4m 2018 Tax 1 Reviewtransfer Tax Vat Remedies and Cta

SECOND EXAM TAXATION LAW REVIEW
Dean Manuel P. Quibod || 4 Manresa 2018-2019

TRANSFER TAX, VAT, REMEDIES, CTA
29 JANUARY 2019 a. Citizen and resident alien decedents: Value at the time
Vega & Amparo of death of all properties (real or personal, tangible or
intangible) wherever situated.
TRANSFER TAXES b. Non-resident alien decedent: Only properties located
and situated in the Philippines.
Transfer taxes are taxes imposed on the gratuitous transfer of
property brought about by death or way of gift.
PROPERTIES THAT FORM PART OF THE TAXABLE ESTATE (Sec.
Transfer from estate to the heirs, and from donor to the donee. 85, Sec 104 of NIRC):
Transfer taxes can either be: SECTION 85. Gross Estate. – The value of the gross estate of
1. Estate tax; or the decedent shall be determined by including the value at
2. Donor’s tax the time of his death of all property, real or personal,
tangible or intangible, wherever situated: Provided,
There is no more inheritance tax. however, that in the case of a nonresident decedent who at
the time of his death was not a citizen of the Philippines, only
that part of the entire gross estate which is situated in the
ESTATE TAX VS. DONORS TAX
Philippines shall be included in his taxable estate.
ESTATE DONOR’S A. Decedent’s Interest

Rate 6% (after standard 6% above Php
deduction of 5 250,000
(A) Decedent's Interest. – To the extent of the interest
million and family
therein of the decedent at the time of his death;
home upto 10
million)
Time of Upon death During lifetime Covers all properties at the time of death.
transmission
Notice Notice of death is Not required
required B. Transfers in Contemplation of Death
Exemption 5 million (standard 250,000
deduction) (B) Transfer in Contemplation of Death. – To the extent of
Purpose Prevent undue Prevent avoidance any interest therein of which the decedent has at any time
accumulation or of the estate tax by made a transfer, by trust or otherwise, in contemplation of
concentration of transfer during the or intended to take effect in possession or enjoyment at or
wealth lifetime after death, or of which he has at any time made a transfer,
Filing and 1 year from death 30 days from by trust or otherwise, under which he has retained for his life
payment donation/gift or for any period which does not in fact end before his death
(1) the possession or enjoyment of, or the right to the income
from the property, or (2) the right, either alone or in
ESTATE TAXATION conjunction with any person, to designate the person who
shall possess or enjoy the property or the income therefrom;
Under TRAIN and before TRAIN except in case of a bona fide sale for an adequate and full
consideration in money or money's worth.
BEFORE TRAIN
Progressive rate of 5 to 20% A flat rate of 6% of taxable These are transfers induce by the thought of death, regardless
estate whether the death is impending or forthcoming.
Exemption of family home – Exemption of family home –
1 million 10 million
Standard deduction – 1 Standard deduction – 5
Transfers conditioned on survivorship
million million*
Deadline – within 6 months Deadline – within 1 year
There is a transfer made but, meanwhile, the transferor is still
around and continues to enjoy and make use or utilize the
* If the decedent left an estate with a value of 5 million,
property. It can only be enjoyed by the transferee upon death of
practically, it is not taxable anymore because it will be entitled to
the transferee. There is no full and complete transfer. In such
the outright 5 million deduction
case, the property will still be part of the estate of the transferor.
Transfers with retention or reservation of rights
You transferred a property but there is a condition that you retain

GROSS ESTATE OF THE DECEDENT
or reserve right of enjoyment and possession of the property. In
the event of death, since there is an incomplete transfer, it is part
of the gross estate.
ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |1
But if the property was passed on to him under a special power

C. Revocable Transfer of appointment, it is excluded because there is a restriction as to
who will succeed the property.
(1) To the extent of any interest therein, of which the
decedent has at any time made a transfer (except in case of
a bona fide sale for an adequate and full consideration in E. Proceeds of life insurance
money or money's worth) by trust or otherwise, where the
enjoyment thereof was subject at the date of his death to (E) Proceeds of Life Insurance. – To the extent of the amount
any change through the exercise of a power (in whatever receivable by the estate of the deceased, his executor, or
capacity exercisable) by the decedent alone or by the administrator, as insurance under policies taken out by the
decedent in conjunction with any other person (without decedent upon his own life, irrespective of whether or not
regard to when or from what source the decedent acquired the insured retained the power of revocation, or to the
such power), to alter, amend, revoke, or terminate, or where extent of the amount receivable by any beneficiary
any such power is relinquished in contemplation of the designated in the policy of insurance, except when it is
decedent's death. expressly stipulated that the designation of the beneficiary is
irrevocable.
(2) For the purpose of this Subsection, the power to alter,
amend or revoke shall be considered to exist on the date of
Included in the estate except when there is an express
the decedent's death even though the exercise of the power
designation of irrevocable beneficiaries.
is subject to a precedent giving of notice or even though the
alteration, amendment or revocation takes effect only on the
expiration of a stated period after the exercise of the power, If the proceeds of the insurance received by the estate is not
whether or not on or before the date of the decedent's death taken out by the decedent upon his own life, that is excluded.
notice has been given or the power has been exercised. In
such cases, proper adjustment shall be made representing
the interests which would have been excluded from the F. Prior Interest
power if the decedent had lived, and for such purpose if the
notice has not been given or the power has not been (F) Prior Interests. – Except as otherwise specifically provided
exercised on or before the date of his death, such notice shall therein, Subsections (B), (C) and (E) of this Section shall apply
be considered to have been given, or the power exercised, to the transfers, trusts, estates, interests, rights, powers and
on the date of death. relinquishment of powers, as severally enumerated and
described therein, whether made, created, arising, existing,
This is a transfer made but the transferor has the right to alter, exercised or relinquished before or after the effectivity of
amend, terminate or revoke the transfer during his life time. In this Code.
the event of death, being a revocable transfer, forms part of the
estate.
D. Property Passing Under General Power of G. Transfers for Insufficient Consideration
Appointment
(G) Transfers for Insufficient Consideration. – If any one of
(D) Property Passing Under General Power of Appointment. the transfers, trusts, interests, rights or powers enumerated
– To the extent of any property passing under a general and described in Subsections (B), (C) and (D) of this Section is
power of appointment exercised by the decedent: (1) by will, made, created, exercised or relinquished for a consideration
or (2) by deed executed in contemplation of, or intended to in money or money's worth, but is not a bona fide sale for an
take effect in possession or enjoyment at, or after his death, adequate and full consideration in money or money's worth,
or (3) by deed under which he has retained for his life or any there shall be included in the gross estate only the excess of
period not ascertainable without reference to his death or the fair market value, at the time of death, of the property
for any period which does not in fact end before his death (a) otherwise to be included on account of such transaction,
the possession or enjoyment of, or the right to the income over the value of the consideration received therefor by the
from, the property, or (b) the right, either alone or in decedent.
conjunction with any person, to designate the persons who
shall possess or enjoy the property or the income therefrom; This is not a bona fide sale for full consideration in money or
except in case of a bona fide sale for an adequate and full money’s worth. The excess of the fair market value the property
consideration in money or money's worth. transferred at the time of death over the amount of consideration
received at the date of transfer will be the balance of the
General power of appointment is an unrestricted authority to difference and will be included in the gross estate.
appoint or designate any person as beneficiary or successor to a
property entrusted to the decedent.
H. Capital/Exclusive property of surviving spouse
During the lifetime of the decedent, he received a property
passed on to him under a general power of appointment. In the
event of death, that property will be part of his estate.
(H) Capital of the Surviving Spouse. – The capital of the time of his death or donation allows a similar
surviving spouse of a decedent shall not, for the purpose of exemption from transfer or death taxes of every
this Chapter, be deemed a part of his or her gross estate. character or description in respect of intangible
personal property owned by citizens of the
Excluded from Gross estate. It is owned by the surviving spouse Philippines not residing in that foreign country.
and is exclusive to him/her. In other words, the absolute
community or conjugal of property will be included in the gross In other words, on the basis of reciprocity where we do not tax
estate. Later na bawasan ng half of the share of surviving spouse the intangible property of the non-resident alien.
after all the deductions have been made.
VALUATION
SECTION 104. PROPERTIES SITUATED IN THE PHILIPPINES AND IS
PART OF THE GROSS ESTATE SECTION 86. Computation of Net Estate. – For the purpose of
the tax imposed in this Chapter, the value of the net estate
SECTION 104. Definitions. – For purposes of this Title, the shall be determined:
terms 'gross estate' and 'gifts' include real and personal
property, whether tangible or intangible, or mixed, wherever Valuation of the properties composing the estate is the fair
situated: Provided, however, That where the decedent or market value at the time of death. (Principle of date of death
donor was a nonresident alien at the time of his death or valuation)
donation, as the case may be, his real and personal property
so transferred but which are situated outside the Philippines For Real Properties – what is used is the zonal value of the
shall not be included as part of his 'gross estate' or 'gross property at the time of death.
gift’: Provided, further,
1. That franchise which must be exercised in the DEDUCTIONS

Philippines;
2. Shares, obligations or bonds issued by any (A) Deductions allowed to the estate of a citizen or a resident
corporation or sociedad anonima organized or
constituted in the Philippines in accordance with its (A) Deductions Allowed to the Estate of Citizen or a Resident.
laws; - In the case of a citizen or resident of the Philippines, by
3. Shares, obligations or bonds by any foreign deducting from the value of the gross estate -
corporation eighty-five percent (85%) of the
business of which is located in the Philippines;
4. Shares, obligations or bonds issued by any foreign 1. Standard deduction
corporation if such shares, obligations or bonds
have acquired a business situs in the Philippines;
(1) Standard Deduction. – An amount equivalent to Five
5. shares or rights in any partnership, business or
million pesos (P5,000,000.00).
industry established in the Philippines, shall be
considered as situated in the Philippines:
 No question asked deduction of 5 million
Properties of non-resident alien decedents situated outside the  There is no longer deduction for funeral expenses,
Philippines are not part of his gross estate in the Philippines. expenses for settlement of the estate and other
expenses.
Intangible personal property of the estate of a non-resident-  If the estate left is less than 5 million, it will be a non-
alien decedent, shall not be taxable in the Philippines if: taxable estate.
2. Claims against the estate

Provided, still further, that no tax shall be collected under
this Title in respect of intangible personal property: (2) For claims against the estate: Provided, That at the time
of indebtedness was incurred that debt instrument was duly
(a) if the decedent at the time of his death or the notarized and, if the loan was contracted within three (3)
donor at the time of the donation was a citizen and years before the death of the decedent, the administrator or
resident of a foreign country which at the time of executor shall submit a statement showing the disposition of
his death or donation did not impose a transfer tax the proceeds of the loan.
of any character, in respect of intangible personal
property of citizens of the Philippines not residing  These are “utang” of the estate
in that foreign country, or  Debts should be collected against the estate
(b) if the laws of the foreign country of which the

decedent or donor was a citizen and resident at the 3. Claims of the deceased against insolvent persons
(b) Eighty percent (80%) of the value, if the prior

(3) For claims of the deceased against the insolvent persons decedent died more than one (1) year but not more
where the value of decedent’s interest therein is included in than two (2) years prior to the death of the
the value of the gross estate. decedent, or if the property was transferred to him
by gift within the same period prior to his death;
 These are collectibles of the deceased during his life
time but it turned out na the debtor is an insolvent (c) Sixty percent (60%) of the value, if the prior
person. decedent died more than two (2) years but not
more than three (3) years prior to the death of the
 These receivables are part of gross estate but a
decedent, or if the property was transferred to him
deduction. So, zero out. by gift within the same period prior to his death;
(d) Forty percent (40%) of the value, if the prior

4. Deduction for unpaid mortgages, indebtedness, taxes, decedent died more than three (3) years but not
casualty losses. more than four (4) years prior to the death of the
decedent, or if the property was transferred to him
(4) For unpaid mortgages upon, or any indebtedness in by gift within the same period prior to his death;
respect to, property where the value of decedent’s interest and
therein, undiminished by such mortgage or indebtedness, is
included in the value of the gross estate, but not including (e) Twenty percent (20%) of the value, if the prior
any income tax upon income received after the death of the decedent died more than four (4) years but not
decedent, or property taxes not accrued before his death, or more than five (5) years prior to the death of the
any estate tax. The deduction herein allowed in the case of decedent, or if the property was transferred to him
claims against the estate, unpaid mortgages or any by gift within the same period prior to his death.
indebtedness shall, when founded upon a promise or
agreement, be limited to the extent that they were These deductions shall be allowed only where a donor's tax
contracted bona fide and for an adequate and full or estate tax imposed under this Title was finally determined
consideration in money or money’s worth. There shall also and paid by or on behalf of such donor, or the estate of such
de deducted losses incurred during the settlement of the prior decedent, as the case may be, and only in the amount
estate arising from fires, storms, shipwreck, or other finally determined as the value of such property in
casualties, or from robbery, theft, or embezzlement, when determining the value of the gift, or the gross estate of such
such losses are not compensated for by insurance or prior decedent, and only to the extent that the value of such
otherwise, and if at the time of the filing of the return such property is included in the decedent's gross estate, and only
losses have not been claimed as deduction for the income tax if in determining the value of the estate of the prior
purposes in an income tax return, and provided that such decedent, no deduction was allowable under paragraph (5)
losses were incurred not later than the last day for the in respect of the property or properties given in exchange
payment of the estate tax as prescribed in Subsection (A) of therefor. Where a deduction was allowed of any mortgage or
Section 91. other lien in determining the donor's tax, or the estate tax of
the prior decedent, which was paid in whole or in part prior
 As long as not compensated with insurance to the decedent's death, then the deduction allowable under
said Subsection shall be reduced by the amount so paid. Such
deduction allowable shall be reduced by an amount which
bears the same ratio to the amounts allowed as deductions
5. Deduction of property previously taxed (Vanishing
under paragraphs (2), (3), (4), and (6) of this Subsection as
deduction) the amount otherwise deductible under said paragraph (5)
bears to the value of the decedent's estate. Where the
(5) Property Previously Taxed. – An amount equal to the property referred to consists of two or more items, the
value specified below of any property forming part of the aggregate value of such items shall be used for the purpose
gross estate situated in the Philippines of any person who of computing the deduction.
died within five (5) years prior to the death of the decedent,
or transferred to the decedent by gift within five (5) years
prior to his death, where such property can be identified as Requisites:
having been received by the decedent from the donor by gift,
or from such prior decedent by gift, bequest, devise or
1. This property is situated in the Philippines. If it is outside,
inheritance, or which can be identified as having been
acquired in exchange for property so received: there is no vanishing deduction.
2. It is transferred to the decedent during his life time and
(a) One hundred percent (100%) of the value, if the there was a taxed paid. That is why it is a property
prior decedent died within one (1) year prior to the previously taxed.
death of the decedent, or if the property was 3. Then he was able to hold to that property within 5 years
transferred to him by gift, within the same period or less before his death.
prior to his death;
The estate could claim an equivalent deduction. So the property
previously taxed is part of the gross estate then claimed as a
deduction on the value at the time of death of that period of time 1. Standard Deduction – The estate may claim only as
he was able to hold on that property for 5 years or less. If held to much as P500,000.
that property over 5 years, part of gross estate but no deduction
for vanishing. Sa citizen or resident alien, the deduction is as much
as P5,000,000.
Q: How much is the deduction?
(1) Standard Deduction. — An amount equivalent to Five
1. Held 1 year or less – 100% of the value hundred thousand pesos (₱500,000);
2. More than 1 but not more than 2 years – 80%
3. More than 2 but not more than 3 years – 60% 2. Proportionate Deduction to be claimed by the estate
4. More than 3 but not more than 4 years – 40% in proportion to the Philippine estate against his total
5. More than 3 but not more than 5 years – 20% gross.
So, in proportion ng claims against the estate of

6. Transfers for public use insolvent person, the losses, indebtedness, and
taxes. Only the proportion.
(6) Transfers for Public Use. – The amount of all the bequests,
legacies, devises or transfers to or for the use of the
(2) That proportion of the deductions specified in paragraphs
Government of the Republic of the Philippines, or any
(2), (3), and (4) of Subsection (A) of this Section which the value
political subdivision thereof, for exclusively public purposes.
of such part bears to the value of his entire gross estate
wherever situated;
 This is part of the gross but claimed as deduction
7. Family Home 3. Property Previously Taxed (Vanishing Deduction) –

For the properties situated in the Philippines being a
(7) The Family Home. – An amount equivalent to the current non-resident alien.
fair market value of the decedent's family home: Provided,
however, That if the said current fair market value exceeds (3) Property Previously Taxed. – An amount equal to the value
Ten million pesos (P10,000,000), the excess shall be subject specified below of any property forming part of the gross estate
to estate tax. situated in the Philippines of any person who died within five
(5) years prior to the death of the decedent, or transferred to
 Amount not to exceeding 10 million the decedent by gift within five (5) years prior to his death,
where such property can be identified as having been received
by the decedent from the donor by gift, or from such prior
decedent by gift, bequest, devise or inheritance, or which can
be identified as having been acquired in exchange for property
so received:One hundred percent (100%) of the value if the prior
decedent died within one (1) year prior to the death of the
8. Amount Received by Heirs Under Republic Act No. decedent, or if the property was transferred to him by gift,
4917 within the same period prior to his death; Eighty percent (80%)
of the value, if the prior decedent died more than one (1) year
(8) Amount Received by Heirs Under Republic Act No. 4917. but not more than two (2) years prior to the death of the
– Any amount received by the heirs from the decedent’s decedent, or if the property was transferred to him by gift
employee as a consequence of the death of the decedent- within the same period prior to his death;Sixty percent (60%) of
employee in accordance with Republic Act No. 4917: the value, if the prior decedent died more than two (2) years but
Provided, That such amount is included in the gross estate of not more than three (3) years prior to the death of the decedent,
the decedent. or if the property was transferred to him by gift within the same
period prior to his death;Forty percent (40%) of the value, if the
 Added as part of gross estate, then claimed as a prior decedent died more than three (3) years but not more than
deduction. four (4) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same period
prior to his death; andTwenty percent (20%) of the value, if the
(B) DEDUCTIONS FOR NON-RESIDENT ESTATES prior decedent died more than four (4) years but not more than
five (5) years prior to the death of the decedent, or if the
(B) Deductions Allowed to Nonresident Estates. — In the case of property was transferred to him by gift within the same period
a nonresident not a citizen of the Philippines, by deducting from prior to his death.These deductions shall be allowed only where
the value of that part of his gross estate which at the time of his a donor's tax, or estate tax imposed under this Title is finally
death is situated in the Philippines: determined and paid by or on behalf of such donor, or the estate
of such prior decedent, as the case may be, and only in the
amount finally determined as the value of such property in “(2) Limitations on Credit. — The amount of the credit taken
determining the value of the gift, or the gross estate of such under this Section shall be subject to each of the following
prior decedent, and only to the extent that the value of such limitations:
property is included in that part of the decedent's gross estate
which at the time of his death is situated in the Philippines; and “(a) The amount of the credit in respect to the tax
only if, in determining the value of the net estate of the prior paid to any country shall not exceed the same
proportion of the tax against which such credit is
decedent, no deduction is allowable under paragraph (2) of
taken, which the decedent’s net estate situated
Subsection (B) of this Section, in respect of the property or
within such country taxable under this Title bears to
properties given in exchange therefore.
his entire net estate; and
Where a deduction was allowed of any mortgage or other lien “(b) The total amount of the credit shall not exceed
in determining the donor's tax, or the estate tax of the prior the same proportion of the tax against which such
decedent, which was paid in whole or in part prior to the credit is taken, which the decedent’s net estate
decedent's death, then the deduction allowable under said situated outside the Philippines taxable under this
paragraph shall be reduced by the amount so paid. Title bears to his entire net estate.”
Such deduction allowable shall be reduced by an amount which Since the citizens and resident decedents’ estates will cover all
bears the same ratio to the amounts allowed as deductions properties within and without, all sources or properties wherever
under paragraphs (1) and (3) of this Subsection as the amount situated (sa citizens lang gurow?) Their properties abroad, the
otherwise deductible under paragraph (2) bears to the value of estate will pay a foreign estate tax.
that part of the decedent's gross estate which at the time of his
death is situated in the Philippines. The same properties abroad will be reported also here in the
Philippines for estate tax purposes. So, dalawang tax ang
Where the property referred to consists of two (2) or more babayaran. Doon sa place where the property is located, and here
items, the aggregate value of such items shall be used for the where the decedent is a citizen or a resident alien.
purpose of computing the deduction.
What will the estate do with the foreign estate tax? The estate
will claim it by way of tax credit.
4. Transfers for public use;
(4) Transfers for Public Use. — The amount of all bequests, EXEMPTED ACQUISITIONS AND TRANSMISSIONS
legacies, devises or transfers to or for the use of the
Government of the Republic of the Philippines or any political  Here, there is actually no transfer.
subdivision thereof, for exclusively public purposes.
SEC. 87. Exemption of Certain Acquisitions and Transmissions. –
The following shall not be taxed:
(C) SHARE IN THE CONJUGAL/COMMUNITY PROPERTY
(A) The merger of usufruct in the owner of the naked title;
The ½ share of the surviving spouse on the conjugal or community
property will be deducted against the net conjugal or community When the owner holding a usufructuary right over a property
estate. dies, the usufruct is also extinguished. You are the beneficial
owner holding that property, and the usufruct is extinguished,
isuli na (ang usufruct) sa owner of the naked title (not a naked
(C) Share in the Conjugal Property.— The net share of the
owner).
surviving spouse in the conjugal partnership property as
diminished by the obligations properly chargeable to such
Because of that merger, there is no taxable transfer. That will not
property shall, for the purpose of this Section, be deducted from
be part of the estate.
the net estate of the decedent.
(B) The transmission or delivery of the inheritance or legacy by

the fiduciary heir or legatee to the fideicommissary;
(D) FOREIGN ESTATE TAX
Transmission lang ito. Kase yung transfer will be emanating from
the estate of the decedent to the beneficiaries. Pag deliver nyan
(D) Tax Credit for Estate Taxes Paid to a Foreign Country.—
sa beneficiaries by the fiduciary, then there is no taxable transfer
“(1) In General. — The tax imposed by this Title shall be kase binayaran na yung tax from the transfer emanating (on
credited with the amounts of any estate tax imposed by the account of the death?) Yun yung taxable transmission, not the
authority of a foreign country. delivery of the inheritance to the beneficiaries.
(C) The transmission from the first heir, legatee or donee in A certified copy of the schedule of partition and the order
favor of another beneficiary, in accordance with the desire of of the court approving the same shall be furnished the
the predecessor; and Commissioner within thirty (30) after the promulgation of
such order.
(D) All bequests, devises, legacies or transfers to social welfare, (C) Extension of Time. - The Commissioner shall have
cultural and charitable institutions, no part of the net income of authority to grant, in meritorious cases, a reasonable
which insures to the benefit of any individual: Provided, extension not exceeding thirty (30) days for filing the return.
however, That not more than thirty percent (30%) of the said
bequests, devises, legacies or transfers shall be used by such (D) Place of Filing. - Except in cases where the Commissioner
institutions for administration purposes. otherwise permits, the return required under Subsection (A)
shall be filed with an authorized agent bank, or Revenue
Notice of Death under SEC. 89 is already repealed. District Officer, Collection Officer, or duly authorized
Treasurer of the city or municipality in which the decedent
was domiciled at the time of his death or if there be no legal
residence in the Philippines, with the Office of the
FILING AND PAYMENT Commissioner.
 Within one (1) year from the death.

SEC. 91. Payment of Tax. –
Sec. 90. Estate Tax Returns. — “(A) Requirements.— In all (A) Time of Payment. - The estate tax imposed by Section 84
cases of transfers subject to the tax imposed herein, or
shall be paid at the time the return is filed by the executor,
regardless of the gross value of the estate, where the said
administrator or the heirs.
estate consists of registered or registrable property such as
real property, motor vehicle, shares of stock or other similar
property for which a clearance from the Bureau of Internal (B) Extension of Time. - When the Commissioner finds that the
Revenue is required as a condition precedent for the transfer payment on the due date of the estate tax or of any part thereof
of ownership thereof in the name of the transferee, the would impose undue hardship upon the estate or any of the
executor, or the administrator, or any of the legal heirs, as heirs, he may extend the time for payment of such tax or any
the case may be, shall file a return under oath in duplicate, part thereof not to exceed five (5) years, in case the estate is
setting forth: settled through the courts, or two (2) years in case the estate is
settled extrajudicially.
“(1) The value of the gross estate of the decedent at the PAYMENT BY INSTALLMENT
time of his death, or in case of a nonresident, not a citizen
 If there is no available cash, there may be payment by
of the Philippines, of that part of his gross estate situated
in the Philippines; installment.
(2) The deductions allowed from gross estate in (C) Payment by Installment. — In case the available cash of the
determining the estate as defined in Section 86; and estate is insufficient to pay the total estate tax due, payment by
installment shall be allowed within two (2) years from the
(3) Such part of such information as may at the time be statutory date for its payment without civil penalty and interest.
ascertainable and such supplemental data as may be
necessary to establish the correct taxes.
This is new. Take note, the legislative word is “cash”. So, issue ka
ng 24 post-dated checks.
“Provided, however, That estate tax returns showing a gross
value exceeding Five million pesos (₱5,000,000) shall be
supported with a statement duly certified to by a Certified (D) Liability for Payment. – The estate tax imposed by Section 84
Public Accountant containing the following: shall be paid by the executor or administrator before delivery to
any beneficiary of his distributive share of the estate.
(a) Itemized assets of the decedent with their Such beneficiary shall to the extent of his distributive share
corresponding gross value at the time of his death, of the estate, be subsidiarily liable for the payment of such portion
or in the case of a nonresident, not a citizen of the of the estate tax as his distributive share bears to the value of the
Philippines, of that part of his gross estate situated total net estate.
in the Philippines; For the purpose of this Chapter, the term "executor" or
(b) Itemized deductions from gross estate allowed in
"administrator" means the executor or administrator of the
Section 86; and
decedent, or if there is no executor or administrator appointed,
(c) The amount of tax due whether paid or still due
and outstanding. qualified, and acting within the Philippines, then any person in
actual or constructive possession of any property of the decedent.
(B) Time for Filing.— For the purpose of determining the
estate tax provided for in Section 84 of this Code, the estate Liability for payment of estate tax that is principal and primary
tax return required under the preceding Subsection (A) shall liability.
be filed within one (1) year from the decedent’s death.
In the event later on merong nakaligtaan, there was a property or judicial administrator without said certification if the credit is
within which no estate tax was paid. Then the subsidiary liability included in the inventory of the estate of the deceased.
will come in. The heirs will be subsidiarily liable in proportion to
the distributive share in the estate. SEC. 97. Payment of Tax Antecedent to the Transfer of Shares,
Bonds or Rights. — There shall not be transferred to any new
owner in the books of any corporation, sociedad anonima,
partnership, business, or industry organized or established in
APPLICATION FOR THE DISCHARGE
the Philippines any share, obligation, bond or right by way of
gift inter vivos or mortis causa, legacy or inheritance, unless a
SEC. 92. Discharge of Executor or Administrator from Personal
certification from the Commissioner that the taxes fixed in this
Liability. – If the executor or administrator makes a written Title and due thereon have been paid is shown.
application to the Commissioner for determination of the amount
of the estate tax and discharge from personal liability therefore, If a bank has knowledge of the death of a person, who
the Commissioner (as soon as possible, and in any event within maintained a bank deposit account alone, or jointly with
one (1) year after the making of such application, or if the another, it shall allow any withdrawal from the said deposit
application is made before the return is filed, then within one (1) account, subject to a final withholding tax of six percent (6%).
year after the return is filed, but not after the expiration of the For this purpose, all withdrawal slips shall contain a statement
period prescribed for the assessment of the tax in Section 203 shall to the effect that all of the joint depositors are still living at the
not notify the executor or administrator of the amount of the tax. time of withdrawal by any one of the joint depositors and such
The executor or administrator, upon payment of the amount statement shall be under oath by the said depositors.
of which he is notified, shall be discharged from personal liability
for any deficiency in the tax thereafter found to be due and shall This is a new feature.
be entitled to a receipt or writing showing such discharge.
More often than not, ang usual na iiwan ng namatay is his or her
bank deposits to the point na hindi maka withdraw from the bank
para pambayad sa funeral expenses.
Prior to TRAIN, the maximum amount you could take out is only
up to P10,000.
ADMINISTRATIVE RESTRICTIONS
Under the new Section 97, pwede mo na i-withdraw lahat subject
No delivery of the inheritance to the beneficiaries unless the to 6% withholding tax. i-withhold ng bank yung 6%, then you can
estate tax has been paid and it has been cleared. Estate tax get the 94% without paying the tax anymore because that is now
clearance. a final withholding tax.
SEC. 95. Duties of Certain Officers and Debtors. – Registers of Meron syang sworn statement na gagawin under Sec. 97 na i-
Deeds shall not register in the Registry of Property any withdraw na nya lahat then bawasan na nang bank yung 6%.
Then, there is no need to declare that in your regular estate tax
document transferring real property or real rights therein or any
return. Kase, the tax there is already a final withholding tax.
chattel mortgage, by way of gifts inter vivos or mortis causa,
legacy or inheritance, unless a certification from the
Commissioner that the tax fixed in this Title and actually due For purposes of computation:
thereon had been paid is show, and they shall immediately
notify the Commissioner, Regional Director, Revenue District Gross estate Pxxx
Officer, or Revenue Collection Officer or Treasurer of the city or Less Deductions Pxxx
municipality where their offices are located, of the non payment Net Taxable Estate Pxxx
of the tax discovered by them.
Estate tax due Pxxx
Any lawyer, notary public, or any government officer who, by Less credits Pxxx
reason of his official duties, intervenes in the preparation or Amount due P xxx
acknowledgment of documents regarding partition or disposal
of donation inter vivos or mortis causa, legacy or inheritance,
shall have the duty of furnishing the Commissioner, Regional OTHER RULES
Director, Revenue District Officer or Revenue Collection Officer
of the place where he may have his principal office, with copies (a) Waiver of hereditary shares is NOT a taxable
donation.
of such documents and any information whatsoever which may
facilitate the collection of the aforementioned tax.
You are one of the heirs. Let’s say you are entitled to 1/5 of the
Neither shall a debtor of the deceased pay his debts to the heirs, estate. You waived your 1/5 in favor of your co-heirs. That is not
legatee, executor or administrator of his creditor, unless the a taxable donation.
certification of the Commissioner that the tax fixed in this
Chapter had been paid is shown; but he may pay the executor (b) Waiver by the surviving spouse of her of his conjugal
or community share is a taxable donation.
Taxable estate No more distinction of relationship between the donor and the
LESS ½ share of the surviving spouse donee. If the donee is a stranger, the rate is still 6%.
NET taxable estate pertaining to the share of the decedent. Yun
yung i-taxed. Taxable Donation of real property is now subject to documentary
stamp tax unless it is an exempted donation. (SEC. 196)
Pag distribute nyan, in your rules on succession, the surviving
spouse gets ½ of the property + his/her share in the estate of the SEC. 196. Stamp Tax on Deeds of Sale, Conveyances and
decedent. Donation of Real Property.— On all conveyances, donations,
deeds, instruments, or writings, other than grants, patents or
If lima sila, pang anim yung surviving spouse, the spouse gets ½ original certificates of adjudication issued by the Government,
of the estate and 1/6 of the estate. whereby any land, tenement, or other realty sold shall be
granted, assigned, transferred, donated or otherwise conveyed
Again, if the surviving spouse will waive his or her ½ share in the to the purchaser, or purchasers, or to any other person or
estate in favor of his or her co-heirs, that is already a taxable persons designated by such purchaser or purchasers, or donee,
donation. there shall be collected a documentary stamp tax, at the rates
herein below prescribed, based on the consideration contracted
Pero kung gi waive ni surviving spouse is yung kanyang 1/6 share, to be paid for such realty or on its fair market value determined
then it is non-taxable. in accordance with Section 6(E) of this Code, whichever is
higher: Provided, That when one of the contracting parties is the
DONOR’S/GIFT TAX Government, the tax herein imposed shall be based on the
actual consideration:
Donor’s tax is one imposed on the privilege of transferring
property by way of donation or gift. “(a) When the consideration, or value received or contracted to
be paid for such realty, after making proper allowance of any
encumbrance, does not exceed One thousand pesos (₱1,000),
KINDS: Fifteen pesos (₱15.00).
1. Donation inter vivos – made and to take effect during the “(b) For each additional One thousand pesos (₱1,000), or
lifetime of the donor (gift tax) fractional part thereof in excess of One thousand pesos (₱1,000)
of such consideration or value, Fifteen pesos (₱15.00).
2. Donation mortis causa - made during the lifetime but to
take effect upon death (estate tax being in the nature of “Transfers exempt from donor’s tax under Section 101(a) and
testamentary disposition). So, there is estate tax, not (b) of this Code shall be exempt from the tax imposed under this
donor’s tax. Section.
The donors may be a natural or juridical persons. “When it appears that the amount of the documentary stamp
tax payable hereunder has been reduced by an incorrect
statement of the consideration in any conveyance, deed,
CITIZEN AND RESIDENT ALIEN DONORS instrument or writing subject to such tax the Commissioner,
provincial or city Treasurer, or other revenue officer shall. From
 They are liable on the donation/gift made within and the assessment rolls or other reliable source of information,
without (properties wherever situated) assess the property of its true market value and collect the
proper tax thereon.”
NON-RESIDENT ALIEN DONORS Sa deed of sale, merong docs stamp (inaudible). Sa deed of
donation dati, walang docs stamp. Ngayon may docs stamp na
 They are liable on the donation/gift made on the yung donation of real property which is a taxable donation.
properties within the Philippines.
The documentary stamp tax will come in if the donation of real
property is taxable. But if the donation of real property is tax-free,
DONOR’S TAX RATES then walang documentary stamp tax.
“Sec. 99. Rate of Tax Payable by Donor.—  Donation to a legally adopted child is not a donation to a
stranger, he is entitled to all the rights of a legitimate
“(A) In General. — The tax for each calendar year shall be six child. Still 6%.
percent (6%) computed on the basis of the total gifts in excess
of Two hundred fifty thousand pesos (₱250,000) exempt gift Pwede ka nga mag donate sa di mo related, much more if
made during the calendar year. adopted. Still at 6%.
“(B) Any contribution in cash or in kind to any candidate,  Donations made between business organizations and
political party or coalition of parties for campaign purposes shall between individual and a business organization are
be governed by the Election Code, as amended.” considered donation to a stranger (6% donor’s tax, unless
exempted donation) even if they are (inaudible)
 Donation/Contribution made during election to any (1) Gifts made to or for the use of the National Government or
candidate, political party, or coalition of parties (Election any entity created by any of its agencies which is not conducted
code) – not taxable. for profit, or to any political subdivision of the said Government;
- After election, the donor shall submit to and
COMELEC statement of contributions and
expenses, any excess or unspent contribution (2) Gifts in favor of an educational and/or charitable, religious,
should be returned to donor; otherwise, it shall cultural or social welfare corporation, institution, accredited
be a taxable income. nongovernment organization, trust or philanthropic
organization or research institution or organization: Provided,
however, That not more than thirty percent (30%) of said gifts
TRANSFER FOR LESS THAN ADEQUATE AND FULL shall be used by such donee for administration purposes. For the
CONSIDERATION purpose of this exemption, a ‘non-profit educational and/or
charitable corporation, institution, accredited nongovernment
SEC. 100. Transfer for Less Than Adequate and Full organization, trust or philanthropic organization and/or
Consideration.— Where property, other than real property research institution or organization’ is a school, college or
referred to in Section 24(D), is transferred for less than an university and/or charitable corporation, accredited
adequate and full consideration in money or money’s worth, nongovernment organization, trust or philanthropic
then the amount by which the fair market value of the property organization and/ or research institution or organization,
exceeded the value of the consideration shall, for the purpose incorporated as a nonstock entity, paying no dividends,
of the tax imposed by this Chapter, be deemed a gift, and shall governed by trustees who receive no compensation, and
be included in computing the amount of gifts made during the devoting all its income, whether students’ fees or gifts,
calendar year: Provided, however, That a sale, exchange, or donation, subsidies or other forms of philanthropy, to the
other transfer of property made in the ordinary course of accomplishment and promotion of the purposes enumerated in
business (a transaction which is a bona fide, at arm’s length, and its Articles of Incorporation.
free from any donative intent), will be considered as made for
an adequate and full consideration in money or money’s (B) In the Case of Gifts Made by a Nonresident Not a Citizen of
worth.” the Philippines. –
 GR: The difference in value shall be deemed (by operation (1) Gifts made to or for the use of the National Government or
of law) a gift subject to gift tax; any entity created by any of its agencies which is not conducted
 EXC: Sale of real property under SEC. 24 (D) subject to for profit, or to any political subdivision of the said Government.
capital gains tax.
(2) Gifts in favor of an educational and/or charitable, religious,
If you transfer a property for insufficient consideration, then the cultural or social welfare corporation, institution, foundation,
difference will be treated as a gift subject to gift tax trust or philanthropic organization or research institution or
organization: Provided, however, That not more than thirty
except sale real property which is subject to capital gains tax even percent (30%) of said gifts shall be used by such donee for
though it is sold at less than adequate consideration (inaudible) administration purposes.
 FURTHER EXCEPTION: unless it is a bonafide sale and at Valuation:

arm’s length and free from donative intent – the
difference in value not a donation. It is not subject to the Fair Market Value (FMV) at the time of death (date of death
donor’s tax. valuation) (SEC. 88)
Example: A watch is used to be sold at P100K, due to lapse of time Real Properties: CIR (Zonal Value) at the time of death.
and other factors, di nabenta, the watch is sold at P9K. That is a
bonafide sale, arm’s length and free from donative intent. Then SEC. 88. (B) Properties. – The estate shall be appraised at its
the difference in value will not be considered as a taxable fair market value as of the time of death.
donation. It will not subject to donor’s tax.
However, the appraised value of real property as of the time
SEC. 101. Exemption of Certain Gifts. — The following gifts or of death shall be, whichever is higher of:
donations shall be exempt from the tax provided for in this (1) The fair market value as determined by the
Chapter: Commissioner, or
(2) The fair market value as shown in the schedule of
“(A) In the Case of Gifts Made by a Resident.— values fixed by the Provincial and City Assessors.
OLD LAW: Donation propter nuptias or Donation on account of SEC. 103. Filing of Return and Payment of Tax. – (A)
marriage – repealed under TRAIN Requirements. – Any individual who makes any transfer by
gift (except those which, under Section 101, are exempt from
Yung P10,000, wala na yan kase may first P250,000 kana that’s the tax provided for in this Chapter) shall, for the purpose of
excluded. When both spouses will make a donation, may kanya- the said tax, make a return under oath in duplicate.
kanya silang P250,000.
The return shall set forth: have the law under 10963 on the last part,
you have there the repealing clause, the
(1) Each gift made during the calendar year which is to provisions of RA 10963 which repealed the
be included in computing net gifts; exempted transactions for VAT purposes and
(2) The deductions claimed and allowable; made them now part of the VAT system.
(3) Any previous net gifts made during the same
calendar year; o It also provides shorter period for claiming
(4) The name of the donee; and refund for zero-rated transactions.
(5) Such further information as may be required by
rules and regulations made pursuant to law. SECTION 105. Persons Liable. – Any person who, in the course
of trade or business, sells barters, exchanges, leases goods or
(B) Time and Place of Filing and Payment. - The return of the properties, renders services, and any person who imports
donor required in this Section shall be filed within thirty (30) goods shall be subject to the value-added tax (VAT) imposed
days after the date the gift is made and the tax due thereon in Sections 106 to 108 of this Code.
shall be paid at the time of filing.
The value-added tax is an indirect tax and the amount of tax
Except in cases where the Commissioner otherwise permits, may be shifted or passed on to the buyer, transferee or
the return shall be filed and the tax paid to an authorized lessee of the goods, properties or services. *
agent bank, the Revenue District Officer, Revenue Collection
Officer or duly authorized Treasurer of the city or This rule shall likewise apply to existing contracts of sale or
municipality where the donor was domiciled at the time of lease of goods, properties or services at the time of the
the transfer, or if there be no legal residence in the effectivity of Republic Act No. 7716.**
Philippines, with the Office of the Commissioner.
The phrase "in the course of trade or business" means the
In the case of gifts made by a nonresident, the return may be regular conduct or pursuit of a commercial or an economic
filed with the Philippine Embassy or Consulate in the country activity, including transactions incidental thereto***, by any
where he is domiciled at the time of the transfer, or directly person regardless of whether or not the person engaged
with the Office of the Commissioner. therein is a nonstock, nonprofit private organization
(irrespective of the disposition of its net income and whether
Filing of Return: Within 30 days after the gift/donation was or not it sells exclusively to members or their guests), or
made. government entity.
Computation: is done cumulatively during the calendar year. The rule of regularity, to the contrary notwithstanding,
services as defined in this Code rendered in the Philippines
The P250,000 exempt gift is availed only one time during the by nonresident foreign persons shall be considered as being
calendar year and the excess of which will be subject to the 6% course of trade or business.
tax.
VAT IS AN INDIRECT TAX
For every donation that will be made, you have to report the
previous donation because you will only subtract the P250,000 * So you have in your study of tax principles that the nature of
once. The excess will be subject to the 6% tax less whatever taxes indirect taxes is that they are allowed to be shifted. So the
that you have paid in the previous (inaudible) statutory tax payer, the VAT registered person is allowed to shift
the burden of the tax to the purchaser or buyer of the goods or
BEFORE TRAIN services. So the purchaser or buyer pays the product or services
0%- 15% 6% in excess of P250,000 already inclusive of the VAT or tax. So the amount of tax may be
regardless of relationship. shifted or passed on to the byer, transferee or lessee of the
30% on donations to goods, properties, or services.
strangers
**This is the E-VAT or the Expanded Value Added Tax. Well, the
12 FEBRUARY 2019 ruling on the case of Tolentino vs. Secretary of Finance, that is the
Confesor & Abad law that was challenged there.
VALUE-ADDED TAX ***So, the VAT is not only applied to those regular conduct or
pursuit of a commercial or an economic activity, but also those
transactions incidental thereto.
Overview
 Revenue Regulations 13-2018. This is the revenue
regulation for the VAT relative to the amendments. One
INCIDENTAL TO THE TRADE OR BUSINESS
of the provisions amended by RA 10963 is the VAT.
Now, in one case what is the jurisprudence on the term
o It clarified some titles, removed about 50
“incidental to the trade or business”, so the CTA defined the term
legislations which granted exemptions from
incidental as– something as primary, necessary, appertaining to
VAT and these exemptions were repealed, so
or depending upon another, termed the principal. Thus, an
they are now part of the VAT system. If you

isolated transaction would not be automatically considered as

incidentally made in the course of trade or business. MEANING OF CONSUMPTION AS APPLIED TO SERVICES
Remember in one case, there was this VAT-registered company. Confusion in zero rating arises (when one) equates the
In its regular conduct of business, the sales of its products are performance of a particular type of service with the consumption
subject to VAT. And there was a time that they defleeted their of its output abroad. The consumption contemplated by law does
service vehicles to their medical representatives and sold the old not imply that the service be done abroad in order to be zero-
units. ISSUE: whether the sale of the 2nd hand units of cars are rated.
subject to VAT? SC: The sale is subject to VAT as it is incidental to
the business.  Kasi dito, the service is done here, kaso the destination
of the product for which the services are rendered are
to be destined outside. That is the reason why it’s zero-
MEANING OF “IN THE COURSE OF TRADE OR BUSINESS” – the rated.
regular conduct or pursuit of a commercial or an economic  In other words, do not be confused that since the
activity, including transactions incidental thereto services were done here, it will be consumed here. So if
the services were done here and the products are
destined or to be sold outside, then the zero-rating is
applied.
Transactions under the VAT system  If the services were done here to the product on which
the services were rendered and to be sold here, then you
a. 12% VAT apply 12%.
b. zero rated or 0% VAT
c. Exempted transactions (not subject to 12% or 0%; but Consumption is the use of a thing in a way that thereby exhausts
it may be taxed under a different category or another it. As Applied to services, the term means the performance or
type of tax like other percentage tax or another tax successful completion of a contractual duty, usually resulting in
treatment, or another type of excise, but not VAT; or it the performer’s release from any past or future liability.
may be non-taxable at all)
Unlike goods, services cannot be physically used in or bound for
a specific place when their destination is determined. Instead,
PRINCIPLE OF DESTINATION: GUIDING RULE TO DETERMINE IF there can only be a predetermined end of a course when
SUBJECT TO 12% OR 0%. determining the service, location, or position for legal purposes.
One guiding rule in determining whether the transaction or sales

of goods or services is subject to 12% or zero-rated is the Rule on EXCEPTION: Zero-Rated Transaction
Destination.
However, the law clearly provides for an exception to the
(1) If the goods are sold or consumed locally, or the destination principle; that is, for a zero percent VAT rate for:
service is done locally – subject to 12% VAT
1. Services that are performed in the Philippines,
(2) If the goods or services are destined outside the 2. Paid for in acceptable foreign currency and
territory. The services are done here but the product 3. Accounted for in accordance with the rules and
on which the services were made are to be brought regulations of the Bangko Sentral.
out of the country for export – the sale is subject to 0%
VAT because of destination. The finished product So, even if the goods are sold here. Because ordinarily, the goods
wherein the services were rendered are destined sold here are to be subject to 12%. But, there are sale of goods
outside the territory. sold here but paid for in acceptable foreign currency, then we
zero-rate the transaction and consider as deemed for export.
So following the rule on destination, since they are not to be sold Because under the law, when the sale of goods and services are
or consumed locally, then they will be zero-rated. So those goods paid for in acceptable foreign currency, then we zero rate it.
or services to be sold or performed domestically or locally or
within, the sale could be subject to 12% VAT.
For the supply of service to be zero-rated as an exception, the
GENERAL RULE: As a general rule, the VAT system uses the law merely requires that:
destination principle. It means that the destination of the goods
determines the taxation or exemption from the VAT. Goods and 1. The service be performed here in the Philippines;
services are taxed only in the country where they are consumed. 2. The service fall under any of the categories in Section
Thus, exports are zero-rated, while imports are taxed. In the case 102(b) [now Sec. 108(B)] of the Tax Code;
of imported goods, they are brought in. so, there is VAT. But when 3. It be paid in acceptable foreign currency accounted for
you bring the goods out or they are for export, then the other in accordance with BSP rules and regulations [CIR vs
consumptions to be done outside, they will be zero-rated. American Express, G.R. No. 152609, June 29, 2005]
(Toshiba Information Equipment vs CIR, G.R. No. 157594, March
9, 2010; CIR vs Seagate Technology, G.R. No., 153866, February
11, 2005) TRANSACTIONS SUBJECT TO 12% VAT

1. SEC. 106(A)(1): VAT on the sale of goods and considered as deemed sale. There will be VAT charged and
properties (includes barter or exchange) collected against the taxpayer there, the corporation.
SECTION 106. Value-Added Tax on Sale of Goods or *** By way of dacion en pago, instead of paying cash, you pay
Properties. – your creditors your own products you produce or manufacture,
(A) Rate and Base of Tax. - There shall be levied, assessed and so that is also considered as deemed sale.
collected on every sale, barter or exchange of goods or
properties, value-added tax equivalent to twelve percent **** Before the 60 day period will lapse, return the goods to the
(12%) of the gross selling price or gross value in money of the consignor so that the consignee, where the goods have been left
goods or properties sold, bartered or exchanged, such tax to for consignment, will not be liable for the VAT arising from a
be paid by the seller or transferor. xxx transaction deemed sale.
The buyer buys the product inclusive already of the VAT because ***** Like a VAT-registered person has been incurring losses, so
the tax is already built-in to the selling price because of the nature instead of continuing the business, he decided to cease
of the VAT being indirect. Under the law, it is the seller who is operating. What happens now to the unsold merchandise? By
statutorily liable. reason of the retirement from or cessation of business, yung
kanilang unsold inventories will be considered as transactions
deemed sale. They will recur a VAT-remittance on these unsold
2. SEC. 106(B)(1): VAT on transactions deemed sale of inventories.
goods
SECTION 106. (B) Transactions Deemed Sale. – The following DETERMINATION OF VAT
transactions shall be deemed sale:
GR: VAT is already deemed included in the selling price and you
(1) Transfer, use or consumption not in the course of are not allowed to bill the VAT as a separate item from the goods.
business of goods or properties originally intended While there is an unbundling that will be reflected in the invoice,
for sale or for use in the course of business;* it should not be billed separately. So kung ano yung presyo, yung
tagged price appearing, that should be the price that you are
(2) Distribution or transfer to: going to pay.
(a) Shareholders or investors as share in the Legend:

profits of the VAT-registered persons; **or
(b) Creditors in payment of debt***; GSP = Gross Selling Price
GVM = Gross Value in Money
(3) Consignment of goods if actual sale is not made Net Price = GSP/GVM divided by 112%
within sixty (60) days following the date such goods
were consigned****; and Formula: two ways of unbundling or determining the 12% VAT.
(4) Retirement from or cessation of business, with 1. 12% VAT = GSP/GVM x 1/9. 333333333; or
respect to inventories of taxable goods existing as 2. 12% VAT = GSP/GVM less/minus Net Price
of such retirement or cessation.*****
The provisions here are exclusive and have not been amended by 3. SEC. 107:VAT on the importation of goods (whether
TRAIN. for personal use or for trade or business)
*So these are products regularly sold by the VAT-registered [12% x Dutiable Value = VAT]
taxpayer (seller), however instead of selling these products, the
VAT-registered seller uses or consumes these goods. EX: SEC. 107. Value-Added Tax on Importation of Goods. –
Hardware store, nagbebenta sya ng cement or construction
materials, ordinary when they are sold – 12%, however this A. In General. - There shall be levied, assessed and
taxpayer constructed a new warehouse, so gagamit sya ng collected on every importation of goods a value-
construction materials. So there is use and consumption of their added tax equivalent to twelve percent (12%)
own products. So the use and consumption of their own based on the total value used by the Bureau of
products, even though not considered in the course of trade or Customs in determining tariff and customs duties
business will be considered as deemed sale. Therefore, it will be plus customs duties, excise taxes, if any, and other
subject to VAT. charges, such tax to be paid by the importer prior
to the release of such goods from customs custody:
** Instead of using cash dividends, ang ididistribute mong Provided, That where the customs duties are
dividend are goods. Say a corporation is a manufacturer of determined on the basis of the quantity or volume
canned goods, so they declared dividends. Instead of declaring of the goods, the value-added tax shall be based on
cash dividends, the products they manufactured for sale are the the landed cost plus excise taxes, If any.
ones being distributed as share of profits or by way of dividends
to their shareholders. So that distribution or transfer may be B. Transfer of Goods by Tax-Exempt Persons. - In the
case of tax-free importation of goods into the
Philippines by persons, entities or agencies exempt shall be used for international shipping or air
from tax where such goods are subsequently sold, transport operations.
transferred or exchanged in the Philippines to non-
exempt persons or entities, the purchasers, Provided, that subparagraphs (3), (4), and (5) hereof shall be
transferees or recipients shall be considered the subject to the 12 % VAT and no longer be considered export
importers thereof, who shall be liable for any sales subject to 0% VAT rate upon satisfaction of the
internal revenue tax on such importation. following conditions:
The tax due on such importation shall constitute a lien on (1) Successful establishment and implementation of
the goods superior to all charges or liens on the goods, an enhanced VAT refund system that grants
irrespective of the possessor thereof. refunds of creditable input tax within 90 days*
from the filing of the VAT refund application with
All goods that are brought in coming from abroad, whether for the Bureau: Provided, that, to determine the
personal use or for trade or business, it will be subject to the 12% effectivity of item no.1, all applications filed from
VAT in addition to the customs duties. So the 12% is based on the January 1, 2018 shall be processed and must be
dutiable value. So the tax that you are going to pay is the VAT plus decided within 90 days from the filing of the VAT
the tariff or the customs duties. refund application;
(2) All pending VAT refund claims as of December 31,
2017 shall be fully paid in cash by Dec. 31, 2019.
4. SEC. 108. VAT on the sale or exchange of services, **xxx
including the use or lease of properties
* Supposedly, beginning 2019, this year, when you apply for a
SECTION 108. Value-added Tax on Sale of Services and Use or VAT refund, dapat 90 days lang yung period within which to
Lease of Properties. – (A) Rate and Base of Tax. - There shall decide. It used to be 120days under the old law. We have to await
be levied, assessed and collected, a value-added tax for regulations for this kung in place na ba ito. Kasi pag inplaced
equivalent to twelve percent (12%) of gross receipts derived na yung system, then this export sales on raw materials or
from the sale or exchange of services, including the use or packaging materials which are destined for exportation, then
lease of properties xxx those considered export sales under the Omnibus Investment
Code, these sales are no longer zero rated, but back to 12% VAT.
ZERO-RATED TRANSACTIONS: VAT AT 0% [RULE ON Kasi remember what we presented a while ago, the exception to
DESTINATION] the zero-rated. Because here, the sales were done in the
Philippines. Kasi nagbenta ka ng raw materials to the export-
oriented enterprise, tapos nagbenta ka ng gaments tapos you
1. 106(A)(2): Zero Rated sales of goods or properties produced jeans, tapos yung finished product mong jeans are
exported. Under the rule on destination, the sale of raw materials
(a) Export Sales: Sec. 106(A)(2)(a) 1, 3, 4, 5, & 6 are done here. But, the finished product is exported outside, so
we zero-rate that as an exception to the rule on destination
(1) The sale and actual shipment of goods from the because what is being sold here is the raw materials. Iba naman
Philippines to a foreign country, irrespective of yung sa finished product. It’s the sale of raw materials or
any shipping arrangement that may be agreed packaging materials yung na gagamitin sa finished products
upon which may influence or determine the (jeans). These are sold to export-oriented enterprise in Ph. So
transfer of ownership of the goods so exported yung buong finished product are now exported. So, zero-rated
and paid for in acceptable foreign currency or yung sale nay un. But ang question ngayon is the sale of raw or
its equivalent in goods or services, and packaging materials. Is that VATable? Or zero-rated? So it is zero-
accounted for in accordance with the rules and rated. But, there will now be a 12% VAT when the following
regulations of the Bangko Sentral ng Pilipinas conditions are now satisfied. When they’re now enhanced VAT
(BSP); system will now be implemented.
(2) (item 2 repealed by RA 10963)
(3) Sale of raw materials or packaging materials to There’s no word yet from the BIR, if they are already using the
export-oriented enterprise whose export sales enhanced VAT-refund system. Because under the law, if hindi nila
exceed seventy percent (70%) of total annual narefund within 90 days, what will happen to the revenue officer?
production; Under 112, malintikan ang revenue officer.
(4) Sale of gold to the Bangko Sentral ng Pilipinas
(BSP); SECTION 112 xxx provided however, that failure on the part
(5) Those considered export sales under Executive of any official, agent, employee of the BIR to act on the
Order No. 226, otherwise known as the application within 90 day period shall be punishable under
Omnibus Investment Code of 1987, and other section 269 of this Code.
special laws; and
(6) The sale of goods, supplies, equipment and fuel **meanwhile, zero-rated muna until they are able to set up an
to persons engaged in international shipping or enhanced VAT-refund system.
international transport operations: Provided,
that the goods, supplies, equipment and fuel (b) Sales to persons or entities whose exemption under
special laws or international agreements to which the
Philippines or is a signatory effectively subject such sale to

zero rate (effectively zero rated sale of goods and properties) Provided, that subparagraphs (B)(1) and (B) (5) hereof shall
sec. 106 (A) (2) (b) be subject to the 12% VAT and no longer subject to 0% VAT
rate upon satisfaction of the following conditions:
(1) Successful establishment and implementation of

b. Section 108 (b): Transactions and services subject an enhanced VAT refund system that grants
to 0% rate: services performed in the Phils. By refunds of creditable input tax within 90 days from
VAT registered persons [Sec. 108(b)(1) to (7)] the filing of the VAT refund application within the
Bureau: Provided that, to determine the effectivity
(B) Transactions Subject to Zero Percent (0%) Rate. – The of item no. 1, all applications filed from January 1,
following services performed in the Philippines by VAT 2018 shall be processed and must be decided
registered persons shall be subject to zero percent (0%) rate. within 90 days from filing of the refund application;
(2) All pending VAT refund claims as of December 31,
(1) Processing, manufacturing or repacking of goods for 2017 shall be fully paid in cash by December 31,
other persons doing business outside the 2019.
Philippines which goods are subsequently exported,
where the services are paid for in acceptable foreign * If you are a domestic carrier by air or by sea within, VAT;
currency and accounted for in accordance with the If domestic carrier with International flights, zero-rated.
rules and regulations of the Bangko Sentral ng
Pilipinas (BSP); ** Services rendered to the export-processing zones are now
VATable and no longer zero-rated.
(2) Services other than those mentioned in the
preceding paragraph rendered to a person engaged (B)(1) and (B)(5) pertains to the Processing, manufacturing or
in business conducted outside the Philippines or to repacking of goods; and (B)(5) Services performed by
a non-resident person not engaged in trade or subcontractors and/or contractors, they will now be subject to
business who is outside the Philippines when the 12% in the event the BIR has set-up an enhanced refund system.
services are performed, the consideration for which If wala, still zero-rated. Pag naset-up na ng BIR yung VAT-refund
is paid for in acceptable foreign currency and system, in so far as these items, the sale of services will be subject
accounted for in accordance with the rules and to 12% VAT, not anymore zero-rated.
regulations of the Bangko Sentral ng Pilipinas (BSP);
EXEMPTED TRANSACTIONS (Sec 109)
(3) Services rendered to persons or entities whose
exemption under special laws or international Section 109 listings used to be from A to W, by virtue of TRAIN, it
agreements to which the Philippines is a signatory is now from A to BB. Nadagdagan. These are the transactions that
effectively subjects the supply of such services to are exempted from VAT, either the 12% or 0%. What are these
zero percent (0%) rate; transactions?
(4) Services rendered to persons engaged in SECTION 109. Exempt Transactions. –

international shipping or international air-transport
operations, including leases of property for use (A) Sale or importation of agricultural and marine food
thereof; Provided, that these services shall be products in their original state, livestock and poultry of a kind
exclusively for international shipping or air generally uses as, or yielding or producing foods for human
transport operations; (As amended by Section 33 of consumption; and breeding stock and genetic materials
RA 10963) therefor.
(5) Services performed by subcontractors and/or Products classified under this paragraph shall be considered
contractors in processing, converting, of in their original state even if they have undergone the simple
manufacturing goods for an enterprise whose processes of preparation or preservation for the market,
export sales exceed seventy percent (70%) of total such as freezing, drying, salting, broiling, roasting, smoking
annual production; or stripping. Polished and/or hushed rice, corn grits, raw
sugar or raw cane sugar and molasses, ordinary salt and
(6) Transport of passengers and cargo by air or sea copra shall be considered in their original state.
vessels from the Philippines to a foreign country;
*and For this purpose, notwithstanding the process/es involved its
production, “raw sugar or raw cane sugar” means sugar
(7) Sale of power or fuel generated through renewable whose content or sucrose by weight, in the dry state,
sources of energy such as but not limited to corresponds to a polarimeter of less than 99.5 degrees.”
biomass, solar, wind, hydropower, geothermal,
ocean energy, and other merging energy sources The amendment by TRAIN is in the 3rd paragraph. When the raw
using technologies such as fuel cells and hydrogen sugar or raw cane sugar, becomes now refined sugar, it is not
fuels. anymore exempt.
(8) Vetoed **
(B) Sale or importation of fertilizers; seeds, seedlings and farm inputs, machineries and equipment, including spare
fingerlings: fish, prawn, livestock and poultry feeds, including parts thereof, to be used directly and exclusively in the
ingredients, whether locally produced or imported, used in production and/or processing of their produce;
the manufacture of finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium fish, zoo animals and (M) Gross receipts from lending activities by credit or multi-
other animals generally considered as pets); purpose cooperatives duly registered with the Cooperative
Development Authority;
(C) Importation of personal and household effects belonging
to the residents of the Philippines returning from abroad and (N) Sales by non-agricultural, non-electric and non-credit
non-resident citizens coming to resettle in the Philippines: cooperatives duly registered with the Cooperative
Provided, That such goods are exempt from customs duties Development Authority: Provided, That the share capital
under the Tariff and Customs Code of the Philippines; contribution of each member does not exceed P15,000 and
regardless of the aggregate capital and net surplus ratably
Importation of personal and household effects belonging to the distributed among members;
residents, of balikbayans, so they are also exempted from the
VAT. (O) Export sales by persons who are not VAT-registered;
(D) Importation of professional instruments and implements, (P) Sale of real properties not primarily held for sale to
tools of trade, occupation or employment, wearing apparel, customers or held for lease in the ordinary course of trade or
domestic animals, and personal and household effects business, or real property utilized for low-cost and socialized
belonging to persons coming to settle in the Philippines or housing as defined by RA 7279 (Urban Development and
Filipinos or their families and descendants who are now Housing Act of 1992), and other related laws, residential lot
residents or citizens of other countries, such parties valued at P1,500,000 and below; house and lot, and other
hereinafter referred to as overseas Filipinos, in quantities residential dwellings valued at P2,500,000 and below; Xxx
and of the class suitable to the profession, rank or position
of the persons importing said items, for their own use and As to the sale of real properties not primarily held for sale to
not for barter or sale, accompanying such persons, or arriving customers, you have there the threshold at P1,500,000 and
within a reasonable time xxx below.
(E) Services subject to percentage tax under Title V; (Q) Lease of a residential unit with a monthly rental not
exceeding P15,000;
(F) Services by agricultural contract growers and milling for
others of palay into rice, corn into grits and sugar cane into Take note here that it is the lease of a residential unit.
raw sugar or raw cane sugar;
If you have several residential units, for as long as the lease does
Pero yung raw sugar or raw cane sugar **** to become refined not exceed P15,000, exempted yan.
sugar, may VAT na yan.
Even if the total collection, the total monthly rentals that you
(G) Medical, dental, hospital and veterinary services except could generate is 10 Million per month, for as long as each unit
those rendered by professionals; owned and rented out is P15,000 or below, you are exempted.
Because the law states that the exemption is lease of a residential
(H) Educational services rendered by private educational unit with a monthly rental not exceeding P15,000.
institutions, duly accredited by the DepEd, CHED, TESDA and
those rendered by government educational institutions; (R) Sale, importation, printing or publication of books and
any newspaper, magazine, review or bulletin which appears
(I) Services rendered by individuals pursuant to an employer- at regular intervals with fixed prices for subscription and sale
employee relationship; and which is not devoted principally to the publication of
paid advertisements;
(J) Services rendered by regional or area headquarters
established in the Philippines by multinational corporations (S) Transport of passengers by international carriers;
which act as supervisory, communications and coordinating
centers for their affiliates , subsidiaries or branches in the  If it is an International Carrier transporting passengers,
Asia-Pacific Region and do not earn or derive income from it is exempted from the VAT.
the Philippines;
 But if it is a Domestic Carrier transporting passengers
(K) Transactions which are exempt under International on international flight of destination, it is Zero-rated.
agreements to which the Philippines is a signatory or under
special laws, except those under Presidential Decree No. 529;  If it is a Domestic Carrier transporting passengers or
cargo, domestic or local, then there is a ***** (Dean
(L) Sales by agricultural cooperatives duly registered with the literally murmured )
Cooperative Development Authority to their members as (T) Sale, importation or lease of passenger or cargo vessels
well as sale of their products, whether in its original state or and aircraft, including engine, equipment and spare parts
processed form, to non-members; their importation of direct thereof for domestic or international transport operations;
(BB) Sale or lease of goods or properties or the performance

(U) Importation of fuel, goods and supplies by persons of services other than the transactions mentioned in the
engaged in international shipping or air transport preceding paragraphs, the gross annual sales and/or receipts
operations: Provided, that the fuel, goods, and supplies shall do not exceed the amount of 3 Million pesos.
be used for international shipping or air transport
operations; CURRENT THRESHOLD
(V) Services of bank, non-bank financial intermediaries Ito yung bagong threshold – 3 MILLION.
performing quasi-banking functions, and other non-bank
financial intermediaries; If you exceed 3M, the transaction now will be part of the 12% VAT
system.
Services of bank, non-bank financial intermediaries, they are
exempted because they are subject to the gross receipts tax or So the seller, being exempted from VAT, is not allowed any Input
the percentage tax. VAT Tax Credit. This is because he is not covered by the Ouput
VAT minus the Input VAT in so far as the exempted transaction.
(W) Sale or lease of goods and services to senior citizens and
persons with disabilities xxx So, the threshold for VAT purposes beginning January 1, 2018 is
3 Million. If your gross sales would exceed 3M at any time during
(X) Transfer of property under Section 40 (C) (2) of the NIRC, the year where you used to be Non-VAT, you need to shift from
as amended. being a Non-VAT to VAT.
Section 40. (C) Exchange of Property

REGISTRATION REQUIREMENTS
(2) Exception. – No gain or loss shall be recognized if in
pursuance of a plan of merger or consolidation – VAT and Non-VAT persons shall register as such and pay a
registration fee of P500 annually.
(a) A corporation, which is a party to a merger or
consolidation, exchanges property solely for The deadline of annual registration is on January 20.
stock in a corporation, which is a party to the
merger or consolidation; or
(b) A shareholder exchanges stock in a COMPUTATION OF VAT LIABILITY
corporation, which is a party to the merger or
consolidation, solely for the stock of another Output VAT (12% from sales) GSP/GVM/GR P xxx
corporation, also to the merger or Less: Input VAT (12% VAT passed on/shifted
consolidation; or on Account of purchases or importation) P xxx
(c) A security holder of a corporation, which is a
party to the merger or consolidation, VATDue/Payable P xxx
exchanges his securities in such corporation,
solely for stock or securities in another Determine the Output VAT (the 12% VAT from the sales) taken
corporation, a party to the merger or from the gross selling price, gross value in money or gross
consolidation. xxx receipts, less the Input VAT (that is the VAT which is passed on or
shifted to the seller on account of purchases or importation). That
Under Section 40, you have the no gain or loss recognition, is how you obtain the VAT due or payable
wherein properties are exchanged for shares of stocks.
Ordinarily, when properties are transferred in exchange for
shares of stocks, they will be subject to the VAT. And there was a SOURCES OF INPUT VAT CREDITS (Section 110)
time when they were subject to a documentary stamp tax (DST).
Now, there is no gain or loss, not subject to income, and not Q: What is an Input and Output VAT?
subject to DST by reason of the exchange, so the transfer is also
not subject to the VAT. Input VAT is the VAT due or paid by the VAT registered person in
the course of trade or business on importation of goods or local
(Y) Association dues, membership fees, and other purchases of goods or services, including lease or use of property
assessments and charges collected by homeowners from a VAT registered person, including further the transitional
associations and condominium corporations; input VAT under Section 111.
(Z) Sale of gold to the Bangko Sentral ng Pilipinas. While the Output VAT is the VAT due on the sale or lease of
taxable goods or properties or services by any person registered
or required under Section 236.
This used to be zero rated. Under TRAIN, it is now exempted.
(AA) Sale of drugs and medicines prescribed for diabetes,
high cholesterol, and hypertension beginning January 1,
Sources of Input VAT:
2019.
a. Purchase of importation of goods
b. Purchase of real properties where VAT is paid
c. Purchase of services where VAT is paid Pero kung mas malaki yung input vat kesa sa output VAT, then
d. Transactions deemed sale there is an excess Input VAT.
e. Transitional Input VAT ( Sec. 111)
f. Presumptive Input VAT (Sec. 111) For the 12% VAT taxpayer he is not allowed to apply for a refund.
The excess input shall be carried over to the succeeding quarter
or quarters.
Now, if a VAT registered person is engaged in VAT and Non-VAT
activities, he shall be allowed Input VAT credits: Zero-rated VAT taxpayer:
Output VAT (0%) P xxx
a. Input VAT directly attributable to the VAT transaction, Less: Input VAT P xxx
and (Excess input VAT) No VAT due P xxx
b. Ratable portion of any Input VAT which cannot be
directly attributed to either activity (allocating or pro- In so far as the zero rated, wala siyang output kasi 0%, he has an
rating for VAT and Non-VAT) input VAT, so what he does to these input is he will apply for a
refund or a tax credit certificate under Section 112.
If your business is subject to VAT and Non-VAT, then meron kang
input VAT which is being used both by your VAT and Non-VAT
activities. INPUT VAT: TRANSITIONAL AND PRESUMPTIVE (Section 111)
Example, meron kang warehouse which is being used both by SEC 111. Transitional/Presumptive Input Tax Credits. –
your VAT and Non-VAT activities, in it meron kang guardiya. The
security guard services is subject to the 12% VAT. So the VAT (A) Transitional Input Tax Credits. – A person who becomes
passed on to you, are you allowed to claim 100% input VAT or the liable to VAT or any person who elects to be a VAT-registered
VAT passed on from the services to your 12% VAT activity? You person, shall, subject to the filing of an inventory according
are not allowed to do that because you have to make a ratable to rules and regulations prescribed by the Secretary of
portion, kung saan yung icharge to Non-VAT and saan mo Finance, upon recommendation of the Commissioner, be
ichacharge so 12% VAT. allowed input tax on his beginning inventory of goods,
materials and supplies equivalent to 2% of the value of such
Let us say, it will be based on the attribution, what is the inventory or the actual VAT paid on such goods, materials
percentage of your total sales – 60% accounts for you VAT and supplies, whichever is higher, which shall be creditable
activities, 40% accounts for Non-VAT activities. Unless you can against output tax. xxx
determine that the input is directly attributable to a VAT activity
then you apply accordingly. If it accounts for both, then you make We have Section 111, this has not been amended, this is still the
a ratable distribution or prorating system so that you will have a same law before.
more accurate presentation of your VAT payable.
Yung transitional is when you shifted from Non-VAT to VAT. Such
taxpayer who shifted would then be allowed to bring a
VAT RETURNS transitional input VAT equivalent to 2% of the value of such
goods, or kung ma account niya yung input – then the actual VAT
In so far as the VAT returns, there is a: paid on such goods, materials and supplies.
a. Monthly return
b. Quarterly return So, ang nangyari dito, during the year, you’ve reached the 3M
threshold kasi you started the year as Non-VAT. February pa lang,
The Monthly returns are VAT monthly declarations within 20 you exceeded na sa 3M, so the law will require you to shift from
days following the end of the month. Non-VAT to VAT. So magregister ka ngayon as VAT registered, so
ngayon 12% ka na. Now, in your unsold merchandise or unsold
The monthly returns will cover the first 2 months of the quarter, inventory, pag nabenta yang mga unsold inventory mo at the
while the 3rd month will be the Quarterly VAT return made within time of cut-off, vatable na yang sales mo. So, the law now gives
25 days from the close of its taxable quarter. you a transitional input VAT of your unsold inventory. (Kasi you
will now be part of the VAT system, you will be paying output less
input equals the VAT payable.)
12% VAT taxpayer: The law gives you a 2% of the VAT or the actual VAT. If you have
Output VAT P xxx the receipts and you could trace (for the unsold merchandise) ano
Less: Input VAT P xxx yung corresponding input VAT, then you are allowed because
(Excess output VAT) Pay VAT due P xxx that is higher.
So the 12% VAT taxpayer pays the tax through the Output VAT So, pag nabenta yung unsold merchandise mo, then, when you
generated from the 12% of their sales, less the Input VAT of the will now make a remittance, you are now entitled to claim an
VAT passed on to the tax payer. input VAT, because it would be unfair na may VAT ka pero di ka
allowed to claim an input VAT by reason that you shifted.
Kung may excess output, you pay the VAT due.
SEC 111. Transitional/Presumptive Input Tax Credits. – xxx

(B) Presumptive Input Tax Credits. – Persons or firms engaged In the hands of the BIR, they are given 120 days, now 90 days
in the processing of sardines, mackerel and milk, and in nalang under the TRAIN law, to decide from the date of
manufacturing refined sugar, cooking oil and packed noodle submission of complete documents in support of the application.
based instant meals, shall be allowed a presumptive input
tax, creditable against the output tax, equivalent to 4% of the In case the refund is denied, or there is an inaction, the Zero-rated
gross value in money of their purchases of primary VAT taxpayer has 30 days from receipt of the denial or after the
agricultural products which are used as inputs to their expiration of the 120 (now 90) day period to decide, to appeal to
production. the Court of Tax Appeals (CTA).
As used in this Subsection, the term “processing” shall mean SEC. 112. Refunds or Tax Credits of Input Tax. –
pasteurization, canning and activities which through physical
or chemical process alter the exterior texture or form or (C) Period within which Refund or Tax Credit of Input Taxes
inner substance of a product in such manner as to prepare it shall be Made. – In proper cases, the Commissioner shall
for special use to which it could not have been put in its grant a refund for creditable input taxes within 90 days from
original form or condition. the date of submission of the official receipt or invoices and
other documents in support of the application filed in
Yung presumptive naman are those who manufacture or produce accordance with Subsection (A) and (B) hereof; Provided,
products using raw materials which are exempted from VAT. That should the Commissioner find that the grant of refund
These are persons or firms engaged in the processing of sardines, is not proper, the Commissioner must state in writing the
kasi yung marine food products wala man yang VAT. So, iprocess legal and factual basis for the denial.
mo, gawin mong sardinas, then nasa lata na. Then may VAT
naman yan on sale, pero, you are not allowed to avail of the input, In case of full or partial denial of the claim for tax refund, the
so the law now gives you this presumptive input tax credit – taxpayer affected may, within 30 days from the receipt of the
Allowing you 4% of the gross value in money of their purchases decision denying the claim, appeal the decision with the CTA:
of primary agricultural products which are used as inputs or raw Provided, however, That failure on the part of any official,
materials to their production. So, the law provides for the certain agent or employee of the BIR to act on the application within
activities. the 90 day period shall be punishable under Section 269 of
this Code.
REFUNDS OR TAX CREDITS OF INPUT VAT BY ZERO-RATED In proper cases, the Commissioner shall grant a refund for
TAXPAYERS (Section 112) creditable input taxes within 90 days.
SEC. 112. Refunds or Tax Credits of Input Tax. – What is Section 269? Violations Committed by Government
Enforcement Officers. They shall be punished by a fine of not less
(A) Zero-Rated or Effectively Zero-Rated Sales. – Any VAT- than 50T but not more than 100T and suffer imprisonment of not
registered person, whose sales are zero rated or effectively less than 10 years but not more than 15 years and shall likewise
zero rated may, within 2 years after the close of the taxable suffer an additional penalty of perpetual disqualification to hold
quarter when the sales were made, apply for the issuance of public office, to vote, and to participate in any public election.
a tax credit certificate or refund of creditable input tax due
or paid attributable to such sales, except transitional input So, while the **** BIR personnel will suffer, what about the claim
tax, to the extent that such input tax has not been applied na hindi niya inactionan? In other words, should you wait for the
against output tax: xxx decision? Yes, because the new statute does not say that in case
of the lapse of the 90day period, unlike the old law na when the
Then you have the refunds. 120 day lapses you can go to the CTA. Now, you have to wait for
the decision.
Q: How were the refunds prior to TRAIN? So, the BIR personnel is given 90 day period to decide, kung hindi
siya magdecide, may mangyayari sa kanya. Then you have to wait
The refunds or tax credits of Input VAT by Zero-rated Taxpayers for the decision.
(Section 112), kasi for them, the input VAT they accumulate
cannot be used as a carry over to the next returns. They will just Could you speculate that after the lapse of the 90 day period you
continue accumulating Input VAT because their Output VAT is would now go to the CTA, within 30 days from the lapse of the 90
zero. Under Section 112, they are allowed to file a refund. day period? To my mind, you could still do that without waiting
for the decision if the 90 day period lapses. Anong basis mo? Your
Q: When to file? basis would now be the CTA, another law – because under the
law creating the CTA, you have there the jurisdiction in cases of
The application of the refund is filed with the Commissioner inaction. In case of an inaction and there is a period to decide,
within 2 years after the close of the taxable quarter when the then you may go to the CTA.
sales were made. So, every taxable quarter kung may input VAT
ka, you should have been given 2 years from the close of the Either you will wait for the decision even beyond the 90 day
taxable quarter, whether that be calendar or fiscal quarter, to file period, or you may go to the CTA within 30 days from the lapse
the refund. of the 90 day period.
Q: What is the period for the BIR to decide? (In the absence that the law does not say that you could go from
the lapse) If you base it from the statutory provisions under
Section 112, you must wait for the decision, without prejudice to (3) The date of transaction, quantity, unit cost and
the administrative action or the sanctions that would be done to description of the goods or properties or nature of
the BIR personnel. the service; and
(4) In the case of sales in the amount of One thousand
pesos (P1,000) or more where the sale or transfer
Refund CTA EN is made to a VAT-registered person, the name,
CIR CTA DIV SC
Claim BANC business style, if any, address and Taxpayer
Identification Number (TIN) of the purchaser,
customer or client.
(For Sections 113-115, Dean did not discuss but is enumerated
only in his powerpoint) (C) Accounting Requirements. – Notwithstanding the
provisions of Section 233, all persons subject to the value-
added tax under Sections 106 and 108 shall, in addition to
INVOICING AND ACCOUNTING REQUIREMENTS (Section 113) the regular accounting records required, maintain a
subsidiary sales journal and subsidiary purchase journal on
SEC. 113. Invoicing and Accounting Requirements for VAT- which the daily sales and purchases are recorded. The
Registered Persons. – subsidiary journals shall contain such information as may be
required by the Secretary of Finance.
(A) Invoicing Requirements. – A VAT-registered person shall
issue: (D) Consequence of Issuing Erroneous VAT Invoice or VAT
Official Receipt. –
(1) A VAT invoice for every sale, barter or exchange of
goods or properties; and (1) If a person who is not a VAT-registered person
(2) A VAT official receipt for every lease of goods or issues an invoice or receipt showing his
properties, and for every sale, barter or exchange Taxpayer Identification Number (TIN),
of services. followed by the word “VAT”;
(B) Information Contained in the VAT Invoice or VAT Official (a) The issuer shall, in addition to any
Receipt. – The following information shall be indicated in the liability to other percentage taxes,
VAT invoice or VAT official receipt: be liable to:
i. The tax imposed in
(1) A statement that the seller is a VAT-registered Section 106 or 108
person, followed by his Taxpayer's Identification without the benefit of any
Number (TIN); and input tax credit; and
(2) The total amount which the purchaser pays or is ii. A 50% surcharge under
obligated to pay to the seller with the indication Section 248(B) of this
that such amount includes the value-added tax. Code;
Provided, That:
(b) The VAT shall, if the other requisite
(a) The amount of the tax shall be known as information required under
a separate item in the invoice or receipt; Subsection (B) hereof is shown on
(b) If the sale is exempt from value-added the invoice or receipt, be recognized
tax, the term “VAT-exempt sale: shall be as an input tax credit to the
written or printed prominently on the purchaser under Section 110 of this
invoice or receipt; Code.
(c) If the sale is subject to zero percent (0%)
value-added tax, the term “zero-rated
sale” shall be written or printed (2) If a VAT-registered person issues a VAT invoice
prominently on the invoice or receipt. or VAT official receipt for a VAT-exempt
(d) If the sale involved goods, properties or transaction, but fails to display prominently
services some of which are subject to and on the invoice or receipt the term ‘VAT exempt
some of which are VAT zero-rated or Vat sale,’ the issuer shall be liable to account for
exempt, the invoice or receipt shall the tax imposed in section 106 or 108 as if
clearly indicate the break-down of the Section 109 did not apply.
sale price between its taxable, exempt
and zero-rated components, and the (E) Transitional Period. – Notwithstanding Subsection (B)
calculation of the value-added tax on hereof, taxpayers may continue to issue VAT invoices and
each portion of the sale shall be known VAT official receipt for the period July 1, 2005 to December
on the invoice or receipt: Provided, That 31, 2005 in accordance with Bureau of Internal Revenue
the seller may issue separate invoices or administrative practices that existed as of December 31,
receipts for the taxable, exempt, and 2004.
zero-rated components of the sale.
Here, you must indicate na VAT yan or Non VAT or Zero-rated.

SEC. 115. Power of the Commissioner to Suspend the Business

RETURN AND PAYMENT OF THE VAT (Section 114) Operations of a Taxpayer. – The Commissioner or his
authorized representative is hereby empowered to suspend
SEC. 114. Return and Payment of Value-Added Tax. – the business operations and temporarily close the business
establishment of any person for any of the following
(A) In General. – Every person liable to pay the value-added violations:
tax imposed under this Title shall file a quarterly return of
the amount of his gross sales or receipts within twenty-five
(25) days following the close of each taxable quarter (a) In the case of a VAT-registered Person. –
prescribed for each taxpayer: Provided, however, That VAT- (1) Failure to issue receipts or invoices;
registered persons shall pay the value-added tax on a (2) Failure to file a value-added tax return as
monthly basis: Provided, finally, That beginning January 1, required under Section 114; or
2023, the filing and payment required under this Subsection (3) Understatement of taxable sales or receipts by
shall be done within 25 days following the close of each thirty percent (30%) or more of his correct
taxable quarter. taxable sales or receipts for the taxable
quarter.
Any person, whose registration has been cancelled in
accordance with Section 236, shall file a return and pay the (b) Failure of any Person to Register as Required under
tax due thereon within 25 days from the date of cancellation Section 236.
of registration: Provided, That only one consolidated return
shall be filed by the taxpayer for his principal place of The temporary closure of the establishment shall be for the
business or head office and all branches. duration of not less than five (5) days and shall be lifted only
upon compliance with whatever requirements prescribed by
(B) Where to File the Return and Pay the Tax. – Except as the the Commissioner in the closure order.
Commissioner otherwise permits, the return shall be filed
with and the tax paid to an authorized agent bank, Revenue So, reminder lang, the Revenue Regulations for the VAT, you have
Collection Officer or duly authorized city or municipal RR 13-2018.
Treasurer in the Philippines located within the revenue
district where the taxpayer is registered or required to From VAT, we will go to REMEDIES next meeting. We will not
register. anymore take up Excise.
(C) Withholding of Creditable Value-added Tax. – The

Government or any of its political subdivisions,
instrumentalities or agencies, including government-owned
or -controlled corporations (GOCCs) shall, before making
payment on account of each purchase of goods and services
which are subject to the value-added tax imposed in Sections 19 FEBRRUARY 2019
106 and 108 of this Code, deduct and withhold the value- Jardnel & Ceballos
added tax imposed in Sections 106 and 108 of this Code,
deduct and withhold a final value-added tax at the rate of 5%
of the gross payment thereof: Provided, That beginning RULES ON THE REMEDIES IN THE NIRC
January 1, 2021, the VAT withholding system under this
Subsection shall shift from final to creditable system: We will jump from VAT and then we will go to Title 8 which is
Provided, further, That the payment for lease or use of Remedies under the NIRC.
properties or property rights to nonresident owners shall be
subject to 12% withholding tax at the time of payment.
Provided, however, that payments for purchases of goods SELF-ASSESSING TAXES vs. NON SELF-ASSESSING TAXES
and services arising from projects funded by Official
Development Assistance (ODA) as defined under RA No. It does not follow that after the filing of the returns, the return
8182, otherwise known as the Official Development that you have complied and the tax that you have paid, your
Assistance Act of 1996, as amended, shall not be subject to liability for taxes ends. It does not always follow, because the
the final withholding tax system as imposed in this nature of the taxes in the NIRC are what we called self-assessing
Subsection. For purposes of this Section, the payor or person taxes as against the non-assessing taxes.
in control of the payment shall be considered as the
withholding agent. The nature of the taxes under the NIRC is self-assessing because
it is the taxpayer who files a return, determines his liability or the
The value-added tax withheld under this Section shall be corporation’s liability or determines the tax that he/she/it is
remitted within 10 days following the end of the month the going to pay. So, there is a self-assessment.
withholding was made.
Considering that there is a self-assessment, the government now
comes in to determine whether the returns that you have filed
POWER OF THE CIR TO SUSPEND BUSINESS OPERATIONS FOR were accurate and correct compared to the non-self-assessing
VAT VIOLATIONS (Section 115) wherein there is already a government intervention that comes
in to assist you in determining liability. So more or less tama yun
kasi may other party involved or government agency to assist you

in determining your liability like in the case of Real Property Tax Since the government now has to figure out and determine
(RPT). whether the returns were correct and accurate, these returns
now will be subject to what we call an assessment, whether
meron kang deficiency tax na babayaran on the basis of the
IN CASE OF REAL PROPERTY TAX return kung tama ba yung return niya kasi kung tama, then you
will notified na “ okay, there is no deficiency here or if there is a
In the case of RPT, the taxpayer or property owner would not deficiency then you will be notified.”
know the tax liability because there is an intervention by the
Office of the assessor who determines the Fair market Value So from the filing of the return, the government is given the
(FMV) of the real property and the assessed value. The taxpayer prescriptive period to make an assessment and you have under
would not know the assessed value unless there is an Section 203, the period which the government is asked to make
intervention from the assessor’s office. an assessment. So the assessment is that process given as the
power of the government through the Commissioner on Internal
In the case of RPT, the assessor determines FMV as well as the Revenue to determine whether there is still a deficiency tax after
assessed value of the property and the taxpayer does not know it the filing of the return.
because there is a percentage provided by law in determining the
classification of the real property and the local treasurer now
collects the tax on the basis of the assessed value of the property PRESCRIPTIVE PERIOD FOR ASSESSMENT AND COLLECTION
times the rate. So this is the nature of the non-self-assessing.
Under the NIRC, there is a prescriptive period. This is for purposes
of protecting the taxpayer. Di pwede na you’ll be open for
IN CASE OF TARIFF AND CUSTOMS CODE investigation for so many years and that would be now unfair on
the part of the taxpayer. So there is a period within which the
The same thing goes to the Tariff and Customs Code (TCC). In the government is allowed to make an assessment under Section 203
Tariff and customs duties where the collector comes in to for the general prescriptive periods of 3 years for the filing of the
determine the dutiable value and assess what would be the returns.
corresponding duties and tariff of that imported article. So the
importer does not make a self-assessment. He brings in
documents by way of import entries to the collector. The SECTION 203. Period of Limitation Upon Assessment and
collector through the custom’s appraiser and examiner will Collection. – Except as provided in Section 222, internal
examine the imported articles whether the articles would revenue taxes shall be assessed within three (3) years after
correspond to what we call the import entry and the bill of lading the last day prescribed by law for the filing of the return, and
whether they are consistent. no proceeding in court without assessment for the collection
of such taxes shall be begun after the expiration of such
So if the actual articles and the documents are consistent, it will period: Provided, That in a case where a return is filed
now determine the dutiable value. And from the dutiable value, beyond the period prescribed by law, the three (3)-year
we’ll now impose the corresponding duty, whether it is an ad period shall be counted from the day the return was filed.
valorem rate or specific rate or some other rate or prompt For purposes of this Section, a return filed before the last
measurement under the TCC. Then now the collector will inform day prescribed by law for the filing thereof shall be
the collector na ito yung duties and taxes na babayaran mo. These considered as filed on such last day.
are not self-assessing.
So you have the provision of your Section 203 that taxes shall be
Unlike in the NIRC, most of the taxes there almost fall, when we assessed within 3 years after the last day prescribed by law for
go to income, the taxpayer there files an ITR, He determines kung the filing of the return and no proceeding in court without
ano ang income nya then he computes the tax. assessment for the collection of such taxes shall be begun after
the expiration of such periods.
IN CASE OF ESTATE AND DONOR’S TAX In other words, the government cannot collect unless there is a
prior assessment. Dapat mauna yung assessment.
In estate tax, estate of the heirs, the executor or administrator
makes an inventory of the properties owned by the estate and
then determines what would be the taxable value and the LETTER OF AUTHORITY (LOA)
interests and tax that they should pay. The same thing with donor
or the one giving the gift files the gift tax return and determines In the assessment process, the government through the revenue
the taxable value of the donation and makes an assessment of examiners will serve the Letter of Authority (LOA). It is the
the tax. Those are the same with VAT, the excise tax whether document that is served upon the taxpayer that is now under
alcohol, the cigarettes or tobacco or excise tax on the petroleum investigation and audit for a certain tax year. The LOA should
products or on the other excise tax like the tax on sweetened determine the tax period of which the taxpayer is subject to
beverages or the documentary stamp tax. The taxpayer makes a assessment. So if there is the LOA, the taxpayer should submit his
self-assessment. books and business records because these will now be subject to
an audit and examination as well as investigation of the records
of the taxpayer to find out whether the return was correct.
ASSESSMENT STAGE Otherwise, you will be notified of the findings of deficiency.
(c) When a taxpayer who opted to claim a refund or

tax credit of excess creditable withholding tax for a
PROCESS: taxable period was determined to have carried
over and automatically applied the same amount
1. LOA claimed against the estimated tax liabilities for the
2. Taxpayer (TP) submits: taxable quarter or quarters of the succeeding
a. Books taxable year; or
b. Business records (d) When the excise tax due on exciseable articles has
3. Audit, examination and investigation not been paid; or
4. Finding of deficiency (e) When the article locally purchased or imported by
an exempt person, such as, but not limited to,
vehicles, capital equipment, machineries and spare
NOTICE TO TAXPAYER: parts, has been sold, traded or transferred to non-
exempt persons.
1. Notice of informal conference
2. PAN The taxpayers shall be informed in writing of the law and
3. FAN the facts on which the assessment is made; otherwise, the
assessment shall be void.
Within a period to be prescribed by implementing rules
This will take place during the 3-year period to make the and regulations, the taxpayer shall be required to respond to
assessment. After 3 years and there is no assessment, the said notice.
government is barred. If the taxpayer fails to respond, the Commissioner or his
duly authorized representative shall issue an assessment
TAKE NOTE that the counting of the period is 3 years from the based on his findings.
last day prescribed by law for the filing of the return. Such assessment may be protested administratively by
Whether you file the return before or during the deadline, the filing a request for reconsideration or reinvestigation within
counting will be after the deadline. In our income tax, for the thirty (30) days from receipt of the assessment in such form
calendar year you have April 15 which is the deadline for the and manner as may be prescribed by implementing rules and
return of the annual return for the previous year. If 2018 yung tax regulations.
period, the deadline of the annual will be April 15, 2019. Within sixty (60) days from filing of the protest, all
Beginning April 16 onwards up to 3 years is the 3-year period relevant supporting documents shall have been submitted;
within which to make an assessment. otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted
To continue with that process, there is a finding of deficiency then upon within one hundred eighty (180) days from submission
there will be notice to the taxpayer. The taxpayer will be notified of documents, the taxpayer adversely affected by the
and the notice, the procedural aspect will be governed by the decision or inaction may appeal to the Court of Tax Appeals
Revenue Regulations, RR 18-2013 then the amendment in RR 7- within thirty (30) days from receipt of the said decision, or
30. These are the revenue regulations providing the procedure from the lapse of one hundred eighty (180)-day period;
for the assessment. otherwise, the decision shall become final, executory and
The notices which the taxpayer will receive will be the NOTICE OF demandable.
INFORMAL CONFERENCE. This was taken out in RR 18-2013.
The revenue regulations providing for that process, you have RR
Ang requirement nila diretso na PAN once there is a finding of 18-2013 and 7-2018.
deficiency.
In 2018, they came out with an amendment na ibinalik ang SUMMARY:

notice of informal conference so balik ito ngayon. Then if that is
ignored, you have the PAN, the pre-assessment notice or (1) The filing of return then see table for the subsequent
Preliminary Assessment Notice, you have section 228. Then they process.
file an assessment notice under section 228.
PRIOR TO RR 18- DURING RR 18- DURING 2018
SECTION 228. Protesting of Assessment. – When the 2013 2013 AMENDMENT
Commissioner or his duly authorized representative finds
that proper taxes should be assessed, he shall first notify the Finding of Finding of Finding of
taxpayer of his findings: Provided, however, That a pre- deficiency deficiency deficiency
assessment notice shall not be required in the following
cases:
(a) When the finding for any deficiency tax is the result Notice of Notice of Notice of
of mathematical error in the computation of the Informal Informal Informal
tax as appearing on the face of the return; or Conference Conference Conference
(b) When a discrepancy has been determined between
the tax withheld and the amount actually remitted
by the withholding agent; or
PAN PAN PAN tax may be assessed, or a preceding in court for the
collection of such tax may be filed without
assessment, at any time within ten (10) years after
the discovery of the falsity, fraud or omission:
FAN FAN FAN Provided, That in a fraud assessment which has
become final and executory, the fact of fraud shall
be judicially taken cognizance of in the civil or
criminal action for the collection thereof.
Collection Collection Collection
(b) If before the expiration of the time prescribed in
Section 203 for the assessment of the tax, both the
These notices should happen within the 3-Year period. So, prior Commissioner and the taxpayer have agreed in
to the end within the 3-year period to make an assessment, the writing to its assessment after such time, the tax
notice of informal conference should be made. If a notice of may be assessed within the period agreed upon.
informal conference was released like 2015 tax year, the deadline The period so agreed upon may be extended by
is April 15, 2016 for the ITR. The assessment period will be from subsequent written agreement made before the
April 16, 2016 to April 15, 2019 = 3 years. So when the notice of expiration of the period previously agreed upon.
informal conference was released on April 16 by me, the same
thing goes with the rest of the notices. Kung ang PAN was (c) Any internal revenue tax which has been assessed
released on April 16 including the FAN, then prescribed na rin. within the period of limitation as prescribed in
paragraph (a) hereof may be collected by distraint
These notices were released let’s say on April 15 - the deadline, or levy or by a proceeding in court within five (5)
even though it was received by the taxpayer on April 20, the years following the assessment of the tax.
prescription has not yet set in because the notices were released
on or before the deadline. In other words, even if the notices (d) Any internal revenue tax, which has been assessed
were received after the deadline for as long as they were within the period agreed upon as provided in
released and sent on or before the deadline, the prescription paragraph (b) hereinabove, may be collected by
has not yet set in, meaning the notices have not yet prescribed. distraint or levy or by a proceeding in court within
So you have that period within which to make an assessment – the period agreed upon in writing before the
3 years. expiration of the five (5) -year period. The period
so agreed upon may be extended by subsequent
In so far as collection, the government cannot collect without written agreements made before the expiration of
these assessment notices kasi what is your basis of collecting the period previously agreed upon.
kung wala naming deficiency. These are requirements of due
process. For purposes of due process, the taxpayer must be (e) Provided, however, That nothing in the
notified that there is a finding of deficiency bago ka magcollect. If immediately preceding and paragraph (a) hereof
the government institutes a collection proceeding without a valid shall be construed to authorize the examination
prior assessment then that is a defense. No administrative and investigation or inquiry into any tax return
collection or a proceeding in court after the 3-year period. filed in accordance with the provisions of any tax
amnesty law or decree.
So you have the general prescriptive period – 3 years.
These are the exceptions then the tax or proceeding for the
collection of such tax may proceed without assessment at
EXCEPTION anytime within 10 years from the discovery of the falsity, fraud or
omission.
By way of exception, you have Section 222 which provides for the
exception to the general prescriptive period.
GR: Section 203 (3 years) EXC to EXC: SECTION 223 (PRINCIPLE OF IMPRESCRIPTIBILITY)
EXC: Section 222 (10 years) In these exceptions, the period to file without assessment is 10
1. False return; years. The exception to the exception is Section 223 where you
2. Fraudulent return with intent to evade the tax; or have this Principle of Imprescriptibility. Ordinarily, there is
3. Failure to file a return prescription in the assessment of taxes. There is prescription of 3
years, there is prescription of 10 years but there is
EXC to EXC: Section 223 imprescriptibility.
You have the instance of imprescriptibility of taxes under

TEN YEARS ASSESSMENT AND COLLECTION section 223. Before we proceed to that we have the things that
will happen during the assessment.
SECTION 222. Exceptions as to Period of Limitation of
Assessment and Collection of Taxes. Q: In case of the 10 year period for false return, fraudulent
return with intent to evade and failure to file a return, in 222-b,
(a) In the case of a false or fraudulent return with since the government is given 3 years to make an assessment,
intent to evade tax or of failure to file a return, the
can the government ask for an extension of the 3-year

prescriptive period?
YES. Under Section 222-b if before the expiration of the time Tax Return
prescribed in section 203 of NIRC, both the commissioner and

taxpayer have agreed in writing for the assessment after such
time, the tax may be assessed within the period agreed upon.
Assessment
(NIC)
CONDITIONS
In other words, the government, the commissioner and the PAN
taxpayer should agree. It’s not unilateral, it’s an agreement by

both. Provided that we have the conditions:
FAN
1. It must be made before the expiration;
2. It must be agreed in writing both by the commissioner
and the taxpayer;
3. Provide for the certainty of the period of the extension. Protest w/in 30
days from
receipt
Hindi pwede yung kapag pumirma ka ng waiver of the period of
prescription, statutory waiver. The valid extension should provide
a period certain agreed by the commissioner and the taxpayer.
You have the tax returns, the assessment wherein you have the
notice of informal conference, from the notice of informal
Q: Can they extend more years or can they make further
conference to Pre-assessment Notice (PAN) then after that, the
extensions after making one, second or third extension?
final assessment notice (FAN).
YES as long as the commissioner and the taxpayer have agreed.
PROTEST
In one case (title not given), the commissioner has asked for an
extension then pumayag yung taxpayer tapos nag asked ng
You have section 228 governing the procedure as well as the
another extension then a third one, after that nagpadala na ng
regulations on what the taxpayer should do. While there is no
assessment notice of the finding of deficiency.
fatal consequence when you would ignore the notice of informal
conference and the PAN, you can ignore those but not the FAN.
The taxpayer invoked the defense of prescription contending that
In the event that you ignore the FAN, meaning, you will not
while the extension was signed by the taxpayer, the same was not
protest, then the assessment becomes final and executory.
signed by the commissioner. The commissioner argued that there
is no need kasi pumirma na nga yung taxpayer eh. The SC in that
When you receive the PAN, the remedy is to protest. While you
case denied the argument of the BIR because of the strict and
could protest at the onset, and rebut the findings of the notice of
mandatory requirements of section 222-b. It must be in writing
informal conference, you can do that using the procedure laid
and signed by both the commissioner and the taxpayer.
down in the regulations.
Here, although it was signed by taxpayer, there was no
Of course the BIR will not agree. They will proceed to notify you
conformity or consent by the commissioner. So the extension is
of the pre-assessment and insist on their findings tapos sumagot
null and void. There was prescription so the assessment becomes
ka ulit denying their claim. You will explain your basis pero,
null and void by reason of the prescription.
denied yung pre-assessment mo so Final Assessment is the next
notice that you will receive.
Now after making the assessment, the next thing that will happen
is the collection.
This time, the remedy is to protest. Again, you may ignore
answering the NIC & PAN but not the FAN.
IN THE ASSESSMENT PROCESS:
The taxpayer will protest. He is given 30 days to make the
protest. He may file for a Motion for reconsideration (MR) or a
Motion for Reinvestigation under Section 228.
In Section 228, you have the manner of the protest.
When the commissioner or his duly authorized representative

finds that the proper taxes should be assessed, he shall first
notify the taxpayer of his findings.
DEAN: That is the notice of informal conference.

Provided however that a pre-assessment notice shall not be government now or the commissioner has 180 days from
required in the following cases: submission of documents or from the filing of the MR to decide.
1. When the finding of the deficiency tax is the result 180 days to make a decision.
of the error in computation;
2. When the discrepancy has been determined The CIR now makes a decision. The period to decide is 180 days.
between the tax withheld and the amount actually The decision will be to grant your motion for reconsideration or
remitted; reinvestigation or to deny.
3. When the excise tax due on the excisable articles
has not been paid; Q: What happens if there is inaction?
4. When an article locally purchased or imported by an
exempt person has been sold, traded or transferred So there is a decision or an inaction during the 180 period. If there
to a non-exempt. is inaction on the part of the commissioner, you have two
options:
DEAN: because they are deemed considered imported. They have 1. In case of an inaction, you may appeal to the CTA; or
to pay the taxes. 2. Wait for the decision.
Those are the exceptions where there is no need for PAN. There is a legislative flaw on this provision on the second to the
last paragraph of section 228.
In the PAN, the taxpayer should be informed in writing of the law
and of the facts on which the assessment is based. Otherwise, it xxx
shall be VOID. Otherwise the assessment becomes final.
xxx
The notice of assessment should contain the facts and the law to
which the assessment was based. Otherwise upon the scrutiny What assessment will become final if there is no decision? There
of the assessment it was just a mere demand then you could is no assessment there that will become final.
invoke invalidity, that the assessment is null and void because it
fails to comply under section 228. In other words, the commissioner may either decide on the
protest or will not act on the protest. If there is inaction, from the
Within the period prescribed, the taxpayer is required to lapse of the 180 period, the taxpayer is given 30 days to go to the
respond to such notice. If the taxpayer fails to respond then CTA or the taxpayer will wait for the decision.
he shall issue an assessment based on his findings.
If he will wait, then the taxpayer after the receipt of the denial
still has 30 days to go to the CTA. Here, in case there is a decision
Kung inignore mo ang PAN, you fail to respond to the PAN, then
during the 180 day period or while waiting for the decision after
you have now the FAN.
the 180 days, and it is a denial, the remedy is appeal to the CTA.
Q: What will you do now if you receive the FAN?
From the CTA division (div), then to the CTA en banc then to the
SC. You have section 228 providing for the substantive aspect.
Such assessment must be protested administratively. There is an
administrative process by filing an MR or motion for
When all these procedural process will attain finality then you
reinvestigation within 30 days from receipt of notice.
have the collection. Your assessment will go through an
administrative and judicial process. There is an exhaustion of the
administrative process. In the hands now of the commissioner, if
Motion for Reconsideration – no additional
it is unfavourable to the taxpayer, it goes now to judicial review.
60d
Then the judicial review is lodge before the CTA, first to the
PROTEST
division then to the en banc then finally to the SC.
Motion for Reinvestigation – additional 60d
So will go to administrative and judicial. After that process then
you have the collection.
If you file for a motion for reinvestigation, you are given an
additional period of 60 days from the filing of you MR to submit
COLLECTION REMEDIES
additional documents because the reinvestigation will require
the submission of documents. Sa MR, dili. So tatanungin ka nyan
In the collection remedies, what is the period to collect? You have
ano ba ang protest mo? MR o reinvestigation? You must be
section 222. The collection period is 5 years. Section 222(c), the
certain with the remedy that you are availing.
prescriptive period to collect is 5 years.
If you availed of the motion for reinvestigation which should be
DEAN reads:
filed within 30 days from the receipt of the FAN, then you have
additional 60 days from the filing of your motion for
Any internal revenue tax that has been assessed within the period
reinvestigation to submit additional documents.
may be collected by distraint or levy or by a proceeding in court.
We have administrative and judicial collection within 5 years
That additional 60 days is not true to the MR. From the filing of
following the assessment.
the recon and from the filing of the additional documents, the

If they agreed to extend the collection under paragraph d, still it (4) Fourth, w hen the warrant of distraint or levy is duly
must be in writing and approved by the commissioner and the served and no property could be located, suspended
taxpayer so that they could collect outside the 5-year period. yung collection. Nag institute na ng collection
proceedings through distraint or levy but no property
could be found then suspended yung collection.
TAX AMNESTY
(5) The last is when the taxpayer is out of the country,
The last paragraph of section 222 (e), in the event that there is a whether there is collection or assessment notices,
tax amnesty that is extended by the government, the taxpayer there will be no prescription to set in. Those are the
has the opportunity to avail the amnesty. instances of imprescriptibility.
SECTION 218. Injunction not Available to Restrain Collection
In the congress now, we have the tax amnesty bill. The president of Tax. – No court shall have the authority to grant an
now wants that when the tax amnesty will come out, is the repeal injunction to restrain the collection of any national internal
of the bank secrecy law on taxation because right now the BIR revenue tax, fee or charge imposed by this Code.
could not inquire on bank accounts except for estate tax purposes
or in case when you enter to a compromise in case of financial INJUNCTION
difficulty. Dalawang instances lang. The president want that
repeal so that the government could inquire the bank account to One important principle in the assessment and collection of taxes
know if you’re paying only this much when you have substantial is section 218, INJUNCTION.
accounts. If hindi ma justify ng bank account mo the tax that
you’re paying so merong leakage. Probably there was an income Injunction is not available to restrain the collection of taxes.
that has not been taxed. Again, taxes are the lifeblood of the government. No court has
the authority to grant injunction to restrain the collection of any
internal revenue tax, fee, charge or imposed.
IMPRESCRIPTIBILITY OF TAXES
In the collection, we have section 205 providing the remedies for
Going back to section 223 that is the imprescriptibility of taxes, collection. We have the administrative and the judicial.
this will cover both assessment and collection.
In 223, the running of the statute of limitations on general DELINQUENT TAXES

prescriptive period is 3 years and section 222 in case of false,
fraudulent return and failure to file a return. SECTION 205. Remedies for the Collection of Delinquent
Taxes. – The civil remedies for the collection of internal
The making of the assessment, distraint or levy or the revenue taxes, fees or charges, and any increment thereto
proceeding for the collection shall be suspended for the period: resulting from delinquency shall be:
(1) First, during which the commissioner is prohibited from (a) By distraint of goods, chattels, or effects, and other
making the assessment or bringing distraint or levy or personal property of whatever character, including
the proceeding for the collection for 60 days thereafter; stocks and other securities, debts, credits, bank
accounts and interest in and rights to personal
(2) Second will be the taxpayer’s request for the property, and by levy upon real property and
reinvestigation. interest in rights to real property; and
(b) By civil or criminal action.
(3) Third, where the taxpayer cannot be located in the
address given because when the address provided on Either of these remedies or both simultaneously may be
the basis of the return it was not received by the pursued in the discretion of the authorities charged with the
taxpayer, yung assessment mo – prescription will not collection of such taxes: Provided, however, That the
set in because here the taxpayer cannot be located in remedies of distraint and levy shall not be availed of where
the last known address, whether that is an assessment the amount of tax involve is not more than One hundred
or collection. pesos (P100).
The judgment in the criminal case shall not only impose
Provided that if the taxpayer informs the commissioner the penalty but shall also order payment of the taxes subject
of the change of address then there is no suspension of of the criminal case as finally decided by the Commissioner.
the running of the prescriptive period. Kasalanan na ng The Bureau of Internal Revenue shall advance the
BIR if nagpadala sila ng notice sa kanyang last address amounts needed to defray costs of collection by means of
in the return when the taxpayer so provided a new civil or criminal action, including the preservation or
address. There, prescription will set in. But if the transportation of personal property distrained and the
taxpayer will provide his new address and the notices advertisement and sale thereof, as well as of real property
will be sent on that then that will be the exception of and improvements thereon.
the imprescriptibility. If the taxpayer receives that
during the period of assessment then that is a valid In the administrative collection of taxes we have the following:
service of the notice. 1. Civil remedies for the collection of internal revenue tax;
2. The distraint of goods and levy on real property; or
3. By civil or criminal action.
The prescriptive period is 5 years to file the criminal

So you the administrative by way of the distraint or garnishment case. Remember that a filling of a criminal action is a
in the case of bank account or levy on the real property. collection remedy.
The judicial may either be a civil action or a criminal action. The filing of a criminal action is the only exception
where no prior assessment is required. In other words,
In the institution of these remedies, the government is not barred when you file a civil action to collect an administrative
from pursuing either of this or both simultaneously. So the remedy to collect, this will require a prior assessment.
government may proceed by administrative as well as by judicial
remedies. They may be pursued even at the same time or Hindi makakolekta by way of civil or administrative
simultaneously. In other words, the government is not barred kung hindi dumaan ng assessment but not in a criminal
from pursuing one or more of several of these available remedies. action. No need of an assessment because there is a
In case of criminal action, the judgment in the criminal case shall separate process.
not only impose the penalty but shall also order payment of the There is a criminal complaint that will be filed by the
tax. The filing of the criminal action is a collection remedy. BIR, before the DOJ or the prosecutor’s office and
following the rules on criminal procedure, the taxpayer
is given the time to file a counter affidavit and then in
ADMINISTRATIVE REMEDIES the submission of papers, the prosecution or the DOJ
will look for probable cause. If there is probable cause,
(1) By way of distraint; there is the filing of the information.
You have section 206 on constructive distraints and In other words, if the taxpayer receives a criminal
section 207 (a) on actual distraints. It follows the same complaint, the remedy is not to protest. His remedy is
procedure in your Rule 39 of your ROC on the execution to file a counter-affidavit because that is the procedure.
of judgment. You may run after the personal or real When you file a protest what you will receive is a
properties of the judgment debtor, in this case, against decision. The criminal complaint where it contain the
the taxpayer to satisfy the tax liability. computation of your tax liability is not an assessment
notice. You have several jurisprudence on that matter.
(2) Section 207 (b) on levy of real property;
(3) Levy on the tax lien under section 219; If taxpayer receives a criminal complaint and finding
(4) Remedy of forfeiture in section 224; them na ito pala yung tax na babayaran nya to which
(5) The informer’s reward in section 282; the corresponding criminal liability, the remedy will be
(6) Remedies under sections 215 and 216 of the NIRC; protest. That is wrong because in a criminal action has
a. Section 215, authority of the internal revenue no assessment notice. It does not require a prior
officers to make arrests and seizures. assessment notice.
(7) Section 5 and 6.
a. Section 5 is the power of the commissioner to It is simply the filing of the criminal complaint and the
obtain permission. determination of the probable cause. Then the
b. Section 6, the power of the commissioner to information is filed in court and then trial and the
make assessments, prescribe the different decision. The decision will cover the corresponding
requirements for tax administration and criminal liability if there is.
enforcement. These are the list of some of
your administrative remedies. If there is none, the corresponding civil liability—the tax
that it has to pay despite the failure to prove guilt
beyond reasonable doubt on the criminal aspect
JUDICIAL REMEDIES because such is not the degree of proof if you are only
to determine the civil liability.
(1) By way of a civil action;
You have the basic that in the institution of the criminal
The civil action to collect the tax is the filing of a sum of action, it carries with it also the civil liability. The
money. It is a mere collection case filed by the judgment in the criminal action whether that is a
government against the taxpayer on the basis of the conviction or acquittal has carried with it the finding
sum of money determined on the jurisdictional of the civil liability for the payment of the tax.
amount. If the amount to be collected on final and
executor judgments is over 1 million for taxes and fees, In section 281, the period of filing the criminal action
the jurisdiction is to the CA. if less than 1 million then it for violation of the NIRC is 5 years.
will be either to the MTC or to the RTC.
(2) Criminal action
In the case of criminal action under section, you have

the prescriptive period under section 281 for violation
of the NIRC.

COLLECTION REMEDIES Unlike in real property tax where the claim of the government
for RPT liability is superior even though there is an existing
We mention on distraint under Section 206. In distraint, we encumbrance or mortgage. The same thing on customs duties on
have what we call (1) constructive distraint and (2) actual the imported articles. Even if there is a claimant of the imported
distraint. article, the claim of the government for duties and taxes is
superior to other claimants but not in the case of the NIRC.
CONSTRUCTIVE DISTRAINT To enforce the lien, the government must annotate its claim
before the ROD where the property is located. Kung may nakauna
In constructive distraint, this is similar to the rule on preliminary na, inferior na yung gobyerno for purposes of taxes under the
attachment because the government notices that the taxpayer is NIRC.
hiding his property or concealing.
This lien shall not be valid under Section 219 against any
These are some of the grounds to ask for, like when you have the mortgage, purchaser or judgment creditor until notice of such
debtor concealing his property - you can ask for preliminary lien.
attachment. That is the nature of the constructive distraint
wherein the taxpayer is concealing or hiding properties then you When the lien is enforced, or na annotate na yung lien then the
may ask for constructive distraint wherein the notice will be next proceeding is the levy. Ibenta or auction of property. The
served to the taxpayer to preserve his property until further proceeds will be applied. Any excess ibalik to the taxpayer.
notice or if there is a third person holding a property or credit
owned by the taxpayer then that person will be served of the
distraint requiring him to preserved until further notice by the FORFEITURE
BIR.
In the case of forfeiture, there is seizure of property. In the
If there is a finding of deficiency and the judgment has become enforcement of forfeiture under section 224, in case of personal
final then the proceeding is actual na. property there is seizure then the subsequent sale. If the property
seized is unfit for consumption, illegal or contrary to public policy
or other grounds of which there are properties which are illegal
ACTUAL DISTRAINT then there will destruction of property.
In actual distraint, there is actual seizure of the property. Then In case of real property which is being forfeited then you
the property will be sold at a public auction. The proceeds will be annotate your claim before the ROD in favor of the government.
applied to the liability. Pag kulang, further distraint. Kung sobra, In the case of forfeiture, proceeds will all go to the government.
return any excess to the taxpayer. Walang ibabalik sa taxpayer. After seizing the property, there will
be sale. Lahat ng proceeds pupunta sa gobyerno whether that is
personal or real.
LEVY
Forfeiture is a proceeding in rem. It is directed on the property.
In levy, what is being pursued is the real properties. So go to the What were seized were taxable imported articles. Yung napuslit
Register of Deeds (ROD) and inquire into the real properties of na laman ng containers are sacks of rice brought unlawfully to the
the taxpayer. Kung meron, i-annotate the levy and there will be a country, so lahat yan. Kung smuggled, wala talagang magkiclaim
notice of sale which will be published. na kanya yan. Smuggled nga. When that will be sold, all proceeds
will go to the government.
The property will be sold to the highest bidder then the certificate
of sale will be annotated to the ROD for purposes of counting the Q: What happens to the mode of conveyance?
one year period. If no redemption – final deed will be released to
the purchaser. If there is redemption then the property will be Yan kasi in the course of forfeiture the mode of conveyance is also
returned. The amount paid will be applied to the taxes. Kung seized whether that is an airplane, a ship or any kind of
sobra yung auction price than the tax liability, then you return the transportation. So those will be seized including the taxable
excess to the owner or taxpayer. Pag kulang, further levy. items.
DISTRAINT AND LEVY MAY BE PURSUED SIMULTANEOUSLY BY The owner of these mode of conveyance could not invoke lack
THE GOVERNMENT TO SATISFY THE TAX LIABILITY. of knowledge na yung kanyang sasakyan is used for illicit or
illegal purposes. That is not a defense. That is a personal defense
if there is a prosecution of the criminal action not for purposes of
ENFORCEMENT OF A TAX LIEN forfeiture because the purpose of forfeiture is to have the item
seized to be brought into the hands of the government. There is
The other remedy is the enforcement of a tax lien under Section seizure and then forfeited in favor of the government. Lahat
219. Under the NIRC, the lien of the government for taxes in the mapunta sa gobyerno.
properties of the taxpayer is inferior if there is already an
annotation or an encumbrance on the property like there is
mortgage. Nauna na yung judgment creditor. So it becomes COMPROMISE UNDER SECTION 204
inferior.

Another remedy, you have compromise under Section 204. In the

course of the proceedings for the assessment or collection, at Any return, statement or declaration under SEC. 6 (a) 3rd
what point in time should you offer to compromise? paragraph, filed in any office, corporation shall not be withdrawn.
Hindi mo iwithdraw mag file kalang ng amendment. Provided that
The offer to compromise may be done by the taxpayer at anytime within 3 years it may be modified, changed or amended. No
whether the assessment is still at the administrative or even in notice for audit or investigation of such return statement or
the judicial proceedings na or sa CTA na sya, the offer to declaration asked in the meantime be actually served upon the
compromise will be pursued even at that point in time. Even if taxpayer. For the meantime wala pang notice if you are under
they’ve become final, you may offer to compromise. investigation or under LOA, you will be examined. Once you been
served with that you are no longer allowed to make an amended
Under section 204, you have the modes of offering a return.
compromise, authority of the commissioner to compromise,
compromise payment when there is reasonable doubt as to the NOTE: Final exam will cover the estate, the donor’s, the VAT, the
validity of the tax claim against the taxpayer. There is a doubt but remedies and then the CTA
then there is clear inability to pay or difficulty to pay,
compromise. Ang requirement is offer your bank accounts so that
the government can inquire. SUMMARY OF THE FLOW:
The compromise settlement of any tax liability shall be subject FILE A RETURN
to:
1. Cases of financial incapacity-10 %
2. Other cases like reasonable doubt-40 %
FINDING OF DEFICIENCY
The taxes, the basic tax exceeds 1 million, the settlement offered
is less than the minimum, the compromise now will be subject to
the approval of the equal division court no longer in the hands of
the commissioner. NOTICE OF INFORMAL CONFERENCE
ABATEMENT OR CANCELLATION OF TAX LIABILITY

PAN
When the tax or portion thereof is unjust or excessive you may (You may or may not protest.)
ask for cancellation. Or when the administration or collection cost
would not justify the claim itself, in other words, yung deficiency
findings nila is only 100k then they spent more than 100k to run
after you to collect the 100k from you, they’d rather abate. The FAN
cost of collection is more than the amount to be collected so (Such assessment must be protested administratively. There is an
abate or cancel the tax liability. administrative process by filing an MR or motion for
reinvestigation within 30 days from receipt of notice.
 GR: All criminal violations, may be compromised maski
nafile na ang criminal case for violation of the NIRC, it is If you availed of the motion for reinvestigation which should be
still subject to compromise. filed within 30 days from the receipt of the FAN, then you have
 EXC: Those already filed in court and those already in additional 60 days from the filing of your motion for
the textbook (?) but in practice even nakafile sya, nag reinvestigation to submit additional documents. That additional
go go parin kasi yung interest ng gobyerno is revenue 60 days is not true to the MR.)
collection not to go into litigation. So kung may
compromise the government will accept.
DECISION
AMENDED RETURN (From the filing of the recon and from the filing of the additional
documents, the government now or the commissioner has 180
If the filing the returns, the taxpayer is allowed to amend his days from submission of documents or from the filing of the MR
return. When you amend a return, you file a new return. Kung to decide.)
ano ang tax mo na nabayaran sa first return, icredit mo lang. The
taxpayer may amend the return at anytime within 3 years from What happens if there is inaction?
the filing of the last return, the first tax return.
So there is a decision or an inaction during the 180 period. If there
Why 3 years? Because after the 3-year period prescription will set is inaction on the part of the commissioner, you have two
in. There is no need to amend pag nagprescribe na. options:
1. Appeal to the CTA; or
But if from the filing of your initial return, you have been 2. Wait for the decision.
subjected to assessment notice by reason of the service of the
LOA, you cannot be allowed to amend anymore. Once you are If he will wait, then the taxpayer after the receipt of the denial
served with LOA, the taxpayer can no longer file any amendment. still has 30 days to go to the CTA. Here, in case there is a decision
during the 180 day period or while waiting for the decision after Notice for Informal Conference
the 180 days, and it is a denial, the remedy is appeal to the CTA.
In the event that there is finding of deficiency or deficiency tax,
From the CTA, so this is CTA by division then to the en banc then there will a notice for informal conference. In RR no. 12-99, to
to the SC.) comply with the requirement of due process, the procedure for
informal conference was provided. In RR no. 18-13, such
requirement was, however, repealed and so it was deleted. But
in RR No. 7-18, it was again reinstated as follows:
COLLECTION
(The collection period is 5 years.) SECTION. 3. Due Process Requirement in the lssuance of a
Deficiency Tax Assessment. –
26 FEBRUARY 2019
Ibay & Geralde 3.1 Mode of procedure in the issuance of a deficiency tax
assessment:
ASSESSMENT
3.1.1 Notice for lnformal Conference. – The Revenue Officer
SEC. 203. Period of Limitation Upon Assessment and who audited the taxpayer's records shall, among others,
Collection. - Except as provided in Section 222, internal state in his report whether or not the taxpayer agrees with
revenue taxes shall be assessed within three (3) years after his findings that the taxpayer is liable for deficiency tax or
the last day prescribed by law for the filing of the return, and taxes. lf the taxpayer is not amenable, based on the said
no proceeding in court without assessment for the collection Officer's submitted report of investigation, the taxpayer shall
of such taxes shall be begun after the expiration of such be informed, in writing, by the Revenue District Office or by
period: Provided, That in a case where a return is filed the Special investigation Division, as the case may be (in the
beyond the period prescribed by law, the three (3)-year case of Revenue Regional Offices) or by the Chief of Division
period shall be counted from the day the return was filed. concerned (in the case of the BIR National Office) of the
discrepancy or discrepancies in the taxpayer’s payment of his
For purposes of this Section, a return filed before the last day internal revenue taxes for the purpose of "lnformal
prescribed by law for the filing thereof shall be considered as Conference," in order to afford the taxpayer with an
filed on such last day. opportunity to present his side of the case.
The assessment comes in after the filing of the tax returns. The The lnformal Conference shall in no case extend beyond
purpose is to find out whether the returns filed is accurate and thirty (30) days from receipt of the notice for informal
correct. If it is not, there will be a finding of deficiency during the conference. lf it is found that the taxpayer is still liable for
period of assessment. deficiency tax or taxes after presenting his side, and the
taxpayer is not amenable, the Revenue District Officer or the
Chief of the Special investigation Division of the Revenue
Assessment Period Regional Office, or the Chief of Division in the National
Office, as the case may be, shall endorse the case within
seven (7) days from the conclusion of the lnformal
 3 years - general prescriptive period
Conference to the Assessment Division of the Revenue
 10 years - for false, fraudulent and omission of filing of
Regional Office or to the Commissioner or his duly authorized
returns.
representative for issuance of a deficiency tax assessment.
Failure on the part of Revenue Officers to comply with the

Letter of Authority
periods indicated herein shall be meted with penalty as
provided by existing laws, rules and regulations."
During such the periods, the government will issue an LOA or
Letter of Authority which the revenue examiner will serve upon
This is to inform the taxpayer of the findings of the examiner. He
the taxpayer. It will inform him that for a particular period he will
is allowed at that level to rebut and to produce other documents
be under investigation, audit and examination.
to counter the findings as regards the deficiency. So he may offer
his evidence or ignore it altogether if he is not interested to
The investigation, audit and examination should take place within
contest the findings.
the 3-year period or 10-year period as the case may be. If it is
done outside the 3 year period, it will be null and void because SEC. 228. Protesting of Assessment. – When the
the period within which the government is allowed by law to Commissioner or his duly authorized representative finds
conduct an examination should only within the prescriptive that proper taxes should be assessed, he shall first notify the
periods. taxpayer of his findings: Provided, however, That a
preassessment notice shall not be required in the following
If your deadline is April 15, the counting begins from such date cases:
and not the actual date of filing. From then, the taxpayer may be
served with the LOA and under that he may be required to submit (a) When the finding for any deficiency tax is the result
books of account, business records, etc. of mathematical error in the computation of the
tax as appearing on the face of the return; or

(b) When a discrepancy has been determined between

the tax withheld and the amount actually remitted All these notices should be made within the 3-year period.
by the withholding agent; or Otherwise, the taxpayer may invoke prescription. If the notice
(c) When a taxpayer who opted to claim a refund or was sent on the last day of the period, it is still valid even if the
tax credit of excess creditable withholding tax for a taxpayer received it outside such period. The validity depends on
taxable period was determined to have carried when the notices were sent.
over and automatically applied the same amount
claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding PROTEST
taxable year; or
(d) When the excise tax due on exciseable articles has
not been paid; or
(e) When the article locally purchased or imported by
an exempt person, such as, but not limited to,
vehicles, capital equipment, machineries and spare
parts, has been sold, traded or transferred to non-
exempt persons.
The taxpayers shall be informed in writing of the law and the Under Section 228, the remedy of the taxpayer is to protest to
facts on which the assessment is made; otherwise, the the assessment. Otherwise, the assessment becomes final and
assessment shall be void. executory for failure to protest. The assessment protested here
is the FAN.
Within a period to be prescribed by implementing rules and
regulations, the taxpayer shall be required to respond to said When to protest – The protest shall be within 30 days from the
notice. If the taxpayer fails to respond, the Commissioner or receipt of the assessment.
his duly authorized representative shall issue an assessment
based on his findings. How to protest – There are two modes of protest under Section
228.
Such assessment may be protested administratively by filing
a request for reconsideration or reinvestigation within thirty  Motion for reconsideration or
(30) days from receipt of the assessment in such form and  Motion for reinvestigation
manner as may be prescribed by implementing rules and
regulations. Within sixty (60) days from filing of the protest, Under RR No. 18-13, the taxpayer shall state the nature or mode
all relevant supporting documents shall have been of protest. If the nature is reconsideration, the taxpayer is not
submitted; otherwise, the assessment shall become final. allowed anymore to submit additional documents or evidence,
unlike reinvestigation.
If the protest is denied in whole or in part, or is not acted
upon within one hundred eighty (180) days from submission When what is filed is a reconsideration, all the documents shall
of documents, the taxpayer adversely affected by the be filed with the protest within the 30-day period to file a protest.
decision or inaction may appeal to the Court of Tax Appeals But if it is reinvestigation, there is still an additional 60days from
within thirty (30) days from receipt of the said decision, or the date filing of the protest to submit additional documents.
from the lapse of one hundred eighty (180)-day period;
otherwise, the decision shall become final, executory and Period to decide –The CIR or his duly authorized representative
demandable. is given a period of 180 days from the submission of documents
to decide. Within the period, there may be a decision or inaction.
Preliminary Assessment Notice (PAN)
If there is no contest on the findings, the next to be issued is the REMEDIES FROM THE CIR
preassessment notice or the preliminary assessment notice
(PAN). The PAN will involve the same findings of deficiency and
again the taxpayer is given the opportunity to rebut or to submit
counter-evidence to the findings.
Final Assessment Notice (FAN)
If this PAN is ignored by the taxpayer, a final assessment notice

(FAN) will thereafter be issued. It now comes with what is called
a formal letter of demand. So, the FAN shall be sent with a formal
letter of demand. Because it used to be that the assessments
notices were only considered as demands and were not final.
Also, the notice for informal conference, the PAN and FAN shall
contain the facts and law upon which the assessment was made.
taxes, fees or charges, and any increment thereto resulting

from delinquency shall be:
If there is a Denial of Protest – The taxpayer may appeal to the (a) By distraint of goods, chattels, or effects, and other
CTA within 30 days from the receipt of decision. personal property of whatever character, including
stocks and other securities, debts, credits, bank
accounts and interest in and rights to personal
If the Protest Not Acted Upon (Inaction) property, and by levy upon real property and
interest in rights to real property; and
The taxpayer has two options: (b) By civil or criminal action.
Either of these remedies or both simultaneously may be
a. He may wait for the decision even after the lapse of the pursued in the discretion of the authorities charged with the
180-day period and appeal to the CTA in case of denial collection of such taxes: Provided, however, That the
of protest within 30 days from receipt decision; or remedies of distraint and levy shall not be availed of where
the amount of tax involve is not more than One hundred
b. Appeal with the CTA within 30 days after the expiration pesos (P100).
of the 180 days to decide (appeal to the CTA cannot be
withdrawn even if the taxpayer later on decide to wait The judgment in the criminal case shall not only impose the
for the decision of the CIR). penalty but shall also order payment of the taxes subject of
the criminal case as finally decided by the Commissioner.
PROCEDURE IN THE CTA The Bureau of Internal Revenue shall advance the amounts
needed to defray costs of collection by means of civil or
criminal action, including the preservation or transportation
of personal property distrained and the advertisement and
sale thereof, as well as of real property and improvements
thereon.
SEC. 281. Prescription for Violations of any Provision of this

All cases appealed to the CTA shall be decided by division and Code. – All violations of any provision of this Code shall
after that en banc. However, there should first be an MR with the prescribe after Five (5) years.
division before going to the en banc. Also, there should also be
an MR of the en banc decision before elevating to the SC. Prescription shall begin to run from the day of the
commission of the violation of the law, and if the same be
Thereafter, the appeal shall be to the Supreme Court. Only not known at the time, from the discovery thereof and the
decisions of the CTA en banc are elevated to the SC. Decisions of institution of judicial proceedings for its investigation and
the CTA division is not appealable to the SC even if it is a pure punishment.
question of law.
The prescription shall be interrupted when proceedings are
When shall the assessment period terminate? instituted against the guilty persons and shall begin to run
again if the proceedings are dismissed for reasons not
The assessment period shall end after the service of the FAN. constituting jeopardy.
The term of prescription shall not run when the offender is

absent from the Philippines.
DIAGRAM
Modes of Collecting Deficiency Tax

Notice for
Tax Return Assessment Informal PAN  Administrative
Conference
o distraint of personal property
o levy upon real property
o forfeiture or enforcement of a tax lien
 Judicial action
CTA in CTA en o criminal action under section 281
FAN Protest SC
Division Banc o civil action in case of final and executory
assessments
Criminal actions will not require any prior assessment. But if the
COLLECTION remedies availed of are the administrative actions and civil
actions, prior assessment is required because of the requirement
SEC. 205. Remedies for the Collection of Delinquent Taxes. of due process to allow him to protest.
– The civil remedies for the collection of internal revenue

The government may avail of one or more or all of these remedies SEC. 229. Recovery of Tax Erroneously or Illegally Collected. –
simultaneously, whether administrative and/or judicial. No suit or proceeding shall be maintained in any court for the
recovery of any national internal revenue tax hereafter
Prescriptive Period: 5 years alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected
During the period of assessment or when the case is pending in without authority, or of any sum alleged to have been
the CTA, the taxpayer is given the opportunity to compromise. It excessively or in any manner wrongfully collected, until a
may also be entered into when the government avails either claim for refund or credit has been duly filed with the
administrative or judicial action for collection. Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has
been paid under protest or duress.
Where to file judicial action for collection –
In any case, no such suit or proceeding shall be filed after the
RA 9282, Section 7 expiration of two (2) years from the date of payment of the
tax or penalty regardless of any supervening cause that may
Jurisdiction. - The CTA shall exercise: arise after payment: Provided, however, That the
Commissioner may, even without a written claim therefor,
xxxx refund or credit any tax, where on the face of the return upon
which payment was made, such payment appears clearly to
b. Jurisdiction over cases involving criminal offenses as have been erroneously paid.
herein provided:
Ground for refund: erroneously or illegally assessed or collected
"1. Exclusive original jurisdiction over all criminal offenses taxes
arising from violations of the National Internal Revenue Code
or Tariff and Customs Code and other laws administered by Note: The remedy under Section 229 covers only refund for
the Bureau of Internal Revenue or the Bureau of Customs: erroneously or illegally collected tax. There is also another
Provided, however, That offenses or felonies mentioned in provision for tax refund which is under Section 112 but this only
this paragraph where the principal amount of taxes and fees, covers taxes of zero-rated VAT taxpayers. The latter is a claim for
exclusive of charges and penalties, claimed is less than One tax credit or refund of input VAT taxes.
million pesos (P1,000,000.00) or where there is no specified
amount claimed shall be tried by the regular Courts and the
jurisdiction of the CTA shall be appellate. Any provision of Q: What are covered under Section 229 –
law or the Rules of Court to the contrary notwithstanding,
the criminal action and the corresponding civil action for the a. Tax hereafter alleged to have been erroneously or
recovery of civil liability for taxes and penalties shall at all illegally assessed or collected;
times be simultaneously instituted with, and jointly b. Any penalty claimed to have been collected without
determined in the same proceeding by the CTA, the filing of authority; or
the criminal action being deemed to necessarily carry with it c. Any sum alleged to have been excessively or in any
the filing of the civil action, and no right to reserve the filling manner wrongfully collected.
of such civil action separately from the criminal action will be
recognized. Protest not required - When claiming a refund under Section
2s29, there is no requirement of making a prior protest or
 CTA - when the amount of taxes to be collected in a payment under protest because “such suit or proceeding may be
criminal or civil action on final and executor assessment maintained, whether or not such tax, penalty, or sum has been
is P1,000,000 or more, the CTA has exclusive original paid under protest or duress”.
jurisdiction
The protest counts only during the assessment when there is a
 Regular Courts - Less than that, the jurisdiction is with finding of deficiency tax. Also, in case of Real Property Tax, there
the regular courts. is a requirement to pay under protest. However, when it is a claim
for refund, protest is not required.
There is also one important feature in the course of collection is
injunction:
Q: What is the period for filing –
SEC. 218. Injunction not Available to Restrain Collection of
Tax. – No court shall have the authority to grant an  It shall be 2 years from the date of payment.
injunction to restrain the collection of any national internal  In case of excessive tax payment or tax credits, it is 2
revenue tax, fee or charge imposed by this Code. years from the actual date of the filing of the annual
return.
This is because of the principle that tax is the lifeblood of the
government. *Tax credit means there is an excess tax payment
because the tax payments for the year exceeded the
annual tax liability. There is an overpayment of taxes.
Claim for Refunds

Note: Do not confuse this with the assessment counting because Reconfiguration of the CTA under RA 9282
that is 3 years from the last day prescribed by law for the filing
of the return. In case of refunds, it is 2 years from the date of It was only in March 30, 2004 under RA 9282 (An Act Expanding
payment of the actual date of filing. the Jurisdiction of the CTA xxx), when the CTA was substantially
restructured. The CTA is no longer equivalent with the RTC. This
The claim for refund may be claimed in an administrative action time, the CTA is equivalent to CA. The magistrates are no longer
with the CIR PRIOR to a judicial action with the CTA (RA 9282). called “judges”, they are already called “justices”.
However, both these actions shall be brought within the 2-year
period. If the refund is claimed with the CIR and such was denied,
the remedy is with the CTA. Recent Amendment by RA 9503
Even if the administrative action is brought within 2 years but the The most recent was RA 9503 (An Act Enlarging The
judicial action is not filed within 2 years, the claim shall be Organizational Structure of the CTA xxx), in June 12, 2008 where
dismissed. there was an increase in the Division of the court.
Q: What if there is inaction?

JURISDICTION
A: If there is inaction by the CIR, then the taxpayer should appeal
within a reasonable time with the CTA before the lapse of the 2- The CTA has the:
year period. Both actions also must be brought within the same  Exclusive appellate jurisdiction and
period similar to above.  Exclusive original jurisdiction.
When the case is already with the CTA because of an adverse

decision or inaction by the CIR, it shall be decided by division. Exclusive Appellate Jurisdiction
Appeal may be made with the en banc and after that to the SC.
One of its exclusive appellate jurisdiction is to review on appeal
In the assessment and refunds, when they are now in the judicial decisions of the CIR in cases involving disputed assessments
process (already in the CTA), there is no period within which the
courts are to decide. In other words, antayin mo ang decision ng RA 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
courts. There is no statutory requirement of the period within
which for the CTA to decide. "a. Exclusive appellate jurisdiction to review by appeal, as
herein provided:
In the claim for refund, both administrative and judicial remedies "1. Decisions of the Commissioner of Internal Revenue in
must be within the 2 year period. When the claim for refund is cases involving disputed assessments, refunds of internal
filed with the CIR within the 2 year period and there is a denial, it revenue taxes, fees or other charges, penalties in relation
will now have a judicial claim to the CTA (also within the 2 year thereto, or other matters arising under the National Internal
period). Revenue or other laws administered by the Bureau of
Internal Revenue;
In the event that there is no decision from the CIR after filing the
administrative claim and the 2 year period is about to lapse, do Take note that here, there are disputed assessments. Disputed
not wait for the expiration of the period. Within reasonable time, Assessment here refers to those assessments that are protested
the claim can be brought to the CTA in Division through an appeal. and is already decided by the CIR. In other words, if you are going
That is part of the exclusive appellate jurisdiction of the CTA. to protest an assessment from the service of that notice of finding
of a deficiency with the CIR, the protest should not be lodged to
JURISDICTION OF THE COURT OF TAX the CTA. It must first be lodged to the CIR. This is because the
jurisdiction of the CTA pertains to the decisions of the CIR.
APPEALS
Likewise, on refund cases, the CTA will also have exclusive
HISTORY
appellate jurisdiction from the decision of the CIR and all other
matters relating to the NIRC and other laws administered by the
The CTA which was created as early as June 16, 1954 under RA
BIR.
1125 (An Act Creating the Court of Tax Appeals).
Example: Opinions under “other matters arising under the
National Internal Revenue”. The taxpayer would ask for a tax
The objectives of the creation of the CTA under RA 1125:
ruling (CIR determines if a transaction is taxable or not). In the
event that the CIR issues an adverse ruling, where will the
1. to entrust tax cases to a special court composed of men
taxpayer go? Where will he appeal?
technically qualified in the field of taxation and to
develop expertise in the subject
2. to expedite the disposition of tax cases, hasten the Jurisprudence provided by Dean:
collection of taxes, and provide an adequate and
speedy remedy to the taxpayers A Tax Ruling (whether taxable or not) was sought from the BIR
in connection to a pawnshop business. The BIR gave an

adverse ruling and declared the pawnshop to be taxable. The "3. Decisions, orders or resolutions of the Regional Trial
matter was brought to the RTC for appeal. Courts in local tax cases originally decided or resolved by
them in the exercise of their original or appellate jurisdiction;
The SC held that the remedy should be an appeal to the CTA.
Q: What are the LOCAL TAX CASES that are brought to the CTA?
Under RA 9282, the decisions that are appealed to the CTA are
not only DECISIONS OF THE CIR, but also RULINGS of the CIR. A:
If the CIR makes an adverse ruling, the remedy is not with the 1. Legality of Tax Ordinance - question on the
regular courts. The remedy is with the CTA. This is based on the constitutionality and legality of a tax ordinance
phrase “or other matters arising under the National Internal 2. Local Tax Assessment - protesting an assessment on
Revenue or other laws administered by the Bureau of Internal local tax cases
Revenue” 3. Claim for Refunds – filing a claim for refund on local
taxes
"2. Inaction by the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal What is brought to the CTA is either:
revenue taxes, fees or other charges, penalties in relations  the decision of the RTC in its exclusive appellate
thereto, or other matters arising under the National Internal jurisdiction
Revenue Code or other laws administered by the Bureau of  the matter is brought in its exclusive original
Internal Revenue, where the National Internal Revenue Code jurisdiction
provides a specific period of action, in which case the
inaction shall be deemed a denial; I. Legality of Tax Ordinance
There is now a statutory provision that states that the inaction is

deemed as a denial.
Situation: In case of disputed assessments, there is a situation

where after filing the protest, the BIR is given 180 days to decide Under the Local Government Code, when you question the
and the CIR will not act on your protest. So the 180 days had validity or legality of an ordinance, the action is brought to the
lapsed. DOJ. The question may be brought to the DOJ within 30 days from
the effectivity of the ordinance. This is to have an administrative
remedy first before resorting to judicial remedies. The DOJ shall
render a decision within 60 days.
You are given the option to:
Within 30 days from receipt of an unfavorable decision or within
 Bring the action to the CTA within 30 days from the 30 days from the lapse of the period to decide, the remedy of the
lapse of the 180 day period. There is deemed an taxpayer is to bring it to the RTC.
inaction which is equivalent to a denial. The CTA has
exclusive appellate jurisdiction over the matter. Q: Why the RTC?
Again, in the event the matter is brought to the CTA by It is because the action questioning the legality or
reason of inaction, the action can no longer be constitutionality of the tax ordinance does not involve any
withdrawn. OR pecuniary estimation.
 The other option is to wait for the decision. In which From the RTC, the next remedy is to bring it to the CTA. CTA in
case Section 7(a)(1) applies. Division then to CTA en Banc and finally to the Supreme Court.
In case the disputed assessment is decided against the Q: Why the CTA?
taxpayer, it can be brought to the CTA.
The CTA has jurisdiction over decisions or orders of the RTC in
In the refund claims, there is a statutory period of 2 years from local tax cases originally decided.
payment. The law requires that both the administrative and
judicial claim must be made within the 2 year period (Section Another local tax case involves assessment, local tax
229). assessments.
Q: What happens if there is inaction by the CIR and the 2 year In local taxation, the counterpart of the BIR is your local treasurer
period is about to lapse? of the LGU. The local treasurer will send to the local taxpayer the
notice of assessment.
A: The inaction is deemed a DENIAL. Then the matter may now
be brought to the CTA. The CTA having exclusive appellate SECTION 194. Periods of Assessment and Collection. –
jurisdiction.
(a) Local taxes, fees, or charges shall be assessed
within five (5) years from the date they became

due. No action for the collection of such taxes, fees, on the protest. The inaction shall be treated as an equivalent to
or charges, whether administrative or judicial, shall denial, so your remedy now is go to the regular courts.
be instituted after the expiration of such period:
Provided, That. taxes, fees or charges which have Since this time there is now pecuniary amount involved then you
accrued before the effectivity of this Code may be have now the proper or appropriate regular courts depending on
assessed within a period of three (3) years from the the jurisdictional amount. So the regular courts may be the RTC
date they became due. or the MTC.
(b) In case of fraud or intent to evade the payment of If it is the RTC in local tax case, the appeal is in the CTA. This is by
taxes, fees, or charges, the same may be assessed division then go to CTA En Banc and then to the Supreme Court.
within ten (10) years from discovery of the fraud or
intent to evade payment. If the jurisdictional amount is in the MTC, then you file that with
the MTC, now, as a matter of procedure the next level court from
(c) Local taxes, fees, or charges may be collected the decision of the MTC you appeal it to the RTC, the RTC in its
within five (5) years from the date of assessment appellate jurisdiction.
by administrative or judicial action. No such action
shall be instituted after the expiration of said So the appeal from the RTC exercising its appellate jurisdiction
period: Provided, however, That, taxes, fees or originating from the MTC, the appeal from RTC is from the CTA,
charges assessed before the effectivity of this Code this time it is to the CTA en banc not anymore in the CTA division
may be collected within a period of three (3) years because of the “Layering”. It has already gone two judicial layer,
from the date of assessment. from MTC to RTC still falling within the substantive requirements.
(1:05:17)
(d) The running of the periods of prescription provided
in the preceding paragraphs shall be suspended for Now as a rule of thumb, when the RTC decides in its appellate
the time during which: jurisdiction, the tax case is brought to the CTA en banc na. Cases
decided in RTC’s original jurisdiction doon yan i-akyat sa CTA
(1) The treasurer is legally prevented from division.
making the assessment of collection;
(2) The taxpayer requests for a The third is claim for refund, in the claim for refund. In your local
reinvestigation and executes a waiver in government code the claim for refund must be made within TWO
writing before expiration of the period YEARS from payment, so at the onset the claim for refund must
within which to assess or collect; and be filed with the trearuer. The administrative claim, it is before
(3) The taxpayer is out of the country or the local treasurer within two years from the date of payment.
otherwise cannot be located.
So the local treasurer shall send this notice of assessment to the SECTION 196. Claim for Refund of Tax Credit. – No case or
local taxpayer of the local taxes he failed to pay, the remedy now proceeding shall be maintained in any court for the recovery
is protest. So that is the local treasurer sending the assessment of any tax, fee, or charge erroneously or illegally collected
notice, then the protest of the taxpayer and then you have the until a written claim for refund or credit has been filed with
decision of the (courts?) whether to grant or deny the protest. the local treasurer. No case or proceeding shall be
entertained in any court after the expiration of two (2) years
SECTION 195. Protest of Assessment. – When the local from the date of the payment of such tax, fee, or charge, or
treasurer or his duly authorized representative finds that from the date the taxpayer is entitled to a refund or credit.
correct taxes, fees, or charges have not been paid, he shall
issue a notice of assessment stating the nature of the tax, From the local treasurer now you appeal to the regular courts. Sa
fee, or charge, the amount of deficiency, the surcharges, regular courts, since there is now subject to pecuniary estimation
interests and penalties. Within sixty (60) days from the the amount will now depend whether the jurisdictional amount
receipt of the notice of assessment, the taxpayer may file a is on the RTC or MTC. So if the jurisdictional amount for the claim
written protest with the local treasurer contesting the is on the RTC, the jurisdiction of the RTC is on the original. If the
assessment; otherwise, the assessment shall become final jurisdictional amount falls within the MTC, the original action of
and executory. The local treasurer shall decide the protest the claim is on the MTC.
within sixty (60) days from the time of its filing. If the local
treasurer finds the protest to be wholly or partly meritorious, From RTC in its original jurisdiction then CTA division to the En
he shall issue a notice cancelling wholly or partially the banc. If MTC ang original then you bring it to the RTC then from
assessment. However, if the local treasurer finds the RTC appeal to CTA En banc. You have the local tax cases.
assessment to be wholly or partly correct, he shall deny the
protest wholly or partly with notice to the taxpayer. The SECTION 200. Chief Officials of the Bureau. – The Bureau
taxpayer shall have thirty (30) days from the receipt of the shall be headed by a Commissioner and shall be assisted by
denial of the protest or from the lapse of the sixty (60) day at least four (4) but not more than six (6) Deputy
period prescribed herein within which to appeal with the Commissioners.
court of competent jurisdiction otherwise the assessment
becomes conclusive and unappealable. The Commissioner shall be appointed by the President of the
Philippines.
In case of denial you appeal to the regular courts or there is
inaction within the lapse of the 60 day period upon failure to act
The Deputy Commissioners shall also be appointed by the (1) Promulgation of rules and regulations;
President and at least majority of whom shall come from the (2) Issuance, revocation or modification of
ranks of the Bureau. rulings; and
(3) Compromise or abate of customs
SECTION 202. Functions of the Bureau. – The Bureau shall obligations.
exercise the following duties and functions:
(f) Assignment or reassignment of any customs officer
(a) Assessment and collection of customs revenues subject to the approval of the Secretary of
from imported goods and other dues, fees, Finance: Provided, That District Collectors and
charges, fines and penalties accruing under this other customs officers that perform assessment
Act; functions shall not remain in the same area of
(b) Simplification and harmonization of customs assignment for more than three (3) years; and
procedures to facilitate movement of goods in (g) Perform all other duties and functions as may be
international trade; necessary for the effective implementation of this
(c) Border control to prevent entry of smuggled goods; Act and other customs related laws.
(d) Prevention and suppression of smuggling and other
customs fraud; SECTION 214. Persons Exercising Police Authority. – For the
(e) Facilitation and security of international trade and effective implementation of this Act, the following persons
commerce through an informed compliance are authorized to effect search, seizure, and arrest:
program;
(f) Supervision and control over the entrance and (a) Officials of the Bureau, District Collectors, Deputy
clearance of vessels and aircraft engaged in foreign District Collectors, police officers, agents,
commerce; inspectors and guards of the Bureau;
(g) Supervision and control over the handling of (b) Upon authorization of the Commissioner, officers
foreign mails arriving in the Philippines for the and members of the Armed Forces of the
purpose of collecting revenues and preventing the Philippines (AFP) and national law enforcement
entry of contraband; agencies; and
(h) Supervision and control on all import and export (c) Officials of the BIR on all cases falling within the
cargoes, landed or stored in piers, airports, regular performance of their duties, when payment
terminal facilities, including container yards and of internal revenue taxes is involved.
freight stations for the protection of government
revenue and prevention of entry of contraband; All officers authorized by the Commissioner to exercise
(i) Conduct a compensation study with the end view police authority shall at all times coordinate with the
of developing and recommending to the President Commissioner.
a competitive compensation and remuneration
system to attract and retain highly qualified Goods seized by deputized officers pursuant to this section
personnel, while ensuring that the Bureau remains shall be physically turned-over immediately to the Bureau,
financially sound and sustainable; unless provided under existing laws, rules and regulations.
(j) Exercise of exclusive original jurisdiction over
forfeiture cases under this Act; and For this purpose, mission orders shall clearly indicate the
(k) Enforcement of this Act and all other laws, rules specific name carrying out the mission and the tasks to be
and regulations related to customs administration. carried out.
SECTION 201. Powers and Functions of the Commissioner. – Subject to the approval of the Secretary of Finance, the
The Commissioner shall have the following powers and Commissioner shah1 define the scope, areas covered,
functions: procedures and conditions governing the exercise of such
police authority including custody and responsibility for the
(a) Exclusive and original jurisdiction, to interpret the seized goods. The rules and regulations to this effect shall be
provisions of this Act, in collaboration with other furnished to the concerned government agencies and
relevant government agencies, subject to review personnel for guidance and compliance.
by the Secretary of Finance;
(b) Exercise any customs power, duties and functions, All seizures pursuant to this section must be effected in
directly or indirectly; accordance with the provisions on the conduct of seizure
(c) Review any action or decision of any customs proceedings provided for in Chapters 3 and 4 of Title XI of this
officer performed pursuant to the provisions of this Act.
Act;
(d) Review and decide disputed assessments and other SECTION 216. Exercise of Power of Seizure. – Any person
matters related thereto, subject to review by the exercising police authority under this Act has the power and
Secretary of Finance and exclusive appellate duty to seize any vessel, aircraft, cargo, goods, animal or any
jurisdiction of the Court of Tax Appeals (CTA); other movable property when the same is subject to
(e) Delegate the powers vested under this Act to any forfeiture or when they are subject of a fine imposed under
customs officer with the rank equivalent to division this Act.
chief or higher, except for the following powers
and functions:
SECTION 424. Duty of Customs Officer Tasked to Assess port. It also includes airport, so port of entry whether by sea or
Imported Goods. – For purposes of assessing duties and taxes by air. So you have the customs collector incharge of that in the
on imported goods, the customs officer shall classify, value, assessment and collection of duties.
and determine the duties and taxes to be paid. The customs
officer shall prepare and submit an assessment report as 2016 TSN * exhaust all administrative remedies before you go to
established under this Act. the Court of Tax Appeals
SECTION 425. Tentative Assessment of Goods Subject to As regards the finding of the collector of the duties assessed
Dispute Settlement. – Assessment shall be deemed tentative against the importer, the importer MUST pay first WITHOUT
if the duties and taxes initially assessed are disputed by the NEED OF PROTESTING PAYMENT, then you pursue now the
importer. The assessment shall be completed upon final protest. So it is lodged before the collector of customs, from the
readjustment based on the tariff ruling in case of collector it is brought to the commissioner of customs then to the
classification dispute, or the final resolution of the protest CTA Division then to CTA En banc and finally to the Supreme
case involving valuation, rules of origin, and other customs Court.
issues.
SECTION 1113. Property Subject to Seizure and Forfeiture. –
The District Collector may allow the release of the imported Property that shall be subject to seizure and forfeiture
goods under tentative assessment upon the posting of include:
sufficient security to cover the applicable duties and taxes
equivalent to the amount that is disputed. (a) Any vehicle, vessel or aircraft, including cargo,
which shall be used unlawfully in the importation
SECTION 429. Final Assessment. – Assessment shall be or exportation of goods or in conveying or
deemed final fifteen (15) days after receipt of the notice of transporting smuggled goods in commercial
assessment by the importer or consignee quantities into or from any Philippine port or place.
The mere carrying or holding on board of smuggled
SECTION 430. Period of Limitation. – In the absence of fraud goods in commercial quantities shall subject such
and when the goods have been finally assessed and released, vehicle, vessel, aircraft, or any other craft to
the assessment shall be conclusive upon all parties three (3) forfeiture: Provided, That the vehicle, vessel,
years from the date of final payment of duties and taxes, or aircraft or any other craft is not used as a common
upon completion of the post clearance audit. carrier which has been chartered or leased for
purposes of conveying or transporting persons or
Then you have decisions to the Commissioner of Customs under cargo;
the Tariff and Customs Code or under the Customs
Modernization Act. Decisions of the commissioner for liability (b) Any vessel engaging in the coastwise trade which
under customs duties. shall have on board goods of foreign growth,
produce, or manufacture in excess of the amount
The seizure and forfeiture proceeding and all other matters necessary for sea stores, without such goods
arising from customs law and other laws administered by the having been properly entered or legally imported;
BOC. Under the Tariff and customs code, the common cases
encountered you have the protest cases, wherein that is the issue (c) Any vessel or aircraft into which shall be
of ascertainment on the importation being protested by the transferred cargo unloaded contrary to law prior to
importer. Here, in the Tariff and customs code, you have the the arrival of the importing vessel or aircraft at the
protest of assessment. port of destination;
SECTION 1106. Protest – When a ruling or decision of the (d) Any part of the cargo, stores, or supplies of a vessel
District Collector or customs officer involving goods with or aircraft arriving from a foreign port which is
valuation, rules of origin, and other customs issues is made, unloaded before arrival at the vessel's or aircraft's
except the fixing of fines in seizure cases, the party adversely port of destination and without authority from the
affected may appeal by way of protest against such ruling or customs officer; but such cargo, ship, or aircraft
decision by presenting to the Commissioner at the time when stores and supplies shall not be forfeited if such
payment of the amount claimed to be due the government is unloading was due to accident, stress of weather,
made, or within fifteen (15) days thereafter, a written or other necessity and is subsequently approved by
protest setting forth the objection to the ruling or decision in the District Collector;
question and the reasons therefore.
(e) Goods which are fraudulently concealed in or
removed contrary to law from any public or private
PROTEST
warehouse, container yard, or container freight
station under customs supervision;
In protesting assessment in the determination of the duties, the
(launchment? Launching?) of the protest is filed before the
(f) Goods, the importation or exportation of which are
Collector of customs. Our country has been divided into
collection districts. One of which is you have the port of Davao, effected or attempted contrary to law, or any
goods of prohibited importation or exportation,
the one incharge there is the collector of the customs of port of
davao. When you say port of davao it does not only involve sasa and all other goods which, in the opinion of the
District Collector, have been used, are or were
entered to be used as instruments in the The second pertains to seizure and forfeiture cases, now seizure
importation or the exportation of the former; and forfeiture cases involves the seizure of imported article as
well as the mode of conveyance, whether by sea, air or land
(g) Unmanifested goods found on any vessel or aircraft transportation where imported articles are brought in the
if manifest therefor is required; country in violation of the customs law. So the articles as well as
the mode of conveyance will be the subject of seizure. So they
(h) Sea stores or aircraft stores adjudged by the are both proceeding in rem, it is directed on the object not on the
District Collector to be excessive, when the duties person or importer. It is directed on the object including the
and taxes assessed by the District Collector thereon mode of conveyance.
are not paid or secured forthwith upon assessment
of the same; Again, the (Lodgment?) seizure proceeding is pursued now at the
onset at the port by the Collector of Customs.
(i) Any package of imported goods which is found
upon examination to contain goods not specified in If the decision of the District Collector is adverse:
the invoice or goods declaration including all other
packages purportedly containing imported goods SECTION 1126. Appeal to the Commissioner. – In forfeiture
similar to those declared in the invoice or goods cases, the person aggrieved by the decision of a District
declaration to be the contents of the misdeclared Collector may, within fifteen (15) days or five (5) days in case
package; of perishable goods, from receipt of the decision, file a
written notice of appeal, together with the required appeal
(j) Boxes, cases, trunks, envelopes, and other fee to the District Collector, furnishing a copy to the
containers of whatever character used as Commissioner. The District Collector shall immediately
receptacle or as device to conceal goods which are transmit all the records of the proceedings to the
subject to forfeiture under this Act or which are so Commissioner, who shall review and decide on the appeal
designed as to conceal the character of such goods; within thirty (30) days from receipt of the records, or fifteen
(15) days in the case of perishable goods: Provided, That if
(k) Any conveyance actually used for the transport of within thirty (30) days, no decision is rendered, the decision
goods subject to forfeiture under this Act, with its of the District Collector under appeal shall be deemed
equipage or trappings, and any vehicle similarly affirmed. An appeal filed beyond the period herein
used, together with its equipment and prescribed shall be dismissed.
appurtenances. The mere conveyance of smuggled
goods by such transport vehicle shall be sufficient Appeals to protest cases shall be governed by Section 114 of
cause for the outright seizure and confiscation of this Act.
such transport vehicle but the forfeiture shall not
be effected if it is established that the owner of the The decision of the Commissioner may be served through the
means of conveyance used as aforesaid, is engaged recognized modes of service under existing law.
as common carrier and not chartered or leased, or
that the agent in charge thereof at the time, has no So in the seizure and forfeiture, one of the issue here is the
knowledge of the unlawful act; and legality of the importation, unlike in the protest is the correctness
of the assessment of the collection. The collector of customs will
(l) Goods sought to be imported or exported: institute the seizure and forfeiture proceeding. The collector will
conduct the proceeding and if the decision is adverse to the
(1) Without going through a customs office, importer the remedy is to appeal to the commissioner of customs
whether the act was consummated, and judicial review is brought to the CTA.
frustrated, or attempted;
(2) Found in the baggage of a person arriving In claims for refund, it is also lodged in the Collector of Customs.
from abroad and undeclared by such
person;
(3) Through a false declaration or affidavit ABANDONMENT
executed by the owner, importer,
exporter, or consignee concerning the Then you have also this remedy of abandonment, whether
importation of such, goods; express or implied. Prior to the new law customs modernization
(4) On the strength of a false invoice or other and tariff act, once you have already abandoned whether express
document executed by the owner, or implied, you cannot anymore recover. Now under the new law,
importer, exporter, or consignee there is still a window of recovery if you abandoned.
concerning the importation or exportation
of such goods; or SECTION 1130. Treatment and Disposition of Abandoned
(5) Through any other practice or device Goods. – Expressly abandoned goods under paragraph (a) of
contrary to law by means of which such Section 1129 of this Act shall ipso facto be deemed the
goods entered through a customs office to property of the government and shall be disposed of in
the prejudice of the government. accordance with the provisions of this Act.
SEIZURE AND FORFEITURES If the Bureau has not disposed of the abandoned goods, the
owner or importer of goods impliedly abandoned may, at
any time within thirty (30) days after the lapse of the property owner and the local assessor on the assessed value, the
prescribed period to file the declaration, reclaim the goods remedy now is to protest the assessment of the assessor. Where
provided that all legal requirements have been complied will you bring your protest? You will bring it to the local board of
with and the corresponding duties, taxes and other charges, assessment appeals.
without prejudice to charges and fees due to the port or
terminal operator, as well as expenses incurred have been SECTION 229. Action by the Local Board of Assessment
paid before the release of the goods from customs custody. Appeals. -
When the Bureau sells goods which have been impliedly (a) The Board shall decide the appeal within one
abandoned, although no offense has been discovered, the hundred twenty (120) days from the date of receipt
proceeds of the sale, after deduction of any duty and tax and of such appeal. The Board, after hearing, shall
all other charges and expenses incurred as provided in render its decision based on substantial evidence
Section 1143 of this Act, shall be turned over to those or such relevant evidence on record as a
persons entitled to receive them or, when this is not possible, reasonable mind might accept as adequate to
held at their disposal for a specified period. After the lapse support the conclusion.
of the specified period, the balance shall be transferred to
the forfeiture fund as provided in Section 1151 of this Act. (b) In the exercise of its appellate jurisdiction, the
Board shall have the power to summon witnesses,
So you have now decision of the Commissioner of Customs not administer oaths, conduct ocular inspection, take
the decision of the Collector of Customs. depositions, and issue subpoena and subpoena
duces tecum. The proceedings of the Board shall be
There are instances where the collector will decide after asking conducted solely for the purpose of ascertaining
for an opinion from the commissioner, so since he will be guided the facts without necessarily adhering to technical
by the opinion of the commissioner the importer now ill appeal rules applicable in judicial proceedings.
to the CTA and by-pass the commissioner, THAT IS NOT
ALLOWED. Even though the collector decided from the opinion (c) The secretary of the Board shall furnish the owner
of the commissioner, what is the legal requirement is the decision of the property or the person having legal interest
of the commissioner which is appealed now to the CTA. Bring it therein and the provincial or city assessor with a
first to the commissioner before going to the CTA. copy of the decision of the Board. In case the
provincial or city assessor concurs in the revision or
the assessment, it shall be his duty to notify the
CENTRAL BOARD OF ASSESSMENT APPEALS owner of the property or the person having legal
interest therein of such fact using the form
Fifth, you have decision of the Central Board of Assessment prescribed for the purpose. The owner of the
Appeals this now involves realty tax. In the exercise of its property or the person having legal interest therein
appellate jurisdiction over cases involving assessment or taxation or the assessor who is not satisfied with the
involving real property originally decided with the provincial or decision of the Board, may, within thirty (30) days
city board assessment appeals. after receipt of the decision of said Board, appeal
to the Central Board of Assessment Appeals, as
SECTION 226. Local Board of Assessment Appeals. – Any herein provided. The decision of the Central Board
owner or person having legal interest in the property who is shall be final and executory.
not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property may, So the remedy is NOT to FILE a motion for reconsideration,
within sixty (60) days from the date of receipt of the written because the assessor insisted that it is the FMV, your remedy is
notice of assessment, appeal to the Board of Assessment to file now the protest before the local board of assessment
Appeals of the provincial or city by filing a petition under appeals. From the local board it is brought now to the central
oath in the form prescribed for the purpose, together with board of assessment appeals there is one board each in Luzon,
copies of the tax declarations and such affidavits or Visayas and Mindanao. Then from the central board it is brought
documents submitted in support of the appeal. to the CTA en banc, hindi na sya sa division, the finally to the
Supreme Court.
So in real property taxation cases will involve protesting the
assessment made by the local assessor. In real property taxation
what is the issue here is the assessment of the RPT, but prior to PROTESTING SPECIAL LEVY
the assessment if the determination of the value of the real
property. The RPT is determined by the assess value times the Another is protesting special levy. The special levy under real
rate. Whether to come up with the assess value, there must be a property taxation occurs when your LGU will introduce public
determination of the FMV times the assessment rate depending works project and infrastructure developments and would like to
on the classification of the real property. recover investment by assessing real property owners over that
development, gusto nilang babawiin yung expenses made by the
In the case of real property taxation, one of the issues involved is LGU so they will pass an ordinance imposing a levy or special
protesting assessment of the local assessor. The local assessor assessment that is NOT tax, it is time bound as there is a period
determines the FMV so that you will arrive at your assess value, to which is to collect that is the recovery period. After recovery,
the assess level is provided by law, your local tax code depending the collection stops. The assessment of the tax will be the
on the classification. So if there is now controversy of the property owners benefitted by the development, if you did not
benefit from the development you will not be assessed special dumping. There is countervailing when the imported article
levy. The same procedure you bring it to the local board of enjoys a subsidy or bounty in the country of origin where they are
assessment appeals. manufactured. So when they are brought in the country of
destination they will now compute and injure the locally
Third is protesting (payment??) so this time since it involves products. Now if it is non-agri DTI will recommend a
payment, it is required when you protest the payment the local countervailing, the countervailing is to offset that advantage. If
assessor will prepare the real property tax declaration. The tax agri yan sya that will be the DA that will recommend the
declaration is now brought to the local treasurer that is his guide countervailing.
in determining the real property tax. There is a requirement of
paying under protest, after paying you indicate in the receipts Decisions of the Secretary of Trade and Industry, in the case
that you are paying under protest that you file your protest within of non-agricultural product, commodity or article, and the
30 days after payment. Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing
The local treasurer shall decide within 60 days, if the protest is duties under Section 301 and 302, respectively, of the Tariff
meritorious then you will be refunded, or the payment will be and Customs Code, and safeguard measures under Republic
applied as tax credit to the future. If the protest is denied or if Act No. 8800, where either party may appeal the decision to
there is no action within 60 days, here the protest to the local impose or not to impose said duties.
treasurer in case of denial or inaction the remedy is go to the local
board of assessment appeals, from the local board to the central SECTION 713. Countervailing Duty. – The provisions of
board then to the CTA En banc then to the Supreme Court. Republic Act No. 8751, otherwise known as "An Act
Strengthening the Mechanisms for the Imposition of
Countervailing Duties on Imported Subsidized Products,
REFUND Commodities or Articles of Commerce in Order to Protect
Domestic Industries from Unfair Trade Competition,
Fourth, claim for refund on real property tax. So again doon parin Amending for the Purpose Section 302, Part 2, Title II, Book I
yan sa local treasurer when you are now asking or you believe of Presidential Decree No. 1464", otherwise known as the
that you have overpaid or erroneously or illegally collected then "Tariff and Customs Code of the Philippines, as Amended",
fil a claim for refund with the local treasurer. The filing the claim are hereby adopted.
for refund is 2 years. Take note that the claim for refund in the
NIRC, the local property tax and real property tax is 2 years from
payment. Bring that up to the local treasurer then there is a SAFEGUARD MEASURES
decision then local board to the central board then to the CTA En
banc and finally to the Supreme Court. The third one is the safeguard measure, it is impose by DTI if there
is a surging of imported article of which there is no dumping nor
countervailing. So there is a heavy importation, an example of
SECRETARY OF FINANCE that is the case of cement several years ago, when there was
heavy importation of cement. There was no dumping or
Then you have the decisions of the Secretary of Finance on countervailing but there was surging and so there was a
customs cases elevated to him automatically for review on the recommendation of imposing safeguard measures. Here you
decisions of the customs commissioner which are adverse to the have the dumping, countervailing and safeguard measure
Government under section 2315 of the tariff and customs code. imposed now by DTI in non-agri.
You have the Collector of Customs, there is a case filed before the If imposed, the protest now is brought to the CTA. The decision
Collector of Customs, the Collector of Customs decides against of the secretary recommending the imposition of dumping,
the government, so the remedy is to appeal to the commissioner countervailing or safeguard measure whether the DTI or DA will
of customs by automatic review. Now the commissioner of now appeal to the CTA division to the CTA En Banc and to the
customs again decides against the government then there is Supreme Court.
automatic review against the secretary of finance. When the
Secretary of finance decides now in favor of the government then Now, in letter B in jurisdiction involving criminal offenses. We
the remedy stops. (unclear). If the decision now of the secretary mention that the filing of criminal action is one of the mode of
of finance is now adverse to the taxpayer, the remedy now is to collection of the tax which will not require any prior assessment.
appeal to the CTA.
(dean did not mention division or en banc) "Sec. 7. Jurisdiction. – The CTA shall exercise: xxx
Exclusive original jurisdiction over all criminal offenses

DEPARTMENT OF TRADE AND INDUSTRY arising from violations of the National Internal Revenue Code
or Tariff and Customs Code and other laws administered by
Number seven, decision of the DTI in case of the non-agri the Bureau of Internal Revenue or the Bureau of Customs:
products and DA in case of agri products involving dumping and Provided, however, That offenses or felonies mentioned in
countervailing duties under safeguard measure. Now the this paragraph where the principal amount o taxes and fees,
dumping duty is a special duty imposed by the BOC or DTI or DA, exclusive of charges and penalties, claimed is less than One
if the imported article is being brought in the country and sold at million pesos (P1,000,000.00) or where there is no specified
less than its normal value. When an imported article is sold at the amount claimed shall be tried by the regular Courts and the
country of destination at less than its normal value it is a case of jurisdiction of the CTA shall be appellate. Any provision of
law or the Rules of Court to the contrary notwithstanding,

the criminal action and the corresponding civil action for the (a) Section 3 of Presidential Decree (P.D.). 1972, s.
recovery of civil liability for taxes and penalties shall at all 1985, as amended, Sections 4 and 5 of Executive
times be simultaneously instituted with, and jointly Order No. (E.O.) 1057, s. 1985, and Section 4 of E.O.
determined in the same proceeding by the CTA, the filing of 1064, s. 1985, insofar as the VAT tax exemption and
the criminal action being deemed to necessarily carry with it tax credit is concerned;
the filing of the civil action, and no right to reserve the filling
of such civil action separately from the criminal action will be (b) Section 10, insofar as VAT exemption is concerned,
recognized. of Republic Act No. (R.A.) 6807 or An Act
Converting the Mati Community College into a
CTA EXCLUSIVE ORIGINAL JURISDICTION State College to be known as the Davao Oriental
State College of Science and Technology, Providing
Here there is exclusive original jurisdiction in the CTA where the for a Charter for this Purpose, Expanding its
claim of that amount for taxes and fees is 1,000,000 or more. Curricular Offerings, Redirecting its Objectives, and
When the amount is less than 1,000,000 the jurisdiction Appropriating Funds Therefor;
depending on the penalty will be on the RTC or MTC. The
jurisdiction of the CTA now becomes appellate. (c) Sections 18 and 19, insofar as VAT exemption is
concerned, of R.A. 6847 or The Philippine Sports
 If RTC has the original jurisdiction appeal to the CTA Commission Act;
Division to the CTA En banc and finally to the Supreme
Court. (d) Section 8(d), last paragraph, insofar as VAT
exemption is concerned, of R.A. 7278 or An Act
 If the MTC has the original jurisdiction appeal is to the Amending Commonwealth Act No. 111, as
RTC then to the CTA En banc and lastly to the Supreme Amended by P.D. 460, entitled An Act to Create a
Court. Public Corporation to be Known as the Boy Scouts
of the Philippines, and to Define its Powers and
Number 8 is decision of the RTC in its original or exclusive Purposes, by Strengthening the Volunteer and
appellate jurisdiction in criminal cases where the amount Democratic Character of the Boy Scouts of the
involved for taxes and fees is less than 1,000,000. Where the Philippines and for Other Purposes;
criminal action involved has an amount of 1,000,000 or more
then the CTA has original and exclusive jurisdiction. The original (e) Section 1, insofar as VAT exemption is concerned,
jurisdiction here is the CTA Division to CTA en banc and to the of R.A. 7291 or An Act Restoring the Tax and Duty
Supreme Court. Incentives Previously Enjoyed by the Veterans
Federation of the Philippines under Republic Act
Then you have number 9, the jurisdiction over tax collection Numbered Twenty-Six Hundred and Forty;
cases. When you are dealing with final and executory assessment,
the exclusive original is with the CTA division then to En banc and (f) Section 21, insofar as VAT exemption is concerned,
now to the SC. Final and executory assessment and the amount of R.A. 7306 or the Charter of the People’s
of tax involved is 1,000,000 or more. If less than 1,000,000 then Television Network, Inc.;
you go to either RTC or MTC.
(g) Section 14, insofar as VAT exemption is concerned,
You have the appellate jurisdiction over tax collection cases, the of R.A. 7354 or the Postal Service Act of 1992;
RTC appellate jurisdiction to the CTA En banc then to the SC.
(h) Section 9(c), insofar as VAT exemption is
When you bring now the action to the Supreme Court from the concerned, of R.A. 7355 or the Manlilikha ng Bayan
CTA it is under rule 45 review by certiorari, whether it is the CTA Act;
deciding in its exclusive original or exclusive appellate, the appeal
from the Supreme Court is under rule 45 or review by certiorari (i) Section 21, insofar as VAT exemption is concerned.
not rule 65. of RA 7366 or the Law Creating the National
Commission for Culture and the Arts;
05 MARCH 2019
Narca & Candolita (j) Section 7(f), insofar as VAT exemption is
concerned, of R.A. 7371 or An Act Converting the
Take note of the amendments of the VAT under TRAIN because Aklan Agricultural College into Ak1an State College
under Section 86 (R.A 10963) there are list of the amendments of Agriculture, and Appropriating Funds Therefor;
of the VAT.
(k) Section 12, second sentence, insofar as VAT
All these items are now part of the 12% VAT. Any transactions exemption is concerned, of R.A. 7373 or An Act
involving will be now subject to the VAT. Establishing the Eastern Visayas Science High
School;
SECTION 86. Repealing Clause.— The following laws or
provisions of laws are hereby repealed and the persons (l) Section 11(j), insofar as VAT exemption is
and/or transactions affected herein are made subject to the concerned, of R.A. 7605 or the Charter of the
VAT provision of Title IV of the NIRC, as amended: Philippine State College of Aeronautics;
Science and Technology High School in Sta. Rosa

(m) Section 126, insofar as VAT exemption is Laguna;
concerned, of R.A. 7653 or The New Central Bank
Act; (z) Section 7(c) and (f), insofar as VAT exemption is
concerned, of RA 9138 or An Act Establishing the
(n) Section 14, insofar as VAT exemption is concerned, Guimaras State College;
of R.A. 7875 or the National Health Insurance Act
of 1995; (aa) Section 7(c), insofar as VAT exemption is
concerned, of R.A. 9141 or An Act Converting the
(o) Section 18, insofar as VAT exemption is concerned, Negros Occidental Agricultural College into State
and Section 18, last paragraph of R.A. 7884 or the College to be known as the Negros Occidental
National Dairy Development Act of 1995; Agricultural College;
(p) Section 8, insofar as VAT exemption is concerned, (bb) Section 16, insofar as VAT exemption is concerned,
R.A. 8160 or An Act Granting the University of the of R.A. 9497 or The Civil Aviation Authority Act of
Philippines a Franchise to Construct, Install, 2008;
Operate and Maintain for Educational and Other
Related Purposes, Radio and Television (cc) Section 25(b) and (c), insofar as VAT exemption is
Broadcasting Stations Within the University of the concerned, and (d), insofar as VAT zero rating is
Philippines and in Such Other Areas Within the concerned, of R.A. 9500 or the University of the
Scope of its Operation; Philippines Charter of 2008;
(q) Sections 2 and 16, insofar as VAT exemption is (dd) Section 25(b) and (c), insofar as VAT exemption is
concerned, of R.A. 8282 or The Social Security Act concerned, and (d) insofar as VAT zero-rating is
of 1997; concerned, of R.A. 9519 or An Act Converting
Mindanao Polytechnic State College into a State
(r) Section 39, insofar as VAT exemption is concerned, University to be Known as the Mindanao University
of R.A. 8291 or The Government Service Insurance of Science and Technology;
System Act of 1997;
(ee) Section 17(c), insofar as VAT exemption is
(s) Section 4(c) and (f), insofar as VAT exemption is concerned, of R.A. 3591, otherwise known as the
concerned, of R.A. 8292 or the Higher Education PDIC Charter, as amended by Section 8 of R.A.
Modernization Act of 1997; 9576, otherwise known as An Act Increasing the
Maximum Deposit Insurance Coverage, and in
(t) Section 25, insofar as VAT exemption is concerned, Connection Therewith, to Strengthen the
of R.A. 8492 or the National Museum Act of 1998; Regulatory and Administrative Authority, and
Financial Capability of the Philippine Deposit
(u) Section 3(h), insofar as VAT exemption is Insurance Corporation (PDIC), Amending for this
concerned, of R.A. 8502 or the Jewelry Industry Purpose Republic Act Numbered Three Thousand
Development Act of 1998; Five Hundred Ninety-One, as Amended, Otherwise
Known as the PDIC Charter, and for Other
(v) Article 65, insofar as VAT exemption and zero Purposes;
rating is concerned, of regional or area
headquarters and zero-rating of the sale or lease of (ff) Sections 2 and 19, insofar as VAT exemption is
goods and property and the rendition of services to concerned, of R.A. 9679 or An Act Further
regional or area headquarters, and Article 67, Strengthening the Home Development Mutual
insofar as VAT exemption is concerned, of R.A. Fund, and for Other Purposes;
8756; Provided, That existing RHQs and ROHQs
enjoying VAT exemption and zero-rating at the (gg) Section 23, insofar as VAT exemption is concerned
time of the effectivity of TRAIN shall not be of the National Historical Commission of the
affected; Philippines, of R.A. 10086, or the Strengthening
Peoples’ Nationalism Through Philippine History
(w) Section 7(c), insofar as VAT exemption is Act;
concerned, of R.A. 9045 or An Act Creating the
Batangas State University; (hh) Section 7(b) and (c), insofar as VAT exemption is
concerned, and (d), insofar as VAT zero-rating is
(x) Section 7(c), insofar as VAT exemption is concerned, of R.A. 9647 or the Philippine Normal
concerned, of R.A. 9055 or An Act Converting the University Modernization Act of 2009;
A1tlan State College of Agriculture into the Aldan
State University; (ii) Section 17, insofar as VAT exemption is concerned,
of R.A. 7898, as amended by R.A. 10349,
(y) Section 13, insofar as VAT exemption is concerned Establishing the Revised AFP Modernization
of R.A. 9083 or An Act Establishing the Sta. Rosa Program and for Other Purposes;

(jj) Section 56, insofar as VAT exemption is concerned, concerned, of R.A. 2067, as amended, or the
of R.A. 10801 or the Overseas Workers Welfare Science Act of 1958; and
Administration Act;
(bbb) Section 9, with respect to VAT, of R.A. 9511 or the
(kk) Section 9(e)(2) and (j), with respect to VAT, of R.A. National Grid Corporation of the Philippines Act.
7900 or the High-Value Crops Development Act of
1995; Provided, That the VAT obligations of government owned
and-controlled corporations, state universities and colleges,
(ll) Section 24(e) of R.A. 10068 or the Organic and other government instrumentalities whose VAT
Agriculture Act of 2010; exemption has been repealed under this Act shall be
chargeable to the Tax Expenditure Fund (TEF) provided for in
(mm) Section 14(b), with respect to VAT, R.A. 7308 or the annual General Appropriations Act: Provided, further,
the Seed Industry Development Act of 1992; That VAT exemption, VAT zero-rating, and VAT credit
granted to state universities and colleges on their purchases
(nn) Section 35 (b)(c), with respect to VAT, of R.A. and importations are hereby repealed and the transactions
8550 or The Philippine Fisheries Code of 1998; affected herein are made subject to the VAT provisions of
(oo) Section 13, second paragraph, with respect to Title IV of the NIRC, as amended.
VAT, of R.A. 10817 or the Philippine Halal Export
Development and Promotion Act of 2016; Provided, That, with respect to income tax, the following
laws or provisions of laws are hereby repealed or amended:
(pp) Section 9(3), (4), and (8), with respect to VAT, of
R.A. 8479 or the Downstream Oil Industry (a) Section 33(A) of R.A. 7277, as amended by R.A.
Deregulation Act of 1998; 10754 or the Magna Carta for Persons with
Disability;
(qq) Section 6(c) and (d), with respect to VAT, of R.A. (b) Section 22(B) of R.A. 10165 or the Foster Care Act
7103 or the Iron and Steel Industry Act; of 2012;
(c) Section 4 of R.A. 1169 or An Act Providing for
(rr) Section 10, with respect to VAT, of R.A. 7718 or Charity Sweepstakes, Horse Races and Lotteries:
An Act Amending R.A. No. 6957;
“Sec. 4. Holding of sweepstakes.— The Office shall
(ss) Section 26(B)(3), with respect to VAT, of R.A. bold charity horse race sweepstakes under such
9275 or the Philippine Clean Water Act of 2004; regulations as shall be promulgated by the Board in
accordance with Republic Act Numbered Three
(tt) Section 20(d)(3) of R.A. 7279 or the Urban hundred and nine: Provided, however, That when
Development and Housing Act of 1992; the holding of a sweepstakes race to determine
prizes is impossible due to war, public calamity, or
(uu) Section 20(d)(3) of R.A. 10884 or An Act other unforeseen or fortuitous event or when
Strengthening the Balanced Housing there is no sufficient number of horses to
Development Program, Amending for the determine the major prizes, the Board of Directors
Purpose RA 7279, as Amended, Otherwise Known may determine the procedure to be followed in the
as the Urban Development and Housing Act of distribution of prizes in the most just, equitable
1992; and expeditious manner. The horse races and the
sale of tickets in the said sweepstakes shall be
(vv) Section 14, with respect to VAT, of R.A. 8423 or exempt from all taxes, except that each ticket shall
the Traditional and Alternative Medicine Act bear a twelve-centavo internal revenue stamp. The
(TAMA) of 1997; tickets shall be printed by the Government and
shall be considered government securities for the
(ww) Section 22(b) of R.A. 10747 or the Rare Diseases purposes of penalizing forgery or alteration.”
of the Philippines;
(d) Section 5 of R.A. 8756 or An Act Providing for the
(xx) Section 45(a), (b), and (c), with respect to VAT, of Terms, Conditions and Licensing Requirements of
R.A. 9003 or the Ecological Solid Waste Regional or Area Headquarters, Regional Operating
Management Act of 2000; Headquarters, and Regional Warehouses of
Multinational Companies, An;tending for the
(yy) Section 5(b), with respect to VAT, of R.A. 10771 Purpose Certain Provisions of Executive Order No.
or the Philippine Green Jobs Act of 2016; 226 or The Omnibus Investments Code of 1987:
Provided, That existing Regional or Area
(zz) Section 6, with respect to VAT, of R.A. 7459 or the Headquarters, Regional Operating Headquarters,
Investors and Inventions Incentives Act of the and Regional Warehouses of Multinational
Philippines; Companies enjoying the preferential income tax
rate at the time of the effectivity of the TRAIN shall
(aaa) Section 24, insofar as VAT exemption of not be affected;
foundations for scientific advancements is (e) Section 2 of P.D. 1354, s. 1978 or Imposing Final
Income Tax on Subcontractors and Alien
Employees of Service Contractors and Under 2018 or the TRAIN Law:

Subcontractors Engaged in Petroleum Operations
in the Philippines under Presidential Decree No. 87: The period is still 2 years but the claim must be decided within 90
Provided, That service contractors and days. What if there is no decision within 90 days? Are you going
subcontractors enjoying the preferential income to wait or should you go to the CTA?
tax rate at the time of the effectivity of the TRAIN
shall not be affected; and ➢ Prior to TRAIN, upon the lapse of the 120-period, you
(f) Section 7 of P.D. 1034, s. 1976, or Authorizing the can treat that as a denial.
Establishment of an Offshore Banking System in ➢ However under the TRAIN, if there is no decision within
the Philippines: Provided, That service contractors 90 days, the officer will be subject to the penalty for not
and subcontractors enjoying the preferential making a decision.
income tax rate at the time of the effectivity of the
TRAIN shall not be affected.
However in the regulation that came out:
RECENT TAX JURISPRUDENCE 2018
➢ If there a decision within the 90-day period and if it is
a denial, then you appeal now to the CTA within 30
VALUE ADDED TAX days.
➢ If there is no decision and the 90-day period has
You have the rule under Section 112 prior to the amendment. lapsed, you do not go to the CTA because there is no
Prior to the TRAIN or prior to the 2018: statutory provision that you would go to the CTA in the
event the 90-day period would lapsed. Walang law
Prior to TRAIN provided. The law is silent. In other words, you have to
wait without prejudice of the administrative action
Section 112. Refunds or Tax Credits of Input Tax. – (A) Zero- which the BIR may pursue against the officer in charge.
rated or Effectively Zero-rated Sales. - any VAT-registered
person, whose sales are zero-rated or effectively zero-rated You have to wait for the decision even beyond the 90-day period.
may, within two (2) years after the close of the taxable If there is now a decision and if it is a denial, then you go now to
quarter when the sales were made, apply for the issuance of the CTA.
a tax credit certificate or refund of creditable input tax due
or paid attributable to such sales, except transitional input
tax, to the extent that such input tax has not been applied Under TRAIN
against output tax: Provided, however, That in the case of
zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and SECTION 36. Section 112 of the NIRC, as amended, is hereby
Section 108 (B)(1) and (2), the acceptable foreign currency further amended to read as follows:
exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko “SEC. 112. Refunds or Tax Credits of Input Tax.—
Sentral ng Pilipinas (BSP): Provided, further, That where the
taxpayer is engaged in zero-rated or effectively zero-rated sale “(A) x x x
and also in taxable or exempt sale of goods of properties or “(B) x x x
services, and the amount of creditable input tax due or paid “(C) Period within which Refund of Input Taxes shall be
cannot be directly and entirely attributed to any one of the Made.— In proper cases, the Commissioner shall grant a
transactions, it shall be allocated proportionately on the basis refund for creditable input taxes within ninety (90) days from
of the volume of sales. the date of submission of the official receipts or invoices and
other documents in support of the application filed in
xxx accordance with Subsections (A) and (B) hereof: Provided,
That should the Commissioner find that the grant of refund
(D) Period within which Refund or Tax Credit of Input Taxes is not proper, the Commissioner must state in writing the
shall be Made. - In proper cases, the Commissioner shall grant legal and factual basis for the denial.
a refund or issue the tax credit certificate for creditable input
taxes within one hundred twenty (120) days from the date of “In case of full or partial denial of the claim for tax refund,
submission of compete documents in support of the the taxpayer affected may, within thirty (30) days from the
application filed in accordance with Subsections (A) and (B) receipt of the decision denying the claim, appeal the decision
hereof. with the Court of Tax Appeals: Provided, however, That
failure on the part of any official, agent, or employee of the
In case of full or partial denial of the claim for tax refund or BIR to act on the application within the ninety (90)-day
tax credit, or the failure on the part of the Commissioner to period shall be punishable under Section 269 of this Code.
act on the application within the period prescribed above, xxx
the taxpayer affected may, within thirty (30) days from the
receipt of the decision denying the claim or after the
expiration of the one hundred twenty day-period, appeal the SITEL PHILS. CORP. vs. CIR
decision or the unacted claim with the Court of Tax Appeals. 817 SCRA 193 | 2017
xxxx [Refund of excess input VAT on zero-rated VAT taxpayers]

Sec. 112, NIRC: procedure to file claim for refund/ The amounts earmarked and eventually paid by
tax credit certificate for the excess input VAT of the MEDICARD to the medical service providers do not
zero-rated taxpayers; (excess input VAT of the 12% form part of gross receipts for VAT purposes. Since
VAT taxpayers is to carry-over not refund). an HMO like MEDICARD is primarily engaged in
arranging for coverage or designated managed care
File administrative claim within 2 years from the end services that are needed by plan holders/members
of the taxable quarter when sales were made  CIR for fixed prepaid membership fees and for a
 decide within 120 days from submission of specified period of time, then MEDICARD is
documents  grant or deny the claim; in case of principally engaged in the sale of services.
denial or the lapse of the 120 day period to decide
and no decision  judicial appeal to the CTA,div.  In Philippine Health Care Providers, Inc. vs.
CTA en banc SC Commissioner of Internal Revenue, the Court
adopted the principal object and purpose object in
Exception is BIR Ruling No. DA-489-03. The judicial determining whether the MEDICARD therein is
claim need not await the expiration of the 120-day engaged in the business of insurance and therefore
period, if such was filed from December 10, liable for documentary stamp tax. The Court held
2003(issuance of BIR Ruling No. DA-489-03) to therein that an HMO engaged in preventive,
October 6, 2010 (promulgation of Aichi). diagnostic and curative medical services is not
engaged in the business of an insurance. In sum, the
Court said that the main difference between an
MEDICARD PHILS. vs. CIR HMO and an insurance company is that HMOs
822 SCRA 444 | 2017 undertake to provide or arrange for the provision of
[VAT exemption of HMO] medical services through participating physicians
while insurance companies simply undertake to
HMO is exempt from VAT under Sec. 109(G), NIRC. indemnify the insured for medical expenses incurred
The amounts earmarked and eventually paid by up to a pre-agreed limit. In the present case, the VAT
MEDICARD to the medical service providers do not is a tax on the value added by the performance of
form part of gross receipts for VAT purposes. An the service by the taxpayer. It is, thus, this service
HMO like MEDICARD is principally engaged in the and the value charged thereof by the taxpayer that
sale of services. Its VAT base and corresponding is taxable under the NIRC. For this Court to subject
liability is, thus, determined under Section 108(A) the entire amount of MEDICARD's gross receipts
of the NIRC as amended by RA No. 9337. without exclusion, the authority should have been
reasonably founded on the language of the statute.
MEDICARD is primarily engaged in arranging for That language is wanting in this case.
coverage or designated managed care services that
are needed by plan holders/members for fixed
prepaid membership fees and for a specified period POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP.
of time, then MEDICARD is principally engaged in the vs. CIR
sale of services. HMO engaged in preventive, 835 SCRA 235 | 2017
diagnostic and curative medical services is not [Sale of business assets under EPIRA VAT exempt]
engaged in the business of an insurance.
Sale of business assets not in the course of trade or
The definition of “gross receipts” of an HMO under business or incident thereto is not subject to VAT.
RR No. 16-2005 merely presumed that the amount The sale of the Pantabangan-Masiway and Magat
received by an HMO as membership fee is the Power Plants by PSALM to private entities is not
HMO’s compensation for their services. As a mere subject to VAT since the sale was made pursuant to
presumption, an HMO is allowed to establish that a PSALM's mandate to privatize NPC generation
portion of the amount it received as membership fee assets, and was not undertaken in the course of
does NOT actually compensate it but some other trade or business. In selling the power plants,
person, which in this case are the medical service PSALM was merely exercising a governmental
providers themselves. In the course of its business, function for which it was created under the EPIRA
its members can either avail of medical services law.
from MEDICARD’s accredited healthcare providers
or directly from MEDICARD. In the former, EXCISE TAXES
MEDICARD would not be actually providing the
actual healthcare service; Thus based on industry CIR vs. SMC
practice, MEDICARD informs its would-be member 815 SCRA 563 | 2017
beforehand that 80% of the membership fee would [Excise tax on San Mig Light as a new brand not a variant of
be earmarked for medical utilization and only 20% Pale Pilsen; Reclassification made by BIR is void]
comprises its service fee. In the latter case,
MEDICARD’s sale of its sale of its services is exempt Excise taxes are imposed on the production, sale or
from VAT under Section 109(G) of the NIRC. consumption of specific goods; the excise tax on
beer is a specific tax based on volume, or on a per

liter basis; any reclassification of fermented liquor retail price of each individual package of 5s, 10s, ect.
products should be by act of Congress. shall be the basis of imposing the tax rate provided
they are bundled together by not more than 20
How a new beer product is taxed depends on its sticks: (4 x5s), or (2 x 10s). The lawmakers intended
classification, i.e. whether it is a variant of an to impose the excise tax on every pack of cigarettes
existing brand or a new brand. Variants of a brand that come in 20 sticks.
that were introduced in the market after January 1, The BIR regulation imposing the tax in packs less
1997 are taxed under the highest tax classification of than 20 sticks is null and void and without authority.
any variant of the brand. On the other hand, new It amended the law.
brands are initially classified and taxed according to
their suggested net retail price, until a survey is TAX REMEDIES
conducted by the Bureau of Internal Revenue to
determine their current net retail price in CIR vs. ASALUS CORP.
accordance with the specified procedure. 818 SCRA 543 | 2017
[Assessment 3 years, exception 10 years]
San Mig Light is a new brand and not a variant of
existing brand. BIR’s reclassification of San Mig GENERAL RULE: Sec. 203, NIRC 1997: prescriptive
Light from new brand to variant of existing brand is period to make an assessment, 3 years after the last
not authorized due to the reclassification freeze day prescribed by law for the filing of the return;
under Sec. 143, NIRC (as amended by RA 9334). The
reclassification of fermented liquors should be by EXCEPTION: Sec. 222 (A), false or fraudulent return
Congress not by BIR. with intent to evade tax or of failure to file a return,
period is 10 years from the discovery of the falsity,
A variant under the Tax Code has a technical fraud or omission.
meaning. It is determined by the brand (name) or
logo of the beer product. A variant is determined by Sec. 248(B), NIRC: there is prima facie evidence of a
the brand (name) of the beer product, whether it false return if there is a substantial under
was formed by prefixing or suffixing a modifier to declaration of taxable sales, receipt or income in an
the root name of the alleged parent brand, or amount exceeding 30% of what is declared in the
whether it carries the same logo or design. returns.
"San Mig Light" and "Pale Pilsen" do not share a root

word. Neither is there an existing brand in the list CIR v. PDI
(Annexes C-1 and C-2 of the Tax Code) called "San 821 SCRA 350 | 2017
Mig" to conclude that "Light" is a suffix rendering [Prescriptive period to make assessment; Defective waiver will
"San Mig Light" as its "variant." "San Mig Light" not toll prescriptive period]
should be considered as one brand name.
Sec. 203, NIRC 1997: Prescriptive period to assess is
The purpose behind the definition was to properly 3 years subject to exceptions under Sec. 222, NIRC.
tax brands that were presumed to be riding on the But filing of a fraudulent return implies that the act
popularity of previously registered brands by being is intentional and done with intent to evade the
marketed under an almost identical name with a taxes, the filing of a false return can be intentional
prefix, suffix, or a variant. It seeks to address price or due to honest mistake.
differentials employed by a manufacturer on similar
products differentiated only in brand or design. The entry of wrong information due to mistake,
Specifically, the provision was meant to obviate any carelessness, or ignorance, without intent to evade
tax avoidance by manufacturing firms from the sale tax, does not constitute a false return. In this case,
of lower priced variants of its existing beer brands, there is no enough evidence to prove fraud or
thus, falling in the lower tax bracket with lower intentional falsity on the part of PDI. Indeed, the
excise tax rates. To favor government, a variant of a Waivers executed by the BIR and PDI were meant to
brand is taxed according to the highest rate of tax extend the three-year prescriptive period, and
for that particular brand. would have extended such period were it not for the
defects found. This further shows that at the outset,
the BIR did not find any ground that would make the
PURISIMA vs. PHIL. TOBACCO INSTITUTE assessment fall under the exceptions. Clearly, the
822 SCRA 632 | 2017 defects in the Waivers resulted to the non-extension
[Excise tax on cigarettes packed in 20s, taxing in less than 20s is of the period to assess or collect taxes, and made the
void] assessments issued by the BIR beyond the three-
year prescriptive period void.
Sec. 145(C), NIRC: The excise tax on cigarettes
packed by machine is imposed per packed of 20 BIR cannot shift the blame to the taxpayer for issuing
sticks. In case of cigarettes packed in not more than defective waivers. The Court has ruled that the BIR
20 sticks, whether in 5 sticks, 10 sticks, and other cannot hide behind the doctrine of estoppel to cover
packaging combinations below 20 sticks, the net its failure to comply with RMO 20-90 and RDAO 05-
01 which were issued by the BIR itself. A waiver of files in writing with the Commissioner a claim for
the statute of limitations is a derogation of the credit or refund within two (2) years after the
taxpayer's right to security against prolonged and payment of the tax or penalty: Provided, however,
unscrupulous investigations and thus, it must be that a return filed showing an overpayment shall be
carefully and strictly construed. Since the three considered as a written claim for credit or refund.
Waivers in this case are defective, they do not
produce any effect and did not suspend the three- A claimant for refund must first file an
year prescriptive period under Section 203 of the administrative claim for refund before the CIR, prior
NIRC. to filing a judicial claim before the CTA. Notably,
both the administrative and judicial claims for
refund should be filed within the two (2)-year
MEDICARD PHILS. vs. CIR prescriptive period.
822 SCRA 444 | 2017
[LOA is a pre-requisite to an assessment not an LN] As per Section 229 of the NIRC, the claimant is
allowed to file the latter even without waiting for
Letter of Authority (LOA) is essential and required the resolution of the former in order to prevent the
before an examination/assessment be ordinarily forfeiture of its claim through prescription.
undertaken upon the taxpayer. An assessment
issued without an LOA is void being a violation of In cases involving a final withholding tax, the 2-year
due process. The letter notice (LN) cannot be period commences to run from the time the refund
converted into an LOA even if issued by the CIR. is ascertained, i.e., the date such tax was paid, and
Sec. 6, NIRC allows the taxpayer to be assessed not upon the discovery by the taxpayer of the
through best-evidence obtainable, inventory taking, erroneous or excessive payment of taxes. On the
or surveillance among others has nothing to do with other hand, in cases involving corporate income
the LOA. They are methods of examining the taxes, the period is reckoned from the time the Final
taxpayer to arrive at the correct taxes. There is a Adjustment Return or the Annual Income Tax Return
great difference between an LOA and LN. PAN and was filed since only then would it be possible to
FAN are null and void if no LOA was issued in the determine whether it paid an amount exceeding its
conduct of the examination even done under Sec. 6, annual income tax liability.
NIRC.
The six (6)-year period provided under the principle
of solutio indebiti does not apply in tax refund cases
DEAN: Remember that before an examiner could institute the because there is a binding relation between the
assessment proceedings, the examiner should be armed of what taxing authority and the withholding agent.
we call a Letter of Authority (LOA). Moreover, the NIRC, a special law, explicitly provides
for a mandatory period for claiming a refund or taxes
The LOA is a prerequisite to an assessment, not the Letter Notice erroneously paid.
(LN). There is a Letter Notice that you will be under examination.
Is that already a valid authority to conduct an examination? SC Section 204, NIRC, provides the CIR with, inter alia,
said NO because the prerequisite to a valid assessment before the authority to grant tax refunds. In this relation,
examining the business records of a taxpayer, you must serve Section 229 of the same Code provides for the
upon the taxpayer a LOA not LN. proper procedure in order to claim for such refunds.
As may be gleaned from the foregoing provisions, a
claimant for refund must first file an administrative
METRO BANK vs. CIR claim for refund before the CIR, prior to filing a
822 SCRA 496 | 2017 judicial claim before the CTA.
[Claim for refund under Sec. 229 NIRC is 2 years from payment
or filing of the tax returns] Notably, both the administrative and judicial claims
for refund should be filed within the two (2)-year
Sec. 229, NIRC 1997, period to file claim for refund prescriptive period indicated therein, and that the
is 2 years from payment or filing of the Final or claimant is allowed to file the latter even without
Annual ITR where the refund is ascertained, and waiting for the resolution of the former in order to
not upon the discovery by the taxpayer of the prevent the forfeiture of its claim through
erroneous or excessive payment of taxes. prescription. In this regard, case law states that "the
primary purpose of filing an administrative claim [is]
Sec. 204, NIRC: CIR has the authority to grant to serve as a notice of warning to the CIR that court
refunds. But the claimant must first file an action would follow unless the tax or penalty alleged
administrative claim before the CIR prior to the filing to have been collected erroneously or illegally is
of a judicial claim before the CTA (Sec. 229, NIRC and refunded.
RA 9282-exclusive appellate jurisdiction of CTA on
refund). To clarify, Section 229 of the Tax Code -then Section
306 of the old Tax Code -however does not mean
Under Section 204, NIRC, no credit or refund of taxes that the taxpayer must await the final resolution of
or penalties shall be allowed unless the taxpayer its administrative claim for refund, since doing so
would be tantamount to the taxpayer's forfeiture of Division.” As explained in CE Luzon Geothermal

its right to seek judicial recourse should the two (2)- Power Company, Inc. v. Commissioner of Internal
year prescriptive period expire without the Revenue, 768 SCRA 269 (2015), as amended decision
appropriate judicial claim being filed. is a different decision, and thus, is a proper subject
of a motion for reconsideration. In this case, the
CIR’s failure to move for a consideration of the
DEAN: We discussed last time that in the filing of a claim for Amended Decision of the CTA Division is a ground
refund under Section 229, this is different from the refund of the for the dismissal of its Petition for Review before the
zero-rated VAT of the NIRC. What is in 229 is for those excessive CTA En Banc. Thus, the CTA En Banc did not err in
and erroneously collected taxes. The period is 2 years from the denying the CIR’s appeal on procedural grounds.
payment or filing of annual tax returns and not upon the Due to this procedural lapse, the Amended Decision
discovery of the taxpayer of the erroneous or excessive payment has attained finality insofar as the CIR is concerned.
of taxes. The CIR, therefore, may no longer question the
merits of the case before this Court.
So if you discovered later on that you erroneously paid taxes and
lumampas na sya from 2 years since you made the payment or 2
years from the filing of the annual tax return, then your claim for CIR v. LANCASTER PHILS.
refund is already barred because it is not counted from discovery. 831 SCRA 1 | 2017
[Even with a valid LOA, assessment is void if it included a tax
Remember that both your administrative claim for refund and period not covered by LOA]
your judicial claim should fall within the 2 year period. Unlike in
VAT where the period for the administrative claim is 2 years and A valid LOA does not necessarily clothe validity to an
the judicial claim may or may not be filed within the same 2 year assessment issued on it, as when the revenue
period. So it's not mandatory that the judicial claim for the excess officers designated in the LOA act in excess or
input VAT claim should be invoked within the 2 year period. That outside of the authority granted them under said
requirement however, is mandatory for Section 229. LOA. In the present case, the subject LOA specified
that the examination should be for the taxable year
In this case of Metrobank, while the BIR has the authority to grant 1998 only but the subsequent assessment issued
refund claims, the claimant must first file an administrative claim against Lancaster involved disallowed expenses
before the BIR commissioner prior to filing a judicial claim before covering the next fiscal year, or the period ending 31
the CTA. March 1999. The taxable year covered by the
assessment being outside of the period specified in
The 6 year period under solutio indebiti or the principle of unjust the LOA in this case, the assessment issued against
enrichment does not apply to tax cases because there is a binding Lancaster is void.
relationship between the taxing authority and the taxpayer.
Moreover, special law ang NIRC and so the specific period under The CTA has jurisdiction to rule on the issue of the
it should be followed. scope of authority of the revenue officers to conduct
the examination of Lancaster’s books of accounts
and accounting records. The law vesting unto the
ASIATRUST DEV’T BANK vs. CIR CTA its jurisdiction is Section 7 of RA No. 1125, as
823 SCRA 648 | 2017 amended by RA 9282, which provides that the
[Abatement of tax liability; MR mandatory before going to CTA jurisdiction of the CTA is not limited only to cases
en banc] which involve decisions or inactions of the CIR on
matters relating to assessments or refunds but also
Tax abatement; Sec. 204 (B), NIRC; tax abatement includes other matters arising from the NIRC or
application will be deemed approved only upon related laws administered by the BIR.
issuance of a termination letter to consider the tax
assessment closed and terminated. CIR has the It is clear that the issue on whether the revenue
power to abate or cancel a tax liability. officers who had conducted the examination on
Lancaster exceeded their authority pursuant to LOA
MR is mandatory before going to CTA en banc. In No. 00012289 may be considered as covered by the
order for the CTA En Banc to take cognizance of an terms “other matters” under Section 7 of RA No.
appeal via a petition for review, a timely motion for 1125 or its amendment, RA No. 9282. The authority
reconsideration or new trial must first be filed with to make an examination or assessment, being a
the CTA Division that issued the assailed decision or matter provided for by the NIRC, is well within the
resolution. Failure to do so is a ground for the exclusive appellate jurisdiction of the CTA.
dismissal of the appeal as the word “must” indicates
that the filing of a prior motion for reconsideration The CTA can resolve an issue which was not raised
is mandatory, and not merely directory. by the parties. Under Section 1, Rule 14 of AM No.
05-11-07-CTA, or the Revised Rules of the Court of
The same is true in the case of an amended decision. Tax Appeals, the CTA is not bound by the issues
Section 3, Rule 14 of the same rules defines an specifically raised by the parties but may also rule
amended decision as “any action modifying or upon related issues necessary to achieve an orderly
reversing a decision of the Court En Bank or in disposition of the case. Thus, the CTA Division was,
therefore, well within its authority to consider in its the exclusive original jurisdiction of the CIR. To allow
decision the question on the scope of authority of the DOJ Secretary to settle the dispute is null and
the revenue officers who were named in the LOA void.
even though the parties had not raised the same in
their pleadings or memoranda.
CIR v. SYSTEMS TECHNOLOGY INSTITUTE, INC.;
G.R. NO. 220835 | 26 JULY 2017
DEAN: When there is a decision in the CTA and it is against the [3 year assessment under Sec. 203 NIRC and waiver of the
taxpayer, or even when the decision is against the BIR, the period]
remedy of the adverse party is to go to the CTA en banc. Prior to
the CTA en banc, you must however, file an MR first before going Section 203 of the NIRC of 1997, as amended, limits
to the CTA. This is mandatory. So the MR is not discretionary for the CIR's period to assess and collect internal
the adverse party and it is also required before going to the SC, revenue taxes to three (3) years counted from the
na mag MR muna. last day prescribed by law for the filing of the return
or from the day the return was filed, whichever
Example: Nag-decision yung CTA and favorable to Taxpayer so comes later. Thus, assessments issued after the
ang mag-MR nito ay ang CIR. On MR, the CTA issued an amended expiration of such period are no longer valid and
decision favorable to the CIR. Mag-MR ka pa ba? YES. Mag-MR effective.
muna ang taxpayer before going to the CTA.
The primary reason behind the prescriptive period
In CIR vs Lancaster, the LOA was valid pero the letter of authority on the CIR's right to assess or collect internal
kasi, it should provide or state there the tax period you are being revenue taxes is to safeguard the interests of
investigated. In this case here, the assessment was void because taxpayers from unreasonable investigation. Any
it included a tax period not covered by the LOA. Therefore the extension or waiver of the period to assess or collect
assessment covering the different period, being outside the should be before the expiration of the period under
period specified in the LOA, the assessment issued against Sec. 222, NIRC. Any assessment made in violation
Lancaster is null and void. thereof is void.
A procedural note: For a valid waiver of the statute of limitations for

the assessment and collection of taxes under
Normally kasi when disputes arise between government Section 222(b) of the NIRC, the following
agencies, it is settled and adjudicated by the DOJ, or SolGen or procedures must be complied with: (1) The waiver
the GOCC. So what happens if there is a tax dispute between must be in the proper form prescribed by BIR
government agencies? Dun pa rin ba sa DOJ, SolGen or GOCC? No issuance RMO 20- 90; (2) The waiver must be signed
more. It is with the BIR. Because it has special jurisdiction on tax by the taxpayer himself or his duly authorized
disputes. representative; (3) The waiver should be duly
notarized; (4) The CIR or the revenue official
authorized must sign the waiver indicating that the
POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP. BIR has accepted and agreed to the waiver; (5) Both
vs. CIR the date of execution by the taxpayer and date of
835 SCRA 235 | 2017) acceptance by the Bureau should be before the
[CIR has jurisdiction of tax dispute between gov’t agencies and expiration of the period of prescription or before
BIR not DOJ, OSG & GOCC] the lapse of the period agreed upon in case a
subsequent agreement is executed; and (6) The
PD 242: all disputes and claims solely between waiver must be executed in three copies.
government agencies and offices, including GOCCs
shall be administratively settled or adjudicated by These requirements are mandatory and must strictly
the Sec. of Justice, the SolGen, or the Gov’t be followed. Tested against the requirements of
Corporate Counsel, depending on the issues and RMO 20-90 and relevant jurisprudence, the waivers
government agencies involved. Intragovernmental subject of this case suffer from the following
disputes are settled administratively since the defects: (1)At the time when the first waiver took
opposing government offices, agencies and effect, the period for the CIR to assess STI for
instrumentalities are all under the President’s deficiency EWT and deficiency VAT had already
executive control and supervision. prescribed; (2) STI's signatory to the three waivers
had no notarized written authority from the
Tax issues/disputes under the NIRC involving corporation's board of directors; and (3) the waivers
government entities and BIR (even if BIR is a in this case did not specify the kind of tax and the
government agency) fall within the exclusive original amount of tax due.
jurisdiction of the CIR and exclusive appellate
jurisdiction of the CTA (Sec. 4, NIRC). PD 242 is a Considering the foregoing defects in the waivers
general law while NIRC is a special law. executed by STI, the periods for the CIR to assess or
Tax dispute between PSALM and NPC (both GOCCs) collect the alleged deficiency income tax, deficiency
and the BIR (gov’t office), over the imposition of the EWT and deficiency VAT were not extended. The
VAT on the sale of the two power plants, is within assessments subject of this case, which were issued
by the BIR beyond the three-year prescriptive, are Resort to summary administrative remedies without
therefore considered void and of no legal effect. a valid assessment is not in accordance with the
prescribed procedure and in violation of Shell’s right
to substantive due process. CIR's collection efforts is
DEAN: For a valid waiver of the statute of limitations for the not valid institution of a judicial remedy for
assessment and collection of taxes under Section 222(b) of the collection of taxes without an assessment, and any
NIRC, the following procedures must be complied with: such judicial remedy is now barred by prescription.
(1) The waiver must be in the proper form prescribed by
BIR issuance RMO 20- 90; The Court dismisses the present petitions for it
(2) The waiver must be signed by the taxpayer himself or cannot allow the CIR to collect any excise tax
his duly authorized representative; deficiency from Shell by mere issuance of the 1998
(3) The waiver should be duly notarized; and 2002 Collection Letters. CIR had failed to comply
(4) The CIR or the revenue official authorized must sign the with the prescribed procedure for collection of
waiver indicating that the BIR has accepted and agreed unpaid taxes through summary administrative
to the waiver; remedies and, thus, violated taxpayer’s right to due
(5) Both the date of execution by the taxpayer and date of process.
acceptance by the Bureau should be before the
expiration of the period of prescription or before the In the normal course of tax administration and
lapse of the period agreed upon in case a subsequent enforcement, the BIR must first make an
agreement is executed; and assessment then enforce the collection of the
(6) The waiver must be executed in three copies. amounts so assessed. "An assessment is not an
action or proceeding for the collection of taxes. x x
x It is a step preliminary, but essential to warrant
PAL vs. CIR/CIR vs. PAL distraint, if still feasible, and, also, to establish a
G.R. NO. 206079-80/206309 | 17 JANUARY 2018 cause for judicial action."
[CTA can review matters on appeal including other factual
matters not presented in the admin claim] In the present case, it is clear from the wording of
the 1998 and 2002 Collection Letters that the CIR
CTA can still review factual matters even not intended to pursue, through said collection letters,
presented in the administrative claim before the CIR. summary administrative remedies for the
While the Commissioner has the right to hear a collection of respondents' alleged excise tax
refund claim first, if he or she fails to act on it, it will deficiencies for the Covered Years. In fact, in the
be treated as a denial of the refund, and the Court respondent Shell's case, the collection letters were
of Tax Appeals is the only entity that may review this already followed by the BIR's issuance of Warrants
ruling. This does not preclude the appellate court of Garnishment and Distraint and/or Levy against it.
from considering evidence that was not presented in
the administrative claim in the Bureau of Internal Absent a previously issued assessment supporting
Revenue in view of Republic Act No. 1125, as the 1998 and 2002 Collection Letters, it is clear that
amended by RA 9282 stating that the Court of Tax petitioner's attempts to collect through said
Appeals is a court of record. Thus, the review of the collection letters as well as the subsequent Warrants
Court of Tax Appeals is not limited to whether or not of Garnishment and Distraint and/or Levy are void
the Commissioner committed gross abuse of and ineffectual. If an invalid assessment bears no
discretion, fraud, or error of law, as contended by valid fruit, with more reason will no such fruit arise
the Commissioner. As evidence is considered and if there was no assessment in the first place.
evaluated again, the scope of the Court of Tax
Appeals' review covers factual findings. Petitioner is already barred by prescription from
issuing an assessment against respondents for
deficiency excise taxes for the Covered Years.
DEAN: We already discussed the appellate jurisdiction of the CTA. Resultantly, this also bars petitioner from
This will include other matters not brought up in the undertaking any summary administrative remedies,
administrative claim and if raised on appeal before the CYA, can i.e., distraint and/or levy, against respondents for
that be within the jurisdiction? YES. Because review powers of collection of the same taxes.
CTA include all other matters even though not presented in the
administrative claim. DEAN: So we have a basic rule in the case of CIR vs. Shell that the
government cannot collect without prior assessment. There is
only one exception when no assessment is required and that is
when it is for criminal action.
So when you pursue collection or administrative remedies like
levy or distraint, this will require prior assessment. Unlike a
CIR vs. PILIPINAS SHELL criminal action where there i s no need or assessment. In the
G.R. No. 197945 | 09 JULY 2018 normal course of tax collection and enforcement, the BIR must
[ASSESSMENT & COLLECTION PERIODS, NO COLLECTION first make an assessment of the tax to be collected. It is a
WITHOUT A PRIOR ASSESSMENT] preliminary step essential to warrant distraint and to establish a
cause for judicial action.
Review Ad Cautelam is not deemed instituted with

the criminal case for tax evasion.
GAW vs. CIR
G.R. No. 222837 | 23 JULY 2018 The CTA recognized the separate and distinct
[CIVIL LIABILITY IN CRIMINAL TAX CASE IS DIFFERENT FROM character of the Petition for Review from the
THE CIVIL ACTION QUESTIONING THE TAX ASSESSMENT] criminal case. What is deemed instituted with the
criminal action is only the government's recovery of
The civil action filed by the petitioner to question the the taxes and penalties relative to the criminal case.
FDDA is not deemed instituted with the criminal The remedy of the taxpayer to appeal the disputed
case for tax evasion. Civil action to protest the tax assessment is not deemed instituted with the
assessment is different from the criminal action to criminal case. To rule otherwise would be to render
collect the tax where the civil liability is deemed nugatory the procedure in assailing the tax
instituted. deficiency assessment.
What is deemed instituted with the criminal action

is only the action to recover civil liability arising from DEAN: The civil liability in the criminal tax case is different from
the crime. Civil liability arising from a different the civil action questioning the tax assessment. In the criminal tax
source of obligation, such as when the obligation is case, whether there is acquittal or conviction, there must be a
created by law, such civil liability is not deemed finding or determination of civil liability.
instituted with the criminal action. The remedy of
the taxpayer to appeal the disputed assessment is This is different from the civil action questioning the tax
not deemed instituted with the criminal case. To rule assessment. The remedy of the taxpayer to appeal the disputed
otherwise would be to render nugatory the assessment is not deemed instituted with the criminal case.
procedure in assailing the tax deficiency assessment.
In other words, to rule otherwise would render nugatory the
It is well-settled that the taxpayer's obligation to pay procedure in assailing the tax deficiency because these are 2
the tax is an obligation that is created by law and separate remedies. While you are are disputing the assessment,
does not arise from the offense of tax evasion, as you cannot prevent the government from running after you for
such, the same is not deemed instituted in the violation of a tax law. Pwede yang sabayin.
criminal case.
The civil action for the recovery of civil liability for LIHAYLIHAY vs. TREASURER OF THE PHILS
taxes and penalties that is deemed instituted with G.R. No. 192223 | 23 JULY 2018
the criminal action is not the Petition for Review Ad [INFORMER’S REWARD]
Cautelam filed by taxpayer in disputing the
assessment filed in the CTA. The grant of an informer's reward for the discovery,
conviction, and punishment of tax offenses is a
Under Sections 254 and 255 of the NIRC, the discretionary quasi-judicial matter that cannot be
government can file a criminal case for tax evasion the subject of a writ of mandamus. It is not a legally
against any taxpayer who willfully attempts in any mandated ministerial duty.
manner to evade or defeat any tax imposed in the
tax code or the payment thereof. The crime of tax This reward cannot be given to a person who only
evasion is committed by the mere fact that the makes sweeping averments about undisclosed
taxpayer knowingly and willfully filed a fraudulent wealth, rather than specific tax offenses, and who
return with intent to evade and defeat a part or all fails to show that the information which he or she
of the tax. It is therefore not required that a tax supplied was the undiscovered pivotal cause for the
deficiency assessment must first be issued for a revelation of a tax offense, the conviction and/or
criminal prosecution for tax evasion to prosper. punishment of the persons liable, and an actual
recovery made by the State. Indiscriminate,
While the tax evasion case is pending, the BIR is not expendable information negates a clear legal right
precluded from issuing a final decision on a disputed and further impugns the propriety of issuing a writ
assessment, such as what happened in this case. In of mandamus. The grant of an informer's reward is
order to prevent the assessment from becoming not a readily demandable entitlement.
final, executory and demandable, Section 9 of R.A.
No. 9282 allows the taxpayer to file with the CTA, a Under Section 282 of the National Internal Revenue
Petition for Review within 30 days from receipt of Code of 1997, as amended, an information given by
the decision or the inaction of the respondent. an informer shall merit a reward only when it
The tax evasion case filed by the government against satisfies certain formal and qualitative parameters.
the erring taxpayer has, for its purpose, the As a matter of form and procedure, that information
imposition of criminal liability on the latter. While must be voluntarily given, definite, and sworn to.
the Petition for Review filed by the petitioner was Qualitatively, that information must be novel and,
aimed to question the FDDA and to prevent it from subsequently, prove itself effective.
becoming final. The stark difference between them
is glaringly apparent. As such, the Petition for
The objects of petitioner's attempts at obtaining an disputed assessment from petitioner granting or
informer's reward are not even tax cases. It is denying the same, whether in whole or in part.
obvious from the evolved statutory provisions-from
Section 1 of Republic Act No. 2338 to Section 282 of Petitioner failed to prove that it sent a notice of
the National Internal Revenue Code of 1997, as assessment and that it was received by respondent.
amended-that an informer's reward under their The failure of petitioner to prove the receipt of the
auspices is proper only in cases of "frauds upon the assessment by respondent would necessarily lead to
internal revenue or customs laws, or violations of the conclusion that no assessment was issued.
any of the provisions thereof." Hence, not entitled
to informer’s reward. It is clear that the right of petitioner to assess
respondent has already prescribed and respondent
Information is novel when it is "not yet in the is not liable to pay the deficiency tax assessment.
possession of the Bureau of Internal Revenue" and The period of collection has also prescribed.
"not refer[ring] to a case already pending or
previously investigated or examined." Information
has shown itself to be effective not only when it DEAN: So the law imposes a substantive requirement not merely
leads "to the discovery of frauds upon the internal a formal requirement so before you collect there must be a valid
revenue laws or violations of any of [its] provisions," assessment otherwise it will be a violation of due process.
but also when that discovery in tum enables "the
recovery of revenues, surcharges and fees and/or
the conviction of the guilty party and/or the CIR vs. CEBU HOLDINGS
imposition of any of the fine or penalty." In lieu of G.R. No. 189792 | 20 JUNE 2018
enabling the conviction of the guilty party and the [REFUND CLAIM UNSUBSTANTIATED THEN OPT TO CARRY-
imposition of fines or penalties, information is also OVER, WHEN PRE-ASSESSMENT NOT REQUIRED]
effective when the discovery of tax offenses leads
the offender to offer "to compromise the violation." It is incumbent upon the CIR to issue a final
A mere offer, however, is not enough; it must have assessment notice and demand letter for the
actually been accepted and collected. Regardless of payment of taxpayer's deficiency tax liability for
whether a compromise or conviction ensues, actual taxable year 2003 without need of pre-assessment
recovery is indispensable: "should no revenue, notice under Sec. 228.
surcharges or fees be actually recovered or
collected, such person shall not be entitled to a In Section 228 (c), NIRC 1997 provides that PAN shall
reward." not be issued but a FAN: “(c) When a taxpayer who
opted to claim a refund or tax credit of excess
creditable withholding tax for a taxable period was
DEAN: This case is nonsense. Si Marvic Leonen ang ponente. determined to have carried over and automatically
Lihay-lihay is asking for Informer’s Reward because he is the applied the same amount claimed against the
source of information regarding Marcos wealth. He is asking for estimated tax liabilities for the taxable quarter or
trillions as Informer’s Reward. Dami nyang case finile. This case quarters of the succeeding taxable year.”
discusses the basis for Informer’s Reward. A nuisance case.
Umabot pa naman ng SCRA. 😂 Considering that respondent's prior year's excess
credits have already been fully applied against its
2002 income tax liability, the Pl6,194,108.00
CIR vs. BPI unsubstantiated tax credits in taxable year 2002
G.R. No. 224327 | 11 JUNE 2018 could no longer be carried over and applied against
[SERVICE OF ASSESSMENT IS A SUBSTANTIVE REQUIREMENT] its income tax liability for taxable year 2003. Thus,
the amount of Pl6,194,108.00 as prior year's excess
The law imposes a substantive, not merely a formal, credits should be deleted, making respondent liable
requirement. To proceed heedlessly with tax for income tax in the amount of P8,540, 182.00 for
collection without first establishing a valid taxable year 2003.
assessment is evidently violative of the cardinal
principle in administrative investigations: that In this case, no pre-assessment notice is required
taxpayers should be able to present their case and since respondent taxpayer carried over to taxable
adduce supporting evidence. Although taxes are the year 2003 the prior year's excess credits which have
lifeblood of the government, their assessment and already been fully applied against its income tax
collection "should be made in accordance with law liability for taxable year 2002.
as any arbitrariness will negate the very reason for
government itself. We cannot subscribe to respondent's reasoning. The
ruling of the CTA First Division and the CTA En Banc
Petitioner insists that respondent failed to elevate clearly affects respondent's income tax liability for
the tax assessment against it to the CTA within the taxable year 2003 precisely because respondent
required period. Respondent, on the other hand, carried over the amount of P16,194,108.00 as prior
claims that it never received any final decision on the year's excess credits, to which it is not entitled.
Respondent is once again trying to evade the
adverse effect of the ruling of the CT A First Division

that respondent (petitioner therein) failed to A timely motion for reconsideration or new trial
substantiate almost all of its claimed prior year's must first be filed with the CTA Division that issued
excess credits, especially since respondent already the assailed decision or resolution in order for the
carried over and applied the amount of CTA En Banc to take cognizance of an appeal via a
P16,194,108.00 as prior year's excess creditable tax petition for review. Failure to do so is a ground for
against the income tax due for the succeeding the dismissal of the appeal as the word "must"
taxable year 2003. To reiterate, the CTA First indicates that the filing of a prior motion is
Division already ruled that respondent (petitioner mandatory, and not merely directory.
therein) failed to substantiate its prior year's excess
credits of P30,150,767.00 except for the amount of
P288,076.04, which can be applied against PPA vs. DAVAO CITY
respondent's income tax liability for taxable year G.R. No.190324 | 06 JUNE 2018
2002. Thus, since respondent's prior year's excess [CTA JURISDICTION INCLUDES ALL OTHER RELIEF RELATED TO
credits have already been fully applied against its THE TAX CASE; CBAA]
2002 income tax liability, the P16,194,108.00
unsubstantiated tax credits in taxable year 2002 When a tax case is pending on appeal with the Court
could no longer be carried over and applied against of Tax Appeals, the Court of Tax Appeals has the
its income tax liability for taxable year 2003. exclusive jurisdiction to enjoin the levy of taxes and
the auction of a taxpayer's properties in relation to
that case. It is improper to bring an injunction relief
DEAN: Instances where pre-assessment is not required. before the Court of Appeals to restrain the auction
(a) When the finding for any deficiency tax is the result of proceedings. Bringing another relief to another
mathematical error in the computation of the tax as court is forum shopping.
appearing on the face of the return; or
(b) When a discrepancy has been determined between the The Court of Tax Appeals had jurisdiction over
tax withheld and the amount actually remitted by the petitioner's appeal to resolve the question of
withholding agent; or whether or not it was liable for real property tax. The
(c) When a taxpayer who opted to claim a refund or tax real property tax liability was the very reason for the
credit of excess creditable withholding tax for a taxable acts which petitioner wanted to have enjoined. It
period was determined to have carried over and was, thus, the Court of Tax Appeals, and not the
automatically applied the same amount claimed Court of Appeals, that had the power to preserve the
against the estimated tax liabilities for the taxable subject of the appeal, to give effect to its final
quarter or quarters of the succeeding taxable year; or determination, and, when necessary, to control
(d) When the excise tax due on excisable articles has not auxiliary and incidental matters and to prohibit or
been paid; or restrain acts which might interfere with its exercise
(e) When an article locally purchased or imported by an of jurisdiction over petitioner's appeal. Thus,
exempt person, such as, but not limited to, vehicles, respondents' acts carried out pursuant to the
capital equipment, machineries and spare parts, has imposition of the real property tax were also within
been sold, traded or transferred to non exempt the jurisdiction of the Court of Tax Appeals.
persons.
There is no dispute that the Central Board of
Assessment Appeals decision constitutes one of the
CITY OF MANILA vs. COSMOS BOTTLING cases covered by the Court of Tax Appeals' exclusive
G.R. No. 196681 | 27 JUNE 2018 jurisdiction.
[MR IN CTA MANDATORY]
Despite the clear wording of the law placing this case
The filing of a motion for reconsideration or new within the exclusive appellate jurisdiction of the
trial to question the decision of a division of the Court of Tax Appeals, petitioner insists that the
Court of Tax Appeals (CTA) is mandatory and Court of Appeals could have issued the relief prayed
indispensable requirement for filing an appeal for despite the provisions of Republic Act No. 9282,
before the CTA en banc. An appeal brought directly considering its urgent need for injunctive relief.
to the CTA En Banc is dismissible for lack of
jurisdiction. The rule against forum shopping is violated when a
party institutes more than one action based on the
The CTA En Banc was correct in interpreting Section same cause to increase its chances of obtaining a
18 of R.A. No. 1125, as amended by R.A. 9282 and favorable outcome. Thus, when a party institutes a
R.A. No. 9503, as requiring a prior motion for case while another case is pending, where there is
reconsideration or new trial before the same an identity of parties and an identity of rights
division of the CTA that rendered the assailed asserted and relief prayed for such that judgment in
decision before filing a petition for review with the one case amounts to res judicata in the other, it is
CTA En Banc. Failure to file such motion for guilty of forum shopping.
reconsideration or new trial is cause for dismissal of
the appeal before the CTA En Banc.
To reverse a court determination that a party has With the enactment of R.A. No. 1125, the CTA was
violated the rule against forum shopping, this party granted the exclusive appellate jurisdiction to
must show that one or more of the requirements for review by appeal all cases involving disputed
forum shopping does not exist. To this end, assessments of internal revenue taxes, customs
petitioner attempts to differentiate the petition filed duties, and real property taxes. In general, it has
with the Court of Appeals from the appeal filed with jurisdiction over cases involving liability for payment
the Court of Tax Appeals. It argues that the right of money to the Government or the administration
asserted before the Court of Appeals is its right to of the laws on national internal revenue, customs,
peacefully possess its ports, free from the threat of and real property.
losing the properties due to tax liabilities, whereas
the right asserted before the Court of Tax Appeals is This Court, however, declares that the Court of Tax
its right to be exempt from real property tax, as a Appeals may likewise take cognizance of cases
government instrumentality. Petitioner further directly challenging the constitutionality or validity
argues that the reliefs sought from the two (2) of a tax law or regulation or administrative issuances
tribunals were not the same-it sought a final relief (revenue orders, revenue memorandum circulars,
from payment of real property taxes on its ports rulings).
from the Court of Tax Appeals; on the other hand, it
sought a temporary and immediate relief from From the clear purpose of R.A. No. 1125 and its
respondents' acts from the Court of Appeals, while amendatory laws, the CTA, therefore, is the proper
the issue of taxability was still pending with the forum to file the appeal. Matters calling for technical
Court of Tax Appeals. knowledge should be handled by such court as it has
the specialty to adjudicate tax, customs, and
assessment cases.
STEEL CORP. vs. BOC & BIR
GR. No. 220502 | 12 FEBRUARY 2018 Section 11, Paragraph 4 of R.A. No. 1125, as
[CTA JURISDICTION ON ALL TAX CASES AND MATTERS RELATED amended by R.A. No. 9282, embodies the rule that
THERETO EVEN IF TAXPAYER IS UNDER CORPORATE REHAB] an appeal to the CTA will not suspend the payment,
levy, distraint, and/or sale of any property of the
The issue is whether a corporation placed under taxpayer for the satisfaction of his tax liability as
corporate rehabilitation can avail the benefits of provided by existing law. Nonetheless, when, in the
Section 19 of R.A. No. 10142, which issue is opinion of the CTA, the collection may jeopardize
cognizable by the RTC and whose decision may be the interest of the Government and/or the taxpayer,
appealed to the CA or the Supreme Court and not to it may suspend the said collection and require the
any other court like the CTA. CTA has exclusive taxpayer either to deposit the amount claimed or to
appellate jurisdiction on the issue on the waiver of file a surety bond for not more than double the
taxes under Sec. 19 of FRIA including injunctive amount. Yet the requirement of deposit or surety
relief. bond may be dispensed with.
SEC. 19. Waiver of Taxes and Fees Due to the

National Government and to Local Government DEAN: This is a good case. We were waiting na lumabas ito sa last
Units (LGUs). -Upon issuance of the year’s Bar, pero wala man. This case involves corporate rehab.
Commencement Order by the court, and until the Under section 19 of the FRIA, waiver of taxes and fees due to
approval of the Rehabilitation Plan or dismissal of national government if you pursue a case for insolvency.
the petition, whichever is earlier, the imposition of
all taxes and fees, including penalties, interests and SEC. 19. Waiver of Taxes and Fees Due to the
charges thereof, due to the national government or National Government and to Local Government
to LGUs shall be considered waived, in furtherance Units (LGUs). - Upon issuance of the
of the objectives of rehabilitation. Commencement Order by the court, and until the
approval of the Rehabilitation Plan or dismissal of
The Court of Tax Appeals has undoubted jurisdiction the petition, whichever is earlier, the imposition of
to pass upon the constitutionality or validity of a tax all taxes and fees, including penalties, interests and
law or regulation when raised by the taxpayer as a charges thereof, due to the national government or
defense in disputing or contesting an assessment or to LGUs shall be considered waived, in furtherance
claiming a refund. It is only in the lawful exercise of of the objectives of rehabilitation.
its power to pass upon all matters brought before it,
as sanctioned by Section 7 of Republic Act No. 1125, What happens if di ka binigyan ng waiver ng rehab courts? You go
as amended. to the CTA. The issue is whether a corporation placed under
corporate rehab can avail of the benefits of Sec. 19. The Court of
R.A. No. 1125 and its amendatory laws, the CTA, Tax Appeals has undoubted jurisdiction to pass upon the
therefore, is the proper forum to file the appeal. constitutionality or validity of a tax law or regulation when raised
Matters calling for technical knowledge should be by the taxpayer as a defense in disputing or contesting an
handled by such court as it has the specialty to assessment or claiming a refund. It is only in the lawful exercise
adjudicate tax, customs, and assessment cases. of its power to pass upon all matters brought before it, as
sanctioned by Section 7 of Republic Act No. 1125, as amended.
For as long as they are tax cases.you can bring them up to the Section 11 of R.A. No. 1125, as amended by R.A. No. 9282,53
CTA, not to the regular courts anymore. Like in this case, hindi sya which embodies the rule that an appeal to the CTA from the
gibigyan ng waiver ng rehab court, your action now is to proceed decision of the CIR will not suspend the payment, levy, distraint,
to the CTA, because this talks about taxes. So hindi na sa regular and/or sale of any property of the taxpayer for the satisfaction of
courts, even though it involves corporate rehab. his tax liability as provided by existing law. When, in the view of
the CTA, the collection may jeopardize the interest of the
Government and/or the taxpayer, it may suspend the said
BIR vs. CTA & CHEVRON collection and require the taxpayer either to deposit the
GR 195320 | 23 APRIL 2018 amount claimed or to file a surety bond.
[CERTIORARI NOT AVAILABLE IF APPEAL IS PROPER]
So you can go now to the CTA to pursue the relief you seek.
Time and again, this Court emphasized that the
special civil action for certiorari is a limited form of Additional note:
review and a remedy of last recourse. Section 1, Rule
65 of the Rules of Court provides that the special civil So this is common procedure ha, even if it’s a tax case, if appeal
action of certiorari may only be invoked when there is available, you cannot go on certiorari. So when the BIR will deny
is no appeal, nor any plain, speedy and adequate your protest, your remedy is not certiorari because of grave
remedy in the course of law. abuse of discretion, your remedy is appeal to CA. That is basic,
whether tax case or not. That’s it. See you on deliberations.
A writ of certiorari is not a substitute for a lost 🙏🙏🙏
appeal. When an appeal is available, certiorari will
not prosper especially if the appeal was lost because
of one's own negligence or error in the choice of
remedy, even if the ground is grave abuse of END
discretion. (MKGumboc)
For cases before the CTA, a decision rendered by a

division of the CT A is appealable to the CTA En Banc
as provided by Section 18 of R.A. No. 1125, as
amended by R.A. No. 9282.
Section 2 of Rule 4 of the Revised Rules of the CT A

also states that the CTA En Banc has exclusive
appellate jurisdiction relative to the review of the
court divisions' decisions or resolutions on motion
for reconsideration or new trial, in cases arising from
administrative agencies such as the BIR.
Clearly, the CT A-Special First Division disposed of

the case in its entirety and no other issues were left
to further rule upon. Therefore, the appropriate
remedy to challenge the Resolution dated
December 3, 2010 is an ordinary appeal, not a
petition for certiorari.
BIR had every opportunity to elevate the matter to

the CTA En Banc but chose not to avail itself of this
remedy. Even on this ground alone, the Court may
already dismiss the present petition.
The Court finds no grave abuse of discretion on the

part of the CT A-Special First Division in issuing the
assailed resolutions. Neither can the BIR, having
chosen not to avail itself of the remedy of appeal,
now substitute certiorari for an appeal· as both
remedies are mutually exclusive, and not alternative
or successive.
DEAN:
GR: Appeal will not suspend the collection of tax.
EXCEPTION:

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SECOND EXAM TAXATION LAW REVIEW

Dean Manuel P. Quibod || 4 Manresa 2018-2019

ESTATE DONOR’S A. Decedent’s Interest

Transfers with retention or reservation of rights

You transferred a property but there is a condition that you retain

But if the property was passed on to him under a special power

1. That franchise which must be exercised in the DEDUCTIONS

2. Claims against the estate

(b) if the laws of the foreign country of which the

(b) Eighty percent (80%) of the value, if the prior

(d) Forty percent (40%) of the value, if the prior

So, in proportion ng claims against the estate of

7. Family Home 3. Property Previously Taxed (Vanishing Deduction) –

(B) The transmission or delivery of the inheritance or legacy by

 Within one (1) year from the death.

 FURTHER EXCEPTION: unless it is a bonafide sale and at Valuation:

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |11

isolated transaction would not be automatically considered as

One guiding rule in determining whether the transaction or sales

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |12

(a) Shareholders or investors as share in the Legend:

Philippines or is a signatory effectively subject such sale to

(1) Successful establishment and implementation of

(4) Services rendered to persons engaged in SECTION 109. Exempt Transactions. –

(BB) Sale or lease of goods or properties or the performance

Section 40. (C) Exchange of Property

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |18

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |20

SEC. 115. Power of the Commissioner to Suspend the Business

(C) Withholding of Creditable Value-added Tax. – The

kasi may other party involved or government agency to assist you

(c) When a taxpayer who opted to claim a refund or

In 2018, they came out with an amendment na ibinalik ang SUMMARY:

You have the instance of imprescriptibility of taxes under

can the government ask for an extension of the 3-year

prescribed in section 203 of NIRC, both the commissioner and

In other words, the government, the commissioner and the PAN

taxpayer should agree. It’s not unilateral, it’s an agreement by

In Section 228, you have the manner of the protest.

When the commissioner or his duly authorized representative

DEAN: That is the notice of informal conference.

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ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |26

In 223, the running of the statute of limitations on general DELINQUENT TAXES

The prescriptive period is 5 years to file the criminal

(2) Criminal action

In the case of criminal action under section, you have

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |28

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |29

Another remedy, you have compromise under Section 204. In the

ABATEMENT OR CANCELLATION OF TAX LIABILITY

Failure on the part of Revenue Officers to comply with the

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |31

(b) When a discrepancy has been determined between

Preliminary Assessment Notice (PAN)

Final Assessment Notice (FAN)

If this PAN is ignored by the taxpayer, a final assessment notice

taxes, fees or charges, and any increment thereto resulting

SEC. 281. Prescription for Violations of any Provision of this

The term of prescription shall not run when the offender is

Modes of Collecting Deficiency Tax

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |33

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |34

Q: What if there is inaction?