The Court of Tax Appeals (CTA) has denied the petition of the estate of slain businessman Henry T. Lao for the refund of P350 million in alleged illegally collected income tax and value-added tax (VAT) for taxable year 2015.
The denial was contained in a decision promulgated last Dec. 19 based on the petition filed by Jose T. Lao, brother of the late businessman and court-appointed administrator of the estate.
“While petitioner (Jose T. Lao in behalf of the estate) alleges that it filed a request for the approval of the availment of compromise settlement, a review of the records shows that no evidence was presented to prove this allegation. As such, the Court cannot determine from the pieces of evidence whether the alleged compromise settlement was made pursuant to a doubtful validity of the assessment or petitioner's financial incapacity,” the CTA ruled.
Thus, the CTA declared that “the Court has no basis to conclude that petitioner's subject payments were made pursuant to a compromise agreement.”
Henry T. Lao was the owner of a chain of department stores in Baguio City and Benguet.
Jose T. Lao was appointed estate administrator during the judicial settlement of estate proceedings following the death of his brother who was found dead with multiple stab wounds inside his house in Baguio City on Dec. 1, 2015.
The CTA noted that “this case emanated from the FDDA (Final Decision on Disputed Assessment) dated May 31, 2019, wherein petitioner was assessed the total amount of One Billion Two Hundred Twenty Nine Million Nine Hundred Thirty Two Thousand One Hundred Thirty Nine & 50/00 Pesos (P1,229,932,139.50) representing deficiency income and value-added taxes.”
It cited that “records reveal that instead of filing a request for reconsideration with the CIR (Commissioner of Internal Revenue) or an appeal, petitioner filed a request to avail compromise settlement for the release of CAR in relation to the judicial settlement of the estate proceedings.”
“Here, petitioner failed to appeal the FDDA within the statutory period. As provided in Section 228 of the 1997 NIRC (National Internal Revenue Code), as amended, the failure of a taxpayer to appeal from an assessment on time renders the assessment final, executory and demandable. Consequently, petitioner is precluded from disputing the correctness of the assessment,” it said.
After filing a request to avail of a compromise settlement for the release of the Certificates Authorizing Registration (CAR) in relation to the judicial settlement of the estate proceedings, court records show that Jose T. Lao paid P200 million on June 28, 2019 in relation to the offer of compromise.
The petitioner then submitted on July 3, 2019 and July 18, 2019 letter requests for the issuance of the CAR but was denied by the Revenue District Officer (RDO).
As a consequence, the BIR later issued a warrant of distraint and/or levy through the regional director (RD) who issued several warrants of garnishments dated Aug. 14, 2019 to different banks.
The RD later ordered the lifting of warrants of garnishments to different banks on Oct. 23, 2019 after Jose T. Lao paid the BIR P150 million on Oct. 22, 2019.
The National Evaluation Board approved in 2020 the petitioner’s application for compromise settlement of deficiency income and value-added taxes amounting to P1,229,932,139.50 after the BIR’s Technical Working Group (TWG) on Compromise issued a certificate of availment of compromise settlement on March 9, 2020.
The CTA noted the TWG later issued on June 9, 2020 “the Authority to Cancel Assessment No. ACA201900002475, where the BIR cancelled the amount of Eight Hundred Seventy-Nine Million Nine Hundred Thirty Two Thousand One Hundred Thirty Nine and 50/100 Pesos (P879,932,139.50) by virtue of petitioner's total payment in the amount of Three Hundred Fifty Million Pesos (P350,000,000.00).”
Then, Jose T. Lao filed before the CTA on June 28, 2021 the petition for review seeking the refund of P350 million. It was denied.