TAXPAYERS’ REMEDIES,

ASSESSMENT AND PROTEST

DEPOSITARIO, CHARMANE MAE
ESPINOSA, LOUIS GABRIEL
GALON, CARL DAVED
CONTENTS
1. Remedies of taxpayers
a. Administrative Remedies
b. Judicial Remedies
c. Substantive Remedies
d. Procedural Remedies
2. Types of Taxes
3. Assessment of Taxes
a. Essential Requirements
b. Types of Assessments
c. Forms of Assessments
d. Significance
e. Basis
4. Protest
a. Forms of Protest
b. When to file?
c. Denial of Protest
i. Direct Denial of Protest
ii. Indirect Denial of Protest
5. Relevant Cases decided recently
01
REMEDIES OF
TAXPAYERS
 REMEDY
A method by which a cause of action
can be enforced by law or equity. It is
the procedure or type of action which
may be availed of by the plaintiff as
the means to obtain the relief desired

(Florenz D. Regalado, Remedial Law Compendium)

 TYPES OF REMEDIES UNDER THE
1997 TAX CODE

01 02 03 04
ADMINISTRATIVE JUDICIAL SUBSTANTIVE PROCEDURAL
Remedies available at Remedies that are Remedies provided Remedies involving
the administrative enforced through for by law or law of pleading,
(BIR) level judicial action, which regulation; evidence, jurisdiction,
may be civil or etc.
criminal An essential part or
constituent or
relating to what is
essential
Administrative remedies

The legal remedies available to taxpayers at the administrative level will depend on whether or not
payment of the deficiency tax assessment was made.

Before payment of the deficiency tax assessment, the taxpayer’s remedy is to file a written protest within
30 days from date of receipt of the formal assessment notice. The timely filing of the written protest
against the assessment is mandatory; otherwise, the assessment will become final.

After payment of the deficiency tax assessment was made, his remedy is to file a written claim for refund
or tax credit with the BIR or Department of Finance one stop Shop Center. The taxpayer need not pay the
deficiency tax assessment under protest nor is he required to write a letter to the BIR protesting said
assessment at the time of payment.
Administrative remedies

Before Payment

a. Protest – A protest is a vital document which is a formal declaration of resistance of the taxpayer. It is a
repository of all arguments. It can be used in court in case administrative remedies have been exhausted.
It is also the formal act of the taxpayer questioning the official actuation of the CIR. This is equivalent to a
pleading.

Filing a petition for reconsideration or reinvestigation within 30 days from receipt of assessment. Within
60 days from filing of protest, all relevant supporting documents should have been submitted, otherwise,
the assessment shall become final – cannot be appealed (Sec. 228, 1997 NIRC).

Note: Submission of documents within the 60 day period is optional to the taxpayer.

"That the relevant supporting documents mentioned in the law refers to such documents which the
taxpayer feels would be necessary to support his protest and not what the Commissioner feels should be
submitted, otherwise, taxpayer would always be at the mercy of the BIR which may require production of
such documents which taxpayer could not produce." (Standard Chartered Bank vs. CIR, CTA Case No. 5696,
August 16, 2001)
Administrative remedies

b. Entering into a compromise

(Sec. 204, 1997 NIRC).

Administrative remedies

After Payment

Filing of claim for refund or tax credit within 2 years from date of payment regardless of any supervening
cause (Sec. 229, 1997 NIRC).
Judicial remedies

If the protest is denied in whole or in part or is not acted upon within 180 days from submission of
documents

● Appeal to the Court of Tax Appeals within 30 days from receipt of decision; Or
● 30 days from lapse of the 180-day period
● Otherwise, the decision becomes final, executory and demandable.
Judicial remedies

Civil Action

a. Appeal to the Court of Appeals – within 30 days from receipt of decision on the protest or from the lapse
of 180 days due to inaction of the Commissioner (Sec. 228, 1997 NIRC).

b. Action to recover the net proceeds realized at the sale (Sec. 231, 1997 NIRC); and

In case of the seizure of personal property under claim of forfeiture

c. Action for damages against a revenue officer by reason of any act done in the performance of official
duty (Sec. 227, 1997 NIRC).
Judicial remedies

Criminal Action

a. Filing of criminal complaint against erring BIR officials and employees.

b. Injunction – when the CTA in its opinion, the collection by the BIR may jeopardize taxpayer.

Note: With the enactment of the new CTA law (RA No. 9282) amending RA No. 1125, CTA now has jurisdiction
over criminal cases.
Taxpayer’s remedies
1. PETITION FOR
Before payment of RECONSIDERATION
File written protest
deficiency tax 2. PETITION FOR
within 30 days
assessment: REINVESTIGATION
ADMINISTRATIVE
File written claim of
After payment of
refund or tax credit 2
deficiency tax
years from date of
assessment:
payment Protest is not
Protest is acted upon
denied within 180
days of
Appeal to Court of tax submission of
JUDICIAL Appeals documents
filed within 30 days from
receipt of decision or
from lapse of 180-day
period
Substantive remedies

1. Questioning the constitutionality or validity of tax statutes or regulations

2. Non-retroactivity of rulings
3. Failure to inform the taxpayer in writing of the legal and factual bases of assessment makes it void
4. Preservation of books of accounts and once-a-year examination
5. Publication of RMC and RMO
6. Power of the CIR to distribute or allocate gross income and deductions does not include the power
to impute “theoretical interests” to the controlled taxpayer’s transactions
7. Availment of tax amnesty
Procedural remedies

To give meaning to the due process clause of the Constitution involving tax cases and to implement
the provisions of the Tax Code, Revenue Regulations No. 12-99 prescribes for the following
procedural requirements in the issuance of deficiency tax assessments:

1. Notice of Discrepancy ( Formerly Notice of informal conference)

2. Post-reporting notice
3. Preliminary assessment notice
4. Formal (or Final) Assessment Notice and Letter of Demand
5. Protest Letters must be filed by taxpayers within 30 days from date of receipt of assessment and
demand letter;
6. Reinvestigation
7. Denial of protest by Regional director
8. Administrative appeal to CIR of decision of Regional Director
9. Denial of protest or inaction by Commissioner within 180 days from date of protest or
supplemental protest
10. Appeal to CTA by taxpayer
Procedural remedies

1. Notice of informal conference

NOTE: Revenue Regulation 22-2020 replaced Notice of Informal Conference with Notice of
Discrepancy.

On 15 September 2020, the Bureau of Internal Revenue (“BIR”) released Revenue Regulations (“RR”)
No. 22-2020 which amends RR No. 12-1999 as further amended by RR No. 18-2013 and RR No. 7-The
amendment relates to the due process requirement in the issuance of a Deficiency Tax Assessment.
Procedural remedies

1. Notice of informal conference

REVENUE OFFICER - must conduct his audit within 120 days from the date of issuance and service of the
Letter of Authority. Otherwise, it must be submitted to the head head of the audit office.

NOTE: There must be a grant of authority before any revenue officer can conduct an examination or
assessment. In case there is a change in the assigned revenue officer, a new LOA must be issued
authorizing the new officer to conduct the audit investigation. The authority of revenue officers to conduct
audit investigation goes into the validity of the assessment; thus, any assessment arising from the
conduct of audit examination of a taxpayer‘s books of accounts by a revenue officer who is not duly
authorized to do so is a complete nullity. (Bonifacio vs CIR)

REVENUE OFFICER LOA TAXPAYER

 Procedural remedies

1. Notice of informal conference

Revenue officer informs the taxpayer of his findings as well as factual and legal bases after
the completion of his tax audit in an informal meeting;

Prepares report of examination based on the results of meeting with taxpayer, after
considering factual and legal explanations of taxpayer;

REVENUE OFFICER

Submits written report to Revenue District Officer

Procedural remedies

1. Notice of informal conference

ISSUANCE OF Notice of informal conference

The Revenue officer who audited the taxpayer’s record shall state in his report whether or
not the taxpayer agrees with his findings that the taxpayer is liable for deficiency tax or
taxes

If the taxpayer is not amenable, based on the officer’s submitted report of investigation, the
taxpayer shall be informed, in writing, by the RDO concerned of the discrepancies in the
taxpayer’s payment of internal revenue taxes.
Procedural remedies

1. Notice of informal conference

INFORMAL CONFERENCE

● Shall not exceed 30 days from receipt of notice

Procedural remedies

Notice of Discrepancy (RR No 22-2020)

The regulation provides that in lieu of a Notice of Informal Conference, a Notice of Discrepancy shall now
be issued.

A Notice of Discrepancy shall be issued if, during the course of an investigation conducted by a Revenue
Officer, the taxpayer is found to be liable for deficiency taxes.

The Notice aims to provide the taxpayer with an opportunity to present his position regarding the
discrepancies identified.
Procedural remedies

Notice of Discrepancy

The Revenue Officer who conducted the investigation shall state in the initial report his findings of
discrepancies. Based on the initial report, the taxpayer shall be informed in writing by the Revenue District
Office or Assessment Division/Regional Investigation Division, or the Chief of the Division concerned, if
conducted by the BIR National Office, of the discrepancies in his internal revenue taxes. There shall then
be a “Discussion of Discrepancy”.

This Discussion of Discrepancy shall not extend beyond thirty (30) days from the receipt of the Notice of
Discrepancy. It is during this period that the taxpayer is given the opportunity to explain the discrepancy
and to submit supporting documents, if necessary. The documents may be submitted during the
discussion, or after, should the taxpayer need more time to collate and present the documents. The
taxpayer must submit all the necessary supporting documents within thirty (30) days after the receipt of
the Notice of Discrepancy.
Procedural remedies

Notice of Discrepancy

If after the Discussion of Discrepancy, the taxpayer is still found to be liable for deficiency taxes, and the
taxpayer does not pay the tax or does not agree with the findings, the investigating office and official shall
endorse the case to the reviewing office and approving official in the National Office or Revenue Regional
Office for the issuance of the Preliminary Assessment Notice (“PAN”). The PAN shall be issued within ten
(10) days from the conclusion of the Discussion.

Source:
https://www.dfdl.com/resources/legal-and-tax-updates/philippines-bir-replaces-notice-of-informal-con
ference-with-notice-of-discrepancy-in-tax-assessment-procedure/
Procedural remedies

2. Post-reporting notice

Done by the Revenue District officer within 15 days

TAXPAYER WRITTEN EXPLANATION RDO ASSESSMENT DIVISION

Procedural remedies

3. Preliminary Assessment Notice (PAN)

Done by the Revenue District officer within 15 days

TAXPAYER WRITTEN EXPLANATION CHIEF, ASSESSMENT REGIONAL

ASSESSMENT NOTICE DIRECTOR
DIVISION AND (FOR APPROVAL)
DEMAND
LETTER
Procedural remedies

3. Preliminary Assessment Notice (PAN)

GENERAL RULE. Required to be issued by the BIR.

EXCEPTION:

1. Deficiency is a result of a mathematical error in the computation;

2. Discrepancy has been determined between tax withheld and the amount actually remitted;
3. Automatically applied to the amount claimed;
4. Excise tax due has not been paid;
5. When an article locally purchased or imported by exempt person has been sold, traded, or
transferred to non-exempt person (Sec 228, NIRC)
Procedural remedies

4. Formal (or Final) Assessment Notice and Letter of Demand

REGIONAL CAUSES TO BE
DIRECTOR RELEASED AND
SIGNS FAN & MAILED OR
FLD PERSONAL SERVICE
Procedural remedies

5. Protest Letters must be filed by taxpayers within 30 days from date of receipt of assessment and
demand letter;

● Request for reinvestigation; or

● Motion for reconsideration

TAXPAYER

6. Reinvestigation

7. Denial of protest by Regional director

180 days from date of filing of protest or submission of documentary evidence by taxpayer
Procedural remedies

8. Administrative appeal to CIR of decision of Regional Director

9. Denial of protest or inaction by Commissioner within 180 days from date of protest or
supplemental protest

10. Appeal to CTA by taxpayer

30 days from date of receipt

02
TYPES
OF TAXES
 TYPES OF TAXES

01 02
SELF-ASSESSING TAXES THAT REQUIRE
TAX WHICH DO NOT ASSESSMENT to
REQUIRE ISSUANCE establish liability
OF ASSESSMENT
Self-assessing Tax

● Internal revenue taxes are self-assessing and no further assessment by the government is required
to create the tax liability (Tupaz vs Ulep, SCRA 118)

● The taxpayer himself assess his tax liability, files the tax return and pays the tax within prescribed
dates.

● The collection of such unpaid tax shown in the tax return filed may proceed without any further
assessment, and the five-year prescriptive period to collect the unpaid delinquent tax applies.
Taxes that require assessment

GENERAL RULE. Taxes are self-assessing and therefore does not require the issuance of an
assessment notice in order to establish the tax liability of a taxpayer.

EXCEPTIONS:

1. Tax period of a taxpayer is terminated;

2. Deficiency tax liability arising from a tax audit conducted by the BIR;
3. Tax lien; and
4. Dissolving corporation
03
ASSESSMENT
Assessment

Notice that the amount therein stated is due from a taxpayer as a tax with a demand for payment of the same
within a stated period of time

Official action of an administrative officer in determining the amount of tax due from a tax due from a taxpayer
Assessment

When is it made?

● Taxes should be assessed within three years after the last day prescribed by law for filing of return

● No proceeding in court without assessment for the collection of such taxes shall begun after the expiration of
such period
Assessment

Requirements for valid assessment

1. Final Assesment Notice (FAN)

2. Demand Letter

3. FAN/DL

a) issued in account or covered by a validly issued letter of authority

b) State the factual and legal bases of the assessment and jurisprudence (NIRC) on whoch it
is based; otherwise, it is void

c) Issued within the original prescriptive period prescibed by the law or within the extended
period prescribed as validly agreed between the BIR and the taxpayer; and served by
personal delivery or by registered mail

d) Addressed and serven to the correct person in his/its registered or duly notified new
address
Assessment

Assessment based on presumption

While it is true that tax assessments have the presumption of correctness and regularity in its favor, it is
equally true that assessments should not be based on mere presumptions, no matter how reasonable or
logical the presumption might be (CIR vs Hanex Trading, GR No 136975)

In order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption
of correctness of assessment being a mere presumption cannot be made to rest on another presumption. (CIR
vs Fort Bonifacio Development Corporation, CTA EB Case No 481)

The assessment notice and letter of demand calling for payment of the taxpayer’s deficiency tax shall state the
facts, law, rules and regulations, or jurisprudence on which the assessment is based; otherwise, the formal
letter of demand and assessment notice shall be void.
Assessment

Forms of Assessment

1. Formal Assessment Notice (FAN)

Generally, an assessment refers to FAN (BIR Form No. 1708) which is serially numbered, accountable
form of government.

2. Informal Written Notice

An assessment may also be in the form of a letter or other less formal communications. In order to
constitute an assessment, the notification must contain an outright demand for payment of the amount
alleged due.
Assessment

Significance of Assessment

a) Relevant in proper pursuit of judicial and extra judicial remedies to enforce tax
payer’s liabilities and certain matters that relate to it, such as the imposition of
surcharges and interest

b) In the application of statutes of limitations

c) In establishment of tax liens

d) In estimating the revenues that may be collected by the government in the

coming year
Assessment

Basis of Assessment

The assessment notice and letter of demand calling for payment of the taxpayer’s deficiency tax shall state the
facts, law, rules and regulations, or jurisprudence on which the assessment is based; otherwise, the formal
letter of demand and assessment notice shall be void.
Assessment

When tax assessment is made or deemed made

1. Issue date

The date when said demand letter or assessment notice is released, mailed or sent to the
taxpayer constitutes actual assessment (Republic vs Limaco & De Guzman Commercial Co)

2. Date of service or mailing

Assessment is deemed made when notice is released or mailed to correct taxpayer

3. Date of receipt

Assessment is deemed made on time when notice to this effect is released, mailed, or sent by
the Collector to the taxpayer, even though the same is actually received by the taxpayer upon
the expiration of the prescriptive period. (Basilan Estates, Inc. v Collector)
Assessment

Assessment Notice

Who may sign?

A. Commissioner
B. May be delegated to subordinate officers (VIllamin v CTA)
04
PROTEST
Assessment and Protest
Carl Daved G. Galon
Louis Gabriel Espinosa
Charmane Mae Depositario
TAX PAYERS ● Protest or dispute the
assessment;
ARE GIVEN 2 ● Refund or recover of erroneously

MAIN REMEDIES
or illegally collected taxes
 IF RECONSIDERATION

180 DAYS

15 DAYS 30 DAYS
PERIOD WITHIN CIR OR AUTHORIZED
REPRESENTATIVE TO DECIDE

FLD/
LOA PAN REPLY PROTEST
FAN
IF REINVESTIGATION

60 DAYS 180 DAYS

Notice of
Discrepancy PERIOD WITHIN CIR OR
(RR No 22-2020) SUBMIT AUTHORIZED
DOCUMENTS REPRESENTATIVE TO
DECIDE
LETTER OF AUTHORITY (LOA)

An official document that empowers a revenue officer to examine and scrutinize a

taxpayer's books of accounts and other accounting records, in order to determine the
taxpayer's correct internal revenue tax liabilities. (CIR v. Lancaster PH, CTA [En Banc]
EB No. 352, 2008)
Bonifacio Corporation v. CIR

THE LETTER OF AUTHORITY MUST SPECIFY THE NAME OF THE REVENUE OFFICER CONDUCTING THE AUDIT
INVESTIGATION; OTHERWISE, THE ASSESSMENT IS VOID.

There must be a grant of authority before any revenue officer can conduct an examination or
assessment. In case there is a change in the assigned revenue officer, a new LOA must be issued
authorizing the new officer to conduct the audit investigation. The authority of revenue officers to
conduct audit investigation goes into the validity of an assessment; thus, any assessment arising
from the conduct of audit examination of a taxpayer's books of accounts by a revenue officer who is
not duly authorized to do so is a complete nullity.
REVENUE OFFICER

● Shall conduct his audit within 120 days from the date of issuance and service of
the LOA

● If the final report is not completed within 120-day, a progress report must be
submitted to the head of the audit office.
Notice of Discrepancy (RR No 22-2020)

The regulation provides that in lieu of a Notice of Informal Conference, a Notice of

Discrepancy shall now be issued. A Notice of Discrepancy shall be issued if, during the
course of an investigation conducted by a Revenue Officer, the taxpayer is found to be
liable for deficiency taxes. The Notice aims to provide the taxpayer with an
opportunity to present his position regarding the discrepancies identified.
This Discussion of Discrepancy shall not extend beyond thirty (30) days from the
receipt of the Notice of Discrepancy. It is during this period that the taxpayer is given
the opportunity to explain the discrepancy and to submit supporting documents, if
necessary. The documents may be submitted during the discussion, or after, should
the taxpayer need more time to collate and present the documents. The taxpayer
must submit all the necessary supporting documents within thirty (30) days after the
receipt of the Notice of Discrepancy.
If after the Discussion of Discrepancy, the taxpayer is still found to be liable for
deficiency taxes, and the taxpayer does not pay the tax or does not agree with the
findings, the investigating office and official shall endorse the case to the reviewing
office and approving official in the National Office or Revenue Regional Office for the
issuance of the Preliminary Assessment Notice (“PAN”). The PAN shall be issued within
ten (10) days from the conclusion of the Discussion.
Issuance of Preliminary Assessment Notice (PAN)

● Commissioner or his duly authorised representative finds that proper taxes shall
be assessed, a PAN shall be issued.

● Expect in the following instances:

○ Mathematical Error
○ Tax Withheld and the amount actually remitted
○ Automatically applied the amount Claimed
○ Excise tax due
○ Transerred to non-exempted person
 IF RECONSIDERATION

180 DAYS

15 DAYS 30 DAYS
PERIOD WITHIN CIR OR AUTHORIZED
REPRESENTATIVE TO DECIDE

FLD/
LOA PAN REPLY PROTEST
FAN
IF REINVESTIGATION
● Reply to PAN by the 60 DAYS 180 DAYS
taxpayer within 15 days
from the date of receipt with
the duly authorized PERIOD WITHIN CIR OR
representative of the SUBMIT AUTHORIZED
Commissioner who signed DOCUMENTS REPRESENTATIVE TO
the PAN DECIDE
Issuance of Formal Letter of Demand and Final
Assessment Notice (FLD/FAN)
A. If the taxpayer fails to respond to the PAN within 15-day period, he shall be
considered in default.

B. If the taxpayer responds within the said period but he disagrees with the
findings of deficiency taxes.

C. Before the lapse of the period to file reply to PAN and the taxpayer has not yet
filed his/her response.
● Shall be issued by the Commissioner or his duly authorized representative as in
the case of PAN

● It must state the facts, law rules and regulations or jurisprudence upon which it
is based; otherwise, the assessment shall be VOID. (CIR vs. ENRON Subic Power
Corporation, G.R. No. 166387, January 19, 2009)
But in Samar-I Electric Cooperative vs. CIR (G.R. No. 193100), which staTed that when
the legal and factual bases can be found in a series of correspondence between the
BIR and the taxpayer, there was substantial compliance with the requirements of
Section 228, as the taxpayer was informed in writing.
 IF RECONSIDERATION

180 DAYS

15 DAYS 30 DAYS
PERIOD WITHIN CIR OR AUTHORIZED
REPRESENTATIVE TO DECIDE

FLD/
LOA PAN REPLY PROTEST
FAN
IF REINVESTIGATION
● Protest against the FLD/FAN 60 DAYS 180 DAYS
within 30 days from receipt
● Note: Failure to file a reply to PERIOD WITHIN CIR OR
the PAN will not bar the SUBMIT AUTHORIZED
taxpayer from protesting the DOCUMENTS REPRESENTATIVE TO
FAN of the BIR DECIDE
PROTESTING AN ASSESSMENT
PROTEST

The act by the taxpayer of questioning the validity of the

imposition of the corresponding delinquency increments
for internal revenue taxes as shown in the notice of
assessment and letter of demand.
PROCEDURE

•1. BIR issues assessment notice;

•2. The taxpayer files an administrative protest against the assessment. Such protest
may either be a request for reconsideration or for reinvestigation. The protest must be
filed within 30 days from receipt of assessment.
•3. All relevant documents must be submitted within 60 days from filing of protest;
only if taxpayer request for reinvestigation unless a waiver of prescriptive period is
executed otherwise the assessment shall become final and unappealable;
•4. In case the CIR decides adversely or if no decision yet at the lapse of 180 days, the taxpayer may appeal to
the CTA Division, 30 days from the receipt of the decision or from the lapse of the 180 days otherwise the
decision shall become final, executory and demandable.

•5. If the decision is adverse to the taxpayer, he may file a motion for reconsideration or new trial before the
same Division of the CTA within 15 days from notice;

•6. In case the resolution of a Division of the CTA on a motion for reconsideration or new trial is adverse to the
taxpayer, he may files a petition for review with the CTA en Banc; and the ruling or decision of the the CTA en
banc may be appealed with the Supreme Court, through a verified petition for review on certiorari pursuant to
Rule 45 of the 1997 Rules of Civil Procedure.
Forms
Request for reconsideration — refers
to a plea of re-evaluation of an
assessment on the basis of existing
records without need of additional
evidence. It may involve both a
question of fact or of law or both.
Request for reinvestigation —
refers to a plea of re-evaluation of
an assessment on the basis of
newly discovered or additional
evidence that a taxpayer intends to
present in the reinvestigation. It
may also involve a question of fact
or of law or both.
CONTENTS OF A VALID PROTEST

a) Nature of protest, whether reconsideration or reinvestigation, specifying newly

discovered or additional evidence he intends to present if it is a request for
reinvestigation;

(b) Date of the assessment notice; and

(c) Applicable law, rules and regulations, or jurisprudence on which his protest is
based.
PERIOD TO FILE PROTEST

The taxpayer or its authorized representative or tax agent

may protest administratively against the issuance of a
FLD/FAN by the Commissioner or his duly authorized
representative within 30 days from the date of receipt
thereof.
SUBMISSION OF SUPPORTING DOCUMENTS

The term “relevant supporting documents” should be understood as those documents

necessary to support the legal basis in disputing a tax assessment as determined by
the taxpayer.

The BIR can only inform the taxpayer to submit additional documents.

The BIR cannot demand what type of supporting documents should be submitted.
Otherwise, a taxpayer of the BIR, which may require the production of documents that
a taxpayer cannot submit. (CIR v. First Express Pawnshop Company, Inc)
When should the taxpayer submit the relevant
supporting documents after the filing of protest?
The taxpayer should submit such documents as follows:

● If the protest is request for reinvestigation, the taxpayer shall submit all relevant
supporting documents in support of his protest within 60 days from the date of
filing of his letter of protest;
● If the protest is a request for reconsideration, the 60-day period shall NOT apply.
Effect of Failure to Submit the Relevant Supporting
Documents within the Prescriptive Period
The assessment shall become “final” by operation of law and the taxpayer shall be
barred from disputing the correctness of the issued assessment by introduction of
newly discovered or additional evidence because he/it is deemed to have lost his/its
chance to present this evidence.

The BIR shall then deny the request for reinvestigation through the issuance of the
FDDA.
Effect of Failure to File Protest

The assessment shall become final, executory and

demandable and no request for reconsideration or
reinvestigation shall be granted.
(R.R. No. 18-2013, Sec. 3.1.4)
What is the period for the Commisioner or his duly
authorized representative to act upon a valid protest
against the FLD/FAN?
The Commissioner’s duly authorized representative must act upon a valid
protest within one hundred eighty (180) days counted from the date of filing
of the protest in case of a request for reconsideration; or from date of
submission by the taxpayer of the required documents within sixty (60) days
from the date of filing of the protest in case of a request for reinvestigation.
What are the options of the
taxpayer? ● If CIR denies Protest?

● If authorized representative denies Protest?

● If CIR or authorized representative does not

act within the 180 day?
Denial of Protest

1. Direct Denial - Final Decision on a Disputed Assessment (FDDA)

The decision of the Commissioner or his duly authorized
representative shall state:
a. the facts, the applicable law, rules and regulations, or jurisprudence on
which such decision is based, otherwise, the decision shall be void, and
b. That the same is his final decision.
1. Indirect denial
a. Formal and final letter of demand from the BIR to the taxpayer
b. Civil collection can also be considered as denial of protest of assessment (BIR v.
Union Shipping Corp., G.R. No. 66160, May 21, 1990)
c. Filing of criminal action against the taxpayer
d. Issuance of warrant of distraint and levy to enforce collection of deficiency
assessment is outright denial of the request for reconsideration (Hilado v. CIR, CTA
case 1256, Feb. 25, 1964).
Remedies of
taxpayer in case of
denial or inaction
By the CIR’s duly authorized representative.

If the protest is denied, in whole or in part, the taxpayer may either:

1. appeal to the CTA within 30 days from date of receipt of the said decision; or
2. elevate his protest through request for reconsideration to the CIR within 30 days from date
of receipt of the said decision. No request for reinvestigation shall be allowed in
administrative appeal and only issues raised in the decision of the CIR’s duly authorized
representative shall be entertained by the CIR.
B. If the protest is not acted upon, the taxpayer may either:

1. appeal to the CTA within 30 days after the expiration of the 180-day period; or
2. await the final decision of the CI R’s duly authorized representative on the
disputed assessment.

NOTE: Items 1&2 are mutually exclusive. The exercise of one option bars the other.
By the CIR

1. If the protest or administrative appeal, as the case may be, is denied, in

whole or in part, the taxpayer may appeal to the CTA within 30 days from
date of receipt of the said decision. Otherwise, the assessment shall become
final, executory and demandable. A motion for reconsideration of the CIR’s
denial of the protest or administrative appeal, as the case may be, shall not
toll the 30-day period to appeal to the CTA.
2. If the protest or administrative appeal is not acted upon, the taxpayer may
either:

A. appeal to the CTA within 30 days from after the expiration of the 180-day period;
or

B. await the final decision of the CIR on the disputed assessment and appeal such
final decision to the CTA within 30 days after the receipt of a copy of such
decision.
NOTE: Items A&B are mutually exclusive. The exercise of one option bars the other. In
case of inaction on protested assessment within the 180-day period, the option of the
taxpayer is to either:

1. file a petition for review with the CTA within 30 days after the expiration of the
180-day period; or

2. await the final decision of the Commissioner or his duly authorized

representative on the disputed assessment and appeal such final decision to the
CTA within 30 days after the receipt of a copy of such decision.
These options are mutually exclusive and the resort to one bars the application of the
other.

When the law provided for the remedy to appeal the inaction of the CIR, it did not
intend to limit it to a single remedy of filing an appeal after the lapse of 180-day
prescribed period. When a taxpayer protested an assessment, he naturally expects
the CIR to decide either positively or negatively. A taxpayer cannot be prejudiced if he
chooses to wait for the final decision of the CIR on the protested assessment (Lascona
Land Co., Inc. v. CIR, G.R. No. 171251, March 5, 2012).
Issuance of Final Decision on a Disputed Assessment
(FDDA)
● Must be issued by the CIR or his duly .authorized representative; 2.
● Must contain the facts, law, and rules on which the decision is based;
● Must be served personally to the taxpayer; and
● Must state that the same is his final decision
Cases
Case No. 1
Facts
● Petitioner is a domestic corporation that is duly organized and registered under the
laws of the Philippines.

● Petitioner received the Letter of Authority (LOA) issued by OIC Regional Director
Jonas Amara, authorizing Revenue Officer (RO) Domingo and Group Supervisor
(GS) Favis, to examine Petitioner’s books of accounts and other accounting records
for all internal revenue taxes covering the period from January 1, 2011 to December
31, 2011.

● Subsequently, Petitioner received a copy of the Preliminary Assessment Notice

(PAN) dated January 8, 2015 on even date, together with Details of Discrepancies,
for taxable year 2011, signed by the Regional Director.
Facts
● On January 23, 2015, petitioner filed its letter dated January 21, 2015, as a reply to
the said PAN.

● On the same date, CIR issued the Formal Letter of Demand (FLD), together with
the Audit Result/Assessment Notices and Details of Discrepancies, assessing
petitioner of deficiency income tax, VAT, IAET and compromise penalty, inclusive of
surcharges and interests, for taxable year 2011.

● Thus, petitioner filed its administrative protest by way of a request for

reinvestigation. Subsequently, petitioner submitted certain documents relevant to
and in support of the said protest.
 I S S U E

WON the deficiency assessments against Petitioner

have factual or legal bases.
Karina, Inc. vs CIR
CTA Case No 9204
Sept. 10, 2020
RULING OF THE COURT
 Karina Inc. vs. CIR
NO. CIR violated Karina’s right to due process, thus, the subject assessments are
considered null and void.

Sec. 228 of the 1997 NIRC states that the taxpayer must respond to the PAN within the
prescribed period by the IRR. In turn, Sec. 3.1.1 of RR No.12-99, as amended, and as
part of due process in the issuance of tax assessments, provides that a taxpayer
must reply within 15 days to the PAN, otherwise he shall be considered in default. After
the lapse of the said period, it is only then that the BIR shall issue an FLD/FAN.

In the case of CIR vs. Avon Products Manufacturing, Inc., the Supreme Court held
that:
● Tax assessments issued in violation of the due process rights of a taxpayer are null
and void.
● In case the CIR or the BIR fails to observe due process, it shall have the effect of
rendering the deficiency tax assessment void, and of no force and effect.
Karina Inc. vs. CIR
● The subject PAN was issued to and received by Karina on January 8, 2015.
● By virtue Section 3.1.1 of RR No. 12-99, as amended, Karina had 15 days from
such receipt of the said PAN, or until January 23, 2015, within which to respond
thereto.
● CIR issued the subject FLD on January 23, 2015 (or the last day of the said 15-day
period for Karina to respond thereto).
● Karina claims that it received the subject FLD on the day that it filed its position
paper to the PAN on January 23, 2015. Evidently, CIR did not wait for Karina to
reply to the PAN before issuing the subject FLD and the Assessment Notices.
● Thus, the said FLD and Assessment Notices were clearly issued prematurely,
thereby depriving Karina of the opportunity to be heard on the PAN, in violation of
the due process requirement in the issuance of tax assessments.
● As such, the said deficiency tax assessments bear no valid fruit, and must not be
given any effect.
Case No. 2
Facts
● LFC is a domestic corporation duly organized and registered under the laws of the
Philippines. It is also a VAT-registered entity engaged in the production and export
of fruits and other agricultural products, the sales of which are classified as
zero-rated.

● LFC filed its Quarterly VAT Return (BIR Form No. 2550Q) for the 1st quarter of the
taxable year 2006. LFC alleges that out of the total input VAT of Php 25,052,911.11,
the amount of Php 12,624,849.66 is attributable to zero-rated export sales and
remained unapplied against any output VAT.

● On March 18, 2008 (March 31, 2008, as alleged in the Petition for Review
before the CTA En Banc), LFC filed an application for refund/tax credit of its
excess/unutilized input VAT from zero-rated sales in the amount of
Php12,624,849.66, allegedly representing unutilized input VAT credits attributable to
zero-rated sales and local purchases for the 1st quarter of taxable year 2006.
Facts

● LPC received a Letter of Denial of its application for tax credit from the BIR.

● On October 15, 2018, LPC filed its Petition for Review with the CTA.

● LPC received the Resolution dismissing the Petition for Review on the ground of
lack of jurisdiction due to the belated filing of the judicial claim.

● LPC’s motion for reconsideration was likewise denied.

● Hence, this Petition for Review.

 I S S U E

WON the Court in Division erred when it ruled that it

has no jurisdiction over the case and denied LPC’s
entitlement to its claim for tax credit.
Lapanday Foods Corp. vs. CIR
CTA EB No 2175
December 7, 2020
RULING OF THE COURT
Lapanday Foods Corp. vs. CIR
● Section 112(C) of the 1997 NIRC:
- CIR has 120 days from the date of submission of the complete supporting
documents within which to act on the application for refund/tax credit.
- A taxpayer can file an appeal in one of two ways:
1. The full or partial denial of the claim within the 120-day period, or
2. The lapse of the 120-day period if the CIR does not act on the claim.

● CIR vs. San Roque:

○ Only the administrative claim must be filed within the 2-year prescriptive
period from the close of the taxable quarter when the relevant sales were
made.
○ The 30-day period of filing its judicial appeal is mandatory and jurisdictional
after the expiration of the 120-day period.
○ Late filing is absolutely prohibited.
Lapanday Foods Corp. vs. CIR
NO. The Court in Division correctly dismissed the CTA Case for lack of jurisdiction.

The expiration of the 120-day period of the administrative claim filed by LFC on March
18, 2008 for refund of the first quarter of 2006 fell on July 16, 2008.

LFC then had until August 15, 2008 to file its judicial claim with this Court.

However, the Petition for Review filed on October 15, 2018 was way beyond the
mandatory and jurisdictional thirty (30) day period from the expiration of the one
hundred twenty (120)-day period provided for in the NIRC.

Thus, the Court no longer had jurisdiction over this action.

Case No. 3
Facts
● CCI is a domestic corporation and a VAT-registered taxpayer.

● CCI incurred unutilized input tax payments attributable to its zero-rated sales for the
1st and 2nd quarters of TY 2014 in the amounts of P2,000,256.32 and
P1,445,784.19, respectively.

● CCI filed with BIR Revenue District Office an administrative claim for refund of the
cited excess input VAT for the 1st and 2nd quarters of TY 2014 in the sum of
3,446,040.51. Hence, CCI prepared the documents necessary and filed an
administrative claim for refund.

● However, it was denied through the Letter of Revenue District Officer Ruizol.

● Thus, CCI authorized its legal counsel to file a Petition for Review.
Facts
● CCI’s President testified that most of the clients of CCI are PEZA and
SBMA-registered entities evidenced by their clients’ Certificates of Registration.

● In CCI’s formal offer of evidence, CIR challenged the admissibility of the subject
PEZA/SBMA Certificates of Registration on the ground that they are hearsay for
lack of proper authentication by the issuing office or authority.

● The Court in Division partially granted CCI’s Petition for Review. Thus, directing the
CIR to refund or to issue a tax credit certificate in favor of CCI.

● Aggrieved, CIR filed a Motion for Reconsideration on the ground that the
PEZA/SBMA Certificates of Registration of CCI’s clients were mere photocopies
and/or not originals. The said MR was denied.
 I S S U E

WON THE CTA ERRED IN ORDERING THE CIR TO

REFUND TO CCI IN THE REDUCED AMOUNT OF
PHP3,155,032.77 REPRESENTING ITS UNUTILIZED
INPUT TAXES ATTRIBUTABLE TO ITS ZERO-RATED
SALES FOR THE 1sT AND 2ND QUARTERS OF
TAXABLE YEAR 2014.
CIR vs COLT Commercial, Inc.
CTA Case No 2074
December 3, 2020
RULING OF THE COURT
 CIR vs COLT Commercial, Inc.
NO. The present petition should be denied for lack of merit.

In Lorenzana v. Lelina, the Court held that evidence not objected to is deemed admitted
and may be validly considered by the court in arriving at its judgment. Courts are not
precluded to accept in evidence a mere photocopy of a document when no objection was
raised when it was formally offered. xxx xxx xxx It is only at this time, and not at any
other, that objection to the documentary evidence may be made. When a party fails to
object to evidence at the time they were formally offered, such objection shall be
considered as waived. xxx xxx xxx Thus, even on appeal, the appellate court may not
consider any other ground of objection, except those that were raised at the proper time.
 CIR vs COLT Commercial, Inc.

In his opposition to Colt’s formal offer of evidence, the CIR only challenged the
admissibility of the subject PEZA/SBMA Certificates of Registration on the ground that
they are hearsay for lack of proper authentication by the issuing office or authority.

It was only in the Motion for Reconsideration that the CIR raised for the first time his
objection against the admission of the subject PEZA/SBMA Certificates of Registration of
Colt’s clients on the ground that they were mere photocopies and/or not originals.

Granting that Certificates were indeed photocopies, by reason of CIR’s failure to object
within the period prescribed by the rules, the same may be admitted.
Case No. 4
Facts
● MPI is a domestic corporation organized and existing under Philippine laws.

● On December 29, 2010, MPI received the Preliminary Assessment Notice (PAN) for
taxable year 2007 issued by the CIR.

● In the said PAN, the BIR informed MPI that the following were found due, to wit:
1. Deficiency income tax;
2. Deficiency value added tax;
3. Deficiency expanding withholding tax.

● Thereafter, on January 7, 2011 (9 days after the issuance of the PAN), CIR issued
the Formal Letter of Demand (FLD) with attached Assessment Notices against MPI,
for alleged deficiency income tax, deficiency value-added taxes and deficiency
expanded withholding taxes for taxable year 2007 x x x.
Facts

● MPI filed with the CIR the Letter of Protest against the PAN.

● Subsequently, MPI filed with the CIR another Letter of Protest against the FLD.

● MPI then filed its Letter with the BIR, submitting certain supporting documents in
connection with the said Letter of Protest.

● In view of the BIR's failure to act within 180 days from the submission of the said
documents pursuant to Section 228 of the NIRC of 1997, MPI filed the instant
Petition for Review.
 I S S U E

WON the assessed deficiency income taxes,

deficiency value-added taxes and deficiency
expanded withholding taxes for taxable year 2007
are valid.
CIR vs Merial Philippines, Inc.
CTA Case No 1398
May 9, 2017
RULING OF THE COURT
 CIR vs Merial Philippines, Inc.
NO. In the case of CIR vs. Metro Star Superama, the failure of the CIR to strictly comply
with the requirements laid down by law and its own rules is a denial of right to due
process. Thus, the assessment made by the CIR is void.

It also has been held in recent cases that a taxpayer's right to due process is violated if
the Formal Letter of Demand/Formal Assessment Notice is issued prior to the lapse of
the 15- day period given to the taxpayer to reply to or protest the PAN.

In the present case, Merial received the PAN on December 29, 2010. The FLD was
issued, a mere nine (9) days after, on January 7, 2011, well within the 15-day period
provided by RR No. 12-99 for the taxpayer to respond to or protest the PAN. Clearly,
Merial was deprived of its right to due process. As such, the FLD is void.

A void assessment bears no fruit and cannot give rise to an obligation to pay deficiency
taxes. Thus, the First Division correctly cancelled the FLD and the attached Assessment
Notices.
CASE NO. 5
Facts
● B-Inc. is a taxpayer.

● On May 17, 2016, the BIR issued the Letter of Authority (LOA) signed by the
OIC-Regional Director authorizing Revenue Officer (RO) Miranda and Group
Supervisor (GS) Mendoza to examine B-Inc.’s books of accounts and other
accounting records for all internal revenue taxes, covering the period from January
1, 2014 to December 31, 2014.

● Thereafter, on March 7, 2017, the Memorandum of Assignment was issued by a

Revenue District Officer, referring the case to RO de Guzman and GS Gozun for the
continuation of the audit/investigation of B-Inc. to replace the previously assigned
revenue officers without issuing another LOA.
Facts
● RO de Guzman recommended the issuance of a Preliminary Assessment Notice
(PAN) against B-Inc. B-Inc. received the PAN, finding due from it, deficiency income
tax, withholding tax on compensation (WTC), expanded withholding tax (EWT), and
miscellaneous tax, for the taxable year 2014.

● B-Inc. received the Formal Letter of Demand (FLD) on the Assessment from the
OIC-Regional Director of the BIR, wherein the latter informed B-Inc. that after audit,
there was found due from it deficiency income tax, EWT, WTC, and other
administrative penalties, for the taxable year 2014.

● B-Inc. filed a Letter of Request for Reinvestigation on the said FLD. In reply, the BIR
informed B-Inc. that the docket of its tax case was referred to the Office of the
Revenue District Office for reinvestigation.
Facts
● On July 19, 2018, another LOA was issued authorizing RO de Guzman and GS
Gozun, to examine B-Inc.’s books of accounts and other accounting records for all
internal revenue taxes including documentary stamp tax and other taxes covering
the period from January 1, 2014 to December 31, 2014.

● Acting on B-Inc.’s administrative protest for reinvestigation, RO de Guzman

subsequently recommended that a Final Decision on Disputed Assessment (FDDA)
be issued against B-Inc. In the FDAA issued and received by B-Inc., the Regional
Director requested the payment of B-Inc.’s income tax liability in the amount of
P1,871,395.77, inclusive of interests and compromise penalty.

● In the meantime, B-Inc. filed the instant Petition for Review.

 I S S U E

WON B-Inc. is liable to pay the assessed deficiency

income tax, expanded withholding tax, withholding
tax on compensation, plus surcharge and interest
and compromise penalties for taxable year 2014
despite its payment of franchise taxes for the year
2014.
BICYCLEPOKER, INC. vs. CIR
CTA Case No. 9868
October 7, 2020
RULING OF THE COURT
 Bicyclepoker, Inc. vs. CIR
Sections 6(A) and 13 of the NIRC of 1997 provide that:
SEC. 6. Power of the Commissioner to Make
Assessments and Prescribe Additional
Requirements for Tax Administration and
Enforcement. -
(A) Examination of Returns and Determination
of Tax Due. - After a return has been filed as
required under the provisions of this Code, the
Commissioner or his duly authorized
representative may authorize the
examination of any taxpayer and the
assessment of the correct amount of tax:
Provided, however, That failure to file a return
shall not prevent the Commissioner from
authorizing the examination of any taxpayer."
SEC. 13. Authority of a Revenue Officer. -
Subject to the rules and regulations to be
prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, a
Revenue Officer assigned to perform
assessment functions in any district may,
pursuant to a Letter of Authority issued by
the Revenue Regional Director, examine
taxpayers within the jurisdiction of the
district in order to collect the correct
amount of tax, or to recommend the
assessment of any deficiency tax due in the
same manner that the said acts could have
been performed by the Revenue Regional
Director himself."
 Bicyclepoker, Inc. vs. CIR
NO. The Revenue Officer (RO) who found it liable for deficiency income tax, and other
taxes, was not authorized by a Letter of Authority (LOA).

In the present case, after the LOA was issued and received by B-Inc., authorizing RO
Miranda and Group Supervisor (GS) Mendoza to conduct tax investigation against
B-Inc., the BIR, thru Revenue District Officer Mina, subsequently issued a Memorandum
of Assignment to RO de Guzman and GS Gozun to continue such investigation without
issuing another LOA. Thus, RO de Guzman and GS Gozun were not validly authorized
to investigate B-Inc.

Having no authority to examine B-Inc.’s books of accounts, and other accounting

records, the Preliminary Assessment Notice (PAN) with Details of Discrepancies and the
Formal Letter of Demand on their assessments are void. Thus, the subject tax
assessments cannot be enforced against B-Inc.