NOTES IN TAXATION:

ASSESSMENT AND COLLECTION OF TAXES UNDER THE NIRC as amended

by TRAIN LAW (RA 10963) with updated BIR Revenue Regulations

A. POWER AND AUTHORITY OF COMMISSIONER

1. to interpret the provisions of the Tax Code and other tax laws;
2. to decide disputed assessments, refunds of internal revenue taxes, fees and
penalties and charges and other matters arising under the Tax Code
*3. to obtain information, summon and examine witnesses (Sec. 4)
*4. to make assessments and examination of taxpayer (Sec. 6 (A)
*5. to prescribe real property values

The TRAIN LAW (Rep. Act 10963) – took effect on January 1, 2018) provided
foradditional requirements on this power of the Commissioner:

M a) Mandatory consultation with private and public appraisers

Ab) Prior notice to affected taxpayers
P c) Publicationin newspaper of general circulation in the province,city or
municipality concerned, or posting of adjustments
B d)Basis of valuation and records of consultation done are public records open to
public
A e)Automatic adjustment once every 3 years

6. to terminate taxable period

7. to inquire into bank deposit accounts
8. to accredit and register tax agents
9. to prescribe additional procedural or documentary requirements
10. to compromise taxes, interests and charges (Sec 7 (c), 204(A); 290 NIRC)

*Cases which may be compromised:

- Delinquent account
- Pending protest with the BIR
- Civil tax cases being dispute before the court (MTC, RTC, CTA, SC)
- Criminal violationsexcept those filed in court or those involving criminal fraud
- with pre-assessment notice where Taxpayer does not agree to the findings

*Cases which cannot be compromised

- withholding tax cases;
- Criminal tax fraud cases;
- Criminal violations filed in court
- Delinquent accounts with approved schedule of installment payment;
- Where final reports of reinvestigation or reconsideration have been issued
and the original assessment was reducedand the TP agreed thereto
- With final and executor judgment of a court.

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Basis for acceptance of compromise by Commissioner:
a) Doubtful validity of assessment – applies to delinquent account or disputed
assessment-minimum compromise rate – 40% of the basic tax assessed
Lower rate may be requested by taxpayer subject to approval of National Evaluation
Board (NEB) – a) the request must be in writing
b) setting forth legal and factual bases for such request.
b) Financial Incapacity of the taxpayer-
1) minimum compromise rate is 20% of the basic tax assessed for:
(i) Dissolved corporations
(ii) Non-operating companies for less than 3 years
(iii) Earnings deficit resulting to impairment in original capital by at least 50%
2) other taxpayers – 10% of the basic tax assessed

Note: 1. The said rates shall apply to compromise of solely increments (surcharge,
interest, penalties) based on the total amount assessed. (RR 7-2001, July 31, 2001)
2. In case the taxpayer reneged in his commitments in the compromise
agreement, the CIR HAS THE OPTION to collect the balance under the agreement,
plus applicable interests; or to disregard the agreement and collect the assessed
tax (original amount assessed including interests and surcharges) less payments
made.

B. ASSESSMENT AND COLLECTION:

Delinquency Tax- arises when:

1. thetaxpayer failed to pay in full the tax due as computed and stated in his tax
return on the prescribed date; the unpaid tax is the delinquency tax.
2. the deficiency tax assessed by the BIR became final and executory.

Deficiency Tax –arises when:

1. the amount of tax imposed by law exceeds the amount of tax as shown in the
taxpayer‟s return – the difference in the amount is the deficiency tax
2. if no amount of tax is shown in the return or the taxpayer did not file a return,
then the amount determined by the CIR is higher than the amountpreviously
assessed or collected without assessment -the difference in the 2 amounts is
the deficiency tax.

Two Concepts of Assessment:

****a process of ascertaining the correct taxes payable by the taxpayer at a given
taxable year;

****a notice sent to the taxpayer informing him of his tax liabilities, penalties,
interests and charges, with a demand to pay on or before the date specified
therein.

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Kinds of assessment:

I. As to period of assessment:
a) normal or ordinary – return filed is not false or fraudulent
--3 yrs. from April 15 or from date of date of actual filing
Question: When is the three-year period to assess reckoned when the
income tax return is amended?

b) abnormal or extraordinary – fails to file a return; or return filed is false fraudulent-

10 yrs. from discovery of non-filing; filing of false or
fraudulent return with intention to defraud the government

False return – when there is deviation intentionally or unintentionally from the

true facts.
Fraudulent return – when the taxpayer intentionally and deceitfully withheld
true and material facts.

2. As to basis of assessment:
a) self-assessment – tax is assessed by the taxpayer himself
b) deficiency assessment – (i) amount ascertained exceeds what is shown
in the return
(ii) no amount of tax is shown in the return
(iii) Taxpayer did not file any return at all
c) illegal and void assessment- tax officer has no power to assess
d) erroneous assessment – tax officer has power to assess but errs in the
exercise thereof
e) jeopardy assessment- without complete or only partial audit by an authorized
revenue officer when assessment will be delayed due to:
(i) Taxpayer fails to comply with submission of documents
(ii) Taxpayer fails to substantiate deductions

Important Principles Governing Tax Assessment

1. Tax assessment is prima facie presumed correct and made in good faith.
2. It must be directed to the right party.
3. The revenue officer who will conduct the examination must be armed with
avalidLetter of Authority.
4. Tax assessment must state the facts and the law upon which it is based; and
mustcontain a demand to pay
5. The power to assess a taxpayer is discretionary on the part of CIR.Mandamus
will not lie against CIR to compel him to assess a taxpayer...

Requisites of valid Letter of Authority:

- dated and signed by the CIR or his duly authorized representative:
- specify the taxable year. (“and prior years” not valid)

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 - state the name of authorized BIR Examiner
- period to assess has not expired
Means Employed by the CIR in the Assessment of Taxes:

1. examination of returns and determination of the tax due

2. assess the proper tax based on best evidence obtainable
3. conduct inventory taking, surveillance and prescribe presumptive gross sales and
receipts
4. issue jeopardy assessment and terminate tax period when:
a) Taxpayer is retiring from business or intends to leave the country;
b) remove, hide or conceal his property; or tend to obstruct the proceeding for the
collection of the tax totally or partially
5. prescribe real property values-
6. Matching of taxpayers

THE ASSESSMENT PROCESS:

a Filing of return – as regards self-assessing taxes (Ex. income tax)
The taxpayer computes his tax liability and pays the tax due thereon at time
the return is filed under the Pay-as-you-file system.

b. issuance of Letter of Authority (LOA)

LOA - the authority of a revenue officer assigned to perform
examination and assessment functions.
**Question: Why is a LOA necessary before a revenue examiner can examine the
books of accounts of the taxpayer?
**Suggested Answer:
The power to examine was not statutorily given toRev. Officer; but to the
Commissioner of Internal Revenue, and for the Rev. Officer to exercise such
power,authority must be given by the CIR or his duly Authorized Representative.
(Sec. 6(A) (Nanox Phil, Inc. v. CIR –CTA EB No. 1629, April 15, 2019)
c. Notice Of Discrepancy (ND)- sent to the taxpayerto fully afford the taxpayer an
opportunity to present and explain his side on the discrepancies found. (RR 22-
2020). The time and date of the Discussion of Discrepancyshall be indicated in
the notice. The Discrepancy discussion shall notextend beyond thirty (30) days
from receipt of the ND. If the taxpayer disagrees with ND, he must present
documents to prove his position within the period said 30-day period.
Effect of non-appearance- deemed waiver to contest the discrepancy and
admits the discrepancy. The revenue officer, will indorse the issuance of a PAN.

d.issuance of preliminary assessment notice (PAN) -taxpayer has 15 days to

file reply to PAN.

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 (i) after said period and no reply -issuance of formal letter of demand
andfinal assessment notice (FLD/FAN);
(ii) if taxpayer replies within 15 days-CIR has 15 days from receipt of said
replyto issue FLD/FAN.

PRE-ASSESSMENT NOTICE (PAN) - When issued:

Gen. Rule - PAN is issued when the taxpayer in any of the following:

a) fails to file a return;

b) files a return but fails to pay the tax;
c) files a return but made insufficient payment;

Exceptions: Instances when PAN is not required:

a) when the deficiency tax is due to mathematical or typographical error;

b) when there is discrepancy between the tax withheld and actually remitted;
c) when claimant of tax refund/credit had actually carried over and automatically
applied said amount against his tax liabilities for the quarter of succeeding
taxable year;
d) excise tax due on excisable articles was not paid
e) when locally purchased or imported articles by an exempt person was sold,
traded or transferred to non-exempt person.

FINAL ASSESSMENT NOTICE (FAN) - When issued:

a) with or without reply to the PAN
b) instances when PAN is not necessary

FAN becomes FINAL AND EXECUTORY if not protested or disputed within 30 days
from receipt by the taxpayer. If disputed or protested timely, the FAN becomes a
DISPUTED ASSESSMENTwhich is appealable to the CTA

PAN VS. FAN

1. as a rule, issued before FAN 1. Issued with or without reply to PAN
2. will not become final and 2. Final and executory if not disputed
executoryorprotested within 30 days from recei
3. cannot be converted disputed 3. can be converted to
disputedassessment assessment
4. not appealable to CTA 4. appealable to CTA

Grounds For Suspension of Statute of Limitations

1. taxpayer is out of the country
2. government is legally prevented to assess or collect

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 3. taxpayer files a motion for reinvestigation coupled with a valid waiver of the
statute of limitations
4. taxpayer cannot be located (except if he informs CIR of change of address)
5. warrant of distraint/levy was served although it did not materialize

***NEW REQUIREMENTS ON VALID WAIVER OF STATUTE OF

LIMITATIONS: Under RMO No. 14-2016 dated April 4, 2016-

1.waiver not necessarily be in the form prescribed byRMO 20-90 or RDAO 05-01;
2. executed before the expiration of the period to assess or to collect taxes;

3. signed by the taxpayer himself, his duly authorized representative, or by any of

the responsible officials for corporations
4. the expiry date of the period agreed upon to assess or collect the tax is
indicated.
5. need not specify the taxes to be assessed nor the amount thereof;
---except in cases of waiver for collection of taxes
6. taxpayer has the burden to ensure that the waiver is validly executed by its
authorized representative. (He cannot thereafter be invalidated on the ground that
the taxpayer‟s representative who participated in the conduct of the audit is not
authorized to sign the waiver.)
7. notarization of the waiver – optional
8. can be accepted by the Commissioner‟s authorized representative as
prescribed in existing regulations, the revenue district officer, or the group
supervisor designatedin the Letter of Authority for the audit.
9. To be valid, there are only two dates that need to be present on the waiver:
(a) the date of execution, and
(b) the expiry date of the period the taxpayer waives the statute of limitations.

***CIR V. NEXT MOBILE, GR 212825 Dec 7, 2015- A taxpayer who is in bad faith
cannot impugn the validity of the waiver.

QUESTION: HOW IS THE LAW ON STATUTE OF LIMITATIONS ON THE

ENFORCEMENT AND COLLECTION OF TAXES CONSTRUED?
BPI v. CIR, G.R. No. 139736, Oct. 17, 2005:In order to provide even better
protection to the taxpayer against unreasonable investigation, the Tax Code of
1977, as amended, identifies specifically the circumstances when the prescriptive
periods for assessing and collecting taxes could be suspended or interrupted. To
give effect to the legislative intent, these provisions on the statute of

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limitations on assessment and collection of taxesshall be construed and
applied liberally in favor of the taxpayer and strictly against the Government.

REMEDIES OF THE TAXPAYER:

A. Payment of the tax on its due date

B. Compromise – see Notes on Power of CIR to compromise
C. Protest the fan –:
D. Tax Refund and Tax Credit

KINDS OF PROTEST:

1. by way of reconsideration – no new evidence or issue is presented by

taxpayer; more on request to reconsider or take a second look on the evidence
already presented.

Procedure:
File PROTEST by reconsideration --- 30 days from receipt of FLD/FAN
CIR has 180 days to decide: no decision and 180 lapsed- appeal to CTA
by petition for review within 30 days from the lapsed of the 180 days;
OR - wait for the written decision and if adverse, appeal to CTA
by petition for review within 30 days fromreceipt of the decision

2. by way of reinvestigation – taxpayer presents new issue or evidence that

would need for the CIR to conduct a reinvestigation on the basis of new
evidence submitted by the taxpayer.

Procedure:
File PROTEST by reinvestigation --- 30 days from receipt of FLD/FAN
Within 60 days from filing the PROTEST- SUBMIT documents to BIR
CIR has 180 days to decide from receipt of the documents/
IF N0 decision and 180 lapsed- appeal to CTA
by petition for review within 30 days from the lapsed of the 180 days;
OR - wait for the written decision and if adverse, appeal to CTA
by petition for review within 30 days from receipt of the decision

Note:1. The taxpayer must state in his Protest the mode of protest – whether by
reconsideration or reinvestigation.
2. Above periods are mandatory.

D. TAX REFUND/ TAX CREDIT

Gen. Rule : written claim must be filed with CIR within 2 years from payment;

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 Exception - no need for written claim– if on the face of the return upon
which payment was made, payment appears to have been
erroneously made.

1. Kinds of Tax Refund –

a. Tax Refund under Sec. 112 – refund of un-utilized input VAT on
zero rated or effectively zero rated transactions
b. Tax Refund under Sec. 229 – refund of other internal revenue taxes,
interests and penalties.

TAX REFUND UNDER SEC. 229:

The administrative and judicial claims must be filed within 2 years from payment or
collection.

(Please read – Metrobank case - List of Cases)

II. TAX REFUND OF UN-UTILIZED INPUT VAT UNDER SEC. 112:

1. Procedure:

a)Administrative claim – within 2 years from the close of the quarter when VAT was
paid; filed with CIR; CIR has 90 days to decide

b). Judicial claim - if administrative claim is denied, or no action after 90 days (as
amended by TRAIN Law -RA 10963)
30 days from receipt of denial or from lapse of 90
days,file claim with competent court.

NOTE: a. The administrative claim must be filed within 2 years from the close
of the quarter when VAT was paid.
b. The judicial claim may be filed even after two years, provided it is filed
within 30 days from receipt of the decision or expiration of
the 90 day- period for CIR to decide on the admin. claim.
c. The 90 and 30 days periods are mandatory and jurisdictional.

(Pls. read: CE Luzon Geothermal v. CIR -- Case #8, List of Cases)

3. Construction and Interpretation of the Law on Statute of Limitations

In the Assessment and Collection of Taxes –

(Pls. read the case - BPI v. CIR, G.R. No. 139736, Oct. 17, 2005- See List of
Cases- Case # 5)

4. How is a judicial action for collection of the tax initiated?

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 A judicial action for the collection of a tax may be initiated by:
1) filing of acomplaint with the proper regular trial court; or
2) where the assessment is appealed to the CTA, by filing an answer to the
taxpayer's petition for review wherein payment of the tax is prayed for.
(Philippine National Oil Company v. Court of Appeals, G.R. No. 109976, 26
April 2005; Fernandez Hermanos, Inc. v. Commissioner of Internal Revenue,
G.R. No. L-21551, 30 September 1969, 29 SCRA 552)

6. CASES:

1. LASCONA LAND CO., INC. v. COMM. , G.R. No. 171251, March 5, 2012
Facts: On March 27, 1998, the CIR issued an assessment notice against Lascona
Land Co., Inc. (Lascona) for deficiency income tax for the year 1993. The protest
filed on April 20, 1998 was denied by the CIR on March 3, 1999 on the ground that
the assessment had already become final and executory for failure to appeal to the
CTA within 30 days from the lapse of the 180 day period for CIR to decide on the
protest pursuant to Sec. 228 of the NIRC.

On appeal, the CTA nullified the subject assessment and held that: in cases
of inaction by the CIR on the protested assessment, Section 228 of the NIRC
provided two options for the taxpayer: (1) appeal to the CTA within thirty (30) days
from the lapse of the one hundred eighty (180)-day period, or (2) wait until the
Commissioner decides on his protest before he elevates the case.
The CIR moved for reconsideration and argued that subject assessment is
already final, executory and demandable pursuant to Section 3 (3.1.5) of Revenue
Regulations No. 12-99 dated September 6, 1999 which reads, thus:

If the Commissioner or his duly authorized representative fails

to act on the taxpayer's protest within one hundred eighty (180) days
from date of submission, by the taxpayer, of the required documents in
support of his protest, the taxpayer may appeal to the Court of Tax
Appeals within thirty (30) days from the lapse of the said 180-day
period; otherwise, the assessment shall become final, executory and
demandable.
CTA denied the CIR's motion for reconsideration and ruled that Revenue
Regulations No. 12-99 must conform to Section 228 of the NIRC. The CTA
emphasized that in cases of discrepancy, Section 228 of the NIRC must prevail
over the revenue regulations. The CA dismissed the CIR‟s appeal.

Issue: Whether the subject assessment has become final, executory and
demandable for failure of petitioner to file an appeal before the CTA within thirty
(30) days from the lapse of the 180)-day period pursuant to Section 228 of the
NIRC.

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Ruling:
NO, the assessment is not yet final and executory. Sec. 228 of the NIRC
provides that in case the Commissioner failed to act on the disputed assessment
within the 180-day period from date of submission of documents, a taxpayer can
either: (1) file a petition for review with the Court of Tax Appeals within 30 days
after the expiration of the 180-day period; or (2) await the final decision of the
Commissioner on the disputed assessments and appeal such final decision to the
Court of Tax Appeals within 30 days after receipt of a copy of such decision,

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 of an appeal after the lapse of the
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 opted to await the final decision of the Commissioner on the

protested assessment, it then has the right to appeal such final decision by
filing a petition for review within 30 days after receipt of a copy of such
decision or ruling, even after the expiration of the 180-day period.

DOCTRINES:
1. "Decisions" in paragraph 1, Section 7 of RA No. 1125 (law creating the
CTA) means the “decisions of the Commissioner of Internal Revenue on the
protest of the taxpayer against the assessments, not the assessment itself.

2. Sec. 228 of the NIRC provides a taxpayer two (2) options in case the
Commissioner failed to act on the disputed assessment within the 180-day period
from date of submission of documents:

(1) file a petition for review with the Court of Tax Appeals within 30 days
after the expiration of the 180-day period; OR
(2) await the final decision of the Commissioner on the disputed
assessments and appeal such final decision to the Court of
Tax Appeals within 30 days after receipt of a copy of such decision;

3. In case of conflict between the NIRC provisions and the revenue

regulations implementing such provision, the NIRC provision should prevail.

4. 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 of an appeal after the
lapse of the 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

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 5. The CIR should be reminded that taxpayers cannot be left in quandary by
its inaction on the protested assessment. It is imperative that the taxpayers are
informed of its action in order that the taxpayer should then at least be able to take
recourse to the tax court at the opportune time.

6. Taxes are the lifeblood of the government and should be collected without
unnecessary hindrance. But such collection should be made in accordance with law
as any arbitrariness will negate the very reason for government itself. It is a
requirement in all democratic regimes that it be exercised reasonably and in
accordance with the prescribed procedure.
______________

2. Western Mindanao Power Corp. v. CIR, G.R. No. 181138. June 13, 2012.

Facts:
WMPC, a domestic corporation engaged in the production and sale of
electricity is a VAT-registered taxpayer; and sells electricity solely to NAPOCOR.

On June 20, 2000 and June13, 2001, it filed applications for tax credit
certificate of its INPUT VAT for the taxable 3rd and 4th quarters of 1999 and all the
taxable quarters of 2000, on the ground that since NAPOCOR is exempt from the
payment of all forms of taxes under Sec. 13 of RA 6395; hence WMPC‟s power
generation to NAPOCOR is zero-rated. CIR failed to act on the said request,
WMPC‟s petition was dismissed by CTA Second Division noting that the VAT
returns filed did not reflect any zero rated or effectively zero-rated sales and the
invoices and OR did not contain the phrase “zero-rated”. CTA En banc affirmed the
dismissal.

Issue: Whether the CTA En Banc was correct in dismissing the claim for a refund
or tax credit on Input VAT on the ground that WMPC‟s official receipts do not
contain the phrase “zero-rated”.

Ruling:
YES, the dismissal was correct. WMPC‟S claim for refund or tax credit of
INPUT VAT is based on Sec. 112 (A) of the Tax Code. When the claim for refund
is based on a statute granting tax exemption, it partakes of the nature of a tax
exemption; hence, the rule that a statute granting tax exemption is strictly construed
against the person claiming it applies to the claim.
Therefore, the applicant for tax refund or tax credit must prove not only
entitlement to the grant of the claim under substantive law, but must show
satisfaction of all documentary and evidentiary requirements for such claim. The
mere fact that WMPC‟S application for zero-rating has been approved by the CIR
does not, by itself, justify the grant of a refund or tax credit. The taxpayer must
further comply with the invoicing and accounting requirements mandated by the Tax
Code and the revenue regulations implementing the Code

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DOCTRINES:

1. When the claim for refund is based on a statute granting tax exemption, it
partakes of the nature of a tax exemption; hence, the rule that a statute granting tax
exemption is strictly construed against the person claiming it applies to the claim.

2. Under the NIRC (Sec. 10[A] (1)) , a creditable input tax should be evidenced
by a VAT invoice or official receipt, which may only be considered as such when it
complies with the requirements of Sec. 4.108-1 of RR 7-95.

3. RR 7-95 proceeds from the rule-making power of the Sec. of Finance

granted by the Tax Code for the efficient enforcement of its provisions and
subsequent amendments. In several cases, it has been held that the RR 7-95 is
reasonable and in accord with the efficient collection of VAT from covered sales of
goods and services
___________________

3. CIR v. Systems Technology Institute G.R. No. 220835, Jul 26, 2017
Facts:This case involves the execution of three (3) waivers of the statute of
limitations on assessment and collection of STI‟s income, vat and expanding
withholding taxes for the fiscal year 2003, signed by its employee, to wit:

a) May 30, 2006- extended the period “not later than December 31,
2006”signed by its employee Sangalang; notarized and accepted by
Large Taxpayer‟s Disctrict Officer of Makati City.
b) December 12, 2006 - notarized waiver extending the period to March
31, 2007; signed by Sangalang;
c) third waiver was executed and accepted extending further the period to
June 30, 2007.

On June 28, 2007, STI received a Formal Assessment Notice for deficiency
income tax, VAT and EWT for fiscal year 2003. On July 25, 2007, STI filed a
request for reconsideration/reinvestigation. On September 11, 2009, STI received
the Final Decision on Disputed Assessment (FDDA) dated August 17, 2009
whereinSTI”s liability for deficiency income tax, VAT and EWT was reduced.STI
appealed to CTA (division), and CTA cancelled the said assessment which was
affirmed by CTA En Banc.

Issues:
1. Whether or not prescription has set in on the right of the government to
assess STI for deficiency income tax, vat and expanded withholding taxes for the
fiscal year 2003.
2. Whether STI is estopped since it actively participated in the
administrative investigation when it filed a request for reinvestigation which resulted
in the reduction of its tax liabilities.

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Ruling:
1. The Waivers of Statute of Limitations, being defective and invalid, did not
extend the CIR's period to issue the subject assessments. Thus, the right of the
government to assess or collect the alleged deficiency taxes is already barred by
prescription.Under Section 203 of the NIRC of 1997, the CIR's period to assess and
collect internal revenue taxes is three (3) years counted from the last day prescribed
by law for the filing of the return or from the day the return was filed, whichever
comes later.

The last day for the CIR to issue an assessment for EWT for the fiscal year
ending March 31, 2003 was on April 17, 2006; and for deficiency VAT for the four
quarters of the same fiscal year was on May 25, 2006. When the first waiver took
effect on June 2, 2003, the period to assess said taxes had already prescribed.
The signatories to all the 3 waivers was not duly authorized; and said waivers
did not specify the kind of tax and the amount of tax due.Clearly,the waivers being
defective did not suspend the running of the said period to assess. Therefore, the
final assessment notice dated June 16, 2007 was issued beyond the three-
year prescriptive period.

2. STI IS NOT ESTOPPEDfrom invoking the defense of prescription.The

CIR‟s reliance on the RCBC case where estoppel was upheld does not apply in the
case of STI.The estoppel in the RCBCcase arose from the taxpayer's act of
payment and not on the reduction in the amount of the assessed
taxes.RCBC's partial payment of the revised assessments effectively belied its
insistence that the waivers are invalid and the assessments were issued beyond the
prescriptive period. STI did not make any payment, the mere reduction of the
amount of the assessment because of a request for reinvestigation should
not bar it from raising the defense of prescription. CTA decision affirmed.
__________

4. Commissioner of Internal Revenue v. Standard Chartered Bank, G.R. No.

192173, July 29, 2015- The Court also invalidated the waivers executed by the
taxpayer because: (1) they were signed by Assistant Commissioner-Large
Taxpayers Service and not by the CIR; (2) the date of acceptance was not shown;
(3) they did not specify the kind and amount of the tax due; and (4) the waivers
speak of a request for extension of time within which to present additional
documents and not for reinvestigation and/or reconsideration of the pending internal
revenue case as required under RMO No. 20-90.
________________

5. BPI v. CIR, G.R. No. 139736, Oct. 17, 2005 –

Facts: On Oct. 10, 1989, BIR issued a Final Assessment Notice against BPI for
deficiency DST on its sale of US dollars to Central Bank on June 14, 1985. It was

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received by BPI on Oct. 20, 1989. On Nov. 16, 1989, BIR protested the
assessment. CIR did not respond to said protest. There was no showing that
petitioner BPI was informed or aware that its request for reconsideration was
granted or acted upon by the BIR.

On Nov. 15, 1992, BIR issued Warrant of Distraint a/or Levy which was
received by BPI on Nov. 23, 1992. On Sept. 11, 1997, BIR denied the protest. BPI
appealed to CTA.

Issues:
1. Whether the filing of the protest by BPI suspends the running of the
statutory period to collect said tax.
2. Whether the issuance of the warrant of distraint and/or levy suspends
the period to collect the subject DST
Ruling:
1. The protest filed by petitioner BPI did not constitute a request for
reinvestigation, granted by the respondent BIR Commissioner, nor a
reconsideration, but a protest based on question of law. The same protest letter
did not raise any question of fact; neither did it offer to present any new evidence. In
BIR‟s letter to petitioner BPI, dated 10 September 1992, the BIR itself referred to the
protest of petitioner BPI as a request for reconsideration. These considerations
would lead the Court to deduce that the protest letter of petitioner BPI was in the
nature of a request for reconsideration, rather than a request for reinvestigation and,
consequently, Section 224 of the Tax Code of 1977, as amended, on the
suspension of the running of the statute of limitations should not apply.

Even if the said protest be considered a request for reinvestigation, the same
must be granted by the Commissioner to effect a suspension of the period. This is
very clear in Section 223 and as pronounced by the Court in the case of Republic
of the Philippines v. Gancayco, 120 Phil. 376 (1964) where taxpayer Gancayco
requested for a thorough reinvestigation of the assessment against him and
submitted all the evidence for such purpose; but, the Collector ignored the request,
and the records and documents were not at all examined. The Court held in the said
case that:

“. . .The act of requesting a reinvestigation alone does not

suspend the period. The request should first be granted,
in order to effect suspension. xxx”

Since the CIR did not grant the BPI‟s alleged request for reinvestigation, the same
did not suspend the running of the period to collect the tax assessed.

2. Existing jurisprudence establishes that distraint and levy proceedings

are validly begun or commenced by the issuance of the Warrant and service thereof
on the taxpayer.The Warrant of Distraint and/or Levy be, at the very least, served
upon the taxpayer in order to suspend the running of the prescriptive period for

14 | P a g e
collection of an assessed tax, because it may only be upon the service of the
Warrant that the taxpayer is informed of the denial by the BIR of any pending
protest of the said taxpayer, and the resolute intention of the BIR to collect the tax
assessed.

The service of the Warrant of Distraint and/or Levy on petitioner BPI on

23 October 1992 was already beyond the prescriptive period for collection of
the deficiency DST, which had expired on 19 October 1992.

DOCTRINE:

1. How is the waiver of the statute of limitations construed or interpreted?

a) The law prescribing a limitation of actions for the collection of the

internal revenue taxes is beneficial both to the Government and to its citizens; to the
Government because tax officers would be obliged to act promptly in the making of
assessment, and to citizens because after the lapse of the period of prescription
citizens would have a feeling of security against unscrupulous tax agents who will
always find an excuse to inspect the books of taxpayers, not to determine the
latter's real liability, but to take advantage of every opportunity to molest peaceful,
law-abiding citizens. Without such a legal defense taxpayers would furthermore be
under obligation to always keep their books and keep them open for inspection
subject to harassment by unscrupulous tax agents.

The law on prescription being a remedial measure should be interpreted in a

way conducive to bringing about the beneficent purpose of affording protection to
the taxpayer within the contemplation of the Commission which recommend the
approval of the law.

In order to provide even better protection to the taxpayer against

unreasonable investigation, the Tax Code of 1977, as amended, identifies
specifically the circumstances when the prescriptive periods for assessing and
collecting taxes could be suspended or interrupted. To give effect to the legislative
intent, these provisions on the statute of limitations on assessment and collection of
taxes shall be construed and applied liberally in favor of the taxpayer and
strictly against the Government.

2. The waiver of the statute of limitations, whether on assessment

or collection, should not be construed as a waiver of the right to invoke the
defense of prescription but, rather, an agreement between the taxpayer and
the BIR to extend the period to a date certain, within which the latter could
still assess or collect taxes due. The waiver does not mean that the taxpayer
relinquishes the right to invoke prescription unequivocally.[citing Republic v.
Ablaza, 108 Phi. 1105 (1960) ;
____________

15 | P a g e
6.CIR v. GJM Phil. Mfg. Inc., G.R. No. 202695, Feb. 29, 2016, 785 SCRA 253

Facts:
GJM informed BIR that due to the bankruptcy of its parent company it will
cancel its registration in Makati City and will transfer to Rosario, Cavite. The said
request was confirmed by the BIR. GJM filed its income tax return for 1999 on April
12, 2000. BIR sent a Letter of Informal Conference to GJM relative to its income tax
deficiency for taxable year 1999. Thereafter, BIR issued a Preliminary Assessment
Notice and an undated Assessment Notice; and Final Notice before seizure; but the
latter claimed that it did not receive any assessment notice. A warrant of distraint
and levy was issued; hence GJMA filed a Letter of Protest with the BIR which was
denied; hence, GJM filed a petition for review with the CTA En Banc affirmed the
CTA Division decision granting the petition and cancelling the the assessment
notice and warrant of distraint and levy.

Issues:
1. Who has the burden to prove receipt of the assessment notice?
2. Whether or not the right of the government to assess had already
prescribe
Ruling:
1. If the taxpayer denies having received an assessment from the BIR, it
then becomes incumbent upon the latter to prove by competent evidence that such
notice was indeed received by the addressee. The onus probandi has shifted to the
BIR to show by contrary evidence that GJM indeed received the assessment in the
due course of mail. It has been settled that while a mailed letter is deemed received
by the addressee in the course of mail, this is merely a disputable presumption
subject to contravention, the direct denial of which shifts the burden to the sender to
prove that the mailed letter was, in fact, received by the addressee.
While it is true that an assessment is made when the notice is sent within the
prescribed period, the release, mailing, or sending of the same must still be clearly
and satisfactorily proved. Mere notations made without the taxpayer's intervention,
notice or control, and without adequate supporting evidence cannot suffice.
Otherwise, the defenseless taxpayer would be unreasonably placed at the mercy of
the revenue offices.

2. The BIR failed to prove with competent evidence GJM's receipt of the
assessment, leads to no other conclusion but that no assessment was issued.
Consequently, the government's right to issue an assessment for the said period
has already prescribed. The assessment for deficiency DST is cancelled.

DOCTRINES:

1. When the taxpayer denies having received any assessment notice, the
burden is shifted on the CIR to prove receipt by competent evidence. Failing which

16 | P a g e
will lead to a conclusion that no assessment was issued. Thus, the right of the
government to asses had already prescribed.

2. The assessment notice must be sent at the laterst updated address of the
taxpayer. While a mailed letter is deemed received by the addressee in the course
of mail, this is merely a disputable presumption which can be controverted by
competent evidence..
_________

7. Metrobank & Trust Company, v.CIR, G.R. No. 182582 APR 17 2017 _
Facts:
Soldibank Corporation extended to „Luzon Hydro Corporation (LHC) a foreign
currency denominated loan in the principal amount of US$123,780,000.00. In their
Agreement, LHC agreed to shoulder all the corresponding internal revenue taxes
required by law to be deducted or withheld on the said loan, the filing of tax returns
and remittance of the taxes withheld to the BIR. On September 1, 2000, Metrobank
acquired Solidbank, and assumed the latter's rights and obligations under the loan
Agreement.

LHC paid Metro bank and withheld the ten percent (10%) final tax on the
interest portions of the said payments and remitted the same to BIR in March and
October 2001. Metrobank claimed it mistakenly paid the said tax and included the
same in the Monthly returns for March and October 2001. On December 27, 2002,
Metrobanki filed a letter to the BIR requesting for the refund thereof.

In view of CIR‟s inaction, Metrobank filed its judicial claim for refund via a
petition for review before the CTA on September 10, 2003. The CIR averred that:
(a) the claim for refund is subject to administrative investigation; ( b) Metro bank
must prove that there was double payment of the tax sought to be refunded; ( c)
such claim must be filed within the prescriptive period laid down by law; (d) the
burden of proof to establish the right to a refund is on the taxpayer; and ( e) claims
for tax refunds are in the nature of tax exemptions, and as such, should be
construed strictissimi juris against the taxpayer. CTA Division and En Banc denied
the claim for refund for March 2001 final tax on the ground of prescription.
Metrobank had until April 25, 2003 to file its administrative and judicial claim for
refund for March 2001 only on September 10. 2003. .

Issue:
Whether or not the CTA En Banc correctly held that Metrobank's claim for
refund relative to its March 2001 final tax had already prescribed.

Ruling:
YES, the claim for refund of the March 2001 final tax had already prescribed.
Sec. 204 (now Sec. 229) of the Tax Code,as amended, provides that no credit or
refund of taxes or penalties shall be allowed unless the taxpayer files in writing with

17 | P a g e
the Commissioner a claim for credit or refund within two (2) years after the payment
of the tax or penalty.

The two (2)-year prescriptive period commences to run from the time the
refund is ascertained, i.e., the date such tax was paid, and not upon the discovery
by the taxpayer of the erroneous or excessive payment of taxes. In the case at bar,
it is undisputed that Metrobank's final withholding tax liability in March 2001 was
remitted to the BIR on April 25, 2001. As such, it only had until April 25, 2003 to file
its administrative and judicial claims for refund, but the judicial claim for March 2001
was filed only on September 2003. A taxpayer must prove not only his entitlement
to a refund, but also his compliance with the procedural due process as
nonobservance of the prescriptive periods within which to file the administrative and
the judicial claims would result in the denial of his claim.

As regards the claim for refund for October 2001 tax payment for
insufficiency of evidence, the claim was denied. Metrobank‟s motion for
reconsideration was partially granted and it was allowed to present further evidence
regarding its claim for refund for the October 2001 final tax

DOCTRINES:

1. Sec. 229 refers to refund of illegally, excessively or erroneously collected

internal revenue taxes.

2. Both the administrative and judicial claims must be filed within two years
from the time the refund is ascertained – that is, from date of payment; not from the
discovery of the illegal, or erroneous or excessive payment.
____________

8. CE Luzon Geothermal Power Corp. v. CIR, GR No. 197526, July 26, 2017

CE Luzon is a VAT-registered domestic corporation engaged in the energy industry and owns
and operates the CE Luzon Geothermal Power Plant. The said plant generates power for sale
to the Philippine National Oil Company-Energy Development Corporation by virtue of an energy
conversion agreement. The sale of generated power by generation companies is a zero-rated
transaction under Section 6 of Republic Act No. 9136.

CE Luzon incurred unutilized creditable input tax amounting to P26,574,388.99 for taxable year
2003 as reflected in its amended quarterly VAT returns. CE Luzon timely filed before the Bureau
of Internal Revenue an administrative claim for refund of its unutilized creditable input tax.

First quarter admin. claim::

Without waiting for the decision of the CIR, or the expiration of 120 days for CIR to
decide, CE Luzon filed a judicial claim for refund of its first quarter unutilized
creditable input tax on March 30, 2005 before the CTA.

Second quarter admin. claim:

18 | P a g e
 On June 24, 2005, CE Luzon received the CIR’s decision denying its claim for
refund of creditable input tax for the second quarter of 2003.On June 30, 2005, it
filed before the CTA a judicial claim for the second to fourth quarters of taxable
year 2003.

The material dates are summarized below:

Period of Claim Date of Filing Expiration of Date of Date of Filing

Taxable Year Administrative 120 days Receipt of of Petition for
2003 Claim Denial of Review
Claim

March 30,
1st quarter January 20, 2005 May 20, 2005 -
2005

2nd quarter May 31, 2005 - June 24, 2005 June 30, 2005

October 5,
3rd quarter June 7, 2005 - June 30, 2005
2005

October 5,
4th quarter June 7, 2005 - June 30, 200515
2005

The CTA Second Division partially granted CE Luzon's claim for unutilized creditable
input tax since both the administrative and judicial claims were brought within the
two (2)-year prescriptive period. The CTA allowed the refund of P22,647,638.47
forhaving been substantiated and directed CIR to issue a tax credit certificate or to
refund CE Luzon the amount of P22,647,63 8.47 representing CE Luzon's creditable
input tax for taxable year 2003. Both the CIR and CE LUZON moved for the
reconsideration of the said Decision. DENIED.

The court of Tax Appeals En Banc partially granted CE Luzon's Petition for
Review.27 The Court of Tax Appeals En Banc ordered the Commissioner of Internal
Revenue to issue a tax credit certificate or to refund CE Luzon the amount of
P23,489,514.64, representing CE Luzon's duly substantiated creditable input tax for
taxable year 2003.Court of Tax Appeals En Banc partially granted CE Luzon's
Petition for Review.27 The Court of Tax Appeals En Banc ordered the Commissioner
of Internal Revenue to issue a tax credit certificate or to refund CE Luzon the
amount of P23,489,514.64, representing CE Luzon's duly substantiated creditable
input tax for taxable year 2003.

ISSUES: 1) whether CE Luzon Geothermal Power, Inc.'s judicial claims for refund
of input Value Added Tax for taxable year 2003 were filed within the prescriptive
period;

2) whether CE Luzon Geothermal Power, Inc. is entitled to the refund of

input Value Added Tax for the second quarter of taxable year 2003. Subsumed in
this issue is whether it has substantiated this claim.

19 | P a g e
RULING:

The tax credit system allows a VAT-registered entity to "credit against or

subtract from the VAT charged on its sales or outputs the VAT paid on its
purchases, inputs and imports."96

The VAT paid by a VAT-registered entity on its imports and purchases of goods and
services from another VAT-registered entity refers to input tax.97 On the other
hand, output tax refers to the VAT due on the sale of goods, properties, or services
of a VAT-registered person.98

Ordinarily, VAT-registered entities are liable to pay excess output tax if their input
tax is less than their output tax at any given taxable quarter. However, if the input
tax is greater than the output tax, VAT-registered persons can carry over the
excess input tax to the succeeding taxable quarter or quarters.99

Nevertheless, if the excess input tax is attributable to zero-rated or effectively zero-

rated transactions, the excess input tax can only be refunded to the taxpayer or
credited against the taxpayer's other national internal revenue tax. Availing any of
the two (2) options entail compliance with the procedure outlined in Section
112,100 not under Section 229, of the National Internal Revenue Code.

Section 229 of the National Internal Revenue Code, in relation to Section 204(C),
pertains to the recovery of excessively, erroneously, or illegally collected national
internal revenue tax. Sections 204(C) and 229 provide:

Section 204. Authority of the Commissioner to Compromise, Abate and Refund or

Credit Taxes. - The Commissioner may -
. . . .
(C) Credit or refund taxes erroneously or illegally received or penalties imposed
without authority, refund the value of internal revenue stamps when they are
returned in good condition by the purchaser, and, in his discretion, redeem or
change unused stamps that have been rendered unfit for use and refund their value
upon proof of destruction. No credit or refund of taxes or penalties shall be allowed
unless the taxpayer files in writing with the Commissioner a claim for credit or
refund within two (2) years after the payment of the tax or penalty: Provided,
however, That a return filed showing an overpayment shall be considered as a
written claim for credit or refund.

....

Section 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or

proceeding shall be maintained in any court for the recovery of any national
internal revenue tax hereafter alleged to have been erroneously or illegally
assessed or collected, or of any penalty claimed to have been collected without
authority, or of any sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not
such tax, penalty, or sum has been paid under protest or duress.

20 | P a g e
In any case, no such suit or proceeding shall be filed after the expiration of two (2)
years from the date of payment of the tax or penalty regardless of any supervening
cause that may arise after payment: Provided, however, That the Commissioner
may, even without a written claim therefor, refund or credit any tax, where on the
face of the return upon which payment was made, such payment appears clearly to
have been erroneously paid.

section 229 presupposes that the taxes sought to be refunded were wrongfully
paid.102

It is unnecessary to construe and harmonize Sections 112(C) and 229 of the

National Internal Revenue Code.

Excess input tax or creditable input tax is not an erroneously, excessively, or

illegally collected tax. Hence, it is Section 112(C) and not Section 229 of the
National Internal Revenue Code that governs claims for refund of creditable input
tax. If the excess input tax is attributable to zero-rated or effectively zero-rated
transactions, the excess input tax can only be refunded to the taxpayer or credited
against the taxpayer's other national internal revenue tax. Availing any of the two (2)
options entail compliance with the procedure outlined in Section 112, not under
Section 229, of the National Internal Revenue Code.

The term "excess" input VAT simply means that the input VAT available
as credit exceeds the output VAT, not that the input VAT is excessively
collected because it is more than what is legally due. Thus, the taxpayer who
legally paid the input VAT cannot claim for refund or credit of the input VAT as
"excessively" collected under Section 229.
The input VAT is not "excessively" collected as understood under Section 229
because at the time the input VAT is collected the amount paid is correct and
proper. The input VAT is a tax liability of, and legally paid by, a VAT-registered
seller of goods, properties or services used as input by another VAT-registered
person in the sale of his own goods, properties, or services. This tax liability is true
even if the seller passes on the input VAT to the buyer as part of the purchase
price. The second VAT-registered person, who is not legally liable for the input VAT,
is the one who applies the input VAT as credit for his own output VAT. If the input
VAT is in fact "excessively" collected as understood under Section 229, then it is the
first VAT-registered person — the taxpayer who is legally liable and who is deemed
to have legally paid for the input VAT — who can ask for a tax refund or credit
under Section 229 as an ordinary refund or credit outside of the VAT System. In
such event, the second VAT- registered taxpayer will have no input VAT to offset
against his own output VAT.

In a claim for refund or credit of "excess" input VAT under Section 110 (B) and
Section 112 (A), the input VAT is not "excessively" collected as understood under
Section 229. At the time of payment of the input VAT the amount paid is the
correct and proper amount. Under the VAT System, there is no claim or issue that
the input VAT is "excessively" collected, that is, that the input VAT paid is more
than what is legally due. The person legally liable for the input VAT cannot claim
that he overpaid the input VAT by the mere existence of an "excess" input VAT. The
21 | P a g e
term "excess" input VAT simply means that the input VAT available as credit
exceeds the output VAT, not that the input VAT is excessively collected because it is
more than what is legally due. Thus, the taxpayer who legally paid the input VAT
cannot claim for refund or credit of the input VAT as "excessively" collected under
Section 229.107 (Citations omitted, emphasis supplied)

Considering that creditable input tax is not an excessively, erroneously, or illegally

collected tax, Section 112(A) and (C) of the National Internal Revenue Code
govern:

Section 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. — Any VAT-registered person,

whose sales are zero-rated or effectively zero-rated may, within two (2) years after
the close of the taxable quarter when the sales were made, apply for the issuance
of 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 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 108 (B)(1) and (2),
the acceptable foreign currency exchange proceeds thereof had been duly
accounted for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated
or effectively zero-rated sale and also in taxable or exempt sale of goods or
properties or services, and the amount of creditable input tax due or paid cannot be
directly

2) In a Rule 45 Petition, only questions of law may be raised. 129 "This Court is not
a trier of facts."130 The determination of whether CE Luzon duly substantiated its
claim for refund of creditable input tax for the second quarter of taxable year 2003
is a factual matter that is generally beyond the scope of a Petition for Review on
Certiorari. Unless a case falls under any of the exceptions, this Court will not
undertake a factual review and look into the parties' evidence and weigh them
anew.

In the Petition docketed as G.R. Nos. 199676-77, the Commissioner of Internal

Revenue failed to establish that this case is exempted from the general rule. Hence,
this Court will no longer disturb the Court of Tax Appeals' findings on the matter.

___________

9. SILKAIR (SINGAPORE) PTE. LTD., vs. CIR, GR. No. 166482,Jan 25, 2012,
664 SCRA 33 -
Facts:
SILKAIR, a foreign corporation duly licensed by the SEC to do business in
the Phil., is an on-line international carrier operating the Cebu-Singapore-Cebu and
Davao-Singapore Davao routes. SILKAIR purchased aviation fuel from Petron Corp.
from July 1, 1998 to December 1, 1998, and paid the excise taxes due thereon.
Payment was made by Singapore Airlines for the benefit of SILKAIR.On Oct. 20,
1999, SILKAIR filed an administrative claim for refund of excise taxes on jet
22 | P a g e
fuel from Petron on the ground of erroneous payment based on Sec. 135(a)
and (b) of the 1997 Tax Code and Article 4 (2) of the Air Transport Agreement
between the Phil. government and Singapore Government.

For failure of CIR to act on said claim SILKAIR appealed to the CTA. Both
CTA and CA dismissed the petition on the ground that while SILKAIR is exempt
from paying excise taxes on petroleum products purchased in the Philippines by
virtue of Sec. 135 (b), it is not the proper party to seek for the refund; but Petron
Corp.-

Issue: Who is the proper party to file the claim for refund.

Ruling:For indirect taxes (i.e. excise tax and valued-added tax or VAT),
theproper party to question or seek a refund of the tax is the STATUTORY
TAXPAYER ---the person on whom the tax is imposed by law and who paid the
same even when he shifts the burden thereof to another; and in this case, it is
Petron Corp.

Excise taxes on articles manufactured or produced in the Philippines for

domestic sale or consumption or for any other disposition and to things imported
into the Philippinesis basically an indirect tax. While the tax is directly levied upon
the manufacturer/importer upon removal of the taxable goods from its place of
production or from the customs custody, the tax, in reality, is actually passed on to
the end consumer as part of the transfer value or selling price of the goods, sold,
bartered or exchanged.
_________________

10. Pacquiao v. CTA (First Division), G.R. 213394, April 6, 2016

Facts:
This petition was filed on the following grounds:

a. The FDDA and PCL were issued against petitioner Pacquiao only; but
the Warrant of Distraint and/or Levy/Garnishment issued by the CIR,
however, were made against the assets of both petitioners.

b. The warrants of garnishment had been served on the banks of both

petitioners even before the petitioners received the FDDA and PCL;

c. The Warrant of Distraint and/or Levy/Garnishment against the

petitioners was allegedly made prior to the expiration of the period
allowed for the petitioners to pay the assessed deficiency taxes;

d. The Warrant of Distraint and/or Levy/Garnishment against petitioners

failed to take into consideration that the deficiency VAT was already
paid in full;

23 | P a g e
 e. Petitioners were not given a copy of the Warrants. Sections 207 and
208 of the Tax Code require the Warrant of Distraint and/or
Levy/Garnishment be served upon the taxpayer.

Issue:
Whether or not there is need for the petitioners to comply with the
requirement of Sec. 11 of RA 1125.

Ruling:
The Supreme Court ruled that inasmuch as this case involves a question of
fact, whether petitioners are exempt from the requirement of Sec. 11 of RA 1125
considering that means employed by the CIR in collecting the tax is not sanctioned
by law. The CTA should have set the case for preliminary hearing to ascertain
whether the petitioners are exempt from the said requirement; whether the CIR
employed legal and proper means to collect the subject taxes. In this regard, the
case was remanded to the CTA for further proceedings for the said purpose, and
pending said determination, the CIR was ordered to cease and desist from
implementing the said warrants.At this early stage of the proceedings, it is
premature for this Court to rule on the issues of whether or not the warrants were
defectively issued; or whether the service thereof was done in violation of the rules;
or whether or not respondent's assessments were valid. These matters are
evidentiary in nature, the resolution of which can only be made after a full
blown trial.

DOCTRINES:

1. The appeal to the CTA does not suspend the collection of the tax assessed,
unless a TRO or injunction is issued by the CTA provided the taxpayer deposit with
the court the amount claimed or posts a surety bond, pursuant to Sec. 11 of RA
1125, the law creating the CTA.

2. The determination of whether the means employed by the government in the

assessment and collection of taxes are not sanctioned by law, is a question of fact.
which requires a full blown trial and the proper to hear the same is the CTA because
the Supreme Court is not a trier of facts.

3. In A.M. No. 15-92-01-CTAthe Supreme Court approved the CTA En

Banc Resolution No. 02-2015, where the phrase "amount claimed"as the basis of
the security deposit or surety bond required in Section 11 of R.A. No. 1125 was
construed to refer to the PRINCIPAL AMOUNT OF THE DEFICIENCY TAXES
ONLY, excluding penalties, interests and surcharges.
_______________

11.Procter & Gamble Asia Pte Ltd., v. CIR, G.R. No. 205652, Sept. 7, 2017
Facts: P&G is a foreign (Singapore) corporation with a Regional Operating
Headquarter in the Philippines and a VAT-registered taxpayer.

24 | P a g e
 On March 22, 2007 and May 2, 2007, P&G filed applications to BIR RDO
No. 49, for the refund or issuance of tax credit certificates (TCCs) of its input VAT
attributable to its zero-rated sales for the first and second quarters of 2005.

Pursuant to BIR Ruling No. DA-489-03dated December 10, 2003, on

March 28, 2007 and June 8, 2007, P&G filed two separate petitions for review with
the CTA for the refund or issuance of TCC for the said input VAT, which were
consolidated.BIR Ruling No. DA-489-03 allows taxpayer to file their judicial
claims for refund even before the lapse of the 120-day for the CIR to decide.
P&G presented its evidence to prove its claims for VAT refund; while the CIR,
submitted the cases for decision based on the pleadings, as the claim for refund
was still pending before the BIR RDO No. 49.The CIR, on the other hand,
contended that the plain language of Section 112(C) of the NIRC, as amended,
demands mandatory compliance with the 120+30-day rule; and P&G cannot claim
reliance in good faith with BIR Ruling No. DA-489-03 to shield the filing of its judicial
claims from the vice of prematurity.

On October 6, 2010, while these cases were pending before the CTA
Division, the Supreme Court promulgated CIR v. Aichi Forging Company of Asia,
Inc. (Aichi) where it was held that compliance with the 120-day period granted
to the CIR, within which to act on an administrative claim for refund or credit
of unutilized input VAT under Section 112(C) of the TaxCode, as amended, is
mandatory and jurisdictional.

In the meantime, on February 12, 2013, the Supreme Court decided the
consolidated cases of CIR v. San Roque Power Corporation, etc. (San
Roque),where BIR Ruling No. DA-489-03 was recognized as an exception to
the mandatory and jurisdictional nature of the 120-day period.

Issues:

1. Whether the judicial claims filed by P&G were prematurely filed for non-
compliance with the 120-day period for CIR to decide on the claims for
refund under Sec. 112 (C).
2. Which of the two decisions should be applied in this case – Aichi or San
Roque?
3. Whether estoppel lie against the BIR in the issuance of BIR Ruling Nol. DA-189-
03 dated December 10, 2003?

Ruling:

NO,P&G‟s judicial claims for refund filed on March 28, 2007 and June 8,
2007, respectively, or after the issuance of BIR Ruling No. DA-489-03, but before
the date when Aichi was promulgatedwere deemed timely filed and should not

25 | P a g e
have been dismissed by the CTA. These cases were considered as exception to
the said 120 day mandatory requirement.

The Court held that BIR Ruling No. DA-489-03 dated December 10, 2003
furnishes a valid basis to hold the CIR in ESTOPPELbecause the CIR had
misled taxpayers into filing judicial claims with the CTA even before the lapse
of the 120-day period. There is no dispute that the 120-day period is mandatory
and jurisdictional, and that the CTA does not acquire jurisdiction over a judicial
claim that is filed before the expiration of the 120-day period.

The Commissioner cannot be allowed to later on question the CTA's

assumption of jurisdiction over such claim since equitable estoppel has set in
as expressly authorized under Section 246 of the Tax Code.

DOCTRINES:

1. Reconciliation of the Aichi and San Roque rulings:

Section 112 of the NIRC, as amended, provides for the rules on claiming
refunds or tax credits of unutilized input VAT. The CIR is given 120 days within
which to grant or deny a claim for refund. Upon receipt of CIR's decision or ruling
denying the said claim, or upon the expiration of the 120-day period without action
from the CIR, the taxpayer has 30 days within which to file a petition for review with
the CTA.Aichi reiterated the rule that the 120-day period for the CIR to decide on
the claim for refund is mandatory and jurisdictional.

Judicial claims for refund of unutilized input VAT attributable to zero dated or
effectively zero-dated transactions filed when BIR Ruling No. DA-489-03 dated
December 10, 2003 was issued up to October 6, 2010, when San Roque was
decided, the taxpayer need not wait for the 120-days for the CIR to decide,
provided, the same is filed within two years from the close of the quarter.

This means that claims for refund of unutilized input VAT attributable to
zero-rated or effectively zero-rated transactions for the period December 10, 2003
to October 6, 2010, the taxpayer need not wait for the 120-day period for the CIR to
decide to file a petition for review with the CTA. Both the administrative and judicial
claims should be filed within the two-year statute of limitations for December 10,
2003 up to October 6, 2010.

2. There are, however, two exceptions to the mandatory requirement of 120

days for the CIR to decide and 30 days to appeal to CTA

a) if the Commissioner, through a specific ruling, misleads a particular

taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is
applicable only to such particular taxpayer.
26 | P a g e
 b) where the Commissioner, through a general interpretative rule issued
under Section 4 of the Tax Code, misleads all taxpayers into filing prematurely
judicial claims with the CTA.

3. BIR Ruling No. DA-489-03 is a valid basis to hold the CIR in

ESTOPPELbecause the CIR had misled taxpayers into filing judicial claims with the
CTA even before the lapse of the 120-day period. The Commissioner cannot be
allowed to later on question the CTA's assumption of jurisdiction over such claim
since equitable estoppel has set in as expressly authorized under Section 246
of the Tax Code,

4.BIR Ruling No. DA-489-03 is general interpretative rule.It is a response to a

query made, not by a particular taxpayer, but by a government agency tasked with
processing tax refunds and credits (the One Stop Shop Inter-Agency Tax Credit and
Drawback Center of the Department of Finance). While this government agency
mentions in its query to the Commissioner the administrative claim of Lazi Bay
Resources Development, Inc., the agency was in fact asking the Commissioner
what to do in cases like the tax claim of Lazi Bay Resources Development,
Inc., where the taxpayer did not wait for the lapse of the 120-day period.The
CIR mislead the taxpayers to rely on the said ruling and did not wait for the lapse of
the 120-day period for CiR to decide on the administrative claim for refund of un-
unitilized input tax attributable to zero-rated and effectively zero-rated transactions.

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