WEEK 3 – REMEDIES OF THE TAXPAYER
At the time the PAN and FAN was issued to Reyes,
A. PROTESTING AN ASSESSMENT
1. INFORMED IN WRITING OF THE LAW AND
FACTS
REYES VS CIR (2006)
FACTS: In 1997, The Regional District Office of South
Makati conducted an investigation on the estate left
by Maria C. Tancinco who died in 1993. Based on the
old Tax Code, a Letter of Authority was issued to
Reyes, a heir, without the submission of preliminary
findings. In 1998, the CIR issued a Final Assessment
Notice (FAN) demanding a payment of 14.9M of taxes
including surcharge and interest. The new Tax
Reform Act was also made effective in 1998.
In 1999, a Warrant of Distraint was issued due to
nonpayment. In 1999 and 2000, Reyes offered
compromises but both were rejected. Upon
notification of the auction sale date, Reyes filed a
petition in the Court of Tax Appeals (CTA). CTA then
resolved that the CIR should refrain from Distraint.
Subsequently, CIR filed a motion stating that CTA has
no jurisdiction in the case because assessment were
already final and executory and the petition of Reyes
was out of time, which the CTA denied. Based on BIR
RR 6-2000 and RMO 42-2000, Reyes applied for
compromise and paid 1M on Jan 29 2001.
In 2001, Reyes filed a motion that the assessment is
settled through a perfected compromise. CTA favored
the CIR declaring that without the approval of NEB,
the compromise cannot be perfected. Therefore, CTA
denied the petition and ordered Reyes to pay the
deficiency estate tax of 19.5M plus delinquency
interest.
Court of Appeals partly granted the petition in favor of
Reyes. The Court ruled the petition as unmeritorious.
ISSUE: WON the assessment against the estate is
valid and whether the compromise entered into is
valid.
RULING: No. It is made clear and mandatory under
Section 228 of the new Tax Code that taxpayers shall
be informed in writing of the law and the facts on
which the assessment is made, otherwise, the
assessment is void. And a void assessment cannot be
a basis for a valid compromise.
The estate was not informed about the assessment in
accordance with the requirement prescribed by
Section 228 but merely notified of the findings by the
CIR, who relied on the provisions of the old Tax Code.
RA 8424 or Tax Reform Act of 1997 was already in
effect. Although the investigation was started in 1997,
the provision regarding the procedure for protesting
an assessment, being remedial in nature and which
does not create new or take away vested rights, can
be applied retroactively. Lastly, any legal proceedings
emanating from a void assessment, including distraint
and compromise, is invalid.
2. PERIOD WITHIN WHICH TO FILE AN
ADMINISTRATIVE PROTEST
3. SUBMISSION OF ADDITIONAL
DOCUMENTS
CIR VS FIRST EXPRESS PAWNSHOP (2009)
FACTS: CIR issued assessment notices against
Respondent for deficiency income tax, VAT and
documentary stamp tax on deposit on subscription
and on pawn tickets. Respondent filed its written
protest on the assessments. When CIR did not act on
the protest during the 180-day period, respondent
filed a petition before the CTA.
ISSUE: WON Respondent’s right to dispute the
assessment in the CTA prescribed?
RULING: NO. The assessment against Respondent
has not become final and unappealable. It cannot be
said that respondent failed to submit relevant
supporting documents that would render the
assessment final because when respondent
submitted its protest, respondent attached all the
documents it felt were necessary to support its claim.
Further, CIR cannot insist on the submission of proof
of DST payment because such document does not
exist as respondent claims that it is not liable to pay,
and has not paid, the DST on the deposit on
subscription.
The term "relevant supporting documents" are those
documents necessary to support the legal basis in
disputing a tax assessment as determined by the
taxpayer. The BIR can only inform the taxpayer to
submit additional documents and cannot demand
what type of supporting documents should be
submitted. Otherwise, a taxpayer will be at the mercy
of the BIR, which may require the production of
documents that a taxpayer cannot submit. Since the
taxpayer is deemed to have submitted all supporting
documents at the time of filing of its protest, the 180-
day period likewise started to run on that same date.
4. FINAL DECISION OF THE CIR
SURIGAO ELECTRIC VS CTA
FACTS: Petitioner Surigao Electric Co., grantee of a
legislative electric franchise, contested a warrant of
distraint and levy to enforce the collection from "Mainit
Electric" of a deficiency franchise tax plus surcharge.
Thereafter the Commissioner, by letter dated April 2,
1961, advised the petitioner to take up the matter with
the General Auditing Office, enclosing a copy of the
4th Indorsement of the Auditor General dated
November 23, 1960.
This indorsement indicated that the petitioner's liability
for deficiency franchise tax for the period from
September 1947 to June 1959 was P21,156.06,
excluding surcharge. Subsequently, in a letter to the
Auditor General dated August 2, 1962, the petitioner
asked for reconsideration of the assessment,
admitting liability only for the 2% franchise tax in
accordance with its legislative franchise and not at the
higher rate of 5% imposed by Sec. 259 of the NIRC,
which latter rate the Auditor General used as basis in
computing the petitioner's deficiency franchise tax.
An exchange of correspondence between the
petitioner, on the one hand, and the Commissioner
and the Auditor General, on the other, ensued, all on
the matter of the petitioner's liability for deficiency
franchise tax. The controversy culminated in a revised
assessment dated April 29, 1963 in the amount of
P11,533.53, representing the petitioner's deficiency
franchise-tax and surcharges thereon for the period
from April 1, 1956 to June 30, 1959. The petitioner
then requested a recomputation of the revised
assessment in a letter to the Commissioner dated
June 6, 1963. The Commissioner, however, in a letter
dated June 28, 1963 denied the request for
recomputation.
Petitioner appealed to the CTA which was
subsequently dismised on the ground that the appeal
was filed beyond the thirty-day period of appeal
provided by Sec. 11 of Republic Act 1125.
ISSUE: WON the petitioner's appeal to the CTA was
time-barred.
RULING: YES. To sustain the petitioner's contention
that the Commissioner's letter of June 28, 1963
denying its request for further amendment of the
revised assessment constitutes the ruling appealable
to the tax court and that the thirty-day period should,
therefore, be counted from July 16, 1963, the day it
received the June 28, 1963 letter, would, in effect,
leave solely to the petitioner's will the determination of
the commencement of the statutory thirty-day period,
and place the petitioner — and for that matter, any
taxpayer — in a position, to delay at will and on
convenience the finality of a tax assessment. This
absurd interpretation espoused by the petitioner
would result in grave detriment to the interests of the
Government, considering that taxes constitute its life-
blood and their prompt and certain availability is an
imperative need.
OCEANIC WIRELESS NETWORK INC VS CIR, CTA
FACTS: Oceanic Wireless is a corporation filed its
1995 Annual Corporate Annual Income Tax Return in
April 1996. In December 1996, petitioner received a
letter from the Revenue District Officer authorizing
Revenue Officers to examine the books of accounts
and other records for the period January to December
1995. Oceanic executed a Waiver of Defense of
Prescription of the NIRC within which respondent may
assess petitioner for deficiency taxes. A preliminary
report of tax assessment was issued and petitioner
was requested to attend an informal conference to
discuss the result of the investigation done on the
books. Petitioner received again another pre-
assessment notice this time with Details of
Discrepancies. The company was advised to file a
written protest or set up an office conference to
discuss the deficiencies. Since the authority of
respondent to assess was about to prescribe in July
31 1999, demand letters were sent on July 30, 1999.
Petitioner’s contention: The assessment notices for
taxable year 1995 are void for having been issued
beyond the 3-yr prescriptive period as provided under
the NIRC. Since the tax return was filed in April 1995,
respondent has 3 years to assess the petitioner.  But
the assessment was done only in 1999, hence the
action has already prescribed. 
Respondent’s contention: Petitioner executed a
waiver extending the period of the respondent
pursuant to the provisions in the Tax Code.
ISSUE: Whether or not the BIR’s right to assess has
already prescribed/ Whether or not the deficiency
assessments are void for failure to state the law and
facts to which the assessments are made/ Whether or
not petitioner is liable for deficiency income tax.
RULING:
1. No. BIR’s right has not yet prescribed and the
assessment notices are valid. At the time of
the execution of the waiver, there was no
preliminary assessment issued yet against
petitioner where the kind and amount of tax
could be referred to. Such details cannot be
specified in the waiver since it was still
unascertainable at the time. Since the period
of respondent to assess was extended up to
July 31, 1999 in view of the waiver, the
deficiency assessments issued against
petitioner on July 30, 1999 are within the
period allowed by law.
2. No. The purpose of Section 228 of the
National Internal Revenue Code of 1997 in requiring
that "the taxpayer be informed of the law and facts on
which assessment is made" is to give the taxpayer the
opportunity to refute the findings of the examiner and
give a more accurate and detailed explanation
regarding the proposed assessment. In the case,
there was substantial compliance with Sec. 228 of the
NIRC because petitioner was able to protest the
assessments intelligently, thereby implying that it had
actual knowledge of the factual and legal bases of the
assessments. The fact that petitioner was furnished
the computation and brief explanation of how the
assessment for deficiency quarterly income tax was
arrived at, the requirement under Section 228 of the
1997 Tax Code is deemed complied with. And even if
petitioner was not furnished of the detailed
computation of the deficiency quarterly income tax,
the same was discussed with petitioner during the
informal conference.  issued a warrant of distraint and levy, which was
3. Yes. Petitioner having failed to comply with
the requirement of the law in disputing an
assessment, the same became final, executory and
demandable.  Sec. 228 states that:
x x x If the protest is denied in whole or in part, or is
not acted upon within one hundred eighty (180)
daysfrom submission of documents, the taxpayer
adversely affected by the decision or inaction may
appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision, or from the
lapse of the one hundred eighty (180)-day period;
otherwise, the decision shall become final, executory
and demandable. Undoubtedly, a taxpayer has sixty
(60) days from the filing of the protest to submit the
relevant documents to support its protest, otherwise,
the assessment becomes final. Within one hundred
eighty(180) days from the submission of the relevant
documents, the respondent should act on the protest.
If the respondent rendered his decision within the
period or failed to act on it, the remedy of the taxpayer
is to file within thirty (30) days from the receipt of the
decision or from the lapse of one hundred eighty(180)
days, an appeal to this court, otherwise, the
assessment will become final, executory and
demandable. x x x
In the case, petitioner failed to submit supporting
documents contrary to what was jointly stipulated by
the parties. Hence, the reckoning of the 180-day
period would be the day the protest was filed which
was August 16, 1999. However, respondent failed to
render his decision within 180 days or until February
12, 2000. The remedy of petitioner was to file within
30 days there from an appeal with this court which
would be until March 14, 2000. But since the Petition
for Review was filed only on May 12, 2000, the same
was definitely filed beyond the date prescribed by
law.
CIR VS UNION SHIPPING CORP & CTA
FACTS: In a letter dated December 27, 1974 herein
petitioner Commissioner of Internal Revenue
assessed against Tee Fong Hong Ltd. and/or herein
private respondent Union Shipping Corporation, the
total sum of Php583,155.22 as deficiency income
taxes due for the years 1971 and 1972.
Said letter was received on January 4, 1975, and in a
letter dated January 10, 1975, received by petitioner
on January 13, 1975, private responded protested the
assessment. Petitioner, without ruling on the protest,
served on private respondent’s counsel, Clemente
Celso, on November 25, 1976. In a letter dated
November 27, 1976, received by petitioner on
November 29, 1976, private respondent reiterated its
request for reinvestigation of the assessment and for
the reconsideration of the summary collection thru the
warrant of distraint and levy.
Petitioner again, without acting on the request for
reinvestigation and reconsideration of the warrant of
distraint and levy, filed a collection suit before branch
XXI of the the CFI of Manila and docketed as civil
case no. 120459 against private respondent.
Summons in the said collection case issued to private
respondent on December 28, 1978.
ISSUE: WON issuance of writ of distraint and levy is a
proof of finality of an assessment
RULING: Yes. The main thrust of their petition is that
the issuance of a warrant distraint and levy is proof of
the finality of an assessment because it is the most
drastic action of all media of enforcing the collection of
tax, and is tantamount to an outright denial of a
motion for reconsideration of an assessment. Among
others, petitioners contends that the warrant of
distraint and levy was issued after respondent
corporation filed a request for reconsideration of
subject assessment, thus constituting petitioner’s final
decision in the disputed assessment.
We deem it appropriate to state that the commissioner
of internal revenue should always indicate to the
taxpayer is clear and unequivocal language whenever
his action on an assessment questioned by a
taxpayer constitute his final determination on the
disputed assessment as contemplated by sections 7
and 11 of RA 1125 as amended. On the basis of this
statement indubitably showing that the
commissioner’s communicated action is his final
decision on the contested assessment, the aggrieved
taxpayer would then be able to take recourse to the
tax court at the opportune time. Without needless
difficulty, the taxpayer would be able to determine
when his right to appeal to the tax court accrues. This
rule of conduct would also obviate all desire and
opportunity on the part of the taxpayer to continually
delay the finality of the assessment — and,
consequently, the collection of the amount demanded
as taxes – by repeated request for recomputation and
reconsideration. On the part of the commissioner, this
would encourage his office to conduct a careful and
thorough study of every questioned assessment and
render a correct and definite decision thereon in the
first instance. This would also deter the commissioner
from unfairly making the taxpayer grope in the dark
and speculate as to which action continues the
decision appealable to the tax court of greater imports
this rule of conduct would must a pressing need for
fair play, regularity, and orderliness in the
administrative action.
Under the circumstances, the commissioner of
internal revenue, not having clearly signified his final
action on the disputed assessment, legally the period
to appeal has not commenced to run. Thus, it was
only when private respondent received the summons
on the civil suit for collection of deficiency income on
December 28, 1978 that the period of appeal
commenced to run.
CIR VS ISABELA CULTURAL CORP
FACTS: Isabela Cultural Corp.(ICC for brevity) , a
domestic corporation received from BIR assessment
notice no. FAS-1-86-90000680 (680 for brevity) for
deficiency income tax in the amount of PhP
333,196.86 and assessment notice no. FAS-1-86-90-
000681 (681 for brevity) for deficiency expanded
withholding tax in the amount of PhP 4,897.79,
inclusive of surcharge and interest both for the taxable
year 1986.  The deficiency income tax of PhP 333,196
arose from BIR disallowance of ICC claimed
expenses deductions for professional and security
services billed to and paid by ICC in 1986.
The deficiency expanded withholding tax of
PhP4,897.79 was allegedly due to the failure of ICC to
withhold 1% expanded withholding tax on its claimed
PhP244,890 deduction for security services.
Court of Tax Appeal and Court of Appeal affirmed that
the professional services were rendered to ICC in
1984 and 1985, the cost of the service was not yet
determinable at that time, hence, it could be
considered as deductible expenses only in 1986 when
ICC received the billing statement for said service.  It
further ruled that ICC did not state its interest income
from the promissory notes of Realty Investment and
that ICC properly withheld the remitted taxes on the
payment for security services for the taxable year
1986.
Petitioner contend that since ICC is using the accrual
method of accounting, the expenses for the
professional services that accrued in 1984 and 9185
should have been declared as deductions from
income during the said years and the failure of ICC to
do so bars it from claiming said expenses as
deduction for the taxable year 1986.
ISSUE:  WON CA is correct in sustaining the
deduction of the expenses for professionals and
security services form ICC gross income? /  WON CA
correctly held that ICC did not understate its interest
income from the promissory notes of Realty
Investment, Inc; that ICC withheld the required 1%
withholding tax from the deduction for security
services / WON Isabela who uses accrual method can
claim on 1986 only
RULING:
1. NO. Revenue Audit Memorandum Order
No.1-2000 provides that under the accrual
method of accounting, expenses not being
claimed as deductions by a tax payer in the
current year when they are incurred cannot be
claimed as deductions from the income for the
succeeding year.
2. Sustaining the finding of the CTA and CA that
no such understatement exist and that only
simple interest computation and not a
compounded one should have been applied
by the BIR.  There is no indeed no stipulation
between the latter and ICC on the application
of compound interest.
Under Article 1959 of the Civil Code, unless
there is a stipulation to the contrary, interest
due should not further earn interest.
3. No. The requisites for the deductibility of
ordinary and necessary trade, business, or
professional expenses, like expenses paid for
legal and auditing services, are: 
(a) the expense must be ordinary and necessary; 
(b) it must have been paid or incurred during the
taxable year; - qualified by Section 45 of the
National Internal Revenue Code (NIRC) which
states that: "[t]he deduction provided for in this
Title shall be taken for the taxable year in
which ‘paid or accrued’ or ‘paid or incurred’,
dependent upon the method of accounting
upon the basis of which the net income is
computed
 (c)  it must have been paid or incurred in carrying
on the trade or business of the taxpayer; and
(d) it must be supported by receipts, records or
other pertinent papers.
Revenue Audit Memorandum Order No. 1-2000,
provides that under the accrual method of accounting,
expenses not being claimed as deductions by a
taxpayer in the current year when they are incurred
cannot be claimed as deduction from income for the
succeeding year. Thus, a taxpayer who is authorized
to deduct certain expenses and other allowable
deductions for the current year but failed to do so
cannot deduct the same for the next year.
The accrual method relies upon the taxpayer’s right to
receive amounts or its obligation to pay them, in
opposition to actual receipt or payment, which
characterizes the cash method of accounting.
Amounts of income accrue where the right to receive
them become fixed, where there is created an
enforceable liability. Similarly, liabilities are accrued
when fixed and determinable in amount, without
regard to indeterminacy merely of time of payment.
The accrual of income and expense is permitted when
the all-events test has been met. This test requires:
(1) fixing of a right to income or liability to pay; and (2)
the availability of the reasonable accurate
determination of such income or liability.
The all-events test requires the right to income or
liability be fixed, and the amount of such income or
liability be determined with reasonable accuracy.
However, the test does not demand that the amount
of income or liability be known absolutely, only that a
taxpayer has at his disposal the information
necessary to compute the amount with reasonable
accuracy. The all-events test is satisfied where
computation remains uncertain, if its basis is
unchangeable; the test is satisfied where a
computation may be unknown, but is not as much as
unknowable, within the taxable year. The amount of
liability does not have to be determined exactly; it
must be determined with "reasonable accuracy."
Accordingly, the term "reasonable accuracy" implies
something less than an exact or completely accurate
amount.
 The propriety of an accrual must be
judged by the facts that a taxpayer knew,
or could reasonably be expected to have
known, at the closing of its books for the
taxable year. 
YABES VS FLOJO & REPUBLIC
FACTS: Doroteo Yabes of Calamaniugan Cagayan, is
an exclusive dealer of products of the International
Harvester Macleod, Inc., received on or about May 1,
1962, a letter from the CIR dated March 27, 1962,
demanding payment of the amount of P15,976.81, as
commercial broker's fixed and percentage taxes plus
surcharges and the sum of P2,530 as compromise
penalty allegedly due from Yabes for the years 1956-
1960; 
On May 11, 1962, Doroteo Yabes, through his
counsel, filed with the Commissioner's Office his letter
protesting the assessment of commercial broker's
fixed and percentage taxes plus penalties against him
on the ground that his agreements with the
International Harvester Macleod, Inc. were of
purchase and sale, and not of agency, hence he
claimed he was not able to pay such kind of taxes; 
Thereafter, there ensued an exchange of
correspondence between the lawyers of Doroteo
Yabes and the Commissioner; the Commissioner in a
letter dated August 3, 1962, informed Doroteo Yabes
that he acted as a commercial broker "in accordance
with the ruling of this Office in the case of Cirilo D.
Constantino;" i
n turn, Doroteo Yabes, in a letter dated August 22,
1962, requested for the reinvestigation, or review of
the case by the appellate division of the Bureau of
Internal Revenue in accordance with standing rules,
regulations or practice on the matter;  Yabes also
wrote the Commissioner on August 24, 1962,
requesting that the appeal be held in abeyance
pending final decision of the Case of Cirilo D.
Constantino;  
in reply, the Commissioner informed Doroteo Yabes in
a letter dated September 18, 1962, that the latter's
request for reinvestigation was denied on the ground
that he has "not submitted any evidence to offset the
findings of this Office as to warrant a reinvestigation
thereof”, but eight days later or on September 26,
1962, the Commissioner wrote a letter advising
Doroteo Yabes that "the administrative appeal ... will
be held in abeyance pending the resolution of the
issues in a similar case (obviously referring to the
aforesaid Constantino case)"; To give time for the
Commissioner to study the case and several other
cases similar thereto, the lawyers of Doroteo Yabes
agreed to file, and their client, Doroteo Yabes did file
a tax waiver on October 20, 1962, extending the
period of prescription to December 31, 1967; Then
Doroteo Yabes died and no estate proceedings were
instituted for the settlement of his estate; his widow
also died during the pendency of the case; the
petitioners are the children of the deceased taxpayer.
On March 14, 1966, the Court of Tax Appeals decided
the Constantino "test" case. The Court of Tax Appeals
ruled that agreements entered into by Constantino
with the International Harvester Macleod, Inc. were of
purchase and sale, and not of agency, hence no
commercial broker's fixed and percentage fees could
be collected from the said taxpayer. However this
Court on February 27, 1970, in G.R. No. L-25926
reversed the Court of Tax Appeals and ruled in favor
of the CIR .
After a lapse of about five years, the heirs of the
deceased Doroteo Yabes, through their lawyers,
received a letter from the Commissioner dated July
27, 1967, requesting that they "waive anew the
Statute of Limitations" and further confirming the
previous understanding that the final resolution of the
protest of the deceased Doroteo Yabes was "being
held in abeyance until the Supreme Court renders its
decision on a similar case involving the same factual
and legal issues brought to it on appeal" (referring to
the Constantino "test" case); conformably with the
request of the Commissioner, the heirs of Doroteo
Yabes filed a revised waiver further extending the
period of prescription to December 31, 1970.
Thereafter, no word was received by the petitioners or
their lawyers during the interim of more than three (3)
years, but on January 20, 1971, petitioners as heirs of
the deceased Doroteo Yabes received the summons
and a copy of the complaint filed by the
Commissioner.
Taking the complaint as the final decision of the
Commissioner on the disputed assessment against
the deceased taxpayer Doroteo Yabes, petitioners
filed on February 12, 1971, a petition for review of
said disputed assessment with the Court of Tax
Appeals; 18 later on the same day, February 12, 1971,
petitioners filed their answer to the complaint of the
Commissioner before the Court of First Instance of
Cagayan; 19 and alleged therein, by way of special
defense, that the Court of Tax Appeals has exclusive
jurisdiction of the action and that there is another
action of the same nature between the parties relating
to the same assessment pending before the Court of
Tax Appeals;
ISSUE: Whether or not the assessment made by the
CIR against the deceased taxpayer Doroteo Yabes,
as contained in the letter dated March 27, 1962, has
become final, executory and incontestable, after
Doroteo Yabes had received the Commissioner's
letter dated August 3, 1962, denying the latter's
protest against the said assessment on September
18, 1962 and his failure to appeal therefrom within the
30-day period contemplated under Section 11, of
Republic Act 1125.
HELD: NO
There is no reason for Us to disagree from or reverse
the Court of Tax Appeals' conclusion that under the
circumstances of this case, what may be considered
as final decision or assessment of the Commissioner
is the filing of the complaint for collection in the
respondent Court of First Instance of Cagayan, the
summons of which was served on petitioners on
January 20, 1971, and that therefore the appeal with
the Court of Tax Appeals in CTA Case No. 2216 was
filed on time. 36 
The respondent Court of First Instance of Cagayan
can only acquire jurisdiction over this case filed
against the heirs of the taxpayer if the assessment
made by the CIR had become final and incontestable.
If the contrary is established, as this Court holds it to
be, considering the aforementioned conclusion of the
Court of Tax Appeals on the finality and
incontestability of the assessment made by the
Commissioner is correct, then the Court of Tax
Appeals has exclusive jurisdiction over this case.
Petitioners received the summons in Civil Case No. II-
7 of the respondent Court of First Instance of
Cagayan on January 20, 1971, and petitioners filed
their appeal with the Court of Tax Appeals in CTA
Case No. 2216, on February 12, 1971, well within the
thirty-day prescriptive period under Section 11 of
Republic Act No. 1125. The Court of Tax Appeals has
exclusive appellate jurisdiction to review on appeal
any decision of the Collector of Internal Revenue in
cases involving disputed assessments and other
matters arising under the National Internal Revenue
Code.
FISHWEALTH CANNING CORP VS CIR
FACTS: The CIR (respondent), by Letter of Authority
dated May 16, 2000,  ordered the examination of the internal
revenue taxes for the taxable year 1999 of Fishwealth
Canning Corp. (petitioner).  The investigation disclosed that
petitioner was liable in the amount of P2,395,826.88
representing income tax, value added tax (VAT), withholding
tax deficiencies and other miscellaneous
deficiencies.  Petitioner eventually settled these obligations
on August 30, 2000.
The petition is bereft of merit.
Section 228 of the 1997 Tax Code provides that an
assessment
x x x may be protested administratively by filing a request for
reconsideration or reinvestigation within thirty (30) days from
receipt of the assessment in such form and manner as may
be prescribed by implementing rules and regulations.  Within
sixty (60) days from filing of the protest, all relevant
supporting documents shall have been submitted; otherwise,
the assessment shall become final.
If the protest is denied in whole or in part, or is not
acted upon within one hundred eighty (180) days from
submission of documents, the taxpayer adversely affected by
the decision or inaction may appeal to the Court of Tax
Appeals within thirty (30) days from receipt of the said
decision, or from the lapse of the one hundred eighty (180)-
day period; otherwise, the decision shall become final,
executory and demandable. (underscoring supplied)
In the case at bar, petitioner’s administrative protest
was denied by Final Decision on Disputed Assessment
dated August 2, 2005 issued by respondent and
which petitioner received on August 4, 2005.  Under the
above-quoted Section 228 of the 1997 Tax Code, petitioner
had 30 days to appeal respondent’s denial of its protest to the
CTA. 
Since petitioner received the denial of its
administrative protest on August 4, 2005, it had
until September 3, 2005 to file a petition for review before the
CTA Division.  It filed one, however, on October 20, 2005,
hence, it was filed out of time.  For a motion for
reconsideration of the denial of the administrative
protest does not toll the 30-day period to appeal to the CTA.
On petitioner’s final contention that it has a
meritorious case in view of the dismissal of the above-
mentioned criminal case filed against it for violation of the
1997 Internal Revenue Code, the same fails.  For the criminal
complaint was instituted not to demand payment, but to
penalize the taxpayer for violation of the Tax Code.
#2 FACTS: Petitioner was assessed for income tax, Value
Added Tax and withholding tax. After Court of Tax Appeals
issued a Final Decision on Disputed Assessment, Petitioner
filed a Letter of Reconsideration with the CIR instead of
appealing the same to the Court of Tax Appeals within 30
days. The CIR then issued a Preliminary Collection Letter
which prompted the Petitioner to file its Petition with the
Court of Tax Appeals. CIR argued that the Petition with the
Court of Tax Appeals was filed out of time.
ISSUE:Did the filing of a Reconsideration toll the running of
the 30-day period to appeal to the Court of Tax Appeals?
HELD: NO. A Motion for Reconsideration of the denial of the
administrative protest does not toll the 30-day period to
appeal to the Court of Tax Appeals.  include not only decision but also inactions and
ALLIED BANKING CORPORATION VS CIR
FACTS: Allied Banking Corporation received a PAN
from the BIR which it timely disputed. In response, the
BIR issued a Formal Letter of Demand with
Assessment Notices. Instead of protesting the FAN,
the petitioner filed a Petition for Review with the CTA.
The CTA dismissed the Petition stating that it is
neither the assessment nor the formal demand letter
itself that is appealable before it but instead it should
be the decision of the CIR on the disputed
assessment 
ISSUE: Can the Formal Letter of Demand be
construed as the final decision of the CIR appealable
to the CTA under Republic Act 9282?
RULING: YES. This is considered an exception to the
general rule on exhaustion of administrative remedies
since the CIR is considered estopped from claiming
the same principle applies in its case. The tenor of the
demand letter is clear that the CIR had already made
a final decision and that the remedy of the Petitioner
was to appeal the same within 30 days of receipt. This
can be gleaned from the use of the terms “final
decision” and “appeal” which were deemed
unequivocal language pointing to the finality of the
decision. While the Court cited the rules relative to (a)
protesting the FAN and not the PAN and (b) counting
the 30 day period to appeal to the CTA from receipt of
the decision of the CIR and not issuance of the
assessment, this particular case was deemed a clear
exception in view of the CIR’s own actions.
4. INACTION OF COMMISSIONER WITHIN 180
DAYS FROM SUBMISISON OF
DOCUMENTS
RCBC VS CIR
FACTS: RCBC received the final assessment notice
on July 5, 2001. It filed a protest on July 20, 2001.
As the protest was not acted upon, it filed a Petition
for Review with the Court of Tax Appeals (CTA)
on April 30, 2002, or more than 30 days after the
lapse of the 180-day period reckoned from the
submission of complete documents. The CTA
dismissed the Petition for lack of jurisdiction since
the appeal was filed out of time
ISSUE: Has the action to protest the assessment
judicially prescribed?
RULING: YES. The assessment has become final.
The jurisdiction of the CTA has been expanded to
both are jurisdictional such that failure to observe
either is fatal.
However, if there has been inaction, the taxpayer
can choose between (1) file a Petition with the CTA
within 30 days from the lapse of the 180-day period
OR (2) await the final decision of the CIR and
appeal such decision to the CTA within 30 days
after receipt of the decision. These options are
mutually exclusive and resort to one bars the
application of the other. Thus, if petitioner belatedly
filed an action based on inaction, it can not
subsequently file another petition once the decision
comes out.
LACSONA LANDS VS CIR
FACTS: On March 27, 1998, the CIR issued a formal
assessment notice (FAN) to Lascona Land Co., Inc.
demanding the company to pay P753,266.56 income
taxes. Lascona filed a protest on April 20, 1998. CIR
promulgated its decision on March 3, 1999. Lascona
received a copy of the decision on March 12, 1999.
On April 12, 1999, Lascona appealed the decision to
the Court of Tax Appeals. The CIR moved for the
dismissal of the appeal on the ground that under a
revenue regulation issued by the Bureau of Internal
Revenue (RR No. 12-99), if the CIR or its
representative failed to act on a protest within the
180-day period the taxpayer may appeal within 30
days from the lapse of the 180-day period to the CTA
otherwise, the decision shall become final and
executor and that Lascona having failed to appeal
within the said period, CTA has no jurisdiction over is entitled to tax incentives under Presidential Decree
the case No. 66 (EPZA Law)

ISSUE: Whether or not the contention of the CIR is The Bureau of Customs denied the claim for refund.
correct. he CTA ruled for Philpho. The matter was elevated by
the Commissioner of Customs (Commissioner) to the
RULING: No. The SC ruled that the Court of Appeals (CA), which eventually affirmed the
revenue regulation to which the CIR anchored its CTA’s Decision in toto.
contention is invalid. Section 228 of the National
Internal Revenue Code provides that a taxpayer has
two remedies if the CIR failed to act on his protest
within the 180-day period, to wit;
1) the taxpayer adversely affected by the decision
may appeal to the CTA within 30 days from receipt of
the decision, or
2) may appeal to the CTA within 30 days from the
lapse of the one hundred eighty (180)-day period.

From the above provision, the taxpayer was given two

options in case CIR failed to act on their claim. First is
to appeal to the CTA within 30 days from the lapse of
the 180 day period; or second, wait for the CIR to
issue the decision and then appeal, if adverse, to the
CTA within 30 days from the receipt of the decision by
the taxpayer

In the case at bar, Lascona waited for the CIR to

decide on the case and it did not appeal within 30
days from the lapse of the 180-day period. Lascona
received the adverse decision of the CIR on March
12, 1999. It appealed on April 12, 1999 which is still
within the 30-day period to appeal to the CTA.

The revenue regulation in question is invalid because

in effect, it limited the remedy provided for by the law.
Section 228 of the NIRC prevails over the said
revenue regulation. The said
revenue regulation cannot validly take away the
option of the taxpayer to continue waiting, even after
the lapse of the 180 day period, for the CIR to decide
on the case and just appeal, within 30 days from
receipt, if the CIR’s ruling is adverse.

B. RECOVERY OF TAX ERRONEOUSLY OR

ILLEGALLY PAID

COMMISSIONER OF CUSTOMS VS PHILIPPINE

PHOSPATE FERTILIZER CORP

FACTS: Philphos made several purchases from

Petron of fuels and other petroleum products used
directly or indirectly in the manufacture of fertilizers.
Philphos indirectly paid as customs duties

In a letter to the Bureau of Customs, Philphos sought

the refund of customs duties it had paid. being an
enterprise registered with the export processing zone,