CUEVA, ALEJANDRA II

1. Yes, the deficiency tax assessments are valid.

Under the existing tax rules and regulations, a Formal Letter of Demand is
issued when a taxpayer fails to respond to a Preliminary Assessment Notice
(PAN) within 15 days from receipt of the PAN.

The facts of the case show that ABC Corporation filed its response to the PAN
within the 15-day prescriptive period. Hence, the assessments for deficiency
tax is valid.

2. No, the BIR is not correct.

Jurisprudence says that a Final Assessment Notice (FAN) is deemed made on

the date when the demand letter or notice of assessment is released, mailed,
or sent, even if the same is actually received by the taxpayer after the
expiration of the prescriptive period. However, if the taxpayer denies receipt
of the FAN, the burden of proof is shifted to the BIR to prove that the FAN
was actually mailed within the period and actually received (even if after the
period expires).

In this case, the BIR's contention relying on Tower E, Inc.'s failure to file a
formal protest is without merit.

3. No, the assessment is not valid.

Under Revenue Regulations No. 38-88, a Letter of Authority (LOA) shall ve

valid only for one-hundred twenty (120) days which can be extended through
revalidation in which a new LOA shall be issued.

In this case, there is no LOA issued after the lapse first LOA dated 03
November 2019. Hence, the assessment by the Revenue Officer and Group
Supervisor is not valid.

4. The assessment of CIR is not valid.

In one of recently decided cases, the Supreme Court reiterated that revenue
officers can only examine the books of account and other accounting records
of taxpayers by virtue of a Letter of Authority.
 In this case, there is a violation of due process on the part of Dream Home
Developers. Therefore, the deficiency tax assessments made by BIR shall be
declared unauthorized.

5. No, Jonathan's constitutional right to due process was not violated.

Jurisprudence states that an assessment of a deficiency is not necessary to a

criminal prosecution for willful attempt to defeat and evade the income tax.

Therefore, the issuance of PAN/FDA/FDDA is not a requisite for the filing of

criminal action for tax evasion.

6. A. Willful blindness doctrine means that an individual or corporation can no

longer say that the errors on their tax returns are not their responsibility or
that it is the fault of the accountant they hired.

B. No, George shall not be held liable for violation of Section 255.

Under the law, the elements of Section 255 of Tax Code are: (1) the
accused is a person required to make or file a return; (2) the accused
failed to make or file the return at the time required by law; and (3) the
failure to make or file the return was willful.

In this case, there was no fraud or any malicious intent on his part
considering that he is religiously paying his taxes and filed his ITRs on
time. Therefore, George cannot be held liable for violation of Section 255.

7. Yes, LOL Corporation is entitled to abatement of surcharge and compromise

penalties.

Under Revenue Regulations No. 13-01, a taxpayer is entitled to abatement of

surcharge and compromise penalties when there is failure to pay on time due
to substantial losses from prolonged labor disputes, force majeure, legitimate
business reverses, and circumstances beyond taxpayer's control.

In this case, the phrase "continuous heavy losses for the last 3 years"
constitutes legitimate business reverses. Therefore, LOL Corporation is
entitled to abatement of surcharge and compromise penalties.

8. No, Clark and Betty cannot be held civilly liable for the tax assessments
despite their acquittal from the criminal case.

Under the law, the civil action for the recovery of taxes and penalties shall be
deemed jointly instituted in the criminal action under Section 255 of the Tax
Code.
 Therefore, the reservation of filing of such civil action separately from the
criminal action is not allowed.

9. A. The requisites of a valid waiver of the Statute of Limitations are the

following:
a. The waiver may is executed before the expiration of the period to
assess or to collect taxes;
b. The waiver is signed by the taxpayer himself, his duly authorized
representative, or by any of the responsible officials for corporations;
and
c. The expiry date of the period agreed upon to assess/collect the tax
after the three-year period of prescription

B. Yes, the taxpayer has the burden to prove that a return had been filed by
him in order that the 3-year period can apply.

C. No, Blue Sky Corporation is not estopped from questioning the validity of
the waivers with respect to the other covered but unsettled assessments.

10. Yes, Anthony and Madel may be held liable despite the nullity of the
tax assessment.

Under the law, violation of Section 255 of the Tax Code is an illegal means to
escape from payment of taxes which is punishable by law.

In this case, the non-payment of the tax liabilities constitutes willfulness

which is one of the essential elements of the offense prohibited under Section
255.