Benipayo and Network Inc. Cases

CIR vs.
Benipayo
Facts:
Respondent is the owner and operator of the Lucena Theater located in the Municipality of Lucena,
Quezon. On Oct 3, 1953 Internal Revenue Agent de Guia investigated respondents amusement tax
liability in connection with the operation of said theater during the period from Aug 1952 to Sept 1953,
His findings was that during the years 1949 to 1951 the average ratio of adults and children patronizing
the Lucena theater was 3 to 1, i.e., for every three adults entering the theater, one child was also admitted,
while during the period in question, the proportion was reversed three children to one adult. From this
he concluded that respondent must have fraudulently sold two tax-Free 20-centavo tickets, in order to
avoid payment of the amusement tax prescribed in section 260 of the NIRC.
On July 14, 1954, petitioner issued a deficiency amusement tax assessment against respondent,
demanding from the latter the payment of the total sum of Php 12,152.93 within thirty days from receipt
thereof. On Aug 16, 1954, respondent filed the corresponding protest with the conference staff of the BIR.
Issue:
WON there is sufficient evidence in the record showing the respondent, during the period under review,
sold, and issued to his adult customers two tax free 20 centavo childrens tickets, instead of one 40
centavo ticket for each adult customer, to cheat or defraud the government
Held:
The assessment has no factual basis. Assessments should not be based on mere presumptions no matter
how reasonable or logical said presumptions may be. Assuming arguendo that the average ratio of adults
and children patronizing the Lucena Theater from 1949 to 1951 was 3 to 1, the same does not give rise to
the inference that the same conditions existed during the years in question (1952 to 1953). The fact that
almost the same ratio existed during the month of July 1955 does not provide a sufficient inference on the
conditions in 1952 and 1953.
In order to stand the test of judicial scrutiny, the assessment must be based on factual facts. The
presumption of correctness of assessment being a mere presumption cannot be made to rest on another
presumption that the circumstances in 1952 and 1953 are presumed to be the same as those existing in
1949 to 1951 and July 1955. In the case under consideration there are no substantial facts to support the
assessment in question
Fraud is a serious charge and, to be sustained, it must be supported by clear convincing proof which, in
this case, is lacking
Network Inc., vs CIR
Facts:
Petitioner challenges the authority of the Chief of the accounts receivable and Billing Division of the BIR
National Office to decide and/act with finality on behalf of the CIR on protests against disputed tax
deficiency assessments.
On March 17, 1988, petitioner received from BIR deficiency tax assessments for the taxable year 1984 in
the total amount of 8,644,998.71. Petitioner filed its protest against the tax assessments and requested a
reconsideration or cancellation of the same in a letter to BIR commissioner dated April 12,1988.
Acting on behalf of the BIR Commissioner, then Chief of the BIR accounts Receivable and Billing
Division, Mr Severino b. Buot, Reiterated the tax assessments while denying petitioners request for
reinvestigation in a letter dated January 24, 1991.
Said letter likewise requested petitioner to pay the total amount of 8,644,998.71 within ten (10) days from
receipt thereof, otherwise the case shall be referred to the Collection Enforcement Division of the BIR
National Offcie for the issuance of a warrant of distraint and levy without further notice.
Upon petitioners failure to pay the subject tax assessments within the prescribed period, the Assistant
commissioner for Collection, acting for the CIR, issued the corresponding warrants of distraint and/or
levy and garnishment. These were served on petitioner on October 10, 1991 and October 17, 1991,
respectively.
On November 8, 1991, petitioner filed a Petition for review with CTA to contest the issuance of the
warrants to enforce the collection of tax assessments. This was docketed as CTA Case no. 4668.
The CTA dismissed the petition for lack of jurisdiction in a decision dated September 16, 1994, declaring
the said petition was filed beyond the thirty (30) day period reckoned from the time when the demand
letter of January 24, 1991 by the Chief of the BIR Accounts Receivable and Billing Division was
presumably received by petitioner.
Petitioner filed a Motion for Reconsideration arguing that the demand letter of January 24, 1991 cannot
be considered as the final decision of the CIR on it protest because the same was signed by a mere
subordinate and not by the Commissioner himself.
With the denial of its motion for reconsideration, Petitioner consequently filed a Petition for review with
the CTA. The Court of Appeals denied the petition in a decision dated October 31, 2000.
Issue:
WON a demand letter for tax deficiency assessments issued and signed by a subordinate officer who was
acting in behalf of the CIR, is deemed final and executory and subject to an appeal to the CTA.
Held:
The letter demand dated January 24, 1991, unquestionably constitutes the final action taken by the BIR on
petitioners request for reconsideration when it reiterated the tax deficiency assessments due from
petitioner and requested its payment. Failure to do s would result in the issuance of warrant of distraint
and levy to enforce its collection without further notice. In addition, the letter contained a notation
indicating that petitioners request for reconsideration had been denied for lack of supporting documents.
The demand letter indeed attained finality despite the fact that it was issued and signed by the Chief of the
Accounts Receivable and Billing Division instead of the BIR Commissioner.
The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner
or from his duly authorized representative.. Thus, the authority to make tax assessment may be
delegated to subordinated officers. Said assessment has the same force and effect as that issued by the
Commissioner himself, if not reviewed or revised by the latter such as in this case

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Network Inc., vs CIR

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