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Case Digest 1 - Allied Banking Corp v. CIR

1) Allied Bank received a Preliminary Assessment Notice from the CIR stating it owed deficiency DST taxes. Allied filed a protest but still received a Formal Letter of Demand. Allied filed a petition for review with the CTA. 2) The CTA dismissed the petition, finding it did not have jurisdiction as Allied filed past the deadline. Allied filed a motion for reconsideration. 3) The CTA affirmed its dismissal, finding the Formal Letter was not a final decision but rather a response to Allied's protest of the PAN. A final decision can only be made in response to a protest of the Final Assessment Notice, which Allied did not file. The CTA therefore properly dismissed the case for

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646 views2 pages

Case Digest 1 - Allied Banking Corp v. CIR

1) Allied Bank received a Preliminary Assessment Notice from the CIR stating it owed deficiency DST taxes. Allied filed a protest but still received a Formal Letter of Demand. Allied filed a petition for review with the CTA. 2) The CTA dismissed the petition, finding it did not have jurisdiction as Allied filed past the deadline. Allied filed a motion for reconsideration. 3) The CTA affirmed its dismissal, finding the Formal Letter was not a final decision but rather a response to Allied's protest of the PAN. A final decision can only be made in response to a protest of the Final Assessment Notice, which Allied did not file. The CTA therefore properly dismissed the case for

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Maria Analyn
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© © All Rights Reserved
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University of the Philippines College of Law

Digester ILAGAN, MARIA ANALYN S.


Topic TAX REMEDIES
Case Name ALLIED BANKING CORP. V. CIR
C.T.A. EB NO. 157 (C.T.A. Case No. 6981) (January 2, 2007)
Ponente Bautista, J.

RELEVANT FACTS
 Petitioner Allied Bank (“Allied”) received a Preliminary Assessment Notice (PAN) issued by respondent
CIR on January 14, 2004. The PAN stated that Allied was liable for the amount of P11Mn, inclusive of
interests and compromise penalty (representing deficiency DST for its Special Savings Account Deposits),
for the taxable year 2001.
 Allied filed its protest to the PAN, arguing that its Special Savings Account Deposits were not subject to
DST. Still, Allied received the Formal Letter of Demand and a copy of Assessment Notice for the
aforementioned amount on March 30, 2004; the documents were dated March 10, 2004.
 On the belief that the Formal Letter of Demand constituted CIR’s final decision, Allied filed a Petition for
Review before the CTA in Division.
 In response to Allied’s petition, CIR argued that the CTA in Division had no jurisdiction to take cognizance
of the case as the petition was filed six (6) days after the expiration of the reglementary period provided
under Section 228 of the 1997 Tax Code.
o Subsequently, CIR filed an MTD on the ground that the Formal Letter of Demand had become
final and executory for Allied’s failure to seasonably file a protest within 30 days from its receipt.
 CTA in Division granted the MTD.
 Allied filed an MR, arguing that the wordings of the Formal Letter of Demand had the nature of finality
considering the words “final decision” were used in the letter.
 CTA in Division denied the MR with finality, saying that the words “final decision” were attached to the
phrase “based on investigation.” This then means that the Letter was issued by CIR in response to
Allied’s protest against the PAN.
o The Court in Division emphasized that the “protest” referred to in Section 228 of the 1997 Tax
Code contemplates the protest on the final assessment notice (FAN) and not the protest on the
PAN.
o Hence, a BIR demand letter sent to the taxpayer after his protest on the FAN is considered as the
final decision of the Commissioner on the protest which is appealable to the Court in Division.

ISSUE AND RATIO DECIDENDI

Issue Ratio
W/N the Formal Demand Letter NO. The CTA in Division correctly dismissed Allied’s Petition for Review for
dated March 10, 2004 lack of jurisdiction.
constituted the final decision of
the CIR, thereby ripening into a  The CTA is a court of special appellate jurisdiction, as such, the
disputed assessment appealable Court's jurisdiction may only be invoked in the particular instances
to the CTA enumerated in the law creating the CTA.
o Among the matters that are reviewable by the CTA include
“decisions of the CIR in cases involving disputed
assessments.”
 The CTA in Division correctly ruled that the Formal Letter of Demand
is not a decision of the CIR in cases involving disputed assessment.
o Section 228 of the 1997 Tax Code provides that the
assessment may be protested administratively by filing a
request for reconsideration or reinvestigation within 30
University of the Philippines College of Law
days from receipt of assessment. If the protest is denied in
whole or in part, or is not acted upon within one hundred
eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may
appeal to the Court of Tax Appeals within thirty (30) days
from receipt of the said decision, or from the lapse of the one
hundred eighty (180)-day period; otherwise, the decision
shall become final, executory and demandable.
 CTA En Banc does not agree with petitioner’s assertion that it was
respondent’s poor choice of words in the letter that led it to believe
that the Formal Letter of Demand was already the respondent’s final
decision on the matter.
 The CTA in Diivision was correct in stating that the required protest
contemplated by the Tax Code is the one assailing the FAN and the
Formal Letter of Demand, and not the PAN. In this case, petitioner
filed only a protest on the PAN. It no longer filed a protest on the FAN
and Formal Letter of Demand.

RULING

WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the assailed Resolutions dated August 8,
2005 and January 3, 2006 are hereby AFFIRMED.

SO ORDERED.

SEPARATE OPINIONS

NOTES

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