 1158, effective on June 3, 1977, provides that the tax
Nineteen days later or on July 7, it filed its petition for review.
may be collected by distraint or levy or by a judicial
In its resolution of August 28, 1979, the Tax Court enjoined
proceeding begun 'within five years after the assessment of
the enforcement of the warrants of distraint.
the tax".
The Tax Court did not resolve the case on the merits. It ruled
The taxpayer received on June 18, 1973 and March 5, 1974
that the warrants of distraint were the
the deficiency assessments herein. The warrants of distraint
Commissioner's appealable decisions. Since Advertising
were served upon it on April 18 and may 25,1978 or within
Associates appealed from the decision of May 23, 1979, the
five years after the assessment of the tax. Obviously, the
warrants were issued to interrupt the five-year prescriptive
period. Its enforcement was not implemented because of the
pending protests of the taxpayer and its requests for
withdrawal of the warrants which were eventually resolved in
Commissioner Plana's letter of May 23, 1979.

It should be noted that the Commissioner did not institute

any judicial proceeding to collect the tax. He relied on the
warrants of distraint to interrupt the running of the statute of
limitations. He gave the taxpayer ample opportunity to
contest the assessments but at the same time safeguarded
the Government's interest by means of the warrants of
distraint.

WHEREFORE, the judgment of the Tax Court is reversed

and set aside. The Commissioner's deficiency
assessments are modified by requiring the petitioner to
pay the tax proper and eliminating the 25% surcharge,
interest and penalty. In case of non-payment, the
warrants of distrant should be implemented. The
preliminary injunction issued by the Tax Court on
August 28, 1979 restraining the enforcement of said
warrants is lifted. No costs.