Remedies of The TP Post TRAIN

TAX
Rights and Remedies of Taxpayers

Under the NIRC I.  AMEND RETURN
Atty. Terence Conrad H. Bello 2
A.  Amend Tax Return A.  Amend Tax Return
May a TP amend his tax return as a matter of Rohm Apollo Semiconductor Phil. v. CIR
right? §  Although TP is allowed to amend its returns, the
§  Yes, subject to the following conditions: amendment so allowed does not extend as to give
—  The amendment is made within 3 years from the filing support to TP’s allegations in its pleadings that are
of the return; and contradictory to the existing evidence on record
—  No notice for investigation or audit of such return,
statement or declaration has, in the meantime, been
actually served upon the TP (§ 6(A))
Atty. Terence Conrad H. Bello Slide No. 3 Atty. Terence Conrad H. Bello Slide No. 4
A.  Procedure
What is the procedure for protesting an assessment?

1.  Notice of informal conference - reinstated by Rev. Regs. 7-2018; informal conference
to be held not more than 30 days from receipt of NIC
§  If TP found to be still liable for deficiency taxes after presenting his side, RDO/
SID shall endorse the case to the Assessment Division within 7 days from
conclusion of the IC
2.  PAN – TP to respond within 15 days, otherwise he shall be considered in default, in
which case a formal letter of demand and assessment notice shall be issued to TP
•  If TP files reply disagreeing with PAN, FAN/FLD shall be issued
3.  FAN – TP to file a protest within 30 days, otherwise the assessment shall become final,
executory and demandable
4.  Relevant supporting documents – to be submitted by TP within 60 days from the filing
of the protest, otherwise the assessment shall become final, executory and
II.  PROTEST ASSESSMENT

demandable
•  Per RR 18-2013, applicable only to requests for reinvestigation
5.  Appeal to CTA – within 30 days from denial of protest or within 30 days from the lapse
of 180 days from submission of relevant supporting documents, otherwise the
assessment shall become final, executory and demandable
Atty. Terence Conrad H. Bello 5 Atty. Terence Conrad H. Bello Slide No. 6
C.  PAN C.  PAN
§  Must the BIR issue the TP a PAN before a FAN? Yes (§ 228) §  If TP fails to present evidence during the PAN stage, does
§  When may the BIR dispense with a PAN? Only in the ff. this mean that the TP is precluded from introducing
instances: evidence in the FAN stage?
a.  Mathematical error –  No. TP still entitled to protest the FAN and submit relevant
b.  Discrepancy bet. tax withheld and tax actually supporting docs. Failure to present evidence during PAN
remitted stage (or even failure to respond to the PAN) not an implied
c.  When TP opting for a refund or TCC carried over and admission of the correctness of the assessment
automatically applied excess credits against tax –  It is only upon TP’s failure to file a protest upon receipt of
liabilities of the succeeding taxable quarter/s or year/s the FAN or to appeal the denial of the protest within the
d.  Non-payment of excise tax prescribed periods would the FAN become final,
unappealable and executory thereby negating TP’s right to
e.  Transfer by exempt person of tax-free articles to non-
exempt persons (§ 228) present evidence precisely because the right to dispute the
assessment has prescribed and the court can no longer
acquire jurisdiction over the same
C.  PAN C.  PAN
§  What is the BIR’s remedy then if TP fails to Pier 8 Arrastre and Stevedoring Services v. CIR
§  Failure of TP to appear and/or to present evidence during
present evidence during the PAN stage?
PAN stage, or even during the protest period does not mean
–  BIR is entitled to issue a FAN based on its a waiver of the right to present any evidence to dispute the
findings assessment
§  Such failure is not equivalent to an implied admission of the
correctness of the tax assessment
§  It is only when TP fails to file a timely protest on the FAN or
fails to timely appeal the denial of the protest would the
assessment become final, unappealable and executory
thereby negating TP’s right to present evidence precisely
because the right to dispute the assessment has prescribed
and the court can no longer acquire jurisdiction over the
same
C.  PAN C.  PAN
§  What if BIR issues a FAN without first issuing a PAN §  See, however, the case of CIR v. Menguito which seems to hold that the
lack of a PAN is not fatal to the BIR so long as a FAN is served on the TP
(assuming the non-issuance of the PAN does not fall
–  However, while the lack of a post-reporting notice and pre-
within the exceptions), will that invalidate the assessment notice is a deviation from the requirements under RR
assessment? 12-85, the same cannot detract from the fact that formal
assessments were issued to and actually received by respondents in
–  Yes. Denial of due process. Even if TP had all the accordance with Section 228 of the NIRC
opportunity to protest the FAN and submit relevant –  Requirement that an assessment be satisfactorily proven to have
supporting documents? Can’t the BIR argue that all been issued and released or, if receipt thereof is denied, that said
that the due process clause requires is the assessment has been served on TP, applies only to a FAN, but not to
post-reporting notices or PAN
opportunity to be heard (which was satisfied when
–  A post-reporting notice and PAN do not bear the gravity of a FAN;
TP protested the FAN and submitted relevant they merely hint at the initial findings of the BIR and invite the TP to
supporting documents)? an informal conference. Neither contains a declaration of the tax
liability of the TP or a demand for payment thereof. Hence, the lack
–  Must be raised though as an affirmative defense in of such notices inflicts prejudice on the TP for as long as the latter is
the protest to the FAN (otherwise if not raised, properly served a FAN
might be considered waived)
C.  PAN D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
§  Lack of PAN is fatal §  What is the effect if the BIR fails to

§  CIR v. Metro Star Superama inform the TP of the factual and legal
§  “[T]he sending of a PAN to taxpayer to inform him basis of the assessment?
of the assessment made is but part of the “due –  The assessment is rendered void
process requirement in the issuance of a deficiency
tax assessment,” the absence of which renders
nugatory any assessment made by the tax
authorities. The use of the word “shall” in
subsection 3.1.2 [of Rev. Regs. 12-99] describes the
mandatory nature of the service of a PAN”
D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
CIR v. Reyes §  In what form should the “informing” take?

§  Merely notifying the TP of the BIR’s findings §  Must factual and legal basis be embodied in
the assessment notice itself?
without informing the TP of factual and legal
§  What is the minimum requirement?
basis of the assessment is insufficient
Australasia Cylinder Corp. v. CIR PNZ Marketing v. CIR

§  In whatever form and manner the assessment §  Factual and legal basis embodied in the
notice is written, as long as TP is informed on
how the assessment is arrived at, then the formal letter of demand attached to the FAN
requirement of the law is sufficiently met complies with § 228
§  Mere computation of taxable income per
audit without explaining how the BIR arrived
at the figures or without explaining the
factual and legal basis of the assessment
renders the assessment void
Phil. Mining Service Corp. v. CIR Oceanic Wireless Network v. CIR

§  There is substantial compliance with § 228 when the TP
§  Report of investigation and memorandum of is able to protest the assessments intelligently, thereby
RO detailing factual and legal basis of implying that it had actual knowledge of the factual and
assessment issued to TP prior to FAN (which legal bases of the assessments
only contained deficiency tax due) satisfies § §  The allegation that TP failed to receive copy of the
detailed computation during the informal conference of
228 the penalties for the quarterly income tax assessment
carries little consideration by the court. It is sufficient
that TP was informed of the reason why the said
assessment was issued. Clearly, TP was informed of the
factual and legal bases on which the assessment for
deficiency quarterly income tax was based
Recap: CIR v. Enron Subic Power Corp.

§  CTA broadly interpreted requirement in the BIR’s §  BIR contention: TP was properly apprised of its
favor
–  Report of investigation and memorandum of
tax deficiency. During the pre-assessment stage,
examiner detailing factual and legal basis of CIR advised TP’s representative of the tax
assessment issued to TP prior to FAN (which only deficiency, informed it of the proposed tax
contained deficiency tax due) satisfies § 228. Phil. deficiency assessment through a preliminary
Mining Service Corp. v. CIR
–  There is substantial compliance with § 228 when five-day letter and furnished TP a copy of the
the TP is able to protest the assessments audit working paper showing in detail the legal
intelligently, thereby implying that it had actual and factual bases of the assessment. These steps
knowledge of the factual and legal bases of the
assessments. Oceanic Wireless Network v. CIR sufficed to inform TP of the laws and facts on
which the deficiency tax assessment was based
CIR v. Enron Subic Power Corp. See, however, Samar-I Electric Cooperative v. CIR, G.R. No. 193100, Dec. 10, 2014 –
§  The advice of tax deficiency, given by the CIR to an employee of TP, There is substantial compliance when factual and legal basis can be found in a series
as well as the preliminary five-day letter, were not valid substitutes of correspondence between TP and the BIR (and not in the FAN/FLD)
for the mandatory notice in writing of the legal and factual bases of •  TP Contention: the assessment is void since the FAN/FLD were silent as to the
the assessment. These steps were mere perfunctory discharges of nature and basis of the assessment
the CIR’s duties in correctly assessing a taxpayer •  Held: Assessment upheld
§  The requirement for issuing a preliminary or final notice, as the •  Prior to the informal conference, TP was already informed of the BIR findings and
case may be, informing a taxpayer of the existence of a deficiency was furnished a summary of report of investigation
tax assessment is markedly different from the requirement of what •  Attached to the PAN was a Details of Discrepancy with an explanation of the BIR’s
such notice must contain. Just because the CIR issued an advice, a factual and legal basis
preliminary letter during the pre-assessment stage and a final •  In response to the TP’s reply to the PAN, the BIR addressed the arguments raised
notice, in the order required by law, does not necessarily mean that by TP in its reply
TP was informed of the law and facts on which the deficiency tax •  Although the FAN/FLD were not accompanied by a written explanation of the
assessment was made factual and legal basis of the assessment, the BIR’s letter responding to TP’s
§  The law requires that the legal and factual bases of the assessment protest against the FAN/FLD explained the factual and legal basis of the
be stated in the formal letter of demand and assessment notice assessment
pursuant to RR 12-99 •  Considering the exchange of correspondence and documents between TP and the
BIR, there was substantial compliance wit Sec. 228 of the 1997 NIRC
E.  Submission of Supporting Documents E.  Submission of Supporting Documents
§  § 228 requires the TP to submit all relevant supporting H. Tambunting Pawnshop, Inc. v. CIR
docs within 60 days from filing the protest. What is the
effect if the TP fails to comply with this req’t? §  “Relevant supporting documents” refers to such
–  The assessment becomes final, executory and documents which the TP feels would be
demandable necessary to support his protest and not what
§  Who determines whether the TP has submitted “all the CIR feels should be submitted, otherwise,
relevant supporting documents?” TPs would always be at the mercy of the BIR
–  The TP. “Relevant supporting documents” refers to which may require production of such
such documents which the TP feels would be documents which TP could not produce. In this
necessary to support his protest and not what the manner the assessment could easily become
CIR feels should be submitted, otherwise, TPs would final
always be at the mercy of the BIR which may require
production of such documents which TP could not
produce. In this manner the assessment could easily
become final
E.  Submission of Supporting Documents E.  Submission of Supporting Documents
CIR v. First Express Pawnshop §  What is the BIR’s remedy then if it feels that
§  It cannot be said that respondent failed to submit relevant supporting the docs submitted by the TP are insufficient?
documents that would render the assessment final because when
respondent submitted its protest, respondent attached the GIS and –  Deny the protest and state that the
Balance Sheet. Further, petitioner cannot insist on the submission of supporting documents submitted by the
proof of DST payment because such document does not exist as TP failed to overturn the presumption of
respondent claims that it is not liable to pay, and has not paid, the DST
on the deposit on subscription
correctness of the assessment
§  The term “relevant supporting documents” should be understood as
those documents necessary to support the legal basis in disputing a tax
assessment as determined by the taxpayer. The BIR can only inform the
taxpayer to submit additional documents. The BIR cannot demand what
type of supporting documents should be submitted. Otherwise, a
taxpayer will be at the mercy of the BIR, which may require the
production of documents that a taxpayer cannot submit
F.  Effect of Failure to File Protest
Dayrit v. Cruz
§  The assessments having become final and executory,
the CFI properly acquired jurisdiction
§  The aforesaid exclusive jurisdiction of the CTA arises
only in cases of disputed tax assessments. As noted
earlier, TPs’ letter dated October 7, 1972 asking for
reconsideration of the questioned assessments cannot
be considered as one disputing the assessments
because petitioners failed to substantiate their claim
that the deficiency assessments are contrary to law.
TPs asked for a period of thirty (30) days within which
to submit their position paper but they failed to
III.  IN CASE OF DENIAL OF PROTEST
submit the same nonetheless. Hence, TPs’ letter for a OR INACTION, APPEAL TO CTA
reconsideration of the assessments is nothing but a
mere scrap of paper
Atty. Terence Conrad H. Bello Slide No. 29 Atty. Terence Conrad H. Bello 30
A.  Scope of Jurisdiction of CTA/What is Appealable to CTA A.  Scope of Jurisdiction of CTA/What is Appealable to CTA
Scope of jurisdiction of the CTA: Scope of jurisdiction of the CTA:

1.  Disputed Assessments, Refunds, etc. 3.  Customs Duties and Taxes
§  Decisions of the CIR on: (i) disputed §  Decisions of the COC: (i) on cases involving
assessments; (ii) refunds of internal revenue liability for duties and taxes; (ii) seizure,
taxes, fees, etc.; and (iii) other matters arising detention and release of property; and (iii) other
matters arising under the TCCP and other
under the NIRC or other tax laws
customs laws
§  Inaction of the CIR on disputed assessments,
4.  Real Property Tax
refunds, etc.
§  Decisions of the CBAA on appeal of real property
2.  Local Tax Cases tax matters originally decided by the LBAA
§  RTC decisions on local tax cases
A.  Scope of Jurisdiction of CTA/What is Appealable to CTA A.  Scope of Jurisdiction of CTA/What is Appealable to CTA
Scope of jurisdiction of the CTA: Scope of jurisdiction of the CTA:

6.  Tax and Customs Criminal Offenses
5.  Decisions of DOF and DTI on certain matters §  Original jurisdiction over criminal offenses arising from
§  Decisions of SecFin on customs cases violation of the NIRC, TCCP and other tax/customs laws
where amount involved is P1 million or more
elevated to him on automatic review of COC
§  Appellate jurisdiction over RTC decisions on criminal
decisions adverse to the government under offenses where amount involved is less than P1 million
TCCP § 2315 7.  Tax Collection Cases
§  Decisions of Sec. of Trade and Industry and/or §  Original jurisdiction over tax collection cases involving final
and executory assessments where amount involved is P1
Sec. of Agriculture involving dumping, million or more
countervailing duties and safeguard measures §  Appellate jurisdiction over RTC decisions on tax collection
cases where amount involved is less than P1 million
A.  Scope of Jurisdiction of CTA/What is Appealable to CTA B.  Application of the 180-Day Rule
CIR v. Villa Lascona Land Co. v. CIR

§  Held: The word “decisions” in ¶ 1, § 7 of RA 1125 means §  It is only the “decision” not appealed by TP to the CTA that
the decisions of the CIR on the protest of the TP against becomes final, executory and demandable. Otherwise,
the assessments. Definitely, said word does not signify Congress could have easily included the word “assessment” as
the assessment itself also becoming final, executory and demandable should the BIR
§  Since in the instant case the TP appealed from the fail to act on the protest within 180 days and the inaction is not
assessment of the CIR without previously contesting the appealed to the CTA
same, the appeal was premature and the CTA had no §  In cases of inaction, Sec. 228 merely gave the taxpayer an
jurisdiction to entertain said appeal. For, as stated, the option:
jurisdiction of the CTA is to review by appeal decisions Ø  First, he may appeal to the CTA within thirty (30) days from
of the CIR on disputed assessments. The CTA is a court the lapse of the 180-day period, or
of special jurisdiction. As such, it can take cognizance
only of such matters as are clearly within its jurisdiction Ø  Second, he may wait until the CIR decides on his protest
before he elevates his case to the CTA
B.  Application of the 180-Day Rule B.  Application of the 180-Day Rule
§  Lascona affirmed by SC RCBC v. CIR

§  Meanwhile, Revised Rules of the CTA approved and issued §  “Based on the foregoing, [TP] can not now claim that the
by the SC on Nov. 22, 2005 adopting Lascona (see § 3(a)(2),
Rule 4 and § 3(a), Rule 8) disputed assessment is not yet final as it remained
§  Correlate Lascona and § 3(a)(2), Rule 4 and § 3(a), Rule 8 unacted upon by the [CIR]; that it can still await the final
with § 7(a)(2) of RA 1125, which provides: decision of the [CIR] and thereafter appeal the same to
–  “Inaction by the [CIR] in cases involving disputed the [CTA]. This legal maneuver cannot be countenanced.
assessments . . . where the [NIRC] provides a specific After availing the first option, i.e., filing a petition for
period of action, in which case the inaction shall be
deemed a denial” review which was however filed out of time, [TP] can not
§  Under NIRC § 228, “[i]f the protest is denied in whole or in successfully resort to the second option, i.e., awaiting the
part . . . the taxpayer adversely affected by the decision . . . final decision of the [CIR] and appealing the same to the
may appeal to the [CTA] within thirty (30) days from receipt [CTA], on the pretext that there is yet no final decision on
of the said decision . . . otherwise, the decision shall become
final, executory and demandable” the disputed assessment because of the [CIR’s] inaction.”
§  Appeal options thus mutually exclusive
C.  What Constitutes Denial of Protest/Decision on Disputed Assessment C.  What Constitutes Denial of Protest/Decision on Disputed Assessment
1.  General rule: FDDA 3.  Final Notice Before Seizure

CIR v. Isabela Cultural Corp.
2.  I s s u a n c e o f R e v i s e d A s s e s s m e n t U p o n
§  Held: In the light of the above facts, the Final Notice Before
Reinvestigation – Seizure cannot but be considered as the CIR's decision
Avon Products Mfg., Inc. v. CIR disposing of the request for reconsideration filed by TP, who
received no other response to its request
§  June 3 letter (which included the revised §  Not only was the Notice the only response received; its
assessment) particularly referred to TP’s content and tenor supported the theory that it was the CIR’s
requests for reinvestigation; also made a final act regarding the request for reconsideration
demand for settlement of reduced tax liabilities §  The very title expressly indicated that it was a final notice prior
within 15 days together with a threat to enforce to seizure of property. The letter itself clearly stated that
respondent was being given “this LAST OPPORTUNITY” to pay;
collection via summary remedies without further otherwise, its properties would be subjected to distraint and
notice levy
§  How then could it have been made to believe that its request
for reconsideration was still pending determination, despite
the actual threat of seizure of its properties?
4.  Final Demand Letter 4.  Final Demand Letter

CIR v. Ayala Securities Corp. CIR v. Ayala Securities Corp.
§  TP assessed; TP protested assessment §  The letter of February 18, 1963 (Exh. G), in the
§  On February 21, 1963, TP received a letter dated view of the Court, is tantamount to a denial of
February 18, 1963 wherein CIR called TP’s the reconsideration or protest of the TP on the
attention to the unpaid tax as assessed and assessment made by the CIR, considering that
demanded payment within 5 days the said letter is in itself a reiteration of the
§  Believing that February 18, 1963 letter was the demand by the BIR for the settlement of the
CIR’s decision on the disputed assessment, TP assessment already made, and for the
appealed to CTA immediate payment of the sum of P758,687.04
in spite of the vehement protest of the TP on
April 21, 1961.
4.  Final Demand Letter 4.  Final Demand Letter

Surigao Electric Co. Inc. v. CTA
CIR v. Ayala Securities Corp. §  Moreover, the letter of demand dated April 29, 1963 unquestionably
constitutes the final action taken by the CIR on the TP’s several requests
§  This certainly is a clear indication of the firm for reconsideration and recomputation. In this letter, the CIR not only in
stand of the CIR against the reconsideration of effect demanded that the TP pay the amount of P11,533.53 but also
the disputed assessment, in view of the gave warning that in the event it failed to pay, the said CIR would be
constrained to enforce the collection thereof by means of the remedies
continued refusal of the TP to execute the waiver provided by law. The tenor of the letter, specifically the statement
of the period of limitation upon the assessment regarding the resort to legal remedies, unmistakably indicates the final
nature of the determination made by the CIR of the TP’s deficiency
in question. franchise tax liability
§  Thus, this Court has considered the following communications sent by
§  This being so, the said letter amounts to a the CIR to TPs as embodying rulings appealable to the CTA: (a) a letter
decision on a disputed or protested assessment which stated the result of the reinvestigation requested by the TP and
and, therefore, the court a quo did not err in the consequent modification of the assessment; (b) a letter which
denied the request of the TP for the reconsideration, cancellation, or
taking cognizance of this case. withdrawal of the original assessment; (c) a letter which contained a
demand on the TP for the payment of the revised or reduced
assessment; and (d) a letter which notified the TP of a revision of
previous assessments
4.  Final Demand Letter 5.  Filing of collection suit

Surigao Electric Co. Inc. v. CTA CIR v. Union Shipping Corp., 185 SCRA 547 (1990)
§  We deem it appropriate to state that the CIR should always indicate to the
TP in clear and unequivocal language whenever his action on an assessment §  Held: citing its admonition to the CIR in Surigao Electric, SC held that:
questioned by a TP constitutes his final determination on the disputed there appears to be no dispute that CIR did not rule on TP’s motion for
assessment reconsideration but contrary to the above ruling of this Court, left TP in
the dark as to which action of the CIR is the decision appealable to the
§  On the basis of this indicium indubitably showing that the CIR’s CTA. Had he categorically stated that he denied TP’s MR and that his
communicated action is his final decision on the contested assessment, the
aggrieved TP would then be able to take recourse to the tax court at the action constitutes his final determination on the disputed assessment,
opportune time TP without needless difficulty would have been able to determine when
his right to appeal accrues and the resulting confusion would have been
§  Without needless difficulty, the TP would be able to determine when his avoided
right to appeal to the tax court accrues
§  This rule of conduct would also obviate all desire and opportunity on the §  Much later, this Court reiterated the above-mentioned dictum in a
part of the TP to continually delay the finality of the assessment — and, ruling applicable on all fours to the issue in the case at bar, that the
consequently, the collection of the amount demanded as taxes — by reviewable decision of the BIR is that contained in the letter of its
repeated requests for recomputation and reconsideration Commissioner, that such constitutes the final decision on the matter
§  On the part of the CIR, this would encourage his office to conduct a careful which may be appealed to the CTA and not the warrants of distraint
and thorough study of every questioned assessment and render a correct (Advertising Associates, Inc. v. Court of Appeals, 133 SCRA 769 [1984])
and definite decision thereon in the first instance §  It was likewise stressed that the procedure enunciated is demanded by
§  This would also deter the CIR from unfairly making the TP grope in the dark the pressing need for fair play, regularity and orderliness in
and speculate as to which action constitutes the decision appealable to the administrative action
tax court. Of greater import, this rule of conduct would meet a pressing
need for fair play, regularity, and orderliness in administrative action
5.  Filing of collection suit 7.  Issuance of WDL –

CIR v. Union Shipping Corp., 185 SCRA 547 (1990) Central Cement Corp. v. CIR
§  Under the circumstances, the CIR, not having clearly §  Held: the matter of jurisdiction was neither raised by CIR in his
"Answer" nor in the trial on the merits of this case.
signified his final action on the disputed assessment,
legally the period to appeal has not commenced to run §  CIR’s counsel actively participated in court proceedings; issue of
lack jurisdiction raised only when case was already submitted for
§  Thus, it was only when TP received the summons on the decision
civil suit for collection of deficiency income on December §  While lack of jurisdiction may be assailed at any stage, a party's
28, 1978 that the period to appeal commenced to run active participation in the proceedings before the court without
§  The request for reinvestigation and reconsideration was jurisdiction will estop such party from assailing such lack of
jurisdiction
in effect considered denied by the CIR when the latter
filed a civil suit for collection of deficiency income. So §  In the case at bar, the WDLs were issued by CIR knowing fully well
that the deficiency assessments were under protest by TP. Even
that on January 10, 1979 when TP filed the appeal with when the issuance of the WDLs were objected to by TP for being
the Court of Tax Appeals, it consumed a total of only in violation of the Tax Code, CIR did not lift said warrants.
thirteen (13) days well within the thirty day period to §  It is by CIR’s own doing that administrative remedies available to
appeal pursuant to Section 11 of R.A. 1125 TP were effectively shut-off thereby, leaving TP with no recourse
but to seek relief from this Court
7.  Issuance of WDL – 7.  Issuance of WDL –

CIR v. Algue, Inc. Advertising Assoc., Inc. v. CIR
§  It is true that as a rule the WDL is "proof of the finality §  Held: We hold that the petition for review was filed on time.
The reviewable decision is that contained in Commissioner
of the assessment" and "renders hopeless a request Plana's letter of May 23, 1979 and not the WDLs
for reconsideration," being "tantamount to an outright §  No amount of quibbling or sophistry can blink the fact that
denial thereof and makes the said request deemed said letter, as its tenor shows, embodies the Commissioner's
rejected." final decision within the meaning of section 7 of RA 1125. The
§  But there is a special circumstance in the case at bar CIR said so. He even directed the TP to appeal it to the Tax
that prevents application of this accepted doctrine Court.
§  The proven fact is that 4 days after the TP received the §  The directive is in consonance with this Court's dictum that
the Commissioner should always indicate to the taxpayer in
CIR’s notice of assessment, it filed its letter of protest. clear and unequivocal language what constitutes his final
This was apparently not taken into account before the determination of the disputed assessment. That procedure is
WDL was issued; indeed, such protest could not be demanded by the pressing need for fair play, regularity and
located in the office of the CIR. It was only after Atty. orderliness in administrative action (Surigao Electric Co., Inc.
Guevara gave the BIR a copy of the protest that it was, vs. Court of Tax Appeals, L-25289, June 28, 1974, 57 SCRA
if at all, considered by the tax authorities. 523).
D.  Period to Appeal/Effect of Failure to Appeal D.  Period to Appeal/Effect of Failure to Appeal
Basa v. RP Mambulao Lumber Co. v. CIR

§  Held: if TP wanted to contest the assessment, §  CFI ruled in favor of CIR; TP appealed to CA which
he should have appealed to CTA affirmed CFI
§  Held: assessment already final and executory for
§  Not having done so, he could no longer TP’s failure to appeal the July 8, 1959 letter
contest the same in the CFI §  In a suit for collection of internal revenue taxes, as
§  TP can no longer raise prescription, which in this case, where the assessment has already
should have been interposed as a defense in become final and executory, the action to collect is
CTA akin to an action to enforce a judgment
§  No inquiry can be made therein as to the merits of
the original case or the justness of the judgment
relied upon. Petitioner is thus already precluded
from raising the defense of prescription
E.  Mode of Appeal and Effect of Appeal E.  Mode of Appeal and Effect of Appeal
1.  What is the TP’s remedy in case the BIR denies the protest 3.  What is the TP’s remedy in case the CTA division issues an
(i.e., issues an adverse decision on the disputed adverse decision vs. the TP?
assessment ) or fails to act on the same within the 180-day §  File an MR or new trial within 15 days from notice of
period? decision (RA 1125 § 11, 3rd par.)
§  Appeal the denial or the inaction to the CTA within 30 days §  Upon issuance of resolution denying the MR or new
from the denial or from the lapse of the 180-day period by
filing a petition for review (RA 1125 § 11) trial, appeal the same to the CTA En Banc within 15
§  A division of the CTA shall hear the appeal days from notice of the resolution (RA 1125 § 18;
Revised Rules of the CTA § 3(b), rule 8)
2.  What is the effect of the appeal on the disputed
assessment? 4.  May the TP appeal the adverse decision directly to the
CTA En Banc without filing an MR?
§  Gen. rule: the appeal will not suspend the payment, levy,
distraint and/or sale of any property of the TP for the §  No. Appeals to the CTA En Banc must be preceded by
satisfaction of his tax liability (RA 1125 § 11, 4th par.) the timely filing of an MR new trial with the CTA
§  Exception: when the collection will jeopardize the interest of division (Revised Rules of the CTA § 1, rule 8; see also
the gov’t or the TP (court will issue an injunction provided RA 1125 § 18)
amount claimed is deposited or surety bond is posted for not
more than 2x the amount claimed)
E.  Mode of Appeal and Effect of Appeal
5.  May the TP appeal the adverse decision of the CTA

division directly to the SC under Rule 45 (on a pure
question of law)?
§  No. Failure to file a motion for reconsideration of an
assailed decision of a CTA division, or at least file a
petition for review with the CTA en banc, before
filing a petition for review with the SC renders the
assailed decision final and executory. Commissioner
of Customs v. Gelmart Industries Phil., Inc., G.R. No.
169352, February 13, 2009 IV.  APPEAL TO SC
A.  What Constitutes Erroneous Payment
1.  Cases –
Chemical Industries of the Phil., Inc. v. CIR
§  Held: the March 31, 1998 ruling request addressed to the
Deputy Commissioner is not a claim for refund but a letter
requesting for a ruling for the refund of the tax allegedly paid
by TP
§  The ruling request is not the written claim for refund required
by law before a judicial refund claim may be filed with the CTA
§  The stock transaction tax was not illegally or erroneously
assessed or collected
§  No allegation that at the time the stock transaction tax was
paid, no such tax was due and payable; in other words, there
V.  REFUND AND/OR TAX CREDIT OF was no allegation that the payment therefore was erroneous
ERRONEOUSLY PAID TAX §  The share sale was already perfected and remained effective
until one or more of the resolutory conditions occurred; such
being the case, the payment of the tax was proper and legal
A.  What Constitutes Erroneous Payment B.  Requirement to File Administrative Claim
•  What can be refunded or credited is a tax that is 1.  Cases –

“erroneously, … illegally, … excessively or in any Bermejo v. Collector
§  Held: TP contended that the requirement to file a refund
manner wrongfully collected” claim with the CIR was complied with, because prior to the
•  In short, there must be a wrongful payment institution of the court case, there were letters sent to the CIR
protesting the tax
because what is paid, or part of it, is not legally §  The law clearly stipulates that after paying the tax, the TP
due (San Roque case) must submit a claim for refund before resorting to the courts.
•  What is the test to determine W/N tax was §  The idea probably is, first, to afford the CIR an opportunity to
correct the action of subordinate officers;
illegally or erroneously assessed or collected? §  and second, to notify the Government that such taxes have
§  At the time the claimed tax was paid, no such been questioned, and the notice should then be borne in mind
in estimating the revenue available for expenditure.
tax was due and payable §  Previous objections to the tax may not take the place of that
§  Payment of a tax beyond beyond what is claim for refund, because there may be some reason to
believe that, in paying, the taxpayer has finally come to realize
legally due the validity of the assessment.
D.  Effect of Supervening Event D.  Effect of Supervening Event
1.  CIR v. Central Azucarera Don Pedro 2.  Case –

§  Held: 2-year period counted from the supervening event Meralco v. CIR
which gave rise to the right to refund (i.e., grant of tax §  Contention of TP: 2-year period should commence to run
exemption on September 20, 1965)
only from the time the refund is ascertained; therefore
period should be reckoned from Oct. 7, 2003 when BIR
§  When the tax sought to be refunded is illegally or issued ruling
erroneously collected, the 2-year period starts from the §  Held: portion of amount sought to be refunded
date the tax was paid prescribed
§  But when the tax is legally collected (as in the present case), §  Under § 229, the administrative claim and the judicial
the 2-year period commences to run from the date of claim must be filed within 2 years from date of payment
of the tax regardless of any supervening cause
occurrence of the supervening event which gave rise to the
§  There is no requirement in the law that a TP must first
right to refund request for a tax ruling confirming exemption before it
v  NB: this case is no longer good law in view of present can file a refund claim in cases of erroneous payment or
language of § 229 (“irrespective of any supervening event”) overpayment of taxes
E.  Offsetting Against Deficiency Assessments E.  Offsetting Against Deficiency Assessments
1.  Cases – 1.  Cases –

CIR v. Cebu Portland Cement BPI Securities Corp. v. CIR
§  Moreover, it appears that the memorandum-report has not yet
§  Held: The argument that the assessment cannot as yet be ripened into a formal assessment duly approved by the Regional
enforced because it is still being contested loses sight of the Director or by the CIR
urgency of the need to collect taxes as “the lifeblood of the §  Thus, the same can proceed independently of the claim for refund
government” and its merits or demerits may be determined in separate
proceedings as provided for in the Tax Code
§  If the payment of taxes could be postponed by simply §  The principle that taxes are not subject to set-off or legal
questioning their validity, the machinery of the state would compensation must govern, especially in this case where the taxes
grind to a halt and all government functions would be and the taxpayer's claim are not fully liquidated, due and
paralyzed demandable
§  This is the reason for the existence of the anti-injunction rule §  In this case, no assessment, whether tentative or final, has been
issued to petitioner. Consequently, we do not find any reason to
§  To require CIR to actually refund to TP the amount of the deviate from the above rulings. Thus, the argument of the
judgment debt, which he will later have the right to distrain respondent that petitioner's refund claim must be denied on the
for payment of its sales tax liability is in our view an idle ritual basis of the findings and recommendation in the memorandum
issued by the Revenue Officer does not deserve consideration
§  We hold that the CTA erred in ordering such a charade v  Question: what if there was already a FAN that the TP protested, would
the result be different?
E.  Offsetting Against Deficiency Assessments F.  Liability of Government for Interest, Attorney’s Fees, Etc.
1.  Cases – Philex Mining Corp. v. CIR

FNCB Finance v. CIR §  No interest on refund of tax can be awarded unless
§  TP filed a refund claim authorized by law or the collection of the tax was
attended by arbitrariness.
§  CIR offered in evidence a report of investigation
which found TP liable instead for deficiency §  An action is not arbitrary when exercised honestly and
income tax upon due consideration where there is room for two
opinions, however much it may be believed that an
§  Held: automatic set-off capricious erroneous conclusion was reached. Arbitrariness
§  Violation of due process presupposes inexcusable or obstinate disregard of legal
§  Without an assessment, there is no debt from TP provisions. None of the exceptions are present in the case
that can be set-off at bar. Respondent’s decision denying petitioner’s claim
for refund was based on an honest interpretation of law.
We, therefore see no reason why petitioner should be
entitled to the payment of interest.
G.  Taxes not Subject to Set-Off G.  Taxes not Subject to Set-Off
Francia v. IAC Francia v. IAC

§  TP owned real property, a portion of which was expropriated by
the gov’t and for which gov’t owed TP P4,116 §  This rule was reiterated in the case of Cordero v.
§  The rest of TP’s property sold at public auction for delinquency Gonda (18 SCRA 331) where we stated that: ". . .
RPT of P2,400 internal revenue taxes can not be the subject of
§  TP contends that his tax delinquency of P2,400.00 has been compensation: Reason: government and taxpayer
extinguished by legal compensation. He claims that the 'are not mutually creditors and debtors of each
government owed him P4,116.00 when a portion of his land was other' under Article 1278 of the Civil Code and a
expropriated on October 15, 1977. Hence, his tax obligation had
been set-off by operation of law as of October 15, 1977 "claim for taxes is not such a debt, demand,
§  Held: contention of the TP has no merit. We have consistently contract or judgment as is allowed to be set-off.“
ruled that there can be no off-setting of taxes against the claims §  Moreover, RPT was due to an LGU while the
that the TP may have against the government. A person cannot
refuse to pay a tax on the ground that the government owes him expropriation was effected by the national
an amount equal to or greater than the tax being collected. The government
collection of a tax cannot await the results of a lawsuit against the
government

G.  Taxes not Subject to Set-Off G.  Taxes not Subject to Set-Off
BIR Rul. 415-93 Summary –

§  Ruling request for automatic offsetting of claims 1.  Government invokes set-off (denies refund on account of
pending assessment):
for excess input VAT against excise tax liability
§  Doctrine: government cannot defeat TP’s entitlement
denied to refund on account of a proposed assessment
§  Claim subject to verification and final v  Options available to the government:
determination before issuance of TCC –  Formalize/finalize assessment (i.e., issue FAN),
then invoke Cebu Portland
–  If there is a final judgment awarding the refund
claim, distrain judgment debt
2.  TP invokes set-off (refuses to pay assessment on account
of pending refund claim):
§  No set-off rule in RP v. Mambulao: collection of taxes
cannot await result of a lawsuit determining propriety
of refund claim
A.  Appeal in Case of Denial of Refund/Tax Credit Claim
1.  Appeal to CTA/SC same as appeal of denial of

protest
VI.  APPEAL IN CASE OF DENIAL OF

REFUND/TAX CREDIT CLAIM
Decision on “Other Matters”
1.  What may be appealed to the CTA pursuant to par.

2, Sec. 4 of the NIRC and Sec. 7(a)(1) of RA 9282?
§  Decisions on:
Ø  Disputed assessments
Ø  Disputed refund
Ø  Other matters arising under the NIRC and
other tax laws
VII.  DECISION ON “OTHER MATTERS”
Decision on “Other Matters” Decision on “Other Matters”
Rodriguez v. Blaquera PNOC v. CA

§  Decision of the CIR on the matter of an enforcement §  CTA had jurisdiction to review decisions of CIR to
of the National Internal Revenue Code enter into a compromise agreement with PNOC and
to reject the informer’s claim for additional reward
wh erei n q u esti o n s o f l aw i n vo l vi n g th e
interpretation and application of the NIRC and E.O.
No. 44 and its implementing rules and regulations
were at issue
Phil. Journalists, Inc. v. CIR Appeal Remedy vs. Challenged BIR Issuances
§  Decision to issue a warrant of distraint and levy to §  If the BIR issues a Rev. Regs., RMO or RMC that is
enforce collection of an assessment that was perceived to be contrary to law, what is the
already barred by prescription taxpayer’s appeal remedy?
§  Conflicting decisions on proper remedy

Appeal Remedy vs. Challenged BIR Issuances §  If exercise of power is quasi-legislative in

§  Sec. 4, par. 1 nature – appeal is to DOF (Sec. 4, 1st par.)
Ø  Power to interpret the provisions of the Tax §  If exercise of power is quasi-judicial in nature
Code and other tax laws – appeal is to CTA (Sec. 4, 2nd par.; Sec. 7, RA
Ø  subject to review by the Sec. of Finance 9282)
§  Sec. 4, par. 2
Ø  Power to decide disputed assessments,
refunds, or other matters arising under the
Tax Code and other tax laws
Ø  Subject to appellate jurisdiction of the CTA
§  Quasi-legislative – power to make rules and §  What is the scope of the DOF’s review power under
regulations of general applicability Sec. 4?
–  The Sec. of Finance only has the power of review
§  Quasi-judicial – power to hear and determine over interpretations of the CIR of the provisions of
questions of fact to which the legislative the NIRC or other tax laws
policy is to apply and to decide in accordance §  What is covered by the CIR’s power of interpretation?
with the standards laid down by law; exercise –  The power of administrative agencies, such as the
of power results to a decision or order BIR, to interpret and construe the statutes
affecting a named person or applying to a entrusted to them for implementation is an
specific situation and becoming final and exercise of the quasi-legislative power of
administrative agencies as distinguished from their
executory after the lapse of a certain period
quasi-judicial power
§  CTA has appellate jurisdiction over decisions Types of BIR Issuances

1.  Rulings – refer to rulings, opinions and interpretations of the CIR with
of the CIR on “other matters arising under the respect to provisions of the Tax Code and other tax laws, which are issued
in response to a specific request for ruling filed by a TP with the BIR
Tax Code or other laws administered by the 2.  Rev. Regs. – contain all needful rules and regulations for the effective
[BIR]” (Sec. 4, 2nd par.) enforcement of the provisions of the NIRC. Promulgated by the Sec. of
Finance, upon recommendation of the Commissioner of Internal Revenue
–  Decision of CIR on “other matters” should be 3.  RMO – contains directives or instructions outlining procedures, techniques,
methods, etc. which are necessary to carry out programs or to achieve
quasi-judicial in nature for the 2nd par. of Sec. 4 policy goals and objectives. Promulgated by Commissioner of Internal
to apply Revenue
4.  RMC – disseminate and embody pertinent and applicable portions, as well
–  See, however, CIR v. Leal (SC held that CTA has as amplifications, of the rules, precedents, laws, regulations, opinions and
jurisdiction over RMCs issued by BIR) other orders and directives issued by the CIR, and by other offices and
agencies, for the information, guidance or compliance of revenue personnel.
Promulgated by CIR
Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
CIR v. Leal, 392 SCRA 9 (2002) Asia Int’l Auctioneers v. Parayno, G.R. 163445, Dec. 18,
§  Challenged RMOs/RMCs are actually rulings or 2007
opinions of the CIR implementing the Tax Code on §  Citing Leal, Blaquera, SC held that assailed RMC is a
taxability of pawn shops ruling or opinion of the CIR on the tax treatment of
§  Jurisdiction to review rulings of the CIR, such as sale of motor vehicles in public auction within SBF
RMOs/RMCs, pertains to CTA, not RTC appealable to CTA
§  CTA has jurisdiction over decisions of the CIR on §  Also held that failure of TPs to ask for
“other matters” arising under the Tax Code reconsideration of the assailed issuances is another
reason for dismissal of the case

British American Tobacco v. Camacho, G.R. 163583, Aug. 20, 2008
Sunlife of Canada v. CIR, CTA Case No. 7833, Jan. 12,
§  While RA 9282 confers on CTA jurisdiction to resolve tax disputes
in general, this does not include case where the constitutionality 2009
of a law or rule is challenged §  Decision of CIR to issue RMC clarifying taxability of
§  Where what is assailed is the validity or constitutionality of a law, insurance companies for MCIT, business tax and DST
or a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts
purposes not a “decision” contemplated by Sec. 7 of
have jurisdiction to pass upon the same RA 1125 that is appealable to the CTA
§  The determination of whether a specific rule or set of rules issued §  Since principal relief sought is to declare null and
by an administrative agency contravenes the law or the void RMC 30-2008, the same is outside jurisdiction
constitution is within the jurisdiction of the regular courts
of CTA (citing British American Tobacco)
Gorospe v. Vinzons-Chato, G.R. 132228, Jan. 21, Philamlife v. Sec. of Finance, G.R. 210987, Nov. 24, 2014
§  BIR issued a ruling denying the request of TP that the
2003 sale of shares at a price below FMV is not subject to
§  Petition before SC assailing validity of RMC donor’s tax
dismissed for non-exhaustion of administrative §  BIR anchored denial on Rev. Regs 6-2008 which treats
remedies. SC held, citing Sec. 4: sale of shares at below FMV as “deemed donations”
subject to donor’s tax
Ø  Petitioners should have asked CIR for a §  TP’s Sec. 4 appeal of the adverse ruling to the Sec. of
reconsideration Finance denied
Ø  If action on reconsideration is adverse, denial §  TP appealed decision of the Sec. of Finance to the CA
(instead of the CTA), where it sought to invalidate
should have been appealed to SecFin
Philamlife v. Sec. of Finance, G.R. 210987, Nov. 24, 2014 Banco de Oro v. RP, G.R. 198756, Jan. 13, 2015
§  Held: Reviews by the Secretary of Finance pursuant to Sec. 4 §  BIR rulings subjecting to withholding tax on maturity of
of the NIRC are appealable to the CTA under “other matters” the so-called PEACe Bonds appealed directly to SC
§  Appellate power of the CTA includes certiorari pursuant to §  SC held that non-exhaustion of administrative remedies
City of Manila v. Grecia-Cuerdo, G.R. 175723, Feb. 4, 2014
proper (purely question of law and urgency of judicial
§  City of Manila diametrically opposes British American intervention exceptions)
Tobacco to the effect that it is now within the power of the
CTA, through its power of certiorari, to rule on the validity of §  Appeal of the questioned tax rulings to the Secretary of
a particular administrative rule or regulation so long as it is Finance would have been proper remedy (citing 1st par.
within its appellate jurisdiction. Hence, it can now rule not of Sec. 4)
only on the propriety of an assessment or tax treatment of §  SC agreed with BIR that jurisdiction to review rulings of
a certain transaction, but also on the validity of the revenue the CIR pertains to the CTA, citing Leal and Blaquera
regulation or RMC on which the assessment is based
Appeal Remedy vs. Challenged BIR Issuances

Appeal Remedy vs. Challenged BIR Issuances Banco de Oro v. RP, G.R. 198756, Aug. 16, 2016
Banco de Oro v. RP, G.R. 198756, Aug. 16, 2016 §  CTA has undoubted jurisdiction to pass upon the constitutionality or
validity of a tax law or regulation when raised by the taxpayer as a
§  British American Tobacco case no longer controlling; defense in disputing or contesting an assessment or claining a refund. It
SC reverting to its earlier decisions in Leal and Asia is only in the lawful exercise of its power to pass upon all matters
Auctioneers brought before it, as sanctioned by Section 7 of Republic Act No. 1125, as
amended
§  CTA has jurisdiction not only on indirect/collateral §  CTA may likewise take cognizance of cases directly challenging the
attacks on the validity of BIR issuances, but also on constitutionality or validity of a tax law or regulation or adminstrative
issuance (revenue orders, revenue memorandum circulars, rulings)
cases directly challenging the constitutionality or
§  In other words, within the judicial system, the law intends the CTA to
validity of a tax law or regulation or administrative have exclusive jurisdiction to resolve all tax problems. Petitions for writs
issuance of certiorari against the acts or omissions of the said quasi-judicial
agencies [CIR, COC, SecFin, CBAA and Sec. of Trade and Industry] should,
thus, be filed before the Court of Tax Appeals.
Recap: Recap:
1.  Indirect (Collateral) Attack: e.g., denial of protest on 2.  Direct Attack:
an assessment for alleged deficiency income tax and §  Appeal RMC/RMO/Rev. Regs. to Secretary of
VAT on condominium dues on the basis of RMC Finance pursuant to Sec. 4, 1st par.; then appeal
65-2012 – appeal denial to CTA denial by SecFin to CTA on the basis of “other
matters” (Philam Life and BDO/PEACe bonds
case)
§  I f e x c e p t i o n s t o p r i o r e x h a u s t i o n o f
administrative remedies apply, appeal directly to
CTA … or directly to SC (under the paramount
national transcendental exception)
Decision on “Other Matters”
Appeal Remedy vs. Challenged BIR Issuances

Note:
•  The Petron case (July 15, 2015) held that the CTA
had no jurisdiction over a petition questioning the
legality of a BOC CMC imposing excise tax on
Petron’s alkylate importations (citing BAT case).
Proper remedy is to appeal CMC to DOF pursuant to
the 1st par. of Sec. 4, then to the Office of the Pres.,
then to regular courts VIII.  STATUTE OF LIMITATIONS
•  BDO/PEACe Bonds case (Aug. 16, 2016 now
controlling)
A.  Period to Assess A.  Period to Assess
1.  When is an assessment deemed made? 2.  Effect of filing an amended return
Basilan Estates, Inc. v. CIR §  What is the effect of filing an amended return?
§  Besides, even granting that notice had been –  It has the effect of extending the prescriptive
received by the TP late, as alleged, under Section period to assess, if the amendment is
substantial
331 of the Tax Code requiring five years within
which to assess deficiency taxes, the assessment
is deemed made when notice to this effect is
released, mailed or sent by the Collector to the
taxpayer and it is not required that the notice be
r e c e i v e d b y t h e t a x p a y e r w i t h i n t h e
aforementioned five-year period
2.  Effect of filing an amended return 2.  Effect of filing an amended return
CIR v. Phoenix Assurance Co.
CIR v. Phoenix Assurance Co.
§  The changes and alterations embodied in the amended
ITR consisted of the exclusion of reinsurance premiums §  Rationale:
received from domestic insurance companies by TP’s –  To strengthen our opinion, we believe that to hold
London head office, reinsurance premiums ceded to
foreign reinsurers not doing business in the Philippines otherwise, we would be paving the way for TPs to
and various items of deduction attributable to such evade the payment of taxes by simply reporting in
excluded reinsurance premiums, thereby substantially their original return heavy losses and amending the
modifying the original return
same more than five years later when the CIR has
§  Considering that the deficiency assessment was based on
the amended return which, as aforestated, is lost his authority to assess the proper tax
substantially different from the original return, the thereunder. The object of the Tax Code is to
period of limitation of the right to issue the same should impose taxes for the needs of the Government, not
be counted from the filing of the amended income tax
return to enhance tax avoidance to its prejudice
3.  Effect of filing a wrong return 3.  Effect of filing a wrong return
§  What is the effect of filing a wrong return? Butuan Sawmill, Inc. v. CTA
–  The effect is as if no return is filed (thus the §  Held: an ITR cannot be considered as a return for
applicable prescriptive is 10 yrs. from compensating tax for purposes of computing the
discovery of the omission to file a return, period of prescription under Section 331 of the Tax
rather than the 3-year ordinary prescriptive Code, and that the TP must file a return for the
period) particular tax required by law in order to avail
himself of the benefits of Section 331 of the Tax
Code;
§  Otherwise, if he does not file a return, an
assessment may be made within the time stated in
Section 332(a) of the same Code
4.  How prescriptive period counted 5.  Gen. rule: 3 years (ordinary prescription) – Sec. 203
CIR v. Primetown Prop. Group, Inc. 6.  Exceptions: 10 years (extraordinary prescription)
§  When the law speaks of a “year,” it is understood to be §  False/fraudulent return or no return – Sec.
12 calendar months
222(a)
§  A calendar month is “a month designated in the
calendar without regard to the number of days it may §  Waiver of prescriptive period – Sec. 222(b)
contain” §  Suspension of prescriptive period – Sec. 223
§  It is the “period of time running from the beginning of -  CIR prohibited from assessing or collecting + 60 days
a certain numbered day up to, including, the -  Request for reinvestigation by TP which is granted
corresponding numbered day of the next month, and if -  TP cannot be located in address given in return
there is not a sufficient number of days in the next
-  No property to satisfy WDL
month, then up to and including the last day of that
-  TP is out of the Philippines
month”
6.  Exception: false/fraudulent return or no return (10 6.  Exception: false/fraudulent return or no return (10
years) years)
§  Question: what are the instances when the 10- Taligaman Lumber Co. v. CIR
year prescriptive period applies? §  TP assessed deficiency sales tax
–  False/fraudulent return with intent to evade §  TP argued that assessment prescribed
payment of taxes §  BIR argued that TP did not file returns, hence, the 10-year
period applies
–  No return §  Held: no showing that returns were filed, hence, 10-year
§  Question: when do you start counting the 10- period applies
year period? §  TP objects to the application of the 10-year prescriptive
period upon the ground that there is no affirmative
–  Counted from discovery of falsity, fraud or evidence that it had not filed the corresponding returns for
omission the years 1948-1949
6.  Exception: false/fraudulent return or no return (10 6.  Exception: false/fraudulent return or no return (10 years)
years) Aznar v. CTA
Taligaman Lumber Co. v. CIR §  Ruling of CTA: 10-year period applies; substantial under-
declarations of income for 6 consecutive years
§  Thus the issue boils down to which of the two parties had demonstrate the falsity or fraudulence of the ITRs
the burden of proving such failure to file said returns. §  Held: 10-year period applies; return of TP “false”
§  It is, however, clear that since prescription is one of the §  3 instances justifying application of 10-year period: (a)
affirmative defenses set up by TP herein, it was incumbent false return, (2) fraudulent return with intent to evade
upon the latter, if it wanted to avail itself of the benefits of payment of taxes, and (3) failure to file a return
Section 331 (5-year prescriptive period), to prove that it §  There is a difference between “false return” and
had submitted said returns, and that, having failed to do so, “fraudulent return”
the conclusion must be that no such returns had been filed §  “False return” implies deviation from the truth, whether
and that the Government had 10 years within which to intentional or not
make the corresponding assessments, as it did in this case
§  “Fraudulent return” implies intentional or deceitful entry
with intent to evade the taxes due
6.  Exception: false/fraudulent return or no return (10 years) 6.  Exception: false/fraudulent return or no return (10 years)
Aznar v. CTA CIR v. B.F. Goodrich
§  The ordinary period of prescription of 5 years within
which to assess tax liabilities under Sec. 331 of the §  CIR insists that TP committed “falsity” when it
NIRC should be applicable to normal circumstances, sold the property for a price lesser than its
but whenever the government is placed at a declared FMV
disadvantage so as to prevent its lawful agents from
proper assessment of tax liabilities due to false §  This fact alone did not constitute a false return
returns, fraudulent return intended to evade payment which contains wrong information due to
of tax or failure to file returns, the period of ten years
provided for in Sec. 332 (a) NIRC, from the time of the mistake, carelessness or ignorance
discovery of the falsity, fraud or omission even seems
to be inadequate and should be the one enforced v  This case thus establishes the rule that not all
§  Issue: W/N the 50% fraud surcharge should apply erroneous entries in the return will render the
(which the CTA imposed) same “false” for purposes of applying the 10-yr.
§  Held: No prescriptive period
6.  Exception: false/fraudulent return or no return (10 years) 6.  Exception: false/fraudulent return or no return (10
Telesat, Inc. v. CIR years)
§  In order to render a return made by TP a “false return” Estate of Reyes. v. CIR
within the meaning of Sec. 223, there must appear a §  TP contention: phrase “with intent to evade tax”
design to mislead or deceive on the part of the TP, or at qualifies both false and fraudulent returns; their
least culpable negligence
supposed good faith in committing errors negates
§  A mistake not culpable in respect of its value would not intent to evade
constitute a false return
§  In fact SC has held that mere falsity of a return does not §  Held: pursuant to Aznar, false return do not
merit the application of the 10-year prescriptive period necessarily mean with intent to evade taxes,
otherwise, there will be no distinction between false
§  The element of fraud as in the case of TP’s intent to and fraudulent returns
evade payment of the correct amount of tax, must be
clearly established §  Returns “false” because there were substantial
§  TP was able to explain discrepancy as merely a timing underdeclarations of properties and substantial
difference due to accounting method overstatement of deductions
6.  Exception: waiver of prescriptive period 6.  Exception: waiver of prescriptive period
RP v. Acebedo CIR v. CA
§  Even the waiver signed by TP on Dec. 17, 1959 §  Contention of BIR: waivers valid even if not signed by CIR
could no longer revive the right of action, for because (a) when RO extended the period to conduct audit,
under the law such waiver must be executed CIR gave implied consent, (b) signature of CIR mere formality
within the original five-year period within which and the lack of it does not vitiate the binding effect of the
suit could be commenced waiver, (c) waiver is not a contract but a unilateral act of
renouncing one’s right to avail of the defense of prescription
§  Held: the waiver of the prescriptive period must be in writing
and signed by both the TP and the CIR; the waivers are invalid
and without binding effect on TP for lack of CIR’s consent
§  It is the very signatures of the TP and CIR that give birth to a
valid agreement
Phil. Journalists, Inc. v. CIR Phil. Journalists, Inc. v. CIR
§  Held: assessment prescribed as waiver did not §  Waiver unlimited
comply with RMO 20-90 §  Waiver not signed by CIR (only RD Officer)
§  Waiver of statute of limitations not a waiver of §  Waiver bilateral act not unilateral
the right to invoke defense of prescription §  Date of acceptance not stated (thus, not clear if waiver
executed before expiration of prescriptive period)
§  TP not furnished copy of duly accepted waiver (which
effectively notifies TP that waiver was accepted)
§  Conclusion: (1) waiver defective, hence, did not operate to
extend prescriptive period; (2) consequently, assessment
invalid because it was issued beyond prescriptive period;
and (3) WDL null and void for having been issued on the
basis of an invalid assessment
CIR v. Kudos Metal: Reqt’s of valid waiver CIR v. Next Mobile, Inc.: doctrine of equitable estoppel
a)  Waiver must be in proper form prescribed by RMO 20-90
•  CTA found the following flaws in multiple waivers executed
b)  Waiver must be signed by TP himself or his duly authorized by the TP: (i) lack of notarized board authority; (ii) dates of
representative. In case of corporation, authority of person
signing waiver must be in writing and duly notarized acceptance by the BIR not indicated; (iii) fact of receipt by
the TP not indicated
c)  Waiver should be duly notarized
d)  CIR or his duly authorized representative must sign the waiver •  Instead of ruling in the same manner as Kudos Metal, SC
indicating acceptance. Date of acceptance should be indicated applied the doctrine of equitable estoppel and disregarded
e)  Both date of execution and date of acceptance must be before the obvious deficiencies in the waivers and sided with the
prescriptive period lapses BIR
f)  Waiver must be executed in three copies: original to docket; 2nd •  SC observed that both parties at fault and that TP knew of
copy to TP; 3rd copy to Office accepting waiver. Fact of receipt of the defects in the waivers, yet did nothing to correct them,
TP’s copy should be indicated in the original copy to show that TP and instead questioned later on the very same deficiencies
was notified of acceptance by BIR and perfection of agreement
that the TP caused to avoid liability
RCBC v. CIR: Estoppel to question validity of waivers
CIR v. Phil. Daily Inquirer •  TP executed waivers
•  On BIR allegation that TP filed a false or fraudulent return, SC •  Received FAN/FLDs for deficiency income tax, GRT, FWT, final tax on FCDU
onshore income, EWT and DST
held that fraud is never imputed and that mere understatement
•  Protest, then later on appealed the inaction to the CTA
of a tax is not itself proof of fraud for the purpose of tax evasion •  Subsequently, TP received a revised FLD/FAN following the request for
•  While filing of fraudulent return necessarily implies that the act reinvestigation requested by TP reducing the amount of the original assessment
of the TP was intentional and done with intent to evade taxes •  TP paid deficiency income tax, GRT, FWT, EWT and DST
due, the filing of a false return can be intentional or due to •  TP refused to pay final tax on FCDU onshore income and DST which remained the
subject of the CTA petition
honest mistake
•  TP argued that waivers void
•  Defects noted on waiver; SC reiterates Kudos Metal •  Held: TP estopped from questioning validity of waivers. Through its partial
payment of the amount assessed within the extended period as provided in the
•  BIR cannot shift the blame to TP for issuing defective waivers. BIR waivers, TP impliedly admitted the validity of the waivers
cannot hide behind doctrine of estoppel to cover its failure to •  Had TP truly believed that the waivers were invalid and the assessments barred by
comply with RMO 20-90. A waiver is a derogation of TP’s right to prescription, then it should not have paid the reduced amount of taxes in the
security against prolonged and unscrupulous investigations, thus, revised assessments
must be carefully and strictly construed
6.  Exception: suspension of prescriptive period 6.  Exception: suspension of prescriptive period
Continental Micronesia, Inc. v. CIR
a.  What are the instances which will suspend the
§  While We have noted that the request for reinvestigation which was
prescriptive period to assess, begin distraint/levy and granted by the CIR in the case at bar was on the PAN and not on the
file a civil suit for collection? FAN, still, § 223 applies.
i.  CIR is prohibited from assessing, beginning §  § 223 of the Code makes no distinction as to whether the request for
distraint/levy or proceeding in court and for 60 reinvestigation of an assessment against the taxpayer is on a PAN or
FAN. It is a well-known maxim in statutory construction that where
days thereafter the law does not distinguish, We should not distinguish.
ii.  When TP requests reinvestigation which is granted §  Thus, for as long as the request for reinvestigation is granted by the
by the CIR CIR, the running of statute of limitations to issue an assessment
under § § 203 and 223 is suspended.
iii.  TP cannot be located in address per return §  It is further worthy to stress that the suspension of the running of
iv.  When WDL is duly served and no property could be Statute of Limitations provided in § § 203 and 222 refers to the
located phrase "on the making of assessment" which phrase refers to the
three-year or ten year period, as the case may be, which includes the
v.  When TP is out of the Philippines (§ 223) issuance of a PAN. Hence, when TP requested for a reinvestigation
on the PAN, the making of the assessment was tolled
B.  Period to Collect B.  Period to Collect
§  Taxes assessed within prescriptive period 1.  Cases –

may be collected by distraint or levy or by a RP v. Ablaza
proceeding in court within 5 years following Rationale for prescriptive period:
the assessment of the tax – Sec 222(c) §  To obligate the government to act promptly in
§  5-year period could be extended by the making of assessment
agreement of the CIR and the TP – Sec. §  To protect TPs from unscrupulous tax agents
222(d)

Palanca v. CIR Palanca v. CIR
§  Following assessment of deficiency estate tax, WDL served on
TP, which was however not executed due to various requests §  Summary remedy of distraint and levy is begun by the
for reinvestigation/re-computation filed by TP issuance of a WDL.
§  After repeated requests were denied and CIR was undertaking §  The right of the CIR to collect by summary method has
steps to collect the deficiency (via execution of the WDL), TP the effect of stopping the running of prescription once a
argued that right of BIR to collect prescribed already
WDL is issued
§  Held: right to collect not yet prescribed
§  All that is required to stop the running of the period of §  The issuance of the WDL begins the summary remedy of
limitation therein prescribed is to distraint or levy, or institute distraint and levy and that it is not necessary that it be
a proceeding in court, within 5 years after the assessment of actually executed to be made effective; not essential that
the tax. A judicial action for the collection of a tax is begun by the WDL be fully executed in order that it may have the
the filing of a complaint with the proper CFI, or where the
assessment is appealed to the CTA, by filing an answer to the effect of suspending the running of the statute of
TP’s petition for review wherein payment of the tax is prayed limitation upon collection of the tax
for

RP v. Ker: Pendency of appeal bars BIR from enforcing collection RP v. Ker
via civil action §  TP Contention: since RP filed the complaint for the collection of the
deficiency income tax for the years 1948 – 1950 only on March 27, 1962,
§  Feb. 16, 1953: TP assessed for tax years 1948 to 1950 or 9 years, 1 month and 11 days from Feb. 16, 1953, the date the tax
§  July 23, 1953: TP assessed for tax year 1947 was assessed, the right to collect the same has prescribed
§  Jan. 5, 1954: Upon reinvestigation at the request of TP, revised §  BIR Contention: the running of the prescriptive period was interrupted
assessment issued reducing 1947 and 1950 assessments; 1948 by the filing of the TP’s petition for review in the CTA on March 1, 1956
and 1949 assessments remained the same §  Held: Did the pendency of the TP’s appeal in the CTA and in the SC have
the effect of legally preventing the CIR from instituting an action in the
§  Mar. 1, 1956: TP filed petition for review with CTA (dismissed CFI for the collection of the tax? Our view is that it did.
by CTA for being time-barred; dismissal affirmed by SC) §  From March 1, 1956 when TP filed a petition for review in the CTA
§  Mar. 27, 1962: action for collection (lower court dismissed contesting the legality of the assessments in question, until the
1947 claim but ordered TP to pay 1948 – 1950 tax liabilities) termination of its appeal in the SC, the CIR was prevented from filing an
ordinary action in the CFI to collect the tax. Besides, to do so would be
§  Held: 1947 assessment prescribed; BIR failed to prove fraud to violate the judicial policy of avoiding multiplicity of suits and the rule
on lis pendens

RP v. Hizon CIR v. Wyeth Suaco Laboratories
§  July 18, 1986: assessment (became final and executory for §  Dec. 19, 1974: TP received 2 assessment notices for deficiency
failure to contest) FWT on royalty payments and deficiency advance sales tax
§  Jan. 12, 1989: WDL issued, but not executed §  Jan. 17 and Feb. 8, 1975: protest letters on the 2 assessments
§  Nov. 3, 1992: TP sought recon of assessment (denied by BIR on §  Jan. 2, 1980: protest denied in part; revised assessment issued
Aug. 11, 1994) prompting TP to appeal to CTA
§  Jan. 1, 1997: collection case §  Feb. 7, 1980: WDL issued (enjoined by CTA)
§  Held: collection enforcement by judicial action prescribed §  Held: settled is the rule that the prescriptive period to collect
(out-of-time protest did not suspend period; assessment by distraint or levy or by a proceeding in court is interrupted
already demandable) once a TP requests for reinvestigation or reconsideration of
§  BIR, however, can still execute WDL having been timely issued the assessment
(sufficient that WDL issued before expiration of prescriptive
period; not necessary that WDL be executed)

CIR v. Wyeth Suaco Laboratories CIR v. Wyeth Suaco Laboratories
§  Although the protest letters prepared by SGV & Co. in §  Verily, the original assessments dated December 16
behalf of TP did not categorically state or use the words and 17, 1974 were both received by TP on December
“reinvestigation” and “reconsideration,” the same are to be 19, 1974. However, when TP protested the
assessments and sought its reconsideration in two
treated as letters of reinvestigation and reconsideration. (2) letters received by the BIR on January 20 and
§  By virtue of these letters, the BIR ordered its Manufacturing February 10, 1975, the prescriptive period was
Audit Division to review the assessments made. interrupted.
Furthermore, TP’s claim that it did not seek reinvestigation §  This period started to run again when the BIR served
or reconsideration of the assessments is belied by the the final assessment to TP on January 2, 1980. Since
subsequent correspondence or letters written by its the WDL were served on TP on March 12, 1980,
officers, as shown above. then, only about four (4) months of the five-year
§  These letters of TP interrupted the running of the 5-year
prescriptive period was used.
prescriptive period to collect the deficiency taxes.

BPI v. CIR BPI v. CIR
§  Oct. 20, 1989: TP received FAN dated Oct. 10, 1989 for §  Service of WDL on TP on Oct. 23, 1992 was time-barred (BIR only
had until Oct. 19, 1992 to enforce collection)
tax year 1985
§  Prescriptive period for collection of taxes can only be suspended
§  Nov. 17, 1989: TP filed protest requesting that by a request for reinvestigation (which is granted), not a request
assessment be “revoked and cancelled” for reconsideration
§  Oct. 23, 1992: TP received WDL dated Oct. 15, 1992 (not §  Protest filed by TP did not constitute a request for reinvestigation
executed however) §  Request for reconsideration refers to a plea for a re-evaluation of
§  Sept. 11, 1997: BIR denied protest (prompting TP to an assessment on the basis of existing records without need of
additional evidence. It may involve both a question of fact or of
appeal to CTA) law or both.
§  CTA ruled that right to collect not yet prescribed; request §  Request for reinvestigation refers to a plea for re-evaluation of an
for reinvestigation is granted when the BIR entertains the assessment on the basis of newly-discovered or additional
request by not issuing a WDL evidence that a taxpayer intends to present in the
§  Issue: W/N right of government to collect has prescribed reinvestigation. It may also involve a question of fact or law or
both
§  Held: Yes §  Wyeth Suaco clarified

Hambrecht & Quist v. CIR Hambrecht & Quist v. CIR
§  Feb. 15, 1993: TP informed BIR of change of business address §  Issue: W/N CTA has jurisdiction to rule that right to collect has
§  Nov. 4, 1993: TP received “tracer-letter” from A/R & Billing prescribed
Division of BIR demanding payment of deficiency taxes for 1989 §  BIR Contention: when the law says that CTA has jurisdiction over
§  Dec. 3, 1993: TP protested deficiency assessment as set forth in “other matters,” it presupposes that the assessment has not become
tracer-letter final and unappealable. Thus, if the assessment has become final and
§  Nov. 7, 2001: nearly 8 years later, TP received decision from BIR unappealable, CTA has no jurisdiction to decide “other matters”
denying the protest on the ground that the protest was time- related to the assessment, such as, the issue on the right to collect
barred the same
§  Dec. 6, 2001: appeal to CTA (in a decision dated Sept. 24, 2004, §  Held: CTA has jurisdiction
CTA held that that although the subject assessment notice sent §  We do not agree. Nowhere in the law does any limitation appear as
by registered mail to TP’s former place of business has become to the extent of the jurisdiction of the Court over “other matters”
final and unappealable for failure to protest the same within the §  The appellate jurisdiction of the CTA is not limited to cases which
period provided by law, nevertheless, the right of CIR in said case involve disputed assessments. The second part also covers other
to collect the assessed taxes has already prescribed) cases that arise out of the NIRC or other related laws administered
by the BIR

Hambrecht & Quist v. CIR Hambrecht & Quist v. CIR
§  As correctly pointed out by TP, a tax assessment deals with §  A request for reconsideration or reinvestigation filed by a taxpayer,
how much taxes are due from a TP, while tax collection deals which has not been seasonably filed, does not interrupt the
prescriptive period to collect taxes appropriately assessed
with the whole process of collecting the same from the TPs.
Therefore, it can really happen, as in this case, that while §  In the instant case, the Original Division of this Court found the
assessment issued against herein respondent, HQPI to be final and
there may no longer be any dispute on the assessment as it
unappealable because its motion for reconsideration/reinvestigation
has become final, there is still an existing controversy was filed out of time. This being so, CIR should have instituted
pertaining to the right of the BIR to legally collect the assessed collection proceedings within the 3-year period from assessment,
taxes either by distraint or levy, or by judicial action. Apparently, the BIR
§  CIR must make a tax assessment within 3 years after the did not initiate collection proceedings within the period provided by
correspondent return is filed. However, no action can be law to enforce the assessment, and the TP had the legal right to
brought by it for the recovery of the tax after the lapse of that assail the same when it filed the petition
period in case no assessment has been made. Any tax §  Correspondingly, the Original Division of this Court appropriately
assessed must in turn be collected by the remedies provided possessed the jurisdiction to act on said case because the officers of
by law, i.e. distraint or levy, within 3 years following the the BIR should not be allowed to benefit from their neglect in
collecting taxes from the TP within the reglementary period
assessment save in cases specified by law
C.  Period to File Protest D.  Period to Appeal Decision on Disputed Assessment
1.  Cases – 1.  See III(D)

Pantranco v. Blaquera
§  30-day appeal period is jurisdictional and non-
extendible
E.  Period to File Refund Claim E.  Period to File Refund Claim

Collector v. Sweeney Collector v. Sweeney
§  TP, a non-stock, non-profit corporation, was assessed
deficiency fixed and percentage taxes for operating a bar §  Held: as to the propriety of taking the case to the CTA
exclusively for its members before TPs received any advice as to the action taken, if
§  TP protested assessment (while protest pending, Club was any, on their petition for refund, this question has already
dissolved) been ruled upon by Us to the effect that TPs need not wait
§  CIR denied protest; sought to collect deficiency taxes from for the action of the CIR on the request for refund before
past presidents of Club taking the matter to court
§  Under threat of criminal prosecution for tax evasion, past
presidents paid the taxes under protest; on the same day, §  Nowhere does the law imply that the CIR must act upon the
past presidents filed refund claim claim or that the TP shall not go to court before he is
§  Due to inaction of CIR on refund claim, past presidents notified of the CIR's action. Having filed his claim and the
appealed claim to CTA CIR having had ample time to study it, the claimant may,
§  CIR Contention: CTA has no jurisdiction over the case indeed should, within the statutory period of 2 years
because the CIR has yet to rule on the refund claim proceed with his suit without waiting for the CIR's decision
1.  Cases –
1.  Cases – Gibbs v. CIR
Collector v. Sweeney §  TP assessed (protested; denied)
§  Oct. 3, 1956: TP paid tax under protest; at the same time,
§  Indeed, it must be observed that under said sought immediate refund
provisions, the TP’s failure to comply with the §  Oct. 26, 1956: CIR denied refund claim (denial received
requirement regarding the institution of the by TP on Nov. 14, 1956)
action or proceeding in court within 2 years after §  Sept. 26, 1957: 10 mos. after receiving the denial, TP
filed petition for review with CTA (dismissed by CTA;
the payment of the taxes bars him from the appeal filed more than 30 days from receipt of denial)
recovery of the same, irrespective of whether a §  Issue: W/N judicial refund claim filed on time
claim for the refund of such taxes filed with the §  Held: No, time-barred
§  TP Contention: although appeal was filed beyond 30-day
CIR is still pending action of the latter period, CTA still had jurisdiction over the same, by virtue
of NIRC § 306 (now § 229)

Gibbs v. CIR CIR v. CA
§  NIRC § 306 should be construed together with § 11 of RA
1125. In fine, a TP who has paid the tax, whether under §  April 2, 1986: TP filed annual ITR for tax year 1985
protest or not, and who is claiming a refund of the same, must §  ITR showed over-payment of quarterly income tax by P65k
comply with the requirements of both sections, that is, he §  April 14, 1988: administrative refund claim
must file a claim for refund with the CIR within 2 years from
the date of his payment of the tax, as required by said NIRC § §  April 15, 1988: judicial refund claim
306, and appeal to the CTA within 30 days from receipt of the §  Issue: whether the 2-year period of prescription for filing a
CIR's decision or ruling denying his claim for refund, as claim for refund, as provided in § 230, is to be counted
required by said § 11 of RA 1125. If however, the CIR takes
time in deciding the claim, and the period of 2 years is about from April 2, 1986 when the corporate income tax return
to end, the suit or proceeding must be started in the CTA was actually filed or from April 15, 1986 when, according to
before the end of the two-year period without awaiting the § 70(b), the final adjustment return could still be filed
decision of the CIR. This is so because of the positive without incurring any penalty
requirement of § 306 and the doctrine that delay of the CIR in
rendering decision does not extend the peremptory period §  Held: from April 2, 1986; hence, admin claim and judicial
fixed by the statute claim barred by prescription

ACCRA Investments Corp. v. CA
CIR v. CA
§  April 15, 1982: TP filed annual ITR showing overpaid income
§  In the context of § 230, which provides for a 2-year tax arising from excess creditable withholding tax (withholding
period of prescription counted “from the date of agents remitted taxes withheld from income payments to TP
payment of the tax” for actions for refund of corporate from Feb. to Dec. 1981)
income tax, the 2-year period should be computed §  Dec. 29, 1983: refund claim with BIR (no BIR action)
from the time of actual filing of the Adjustment Return §  April 13, 1984: petition for review (dismissed by CTA;
reckoning point of 2-year prescriptive period is Dec. 31, 1981,
or Annual Income Tax Return. This is so because at when taxes withheld were paid to BIR, not April 15, 1982,
that point, it can already be determined whether there when TP filed annual ITR)
has been an overpayment by the TP. Moreover, under §  Held: 2-year prescriptive period is counted from April 15, 1982
§ 49(a) of the NIRC, payment is made at the time the §  As regards excess CWT, the 2-year period from the “date of
return is filed payment of the tax” is reckoned “when the tax liability falls
due”

ACCRA Investments Corp. v. CA
§  A TP whose income is withheld at source will be deemed to ACCRA Investments Corp. v. CA
have paid his tax liability when the same falls due at the §  It bears emphasis at this point that the rationale in
end of the tax year. It is from this latter date then, or when
the tax liability falls due, that the 2-year prescriptive period computing the 2-year prescriptive period with
under § 306 (now part of § 230) starts to run with respect respect to the TP’s claim for refund from the time
to payments effected through the withholding tax system
(Gibbs v. CIR) it filed its FAR is the fact that it was only then that
§  W/N the TP is entitled to a refund is determined when the the TP could ascertain whether it made profits or
TP files its annual ITR on or before April 15, 1982 when its incurred losses in its business operations. The
tax liability for 1981 fell due
§  If we were to uphold the respondent appellate court in “date of payment,” therefore, in the herein TP’s
making the “date of payment” coincide with the “end of case was when its tax liability, if any, fell due upon
the taxable year,” the TP at the end of the 1981 taxable
year was in no position then to determine whether it was its filing of its final adjustment return on April 15,
liable or not for the payment of its 1981 income tax 1982

CIR v. TMX Sales, Inc. CIR v. TMX Sales, Inc.
§  Issue: In a case involving overpaid corporate quarterly §  Held: the most reasonable and logical application of the law
income tax, does the 2-year prescriptive period to claim would be to compute the 2-year prescriptive period at the
a refund of erroneously collected tax provided for in § time of filing the FAR or the Annual Income Tax Return,
292 (now § 229) commence to run from the date the when it can be finally ascertained if the TP has still to pay
quarterly income tax was paid, or from the date of filing
of the Final Adjustment Return (final payment)? additional income tax or if he is entitled to a refund of
overpaid income tax
§  Facts: May 15, 1981: TP filed quarterly income tax return
reporting income of P571k and paying income tax of §  The filing of a quarterly ITRs and payment of quarterly
P247k income tax should only be considered mere installments of
§  During subsequent quarters TP suffered net losses such the annual tax due. These quarterly tax payments which are
that when it filed its annual ITR on April 15, 1982, it computed based on the cumulative figures of gross receipts
reported a negative tax position and deductions in order to arrive at a net taxable income,
§  July 9, 1982: refund claim (not acted upon) should be treated as advances or portions of the annual
income tax due, to be adjusted at the end of the calendar
§  March 14, 1984: petition for review or fiscal year
E.  Period to File Refund Claim
1.  Cases –
CIR v. TMX Sales, Inc.
§  In the case of Collector v. Prieto (2 SCRA 1007
[1961]), this Court held that when a tax is paid in
installments, the 2-year prescriptive period should
be counted from the date of the final payment. This
ruling is reiterated in CIR v. Palanca (18 SCRA 496
[1966]), wherein this Court stated that where the tax
account was paid on installment, the computation of
the 2-year prescriptive period should be from the
IX.  NON-RETROACTIVITY OF
date of the last installment RULINGS OR REGULATIONS
B.  Non-Retroactivity of Rulings/Regs. B.  Non-Retroactivity of Rulings/Regs.
§  Sec. 246: Any revocation, modification or reversal of any §  Gen. rule: the government is not bound by
of the rules and regulations shall not be given retroactive the mistakes of its agents
application if the revocation, modification or reversal will
be prejudicial to the taxpayers, except in the following §  Exception: Sec. 246
cases: §  Rationale: justice and fair play
•  Where the taxpayer deliberately misstates or omits
–  Because the “opinion or ruling of the
material facts;
Commissioner of Internal Revenue, the agency
•  Where the facts subsequently gathered by BIR are tasked with the enforcement of tax laws, is
materially different from the facts on which the ruling accorded much weight and even finality, when
is based; or there is no showing that it is patently wrong,” “a
•  Where the taxpayer acted in bad faith taxpayer cannot be convicted for taking the tax
authorities at their word
§  Administrative agencies, such as the BIR, are CIR v. Burroughs, Ltd.

not bound by precedents and may overrule §  TP remitted branch profits to parent; paid 15%
BPRT based on total branch profits out of which
o r a b a n d o n t h e i r o w n r u l i n g s o r remittance was made
interpretations of the law or those of their §  Subsequent BIR ruling that 15% BPRT should be
predecessors in favor of new ones which are based on amount actually remitted, not on total
branch profits out of which remittance is to be
deemed more consonant with the letter and made
spirit of the law §  Refund claim
–  The power to abandon rulings, however, are §  RMC revoking BIR ruling
limited by Sec. 246 §  TP entitled to refund since revocatory RMC
§  What is the danger if Sec. 246 is not in place? cannot be given retroactive effect
PBCom v. CIR 1.  Cases –

§  Issue was whether refund claim of TP was filed out ABS-CBN v. CTA
of time
§  TP relied on RMC which changed period of
prescription for overpaid quarterly income tax from
2 years to 10 years
§  SC did not apply Sec. 246
–  Taxes are the lifeblood of the nation BS
–  State is not estopped by the mistakes of its agents
–  Sec. 246 not applicable because nullity of RMC was
declared by the court and not by the CIR

Remedies of The TP Post TRAIN

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Remedies of The TP Post TRAIN

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TAX

Rights and Remedies of Taxpayers

Atty. Terence Conrad H. Bello 2

A. Amend Tax Return A. Amend Tax Return

What is the procedure for protesting an assessment?

II. PROTEST ASSESSMENT

C. PAN C. PAN

C. PAN C. PAN

§ Lack of PAN is fatal § What is the effect if the BIR fails to

CIR v. Reyes § In what form should the “informing” take?

Australasia Cylinder Corp. v. CIR PNZ Marketing v. CIR

Phil. Mining Service Corp. v. CIR Oceanic Wireless Network v. CIR

Recap: CIR v. Enron Subic Power Corp.

E. Submission of Supporting Documents E. Submission of Supporting Documents

F. Effect of Failure to File Protest

Scope of jurisdiction of the CTA: Scope of jurisdiction of the CTA:

Scope of jurisdiction of the CTA: Scope of jurisdiction of the CTA:

CIR v. Villa Lascona Land Co. v. CIR

§ Lascona affirmed by SC RCBC v. CIR

1. General rule: FDDA 3. Final Notice Before Seizure

4. Final Demand Letter 4. Final Demand Letter

4. Final Demand Letter 4. Final Demand Letter

4. Final Demand Letter 5. Filing of collection suit

5. Filing of collection suit 7. Issuance of WDL –

7. Issuance of WDL – 7. Issuance of WDL –

Basa v. RP Mambulao Lumber Co. v. CIR

5. May the TP appeal the adverse decision of the CTA

A. What Constitutes Erroneous Payment

• What can be refunded or credited is a tax that is 1. Cases –

1. CIR v. Central Azucarera Don Pedro 2. Case –

1. Cases – 1. Cases –

1. Cases – Philex Mining Corp. v. CIR

Francia v. IAC Francia v. IAC

BIR Rul. 415-93 Summary –

A. Appeal in Case of Denial of Refund/Tax Credit Claim

1. Appeal to CTA/SC same as appeal of denial of

VI. APPEAL IN CASE OF DENIAL OF

1. What may be appealed to the CTA pursuant to par.

VII. DECISION ON “OTHER MATTERS”

Decision on “Other Matters” Decision on “Other Matters”

Rodriguez v. Blaquera PNOC v. CA

Decision on “Other Matters” Decision on “Other Matters”

Appeal Remedy vs. Challenged BIR Issuances § If exercise of power is quasi-legislative in

Decision on “Other Matters” Decision on “Other Matters”

Decision on “Other Matters” Decision on “Other Matters”

§ CTA has appellate jurisdiction over decisions Types of BIR Issuances

Decision on “Other Matters” Decision on “Other Matters”

Decision on “Other Matters” Decision on “Other Matters”

Decision on “Other Matters” Decision on “Other Matters”

Appeal Remedy vs. Challenged BIR Issuances

Decision on “Other Matters” Decision on “Other Matters”

Appeal Remedy vs. Challenged BIR Issuances

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

B. Period to Collect B. Period to Collect

A.  Amend Tax Return A.  Amend Tax Return

II.  PROTEST ASSESSMENT

C.  PAN C.  PAN

C.  PAN C.  PAN

§  Lack of PAN is fatal §  What is the effect if the BIR fails to

CIR v. Reyes §  In what form should the “informing” take?

E.  Submission of Supporting Documents E.  Submission of Supporting Documents

F.  Effect of Failure to File Protest

§  Lascona affirmed by SC RCBC v. CIR

1.  General rule: FDDA 3.  Final Notice Before Seizure

4.  Final Demand Letter 4.  Final Demand Letter

4.  Final Demand Letter 4.  Final Demand Letter

4.  Final Demand Letter 5.  Filing of collection suit

5.  Filing of collection suit 7.  Issuance of WDL –

7.  Issuance of WDL – 7.  Issuance of WDL –

5.  May the TP appeal the adverse decision of the CTA

A.  What Constitutes Erroneous Payment

•  What can be refunded or credited is a tax that is 1.  Cases –

1.  CIR v. Central Azucarera Don Pedro 2.  Case –

1.  Cases – 1.  Cases –

1.  Cases – Philex Mining Corp. v. CIR

A.  Appeal in Case of Denial of Refund/Tax Credit Claim

1.  Appeal to CTA/SC same as appeal of denial of

VI.  APPEAL IN CASE OF DENIAL OF

1.  What may be appealed to the CTA pursuant to par.

VII.  DECISION ON “OTHER MATTERS”

Appeal Remedy vs. Challenged BIR Issuances §  If exercise of power is quasi-legislative in

§  CTA has appellate jurisdiction over decisions Types of BIR Issuances

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

B.  Period to Collect B.  Period to Collect

§  Taxes assessed within prescriptive period 1.  Cases –

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  See III(D)

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

E.  Period to File Refund Claim

B.  Non-Retroactivity of Rulings/Regs. B.  Non-Retroactivity of Rulings/Regs.

§  Administrative agencies, such as the BIR, are CIR v. Burroughs, Ltd.

B.  Non-Retroactivity of Rulings/Regs. B.  Non-Retroactivity of Rulings/Regs.

PBCom v. CIR 1.  Cases –