Dumaguete Cathedral Credit Cooperative (DCCCo) vs. CIR G.R. No.

182722 | 2010-01-22 Facts: DCCCo is a credit cooperative registered and regulated by Cooperative Development Authority. In 2001, BIR Deputy Commissioner authorized BIR officers to inspect the books of DCCCo. In 2002, DCCCo received 2 Pre-assessment Notices, in two instances, for taxable years 1999 and 2001 covering payments of the honorariums of its Board of Directors, security and janitorial services, legal and professional fees, and interest n savings and time deposits of its members. Subsequently, petitioner availed to the Voluntary Assessment and Abatement Program of the BIR and paid the amounts corresponding to the withholding taxes on payment for the compensation, honorarium of the BOD, security and janitorial services, and legal and professional services for the years 1999 and 2001 respectively. However in 2003, DCCCo received an increased assessment which it protested with the commissioner. After the lapse of 180 days without action from the commissioner, petitioners filed a petition for review with the CTA. The 1st division of CTA ruled to cancel the assessment for deficiency withholding taxes on the honorarium and per diems of petitioners BOD, security and janitorial services, commissions and legal and professional fees but retain the assessment for deficiency withholding taxes on interests. Reconsideration denied, DCCCo filed a petition for review with CTA en banc who likewise denied the petition. Issue: Whether or not DCCCo is liable to pay the deficiency withholding taxes on interest from savings and time deposits of its members for 1999 and 2000 Held: DCCCo is correct invoking BIR Ruling No. 551-888 and BIR Ruling DA 591-2006 wherein the BIR ruled that cooperatives are not required to withhold the corresponding tax on the interest from savings and time deposits of their members. SC ruled that interpretations of administrative agencies in charge of enforcing a law are entitled to great weight and consideration by the courts, unless such interpretations are in a sharp conflict with the governing statute or the Constitution and other laws. Members of cooperatives deserve a preferential tax treatment pursuant to RA 6938 or the Cooperative Code of the Philippines, and as retained in RA 9520. SC further held that cooperatives, including their members, deserve a preferential tax treatment because of the vital role they play in the attainment of economic development and social justice. Thus, although taxes are the lifeblood of the government, the State's power to tax must give way to foster the creation and growth of cooperatives. To borrow the words of Justice Isagani A. Cruz: "The power of taxation, while indispensable, is not absolute and may be subordinated to the demands of social justice.

Rizal Commercial Banking Corp (RCBC) vs. CIR G.R. No. 170257- September 7, 2011 FACTS: RCBC is private domestic commercial bank engaged in general banking operations. In 1996, it received a Letter of Authority authorizing a special team to inspect its books covering all revenue taxes from January 1994 to December 1995. RCBC executed 2 Waiver of Defense of Prescription under the Statute of Limitations for internal revenue taxed for 1994 and 1995 thereby extending the period of BIR to assess up to December 2000. CIR issued Formal letter of demand in January 2000 which RCBC protested in February 2000. In November 2000, RCB filed a petition for review with CTA. However, RCBC received another formal letter of demand in December 2000. RCBC however paid all tax deficiencies except the assessments for final tax on FCDU income and DST which remained to be the subject of its petition for review. RCBC additionally assailed the validity of the waivers on the ground that it lacked the signature of the CIR. The CTA 1st division upheld the assessment and likewise the CTA en banc denied RCBCs petition. ISSUE: WON RCBC by paying the other tax assessments covered by the waiver is rendered stopped from questioning the validity of said waivers;

HELD: RCBC is stopped from questioning the validity of the waivers. Estoppel is clearly applicable to the case. A party is precluded from denying his own acts, admissions, or representations to the prejudice of the other party in order to prevent fraud and falsehood. RCBCs partial payment of the revised assessments issued within the extended period impliedly admitted the validity of the waiver.

Allied Banking Corporation vs. CIR

G.R. No. 175097-February 5, 2010

FACTS: Preliminary Assessment Notice was issued against Allied Banking. The filed a protest on the PAN. BIR denied the protest and demanded payment of the deficiency taxes through the issuance of a formal letter of demand. Portions of the formal letter of demand, which brought the dispute is quoted hereunder: It is requested that the above deficiency tax be paid immediately upon receipts hereof, inclusive of penalties incident to delinquency. This is our final decision based on investigation. If you disagree, you may appeal the final decision within 30 days from receipt hereof, otherwise said deficiency tax assessment shall become final, executory and demandable. Instead of filing a protest on the demand, Allied Banking appealed to CTA. BIR argued that it was prematurely appealed.

ISSUE: WON the Formal Letter of Demand issued by the BIR can be construed as a final decision of the BIR, hence appealable to the CTA.

HELD: SC found the foregoing tenor of the Formal Letter of Demand with Assessment Notices issued as BIRs final decision which is appealable to the CTA. BIR cannot dispute the appeal made by Allied Banking since it is now stopped from its own pronouncements. A careful reading of the Formal Letter of Demand with Assessment Notices leads the SC to agree with Allied Banking that the instant case is an exception to the rule on exhaustion of administrative remedies, i.e., estoppel on the part of the administrative agency concerned.