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LAW 411
Atty. Oliver Saniel

GS 105 (4:30- 6:30 pm)

July 18, 2016

CASE No.2:
G.R. No. 152532, August 16, 2005

Cite or identify at least 10 acts.

Acts that justify the abovementioned case which proved that based on the nature
of the transactions described a tax pyramiding by the said institution. (see
attached case, noted as (C)).
1. Erroneous Specific Tax Assessment
According to Atty. Howard Chan (2013), it was found by the Sandiganbayan
that there was an improper computation in the tax liability of SMC. It was
therefore proper to have the tax be reduced from P302 million to P22 million.
2. Erroneous Ad Valorem Tax Assessment
It was presented by court:
(a) that the computation of the ad valorem tax deficiency was erroneous
since the BIR examiners disallowed the deduction of the price differential
(cost of freight from brewery to warehouse) and ad valorem tax. (see
attached case).
3. Tax Assessment Erroneous
Supported by the original assessments mentioned in the case
()the original assessment of P342,616,217.88 was reduced toP302,
[0]51,048.93 due to the crediting of the taxpayers excess ad valorem tax
deposit of P21,805,409.10 with a reiteration of the payment of the
assessed specific and ad valorem tax as reduced (see attached case).

BENTILLO [CASE No.5: People of the Philippines vs. SANDIGANBAYAN]

The fact remains, however, that the initial tax assessment of P300 million was
correctly found by the SB to be overly excessive and erroneous. (see
attached case).
4. Abatement
The abatement of the excessive and erroneous taxes was not only within the
discretion of respondent (see attached case).
Furthermore, the Court correctly held that the abatement of SMCs ad valorem
taxes proper. (see attached case).
According to Atty. Howard Chan, abatement is the diminution or decrease in
the amount of tax imposed. It refers to the act of eliminating or nullifying; of
lessening or moderating. To abate is to nullify or reduce in value or amount

5. Tax compromise
As explained by Chan (2013), the BIR has the power to abate or cancel the
whole or any unpaid portion of a tax liability, inclusive of increments, if its
assessment is excessive or erroneous, or if the administration costs involved
do not justify the collection of the amount due.
To compromise a tax liability of more than P300 million for only P10 million
may appear to be an arbitrary action grossly disadvantageous to the
government. (see attached case).
As justified by the court finding as the Court finds the compromise agreement
to have been entered into illegally, the [BIR] is hereby ordered to collect from
[SMC] the amount of P292,951,048.93 representing its tax liabilities covering
the period from January 1, 1985 to March 31, 1986. (see attached case,
noted as (C)). The term used should be abatement abatement (not
compromise as termed by SMC).

6. Acceptance of P10 M for the alleged compromise

Based on other researched case digests, it justified that former BIR
Commissioner Bienvenido A. Tan Jr is well within his power to accept the P10

million compromise offer. And it was considered to be an abatement (not

compromise as termed by SMC). Accepting the minimal P10 million offer was
to avoid a protracted and costly litigation (Chan,2013).
Further justified and presented in the attached case that the Sandiganbayan
did not gravely abuse its discretion when it upheld private respondents
acceptance of SMCs compromise offer of P10 million.
7. Tax pyramiding
A tax should not be imposed upon another tax. This is tax pyramiding, which
is present but has no basis either in fact or in law.
Further emphasized by Atty. Chan (2013), the error basically imposed tax on
top of another tax which if allowed would be unfair to the taxpayer.
8. Price differential Deduction
To simply justify
No ad valorem tax can ever be paid before the removal of the fermented
liquor from the place of production. This outcome cannot be countenanced,
for it would be contrary to what the law mandates -- payment before removal.
(see attached case).
9. No Abuse of discretion
No grave abuse of discretion was committed when the SB upheld private
respondents approval of SMCs application of its excess ad valorem
tax deposits to its specific tax deficiency. (see attached case, noted as (C)).
10. Government Disadvantage
Already at an disadvantage, as presented in the case the Court is correct in
ruling that there was a compromise of SMCs tax which resulted in undue
injury to the government. (see attached case)
Web References:

Atty. Howard Chan (January 2013). People of the Philippines vs

Sandiganbayan and Bienvenido Tan, Jr. Retrieved July 18, 2016 from