G.R. No. 159694 January 27, 2006 relevant documents before the compromise is signed by the CIR.

vant documents before the compromise is signed by the CIR. Reyes posited that
the absence of the requisite initials and signatures on said documents does not vitiate
COMMISSIONER OF INTERNAL REVENUE vs. AZUCENA T. REYES the perfected compromise agreement
Topic: Formal Letter of Demand > The CIR countered that without the approval of the NEB, The application for
compromise with the BIR cannot be considered a perfected or consummated, an
Facts:
application for compromise of a tax liability under RR No. 6-2000 and RMO No. 42-
> On February 12, 1998, the Chief, Assessment Division, Bureau of Internal Revenue 2000 requires the evaluation and approval of either the NEB or the Regional
(or "BIR"), issued a preliminary assessment notice against the estate of Maria Evaluation Board (or "REB")
Tancino amounting to P14,580,618
Issues:
>On May 10, 1998, the heirs of the decedent received a final estate tax assessment...
notice and a demand letter which amounted to P14,912,205 "1. Whether or not an offer to compromise by the [CIR], with the acquiescence by the
Secretary of Finance, of a tax liability pending in court, that was accepted and paid by
>On June 1, 1998 Felix M. Sumbillo protested the assessment on behalf of the heirs the taxpayer, is a perfected and consummated compromise.
on the ground that the subject property had already been sold by the decedent
"2. Whether this compromise is covered by the provisions of Section 204 of the Tax
sometime in 1990.
Code (CTRP) that requires approval by the BIR [NEB]."
>On January 5, 1999, a Warrant of Distraint and/or Levy was served upon the estate
Whether petitioner's assessment against the estate is valid.
>On March 2, 1999 Reyes protested the notice of levy. However, on March 11, 1999,
"II. Whether respondent can validly argue that she, as well as the other heirs, was not
the heirs proposed a compromise settlement of P1,000,000.00.
aware of the facts and the law on which the assessment in question is based, after
>The CIR rejected Reyes's offer As the estate failed to pay its tax liability within the she had opted to propose several compromises on the estate tax due, and even
April 15, 2000 deadline. The BIR notified Reyes on June 6, 2000 that the subject prematurely acting on such proposal... by paying 20% of the basic estate tax due.
property would be sold at public auction on August 8, 2000.
Ruling:
>On June 13, 2000, Reyes filed a protest with the BIR Appellate Division Without
acting on the protest and offer, the CIR instructed the Collection Enforcement Division Second paragraph of Section 228 of the Tax Code[12] is clear and mandatory.
to proceed with the August 8, 2000 auction sale The taxpayers shall be informed in writing of the law and the facts on which the
>The CIR filed a Motion to Dismiss the petition on the grounds... because the assessment is made: otherwise, the assessment shall be void."
assessment against the estate is already final and executory In the present case, Reyes was not informed in writing of the law and the facts on
>On November 25, 2000, Reyes filed an application with the BIR for the compromise which the assessment of estate taxes had been made. She was merely notified of the
settlement (or "compromise") of the assessment against the estate pursuant to Sec. findings by the CIR, who had simply relied upon the provisions of former Section
229[13] prior to its amendment by Republic Act (RA) No. 8424, otherwise known as
204(A) of the Tax Code, as implemented by RR No. 6-2000 and RMO No. 42-2000.
the Tax Reform Act of 1997.
>In said motion, she alleged that the CIR had not yet signed the compromise
because of procedural red tape requiring the initials of four Deputy Commissioners on
First, RA 8424 has already amended the provision of Section 229 on protesting an
assessment. The old requirement of merely notifying the taxpayer of the CIR's
findings was changed in 1998 to informing the taxpayer of not only the law, but... also
of the facts on which an assessment would be made; otherwise, the assessment itself
would be invalid.

It was on February 12, 1998, that a preliminary assessment notice was issued
against the estate. On April 22, 1998, the final estate tax assessment notice, as well
as demand letter, was also issued. During those dates, RA 8424 was already in
effect. The notice required under the... old law was no longer sufficient under the new
law.

The act cannot be taken to mean that Reyes... already knew the law and the facts on
which the assessment was based. It does not at all conform to the compulsory
requirement under Section 228

It would be premature for this Court to declare that the compromise on the estate tax
liability has been perfected and consummated, considering the earlier determination
that the assessment against the estate was void. Nothing has been settled or
finalized. Under Section 204(A)... of the Tax Code, where the basic tax involved
exceeds one million pesos or the settlement offered is less than the prescribed
minimum rates, the compromise shall be subject to the approval of the NEB
composed of the petitioner and four deputy commissioners.