MERIDIEN EAST REALTY & DEVELOPMENT CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY Special Second Division MERIDIEN EAST REALTY & CTA CASE NO. 9837 DEVELOPMENT CORPORATION, Members: Petitioner, RINGPIS-LIBAN, PJ, Chairperson, MODESTO-SAN PEDRO, and -versus- FERRER-FLORES, JJ COMMISSIONER OF Promulgated: l.j;). )- /711 INTERNAL REVENUE, x -----------------------------------~~-s~~~~=~~~-----------------------------------------------~�;;,v R E S0 L U T I 0 N //'/' - , MODESTO-SAN PEDRO, J.: Before the Court is respondent's Motion for Reconsideration, filed via licensed courier on November 18, 2025, with petitioner's Opposition (To: Motion for Reconsideration dated 18 November 2025), filed on December 1, 2025. In his Motion, respondent assails this Court's Decision, dated October 21, 2025, arguing that (1) a 30% underdeclaration allows respondent to presume fraud, so he was justified in following the extended 10-year prescriptive period to assess and the assailed assessment had not yet prescribed when he issued it; and (2) taxes are the lifeblood ofthe government. Petitioner counters this in its Opposition by ( 1) agreeing with the Decision that the assessment had already prescribed; and (2) arguing that the status of taxes as the lifeblood of the government "cannot be used to disregard the due process of law". The Motion lacks merit. Under Section 248 ofthe National Internal Revenue Code of 1997, as amended ("NIRC'), a 30% underdeclaration can, indeed, be taken as prima facie evidence of fraud. However, following the prevailing strict interpretation of Section 222 ofthe NIRC espoused by Commissioner ofInternal Revenue v. B.F. Goodrich Phils., Inc. 1 and McDonald's Philippines Realty Corporation v. Commissioner ofInternal Revenue,2 among others, said evidence is merely prima facie: it does not establish fraud, which must still be proved before thifr G.R. No. 104171, February 24, 1999. G.R. No. 247737, August 8, 2023.

-- REsou:noN CTA CASE NO. 9837 Page 2 of2 Court. Respondent failed to prove such. Consequently, his use of the extended 10-year period was invalid, and the assessment had already prescribed before he issued it. His invocation ofthe lifeblood doctrine is likewise untenable. Petitioner is correct in arguing that such status does not allow the disregard of due process rights. Taxes may be the lifeblood of the government, but they cannot be collected by illegal means, such as by violating a taxpayer's right to due process. The argument thus poses no challenge to Our ruling. Considering the above, the Motion discloses no cogent reason for the Court to reverse Our ruling. The assailed Decision stands. ACCORDINGLY, Motion for Reconsideration, filed via licensed courier on November 18, 2025, is hereby DENIED for lack of merit. The assailed Decision, dated November 18, 2025, is AFFIRMED. SO ORDERED. PJ I WE CONCUR: ~-~7- MA. BELEN M. RINGPIS-LIBAN Presiding Justice ON OFFICIAL BUSINESS CORAZON G. FERRER-FLORES Associate Justice