FORMER SECOND DIVISION

[C.T.A. CASE NO. 7578. February 11, 2010.]

SILKAIR (SINGAPORE) PTE. LTD., petitioner, vs.

COMMISSIONER OF INTERNAL REVENUE, respondent.

DECISION

PALANCA-ENRIQUEZ, J : p

The determinations and assessments of the Bureau of Internal

Revenue are presumed correct and made in good faith. The taxpayer has the
duty of proving otherwise. In the absence of proof of any irregularities in the
performance of official duties, an assessment will not be disturbed. Even an
assessment based on estimates is prima facie valid and lawful where it does
not appear to have been arrived at arbitrarily or capriciously. The burden of
proof is upon the complaining party to show clearly that the assessment is
erroneous. Failure to present proof of error in the assessment will justify the
judicial affirmance of said assessment (Gutierrez vs. Villegas, 8 SCRA 527;
Marcos II vs. Court of Appeals, 273 SCRA 66-67). DIETHS

THE CASE
This is a Petition for Review filed by Silkair (Singapore) PTE. Ltd.
(hereafter "petitioner") praying for the reversal of the Final Decision on
Disputed Assessment dated November 27, 2006 rendered by the
Commissioner of Internal Revenue.
THE PARTIES
Silkair (Singapore) Pte. Ltd. is a foreign corporation duly existing under
the laws of Singapore and is duly registered with the Philippine Securities
and Exchange Commission (SEC), as a representative office. It is likewise
registered with the Civil Aeronautics Board (CAB), as a foreign carrier
authorized to operate in the Philippines.
Respondent Commissioner of Internal Revenue, on the other hand, is
the official authorized under Section 4 of the NIRC of 1997, as amended, to
assess and collect internal revenue taxes, as well as to decide disputed
assessments, subject to the exclusive appellate jurisdiction of this Court. He
holds office at the 5th Floor, BIR National Office Building, BIR Road, Diliman,
Quezon City.
THE FACTS
On June 23, 2006, petitioner received an undated Preliminary
Assessment Notice (PAN) from the BIR Large Taxpayers District Office
(LTDO)-Cebu assessing it for alleged tax deficiencies in the aggregate
amount of P92,183,782.86, inclusive of penalties and surcharges, relative to
the result of the examination of its accounts for fiscal year ending March 31,
2004, in accordance with BIR Letter of Authority (LOA) Nos. 2000 00067375
and 00067384, dated August 16, 2005 and October 17, 2005, respectively.
On September 18, 2006, petitioner likewise received an undated
Formal Letter of Demand, with a revised computation of alleged tax
deficiencies in the amount of P93,381,506.19, inclusive of interest and
penalties. Said tax deficiencies arose due to the following:aTAEHc

a. Deficiency Income Tax — disallowance of petitioner's claim

for creditable withholding taxes amounting to P648,315.08 since the
withholding tax certificates bear the name of Royal Winds, Inc., instead
of Silkair. Interests amounting to P280,934.57 were charged on the
disallowed creditable withholding taxes.

b. Deficiency Percentage Tax — discrepancy between the

reported Gross Philippine Billings in its income tax return and
percentage tax returns.

c. Deficiency Expanded Withholding Tax — failure to withhold

tax from payments it made in favor of Royal Winds Inc. in the amount
of P15,677,476.19, Philippine Airlines in the amount of P153,323.00,
Cebu Pacific Catering in the amount of P4,202,083.76, and other
parties in the aggregate amount of P5,263,637.42. The alleged total
withholding tax due amounted to P1,759,938.77. Interests amounting
to P879,969.38 were also charged.

d. Deficiency Withholding Tax on Compensation — failure to

withhold the amount of P484,876.68 from the income payments made
by petitioner to its personnel. Interests and penalties amounting to
P246,807.15 were likewise imposed.

e. Deficiency Fringe Benefits Tax — failure of petitioner to pay

taxes on the fringe benefits it granted to its personnel. Interests and
penalties amounting to P170,739.97 were charged.

f. Deficiency Branch Profit Remittance Tax — failure of

petitioner to pay the required tax amounting to P88,650,751.28,
inclusive of interests and penalties, for the remittances made to its
parent company in Singapore allegedly amounting to P529,073,535.24
based on the Gross Philippine Billings as reported and attached to the
Final Income Tax Return for the year ended March 31, 2004, pursuant
to Section 28(b)(5) of the NIRC of 1997, as amended.

On September 21, 2006, petitioner paid some of the assessments, in

the aggregate amount of P438,966.81, for the following tax deficiencies: (1)
expanded withholding tax in the amount of P74,632.05; (2) percentage tax
in the amount of P1,520.22; and (3) fringe benefit tax in the amount of
P362,814.54. Thereby, reducing the deficiency tax assessment to
P92,926,960.66.
On September 22, 2006, petitioner filed an administrative protest with
the BIR LTDO-Cebu to contest the validity of the assessments. cDIaAS
 On January 29, 2007, petitioner received respondent's Final Decision
on Disputed Assessment dated November 27, 2006, which adjusted the
deficiency tax assessment to P15,352,055.39, inclusive of interests and
penalties, computed as follows:
 Tax Type  Amount (Peso)
Income Tax  Â
 Basic Tax 648,315.08 Â
 Interest 324,151.06 972,466.14
Expanded Withholding Tax  Â
 Basic Tax 846,522.67 Â
 Interest 479,690.53 1,326,213.20
Withholding Tax —
 Â
Compensation
 Basic Tax 484,876.68 Â
 Surcharge 1,895.05 Â
 Interest 275,233.98 Â
 Compromise Penalty 2,000.00 764,005.71
Branch Profit Remittance  Â
 Basic 8,776,803.57 Â
 Surcharge 2,194,200.89 Â
 Interest 1,243,365.88 Â
 Compromise penalty 25,000.00 12,239,370.34
Penalty — No books of
 50,000.00
accounts and F/S
   ––––––––––––
Total Tax Deficiencies  15,352,055.39
   ============
On January 31, 2007, petitioner settled its tax liabilities as regards the
income tax and expanded withholding tax deficiencies through the
availment of the abatement program of the BIR under R.R. No. 15-2006 and
its implementing regulations under Revenue Memorandum Order (RMO) No.
23-2006; thus, leaving the alleged deficiency withholding tax on
compensation in the amount of P764,005.71 and deficiency branch profit
remittance tax in the amount of P12,239,370.34, as contested.
On February 28, 2007, petitioner filed the instant Petition for Review.
On August 30, 2007, respondent filed his Answer, alleging the
following:

"6. Remittances to Singapore were not subjected to Branch

Profit Remittance Tax (BPRT). This is in violation of Section 28 (A) (5) of
the National Internal Revenue Code of 1997 (NIRC of 1997) which
provides thus:

'SEC. 28. Rates of Income Tax on Foreign Corporations.

—

(A)Â Tax on Resident Foreign Corporations. —

xxx xxx xxx

 (5)Â Tax on Branch Profits Remittances. — Any profit
remitted by a branch to its head office shall be subjected
to a tax of fifteen percent (15%) which shall be based on
the total profits applied or earmarked for remittance
without any deduction for the tax component thereof
(except those activities which are registered with the
Philippine Economic Zone Authority). The tax shall be
collected and paid in the same manner as provided in
Sections 57 and 58 of this Code: Provided, That interest,
dividends, rents, royalties, including remuneration for
technical services, salaries, wages, premiums, annuities,
emoluments or other fixed or determinable annual,
periodic or casual gains, profits, income and capital gains
received by a foreign corporation during each taxable
year from all sources within the Philippines shall not be
treated as branch profit unless the same are effectively
connected with the conduct of its trade or business in the
Philippines.'EHDCAI

xxx xxx xxx

7. Petitioner's contention that it is not subject to BPRT just like

Air France which was ruled as exempt from BPRT on account of its
treaty is untenable. The ruling in favor of Air France cannot be applied
to petitioner since each country has its own independent treaty with
the Republic of the Philippines and not interdependent with each other.

8. There was error in the computation of withholding tax on

compensation. This is in violation of Sections 76, 77, 78 and 79 of the
NIRC of 1997 and Revenue Regulations No. 17-2003. Petitioner claims
that it erroneously filled up the amount of tax base on the return filed
(which was the basis of the computation of the deficiency tax) but did
not submit any other documents to support its protest such as payroll
or alpha list or proof of payment to its employees.

9. All presumptions are in favor of the correctness of tax

assessments. The good faith of tax assessors and the validity of their
actions are presumed. They will be presumed to have taken into
consideration all the facts to which their attention was called (CIR vs.
Construction Resources of Asia, Inc., 145 SCRA 671) . It is incumbent
upon the taxpayer to prove the contrary (Mindanao Bus Company vs.
CIR, 1 SCRA 538; CIR vs. Tuazon, Inc., 173 SCRA 397) and failure to do
so shall vest legality to respondent's actions and assessments.

10. Failure to present proof of error in the assessment will

justify judicial affirmation of said assessment (Delta Motors Co. vs.
Commissioner, CTA Case No. 3782, 21 May 1986; Commissioner of
Internal Revenue vs. Court of Appeals, et al., G.R. Nos. 104151 and
105563, 10 March 1995)."

Petitioner presented Moises Visperas, Jr., its Tax Consultant, and Clavel
Viacrusis, its Accountant, as witnesses, and documentary evidence, marked
as Exhibits "A" to "L", inclusive of their submarkings, which were all admitted
by the Court in a Resolution dated September 5, 2008, except for Exhibits
"E-2" and "E-4", which were denied admission for failure to present the
original copies for comparison.
On July 14, 2008, counsel for petitioner manifested that petitioner
availed of the Tax Amnesty. Hence, on July 24, 2008, petitioner filed a
"Motion to Partially Withdraw Petition for Review", which was granted by the
Court in a Resolution dated January 14, 2008, insofar as the deficiency
branch profit remittance tax for fiscal year ending March 31, 2004 is
concerned. caIACE

Respondent, on the other hand, presented Alicia Socorro T. Abutazil,

the BIR Acting Chief of the Assessment Division of the LTDO-Cebu, as
witness, and documentary evidence, marked as Exhibits "1" and "2",
inclusive of their submarkings, which were all admitted by the Court in a
Resolution dated January 12, 2009.
Thereafter, both parties were granted thirty (30) days from notice,
within which to file their simultaneous memoranda, afterwhich the case shall
be deemed submitted for decision. On February 16, 2009, petitioner filed its
Memorandum; while respondent filed his Memorandum on February 18,
2009.
Hence, the case was deemed submitted for decision.
ISSUES
As stipulated upon by the parties, the following are the issues for this
Court's consideration:

WHETHER OR NOT PETITIONER'S REMITTANCES ARE SUBJECT TO

BRANCH PROFIT REMITTANCE TAX (BPRT). IF IN THE AFFIRMATIVE,
WHETHER OR NOT BPRT SHOULD BE BASED AT THE NET EFFECTIVE
REMITTANCE OF PHP14,019,811.93.

II

WHETHER OR NOT THERE WAS ERROR IN THE COMPUTATION OF

WITHHOLDING TAX ON COMPENSATION.

Remaining Issue
To Be Resolved
Considering that the Court already granted petitioner's "Motion to
Partially Withdraw Petition for Review" insofar as its deficiency branch profit
remittance tax for fiscal year ending March 31, 2004 is concerned, the
remaining issue to be resolved is:SHIcDT

Whether or not the Final Decision on Disputed Assessment of

respondent against petitioner, finding it liable for deficiency
withholding tax on compensation in the amount of P764,005.71 is
supported by law and evidence.

Petitioner Silkair's
Arguments
Petitioner claims that both the Preliminary Assessment Notice and the
Final Decision on Disputed Assessment did not provide the facts and the law,
rules and regulations or jurisprudence on which the assessment was based,
in violation of Section 228 of the NIRC of 1997, as amended, and Revenue
Regulations No. 12-99 ; that petitioner was at a loss as to how or where the
deficiency withholding tax on compensation came from due to the total
defect in the PAN. Accordingly, respondent's assessment for deficiency
withholding tax on compensation against petitioner is null and void.
Respondent CIR's
Counter-Arguments
Respondent CIR, on the other hand, counter-argues that for failure of
petitioner to withhold and remit the correct withholding tax on payments to
managers Geoffrey Wong Sing Luk and Ronnie Lau, petitioner was assessed
for deficiency withholding tax on compensation, exclusive of penalties and
interests, pursuant to Sections 79 and 80 (A) of the NIRC of 1997, as
amended.
Respondent CIR further contends that petitioner failed to submit proof
in support of the alleged mathematical error in the filing of BIR Form No.
1601-C for the period July 2003, pertaining to Geoffrey Wong Sing Luk; and
for petitioner's failure to maintain books of accounts and financial
statements, a penalty was charged pursuant to Section 232 of the NIRC of
1997, as amended.
THE COURT'S RULING
We deny the Petition.
The second paragraph of Section 228 of the NIRC of 1997, as
amended, is clear and mandatory. It provides, as follows:

"SEC. 228. Protesting of Assessment. —

xxx xxx xxx

The taxpayers shall be informed in writing of the law and the facts on
which the assessment is made; otherwise, the assessment shall be
void."

Petitioner now questions the validity of the assessment for failure to

state the facts and the law on which it was based, thus, leaving petitioner to
be at loss on how respondent came up with the deficiency withholding tax
assessment.
Records show:
1)Â In its Summary of Withholding on Compensation (BIR Records, p.
450), respondent CIR made the following findings:
 Period Compensation Tax
  Â
   Â
April 236,662.74 68,485.41
May 226,162.66 65,308.55
June 204,192.17 61,571.50
July 1,839,029.31 149,993.94
August 104,057.88 33,648.51
September - Â
October - Â
November 208,261.72 59,103.75
December 466,740.50 101,856.96
January 166,189.58 49,410.67
February 300,097.22 92,261.11
March 200,084.64 60,257.08
 –––––––––––––––––––––––
Total 3,951,478.42 741,897.48
 =========== =========

Deficiency Withholding Tax on

Â
Compensation
Withholding Tax Due per Audit Â
Total Compensation 3,951,478.42
Less: Personal Exemption 32,000.00
 –––––––––––
Net Taxable Income 3,919,478.42
 ===========
Withholding Tax Due 3,884,478.42
Less: Amount remitted 741,897.48
 –––––––––––
Deficiency withholding tax on
3,142,580.94
compensation
Add: Interest up to June 10, 2006 1,361,774.60
 –––––––––––
Total deficiency w/holding tax on
4,504,355.54
compensation
 ===========
The above Summary shows the source of petitioner's deficiency on its
withholding tax on compensation.
Records show that petitioner was furnished by the BIR with a copy of
this Summary of Withholding Tax on Compensation.
2)Â A perusal of the Summary of Discrepancy (BIR Records, p. 451)
also shows the following:
Deficiency Withholding Tax on Compensation
Withholding Tax Due per Audit Â
Total Compensation 3,951,478.42
Less: Personal Exemption 32,000.00
 –––––––––––
Net Taxable Income 3,919,478.42
 ==========
Withholding Tax Due 3,884,478.42
Less: Amount remitted 741,897.48
 –––––––––––
Deficiency withholding tax on
3,142,580.94
compensation
 ==========

Legal Basis: Secs. 78, 79, 80 and 81 of NIRC and RR 2-98

This document shows the initial computation of the discrepancy, as
found during the informal conference.
3)Â In a Letter dated April 26, 2006 (BIR Records, p. 468), petitioner's
Tax Consultant, Moises M. Visperas, Jr., stated:

"On behalf of SILKair (Singapore) Pte. Ltd. Cebu Branch

Office with office address at Suite 302, 3rd Floor, Cebu Holdings,
Cardinal Rosales Avenue, Cebu Business Park, Cebu City, Philippines, I
would like to initially submit the following arguments and documents in
support of our position in response to the Summary of Discrepancies
relative to your examination of accounts for the fiscal year ending
March 31, 2004 in accordance with your Letter of Authority No. 2000
00067375 and 00067384 dated August 16, 2005 and October 17, 2005
which was received on April 18, 2006, and the revised summary which
was received on April 19, 2006.

First of all, I would like to express my appreciation for the

courtesy we received from your Ms. Alicia Socorro Abutazil as she gave
in to our request for a soft copy of the supporting computations of the
different categories of assessments. This indeed hastened the process
of our review of the discrepancies."
ASCTac

The above-quoted Letter, supported by Annexes "A" and "B", pertains

to Geoffrey Wong Sing Luk's compensation income in the Philippines from
January 1, 2003 to August 17, 2003, and Ronnie Lau's compensation income
in the Philippines from September 2003 to December 2003 (BIR Records, pp.
459-460).
4)Â On April 27, 2006, petitioner's representative wrote a Letter to the
BIR (BIR Records, pp. 473-477), copy of which was received by respondent
CIR on April 27, 2006, which reads, as follows:

"On behalf of SILKair (Singapore) Pte. Ltd. Cebu Branch

Office with office address at Suite 302, 3rd Floor, Cebu Holdings,
Cardinal Rosales Avenue, Cebu Business Park, Cebu City, Philippines,
and following our submission of our initial letter dated April 26, 2006
during the informal conference with your Revenue Officers Mr. Teodoro
B. Amora, Jr. and Ms. Alicia Socorro Abutazil held yesterday at your
office in response to the original Summary of Discrepancies
relative to your examination of accounts for the fiscal year ending
March 31, 2004 in accordance with your Letter of Authority No. 2000
 00067375 and 00067384 which was received on April 18, 2006, and
the 1st revised summary which was received on April 19, 2006 we
would like to make additional supporting arguments and documents in
reaction to the results of our discussions as well as our reaction to your
examiner's 2nd revised summary of discrepancies which we
received during said informal conference as follows:"

The above letter shows that petitioner made additional supporting

arguments and submitted documents in reaction to the BIR examiner's 2nd
Revised Summary of Discrepancies.
5)Â On the other hand, in its Summary of Withholding on
Compensation (BIR Records, p. 483), respondent CIR made the following
findings:
Monthly Computation of W/holding Tax Due Â
Geoffrey Wong Sing Luk  Â
   Â
 Tax Base W/holding Tax Due
 per return Per Silk Air
April 236,662.74 68,485.41
May 226,162.66 65,308.55
June 204,192.17 61,571.50
July 1,839,029.31 149,993.94
August 68,741.58 33,648.51
Add'l per 35,316.30 Â
Silkair ––––––––––––––––––––––
 2,610,104.76 379,007.91
  Â
Ronnie
 Â
Lau
September - Â
October - Â
November 208,261.72 59,103.75
December 466,740.50 101,856.96
January 166,189.58 49,410.67
February 300,097.22 92,261.11
March 200,084.64 60,257.08
 –––––––––––––––––––––––
 1,341,373.66 362,889.57
Tax 3,951,478.42 741,897.48
Deficiency ========== ========
Add: Late payment (tax base per Silkair Schedule submitted — Annex B)
   Â
  Tax Due
September 60,834.98 15,697.30
October 177,036.20 52,881.69
Total 237,871.18 68,578.99
Tax Paid in  Â
Dec. Â 59,103.75
Late payment not subjected Â
to
 9,475.24
penalties
  Â
Interest on tax deficiency Â
(up to June 10, 2006) Â
Total Withholding Tax Deficiency on Compensation
  Â

Note:Â Taxpayer claim that except for the COLA, all other salaries of the manager was
paid in Singapore and that the BIR form 2307 was erroneously filled up.
However, no supporting documents were submitted to prove the figures
submitted in annexes A & B as to the salaries and other allowances of the
manager. The Revenue Officers have no other basis for tax base but the tax
return which is presumed to be correct unless an amended return is filed."
6)Â As a result of the investigation conducted pursuant to LOA No.
00067384 , in their Memorandum dated April 27, 2006 (BIR Records, p. 523),
the BIR Officers made the following observations:

"Withholding tax on compensation:

There is still withholding tax due on compensation paid to the

Philippine Manager. The amount of deficiency was based on figures
declared in the 1601C filed by the taxpayer. Although the taxpayer
claim error in the figure declared, they did not submit supporting
documents such as payroll or proof of payment made to the Manager to
disprove the findings.

Withholding tax deficiency on compensation amounted to

P484,876.68."

From the foregoing, it is clear that there was an active exchange of

correspondence between petitioner and respondent in the administrative
proceeding in resolving petitioner's protest on the assessments. The source
of the factual basis was clearly identified in the assessment. Petitioner was
apprised and informed as to how the tax deficiency assessment was made.
Records reveal that petitioner was clearly informed of the bases of the
assessments during the informal conference and in the course of clarifying
the issues regarding the PAN. In fact, petitioner was able to intelligently
argue its position in its protest with regard to the findings of discrepancies
against the subject assessment. ScHADI

We, therefore, find that petitioner was accorded all the opportunity
under the law to be heard and present its side and to adduce evidence in
support thereof. In administrative proceedings, the essence of due process is
simply an opportunity to explain one's side or opportunity to seek a
reconsideration of the action or ruling complained of (Audion Electric Co.,
Inc. vs. NLRC, 308 SCRA 340) . Accordingly, petitioner having been afforded
all the opportunities under the law to present its side and adduce evidence to
support its claim, was not denied due process. The assailed assessment
having been issued in accordance with law is, therefore, valid in all respects.
We cannot, therefore, give credence to petitioner's claim that it was at
a loss as to how or where the deficiency withholding tax on compensation
came from.
Let it be emphasized that the purpose of Section 228 of the 1997 NIRC,
as amended, is to give the taxpayer the opportunity to refute the findings of
the examiner and give more accurate and detailed explanation regarding the
assessments. If the purpose is served in the process of issuing an
assessment, then the provision is deemed to have been complied with.
Furthermore, settled is the rule that tax assessments by tax examiners
are presumed correct and made in good faith. All presumptions are in favor
of the correctness of a tax assessment. It is to be presumed, however, that
such assessment was based on sufficient evidence. Upon the introduction of
the assessment in evidence, a prima facie case of liability on the part of the
taxpayer is made. If a taxpayer files a petition for review in the CTA and
assails the assessment, the prima facie presumption is that the assessment
made by the BIR is correct, and that in preparing the same, the BIR
personnel regularly performed their duties. This rule for tax initiated suits is
premised on several factors other than the normal evidentiary rule imposing
proof obligation on the petitioner-taxpayer: the presumption of
administrative regularity; the likelihood that the taxpayer will have access to
the relevant information; and the desirability of bolstering the record-
keeping requirements of the NIRC (CIR vs. Hantex, 454 SCRA 301).
In the case of Marcos II vs. Court of Appeals, et al., supra, the Supreme
Court ruled:

"It is not the Department of Justice which is the government

agency tasked to determine the amount of taxes due upon the subject
estate, but the Bureau of Internal Revenue, whose determinations and
assessments are presumed correct and made in good faith. The
taxpayer has the duty of proving otherwise. In the absence of proof of
any irregularities in the performance of official duties, an assessment
will not be disturbed. Even an assessment based on estimates is prima
facie valid and lawful where it does not appear to have been arrived at
arbitrarily or capriciously. The burden of proof is upon the complaining
party to show clearly that the assessment is erroneous. Failure to
present proof of error in the assessment will justify the judicial
affirmance of said assessment. In this instance, petitioner has not
pointed out one single provision in the Memorandum of the Special
Audit Team which gave rise to the questioned assessment, which bears
a trace of falsity. Indeed, the petitioner's attack on the assessment
bears mainly on the alleged improbable and unconscionable amount of
the taxes charged. But mere rhetoric cannot supply the basis for the
charge of impropriety of the assessments made." AHaDSI

Pursuant to the above decision of the Supreme Court, petitioner's bare

assertion that the PAN and the Final Decision on Disputed Assessment are
void for alleged lack of computation or notes and for failure to specify what
provision of the Tax Code was violated, cannot be sustained. Apparently,
petitioner failed to appreciate the fact that attached to the PAN and the Final
Decision on Disputed Assessment were the Details of Discrepancies (Exhibits
"C-3" and "D-3") for the respective notices, which this Court considers as
substantial compliance with the prescribed requisite of informing the
taxpayer with the factual and legal basis on which the assessment was
made, in accordance with the provisions of Section 228 of the NIRC of 1997,
as amended.
The Final Decision on Disputed Assessment dated November 27, 2006
(Exhibit "C-1") reads:

"• Deficiency Withholding Tax on Compensation — Tax

due — P484,876.68 — There was error in the computation of
withholding tax on compensation. This is in violation of Section 76-79
of the NIRC and RR 17-2003. Taxpayer claim that it erroneously filled
up the amount of tax base on the return filed (which was the basis of
computation for the deficiency tax) but did not submit any other
document to support its protest such as payroll or alpha list or proof of
 payment to its employee."

Petitioner should not limit itself only to the document entitled PAN, but
rather to the entire notice furnished to apprise the taxpayer of its
deficiencies and to the entire proceedings afforded to petitioner to give them
due process. It is petitioner who is amiss of its duty to prove its contentions
and contradict the findings of respondent since it was already informed of
the deficiency as early as the informal conference. However, even in the
proceedings of this case, petitioner failed to fully substantiate its claim.
Petitioner failed to prove proper withholding and remittance of the
withholding taxes of its Country Managers. There was no evidence presented
to prove that petitioner indeed withheld and paid the BIR the corresponding
withholding taxes. The alleged error in the filing of BIR Form No. 1601-C,
from which the error of computation arose, was not proven by petitioner.
The burden of proof is on the taxpayer contesting the validity or
correctness of an assessment to prove not only that the Commissioner of
Internal Revenue is wrong but the taxpayer is right (Tan Guan vs. CTA, 19
SCRA 903) , otherwise, the presumption in favor of the correctness of tax
assessment stands (Sy Po vs. CTA, 164 SCRA 524). The burden of proving
the illegality of the assessment lies upon the petitioner alleging it to be so. In
the present case, petitioner miserably failed to discharge this duty. EITcaH

Furthermore, this objection to the assessment should have been raised

with the BIR. The obvious intent of filing a claim to the Commissioner of
Internal Revenue before seeking a judicial redress is to afford respondent
CIR an opportunity to consider the taxpayer's claim first in the administrative
level.
Failure to assert a question within a reasonable time warrants a
presumption that the party entitled to assert it either has abandoned or
declined to assert it. It is too late for petitioner to raise said issue in this
appeal. Thusly:

"To allow a litigant to assume a different posture when he comes

before the court and challenge the position he had accepted at the
administrative level, would be to sanction a procedure whereby the
court — which is supposed to review administrative determinations —
would not review, but determine and decide for the first time, a
question not raised at the administrative forum. This cannot be
permitted, for the same reason that underlies the requirement of prior
exhaustion of administrative remedies to give administrative
authorities the prior opportunity to decide controversies within its
competence, and in much the same way that, on the judicial level,
issues not raised in the lower court cannot be raised for the first time
on appeal." (Aguinaldo Industries Corporation vs. Commissioner of
Internal Revenue, 136 SCRA 146)

Finding no reversible error, we affirm the assailed Final Decision on

Disputed Assessment dated November 27, 2006 of the Commissioner of
Internal Revenue.
WHEREFORE, premises considered, the present Petition for Review is
h e r e b y DISMISSED for lack of merit. Accordingly, petitioner Silkair
(Singapore) PTE. LTD. is hereby ORDERED TO PAY the Commissioner of
Internal Revenue the amount of SEVEN HUNDRED SIXTY FOUR
THOUSAND FIVE & 71/100 PESOS (P764,005.71), representing the
deficiency withholding tax on compensation, plus twenty percent (20%)
delinquency interest per annum from February 29, n 2007 until fully paid,
pursuant to Section 249 (c) (3) of the NIRC of 1997, as amended.
SO ORDERED.
Â

(SGD.) OLGA PALANCA-ENRIQUEZ

Associate Justice
Juanito C. Castañeda, Jr. and Erlinda P. Uy, JJ., concur.