(BDB Law’s “Tax Law For Business” appears in the opinion section of BusinessMirror every

Thursday. BDB Law is an affiliate of Punongbayan & Araullo (P&A).

Of tax assessments and remedies
Time and again, taxpayers have faced tax assessments which are issued against them
by the Bureau of Internal Revenue (BIR). It must be noted that while specific remedies
are available to taxpayers and the BIR alike, these must, however, be exercised in
consonance with the tenets of due process of law.

Both must abide by the legal process which is strictly governed by the rules of procedure
that mandate the availability of a particular remedy only for a certain period.

This principle was further entrenched in jurisprudence when the Supreme Court ruled in
the case of Commissioner of Internal Revenue v. BF Goodrich Philippines Inc. (G.R.
104171, February 24, 1999) that “the purpose of safeguarding taxpayers from any
unreasonable examination, investigation or assessment, our tax law provides a statute
of limitations in the collection of taxes. Thus, the law on prescription, being a remedial
measure, should be liberally construed in order to afford such protection. As a corollary,
the exceptions to the law on prescription should perforce be strictly construed.”

Considering the same, it is best for taxpayers to use extraordinary prudence and
vigilance at every stage of the assessment process, which often entails administrative
and judicial proceedings.

This brings to mind the recent ruling of the Court of Tax Appeals (CTA) in the case of Fil-
Hispano Holdings Corporation v. Commissioner of Internal Revenue, CTA EB 343, June
12, 2008, where the taxpayer was assessed for deficiency creditable withholding and
documentary-stamp taxes on the contract of sale of land and improvements that it
previously entered into as seller in December 2001.

In its own interpretation of the statute of limitations provided under Section 228 of the
Tax Code, as enforced under Revenue Regulations 12-99, the taxpayer alleged that it
had timely filed its petition for review before the CTA.
The CTA en banc ruled otherwise and held that although the taxpayer had timely filed its
protest, it failed to file supporting documents within 60 days since what it had in fact filed
was merely a letter indicating their decision to file an appeal with the CTA. In view of
such failure to file relevant supporting documents, the CTA said the reckoning point for
the 180-day period within which the assessment shall be deemed final due to inaction of
the Commissioner of Internal Revenue (CIR) should have been the date when the
protest was filed, excluding the 60-day period to file supporting documents.

The subsequent failure of the taxpayer to file a petition for review with the CTA within 30
days from the lapse of the 180-day period, reckoned from the date the protest was filed,
renders the assessment final, executory and demandable. In this case, the taxpayer did
not wait for the decision of the CIR and instead availed itself of the option to appeal its
assessment with the CTA following the 180-day rule.

The CTA also declared that denial of the petition for review would still be proper even if
the letter filed by the taxpayer is considered as a relevant supporting document, since it
was admitted by the latter that the petition would still be filed three days late under the

To cover all bases, the CTA also held that although the decision rendered by the
revenue region was further reiterated in a letter subsequently sent to the taxpayer, and
was allegedly not yet final, this, in effect, would result in a situation where such taxpayer
has prematurely filed its petition, since the same was made prior to the expiration of the
180-day period given to the commissioner to act on the matter.

Accordingly, the mistakes made by the taxpayer was fatal to his case as it must be
remembered that in the instance that a statutory remedy provides as a condition
precedent that the action to enforce it must be commenced within a prescribed time,
such requirement is jurisdictional and failure to comply therewith may be raised in a
motion to dismiss. (Ker & Company, Ltd. v. Court of Tax Appeals, G.R. 168498, June 16,

From the forgoing, it is obvious that tax assessments should be taken seriously. Each
stage of the assessment has its own purpose, and the remedies available to taxpayers
should be utilized at the proper time.