PM Reyes Notes On Taxation 2 - Remedies (Working Draft) (Updated 3 Mar 2013)

Updated 22 Mar 2013
PM REYES NOTES ON TAXATION II: REMEDIES

1. Tax Administration Composition, Powers, and Duties of the BIR
(Read Sections 2-3, 9-20, 244-246 and 290, Tax Code) Q1.What is the basic composition of the BIR?
Section 3 of the Tax Code provides that the BIR shall consist of a chief known as the Commissioner of Internal Revenue1 and four (4) assistant chiefs to be known as Deputy Commissioners.2 (see SECTION 3, T AX CODE)
Q3.Describe briefly the structure of the BIR?

The BIR is under the supervision and control of the Department of Finance (DOF). It is headed by the Commissioner of Internal Revenue and assisted by 6 Deputy Commissioners. Each region of the country has a Revenue Regional Director. The country is also divided into Internal Revenue districts headed by Revenue District Officers.
Q4.Give some notable powers and duties of a Revenue Regional Director?

1. Implement tax laws in the regional area 2. Administer and enforce tax laws including assessment and collection of all internal revenue taxes 3. Issue Letters of Authority (LOA) for the examination of taxpayers in the region ( see SECTION 11, T AX CODE)
Q2.What are the powers and duties of the BIR?

The powers and duties of the BIR shall comprehend: 1. The assessment and collection of all national internal revenue taxes, fees and charges 2. The enforcement of all forfeitures, penalties and fines connected therewith 3. Including the execution of judgments in all cases decided in its favor by the CTA and the ordinary courts 4. The Bureau shall give effect to and administer the supervisory and police powers conferred to it by this Code or other laws (see SECTION 2, T AX CODE)
Q5.What is the authority given to a Revenue Officer

The Revenue Officer, pursuant to a LOA, may examine taxpayers within the jurisdiction of the district to collect the correct amount of tax or to recommend the assessment of any deficiency tax. (see SECTION 13, T AX CODE)
Q6.Who promulgates revenue rules and regulations?

The Secretary of Finance, upon recommendation of the CIR, shall promulgate all needful rules and regulations for the enforcement of tax laws. (see SECTION 244, T AX CODE)
The present Commissioner for Internal Revenue is Kim JacintoHenares. 2 Note that under the approved BIR Rationalization Plan [June 29, 2010], the BIR shall have six (6) Deputy Commissioners to head the following functional groups: (1) Operations Group (2) Legal and Enforcement Group (3) Information Systems Group (4) Resource Management Group (5)Tax Reform Administration Group (new) and (6) Special Concerns Group (new) PM REYES NOTES ON TAXATION II: REMEDIES BY PIERRE M ARTIN DE LEON REYES
Q6.1. Give examples of revenue regulations made pursuant to Section 244 of the Tax Code RR 14-2008 [NOVEMBER 26, 2008]
Amends RR 2-98 increasing the coverage of withholding tax agents required to withhold 1%
Special thanks to BUTCH RAMIRO for assisting me in synthesizing the doctrines of the cases in the discussion of the jurisdiction of the CTA. This reviewer is a compilation of personal notes in Taxation Two and notes and lectures from Atty. Gruba, Atty. Montero and Atty. Mamalateo. References have also been made to the following books: DE LEON & DE LEON, JR. THE FUNDAMENTALS OF TAXATION (2012); DE LEON & DE LEON, JR. COMPREHENSIVE REVIEW OF TAXATION (2010); VITUG & ACOSTA. TAX LAW AND JURISPRUDENCE (2006); DOMONDON, TAXATION VOLUME II: INCOME TAX (2009); CO-U NTIAN, JR. TAX DIGEST (2009); MAMALATEO, REVIEWER ON TAXATION (2008). This reviewer is best used with SACDALAN-CASASOLA, NIRC AND OTHER LAWS (2012). Possessors are granted the right to reproduce and distribute this reviewer as well as the right to convert the work to any medium for the purpose of preservation and/or continued distribution provided that the authors name remains clearly associated with the work and that no alterations of the form and content are made.
Updated 22 Mar 2013

from regular supplier of goods and 2% from services from top 10,000 private corporations to top 20,000 private corporations Revenue Memorandum Circular (RMCs) and void ab initio. are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices. refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenues positions of the Tax Code, relevant tax laws and other issuances for the guidance of the public. are official position of the Bureau to Queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws. are issued by the BIR International Tax Affairs Division to rule on certain issues relating to interpretations of international tax treaty provision under which certain taxpayers or transactions can avail of tax exemptions or preferential tax rates.
RR 16-2002 [OCTOBER 11, 2002]

Amends RR4-97 on provisions relating to acceptable modes of payment of internal revenue taxes coursed through authorized agent banks, the recording of such payments and issuance of validated BIRprescribed deposit slips and the control mechanisms to deter and detect diversion of tax payments.
Revenue Bulletins (RB)
Q7.Enumerate and define the tax-related administrative issuances

Revenue Regulations (RRs) are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, the specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes. are issuances that provide directives or instructions; prescribe guideline; and outline processes, operations, activites, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing. are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null
BIR Rulings
BIR ITAD Rulings
Revenue Memorandum Orders (RMOs)
2. CIRs Powers and Duties

(Read Sections 4-8, Tax Code) Q8.What are the powers of the CIR?
1. To interpret tax laws and to decide cases 2. To obtain information and to summon, examine and take testimony of persons 3. To make assessment and prescribe additional requirements for tax administration and enforcement 4. To delegate power 5. To ensure the provision and distribution of forms, receipts, certificates, and appliances and acknowledgment of payment of taxes
Revenue Memorandum Rulings (RMRs)
PIERRE MARTIN DE LEON REYES
Updated 22 Mar 2013

To interpret tax laws and decide cases Q8.1. Differentiate the power of the CIR to interpret tax laws and the power to decide tax cases.
The power to interpret tax laws is under the exclusive and original jurisdiction of the CIR, subject to the review by the Secretary of Finance On the other hand, the power to decide tax cases, while vested also in the CIR, is subject to the exclusive appellate jurisdiction of the CTA. In BIR RULING NO. 370-2011 [OCTOBER 7, 2011], the CIR affirmed its position that the Poverty Alleviation and Eradication Certificates (PEAce) Bonds are not tax-exempt and subject to a 20% FWT. Previously, 2001 BIR Rulings have considered such instruments as tax-exempt. The CIR concluded that no right has been vested by virtue of the 2001 Rulings as they were null and void for being contrary to law.
Q8.2.2. What is the effect of RR 5-2012 [April 5, 2012] on rulings issued prior to January 1, 1998?
RR 5-2012 [APRIL 5, 2012] provides that all rulings issued prior to January 1, 1998 will no longer have any binding effect. They can no longer be invoked as basis for any current business transaction/s or as a basis for securing legal tax opinions and rulings. RMC 22-2012 [MAY 7, 2012] clarified that BIR Rulings prior to January 1, 1998 remains valid: 1. To the taxpayer who was issued the ruling 2. Covering the specific transaction which is subject of the ruling
Q8.1.1. Can the Secretary of Finance motu proprio review a ruling of the CIR?
Yes. DOF ORDER NO. 007-02 [MAY 7, 2002] provides that the Secretary of Finance may, of his own accord, review a ruling issued by the CIR.
Q8.2. Explain the rule retroactivity of rulings
on
non-
General Rule: Revenue Regulations, Rulings, Circulars and other administrative issuances have retroactive application Exception: If prejudicial to the taxpayer, they shall have retroactive application Exception to the Exception: Even if prejudicial to the taxpayer, they shall have retroactive effect in the following cases
1. The taxpayer deliberately misstates or omits material facts 2. The facts subsequently gathered are different from the facts on which the ruling was based 3. The taxpayer acted in bad faith
To obtain information, summon, examine and take testimony of persons Q8.3. Can the BIR obtain information without the consent of the taxpayer?
Yes. As ruled in FITNESS BY DESIGN V. CIR [OCTOBER 17, 2008], the BIR can obtain all relevant records and data in the person of the taxpayer without his consent
Q8.4. Does the CIRs power to obtain information include the power to inquire into bank deposits?
No as a general rule. However, the CIR is authorized to inquire into the bank deposits of: 1. A decedent to determine his gross estate 2. Any taxpayer who has filed an application for compromise of his tax liability under Section 204(A)(2) of the Tax Code by reason of financial incapacity to pay his tax liability. In addition as provided under RA 10021 (Exchange of Information on Tax Matters Act of 2009)
Q8.2.1. If a ruling was subsequently found by the CIR to be null and void, does the nonretroactivity principle still apply?
No. The non-retroactivity principle does not apply when the ruling involved is null and void for being contrary to law.
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3. Specific taxpayers subject of a request for exchange of information by a foreign tax authority pursuant to an international convention or agreement on tax matters to which the Philippines is a signatory or a party of.3 (see RR 10-2010 [OCTOBER 6, 2010]) facts. It ruled that best evidence includes the corporate and accounting records of the taxpayer who is subject of the assessment process while the best evidence obtainable does not include mere photocopies of records and documents. Such photocopies have no probative value and cannot be used as basis for any deficiency taxes against the taxpayer.
To make assessments and prescribe additional requirements for tax administration and enforcement Q8.5. Enumerate those acts which fall within the power of the CIR to make assessments and prescribe additional requirements for tax administration and enforcement.
1. Examination of returns and determination of tax due 2. Failure to submit required returns, statements, reports, and other documents 3. Authority to conduct inventory-taking, surveillance, and to prescribe presumptive gross sales and receipts 4. Authority to terminate the taxable period 5. Authority to prescribe real estate values 6. Authority to inquire into bank deposits 7. Authority to accredit and register tax agents 8. Authority to prescribe additional procedural or documentary requirements
Q8.5.3. In what instances can the CIR terminate the taxable period of a taxpayer?
When the taxpayer is: 1. Retiring from business 2. Intending to leave the country 3. Removing his property 4. Obstructing tax collection
Q8.5.4. Does the CIRs power to prescribe real estate values include the power to unilaterally reclassify the zonal valuation of properties?
As held in CIR V. AQUAFRESH SEAFOODS [OCTOBER 20, 2010], the Supreme Court ruled that although the CIR has the authority to prescribe real property values and divide the Philippines into zones, the law is clear that the same should be done upon consultation with competent appraisers both from the public and private sectors.
Q8.5.1. When a taxpayer files his return, can he still (1) withdraw it; or (2) amend it?
Once filed, the taxpayer may no longer withdraw it but he may amend it subject to the following requirements: 1. It is made within 3 years from filing 2. No notice for audit or investigation has been actually served to him
Q8.5.5. Who are tax agents?
practitioners/tax
tax
RR 11-2006 [JUNE 15, 2006] defines a practitioner/agent as those who are:
Q8.5.2. Explain the best obtainable evidence rule.

The rule is that an assessment must made based on the best evidence obtainable. In CIR V. HANTEX T RADING [MARCH 31, 2005], the Supreme Court opined that assessments must be based on actual
3
1. engaged in the regular preparation, certification, audit and filing of tax returns, information returns or other statements or reports 2. engaged in the regular preparation of requests for ruling, petitions for reinvestigation, protests, requests for refund or tax credit certificates, compromise settlement and/or abatement of tax liabilities and other official papers and correspondence 3. regularly appear in meetings, conferences, and hearings before any office of the BIR officially on behalf of a taxpayer or client in all
For income tax returns it shall be upon order of the President.
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matters relating to a client's rights, privileges, or liabilities Tax practitioners and agents are required to apply for accreditation. RR 11-2006 [JUNE 15, 2006], as amended by RR 4-2010 [FEBRUARY 24, 2010] and RR 14-2010 [NOVEMBER 25, 2010] provide for the guidelines on accreditation of tax practitioners/agents as a pre-requisite for their practice and representation before the BIR. power to the Chief of Legal Division of Region IV, the act having been likewise verified by the Regional Director.
3. Power/Remedy of Assessment4
(Read Sections 56 and 71, Tax Code and RR 12-99) Q10. Define assess taxation for purposes of
Q9.What powers delegable?
of
the
CIR
are
non-
1. To recommend the promulgation of rules and regulations 2. Issuance of first impression rulings 3. Compromise or abatement if the amount is over P500,000 4. Assign officers in charge of excisable articles
Assess means to impose a tax; to charge a tax; to declare a tax to be payable; to settle, determine or fix the amount of tax to be paid.
Q10.1. May the CIR be compelled by mandamus to make an assessment?

No. In MERALCO SECURITIES CORP V. SAVELLANO [ OCTOBER 23, 1982], the Supreme Court held that mandamus cannot lie to compel the CIR to impose a deficiency tax assessment. The CIRs power t o assess is a discretionary one.
Q9.1. A is the assistant commissioner of the BIR. Upon inquiry by ABC and XYZ company on the applicable excise tax rates, A signed a letter informing ABC and XYZ of the conduct of the survey, the results thereof and the applicable excise tax rates. ABC and XYZ contend that that A acted without authority and that it should be the CIR who signed such issuance. Are ABC and XYZ correct?
No. Under Section 7 of the NIRC, the CIR is authorized to delegate to his subordinates the powers vested in him except, among others, the power to issue rulings of first impression. Here, the subject matter of the letter does not involve the exercise of the power to rule on novel issues. It merely implemented the revenue regulations then in force (see PARAYNO VS. LA SUERTE CIGAR AND CIGARETTE FACTORY [JUNE 11, 2009])
Q11. How are taxes assessed? 5

1. Self-assessment Taxpayers are required to file tax returns for various kinds of income earned which may be subject to tax. When a taxpayer files the tax return, he is actually making a self-assessment. 2. Deficiency assessment is an assessment made by the BIR after the conduct of an investigation or audit when it finds that the tax return filed by the taxpayer contains an under-declaration of income or when the taxpayer does not at all file a tax return6
4
Q9.2. May the CIR delegate the power to approve the filing of tax collection cases?
Yes. The CIR may validly delegate to subordinates the power to approve the filing of tax collection cases in court. In REPUBLIC VS. HIZON [DECEMBER 13, 1999], the Supreme Court upheld the delegation of that
The discussion here will leave out those relating to the protest of an assessment. 5 In PNOC V. CA [APRIL 26, 2005], the Supreme Court differentiated self-assessment and deficiency assessment in this sense: Where tax liabilities are self-assessed, the compromise payment shall be based on the tax return filed by the taxpayer. On the other hand, where the BIR already issued an assessment, the compromise payment shall be computed based on the tax due on the assessment notice. 6 The term deficiency means: 1. The amount by which the tax imposed exceeds the amount shown as the tax by the taxpayer upon his return 2. If no amount is shown as the tax by the taxpayer upon his return, then the amount by which the tax exceeds the amount previously assessed (or collected without assessment)
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Q12. Describe the assessment process.
1. Assessment starts with the self-assessment by the taxpayer of his tax liability, the filing of his return and the payment of the tax due shown in his return 2. Issuance of a Letter of Authority (LOA)7 3. Examination of books of accounts and other records of taxpayers by revenue officers to 8 determine correct tax liability (Tax Audit) 4. Preparation of tentative findings and holding of informal conference (Issuance of a Notice of Informal Conference or NIC)9 5. Issuance of a Preliminary Assessment Notice (PAN) which may be objected to via a 10 Reply 6. Issuance of a Formal Assessment Notice (FAN) and letter of demand which may be objected to via a Protest11 (see RR 12-99 [SEPTEMBER 6, 1999])12 prohibited. If the audit of a taxpayer shall include more than one taxable period, the other periods shall be specifically indicated. (see RMO 43-90 [SEPTEMBER 20, 1990]. In CIR V. SONY PHILIPPINES [NOVEMBER 17, 2010], a Letter of Authority was issued covering the period 1997 and unverified prior years. The deficiency VAT assessment was based on records from January to March 1998. The Supreme Court held that the CIR went beyond the scope of their authority as indicated in the LOA. Further, the fact that the LOA covers unverified prior years invalidates it and a VAT deficiency assessment made on the basis thereof must be disallowed.
Q12.2.2. What is a Letter Notice?

A Letter Notice (LN) is a discrepancy notice issued by the CIR after conducting data matching processes, informing the taxpayer of findings of discrepancy. A LN covers only a tax indicated therein on a given particular period or quarter (e.g. VAT liabilities for 2002 3rd quarter) It must be noted, however, that under RMC 40-2003 [JULY 7, 2003] and RMO 55-2010 [JUNE 15, 2010], a LN shall be treated as a notice of audit or investigation in the absence of evident error or clear abuse of discretion. In order to expedite the processing of LN cases, the issuance of NICs may immediately commence, even without prior issuance of LOAs.13
Q12.1. What is system?
the
pay-as-you-file
Section 56, Tax Code provides that, as a general rule, the total amount of the tax shall be paid at the time the return is filed. This is otherwise known as the pay-as-you-file system.
Q12.2. What is a Letter of Authority (LOA)?

The Letter of Authority is the authority given to the revenue officer to perform assessment functions.
Q12.2.1. A LOA was issued to cover an audit of unverified prior years. Is the LOA valid?
No. A LOA should cover a taxable period not exceeding one taxable year. The practice of issuing LOAs covering audit of unverified prior years is
7
Q12.2.3. What constitutes as a valid assessment?

Previously, it is sufficient that the taxpayer be notified of the findings of the CIR. The rule now is that the taxpayer must be informed of not only the law but also of the facts on which an assessment would be made. (see CIR V. REYES [JANUARY 27, 2006]. An assessment must be based on actual facts and not on mere presumptions (see CIR V. BENIPAYO [JANUARY 31, 1962]) In CIR V. PASCOR REALTY [JUNE 29, 1999], the Supreme court held that an assessment must not
13
RM0 69-2010 [August 11, 2010] provides for the guidelines for the issuance of electronic LOAs 8 RMO 5-2009 [JANUARY 22, 2009] delineates the investigating offices that has jurisdiction to audit/ examine taxpayers. 9 If the taxpayer fails to respond within 15 days from date of receipt of the NIC, he shall be considered in default and the case shall be endorsed for assessment. 10 The taxpayer has 15 days to respond via a reply. 11 The taxpayer may protest administratively the formal letter of demand and assessment notice within 30 days from receipt thereof. This will be discussed in greater detail later. 12 This is a must read.
Thus, in this case, a LN is effectively equated to a LA.
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only contain a computation of tax liabilities but also a deman for payment within the prescribed period. In ADAMSON V. CA [MAY 21, 2009], at issue was whether the CIRs recommendation letter for the filing of a criminal complaint against the taxpayer for fraudulent returns and tax evasion can be considered a formal assessment. The Supreme Court held that such was not equivalent to a formal assessment. An assessment is a written notice and demand may by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed. A written communication containing a computation and giving him an opportunity to contest or disprove the findings is not an assessment since it is yet indefinite. 1. Assessment is purely mathematical error 2. Discrepancy between tax withheld remitted 3. Claim for refund is filed when it previously carried over (Section 76, Code) 4. Excise tax on excisable article not paid 5. Goods imported by tax-exempt entity sold to a taxable entity. and was Tax
are
Q12.2.4. Does the lack of a control number in the assessment notice invalidate it?
No. As held in CIR V. GONZALEZ [OCTOBER 12, 2010], the formality of a control number in the assessment notice is not a requirement for its validity bur tather the contents thereof which should inform the taxpayer of the declaration of deficiency tax against the said taxpayer.
In CIR V. METRO STAR SUPERAMA [DECEMBER 8, 2010], where the taxpayer received only a FAN, the Supreme Court ruled that such amounted to a denial of due process. The taxpayer must be informed of the facts and law upon which the assessment is made. The law imposes a substantive, not merely a formal requirement
4. Prescription of governments right to assess

(Read Sections 203 and 222-223, Tax Code)
.
Q12.2.5. Is an assessment presumed to be correct and made in good faith?

Yes. In BONIFACIO SY PO V. CTA [AUGUST 18, 1988], the Supreme Court held that tax assessments by tax examiners are presumed correct and made in good faith. The taxpayer has the duty to provide otherwise. However, that is the general rule. In CIR V. HANTEX T RADING [MARCH 31, 2005], the Supreme Court held that the rule does not apply when the CIR comes out with a naked assessment (an assessment that is without any foundation and hence, arbitrary and capricious).
Q13. How should the provisions on statute of limitations on assessment and collection of taxes be construed and applied?
Such provisions should be construed and applied liberally in favor of the taxpayer and strictly against the government. In CIR V. B.F. GOODRICH PHILS [FEBRUARY 24, 1999], the Supreme Court noted that our tax laws provides for a statute of limitations in the collection of taxes for the purpose of safeguarding taxpayers from any unreasonable examination, investigation or assessment.
Q12.2.6. Discuss the rule that the PAN must be issued prior to the FAN and demand letter and the exceptions thereto.
General Rule: The PAN must be issued by the BIR before issuing the FAN and letter of demand. Exceptions: A PAN is not required in the following instances
Q13.1. A filed a claim for tax refund of income tax paid in 1997. Pursuant to Section 229 of the Tax Code, A had two years from the filing of its final adjusted return to file a claim for tax refund or credit. The CIR argued that the taxpayer had 730 days to file its claim given that Article 13 of the Civil Code states that a year is understood to mean 365 days. The taxpayer contended that under the Administrative
Updated 22 Mar 2013

Code, a year consists of 12 calendar months and having filed the claim on the last day of the 24 th calendar month, the claim was filed within the prescriptive period. Which contention is correct?
The taxpayer is correct. In CIR V. PRIMETOWN PROPERTY [AUGUST 28, 2007], the Supreme Court held that there exists a manifest incompatibility between the manner of computing legal periods under the Civil Code and the Administrative Code. Given that the Administrative Code is the more recent law, its treatment of a year governs the computation of legal periods. In comparison, the right to collect the tax prescribes in 5 years.
Q14.1. May there be a proceeding in court when no assessment is made within the 3 year period?
General Rule: There must be an assessment within the 3 year period. Exceptions: Section 222, Tax Code provides for the following instances 1. A false or fraudulent return is filed with intent to evade tax 2. There is a failure to file a return In such cases, the tax may be assessed or a proceeding in court for collection may be filed without assessment at any time within 10 years from discovery of the falsity, fraud, or omission.
Q13.2. The last day of the 36th calendar month falls on a Saturday. Can the BIR issue the assessment on Monday instead?
Yes. As held in CIR V. WESTERN PACIFIC CORPORATION [MAY 27, 1965], where the last day for issuing a tax assessment falls on a Saturday, it may be validly issued the following business day pursuant to RA 1880 which ordains that certain offices like the BIR are not required to observe office hours on such day.
Q14.1.1. Is there a difference between a false return and a fraudulent return?

Yes. A false return merely implies deviation from the truth, whether intentional or not, while a fraudulent return refers to an intentional evasion of tax. (see AZNAR V. CTA [AUGUST 23, 1974])
Q13.3. Can limitations on the right to assess and collect be presumed?

No. As held in CIR V. AYALA SECURITIES CORPORATION [NOVEMBER 21, 1980], limitations upon the right of the government to assess and collect taxes will not be presumed in the absence of clear legislation to the contrary and that where th government has not by express statutory territory provisions provided a limitation upon its right to assess unpaid taxes, such right imprescriptible.
Q14.1.2. A filed his tax return in 2000. The CIR assessed A for deficiency taxes in 2004 alleging fraud in its complaint. Has the right to assess prescribed?
Yes. As held in REPUBLIC V. LIM DE YU [APRIL 30, 1964], it is not enough the fraud is alleged in the complaint, it must be proven and established.
Q14. When does the governments right to assess prescribe?

The governments right to assess prescribes in 3 years from the date of the last day of filing. However: 1. If the return is filed after such date, the 3 year period is reckoned from date of actual filing 2. If the return is filed before the last day, then considered as filed on last day.
Q14.1.3. The CIR contends that seven lots were deliberately omitted by A in his return filed as the representative of the heirs. A contends that the lots were excluded because one belonged to one of the heirs, three were already declared in the return of the surviving spouse, and three were
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actually included. Is there a deliberate intent to evade taxes on the part of A? No. As held in REPUBLIC V. HEIRS OF CESAR JALANDONI [SEPTEMBER 20, 1965], the omission as described above was not deliberate and did not amount to fraud indicative of an intention to evade payment of the proper tax due the government. Q14.2. When is the running of the period of prescription suspended?
It is suspended when: 1. The CIR was prohibited from making the assessment or beginning distraint/levy and for 60 days thereafter14 2. Taxpayer requests reinvestigation which is granted by the CIR 3. Taxpayer cannot be located in address 4. A warrant of distraint and levy is served (not only issued) and no property could be found 5. Taxpayer is out of the Philippines
Q14.4.1.
What is the exception to the above rule?
If the receipt is disputed and for this presumption of receipt of mail to apply, the CIR must prove that: 1. The letter was properly addressed 2. The letter was mailed; otherwise, presumption of receipt cant apply. (see NAVA V. CIR [JANUARY 30, 1965]) In REPUBLIC V. CA [APRIL 30, 1987], the Supreme Court held that a direct denial of receipt of a mailed demand letter by the addressee shifts the burden upon the party favored by the presumption of receipt of letter to prove that the mailed letter was indeed received.16
Q14.5. Will service of an assessment notice made to the agent of the decedent after the decedents death be effective?
No. As held in ESTATE OF L ATE JULIAN DIEZ V. CIR [JANUARY 27, 2004], service of assessment notice on the trust officer/agent of the decedent made after the death is invalid since at that time the legal relationship between the principal and his agent had been automatically severed by the death of the principal even if the agent continued to act as such by filing the decedents ITR. The fact of failure to file a notice of death will not later this effect but will only expose the estate to penalties and will not continue the relationship with the agent.
Q14.3. What is the effect if the assessment is made beyond the prescribed period?
Assessments made beyond the prescribed period would not be binding on the taxpayer. (see T UPAZ V. ULEP [OCTOBER 1, 1999]; CIR v. AYALA SECURITIES CORPORATION [MARCH 31, 1976]
Q14.4. Is there a need to prove that the taxpayer actually received the assessment notice within the prescriptive period?
No. As a general rule, the assessment is deemed made once the notice is mailed.15 (see BASILAN ESTATES V. CIR [SEPTEMBER 5, 1967]).
Q14.6. What is the significant of the taxpayers indicating in the previous years ITR its new address?
As held in CIR V. BPI AS LIQUIDATOR OF PARAMOUNT ACCEPTANCE CORP [SEPTEMBER 23, 2003], any service of assessment notice on the old address subsequent to such previous year invalidates the assessment.
14
An example would be when an injunction is allowed under the CTA law is availed of 15 RR 12-99 [SEPTEMBER 6, 1999] provides that if the notice to the taxpayer is served by registered mail and no response is received from the taxpayer within the prescribed period from date of the posting thereof in the mail, the same shall be considered actually or constructively received by the taxpayer. Further, if the same is personally served and the taxpayer refuses to acknowledge receipt thereof, the same shall be constructively reserved on the taxpayer.
Q14.7. What is the reckoning point with respect to amended returns?
16
Also important to note in this case is the ruling that a follow-up letter which reiterates demand for payment of taxes is considered a notice of assessment.
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From the filing of the amended return if the amendment is substantial. In CIR V. PHOENIX [MAY 20, 1965], the taxpayer filed its ITR for 1952 on 1 April 1953. It amended the said return on 30 August 1955. Thereafter, on 24 July 1958, the CIR assessed deficiency income tax on the basis of the amended return contending that his right to assess has not yet prescribed inasmuch as the same was availed of 17 within 5 years from the filing of the amended return. The Supreme Court ruled that where the deficiency assessment is based on the amended return, which is substantially different from the original return, the period of limitation of the right to issue the same should be counted from the filing of the amended return. In this case, the changes and alterations embodied in the amended return constituted substantial ones and thus the CIRs deficiency assessment was not barred by prescription. 3. Taxpayer must be furnished a copy of the waiver in order to perfect the agreement since the waiver is not a mere unilateral act (see PHILIPPINE JOURNALISTS INC. V. CIR [DECEMBER 16, 2004]). Q14.10.1. Can the waiver cover taxes already prescribed? No. As held in REPUBLIC V. LIM DE YU [APRIL 30, 1964], the waiver of the statute of limitations executed by the taxpayer cannot be deemed to include taxes already prescribed. Q14.10.2. Can the doctrine of estoppel be applied as an exception to the statute of limitations? No. In CIR V. KUDOS METAL CORPORATION [MAY 5, 2010], the Supreme Court held that the doctrine of estoppels cannot be applied as an exception to the statute of limitations on the assessment of taxes considering that there is a detailed procedure for the proper execution of the waiver.
Q14.8. What if the return is incomplete, will the prescriptive period to assess run?
No. As held in REPUBLIC V. MARSMAN DEVELOPMENT COMPANY [APRIL 27, 1972], in order that the filing of a return may serve as a starting point of the period for making an assessment, the return must be as substantially complete as to include the needed details on which the full assessment may be made.
4. Imposition of Penalties
(Read Section 247-252, Tax Code and RR 1299 and RMO 19-2007 [August 10, 2007]19) Q15. What are the civil penalties under the Tax Code and in what instances are they imposable?
1. 25% surcharge, which is imposable in case of: a. Failure to file a return and pay tax due thereon b. Filing with unauthorized revenue office c. Failure to pay within time prescribed in assessment notice d. Failure to pay part of the amount shown in ITR 2. 20% interest, which is imposable in all abovementioned cases except letter (d). 3. 50% surcharge, which is imposable in case of:
19
Q14.9.
Can an income tax return be deemed a return of sales tax purposes?
No. As held in BUTUAN SAWMILL V. CTA [FEBRUARY 28, 1966], an income tax return cannot be considered as a return for compensating tax or sales tax purposes. The taxpayer must file a return for the particular tax required by law in order to avail himself of the benefits of the law.
Q14.10. What are the requirements of a valid waiver of the statute of limitations?18
1. The specified period 2. Signature of the proper authority (for Php 1 million or above, the CIR must sign)
17
Note that the case was governed under the old law which provides for 6 tears to assess and another 5 years to collect. 18 RMC No. 29-2012 [June 29, 2012] provides for the form to be used for waiver of the defense of prescription under the Statute of Limitations.
This RMO contains the Consolidated Revised Schedule of Compromise Penalties for Violations of the Tax Code.
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a. Willful neglect to file the return within the period prescribed b. False or fraudulent return is willfully made In CIR V. AIR INDIA [JANUARY 29, 1988], the Supreme Court explained the fraud contemplated by the law in this way: It must be intentional fraud, consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some legal right. Negligence, whether slight or gross, is not equivalent to the fraud with intent to give up some legal right. Negligence, whether slight or gross, is not equivalent to the fraud with intent to evade the tax contemplated by the law. It must amount to intentional wrongdoing with the sole object of avoiding the tax.
Q15.1. Is the collection of penalty and interest in case of delinquency mandatory?

Yes. As held in PHILIPPINE REFINING COMPANY V. CA [MAY 8, 1996], it is mandatory to collect penalty and interest at the stated rate in case of delinquency. The intention of the law is to discourage the delay in the payment of taxes due the Government, and, in this sense, the penalty and interest is not penal but compensatory for the concomitant use of the funds by the taxpayer beyond the date when he is supposed to have paid them to the government.
Q15.4. When may interest on deficiency tax be waived?

When the assessment is highly controversial as in the case of CAGAYAN ELECTRIC POWER & LIGHT CO. V. CIR [SEPTEMBER 25, 1985], where there was a withdrawal of its exemption from income tax and a subsequent reinstatement of such exemption. Thus, non-payment during the short time when the taxpayer was exempt was not subjected to interest payment.
Q15.2. ABC is a cement company. Initially, the BIR ruled that cement is a mineral product rather than a manufactured product and is therefore subject to ad valorem tax, not sales tax. Subsequently, the CIR ruled that cement is a manufactured product and therefore subject to sales tax. The BIR then assessed ABC for deficiency sales tax and imposed the 25% surcharge. Is the 25% surcharge imposable?
No. In CIR V. REPUBLIC CEMENT CORP [AUGUST 10, 1983], the Supreme Court noted that the 25% penalty contemplates a case where the liability for the tax is undisputed or indisputable. In this case, the assessments are disputed. The dispute as to the tax liability of Republic Cement for sales tax arose not simply because of ordinary divergence of views in good faith vis--vis the interpretation of the law, the position of Republic Cement was founded upon the original stand of the BIR itself that cement is a mineral product. Under such circumstances, the 25% surcharge imposition must be deleted.
Examples on Civil Penalty Impositions

Q15.5. If a taxpayer who files a return subsequently realizes that the return filed was insufficient, will his amended return be subject to the 25% surcharge?
No. As long as the taxpayer files the amended return before the lapse of any demand by the BIR to pay his deficiency assessment, the taxpayer is not liable for any surcharge.
Q15.6. Taxpayer A filed and paid taxes on April 15, 2009 worth 5 million. On May 15, 2009, he realized he should have paid 6 million and thus pays the additional 1 million. Is A subject to the 25% surcharge?
No. None of the violations mentioned was committed by the taxpayer.
Q15.3. What is the nature of the fraud contemplated in the act of making a fraudulent return which would subject the taxpayer to a 50% surcharge?
Q15.7. Taxpayer B filed and paid taxes on April 15, 2009 worth 5 million. On May 15, 2009, the BIR issued an assessment and required B to pay an additional 1 million on or before
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June 15, 2009. If B pays before June 15, 2009, is he subject to the 25% surcharge?
No. None of the violations mentioned was committed by the taxpayer. consequence of the criminal act charged nor is it a mere civil liability arising from a crime that could be wiped out by judicial declaration of non-existence of the criminal acts charged.
Q17. Should the filing of a criminal complaint be preceded by assessment?

No. In case of a false or fraudulent return, proceedings in court may be commenced without an assessment since under the Tax Code, civil and criminal aspects may be pursued In UNGAB V. CUSI [MAY 30, 1980]the Supreme Court held that while there can be no civil action to enforce collection before the assessment procedures provided in the Tax Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Tax Code. This was clarified further in CIR V. PASCOR REALTY AND DEVELOPMENT CORP. [JUNE 29, 1999], the taxpayer argued that a tax assessment should precede a criminal indictment. The Supreme Court disagreed. The Court noted that Section 222 of the Tax Code specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file return, proceedings in court may be commenced without an assessment. Further, Section 205 provides that the civil and criminal aspects may be pursued simultaneously. An assessment is not necessary before a criminal charge can be filed and such criminal charge need only be supported by a prima facie showing of failure to file a required 20 return. This was likewise reiterated in Adamson v. CA [May 21, 2009] where the Court held that there is no need for precise computation and formal assessment in order for criminal complaints can be filed against the taxpayer. An assessment is not necessary for a criminal prosecution for willful attempt to defeat and evade the income tax.
Q15.8. Taxpayer C did not file any return nor pay any taxes on April 15, 2009. On May 15, 2009, he realized he should have paid 6 million and thus pays the whole 6 million. Is he subject to the 25% surcharge?
Yes. Taxpayer C failed to file a return and pay the tax due thereon which is the first type of act which requires a 25% surcharge imposition.
Q15.9. Taxpayer D filed and paid taxes on April 15, 2009 worth 10 million. On May 15, 2009, the BIR issued an assessment and required D to pay an additional 5 million on or before June 15, 2009. If D pays before June 15, 2009, is he subject to any surcharge?
Yes. Taxpayer D will be subject to the 50% surcharge since (a) he failed to pay within the time prescribed in the notice of assessment; and (b) the under declaration is 50% or in excess of the 30% threshold which raises the prima facie presumption of a false or fraudulent return. As such allegation is only prima facie, it may be rebutted.
5. Criminal Action and other penalties

(Read Sections 253-280, Tax Code) Q16. Does the dismissal of a civil acion carry with it the dismissal of the civil aspect of tax collection?
No. The proceedings in tax cases are different since the tax liability is not deemed included in criminal cases filed. In REPUBLIC V. PATANAO [JULY 21, 1967], the Supreme Court held that since the taxpayers civil liability is not included in the criminal action, his acquittal in the criminal proceeding does not necessarily entail exoneration from his liability to pay taxes. His legal duty to pay taxes cannot be affected by his attempt to evade taxes. Said obligation is not a
Q18. What are the elements of a violation of Section 255 of the Tax Code for failure to make or file a return?
1. The accused is a person required to make or file a return
20
The Court also stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.
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2. The accused failed to make or file the return at the time required by law 3. The failure to make or file the return was willful (see PEOPLE V. KINTANAR [CTA CRIM . CASE NO. 006, DECEMBER 3, 2010]) punishment of the tax offense involving a fraudulent return before the 5-year prescriptive period begins? Yes. In LIM, SR. V. CA [OCTOBER 18, 1990], the Supreme Court held adopted the view of the Solicitor General to the effect that, in addition to the fact of discovery, there must be a judicial proceeding for the investigation and punishment of the tax offense before the five-year limiting period begins. Also,
Q18.1. Define willful in the context of the third element of a violation of the Tax Code for failure to make or file the return?
In PEOPLE V. KINTANAR [CTA CRIM . CASE NO. 006, DECEMBER 3, 2010, affirmed by the Supreme Court in a minute resolution [G.R. 196340] dated February 2012], the Supreme Court defined willful in this light: willful in the tax crimes statutes means voluntary, intentional violation of a known legal duty, and bad faith or bad purpose need not be shown. Further, the Supreme Court stated that an act or omission is "willfully" done if done voluntarily and intentionally and with specific intent to do something the law forbids, or with specific intent to fail to do something the law requires to be done; that is, with bad purpose to either disobey or disregard the law. A willful act may be described as one done intentionally, knowingly and purposely, without justifiable excuse.
Q19.2. In what instances is the prescriptive period interrupted?

1. When proceedings are instituted against guilty persons (and shall run again if proceedings are dismissed for reasons constituting jeopardy) 2. When the offender is absent from Philippines the the not the
7. Informers Reward
(Read Section 282, Tax Code) Q20. What is the reward given to persons instrumental to the discovery of violations of the Tax Code?
A sum equivalent to 10% of the revenues, surcharges, or fees recovered and/or fine or penalty imposed and collected or P1 million, whichever is lower. Entitlement to Informers Reward Yes No
6. Prescription of Criminal Action

(Read Section 281, Tax Code) Q19. What is the prescriptive period for violations of the Tax Code?
All violations of any provision of the Tax Code shall prescribe after 5 years.
Q19.1. When does the period begin?

Prescription shall begin to run from:
prescriptive
The offender offered to compromise No revenue, surcharges or fees were actually recovered The information refers to case already pending or previously investigated
No
1. The day of the commission of the violation 2. If the same is not known, from the discovery and the institution of judicial proceedings for its investigation and punishment.
Q20.1. Who are disqualified from availing of the informers reward?

1. A BIR official or employee or any other incumbent public official or employee;
Q19.1.1. In addition to discovery, must

there be a judicial proceeding for the investigation and
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2. Relative within the sixth (6th) civil degree of consanguinity of a BIR official or employee, or other public official or employee; and 3. Though already retired or otherwise separated from service, BIR officials or employees or other public officials who acquired the information in the course of the performance of their duties during their incumbency. (see RR 16-2010 [NOVEMBER 25, 2010])
and executory assessments for taxes, fees, charges and penalties?

1. The CTA if the principal amount of taxes and fees, exclusive of charge and penalties is Php 1 million and above. 2. The proper MTC or RTC if the principal amount of taxes and fees, exclusive of charge and penalties, is less than Php 1 million. Q22.1.1. Assuming that the principal amount of taxes and fees is less than Php 1 million, can the lower court acquire jurisdiction over a a tax collection case while there is a pending case in the CTA disputing the assessment? No. As held in YABES V. FLOJO [JULY 20, 1982], the Supreme Court held that the lower court can acquire jurisdiction over a claim for collection of deficiency taxes only after the assessment made by the CIRT has become final and unappealable, not where there is still a pending CTA case.
9. Power/Remedy of Collection
Q21. What are the remedies available for the collection of taxes?
1. 2. 3. 4. 5. 6. 7. 8. Tax Lien21 Compromise22 Distraint of goods Levy of real property Civil or criminal action Forfeiture Suspension of business operations Enforcement of administrative fines
The remedies may be resorted to all at the same time but distraint of goods and levy of real property is not available if less than 100 pesos.
Collection in cases where assessment has become final and appealable

(Read Section 205, Tax Code) Q22. What is the effect of the failure of the taxpayer to appeal the denial of the protest by the CIR to the CTA in due time?
Failure of the taxpayers to appeal to the CTA in due time make the assessments in question, final, executory and demandable. (see DAYRIT V. CRUZ 23 [SEPTEMBER 26, 1988]).
Q22.2. When an assessment has become final for failure to protest, can the taxpayer still raise the issue of prescription?
Yes. As held in CIR V. HAMBRECHT & QUIST PHILIPPINES [NOVEMBER 17, 2010], the Supreme Court held that the fact that an assessment has become final for failure of the taxpayer to file a protest within the time allowed only means that the validity or the correctness of the assessment may no longer be questioned on appeal. However, the validity of the assessment itself is a separate and distinct issue from the issue of whether the right of the CIR to collect the validly assessed tax has prescribed.
Q22.1. Which court has exclusive original jurisdiction in tax collection cases involving final
21 22
Q22.3. May an assessment for deficiency estate tax attain finality when there is a pending case in the probate court?
Yes. In MARCOS II V. CA [JUNE 5, 1997], the Supreme Court held that the approval of the probate court is not a mandatory requirement in the collection of estate taxes. In this case, the estate tax assessment
See Section 209, Tax Code See Section 204, Tax Code 23 The Court also stated that a suit for collection of internal revenue taxes where the assessment has already become final and executory is akin to an action to enforce judgment.
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had become final and unappealable by the failure of the taxpayer to contest or appeal the assessment made. The deficiency tax assessment, being final, executory, and demandable may now be collected.
Q23. Is a decision on a request for reinvestigation a condition precedent to the filing of an action of taxes already assessed?
No. In REPUBLIC V. LIM T IAN T ENG SONGS & CO [MARCH 31, 1966], the Supreme Court ruled that a decision on a request for reinvestigation is not a condition precedent to the filing of an action of taxes already assessed. Nowhere in the Tax Code is the CIR required to rule first on a taxpayers request for reconsideration before he can go to court for the purpose of collecting the tax assessed. The requirement to rule on disputed assessments before bringing action for collection is applicable only on where the assessment was actually disputed, adducing reasons in support thereto. In this case, the taxpayer did not actually contest the assessment by stating the basis thereof. (see DAYRIT V. CRUZ [SEPTEMBER 26, 1988])
Q25. The CIR served a warrant of distraint over four barges owned by ABC Company to satisfy various deficiency taxes. Later, the same four barges were levied upon execution to satisfy a judgment for unpaid wages and other benefits of the employees of ABC Company. Which claim is superior?
The claim of the government is superior. As held in CIR v. NLRC [November 9, 1994] reiterating the doctrine laid down in REPUBLIC V. ENRIQUEZ [OCTOBER 21, 1988], the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicted on a judgment. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax had become due and payable. In both cases, the distraint was made long before the writ of execution was issued to implement the levy on execution.
Compromise & Abatement

(Read Section 204, Tax Code, RR 30-2002 [for compromise], RR 13-01 [for abatement])25 Q26. What is a compromise?
A compromise is an agreement whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced (see ART. 2208, CIVIL CODE)
Tax Lien
(Read Section 219, Tax Code) Q24. Does the tax lien follow the property subject to the tax into the hands of a third party when at the time of transfer, no demand had been made and the purchaser had no notice of the existence of the lien? No. In HSBC V. RAFFERTY [NOVEMBER 15, 1918], the Supreme Court held that a business of ordinary prudence could not be expected to foresee that the property which he had teken in satisfaction of a debt was burdened by a tax. Because no demand had been made and because the business had no notice of the tax, there was no valid subsisting lien upon the ties.24
24
Q26.1. Can a compromise be made after final judgment?

No. In Rovero v. Amparo [May 5, 1952], the Supreme Court stressed that a compromise is resorted to, to avoid litigation or to end a suit already instituted. There can no longer be a compromise at a stage of judicial proceedings where a final judgment has already been rendered because there is nothing to compromise as the Government has definitely and finally won the litigation.
It must be noted that Section 219 of the Tax Code provides that the lien shall not be valid against any mortgagee, purchaser or judgment creditor until notice of such lien shall be filed by the CIR in the Office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located.
Q26.2. What are the grounds for the compromise of payment of internal revenue taxes?26
25
RMO 20-2007 [AUGUST 13, 2007] provides for the guidelines for the simplified processing of applications for compromise and abatements.
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1. Doubtful validity of the assessment 2. Financial incapacity made (see PEOPLE V. SANDIGANBAYAN [AUGUST 16, 2005].
Q26.3. What are the minimum amounts for compromise settlements?

1. For cases of financial incapacity, the minimum compromise rate is 10% of the basis assessed tax. 2. For other cases (including doubtful validity), the minimum compromise rate is 40% of the basic assessed tax. Q26.3.1. Can the compromise offer of a taxpayer be lower than the prescribed rates? Yes, but the approval by the Evaluation Board which is composed of the CIR and the 4 Deputy Commissioners is required.
Q27.2. What are the abatement?27
grounds
for
1. If the assessment is excessive or erroneous 2. If the administration costs involved do not justify the collection of the amount due
Civil Remedies for Collection (Distraint & Levy)

(Read Section 205-217, Tax Code) Q28. In what instances can the CIR place under constructive distraint28 the property of a taxpayer?
1. Delinquent taxpayer 2. Taxpayer is retiring from any business subject to tax 3. Taxpayer is intending to leave the Philippines 4. Taxpayer is intending to remove his property therefrom 5. Taxpayer is intending to hide or conceal his property 6. Taxpayer is intending to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him (see SECTION 206, T AX CODE; RMO 42-2010 [MAY 4, 2010])
Q26.4. Can a void assessment serve as basis for a compromise?

No. As held in CIR V. REYES [JANUARY 27, 2006], the Supreme Court reiterated that an assessment that fails to inform the taxpayer of the law and the facts on which it is made is void. As a corollary, a void assessment cannot in turn be used as basis for perfection of a tax compromise.
Q26.5. Can criminal violations of the Tax Code be compromised?

Yes, except (a) those already filed in court and (b) those involving fraud.
Q29. When can there be (a) distraint and (b) levy?

1. For distraint upon failure of the person owing any delinquent tax or delinquent revenue to pay the same at the time required
Q27. What is abatement?

An abatement is a diminution or decrease in the amount of tax imposed such that to abate is to nullify or reduce in value or amount.
Q27.1. How is it different compromise?
from
27 27
A compromise is marked by mutual concessions, whereas in abatement or cancellation, no mutual concessions between the taxpayer and the CIR are
26
Refer to RR 30-2002 [December 16, 2002] for the instances where the tax can be compromised under these two grounds.
Refer to RR 13-2001 [September 27, 2001] for the instances where the tax can be compromised under these two grounds. Note that RR 13-2001 was amended by RR 4-2012 [March 28, 2012]. Previously, one of the instances is when there is late payment of the tax under meritorious circumstances. One day late filing and remittance due to failure to beat bank cut-off time fall under this instance in RR 13-2001. RR 4-2012 deleted the same. 28 In a constructive distraint, the taxpayer or any person having possession or control of the property will sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispute the same without authority from the CIR.
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2. For levy after the expiration of the time required to pay the delinquent tax or delinquent revenue and after the distraint of the property
10. Prescription of governments right to collect

(Read Section 203, and 222-223, Tax Code) Q32. When may made?30 collection of taxes be
Q30. When can warrants of distraint and garnishment and/or levy on disputed assessments finally decided by the BIR against the taxpayer and on assessments upheld by the CTA be issued and served ?
1. For disputed assessments finally decided by the BIR, upon issuance of the CIR or Regional Director of the final decision on the disputed assessment 2. For assessments upheld by the CTA, upon issuance by the CTA in division or En Banc of its decision (see RMO 39-07 [DECEMBER 12, 2007])
It may be made within 5 years from assessment.
Q32.1. Summarize the prescriptive periods for the collection of taxes.

Regular ITR No ITR, False ITR, Fraudulent ITR Collection w/ prior assessment Assess within 3 years Assess within 10 years from actual filing or last from discovery of fraud, day to file, whichever is falsity or omission later Collect within 5 years Collection within 5 years from date of assessment from date of assessment by summary or judicial by summary or judicial31 Collection w/o prior assessment Cannot be done anymore Collection within 10 years because there must be from date of discovery of an assessment before the falsity, fraud, collection in the case of a omission by judicial regular ITR proceedings only. Q32.1.1. What are the alternatives of the CIR in cases of a false, fraudulent return or the failure to file a return in terms of collection? As held in REPUBLIC V. RET [MARCH 31, 1962],32 the CIR has two alternatives: 1. Assess the tax within 10 years from the discovery of the falsity, fraud or failure and then collect within 5 years by judicial or summary proceedings
Injunction
(Read 218, Tax Code) Q31. Can an injunction be issued to restrain the collection of any internal revenue tax, fee or charge?
General Rule: No court can issued an injunction, as provided under Section 218, Tax Code.29 Exception: Section 11, RA 9282 provides that an injunction may be issued by the CTA to restrain the collection of taxes when in the opinion of the Court the collection may jeopardize the interest of the Government and/or the taxpayer, the Court at any stage of the proceeding may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court. TROs and injunctions issued by courts other than the CTA against the BIR should be annulled and cancelled for lack of jurisdiction [see RMO 042-10 [MAY 4, 2010].)
30 31 29
Note however that as held in ANGELES CITY V. ANGELES ELECTRIC CORPORATION [JUNE 29, 2010], the prohibition on the issuance of a writ of injunction to enjoin the collection of taxes is applied only to national internal revenue taxes, not to local taxes. However, the Supreme Court noted that such injunctions enjoining the collection of local taxes are frowned upon.
Refer to Q14.3 The rule is to the effect that once there is already an assessment, the period to collect is always 5 years even if the return is fraudulent, false, or was not filed. 32 In the said case, the Supreme Court noted that Section 332 (no w Section 222) does not apply in the collection of income taxes by summary proceedings. But when the collection of income taxes is to be effected by court action, the provision is controlling.
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2. Do not assess and instead collect the tax without assessment within 10 years from the discovery of the falsity, fraud or failure by judicial proceedings only. Thus, when there is an assessment, the 10 year period to collect from discovery of falsity, fraud, and failure is not applicable. In CIR V. CA [FEBRUARY 25, 1999], the Supreme Court reiterated that waiver of the five-year prescriptive period must be in writing and signed by both the BIR Commissioner and the taxpayer. Hence, a waiver which does not have the consent of the CIR is invalid and without any binding effect. Q32.3.3. How should the waiver be construed when the specified period in the waiver refers to both assessment and collection? If the waiver refers to both assessment and collection and interpreting such will in effect shorten the collection period, then such waiver is deemed to refer to assessment only and not collection (see REPUBLIC V. LIM DE YU APRIL 30, 1964])
Q32.2. The CIR maintains that the prescription of his right to collect the amount of deficiency taxes is governed by Article 1145 of the Civil Code, which gives him 6 years. Is the CIR correct?
No. As held in GUAGUA ELECTRIC LIGHT COMPANY V. CIR [APRIL 24, 1967], the right to assess and collect is governed by the Tax Code and not by Article 1145 of the Civil Code. A special law (Tax Code) shall prevail over a general law (Civil Code).
Q32.3. Can the prescriptive period to collect be waived?

Yes, provided the requirements of a valid waiver are present: 1. Specified period 2. Signed by the proper authority (for 1 million or above, the CIR must sign) 3. Taxpayer must be furnished copy of the waiver in order to perfect the agreement since waiver is not a mere unilateral act. Q32.3.1. A tax was assessed in September 27, 1999. The CIR filed a suit to collect deficiency taxes in December 27, 2009. The CIR claims that there was a waiver of the 5-year prescriptive period and presented a waiver dated December 17, 2005. Is the waiver valid? No. As held in REPUBLIC V. ABECEDO [MARCH 29, 1968], the waiver must be executed within the 5 year period. A waiver executed beyond the five-year limitation is in effective and, as such, the CIR can no longer revive the right of action. Q32.3.2. What is effect of the failure of the waiver to bear the written consent of the CIR?
Q32.4. Is the government barred by prescription from claiming deficiency taxes against an estate?
No. In VERA V. FERNANDEZ [MARCH 30, 1979], the Supreme Court held that claims for taxes are collectible even after distribution of decedents estate among his heirs who are liable in proportion of their share in the inheritance to the payment of taxes. Claims for taxes against the estate are excepted from the statute of non-claims and are not barred forever.
Q32.5. Can a letter of demand be deemed an assessment such that the 5year period for collection shall commence from the time such letter was sent?
Yes. In REPUBLIC V. LIMACO & DE GUZMAN [AUGUST 31, 1962], the Supreme Court held that a letter of demand should be deemed an assessment if it declares and fizes th tax to be payable against the party liable thereto and demands the settlement thereof. Hence, the 5-year period for collection of the tax due should commence anew from time said letter of demand was sent to the taxpayer.
Q32.6. What is the effect of pendency of appeal on the running of the prescriptive period?
Under SECTION 223 OF THE T AX CODE, the running of the prescriptive period to collect deficiency taxes
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shall be suspended for the period during which the CIR is prohibited from beginning a distraint or levy or instituting a proceeding in court and for 60 days thereafter. In REPUBLIC V. KER & CO. [SEPTEMBER 29, 1966], the Supreme Court held that the pendency of a taxpayers appeal has the effect of temporarily staying the hands of the CIR. The running of the prescriptive period is suspended. In PROTECTORS SERVICES V. CA [APRIL 12, 2000], the Supreme Court held that the act of a taxpayer in filing a petition before the CTA to prevent the collection of the assessed deficiency tax and in elevating the case to the Supreme Court for review after the CTA dismissed the petition suspended the running of the statute of limitations. The period utilized for reinvestigation is deducted from the period within which to collect. (see REPUBLIC 33 V. LOPEZ [MARCH 30, 1963]) Q32.8.1. Can a taxpayer invoke the defense of prescription when he made repeated requests for reinvestigation and repeated requests for extension of time to pay? No. As held explained by the Supreme Court in REPUBLIC V. ARCACHE [FEBRUARY 29, 1964]: W hile we may argue with the Court of Tax Appeals that a mere request for re-examination or re-investigation may not have the effect of suspending the running of the period of limitation for in such a case there is need of a written agreement to extend the period between the Collector and the taxpayer, there are cases however where a taxpayer may be prevented from setting up the defense of prescription even if he has no previously waived it in writing as when by his repeated requests or positive acts the Government has been, for good reasons, persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the Government. Q32.8.2. What happens if the CIR does not consider or act upon the request for reinvestigation? As there was no evidence that the request was considered or acted upon, it did not suspend the running of the period for filing an action for collection (see REPUBLIC V. ABECEDO [MARCH 29, 1968]) In BPI v. CA [OCTOBER 17, 2005] as reiterated in BPI V. CA [M ARCH 17, 2008], the Supreme Court emphasized that the BIR must first grant the request for reinvestigation as a requirement for the suspension of the statute of limitations. Q32.8.3. What is the difference between a request for reinvestigation and a request for reconsideration for purposes of tolling the running
Q32.7. An informer filed a case with the CTA against the taxpayer and BIR. The informer was seeking to (1) declare the taxpayer as having an assessment; and (2) as a consequence, to collect his informers reward. This case was filed by the informer within 3 years from the time that the taxpayer filed his return. However, apart from this action initiated by the informer, no other action was filed by the government seeking to collect against the taxpayer. Has the right to collect already prescribed?
No. In PNOC V. CA [APRIL 26, 2005], the Supreme Court held that the BIR is deemed to be compliant with the requirement that collection be made within the 5 years from time of assessment since if the informant won, the CTA would have ordered the erring parties to pay the tax. At the very least, the filing by the informer of the case would have suspended the running of the period because the BIR is prohibited from making collection because there was a pending case.
Q32.8. What is the effect or a reinvestigation on the period to collect?
33
Example: If the assessment was made on 1/1/2000 and the collection was made on 1/1/2006 but it was shown that from 1/1/2000 to 1/1/2003 or a period of 2 years that the assessment was being reinvestigated, the action to collect has not yet prescribed since deducting the 2 year period when reinvestigation was made will only amount to 4 years and is thus still within the 5 year period to collect.
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of the prescriptive period to collect? A request for reconsideration is a reevaluation on the basis of existing records whereas a reinvestigation is a reevaluation on the basis of newly-discovered or additional evidence. It is the request for reinvestigation acted upon which suspends the prescriptive period to collect. (see BPI V. CIR [OCTOBER 17, 2005]; CIR V. PHILIPPINE GLOBAL 34 COMMUNICATIONS [OCTOBER 31, 2006]) Division has to decide the case within 30 days after submission for decision. Motion for Reconsideration or New Trial to CTA Division within 15 days from receipt of decision. 11. Appeal to CTA En Banc within 15 days from receipt of resolution. Motion for Reconsideration to the CTA En Banc within 15 days from receipt of decision 12. Appeal to the SC within 15 days from receipt of resolution under Rule 45
11. Taxpayers Remedies Protest

(Read Section 228, Tax Code and RR 12-99) Q33. Outline the steps in disputing an assessment starting from the filing of the return until the appeal to the Supreme Court.
1. Filing of the Return - period begins on date of filing or last day required by law, whichever is later) 2. Issuance of LA served to the taxpayer within 30 days from issuance 3. Audit within 120 days from date of receipt of LA by taxpayer 4. Notice of Informal Conference taxpayer submits explanation within 15 days from receipt of notice 5. Preliminary Assessment Notice (PAN)35 taxpayer submits reply within 15 days from receipt of notice 6. Final Assessment Notice 7. Taxpayer files protest within 30 days from receipt of FAN and Formal Notice of Demand 8. Relevant supporting documents submitted within 60 days from filing of letter of protest 9. CIRs denial of protest or inaction for 180 days 10. Appeal to CTA Division within 30 days from date of receipt of CIRs denial or from the lapse of 180 days of inaction counted from submission of documents to CIR. CTA
34
Q33.1. What is the nature of the requirement that the assessment must first state the facts and the law on which the assessment is based?
Such is not merely a procedural requirement but a substantive requirement which determines the taxpayers ability to protest. Thus, the same must be complied with otherwise the assessment is void. Thus, assessment notices which only have computations are invalid. This is the reason why the new Tax Code provides that the taxpayer be informed and not merely notified. Given that this new rule benefits the taxpayer, the same may be applied retroactively (CIR V. AZUCENA REYES [JANUARY 27, 2006] In CIR V. GONZALEZ [OCTOBER 13, 2010],36 the Supreme Court reiterated that the assessment must state the fact, the law, the rules and regulations or jurisprudence on which the assessment is based, otherwise the assessment shall be void (see also CIR V. METRO STAR SUPERAMA [DECEMBER 8, 2010] and CIR v. ENRON SUBIC POWER CORPORATION [JANUARY 19, 2009]; FLUOR DANIEL PHILIPPINES V. CIR [CTA CASE NO. 7793, APRIL 17, 2012])
Q33.2. Is the requirement that the appeal of the decision of the CIR to the CTA be brought within 30 days jurisdictional?
In RCBC V. CIR [JUNE 16, 2006], the Supreme Court held that while the right to appeal a decision of the
36
The ruling in CIR V. CAPITOL SUBDIVISION [APRIL 30, 1964] to the effect that the prescriptive period to collect a deficiency tax is interrupted when there is a request for review or reconsideration is no longer controlling. 35 when PAN is not required, from filing of return, a final assessment notice will be issued.
Further, the formality of a control number in the assessment notice is not a requirement for its validity but rather the contents thereof which should inform the taxpayer of the declaration of deficiency tax.
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CIR to the CTA is merely a statutory remedy, nevertheless the requirement that it must be brought within 30 days is jurisdictional. If a statutory remedy provides as a condition precedent that the action to enforce it must be commenced within a prescribed time, such requirement is jurisdictional and failure to comply may be raised in a motion to dismiss. 3. Submission of additional and relevant support documents within 60 days from filing of claim 4. Appeal to CTA Division within 30 days from receipt of notice of denial or from inaction of the CIR37 counted from submission of documents. Appeal should always be within the 2 years prescriptive period. Motion for Reconsideration or New Trial to CTA Division within 15 days from receipt of decision. 5. Appeal to CTA En Banc within 15 days from receipt of resolution. Motion for Reconsideration to the CTA En Banc within 15 days from receipt of decision 6. Appeal to the SC within 15 days from receipt of resolution under Rule 45
Q33.3. What happens if the protest is not acted upon within 180 days by the CIR?
The taxpayer adversely affected by the inaction may appeal to the CTA within 30 days from the lapse of the 180-day period from submission of the documents. (see CIR V. FIRST EXPRESS PAWNSHOP COMPANY, INC [JUNE 16, 2009]). In RCBC V. CA [APRIL 24, 2007], the Supreme Court stated that in case the CIR fails to act on the disputed assessment within the 180-day period from date of submission of documents, the taxpayer can either: 1. file a petition for review with the CTA within 30 days after the expiration of the 180 day period 2. await the final decision of the CIR on the disputed assessment and appeal such final decision to the CTA within 30 days after receipt of a copy of such decision However, after availing of the first option (filing of the petition for review) which was however filed out of time, a taxpayer cannot successfully resort to the second option (await final decision and appeal the same to the CTA) on the pretext that there is yet no final decision on the disputed assessment because of the CIRs inaction. (see also LASCONA LAND V. CIR [MARCH 5, 2012])
Q34.1. Are
the steps provided above applicable to the refund/credit of VAT?
No. For the tax refund/credit of VAT, the steps are as follows: 1. Filing and Payment 2. Administrative claim within 2 years counted from the close of the taxable quarter when the relevant sales were made
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Refund
(Read Sections 72, 204, and 229-23, Tax Code) Q34. Outline the steps for tax refund/credit of erroneously or illegally collected internal revenue tax (except VAT)
1. Payment period begins on the date of payment of tax or penalties regardless of any supervening cause 2. Administrative claim within 2 years from payment filed with the CIR
Montero says that the CIR must act within a period of 120 days. That period, however, is found in Section 112(A) which applies to VAT refunds. Further, the 180 day period provided in Section 228 applies to a protest. The better view is to follow the 120 days as that governs refunds. In any case, Section 3(A)(2), Rule 4 of the Revised Rules of the CTA provides that Provided, that in case of disputed assessments, the inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 of the National Internal revenue Code shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case; Provided, further, that should the taxpayer opt to await the final decision of the Commissioner of Internal Revenue on the disputed assessments beyond the one hundred eighty day-period abovementioned, the taxpayer may appeal such final decision to the Court under Section 3(a), Rule 8 of these Rules; and Provided, still further, that in the case of claims for refund of taxes erroneously or illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of the two-year period under Section 229 of the National Internal Revenue Code. Thus, it is submitted that whether we follow the 120 day or 180 period is irrelevant as the taxpayer may already appeal to the CTA even if such periods have not yet expired provided that the 2 year period is about to lapse and not decision as yet been given.
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3. Submission of additional and relevant support documents within 60 days from filing of claim 4. Appeal to CTA Division within 30 days from receipt of notice of denial or from lapse of 120 days of inaction counted from submission of documents. The appeal need not be made within the 2-year prescriptive 38 period. The Motion for Reconsideration or New Trial to CTA Division within 15 days from receipt of decision. 5. Appeal to CTA En Banc within 15 days from receipt of resolution. Motion for Reconsideration to the CTA En Banc within 15 days from receipt of decision 6. Appeal to the SC within 15 days from receipt of resolution under Rule 45
assessment, and formally demanded in writing its refund. In one of his letters to the CIR, he stated that if his demand was not effected, he would collect from the CIR the attorneys fees. Will the 30 -day period in which to file an appeal to the CTA run from As receipt of the notice of the CIRs decision denying the claim?
Yes. As held in GIBBS V. CIR [NOVEMBER 29, 1965], the Supreme Court held that the circumstances show that he acted not merely as an agent or attorney-infact of the taxpayer but as their legal counsel. His receipt therefore of the CIRs decision denying the claim for refund was receipt of the same by the taxpayer and the 30-day period for the filing of a petition for review should be computed from the date of such receipt.
Q34.2. What is the nature of a claim for tax refund?

A claim for tax refund is in the nature of a claim for exemption and should be construed strictissimi juris against the taxpayer. (see CIR V. T OKYO SHIPPING [MAY 26, 1995])
Q34.6. From when do we compute the 2 year prescriptive period?

The two year prescriptive period is reckoned from the date of filing of the Final Adjustment Return. It is at this point that it can already be determined whether there has been an overpayment of the taxpayer. (see CIR V. PHILAMLIFE [MAY 29, 1995]) Further, Section 56 of the Tax Code provides that payment is made at the time the return is filed, thus, in consonance with Section 229 which provides tha the two-year period should be counted from the date of the payment of the tax. Q34.6.1. What are the special rules in computing the two-year prescriptive period? For income taxes From the time of filing of Final Adjustment Return (and final payment 39 of tax)
Q34.3. Who is the proper party to claim a tax credit/refund?

The proper party to seek a refund is the statutory taxpayer, who is the person on whom the tax is imposed by law and who paid the same, even if that person shifted the tax to another (see SILKAIR SINGAPORE V. CIR [NOVEMBER 14, 2008])
Q34.4. Is a written claim by the taxpayer within two years required before the CIR can exercise his authority to grant a credit or refund?
Yes. As held in VDA. DE AGUINALDO V. CIR [FEBRUARY 26, 1965], such requirement is a condition precedent and non-compliance precludes the CIR from exercising the authority to grant the credit or refund.
Q34.5. A, signing as attorney-in-fact, acknowledged for B (taxpayer) receipt of the deficient tax assessment. A formally protested the same in writing, paid the
39 38
As held in CIR V. AICHI FORGING COMPANY OF ASIA [OCTOBER 6, 2010].
For actions for refund of corporate income tax, the two-year prescriptive period is counted from the time of actual filing of the Final Adjustment Return or Annual Income Tax Return. (see CIR V. CA [JANUARY 21, 1999])
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Tax paid in installments From the time of payment of last 40 installment From the time of filing of the quarterly VAT return, i.e. within 25 days after the close of each taxable quarter that filing the judicial claim within the 2-year prescriptive period is premature. Such period applies only to the administrative claim.
For VAT
Q34.9. Will the filing of a supplemental petition be sufficient to toll the prescriptive period for the claim for refund?
No. The claim for refund has been barred by prescription since the supplemental petition was not admitted. While retirement funds/employment trusts are still absolutely exempt from income tax regardless of the nature of tax, the taxpayers claim was barred by prescription since the filing of the supplemental petition (and not an original action) was not granted and therefore it did not have any judicial effect to toll the running of the 2 year period. It was only when a subsequent petition for review was filed did the prescriptive period toll. Further, this is not a case where the 2-year period can be considered nonjurisdictional since there are no exceptional or supervening circumstances to speak of. (see FAR EAST BANK AND T RUST COMPANY V. CIR [MAY 2, 2006])
Q34.7. Is the RMC stating that the 2 year period to file a claim for refund is extended to make it 10 years valid?
No, the RMC cannot go beyond what is provided in the law and the State cannot be put into estoppels (see PBCOM V. CIR [JANUARY 28, 1999])
Q34.8. What must the taxpayer do in case of a situation where the CIR is taking time to decide the claim and the period of 2 years is about to end?
Similar to assessments, taxpayers may appeal the inaction of the BIR to the CTA even for refund cases. However, the period is different since the BIR is given 120 days to act on a refund; otherwise, the taxpayer may already appeal the inaction. However, if the 2 year period is about to lapse and no decision has not yet been given, the taxpayer may already appeal to the CTA even if the 120 day period to decide has not yet expired.41 In GIBBS V. COLLECTOR OF I NTERNAL REVENUE [FEBRUARY 29, 1960], the Supreme Court noted that if the CIR takes time in deciding the claim and the period of two years is about to end, the suit or proceeding must be started in the CTA before the end of the 2 year period without awaiting the decision of the CIR. In CIR V. SWEENEY [AUGUST 21, 1959], the Supreme Court stated that taxpayers need not wait for the action of the CIR on the request for refund before taking the matter to Court. Compare this with the prevailing rule for VAT refund/credit: In CIR V. AICHI FORGING COMPANY OF ASIA [OCTOBER 6, 2010], the Supreme Court ruled
40
Q34.10. Is the 2-year prescriptive period jurisdictional and may it be suspended?

Even if the 2 year prescriptive period, if applicable, had already lapsed, the same is not jurisdictional and may be suspended for reasons of equity and other special circumstances. (see CIR V. PHILAMLIFE [MAY 29, 1995]; CIR v. PNB [OCTOBER 25, 2005])
Q34.11. Name some reasons of equity and other special circumstances that jurisprudence has considered to extend the 2 year prescriptive period.
1. When the taxpayer made advance income tax payment heeding former President Corazon Aquinos call and was made to believe that its request for tax credit will be acted upon and favourably considering that its carry over was unutilized since the company suffered losses for the next 4 years (see PNB V. CA [OCTOBER 25, 2005]) 2. When the taxpayer and the CIR agreed to wait for the result of another case having the
Where the tax account was paid by installment, then the computation of the 2 year prescriptive period should be from the date of last installment (see CIR v. PALANCA [OCTOBER 29, 1966]) 41 The 120 day period here is in consonance with the view of the majority including Atty. Montero.
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same issue (see PANAY ELECTRIC CO. V. CIR [MAY 28, 1958]) 3. When the CIR initially agreed to grant the refund and later denied the same (see NAGUIAT) excess income tax, thus, prohibiting the taxpayer from applying for a refund. The unutilized tax credits will remain in the taxpayers account and will be carried over and applied against the taxpayers income tax liabilities in the succeeding taxable years until fully utilized.
Q34.12. If the availment of the tax credit/refund is due for reasons other than the erroneous or wrongful collection of taxes, what prescriptive period shall apply?
As held in CIR v. PNB [OCTOBER 25, 2005] citing CIR V. PHILAMLIFE [MAY 29, 1995], availment of a tax credit due for reasons other than the erroneous or wrongful collection of taxes may have a different prescriptive period. Absent any specific provision in the Tax Code or special laws, the period would be 10 years under Article 1144 of the Civil Code.
Q34.15.
What are the requisites for calim for tax credit or refund of a creditable withholding tax?
Q34.13. May interest on the tax refund be awarded?

General Rule: No, the Government cannot be required to pay interest (see CIR V. SWEENEY [AUGUST 21, 1959]) Exceptions: 1. Authorized by law 2. The collection of the tax was attended by arbitrariness (inexcusable or obstinate disregard of legal provisions). Note, however, that there is no arbitrariness when there is room for two opinions (see PHILEX MINING V. CIR [APRIL 21, 1999])
1. Claim must be filed within the two-year prescriptive period from date of payment of the tax 2. It must be shown on the return that the income received was declared as part of gross income 3. The fact of withholding must be established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of tax withheld. (see CIR V. FAR EAST BANK & T RUST COMPANY [MARCH 15, 2010])
Q34.16.
May a withholding agent file a claim for tax refund?
Q34.14.
May a taxpayer ask for both a tax refund and a tax credit?
No. As held in PHILAM ASSET MANAGEMENT V. CIR [DECEMBER 14, 2005], a taxpayer may apply for either a tax refund or tax credit, but not both. The choice of one precludes the other. Failure to indicate a choice, however, will not bar a valid request for a refund, should this option be chosen by the taxpayer later on. In ASIAWORLD PROPERTIES V. CIR [JULY 29, 2010], the Supreme Court opined that once the taxpayer opts to carry-over the excess income tax against the taxes due for the succeeding taxable years (tax credit), such option is irrevocanle for the whole amount of the
Generally, the person entitled to claim a tax refund is the taxpayer. However, if the taxpayer does not file the claim, the withholding agent may file the same. In CIR V. SMART COMMUNICATIONS [AUGUST 25, 2010], it was submitted that rule allowing the withholding agent to file the claim is applicable only when the withholding agent and the taxpayer are related parties. The Supreme Court disagreed and stated that such relationship is not required. A withholding agent has a legal right to file a claim for refund. First, he is considered a taxpayer under the Tax Code as he is personally liable for the withholding tax as well as for deficiency assessments, surcharges, and penalties, should the amount withheld be finally found to be less than the amount that should have been withheld. Second, as an agent of the taxpayer, his authority to file the income tax return and remit the tax withheld to the government includes the authority to file a claim for refund and to bring an action for recovery of such claim. Q34.16.1. Is the withholding agent who filed the claim for tax refund obliged to remit the same to the taxpayer?
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Yes. In CIR V. SMART COMMUNICATIONS [AUGUST 25, 2010], the Supreme Court ruled that while the withholding agent has the right to recover the taxes erroneously or illegally collected, he nevertheless has the obligation to remit the same to the principal taxpayer under the principle of unjust enrichment. Executive Order 68 allows qualified VAT-registered taxpayers to receive the cash equivalent of their outstanding TCCs either: 1. Collecting in advance from a trustee bank a discounted cash value of their TCCs or 2. Collect full cash value of their TCC upon a certain maturity date to be determined by the 42 BIR and BOC The monetization of outstanding TCCs under Executive Order 68 only covers VAT refunds under Section 112(A) of the Tax Code (zero-rated sales) and Section 106(e) of the TCCP (drawbacks). Also, beginning 2012, the BIR and BOC shall no longer issue TCCs for VAT refund unless applied for by the VAT taxpayer under the two aforesaid sections.
Q34.17.
PSPC acquired some TCCs (tax Credit Certificates) through the One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center from other BOI-registered entities. PSPC then utilized the said TCCs for its excise taxes and were then issued TDM (Tax Debit Memo) and ATAPs (Authority to Accept Payment) by the BIR. However, the BIR assessed PSPC for delinquent excise taxes alleging that PSPC is not a qualified transferee of the TCCs. CA ruled that the PSPC was not entitled to the benefit of the TCCs and thus upheld the assessment. Was the use of PSPC of the TCCs valid?
Q34.18.
Is a tax refund automatically granted?
No. As held in UNITED AIRLINES V. CIR [SEPTEMBER 29, 2010], the grant of a refund is
founded on the assumption that the tax return is valid, that is, the facts stated therein are true and correct. Before granting the refund, the CIR must determine the proper assessment and the tax due. In this case, the CIR found that the tax return was not valid and, thus, it was justified in denying the claim after determining the proper assessment and the tax due.
Yes. As held in PILIPINAS SHELL V. CIR [DECEMBER 21, 2007], there is no suspensive condition for the validity of TCCs as they are feective immediately and only computational errors are allowed as basis to invalidate TCCs. Also, even if the source is defective, it does not affect PSPCs right as it acted in good faith and the agencies approved of the use of TCCs. In CIR V. PETRON [MARCH 21, 2012], the Supreme Court had occasion to reiterate that TCCs are valid and effective from their issuance and are not subject to post-audit as a suspensive condition for their validity. Q34.17.1. What is the effect of RR 142011 [JULY 29, 2011] on the transferability of TCCs? All Tax Credit Certificates (TCCs) issued by the BIR are no longer transferable or assignable to any person. Q34.17.2. What is the effect of Executive Order 68 on outstanding VAT TCCs?
Q34.19.
A was assessed deficiency income tax. He protested the same to the CIR. The CIR denied the claim and contended that A failed to file a written claim for refund. A appeals the CIRs denial of the protest. The CTA dismissed the petition for lack of jurisdiction holding that the lack of a written claim for refund was fatal to As recourse to the CTA. Are the contentions of the BIR and CTA correct?
No. As held in VDA. DE SAN AGUSTIN V. CIR [SEPTEMBER 10, 2001], to hold that the taxpayer has lost the right to appeal from the ruling on the disputed
42
DOF Joint Circular 2-2012 provides that the monetization will start in 2012 for TCCs issued prior to 2004 while those issued in 2011 and 2012 will be monetized in 2016.
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assessment but must prosecute his appeal under Section 306 (now Section 204 in relation to Section 229), which requires a taxpayer to file a claim for refund of the taxes paid as a condition precedent to his right to appeal, would in effect require him to go through a useless and neddelss ceremony that would only delay disposition of the case. An appeal is allowed from the decision of the CIR on a disputed assessment as distinguished from a decision involving refunds of internal revenue taxes.
Q35.1. What are the modes of appeal in the CTA?

1. Petition for review under Rule 42 (to be 45 heard by division) 2. If from CBAA or RTC in the exercise of their appellate jurisdiction, Rule 43 (to be heard en banc) 3. From CTA division to en banc petition review 4. From the CTA en banc to the Supreme Court petition for review on certiorari under Rule 45
12. CTA
(Read RA 9282, as amended by RA 9503; and A.M. No. 05-11-07-CTA Revised Rules of the Court of Tax Appeals [November 22, 2005]) Q35. What is the jurisdiction of the Court of Tax Appeals A. Exclusive Appellate Jurisdiction
3. 4. 5. 6. 7. Decisions of the CIR Inaction of the CIR Decisions of the RTC on Local Tax Cases Decisions of the BOC/COC Decisions of the CBAA (in exercise of appeal over RPT cases decided by the LBAA 8. Decisions of the DOF on Customs cases elevated to him on automatic review due to adverse decision vs. the Government 9. Decisions of the DTI (on non-agri products) and DA (on agri. Products) involving dumping and countervailing duties B. Over Criminal Offenses 1. Original For criminal acts under the Tax Code and Tariffs and Customs Code involving an amount of 1 million or above 2. Appellate If the amount is less than 1 million or no specified amount.43 C. Over Tax Collection Cases 1. Original if the amount is 1 million or above 2. Appellate if the amount is less than 1 44 million
Q35.2. When is a decision appealable to the CTA?

So long as the tenor of the decision is that the dispute of the taxpayer is denied, it is appealable. To let the taxpayer defer the period is to unduly put in his hand the collection of taxes. The CIR should always indicate in clear language the decision of the BIR (see SURIGAO ELECTRIC V. CTA [JUNE 28, 1974]) Q35.2.1. Name some communications sent by the CIR to taxpayers that are deemed appealable to the CTA.
As provided in Surigao ELECTRIC V. CTA [JUNE 28, 1974]: 1. a letter which stated the result of the investigation requested by the taxpayer and the consequent modification of the assessment; 2. letter which denied the request of the taxpayer for the reconsideration cancellation, or withdrawal of the original assessment 3. a letter which contained a demand on the taxpayer for the payment of the revised or reduced assessment; and 4. a letter which notified the taxpayer of a revision of previous assessments
Q35.3. Is the final demand letter issued by the BIR reiterating the demand for immediate payment considered a final decision appealable to the CTA?
43
Regular courts first; if from RTC, appeal to the CTA/ if from MTC, then RTC, then file a petition for review with the CTA 44 Regular courts first; if from RTC, appeal to the CTA/ if from MTC, then RTC, then file a petition for review with the CTA
45
RA 9282 elevates CTA to CA level
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Yes. As held in CIR v. ISABELA CULTURAL CORP [JULY 11, 2001], the letter is deemed as the CIRs final act since failure to comply therewith exposes the property o distraint and levy. The Supreme Court stated that a final demand letter from BIR, reiterating to the taxpayer the immediate payment of a tax deficiency assessment previously made, is tantamount to a denial of the taxpayers request for reconsideration. Such letter amounts to a final decision on a disputed assessment and is thus appealable to the CTA. More importantly, Section 228 allows direct appeal to the CTA if protest is not acted upon within 180 days. reckoning point of the appeal period to the CTA, the issuance of the warrant of distraint, or the letter embodying the final demand of payment?? The reviewable decision is the latter letter where the CIR clearly directed the taxpayer to appeal to the CTA and not the warrants of levy and distraint. No amount of quibbling or sophistry can blink the fact that said letter, as its tenor shows, embodies the Commissioner's final decision. He even directed the taxpayer to appeal it to the Tax Court. The directive is in consonance with this Court's dictum that the Commissioner should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment. That procedure is demanded by the pressing need for fair play, regularity and orderliness in administrative action. (see ADVERTISING ASSOCIATES, INC. VS. COURT OF APPEALS [DECEMBER 26, 1984])
In OCEANIC WIRELESS NETWORK

OF
VS. COMMISSIONER I NTERNAL REVENUE [DECEMBER 9, 2005], the Supreme Court reiterated that a demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment. The determination on whether or not a demand letter is final is conditioned upon the language used or the tenor of the letter being sent to the taxpayer. In this case, the letter of demand dated January 24, 1991, unquestionably constitutes the final action taken by the Bureau of Internal Revenue on petitioners request for reconsideration when it reiterated the tax deficiency assessments due from petitioner, and requested its payment. Failure to do so would result in the issuance of a warrant of distraint and levy to enforce its collection without further notice. In addition, the letter contained a notation indicating that petitioners request for reconsideration had been denied for lack of supporting documents.
Q35.5. U Corp was assessed deficiency income

taxes (FAN). U Corp protested the assessment. BIR, without ruling on the protest, issued a warrant of distraint and levy. U Corp requested reinvestigation and reconsideration of issuance of the warrant. Thereafter, BIR filed a collection suit to collect the taxes. U Corp then filed a petition for review with the CTA, on the theory that its period to appeal only began to run from its receipt of summons in the civil collection case. BIR argued the appeal was filed out of time, as the period began to run when the warrant of distrant and levy was issued. Who is correct? U Corp is correct. Under the circumstances, the Commissioner of Internal Revenue didnt clearly signify his final action on the disputed assessment. Thus, it was only when U Corp received the summons on the civil suit for collection of deficiency income that the period to appeal commenced to run. The request for reinvestigation and reconsideration was in effect considered denied by the CIR when the latter filed a civil suit for collection of deficiency income. [COMMISSIONER OF I NTERNAL REVENUE VS. UNION SHIPPING CORPORATION (MAY 21, 1990)]
Q35.4. AA Corp received a FAN for contractors

tax. It protested the assessments. Thereafter, AA requested for the cancellation of the assessments. 4 years passed and nothing happened. CIR then issued 2 warrants of distraint to collect the taxes. One year later, CIR answered and denied AAs request for cancellation. The CIR, in its answer to AAs request for the cancellation of the assessments, requested the taxpayer to pay the deficiency taxes within ten days from receipt of the demand; otherwise, the Bureau would enforce the warrants of distraint. He closed his demand letter with this paragraph: This constitutes our final decision on the matter. If you are not agreeable, you may appeal to the Court of Tax Appeals within 30 days from receipt of this letter. What is the
Q35.6. The City of Makati received assessment notices imposing deficiency taxes. Makati protested.
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The BIR stated that the assessments were already final and executory. Nonetheless, Makati requested fron another reinvestigation. The Revenue officer and deputy Commissioner granted this request. Did the reinvestigation of the case reversed the finality of the assessments?
No. Only the Commissioner of Internal Revenue has the power to reverse, revoke or modify any existing ruling of the Bureau of Internal Revenue (BIR), which power cannot be delegated. In assessment cases, a reopening/reinvestigation after a final decision on disputed assessment (FDDA) has been issued must be initiated by the commissioner. Otherwise, the reopening / reinvestigation is without authority and failure to appeal the FDDA to CTA would render the assessment final and executory. Here, the reinvestigation was merely granted by a revenue officer and a deputy commissioner. (see CITY OF MAKATI VS. COMMISSIONER OF I NTERNAL REVENUE [CTA CASE NO. 641, SEPTEMBER 16, 2011]) present case, this Court cannot take cognizance of the present case.
Q35.8. Is the denial by the BIR of the protest on the PAN (not the FAN) appealable to the CTA?
No, the denial of the CIR must be on the protest of the FAN. In ALLIED BANKING CORPORATION VS. COMMISSIONER OF I NTERNAL REVENUE [FEBRUARY 5, 2010], the Supreme Court ruled that it is the Formal Letter of Demand and Assessment Notice (FAN) that must be administratively protested or disputed within 30 days, and not the PAN. Q35.8.1. BIR issued a PAN to AB Corp for deficiency DST. AB protested the PAN. Thereafter, BIR sent a FAN to AB Corp. The letter provided: It is requested that the above deficiency tax be paid immediately upon receipt hereof, inclusive of penalties incident to delinquency. This is our final decision based on investigation. If you disagree, you may appeal the final decision within thirty (30) days from receipt hereof, otherwise said deficiency tax assessment shall become final, executory and demandable. Thereafter, AB immediately filed a petition for review with the CTA. Should the petition be dismissed? No. Ordinarily, the procedure is that its the FAN that must be administratively protested, as a prequisite to subsequently filing a PFR with the CTA. However, the SC ruled in this case that the CIR was estopped from claiming the need for a protest. AB Corp cant be blamed for not filing a protest against the FAN since the language used and the tenor of the FAN indicate that it is the final decision of the CIR on the matter. The CIR is required to indicate, in a clear and unequivocal language, whether his action on a disputed assessment constitutes his final determination thereon in order for the taxpayer concerned to determine when his or her right to appeal to the tax court accrues. Thus, CIR is now estopped from claiming that he did not intend the FAN to be a final decision. Moreover in the Formal Letter of Demand with Assessment Notices, CIR used the word appeal instead of protest,
Q35.7. The CIR filed a Motion to Dismiss the

Petition for Review commenced by Festo Holdings on the ground of lack of jurisdiction. The CIR argued that the Revenue District Officer who signed the letter which became the basis of the instant petition, cannot be deemed an alter ego of the CIR for purposes of issuing a final decision on Festos protest under a delegated authority. As such, the subject letter is not the CIR's final decision on Festos protest; thus, the 30 day period to file an appeal was yet to commence, rendering the instant petition premature. Is the contention of the CIR correct? Yes, the appeal to the CTA was premature. As held in FESTO HOLDINGS, INC. VS. COMMISSIONER OF INTERNAL REVENUE [CTA CASE NO. 8226, SEPTEMBER 2, 2011], the Revenue District Officer who issued the letter cannot be considered as the CIR's decision appealable to this Court, in the absence of any proof that the former was authorized to decide and act in behalf of the latter on the protest of a taxpayer. Nowhere is it provided that a Revenue District Officer can issue decisions that are appealable to this Court. Therefore, there being no decision of the CIR in the
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reinvestigation, or reconsideration. Although there was no direct reference for petitioner to bring the matter directly to the CTA, it cannot be denied that the word appeal under prevailing tax laws refers to the filing of a Petition for Review with the CTA (see ALLIED BANKING CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE [FEBRUARY 5, 2010]) of time to file her petition for review in CTA en banc. Thereafter, she filed her PFR with CTA en banc. CTA en banc denied both the petition for extension, and the petition for review, on the theory that the denial of the motion to quash was an interlocutory order, and therefore, unappealable. Was the dismissal by CTA en banc proper? Yes. CTA en banc did not err in denying petitioners Motion for Extension of Time to File Petition for Review. Petitioner cannot file a Petition for Review with the CTA en banc to appeal the Resolution of the CTA First Division denying her Motion to Quash. The Resolution is interlocutory and, thus, unappealable. Even if her Petition for Review is to be treated as a petition for certiorari, it is dismissible for lack of merit. (see JUDY ANNE L. SANTOS VS. PEOPLE OF THE PHILIPPINES AND BUREAU OF INTERNAL REVENUE [AUGUST 26, 2008])
Q35.9. Can a Motion for Reconsideration or Motion for New Trial be filed in the CTA?
Yes, within 15 days from receipt of denial. Q35.9.1. Does a Motion for Reconsideration toll the 30 day period to appeal the denial of the protest of the FAN? No. A motion for reconsideration of the denial of the administrative protest does not toll the 30-day period to appeal to the CTA. (see FISHWEALTH CANNING CORPORATION VS. COMMISSIONER OF I NTERNAL REVENUE [JANUARY 21, 2010]) Q35.9.2. Is a prior MR required before filing a Petition for Review of a decision of a CTA division? Yes. On the procedure, the Court agrees with the CTA En Banc that the Commissioner failed to comply with the mandatory provisions of Rule 8, Section 1 of the Revised Rules of the Court of Tax Appeals requiring that the petition for review of a decision or resolution of the Court in Division must be preceded by the filing of a timely motion for reconsideration or new trial with the Division. The word "must" clearly indicates the mandatory -- not merely directory -- nature of a requirement. The rules are clear. Before the CTA En Banc could take cognizance of the petition for review concerning a case falling under its exclusive appellate jurisdiction, the litigant must sufficiently show that it sought prior reconsideration or moved for a new trial with the concerned CTA division. (see COMMISSIONER OF CUSTOMS VS. MARINA SALES, INC. [NOVEMBER 22, 2010])
Q35.11. Sec 7(a)(1) of RA 1125 as amended by

RA 9262 provides that the CTA has exclusive appellate jurisdiction to review by appeal the decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue. Does the CTA also have jurisdiction to determine the validity of warrants of distraint/levy and the waiver of statute of limitations? Yes. The appellate jurisdiction of the CTA is not limited to cases which involve decisions of the Commissioner of Internal Revenue on matters relating to assessments or refunds. The second part of the provision covers other cases that arise out of the NIRC or related laws administered by the Bureau of Internal Revenue. The wording of the provision is clear and simple. It gives the CTA the jurisdiction to determine if the warrant of distraint and levy issued by the BIR is valid and to rule if the Waiver of Statute of Limitations was validly effected. This is not the first case where the CTA validly ruled on issues that did not relate directly to a disputed assessment or a claim for refund. In Pantoja v. David, we upheld the jurisdiction of the CTA to act on a
Q35.10. Juday was criminally charged in the

CTA for filing a fraudulent income tax return. Thereafter, she filed a motion st to quash in the CTA 1 division. The MTQ was denied. MR was also denied. She then filed a motion for extension
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petition to invalidate and annul the distraint orders of the Commissioner of Internal Revenue. Also, in Commissioner of Internal Revenue v. Court of Appeals, the decision of the CTA declaring several waivers executed by the taxpayer as null and void, thus invalidating the assessments issued by the BIR, was upheld by this Court. (see PHILIPPINE JOURNALISTS INC. VS. COMMISSIONER OF I NTERNAL REVENUE [DECEMBER 16, 2004])
argued that the petition for review was filed out of time. What are the rules governing the extensions of time to file a petition for review to the CTA?
As held in CITY OF MANILA VS. COCA-COLA BOTTLERS PHILIPPINES, INC. [AUGUST 4, 2009], it is clear from the 46 Section 3 of the Revised Rules of the CTA that to appeal an adverse decision or ruling of the RTC to the CTA, the taxpayer must file a Petition for Review with the CTA within 30 days from receipt of said adverse decision or ruling of the RTC. It must be pointed out that the rule is silent as to whether the 30 day period can be extended or not. However, Section 11 of Republic Act No. 9282 does state that the Petition for Review shall be filed with the CTA following the procedure analogous to Rule 42 of the Revised Rules of Civil Procedure. Following by analogy Section 1, Rule 42 of the Revised Rules of Civil Procedure, the 30-day original period for filing a Petition for Review with the CTA under Section 11 of Republic Act No. 9282, as implemented by Section 3(a), Rule 8 of the Revised Rules of the CTA, may be extended for a period of 15 days. No further extension shall be allowed thereafter, except only for the most compelling reasons, in which case the extended period shall not exceed 15 days.47
Q35.12. The CIR, pursuant to the NIRC, issued

a RMO imposing a 5% lending investors tax on pawnshops. The RMO identified pawnshops as a lending investor due to the nature of its activities. Leal, a pawnshop owner, filed with the RTC a petition for prohibition that sought to stop the CIR from implementing the RMO. CIR filed a motion to dismiss. CIR alleged RTC had no jurisdiction over the matter. Did the RTC have jurisdiction over the action to nullify the RMO? No, the CTA had exclusive jurisdiction. The questioned is actually a ruling or opinion of the CIR in implementing the Tax Code with regard taxability of pawnshops. The RMO was issued pursuant to CIRs powers under Section 244 of the NIRC (providing for the power of the Commissioner of Internal Revenue to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including ruling on the classification of articles of sales and similar purposes). Thus, the petition should have been filed with the CTA. (see COMMISSIONER OF I NTERNAL REVENUE VS. LEAL [NOVEMBER 18, 2002]) Similarly, in the case of ASIA I NTERNATIONAL AUCTIONEERS, INC. VS. PARAYNO (DECEMBER 18, 2007], several RRs and RMOs were also considered as rulings/opinions of the CIR on the tax treatment of motor vehicles sold at public auction within the SSEZ. They were deemed issued pursuant to the power of the CIR to interpret provisions of the NIRC. Thus, when an action to annul such RRs/RMOs was filed with the RTC, SC held that such was improper, as it was the CTA that had exclusive jurisdiction
Q35.14. B Corp is an insurance company. It issued customs bonds to its clients in favor of the BOC. These secure the relaese of imported goods. Under these bonds, B Corp and its clients jointly and severally bind themselves to pay the BOC the face value of the bonds, in the event that the bonds expire without either the imported goods being re-exported or the proper duties and taxes being paid.
46
Q35.13. CC Corp filed a petition in the RTC to nullify an ordinance enacted by the City of Manila. RTC dismissed the petition. CC Corp filed a petition for review with CTA. It was
SEC 3. Who may appeal; period to file petition . (a) A party adversely affected by a decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or aRegional Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. x x x. (Emphasis supplied.) 47 In other words, two extensions (15 days each) allowed, with the nd 2 allowable only for most compelling reasons.
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Thereafter, BOC filed a collection case in the RTC. It was alleged that B Corp had unpaid customs bonds with the BOC. RTC ordered B Corp to pay under the bond. B Corp appealed the decision to the CA. CA dismissed for lack or jurisdiction. CA found that it shouldve been filed with the CTA, as the case was actually one for collection of taxes. Is CA correct?
No. In this case, the original complaint filed with the trial court was in the nature of a collection case, purportedly to collect on the obligation of B Corp by virtue of the bonds executed by it in favor of BOC, essentially a contractual obligation. An action to collect on a bond used to secure the payment of taxes is not a tax collection case, but rather a simple case for enforcement of a contractual liability. Thus, CA had jurisdiction. (SEE PHILIPPINE BRITISH ASSURANCE COMPANY, INC. VS. REPUBLIC OF THE PHILIPPINES (FEBRUARY 2, 2010)]
Q35.15. Are the remedies of (1) filing an appeal on the BIR inaction and (2) filing an appeal on the CIRs decision exclusive or alternative remedies?
The options are mutually exclusive and resort ot one bars the other. In RCBC V. CIR [APRIL 24, 2007], the CIR failed to act on the disputed assessment within 180 days from date of submission of documents. Thus, RCBC opted to file a petition for review before the CTA but filed the same more than 30 days after the lapse of the 180-day period. The Supreme Court ruled that after availing the first option (filing a petition for review) which was however filed out of time, RCBC cannot successfully resort to the second option (awaiting the final decision of the CIR and appealing the same to the CTA on the pretext that there is yet no final decision on the disputed assessment because of the CIRs inaction.
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PM Reyes Notes On Taxation 2 - Remedies (Working Draft) (Updated 3 Mar 2013)

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PM Reyes Notes On Taxation 2 - Remedies (Working Draft) (Updated 3 Mar 2013)

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Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Q3.Describe briefly the structure of the BIR?

Q4.Give some notable powers and duties of a Revenue Regional Director?

Q2.What are the powers and duties of the BIR?

Q5.What is the authority given to a Revenue Officer

Q6.Who promulgates revenue rules and regulations?

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

RR 16-2002 [OCTOBER 11, 2002]

Revenue Bulletins (RB)

Q7.Enumerate and define the tax-related administrative issuances

BIR ITAD Rulings

Revenue Memorandum Orders (RMOs)

2. CIRs Powers and Duties

Revenue Memorandum Rulings (RMRs)

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Q8.2. Explain the rule retroactivity of rulings

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Q8.5.5. Who are tax agents?

RR 11-2006 [JUNE 15, 2006] defines a practitioner/agent as those who are:

Q8.5.2. Explain the best obtainable evidence rule.

For income tax returns it shall be upon order of the President.

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Q9.What powers delegable?

Q10.1. May the CIR be compelled by mandamus to make an assessment?

Q11. How are taxes assessed? 5

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Q12.2.2. What is a Letter Notice?

Q12.1. What is system?

Q12.2. What is a Letter of Authority (LOA)?

Q12.2.3. What constitutes as a valid assessment?

Thus, in this case, a LN is effectively equated to a LA.

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

4. Prescription of governments right to assess

Q12.2.5. Is an assessment presumed to be correct and made in good faith?

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Q14.1.1. Is there a difference between a false return and a fraudulent return?

Q13.3. Can limitations on the right to assess and collect be presumed?

Q14. When does the governments right to assess prescribe?

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

What is the exception to the above rule?

Q14.7. What is the reckoning point with respect to amended returns?

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013

PM REYES NOTES ON TAXATION II: REMEDIES

Can an income tax return be deemed a return of sales tax purposes?

PIERRE MARTIN DE LEON REYES

Updated 22 Mar 2013