Republic of the Philippines

COURT OF TAX APPEALS

Quezon City

SECOND DIVISION

TRUSTMARK HOLDINGS CTA Case No. 9072

CORPORATION,
Petitioner, Members:
CASTANEDA, JR., Chairperson,
CASANOVA, and
-versus- MANAHAN, JJ.

COMMISSIONER OF INTERNAL Promulgated:

REVENUE,
MAY 19 201y
Respondent.
. r/7 f:;,< ,.,. .
x----------------------------------------------------------------------------------x

DECISION

CASANOVA, J.:

This is a Petition for Review 1 filed by Trustmark Holdings

Corporation praying that respondent's Assessment Notice No. ELTAD-
II-DS-09-0019 issued against petitioner for surcharge, deficiency
interest and delinquency interest arising from deficiency documentary
stamp tax assessment (DST) in the aggregate amount of
P310,262,534.02 for taxable year 2009 and prior years be declared null
and void.

Petitioner is a domestic corporation duly registered with the

Securities and Exchange Commission with S.E.C. Reg. No.
A200009678, whose primary purpose is to be a holding corporation,
without, however, engaging as a stockbroker or as dealer of
securities. 2 It is duly registered with the Bureau of Internal Revenue
(BIR) with Taxpayer's Identification Number 207-483-528-000~

1
Docket, pp. 10-33
2 Exhibit "P-1".
3 Exhibit "P-2".
DECISION
CfA Case No. 9072
Page 2 of 30

Respondent is the duly appointed Commissioner of Internal

Revenue (CIR) vested with the power to decide disputed assessments,
cancel and abate tax liabilities pursuant to the provisions of the
National Internal Revenue Code (NIRC) of 1997, as amended. He
holds office at the 5th Floor, BIR National Office Building, BIR Road,
Diliman, Quezon City.

Sometime in May 20104, petitioner received from respondent

Letter of Authority (LOA-124-2010-00000086) 5, dated May 14, 20106 ,
which authorized Revenue Officers Olivia Aviles, Teofilo Jr Barbiran,
Dominic Morales, Katherine Mary Reyes and Group Supervisor Ernesto
Gamad to examine petitioner's books of accounts and other accounting
records for all internal revenue taxes for taxable period January 1,
2009 to December 31, 2009. Later on, the continuation of the conduct
of the audit was assigned to Revenue Officer Flor Jasmin R. Soriano. 7

Thereafter, a Notice of Informal Conference (NIC) 8 dated

October 19, 2011 was issued to and received by petitioner. 9

On November 25, 2011, petitioner filed a letter10 dated

November 10, 2011 stating that it is willing to pay the basic taxes due
upon receipt of the corresponding PAN but made a reservation as to
its right to apply for an abatement of the penalties pursuant to Section
204(8) of the NIRC of 1997, as amended, and its implementing
regulations.

The Preliminary Assessment Notice (PAN) with Details of

Discrepancies 11 dated December 1, 2011, was, thereafter, issued to
and received by petitioner 12 on December 23, 2011 13 , assessing
petitioner for deficiency DST, computed as follows:

Transactions subject to DST:

Advances to Affiliates 5 391 387 600.00
Advances from Affiliates 28 760 767 675.00
Payable-Others 136 000 000.00
Notes Payable 20 936 804.00

4
Par. 10, Petition for Review, Docket, p. 12.
5
Exhibit "P-4"; Exhibit "R-1".
6
Par. 2, Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), Docket, p. 206.
7
Exhibit "R-5".
8 Exhibit "P-5"; Exhibit "R-7".
9
Par. 3, Admitted Facts, JSFI, Docket, p. 206.
10
Exhibit "P-7".
11 Exhibits "P-6" and "P-6-a"; Exhibit "R-9".
12
Par. 4, Admitted Facts, JSFI, Docket, p. 206;
13
Par. 13, Petition for Review, Docket, p. 12.
DECISION
CTA Case No. 9072
Page 3 of 30

Total Amount subject to DST 34 309 092 079.00

DST Due Thereon 171,545,463.00

Add: 25% Surcharge for failure to file DST Return 42,886,365.75
and pay correspondinq tax due
20% Interest p.a. until December 31 2011 150 762 445.67 193 648 811.42
Total Amount due 3"1;_1Q4.274.42

On December 28, 2011, petitioner paid the basic DST due

amounting to P171,545,463.00. 14

On April 18, 2012, petitioner filed a letter 15 dated April 16, 2012
with respondent informing the latter that it has already paid the basic
DST. With regard to the surcharge and interest, it requested that these
be waived on the ground that the late payment of DST was due to a
difficult interpretation of the law.

On June 25, 2012, petitioner filed an Application for Abatement

or Cancellation of Tax, Penalties and/or Interest16 for the cancellation
of the surcharge and interest imposed amounting to P193,648,811.42
based on "non-compliance due to difficult interpretation of the law".

On October 28, 2014 17, petitioner received respondent's Formal

Letter of Demand (FLD) dated October 28, 2014 together with the
Details of Discrepancies and Assessment Notice No. ELTAD-II-DS-09-
001918, assessing petitioner for deficiency DST, computed as follows:

Total Deficiency Tax Per PAN 365/194 274.42

Less: Amount Paid on Dec. 28 2011 1711545 463.00
Deficiency DST 193/648 811.42
Add:
Interest 20% p.a. Dec. 28 2011 to Dec. 31 2014 116 613J22.60
TOTAL AMOUNT DUE 310,262,534.02

On November 27, 2014, petitioner filed its administrative

protest19 by way of a request for reconsideration.,_

14
Exhibits "P-8" to "P-8-a".
15
Exhibit "P-9".
16
Exhibit "P-10".
17
Par. 16, Petition for Review1 p. 13. However, Exhibits "R-11" and "R-11-a", show that it was
received on October 29 1 2014 by a certain Nette Ong.
18
Par. 5, Admitted Facts 1 JSFI, Docket, p. 206; Exhibits "P-3", "P-3-a", "P-3-b" and "P-3-c"; Exhibits
"R-11" and "R-11-a".
19
Exhibit "P-11".
DECISION
CTA Case No. 9072
Page 4 of 30

On May 21, 2015, petitioner received respondent's Final Decision

on Disputed Assessment (FDDA) 20 dated March 31, 2015 21 , denying
petitioner's request for reconsideration and stating, among others, that
petitioner was not able to introduce any evidence to overthrow the
validity of respondent's findings.

Hence, petitioner filed the instant Petition for Review before this
Court on June 19, 2015.

In his Answer22 filed on September 9, 2015, respondent raised

the following special and affirmative defenses:

"RESPONDENT OBSERVED
BOTH PROCEDURAL AND
SUBSTANTIAL DUE PROCESS
IN ISSUING THE
ASSESSMENT.

7. The assessment for deficiency Documentary Stamp

Tax in the amount of P 310,262,534.02 for calendar
year 2009 was made in accordance with law, rules
and jurisprudence.

8. Respondent accorded procedural and substantial due

process to petitioner in issuing the assessment
subject of this case. The Letter of Authority (LOA),
Notice for Informal Conference, Preliminary
Assessment Notice with attached Details of
Discrepancies, Formal Letter of Demand with
attached Details of Discrepancies as well as Audit
Result/ Assessment Notice and Final Decision on
Disputed Assessment were issued in accordance with
law, rules and jurisprudence.

9. Petitioner was also informed of the factual and legal

basis of the assessment. The Preliminary Assessment
Notice with attached Details of Discrepancies, Formal
Letter of Demand with attached Details of
Discrepancies as well as Audit Result/ Assessment,-

20
Exhibit "P-12"; Exhibit "R-14".
21
Par. 6, Admitted Facts, JSFI, Docket, p. 207.
22 Docket, pp. 104-120.
DECISION
CfA Case No. 9072
Page 5 of 30

Notice and Final Decision on Disputed Assessment

indicated not only the deficiency tax involved,
surcharge and interest due thereon, but also
sufficiently stated the facts, the law, rules and
regulations on which the assessment is based.

THE ASSESSMENT ISSUED

AGAINST PETITIONER IS
VALID AND LAWFUL.

10. 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. (Marcos II vs.
Court of Appeals G.R. No. 120880 June 5,
1997)

11. 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. Otherwise the
presumption of the correctness of tax assessment
stands (Commissioner of Internal Revenue vs.
Hantex Trading Co., Inc., G.R. No. 136975,
March 31, 2005). The presumption in favor of the
correctness of tax assessment stands where
evidence to the contrary is wanting. Hence, the
assessment issued against petitioner is imbued with
factual and legal bases.

12. All presumptions are in favor of the correctness of

tax assessments (Sy Po vs. Court of tax Appeals, 164
SCRA 524). Dereliction on the part of petitioner to
satisfactorily overcome the presumption of regularity
and correctness of the assessment will justify the
judicial upholding of said assessment notice.~
DECISION
CTA Case No. 9072
Page 6 of 30

PETITIONER IS LIABLE TO PAY

DEFICIENCY DOCUMENTARY
STAMP TAX IN THE AMOUNT
OF P310,262,534.02.

13. The Revenue Officers performed a comprehensive

audit procedure taking into account relevant
documents. Consequently, petitioner is liable to pay
deficiency documentary stamp tax for calendar year
2009 in the aggregate amount of P 310,262,534.02.
The following is a summary of the findings of the
revenue examiner as a result of the investigation
conducted, to wit:

Assessment Notice No. ELTAD-II-DS-09-0019

Total Deficiency Tax Per PAN 365,194,274.42

Less: Amount Paid on Dec. 28 2011 171,545 463.00
Deficiency DST 193 648,811.42
Add:
Interest 20% p.a. Dec. 28 2011 to Dec. 31, 2014 116 613 722.60
TOTAL AMOUNT DUE 3101262,534.02

14. The assessments issued against petitioner must

stand as supported by the following factual and legal
bases stated in the Details of Discrepancies (attached
to the Formal Letter of Demand and Final
Assessment Notice dated 28 October 2014),
reiterated and incorporated hereunder to wit:

DETAILS OF DISCREPANCIES

Assessment No. ELTAD-II-DS-09-0019

The law on documentary stamp tax was

previously amended by Republic Act No. 7660
[An Act Retionalizing Further the Structure and
Administration of the Documentary Stamp Ta;v
Amending for the Purpose Certain Provisions of
the National Internal Revenue Code, As
AmendedJ as implemented by Revenue
Regulations No. 9-94. Subsequent amendment
was brought about by the passage of RA 8424,
the Comprehensive Tax Reform Program o~
DECISION
CTA Case No. 9072
Page 7 of 30

1997, where only the time of filing of return

and payment of DST was changed. [Salient
feature of RA 8424, Revenue Memorandum
Circular 1-98J. The last significant changes in
DST law were introduced beginning March
2004 when Republic Act No. 9243 [An Act
Rationalizing the Provisions on the
Documentary Stamp Tax of the National
Internal Revenue Code of 199~ as Amended,
and for other purposes] took effect and
implemented by Revenue Regulations No. 13-
04. DST shall be levied wherever the document
made is made, signed, issued or accepted
when the obligation or right arises from
Philippine sources or the property is situated in
the Philippines [Section 173, NIRC of 199?].

The latest and significant change in DST law

was brought about by the decision of the
Supreme Court in CIR vs. Filinvest
Development Corporation, G.R. No.163653 and
GR 167689 both dated July 19, 2011 whereby
the Supreme Court held that intercompany
advances to affiliates supported by journal
vouchers, check vouchers, and even
instructional letters are subject to the
imposition of documentary stamp tax pursuant
to Section 180 of the Tax Code. When RA 9243
amended that Tax Code, Section 180 was
renumbered and renamed as Section 179.

Any of the parties to a transaction shall be

liable for the full amount of tax documentary
stamp tax due. However, whenever one of the
parties to the taxable transaction is exempt
from the tax imposed under Title VII of the
Code, the other party thereto who is not
exempt shall be the one directly liable for the
tax. (Section 2(a) & (b)/ Revenue Regulations
No. 9-00 November 2~ 2000).

Under Section 222 of the Tax Code of 1997,

in case of failure to file a return, the tax maybe
assessed at any time within ten (10) years after
the discovery of the omission. The Supreme~
DECISION
CfA Case No. 9072
Page 8 of 30

Court has already spoken on this issue. 'In case

of failure to file a return, the tax maybe
assessed at any time within ten years after the
omission, and the tax so assessed maybe
collected by levy upon real property within
three years following the assessment of the
tax' (CIR vs. Arturo Tulio, G.R. No. 139858,
October 25, 2005).

DST shall be levied wherever the document

is made, signed, issued or accepted when the
obligation or right arises from Philippine
sources or the property is situated in the
Philippines (Section 173, NIRC of 1997).

Our review of the accounting records

disclosed transactions with affiliates that
partake the nature of borrowing and lending
transactions subject to the imposition of DST
under Section 179 of the Tax Code of 1997, as
amended, in relation to the recent decision of
the Supreme Court in the case of GR No.
163653 and GR No. 167689 both dated July 19,
2011. As there was failure to file return and pay
the tax due thereon, surcharge was imposed
pursuant to Section 248 of the Tax Code of
1997, as amended.

Accordingly, there was found due from you

a deficiency documentary stamp tax amounting
to P 365,194,274.42, (please see Annex A)
inclusive of surcharge and interest amounting
to P 193,648,811.42. You were informed of
your DST liabilities and demand payment
thereof through our Pre-Assessment Notice
dated December 1, 2011 and received in your
end on December 23, 2011.

You must have understood and found merit

in the assessment that you paid 100°/o of the
basic tax amounting to P 171,545,463.00 on
December 28, 2011 and opted to apply for the
abatement of surcharge and interest
amounting to P 193,648,811.42 under the,
DECISION
CTA Case No. 9072
Page 9 of 30

provisions of Revenue Regulations No. 13-2001

on the ground of difficult interpretation of law.
However, your application for abatement of
penalties was subsequently denied by the
Commissioner of Internal Revenue.
Consequently, Formal Letter of Demand and
Assessment Notice must be issued to effect
collection of the unpaid amount plus interest.

As provided for under Revenue

Memorandum Circular no. (sic) 46-99, the 20°/o
interest per annum shall be imposed,
computed based on the 'unpaid amount',
pursuant to the provisions of Section 249 (D)of
the Code. This is also consistent with the
provisions of ARTICLE 1253 of the Civil Code
which provides: 'If the debt produces interest,
payment of the principal shall not be deemed
to have been made until the interest have been
covered.'

The records of this case disclosed that you

have not introduced any evidence to overthrow
the validity of our said findings.

15. Portions of the Final Decision on Disputed

Assessment is likewise incorporated herein, to wit:

FINAL DECISION ON DISPUTED ASSESSMENT

XXX XXX XXX

'In fine, when you paid the basic deficiency

documentary stamp tax on our findings that
your liabilities indicated as Advances From/To
Affiliates, Payable-Others and Notes Payable,
you must have expressly admitted that all
these transactions partake the nature of
borrowing transactions subject to the
imposition of DST as identified in our
assessment notices.

It should be noted that even in the year

subject of examination, the SIR ruling,..
DECISION
CfA Case No. 9072
Page 10 of 30

obtaining at that time was that inter-office

memos evidencing !endings or borrowings
extended by a corporation to its affiliates area
akin to promissory notes, hence, subject to
documentary stamp taxes. The BIR ruled 'After
careful restudy of the aforementioned ruling,
this office is of the opinion as it hereby hold
that inter-office memo covering the advances
granted by a corporation affiliate company,
i.e., or inter-office memo evidencing
!endings/borrowings is in the nature of a
promissory note subject to the documentary
stamp tax imposed under Section 180 of the
Tax Code of 1997. This modifies BIR Ruling No.
116-98 dated 30 July 1998 insofar as inter-
office memo covering the advances granted by
a corporation affiliate company, i.e., inter-
office memo evidencing lending/borrowings, is
concerned which shall be subject to
documentary stamp tax imposed under Section
180 of the Tax Code of 1997 (BIR Ruling No
108-99 dated 15 July 1999).

The legal basis of the assessment is

anchored in the Supreme Court decision in CIR
vs. Filinvest Development Corporation, G.R.
No. 167689. 'It is elementary that the
interpretation of a law by this Court constitutes
part of that law from the date it was originally
passed, since this Court's construction merely
established the contemporaneous legislative
intent that the interpreted law carried into
effect. ( Senarillos vs. Hermosisima, 100 Phil
501 (1956), as cited in Accenture, Inc. vs.
Commissioner of Internal Revenue, G. R. No.
190102, July 11, 2012). Accordingly, the
taxability of instructional letters, journal and
check vouchers for documentary stamp
purposes must already be obtaining when the
DST law were last amended by Republic Act no.
9234 in 2004.'

16. As decreed by the Honorable Supreme Court:~

DECISION
CTA Case No. 9072
Page 11 of 30

'Tax assessments by tax examiners are

presumed correct and made in good faith. The
taxpayer has the duty to prove otherwise. In the
absence of proof of any irregularities in the
performance of duties, an assessment duly made by
a Bureau of Internal Revenue examiner and
approved by his superior officers will not be
disturbed. All presumptions are in favor of the
correctness of tax assessments.'

17. Well settled in the field of taxation -the burden of

proof is on the taxpayer to present evidence to show
the incorrectness of the assessment. Petitioner
miserably failed to provide any concrete proof to
justify its claim in assailing the assessments issued
against it.

THE PREVAILING LAW IS

SECTION 179 OF THE TAX
CODE AS CORRECTLY
INTERPRETED IN THE
FILINVEST CASE. HENCE,
THERE IS NO RETROACTIVE
EFFECT IN THE INSTANT CASE.

18 Petitioner contends that BIR Ruling No. 108-99 dated

July 15, 1999 runs counter to the prevailing rule for
the year under audit 2009.

19. Petitioner hinged it's contention on its supposed

conclusion that starting 2002, the prevailing rule
as pronounced by theCA is that board resolutions,
inter-office memoranda, letters of instructions,
journal or cash vouchers evidencing
lending/borrowings are not subject to DST. In
relation thereto, it also asseverated that the case of
CIR vs. Filinvest Development Corporation cannot be
given retroactive effect.

20. With all due respect, respondent begs to disagree ..e-

DECISION
CTA Case No. 9072
Page 12 of 30

21. On the contrary, the basis of the deficiency DST

assessment is Section 179 of the Tax Code which is
the law on the imposition of DST on all debt
instrument for the year under audit. The ruling of
the Supreme Court in the case of Commissioner of
Internal Revenue vs. Filinvest Development
Corporation is an affirmation of respondent's position
that intercompany loans and advances covered by
mere office memo, instructional letter and/or cash
and journal vouchers qualify as loan agreements that
are subject to DST. Hence, there is no retroactive
effect in the instant case.

22. In the case of Diageo Philippines, Inc. vs. CIR, the

Honorable Court of Tax Appeals En Bane ruled, to
wit:

'In refuting the application of Aichi Case in

the instant petition, petitioner argues that
the rule enunciated in the Aichi Case
should not be applied retroactively as its
vested rights would be unduly impaired.
Petitioner asseverates that at the time it
filed the instant Petition for Review, the
controlling jurisprudence insofar as the
prescriptive period for filing a judicial
claim for refund under Section 112fAJ of
the NIRC of 1997, as amended was that
both the administrative and judicial
claims for input VAT refund must be filed
within two years reckoned from the filing of the
VAT return citing Atlas Consolidated Mining and
Development Corporation v. Commissioner of
Internal Revenue (the 'Atlas Case).

Petitioner's argument is misplaced.

It is axiomatic that when the Supreme

Court decides a case, it does not amount
to a passage of a new law but merely
interprets a pre-existing one, and such
judicial interpretation of a statute
constitutes part of that law as of the date
of its original passage. It merely casts ~
DECISION
CTA Case No. 9072
Page 13 of 30

light upon the contemporaneous

legislative intent of the law.

In the recent case of Accenture, Inc. v.

Commissioner of Internal Revenue, the
Supreme Court elucidated the foregoing
principle in this wise:

'Moreover, even though Accenture's

Petition was filed before Burmeister was
promulgated, the pronouncements made
in the case may be applied to the present
one without violating the rule against
retroactive application. When this
Court decides a case, it does not
pass a new law, but merely
interprets pre-existing one. When
this Court interpreted Section 102(b) of
the 1997 Tax Code in Burmeister, this
interpretation became part of the law
from the moment it became effective. It
is elementary that the
interpretation of a law by this Court
constitutes part of that law from the
date it was originally passed, since
this Court's construction merely
establishes the contemporaneous
legislative intent that the
interpreted law carried into effect.'

Thus, contrary to petitioner's

assertion, the Supreme Court's
interpretation of Section 112(C) of the
NIRC of 1997, as amended, in the Aichi
Case may be applied to the instant
case without violating the rule
against retroactive application as
such interpretation constitutes part
of the law as of the date of its
original passage. (Emphasis and
underscoring supplied) t::V
DECISION
CTA Case No. 9072
Page 14 of 30

23. Additionally, Petitioner is also arguing that

respondent issued Rulings delving on the same
subject which allegedly contradicts respondent's
position in her FDDA and likewise concluded that
rulings and circulars, rules and regulations
promulgated by the CIR cannot be given retroactive
application xxx.

24. Petitioner's reliance on the Rulings cited is manifestly

misplaced.

25. It must be stressed that the BIR Rulings cited by

petitioner do not apply in the instant case since these
are based only on a set of facts as represented by a
taxpayer and made applicable only to the facts and
circumstances thereto.

26. Besides, the BIR Rulings cited can only be utilized by

the taxpayer who applied for the same. Since
petitioner is not the one who applied for the BIR
Rulings, then it cannot invoke the principle on non-
retroactivity of BIR rulings. Thus, it is not a bar on
the government to enforce its power to tax.

27. In the case of CIR vs. Filinvest Development

Corporation, G.R. No. 163653 and GR 167689 both
dated July 19, 2011, the Honorable Supreme Court
ruled that:

'Applying the aforesaid prov1s1ons to the

case at bench, we find that the instructional
letters as well as the journal and cash vouchers
evidencing the advances FDC extended to its
affiliates in 1996 and 1997 qualified as loan
agreements upon which documentary stamp
taxes may be imposed. In keeping with the
caveat attendant to every BIR Ruling to
the effect that it is valid only if the facts
claimed by the taxpayer are correct, we
find that the CA reversibly erred in
utilizing BIR Ruling No. 116-98, dated 30
July 1998 which, strictly speaking, couldc:;.-
DECISION
CTA Case No. 9072
Page 15 of 30

be invoked only by ASB Development

Corporation. the taxpayer who sought
the same.' xxx

XXX XXX XXX

In its appeal before the CA, the CIR argued

that the foregoing ruling was later modified in
BIR Ruling No. 108-99 dated 15 July 1999,
which opined that inter-office memos
evidencing !endings or borrowings extended by
a corporation to its affiliates are akin to
promissory notes, hence, subject to
documentary stamp taxes. In brushing aside
the foregoing argument, however, the CAT
applied Section 246 of the 1993 NIRC from
which proceeds the settled principle that
rulings, circulars, rules and regulations
promulgated by the BIR have no retroactive
application if to so apply them would be
prejudicial to the taxpayers. Admittedly, this
rule does not apply: (a) where the taxpayer
deliberately misstates or omits material facts
from his return or in any document required of
him by the Bureau of Internal Revenue; (b)
where the facts subsequently gathered by the
Bureau of Internal Revenue are materially
different from the facts on which the ruling is
based; or (c) where the taxpayer acted in bad
faith. Not being the taxpayer who. in the
first instance, sought a ruling from the
CIR. however. FDC cannot invoke the
foregoing principle on non-retroactivity
of BIR rulings. (Empahsis and underscoring
supplied)

28. Moreover, petitioner already admitted that it relied

on a pronouncement made by the Honorable
Court of Appeals which only have a persuasive
effect since only Decisions of the Supreme
Court establish jurisprudence and doctrine on
this jurisdiction.~
DECISION
CTA Case No. 9072
Page 16 of 30

29. Based on the foregoing, since petitioner's reliance on

the supposed prevailing rule and jurisprudence as
well as BIR Rulings is inappropriate, it is liable to pay
for the deficiency tax due, surcharge, deficiency and
delinquency interest.

SECTION 204 OF THE TAX

CODE DOES NOT CONFER AN
ABSOLUTE RIGHT TO BE
ENTITLED TO THE REMEDY OF
AN ABATEMENT.

30. The power of the Commissioner to abate surcharges

on tax liabilities is enshrined in Section 204 of the
Tax Code. However, Section 204 of the Tax Code,
and its related implementing regulations and
issuances, does not confer to a taxpayer absolute
right to be entitled to the remedy of an abatement.

31. Moreover, the burden clearly is on the taxpayer to

convince the Commissioner that an abatement is in
order. The taxpayer must be able to provide
evidence to cast doubt on the correctness of the
assessment since tax assessments are presumed to
have been valid when issued.

32. This can be attributable to the fact that the grounds

for abatement are very specific, and failure to qualify
under any of those cases would automatically
warrant a denial of the application.

33. Section 204 of the Tax Code, provides:

Section 204. Authority of the Commissioner to

Compromise, Abate and Refund or Credit Taxes

XXX XXX XXX

(B) Abate or cancel a tax liability, when:r

DECISION
CTA Case No. 9072
Page 17 of 30

(1) The tax or any portion thereof appears

to be unjustly and excessively
assessed; or

(2) The administration and collection costs

involved do not justify and collection of the
amount due. (Emphasis and underscoring
supplied)

34. The taxpayer must likewise be able to prove

sufficiently that the abatement recourse meets the
qualifications and complies with the stringent
requirements under applicable laws and regulations.
Failure to do so will leave the taxpayer with no choice
but to fulfill his or her tax obligations.

35. The Commissioner by exercising the power to abate

tax liabilities diminishes or decreases the amount
that is rightfully due the government.

36. Simply stated, abatement takes the form of a waiver

on the part of the government of its right to demand
and receive contribution from its inhabitants.
Therefore, the waiver in order to be valid must be
made voluntarily. In the case of Spouses Va/derama
vs. Maca/de, citing the case of People v. Bodoso, no
less than the Honorable Supreme Court made it
explicit that: For a waiver of rights to exist, three
elements are essential: (a) existence of a right; (b)
the knowledge of the evidence thereof; and (c) an
intention to relinquish such right. In People v.
Bodoso, this Court held that it is elementary that the
existence of waiver must be positively demonstrated
since a waiver by implication cannot be presumed.
The standard of waiver requires that it "not only
must be voluntary, but must be knowing,
intelligent, and done with sufficient
awareness of the relevant circumstances and
likely consequences." There must thus be
persuasive evidence of an actual intention to
relinquish the right. (Emphasis ours)
37. Furthermore, the approval of an abatement is within
the judgment and discretion of the Commissioner o{;,a..
DECISION
CTA Case No. 9072
Page 18 of 30

Internal Revenue, or any other authorized officer, as

the case may be. To reiterate, what has been
bestowed to the Commissioner by law is not only the
power to abate tax liabilities but also the discretion
when or when not to exercise it.

38. In the case of Licomcen, Inc. vs. Guillermo T.

Parayno, eta/., the Honorable Court of Tax Appeals
En Bane, held to wit:

'It must be emphasized that the

authority of the Commissioner of
Internal Revenue (CIR) to abate a tax
liability involves the exercise of
discretion and thus, would depend on the
CIR's own judgment. Hence, petitioner
should not anticipate that is application
for abatement would be approved by its
mere filing of the same. This especially.
holds true since more than one (1) year had
already elapsed from the filing of such
application, i.e., on March 29, 2007.

Moreover, at this stage, the subject

assessment of the BIR is presumed
correct and made good faith. The
taxpayer, petitioner herein, has the duty
of proving otherwise. Thus, petitioner,
notwithstanding its application for abatement
of its tax liability, is expected to prosecute the
instant Petition for Review without
unnecessary delay'. (Emphasis and
underscoring supplied)

39. Since tax abatement is a diminution or decrease in

the amount of tax imposed, the BIR expectedly has
to act upon these offer of abatement with extreme
caution. In the matter of abatement of tax penalties,
the Commissioner of Internal Revenue should not act
from motives merely out of compassion or charity,
but should consider the pecuniary interest of the
government, justice and equity and public policy.~
DECISION
CTA Case No. 9072
Page 19 of 30

THE COLLECTION OF
SURCHARGE AND PENALTIES
ACCOMPANYING THE TAX
LIABILITIES IS JUSTIFIED.

40. Section 248 of the National Internal Revenue Code

provides:

Section 248. Civil Penalties.- There shall be

imposed, in addition to the tax required to be
paid, a penalty equivalent to twenty-five
percent (25°/o) of the amount due, in the
following cases:

1. Failure to file any return and pay the

tax due thereon as required under the
provisions of this Code or rules and
regulations on the date prescribed. xxx
(Emphasis ours)

41. In addition, Section 249 of the same Tax Code

provides:

Section 249. Interest. -

(A) In general. - There shall be assessed

and collected on any unpaid amount of tax,
interest at the rate of twenty percent (20°/o)
per annum, or such higher rate as may be
prescribed by rules and regulations, from the
date prescribed for payment until the payment
is fully paid. (Emphasis ours)

42. The imposition of surcharge and interest is justified

because the intention of the law is precisely to
discourage delay in the payment of taxes due to the
State and, in this sense, the surcharge and interest
charged is not penal but compensatory in nature.
They are compensation to the State for the delay in
payment of the tax and for the concomitant use by
the taxpayer of the funds that rightfully should be in?
DECISION
CTA Case No. 9072
Page 20 of 30

the government's hands. Thus for failure of

Petitioner to timely comply with its obligation,
imposition of surcharge is nothing but a consequence
of its own act.

A Notice of Pre-Trial Conference 23 was issued by the Court on

September 11, 2015, setting the case for pre-trial conference on
October 15, 2015,but later reset24 to November 12, 2015. Accordingly,
Respondent's Pre-Trial Brief2 5 was filed on October 6, 2015 while the
Pre-Trial Brief for the Petitioner26 was filed on October 9, 2015.

The parties submitted their Joint Stipulation of Facts and Issues27

on November 27, 2015. Thereafter, on January 18, 2016, the Court
issued a Pre-Trial Order approving the same and the pre-trial was
deemed terminated. 28

During trial, petitioner presented Ms. Zerlynette C. Ong,

petitioner's accountant, as its witness. 29 Petitioner formally offered 30
Exhibits "P-1" to "P-13", inclusive of sub-markings, which were all
admitted in evidence. 31

On the other hand, respondent presented Revenue Officer Flor

Jasmin R. Soriano32 • Respondent formally offered 33 Exhibits "R-1" to
"R-15", inclusive of sub-markings, which were all admitted in
evidence. 34

The case was submitted for decision 35 on September 15, 2016

considering the Memorandum for the Petitioner36 filed on September
7, 2016 and respondent's Manifestation 37 filed on August 3, 2016,
adopting his Answer dated September 8, 2015 as his memorandum inc::a.,
this case~

23
Docket, pp. 121-122.
24
Notice of Resetting dated October 13, 2015, Docket, p. 142.
25 Docket, pp. 123-128.
26
Docket, pp. 133-140.
27
Docket, pp. 206-212.
28
Docket, pp. 214-218.
29
Minutes of the Hearing dated February 10, 2016, Docket, p. 226; Exhibit "P-13".
30
Resolution dated April 25, 2016, docket, pp. 274-275.
31
Formal Offer of Evidence for the Petitioner filed on March 22, 2016; Docket, pp. 244-250.
32
Minutes of the Hearing dated June 8, 2016, Docket, p. 290; Exhibit "R-15".
33
Formal Offer of Documentary Evidence filed on June 22, 2016; Docket, pp. 296-305.
34
Resolution dated July 26, 2016, Docket, pp. 319-320.
35
Resolution dated September 15, 2016, Docket, p. 351.
36
Docket, pp. 330-350.
37
Docket, pp. 321-324.
DECISION
CTA Case No. 9072
Page 21 of 30

The sole issue presented by the parties for this Court's resolution
is whether petitioner is liable to pay the surcharge, deficiency interest
and delinquency interest in the amount of P310,262,534.02 pursuant
to Sections 248 and 249 of the NIRC of 1997, as amended. 38

As mentioned earlier, the PAN with Details of Discrepancies39

assessed petitioner for deficiency DST, computed as follows:

Transactions subject to DST:

Advances to Affiliates 5 391 387 600.00
Advances from Affiliates 28 760 767 675.00
Payable-Others 136 000 000.00
Notes Payable 20 936 804.00
Total Amount subiect to DST 34 309 098 079.00

DST Due Thereon 171 545 463.00

Add: 25% Surcharge for failure to file DST Return 42,886,365.75
and pay corresponding tax due
20% Interest p.a. until December 31, 2011 150 762 445.67 193 648 811.42
Total Amount due 365.194.274.42

In the Details of Discrepancies, respondent states that a review

of petitioner's financial statements disclosed outstanding transactions
that are qualified for imposition of DST in light of the recent decision
of the Supreme Court in CIR vs. Filinvest Development Corporation,
G.R. Nos. 163653 and 167689, July 19, 2011 (Filinvestcase). One of
the issues resolved in the said case pertains to DST on intercompany
advances to affiliates. The Supreme Court ruled that the "documentary
stamp taxes due on the instructional letters as well as journal and cash
vouchers evidencing the advances FDC extended to its affiliates are
declared valid."

Respondent found that the Advances to Affiliates were made in

2008, Advances from Affiliates were received in the years 2000, 2006,
2007 and 2008, while Payable-Others and Notes Payable were
transactions in 2008. However, upon checking the SIR's Integrated
Tax System, respondent found no payment for DST in those mentioned
years, hence, the deficiency DST assessment.

Respondent also assessed petitioner with 25°/o surcharge

pursuant to Section 248(A) of the NIRC of 1997, as amended, in view
of petitioner's failure to file any return and pay the tax due thereon~
38
Issue, JSFI, Docket, p. 207.
39 Exhibits "P-6" and "P-6-a"; Exhibit "R-9".
DECISION
CTA Case No. 9072
Page 22 of 30

while the 20°/o interest was based on Section 249(8) of the NIRC of
1997, as amended.

Thereafter, respondent issued the FLD dated October 28, 2014

with the Details of Discrepancies and Assessment Notice No. ELTAD-
II-DS-09-001940, reiterating its assessment in the PAN but took into
consideration petitioner's payment of the basic deficiency DST
amounting to P171,545,463.00, hence, the amount still due was
computed as follows:

Total Deficiency Tax Per PAN 365 194,274.42

Less: Amount Paid on Dec. 28, 2011 171 545,463.00
Deficiency DST 193 648 811.42
Add:
Interest 20% p.a. Dec. 28, 2011 to Dec. 31, 2014 116 613 722.60
TOTAL AMOUNT DUE 310,262,534.02

The Details of Discrepancies explained that the latest and

significant change in DST law was brought about by the decision of the
Supreme Court in CIR vs. Filinvest Development Corporation whereby
the Supreme Court held that intercompany advances to affiliates
supported by journal vouchers, check vouchers, and even instructional
letters are subject to the imposition of DST pursuant to Section 180 of
the Tax Code. When Republic Act No. 9243 amended the Tax Code,
Section 180 was renumbered as Section 179.

It was further stated in the Details of Discrepancies that:

"You must have understood and found merit in the

assessment that you paid 100°/o of the basic tax amounting
to P171,545,463.00 on December 28, 2011 and opted to
apply for the abatement of surcharge and interest
amounting to P193,648,811.42 under the provisions of
Revenue Regulations No. 13-2001 on ground of difficult
interpretation of law. However, your application for
abatement of penalties was subsequently denied by the
Commissioner of Internal Revenue. Consequently, Formal
Letter of Demand and Assessment Notices must be issued
to effect collection of the unpaid amount plus interest.,..

40
Par. 5, Admitted Facts, JSFI, Docket, p. 206; Exhibits "P-3", "P-3-a", "P-3-b" and "P-3-c"; Exhibits
"R-11" and "R-11-a".
DECISION
CfA Case No. 9072
Page 23 of 30

As provided for under Revenue Memorandum

Circular No. 46-99, the 20°/o interest per annum shall be
imposed, computed based on the 'unpaid amount'
pursuant the to provisions of Section 249(D) of the Code.
This is also consistent with the provisions of ARTICLE 1253
of the Civil Code which provides: 'If the debt produces
interest, payment of the principal shall not be deemed to
have been made until the interests have been covered.'

The records of this case disclosed that you have not

introduced any evidence to overthrow the validity of our
said findings."

The FDDA41 basically reiterated the findings of the PAN and FLD
and added that:

"In fine, when you paid the basic deficiency

documentary stamp tax on our findings that your liabilities
indicated as Advances From/To Affiliates, Payable-Others
and Notes Payable, you must have expressly admitted that
all these transactions partake the nature of borrowing
transactions subject to the imposition of DST as identified
in our assessment notices.

It should be noted that even in the year subject of

examination, the BIR ruling obtaining at that time was that
inter-office memos evidencing !endings or borrowings
extended by a corporation to its affiliates are akin to
promissory notes, hence, subject to documentary stamp
taxes. The BIR ruled that 'After a careful restudy of the
aforementioned ruling, this office is of the opinion as it
hereby hold that inter-office memo covering the advances
granted by a corporation affiliate company, i.e. or inter-
office memo evidencing !endings/borrowings is in the
nature of a promissory note subject to the documentary
stamp tax imposed under Section 180 of the Tax Code of
1997. This modifies BIR Ruling No. 116-98 dated July 30,
1998 insofar as inter-office memo covering the advances
granted by a corporation affiliate company, i.e., inter-office
memo evidencing !endings/borrowings is concerned which
shall be subject to documentary stamp tax imposed under~

41
Exhibit "P-12"; Exhibit "R-14".
DECISION
CTA Case No. 9072
Page 24 of 30

Section 180 of the Tax Code of 1997. ( BIR Ruling No. 108-
99 dated 15 July 1999).

The legal basis of the assessment is anchored in the

Supreme Court decision in CIR vs. Filinvest Development
Corporation, G.R. No. 167689. 'It is elementary that the
interpretation of a law by this Court constitutes part of that
law from the date it was originally passed, since this Court's
construction merely established the contemporaneous
legislative intent that the interpreted law carried into
effect. (Senarillos vs. Hermosisima/ 100 Phil 501 (1956) as
cited in Accenture/ Inc. vs. Commissioner of Internal
Revenue/ G.R. No. 190102, July 11/ 2012). Accordingly,
the taxability of instructional letters, journal and check
vouchers for documentary stamp purposes must already
be obtaining when the DST laws were last amended by
Republic Act No. 9243 in 2004."

At the outset, petitioner points out that the present assessment

of P310,262,534.02 pertains only to the surcharge and interest which
remain from the total assessment indicated in the PAN, with the
additional assessment for interest coming from the issuance of the
FLD.

From the foregoing, the Court finds that petitioner already paid
the basic deficiency DST assessed by respondent. Petitioner only
contests respondent's imposition of the corresponding surcharge and
interest arising from the DST assessment. This is confirmed by
petitioner's statement in its Memorandum, to wit:

"32) It must be noted that there is no dispute as to

the correctness of the CY 2009 assessment of Basic DST
against Petitioner for it is moot in view of Petitioner's
payment of Basic DST, without protest, on December 28,
2011, or merely five (5) days from the issuance of PAN in
December 23, 2011. What remains as an issue is the
propriety or equitableness of the imposition of interests
and surcharge, which was the subject of the questioned
assessment". 4 ~

42
Par. 32, IV. Discussions/Arguments, Memorandum for the Petitioner, Docket, p. 340.
DECISION
CTA Case No. 9072
Page 25 of 30

Petitioner argues there were conflicting rulings on the imposition

of DST on intercompany advances prior to the Supreme Court decision
in the Filinvest case. The BIR itself has been inconsistent with its
position as to the imposition of DST on intercompany advances. If the
agency tasked to enforce tax laws was indecisive as to the scope of
Section 179 of the NIRC, much less should be expected from taxpayers
who are not tasked to make such interpretations and merely take as
guidance the BIR rulings and court decision at that time.

The Court agrees with petitioner's observation that there were

conflicting BIR rulings on the imposition of DST on intercompany
advances covered by board resolution, office memo, instructional letter
and/or cash and journal vouchers prior to the 2011 Filinvestcase.

In BIR Ruling No. 116-98 dated July 30, 1998, the BIR held that
"inter-office memo evidencing !endings/borrowings which is neither a
form of promissory note nor a certificate of indebtedness issued by the
corporation-affiliate", is not subject to DST. Rather, inter-office memo
is "being prepared for accounting purposes only in order to avoid the
co-mingling of funds of the corporate affiliates".

However, in BIR Ruling No. 108-99 dated July 15, 1999, the BIR
modified its earlier ruling and held that inter-office memo covering the
advances granted by a corporation affiliate company is in the nature
of a promissory note subject to DST.

Subsequently, in BIR Ruling No. DA-666-A-99 dated December

3, 1999, the BIR reverted to its earlier position and held that since
inter-company advances are not covered by loan agreements,
promissory notes, debit and credit memos nor by inter-company loan
memos and since the only documents relating to the inter-company
advances are the board resolutions of the lenders and the cash
vouchers issued by the lenders which are acknowledged by the
borrowers, the said inter-company advances are not subject to DST.
Such board resolutions of the lenders and the cash voucher
acknowledged by the borrowers are not in the nature of promissory
note subject to DST.

Significantly, in a number of rulings, e.g., BIR Ruling Nos. DA-

696-06 dated December 11, 2006, DA-701-07 dated December 28,
2007, DA-016-08 dated January 17, 2008, and DA-(C-035) 127-08
dated August 8, 2008, the BIR held that board resolution, inter-office,--
DECISION
CTA Case No. 9072
Page 26 of 30

memoranda, letters of instructions, bank transfer forms, journal or

cash/check vouchers or similar documents evidencing intercompany
lending/borrowings are not subject to DST.

In APC Group, Inc. vs. CIR, CTA Case No. 6155, March 11, 2002,
CIR vs. APC Group, Inc., CA-G.R. SP No. 69869 dated November 29,
2002 and Filinvest Development Corporation and Filinvest Alabang,
Inc. vs. CIR, CTA Case No. 6182, September 10, 2002, CIR vs. Filinvest
Development Corporation and Filinvest Alabang, Inc., CA-G.R. No. SP
No. 74510, January 26, 2005, both the Court of Tax Appeals (CTA) and
Court of Appeals (CA) held that board resolutions, inter-office
memoranda, letters of instructions, journal or cash vouchers
evidencing lending/borrowings are not subject to DST.

While BIR rulings are not conclusive in the interpretation of tax

laws, still, the interpretation placed upon a tax statute by the BIR, the
administrative agency tasked to enforce tax laws, is entitled to great
respect. 43

As to decisions of the CTA/CA, although only the decisions of the

Supreme Court establish jurisprudence or doctrines in this jurisdiction,
nonetheless the decisions of subordinate courts have a persuasive
effect and may serve as judicial guides. 44

From the foregoing rulings of the BIR and CTA/CA issued prior
to Rlinvest case promulgated on July 19, 2011, the taxpayer cannot
be faulted if it relied on these rulings and believed in good faith that
intercompany advances covered by board resolution, office memo,
instructional letter and/or cash and journal vouchers or similar
documents are not subject to DST.

It should be noted that petitioner does not question the

application of the Filinvest ruling to its case but rather seeks the
cancellation of the surcharge and interest because of its good faith and
honest belief that intercompany advances covered by board resolution,
inter-office memo, instructional letter and/or cash and journal
vouchers or similar documents are not subject to DST.~

43
Philippine Bank Communications vs. CIR/ eta/., G.R. No. 112024, January 28, 1999.
44
CIR vs. Court of Appeals/ Atlas Consolidated Mining and Development Corporation and Court of
Tax Appeals, G.R. Nos. 104151 and 105563, March 10, 1995 citing Paras, E., Civil Code of the
Philippines Annotated, Vol. 1, Twelfth Edition, 58-59, citing Vda. de Miranda/ eta/. vs. Imperia~
eta!., 77 Phil. 1066 (1947).
DECISION
CTA Case No. 9072
Page 27 of 30

In Michel J. Lhuillier Pawnshop, Inc. vs. Cif?l 5, the Supreme Court

held that:

"Nevertheless, all is not lost for petitioner. The

settled rule is that good faith and honest belief that
one is not subject to tax on the basis of previous
interpretation of government agencies tasked to
implement the tax law, are sufficient justification to
delete the imposition of surcharges and interest. In
Connell Bros. Co. (PhtZ} v. Collector ofInternal Revenue, it
was held that:

We are convinced that appellant, in

preparing its sales invoices as it did, was not
guilty of an intentional violation of the law. It
did not delay filing the returns for the sales
taxes corresponding to the period in question,
let alone did so purposely. The delay was in the
payment of the deficiency, which arose from a
mistaken understanding of the regulations laid
down by appellee. The ensuing controversy
was, in our opinion, generated in good faith
and should furnish no justification for the
imposition of a penalty.

XXX XXX XXX

This ruling was subsequently reiterated in Tuason, Jr.

v. Lingad, where we deleted the order to pay interest and
surcharges, and in Commissioner of Internal Revenue v.
Republic Cement Corporation, where the same surcharge
was dispensed with because of the taxpayer's good faith
and the BIR's previous erroneous interpretation of the laws
involved. We see no reason not to apply the same
doctrine in the instant case which settles the
divergent rulings of the BIRon DST and establishes
the foremost categorical pronouncement of the
Court that pledge transactions entered into by
pawnshops are subject to DST." (Emphasis supplied)~

45
G.R. No. 166786, September 11, 2006.
DECISION
CTA Case No. 9072
Page 28 of 30

Applying the foregoing, the Court is convinced that petitioner

acted in good faith when it believed that intercompany advances are
not subject to DST prior to the 2011 Filinvest case. After all, it was
based on numerous rulings of the BIR that intercompany advances are
not subject to DST. Moreover, the CA and CTA, the specialized body
handling tax cases, also had similar rulings. Hence, petitioner cannot
be faulted if it relied in good faith on these rulings.

Moreover, after receipt of the PAN on December 23, 2011,

petitioner immediately paid the basic deficiency DST on December 28,
2011. In fact, petitioner even paid the basic deficiency DST assessed
by respondent for the years 2000, 2006, 2007 and 2008 46 even though
the Letter of Authority4 7 only authorizes the BIR to conduct an
investigation of petitioner's books of accounts for taxable year 2009.
The breakdown of the basic deficiency DST assessment is as follows
(Annex A of the Details of Discrepancies of the FLD):

Particular Total DST Rate DST Due

Advances to Affiliates
Total- 2008 5 39t387,600.00 0.005 26 956,938.00

Advances from Affiliates

Total-2000 251,033,996.00 0.005 1,255,170.00
Total-2006 23 117 262,225.00 0.005 115,586,312.00
Total-2007 1 083,854.00 0.005 5,420.00
Total-2008 5 391,387,600.00 0.005 26,956,938.00
Total-2009 (2, 189, 123,581.00)
Total 26 571,644,094.00

Payables-Others
Total-2008 136,000,000.00 0.005 680 000.00

Notes Payable
Total-2008 20,936,804.00 0.005 104,685.00
171,545,463.00

In the case of CIR vs. Sony Philippines, Inc. 48 , the BIR issued a
Letter of Authority to examine the taxpayer's books of accounts and
other accounting records for "the period 1997 and unverified prior
years." The Supreme Court held that the CIR acting through its
revenue officers went beyond the scope of their authority as to the
deficiency tax assessment arrived at based on records from January to~

46
Exhibit "P-3-b"; Exhibit "R-11".
47
Exhibit "P-4"; Exhibit "R-1".
48
G.R. No. 178697, November 17, 2010.
DECISION
CTA Case No. 9072
Page 30 of 30

ATTESTATION

I attest that the conclusions in the above Decision were reached

in consultation before the case was assigned to the writer of the
opinion of the Court's Division.

~~c.~~~
ltJANITO c. CASTANEf>A, JR.
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the

Division Chairperson's Attestation, it is hereby certified that the
conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court.

G
Presiding Justice
DECISION
CTA Case No. 9072
Page 29 of 30

March 1998. Thus, the deficiency tax assessment from January to

March 1998 is not valid and must be disallowed.

On this point alone, the deficiency DST assessment for 2000,

2006, 2007 and 2008 should be disallowed since the Letter of Authority
issued by the BIR covers only the period of January 1, 2009 to
December 31, 2009. And, an examination of the breakdown of the
DST assessment will show that for 2009 no DST was even assessed.
Be that as it may, petitioner only wants to show that it was in good
faith when confronted with an assessment for DST for the years 2000,
2006, 2007, 2008 and 2009.

All these circumstances demonstrate petitioner's good faith and

are sufficient justification to delete the imposition of surcharge and
interests.

WHEREFORE, premises considered, the instant Petition for

Review is GRANTED. Accordingly, respondent's imposition of
surcharge and interests arising from the deficiency DST assessment is
DELETED. Consequently, respondent's Formal Letter of Demand
dated October 28, 2014 and Assessment Notice No. ELTAD-II-DS-09-
0019, essentially assessing petitioner for surcharge and interests, are
CANCELLED.

SO ORDERED.

CAESAR A. CASANOVA
Associate Justice

WE CONCUR:

~~ C.~--o4_,9,.. ~f.~
JUKNITO C. CASTANEDl, JR. CATHERINET.MANAHAN
Associate Justice Associate Justice