Remedies of TP

TAX
Rights and Remedies of Taxpayers

Under the NIRC I.  AMEND RETURN
A"y. Terence Conrad H. Bello 2
A.  Amend Tax Return A.  Amend Tax Return
May a TP amend his tax return as a ma"er of Rohm Apollo Semiconductor Phil. v. CIR
right? §  Although TP is allowed to amend its returns, the
§  Yes, subject to the following condiHons: amendment so allowed does not extend as to give
—  The amendment is made within 3 years from the filing support to TP’s allegaHons in its pleadings that are
of the return; and contradictory to the exisHng evidence on record
—  No noHce for invesHgaHon or audit of such return,
statement or declaraHon has, in the meanHme, been
actually served upon the TP (§ 6(A))
A"y. Terence Conrad H. Bello Slide No. 3 A"y. Terence Conrad H. Bello Slide No. 4
A.  Procedure
What is the procedure for protesHng an assessment?

1.  NoCce of informal conference – TP to respond in 15 days from receipt of
noHce, otherwise he shall be considered in default; docket to be endorsed to
the next higher office for review and issuance of assessment, if warranted
2.  PAN – TP to respond within 15 days, otherwise he shall be considered in
default, in which case a formal le"er of demand and assessment noHce shall
be issued to TP
•  If TP files reply disagreeing with PAN, FAN/FLD shall be issued
3.  FAN – TP to file a protest within 30 days, otherwise the assessment shall
become final, executory and demandable
4.  Relevant supporCng documents – to be submi"ed by TP within 60 days from
the filing of the protest, otherwise the assessment shall become final,
II.  PROTEST ASSESSMENT executory and demandable
•  Per RR 18-2013, applicable only to requests for reinvesHgaHon
5.  Appeal to CTA – within 30 days from denial of protest or within 30 days from
the lapse of 180 days from submission of relevant supporHng documents,
otherwise the assessment shall become final, executory and demandable
A"y. Terence Conrad H. Bello 5 A"y. Terence Conrad H. Bello Slide No. 6
C.  PAN C.  PAN
§  Must the BIR issue the TP a PAN before a FAN? Yes (§ 228) §  If TP fails to present evidence during the PAN stage, does
§  When may the BIR dispense with a PAN? Only in the ff. this mean that the TP is precluded from introducing
instances: evidence in the FAN stage?
a.  MathemaHcal error –  No. TP sHll enHtled to protest the FAN and submit relevant
b.  Discrepancy bet. tax withheld and tax actually remi"ed supporHng docs. Failure to present evidence during PAN
c.  When TP opHng for a refund or TCC carried over and stage (or even failure to respond to the PAN) not an implied
automaHcally applied excess credits against tax admission of the correctness of the assessment
liabiliHes of the succeeding taxable quarter/s or year/s –  It is only upon TP’s failure to file a protest upon receipt of
d.  Non-payment of excise tax the FAN or to appeal the denial of the protest within the
prescribed periods would the FAN become final,
e.  Transfer by exempt person of tax-free arHcles to non-
unappealable and executory thereby negaHng TP’s right to
exempt persons (§ 228)
present evidence precisely because the right to dispute the
assessment has prescribed and the court can no longer
acquire jurisdicHon over the same
C.  PAN C.  PAN
§  What is the BIR’s remedy then if TP fails to Pier 8 Arrastre and Stevedoring Services v. CIR
§  Failure of TP to appear and/or to present evidence during
present evidence during the PAN stage?
PAN stage, or even during the protest period does not mean
–  BIR is enHtled to issue a FAN based on its a waiver of the right to present any evidence to dispute the
findings assessment
§  Such failure is not equivalent to an implied admission of the
correctness of the tax assessment
§  It is only when TP fails to file a Hmely protest on the FAN or
fails to Hmely appeal the denial of the protest would the
assessment become final, unappealable and executory
thereby negaHng TP’s right to present evidence precisely
because the right to dispute the assessment has prescribed
and the court can no longer acquire jurisdicHon over the
same
C.  PAN C.  PAN
§  What if BIR issues a FAN without first issuing a PAN §  See, however, the case of CIR v. Menguito which seems to hold that the
lack of a PAN is not fatal to the BIR so long as a FAN is served on the TP
(assuming the non-issuance of the PAN does not fall
–  However, while the lack of a post-reporHng noHce and pre-
within the excepHons), will that invalidate the assessment noHce is a deviaHon from the requirements under RR
assessment? 12-85, the same cannot detract from the fact that formal
assessments were issued to and actually received by respondents in
–  Arguably, yes. Denial of due process. Even if TP had accordance with SecHon 228 of the NIRC
all the opportunity to protest the FAN and submit –  Requirement that an assessment be saHsfactorily proven to have
relevant supporHng documents? Can’t the BIR argue been issued and released or, if receipt thereof is denied, that said
that all that the due process clause requires is the assessment has been served on TP, applies only to a FAN, but not to
post-reporHng noHces or PAN
opportunity to be heard (which was saHsfied when
–  A post-reporHng noHce and PAN do not bear the gravity of a FAN;
TP protested the FAN and submi"ed relevant they merely hint at the iniHal findings of the BIR and invite the TP to
supporHng documents)? an informal conference. Neither contains a declaraHon of the tax
liability of the TP or a demand for payment thereof. Hence, the lack
–  Must be raised though as an affirmaHve defense in of such noHces inflicts prejudice on the TP for as long as the la"er is
the protest to the FAN (otherwise if not raised, properly served a FAN
might be considered waived)
lack of PAN is fatal
superseded by CIR v Metro Star Superama

C.  PAN D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
§  Lack of PAN is fatal §  What is the effect if the BIR fails to

§  CIR v. Metro Star Superama inform the TP of the factual and legal
§  “[T]he sending of a PAN to taxpayer to inform him basis of the assessment?
of the assessment made is but part of the “due –  The assessment is rendered void
process requirement in the issuance of a deficiency
tax assessment,” the absence of which renders
nugatory any assessment made by the tax Sec 228 is very important!!!
authoriHes. The use of the word “shall” in
subsecHon 3.1.2 [of Rev. Regs. 12-99] describes the
mandatory nature of the service of a PAN”
next meeting
D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
CIR v. Reyes §  In what form should the “informing” take?

§  Merely noHfying the TP of the BIR’s findings §  Must factual and legal basis be embodied in
the assessment noHce itself?
without informing the TP of factual and legal
§  What is the minimum requirement?
basis of the assessment is insufficient
Australasia Cylinder Corp. v. CIR PNZ MarkeGng v. CIR

§  In whatever form and manner the assessment §  Factual and legal basis embodied in the
noHce is wri"en, as long as TP is informed on
how the assessment is arrived at, then the formal le"er of demand a"ached to the FAN
requirement of the law is sufficiently met complies with § 228
§  Mere computaHon of taxable income per
audit without explaining how the BIR arrived
at the figures or without explaining the
factual and legal basis of the assessment
renders the assessment void
Phil. Mining Service Corp. v. CIR Oceanic Wireless Network v. CIR

§  There is substanHal compliance with § 228 when the TP
§  Report of invesHgaHon and memorandum of is able to protest the assessments intelligently, thereby
RO detailing factual and legal basis of implying that it had actual knowledge of the factual and
assessment issued to TP prior to FAN (which legal bases of the assessments
only contained deficiency tax due) saHsfies § §  The allegaHon that TP failed to receive copy of the
detailed computaHon during the informal conference of
228 the penalHes for the quarterly income tax assessment
carries li"le consideraHon by the court. It is sufficient
that TP was informed of the reason why the said
assessment was issued. Clearly, TP was informed of the
factual and legal bases on which the assessment for
deficiency quarterly income tax was based
Recap: CIR v. Enron Subic Power Corp.

§  CTA broadly interpreted requirement in the BIR’s §  BIR conten*on: TP was properly apprised of its
favor
–  Report of invesHgaHon and memorandum of
tax deficiency. During the pre-assessment stage,
examiner detailing factual and legal basis of CIR advised TP’s representaHve of the tax
assessment issued to TP prior to FAN (which only deficiency, informed it of the proposed tax
contained deficiency tax due) saHsfies § 228. Phil. deficiency assessment through a preliminary
Mining Service Corp. v. CIR
–  There is substanHal compliance with § 228 when five-day le"er and furnished TP a copy of the
the TP is able to protest the assessments audit working paper showing in detail the legal
intelligently, thereby implying that it had actual and factual bases of the assessment. These steps
knowledge of the factual and legal bases of the
assessments. Oceanic Wireless Network v. CIR sufficed to inform TP of the laws and facts on
which the deficiency tax assessment was based
D.  Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment E.  Submission of SupporHng Documents
CIR v. Enron Subic Power Corp. §  § 228 requires the TP to submit all relevant supporHng
§  The advice of tax deficiency, given by the CIR to an employee of TP, docs within 60 days from filing the protest. What is the
as well as the preliminary five-day le"er, were not valid subsHtutes effect if the TP fails to comply with this req’t?
for the mandatory noHce in wriHng of the legal and factual bases of
the assessment. These steps were mere perfunctory discharges of –  The assessment becomes final, executory and
the CIR’s duHes in correctly assessing a taxpayer demandable
§  The requirement for issuing a preliminary or final noHce, as the §  Who determines whether the TP has submi"ed “all
case may be, informing a taxpayer of the existence of a deficiency
tax assessment is markedly different from the requirement of what relevant supporHng documents?”
such noHce must contain. Just because the CIR issued an advice, a –  The TP. “Relevant supporHng documents” refers to
preliminary le"er during the pre-assessment stage and a final such documents which the TP feels would be
noHce, in the order required by law, does not necessarily mean that necessary to support his protest and not what the
TP was informed of the law and facts on which the deficiency tax
assessment was made CIR feels should be submi"ed, otherwise, TPs would
§  The law requires that the legal and factual bases of the assessment always be at the mercy of the BIR which may require
be stated in the formal le"er of demand and assessment noHce producHon of such documents which TP could not
pursuant to RR 12-99 produce. In this manner the assessment could easily
become final
E.  Submission of SupporHng Documents E.  Submission of SupporHng Documents
H. TambunGng Pawnshop, Inc. v. CIR CIR v. First Express Pawnshop

§  “Relevant supporHng documents” refers to such §  It cannot be said that respondent failed to submit relevant supporHng
documents that would render the assessment final because when
documents which the TP feels would be respondent submi"ed its protest, respondent a"ached the GIS and
necessary to support his protest and not what Balance Sheet. Further, peHHoner cannot insist on the submission of
the CIR feels should be submi"ed, otherwise, proof of DST payment because such document does not exist as
TPs would always be at the mercy of the BIR respondent claims that it is not liable to pay, and has not paid, the DST
which may require producHon of such on the deposit on subscripHon
documents which TP could not produce. In this §  The term “relevant supporHng documents” should be understood as
manner the assessment could easily become those documents necessary to support the legal basis in dispuHng a tax
assessment as determined by the taxpayer. The BIR can only inform the
final taxpayer to submit addiHonal documents. The BIR cannot demand what
type of supporHng documents should be submi"ed. Otherwise, a
taxpayer will be at the mercy of the BIR, which may require the
producHon of documents that a taxpayer cannot submit
E.  Submission of SupporHng Documents F.  Effect of Failure to File Protest
§  What is the BIR’s remedy then if it feels that Dayrit v. Cruz

the docs submi"ed by the TP are insufficient? §  The assessments having become final and executory,
–  Deny the protest and state that the the CFI properly acquired jurisdicHon
supporHng documents submi"ed by the TP §  The aforesaid exclusive jurisdicHon of the CTA arises
only in cases of disputed tax assessments. As noted
failed to overturn the presumpHon of earlier, TPs’ le"er dated October 7, 1972 asking for
correctness of the assessment reconsideraHon of the quesHoned assessments cannot
be considered as one dispuHng the assessments
because peHHoners failed to substanHate their claim
that the deficiency assessments are contrary to law.
TPs asked for a period of thirty (30) days within which
to submit their posiHon paper but they failed to
submit the same nonetheless. Hence, TPs’ le"er for a
reconsideraHon of the assessments is nothing but a
mere scrap of paper
A.  Scope of JurisdicHon of CTA/What is Appealable to CTA
Scope of jurisdicHon of the CTA:

1.  Disputed Assessments, Refunds, etc.
§  Decisions of the CIR on: (i) disputed
assessments; (ii) refunds of internal revenue
taxes, fees, etc.; and (iii) other ma"ers arising
under the NIRC or other tax laws
§  InacHon of the CIR on disputed assessments,
III.  IN CASE OF DENIAL OF PROTEST refunds, etc.
OR INACTION, APPEAL TO CTA 2.  Local Tax Cases
§  RTC decisions on local tax cases
A.  Scope of JurisdicHon of CTA/What is Appealable to CTA A.  Scope of JurisdicHon of CTA/What is Appealable to CTA
Scope of jurisdicHon of the CTA: Scope of jurisdicHon of the CTA:

3.  Customs DuHes and Taxes 5.  Decisions of DOF and DTI on certain ma"ers
§  Decisions of the COC: (i) on cases involving §  Decisions of SecFin on customs cases
liability for duHes and taxes; (ii) seizure, elevated to him on automaHc review of COC
detenHon and release of property; and (iii) other decisions adverse to the government under
ma"ers arising under the TCCP and other
TCCP § 2315
customs laws
§  Decisions of Sec. of Trade and Industry and/or
4.  Real Property Tax
Sec. of Agriculture involving dumping,
§  Decisions of the CBAA on appeal of real property countervailing duHes and safeguard measures
tax ma"ers originally decided by the LBAA
A.  Scope of JurisdicHon of CTA/What is Appealable to CTA A.  Scope of JurisdicHon of CTA/What is Appealable to CTA
Scope of jurisdicHon of the CTA: CIR v. Villa

6.  Tax and Customs Criminal Offenses §  Held: The word “decisions” in ¶ 1, § 7 of RA 1125 means
§  Original jurisdicHon over criminal offenses arising from the decisions of the CIR on the protest of the TP against
violaHon of the NIRC, TCCP and other tax/customs laws the assessments. Definitely, said word does not signify
where amount involved is P1 million or more the assessment itself
§  Appellate jurisdicHon over RTC decisions on criminal §  Since in the instant case the TP appealed from the
offenses where amount involved is less than P1 million assessment of the CIR without previously contesHng the
7.  Tax CollecHon Cases same, the appeal was premature and the CTA had no
§  Original jurisdicHon over tax collecHon cases involving final jurisdicHon to entertain said appeal. For, as stated, the
and executory assessments where amount involved is P1 jurisdicHon of the CTA is to review by appeal decisions
million or more of the CIR on disputed assessments. The CTA is a court
of special jurisdicHon. As such, it can take cognizance
§  Appellate jurisdicHon over RTC decisions on tax collecHon only of such ma"ers as are clearly within its jurisdicHon
cases where amount involved is less than P1 million
B.  ApplicaHon of the 180-Day Rule B.  ApplicaHon of the 180-Day Rule
Lascona Land Co. v. CIR §  Lascona affirmed by SC

§  Meanwhile, Revised Rules of the CTA approved and issued
§  It is only the “decision” not appealed by TP to the CTA that by the SC on Nov. 22, 2005 adopHng Lascona (see § 3(a)(2),
becomes final, executory and demandable. Otherwise, Rule 4 and § 3(a), Rule 8)
Congress could have easily included the word “assessment” as §  Correlate Lascona and § 3(a)(2), Rule 4 and § 3(a), Rule 8
also becoming final, executory and demandable should the BIR with § 7(a)(2) of RA 1125, which provides:
fail to act on the protest within 180 days and the inacHon is not –  “InacHon by the [CIR] in cases involving disputed
appealed to the CTA assessments . . . where the [NIRC] provides a specific
period of acHon, in which case the inacHon shall be
§  In cases of inacHon, Sec. 228 merely gave the taxpayer an deemed a denial”
opHon: §  Under NIRC § 228, “[i]f the protest is denied in whole or in
Ø  First, he may appeal to the CTA within thirty (30) days from part . . . the taxpayer adversely affected by the decision . . .
the lapse of the 180-day period, or may appeal to the [CTA] within thirty (30) days from receipt
of the said decision . . . otherwise, the decision shall become
Ø  Second, he may wait unHl the CIR decides on his protest final, executory and demandable”
before he elevates his case to the CTA
B.  ApplicaHon of the 180-Day Rule C.  What ConsHtutes Denial of Protest/Decision on Disputed Assessment
RCBC v. CIR 1.  General rule: FDDA

§  “Based on the foregoing, [TP] can not now claim that the 2.  I s s u a n c e o f R e v i s e d A s s e s s m e n t U p o n
disputed assessment is not yet final as it remained ReinvesHgaHon –
unacted upon by the [CIR]; that it can sHll await the final Avon Products Mfg., Inc. v. CIR
decision of the [CIR] and thereaser appeal the same to §  June 3 le"er (which included the revised
the [CTA]. This legal maneuver cannot be countenanced. assessment) parHcularly referred to TP’s
Aser availing the first opHon, i.e., filing a peGGon for requests for reinvesHgaHon; also made a
review which was however filed out of Hme, [TP] can not demand for se"lement of reduced tax liabiliHes
successfully resort to the second opHon, i.e., awaiGng the within 15 days together with a threat to enforce
final decision of the [CIR] and appealing the same to the
collecHon via summary remedies without further
noHce
[CTA], on the pretext that there is yet no final decision on
the disputed assessment because of the [CIR’s] inacHon.”
§  Appeal opHons thus mutually exclusive
C.  What ConsHtutes Denial of Protest/Decision on Disputed Assessment C.  What ConsHtutes Denial of Protest/Decision on Disputed Assessment
3.  Final NoHce Before Seizure 4.  Final Demand Le"er

CIR v. Isabela Cultural Corp.
CIR v. Ayala SecuriGes Corp.
§  Held: In the light of the above facts, the Final NoHce Before
Seizure cannot but be considered as the CIR's decision §  TP assessed; TP protested assessment
disposing of the request for reconsideraHon filed by TP, who §  On February 21, 1963, TP received a le"er dated
received no other response to its request
§  Not only was the NoHce the only response received; its February 18, 1963 wherein CIR called TP’s
content and tenor supported the theory that it was the CIR’s a"enHon to the unpaid tax as assessed and
final act regarding the request for reconsideraHon demanded payment within 5 days
§  The very Htle expressly indicated that it was a final noHce prior §  Believing that February 18, 1963 le"er was the
to seizure of property. The le"er itself clearly stated that
respondent was being given “this LAST OPPORTUNITY” to pay; CIR’s decision on the disputed assessment, TP
otherwise, its properHes would be subjected to distraint and appealed to CTA
levy
§  How then could it have been made to believe that its request
for reconsideraHon was sHll pending determinaHon, despite
the actual threat of seizure of its properHes?
4.  Final Demand Le"er 4.  Final Demand Le"er

CIR v. Ayala SecuriGes Corp. CIR v. Ayala SecuriGes Corp.
§  The le"er of February 18, 1963 (Exh. G), in the §  This certainly is a clear indicaHon of the firm
view of the Court, is tantamount to a denial of stand of the CIR against the reconsideraHon of
the reconsideraHon or protest of the TP on the the disputed assessment, in view of the
assessment made by the CIR, considering that conHnued refusal of the TP to execute the waiver
the said le"er is in itself a reiteraHon of the of the period of limitaHon upon the assessment
demand by the BIR for the se"lement of the in quesHon.
assessment already made, and for the §  This being so, the said le"er amounts to a
immediate payment of the sum of P758,687.04 decision on a disputed or protested assessment
in spite of the vehement protest of the TP on and, therefore, the court a quo did not err in
April 21, 1961. taking cognizance of this case.
4.  Final Demand Le"er 4.  Final Demand Le"er

Surigao Electric Co. Inc. v. CTA Surigao Electric Co. Inc. v. CTA
§  We deem it appropriate to state that the CIR should always indicate to the
§  Moreover, the le"er of demand dated April 29, 1963 unquesHonably TP in clear and unequivocal language whenever his acHon on an assessment
consHtutes the final acGon taken by the CIR on the TP’s several requests quesHoned by a TP consHtutes his final determinaHon on the disputed
for reconsideraHon and recomputaHon. In this le"er, the CIR not only in assessment
effect demanded that the TP pay the amount of P11,533.53 but also
gave warning that in the event it failed to pay, the said CIR would be §  On the basis of this indicium indubitably showing that the CIR’s
communicated acHon is his final decision on the contested assessment, the
constrained to enforce the collecHon thereof by means of the remedies aggrieved TP would then be able to take recourse to the tax court at the
provided by law. The tenor of the le"er, specifically the statement opportune Hme
regarding the resort to legal remedies, unmistakably indicates the final
nature of the determinaHon made by the CIR of the TP’s deficiency §  Without needless difficulty, the TP would be able to determine when his
franchise tax liability right to appeal to the tax court accrues
§  This rule of conduct would also obviate all desire and opportunity on the
§  Thus, this Court has considered the following communicaHons sent by part of the TP to conHnually delay the finality of the assessment — and,
the CIR to TPs as embodying rulings appealable to the CTA: (a) a le"er consequently, the collecHon of the amount demanded as taxes — by
which stated the result of the reinvesHgaHon requested by the TP and repeated requests for recomputaHon and reconsideraHon
the consequent modificaHon of the assessment; (b) a le"er which §  On the part of the CIR, this would encourage his office to conduct a careful
denied the request of the TP for the reconsideraHon, cancellaHon, or and thorough study of every quesHoned assessment and render a correct
withdrawal of the original assessment; (c) a le"er which contained a and definite decision thereon in the first instance
demand on the TP for the payment of the revised or reduced
assessment; and (d) a le"er which noHfied the TP of a revision of §  This would also deter the CIR from unfairly making the TP grope in the dark
and speculate as to which acHon consHtutes the decision appealable to the
previous assessments tax court. Of greater import, this rule of conduct would meet a pressing
need for fair play, regularity, and orderliness in administraHve acHon
5.  Filing of collecHon suit 5.  Filing of collecHon suit

CIR v. Union Shipping Corp., 185 SCRA 547 (1990)
CIR v. Union Shipping Corp., 185 SCRA 547 (1990)
§  Held: ciHng its admoniHon to the CIR in Surigao Electric, SC held that:
there appears to be no dispute that CIR did not rule on TP’s moHon for §  Under the circumstances, the CIR, not having clearly
reconsideraHon but contrary to the above ruling of this Court, les TP in signified his final acHon on the disputed assessment,
the dark as to which acHon of the CIR is the decision appealable to the legally the period to appeal has not commenced to run
CTA. Had he categorically stated that he denied TP’s MR and that his
acHon consHtutes his final determinaHon on the disputed assessment, §  Thus, it was only when TP received the summons on the
TP without needless difficulty would have been able to determine when civil suit for collecHon of deficiency income on December
his right to appeal accrues and the resulHng confusion would have been 28, 1978 that the period to appeal commenced to run
avoided
§  Much later, this Court reiterated the above-menHoned dictum in a ruling §  The request for reinvesHgaHon and reconsideraHon was
applicable on all fours to the issue in the case at bar, that the reviewable in effect considered denied by the CIR when the la"er
decision of the BIR is that contained in the le"er of its Commissioner, filed a civil suit for collecHon of deficiency income. So
that such consHtutes the final decision on the ma"er which may be
appealed to the CTA and not the warrants of distraint (AdverHsing that on January 10, 1979 when TP filed the appeal with
Associates, Inc. v. Court of Appeals, 133 SCRA 769 [1984]) the Court of Tax Appeals, it consumed a total of only
§  It was likewise stressed that the procedure enunciated is demanded by thirteen (13) days well within the thirty day period to
the pressing need for fair play, regularity and orderliness in appeal pursuant to SecHon 11 of R.A. 1125
administraHve acHon
7.  Issuance of WDL – 7.  Issuance of WDL –

Central Cement Corp. v. CIR CIR v. Algue, Inc.
§  Held: the ma"er of jurisdicHon was neither raised by CIR in his
"Answer" nor in the trial on the merits of this case. §  It is true that as a rule the WDL is "proof of the finality
§  CIR’s counsel acHvely parHcipated in court proceedings; issue of of the assessment" and "renders hopeless a request
lack jurisdicHon raised only when case was already submi"ed for for reconsideraHon," being "tantamount to an outright
decision denial thereof and makes the said request deemed
§  While lack of jurisdicHon may be assailed at any stage, a party's rejected."
acHve parHcipaHon in the proceedings before the court without §  But there is a special circumstance in the case at bar
jurisdicHon will estop such party from assailing such lack of
jurisdicHon that prevents applicaHon of this accepted doctrine
§  In the case at bar, the WDLs were issued by CIR knowing fully well §  The proven fact is that 4 days aser the TP received the
that the deficiency assessments were under protest by TP. Even CIR’s noHce of assessment, it filed its le"er of protest.
when the issuance of the WDLs were objected to by TP for being This was apparently not taken into account before the
in violaHon of the Tax Code, CIR did not lis said warrants. WDL was issued; indeed, such protest could not be
§  It is by CIR’s own doing that administraHve remedies available to located in the office of the CIR. It was only aser A"y.
TP were effecHvely shut-off thereby, leaving TP with no recourse
but to seek relief from this Court Guevara gave the BIR a copy of the protest that it was,
if at all, considered by the tax authoriHes.
C.  What ConsHtutes Denial of Protest/Decision on Disputed Assessment D.  Period to Appeal/Effect of Failure to Appeal
7.  Issuance of WDL – Basa v. RP

AdverGsing Assoc., Inc. v. CIR
§  Held: We hold that the peHHon for review was filed on Hme. §  Held: if TP wanted to contest the assessment,
The reviewable decision is that contained in Commissioner he should have appealed to CTA
Plana's le"er of May 23, 1979 and not the WDLs
§  No amount of quibbling or sophistry can blink the fact that §  Not having done so, he could no longer
said le"er, as its tenor shows, embodies the Commissioner's contest the same in the CFI
final decision within the meaning of secHon 7 of RA 1125. The
CIR said so. He even directed the TP to appeal it to the Tax §  TP can no longer raise prescripHon, which
Court. should have been interposed as a defense in
§  The direcHve is in consonance with this Court's dictum that
the Commissioner should always indicate to the taxpayer in CTA
clear and unequivocal language what consHtutes his final
determinaHon of the disputed assessment. That procedure is
demanded by the pressing need for fair play, regularity and
orderliness in administraHve acHon (Surigao Electric Co., Inc.
vs. Court of Tax Appeals, L-25289, June 28, 1974, 57 SCRA
523).
D.  Period to Appeal/Effect of Failure to Appeal E.  Mode of Appeal and Effect of Appeal
Mambulao Lumber Co. v. CIR 1.  What is the TP’s remedy in case the BIR denies the protest
§  CFI ruled in favor of CIR; TP appealed to CA which (i.e., issues an adverse decision on the disputed
assessment ) or fails to act on the same within the 180-day
affirmed CFI period?
§  Held: assessment already final and executory for §  Appeal the denial or the inacHon to the CTA within 30 days
TP’s failure to appeal the July 8, 1959 le"er from the denial or from the lapse of the 180-day period by
filing a peHHon for review (RA 1125 § 11)
§  In a suit for collecHon of internal revenue taxes, as §  A division of the CTA shall hear the appeal
in this case, where the assessment has already 2.  What is the effect of the appeal on the disputed
become final and executory, the acHon to collect is assessment?
akin to an acHon to enforce a judgment §  Gen. rule: the appeal will not suspend the payment, levy,
§  No inquiry can be made therein as to the merits of distraint and/or sale of any property of the TP for the
the original case or the justness of the judgment saHsfacHon of his tax liability (RA 1125 § 11, 4th par.)
relied upon. PeHHoner is thus already precluded §  Excep*on: when the collecHon will jeopardize the interest of
the gov’t or the TP (court will issue an injuncHon provided
from raising the defense of prescripHon amount claimed is deposited or surety bond is posted for not
more than 2x the amount claimed)
E.  Mode of Appeal and Effect of Appeal E.  Mode of Appeal and Effect of Appeal
3.  What is the TP’s remedy in case the CTA division issues an 5.  May the TP appeal the adverse decision of the CTA
adverse decision vs. the TP? division directly to the SC under Rule 45 (on a pure
§  File an MR or new trial within 15 days from noHce of quesHon of law)?
decision (RA 1125 § 11, 3rd par.) §  No. Failure to file a moHon for reconsideraHon of an
§  Upon issuance of resoluHon denying the MR or new assailed decision of a CTA division, or at least file a
trial, appeal the same to the CTA En Banc within 15
days from noHce of the resoluHon (RA 1125 § 18; peHHon for review with the CTA en banc, before
Revised Rules of the CTA § 3(b), rule 8) filing a peHHon for review with the SC renders the
4.  May the TP appeal the adverse decision directly to the assailed decision final and executory. Commissioner
CTA En Banc without filing an MR? of Customs v. Gelmart Industries Phil., Inc., G.R. No.
§  No. Appeals to the CTA En Banc must be preceded by 169352, February 13, 2009
the Hmely filing of an MR new trial with the CTA
division (Revised Rules of the CTA § 1, rule 8; see also
RA 1125 § 18)
file MR CTA en banc

file petrev SC
motion for extension for 30 days 30 days
IV.  APPEAL TO SC V.  REFUND AND/OR TAX CREDIT OF

ERRONEOUSLY PAID TAX

A"y. Terence Conrad H. Bello 55 A"y. Terence Conrad H. Bello 56
A.  What ConsHtutes Erroneous Payment A.  What ConsHtutes Erroneous Payment
1.  Cases – •  What can be refunded or credited is a tax that is

Chemical Industries of the Phil., Inc. v. CIR “erroneously, … illegally, … excessively or in any
§  Held: the March 31, 1998 ruling request addressed to the
Deputy Commissioner is not a claim for refund but a le"er manner wrongfully collected”
requesHng for a ruling for the refund of the tax allegedly paid
by TP
•  In short, there must be a wrongful payment
§  The ruling request is not the wri"en claim for refund required because what is paid, or part of it, is not legally
by law before a judicial refund claim may be filed with the CTA due (San Roque case)
§  The stock transacHon tax was not illegally or erroneously •  What is the test to determine W/N tax was
assessed or collected
§  No allegaHon that at the Hme the stock transacHon tax was illegally or erroneously assessed or collected?
paid, no such tax was due and payable; in other words, there §  At the Hme the claimed tax was paid, no such
was no allegaHon that the payment therefore was erroneous
§  The share sale was already perfected and remained effecHve tax was due and payable
unHl one or more of the resolutory condiHons occurred; such
being the case, the payment of the tax was proper and legal
§  Payment of a tax beyond beyond what is
legally due
if claim for refund denied, denial must be appealed to CTA within 30 days (Sec.7, RA1125)
no refund allowed beyond 2yr period
whichever is earlier…
if inaction, deemed a denial

recourse: need not wait, appeal to CTA
B.  Requirement to File AdministraHve Claim D.  Effect of Supervening Event
1.  Cases – 1.  CIR v. Central Azucarera Don Pedro

Bermejo v. Collector
§  Held: 2-year period counted from the supervening event
§  Held: TP contended that the requirement to file a refund
claim with the CIR was complied with, because prior to the which gave rise to the right to refund (i.e., grant of tax
insHtuHon of the court case, there were le"ers sent to the CIR exempHon on September 20, 1965)
protesHng the tax §  When the tax sought to be refunded is illegally or
§  The law clearly sHpulates that aser paying the tax, the TP
must submit a claim for refund before resorHng to the courts. erroneously collected, the 2-year period starts from the
§  The idea probably is, first, to afford the CIR an opportunity to date the tax was paid
correct the acHon of subordinate officers; §  But when the tax is legally collected (as in the present case),
§  and second, to noHfy the Government that such taxes have the 2-year period commences to run from the date of
been quesHoned, and the noHce should then be borne in mind
in esHmaHng the revenue available for expenditure. occurrence of the supervening event which gave rise to the
§  Previous objecHons to the tax may not take the place of that right to refund
claim for refund, because there may be some reason to v  NB: this case is no longer good law in view of present
believe that, in paying, the taxpayer has finally come to realize language of § 229 (“irrespecGve of any supervening event”)
the validity of the assessment.
D.  Effect of Supervening Event E.  Offsewng Against Deficiency Assessments
2.  Case – 1.  Cases –

Meralco v. CIR CIR v. Cebu Portland Cement
§  Conten*on of TP: 2-year period should commence to run §  Held: The argument that the assessment cannot as yet be
only from the Hme the refund is ascertained; therefore enforced because it is sHll being contested loses sight of the
period should be reckoned from Oct. 7, 2003 when BIR urgency of the need to collect taxes as “the lifeblood of the
issued ruling government”
§  Held: porHon of amount sought to be refunded §  If the payment of taxes could be postponed by simply
prescribed quesHoning their validity, the machinery of the state would
§  Under § 229, the administraHve claim and the judicial grind to a halt and all government funcHons would be
claim must be filed within 2 years from date of payment paralyzed
of the tax regardless of any supervening cause §  This is the reason for the existence of the anH-injuncHon rule
§  There is no requirement in the law that a TP must first §  To require CIR to actually refund to TP the amount of the
request for a tax ruling confirming exempHon before it judgment debt, which he will later have the right to distrain
can file a refund claim in cases of erroneous payment or for payment of its sales tax liability is in our view an idle ritual
overpayment of taxes
§  We hold that the CTA erred in ordering such a charade
E.  Offsewng Against Deficiency Assessments E.  Offsewng Against Deficiency Assessments
1.  Cases –
BPI SecuriGes Corp. v. CIR
1.  Cases –
§  Moreover, it appears that the memorandum-report has not yet FNCB Finance v. CIR
ripened into a formal assessment duly approved by the Regional
Director or by the CIR §  TP filed a refund claim
§  Thus, the same can proceed independently of the claim for refund §  CIR offered in evidence a report of invesHgaHon
and its merits or demerits may be determined in separate which found TP liable instead for deficiency
proceedings as provided for in the Tax Code
§  The principle that taxes are not subject to set-off or legal income tax
compensaHon must govern, especially in this case where the taxes
and the taxpayer's claim are not fully liquidated, due and
§  Held: automaHc set-off capricious
demandable §  ViolaHon of due process
§  In this case, no assessment, whether tentaHve or final, has been
issued to peHHoner. Consequently, we do not find any reason to §  Without an assessment, there is no debt from TP
deviate from the above rulings. Thus, the argument of the that can be set-off
respondent that peHHoner's refund claim must be denied on the
basis of the findings and recommendaHon in the memorandum
issued by the Revenue Officer does not deserve consideraHon
v  Ques*on: what if there was already a FAN that the TP protested, would
the result be different?
no cost of suit, no interest
F.  Liability of Government for Interest, A"orney’s Fees, Etc. G.  Taxes not Subject to Set-Off
Philex Mining Corp. v. CIR Francia v. IAC

§  TP owned real property, a porHon of which was expropriated by
§  No interest on refund of tax can be awarded unless the gov’t and for which gov’t owed TP P4,116
authorized by law or the collecHon of the tax was §  The rest of TP’s property sold at public aucHon for delinquency
a"ended by arbitrariness. RPT of P2,400
§  An acHon is not arbitrary when exercised honestly and §  TP contends that his tax delinquency of P2,400.00 has been
upon due consideraHon where there is room for two exHnguished by legal compensaHon. He claims that the
government owed him P4,116.00 when a porHon of his land was
opinions, however much it may be believed that an expropriated on October 15, 1977. Hence, his tax obligaHon had
erroneous conclusion was reached. Arbitrariness been set-off by operaHon of law as of October 15, 1977
presupposes inexcusable or obsHnate disregard of legal §  Held: contenHon of the TP has no merit. We have consistently
provisions. None of the excepHons are present in the case ruled that there can be no off-sewng of taxes against the claims
that the TP may have against the government. A person cannot
at bar. Respondent’s decision denying peHHoner’s claim refuse to pay a tax on the ground that the government owes him
for refund was based on an honest interpretaHon of law. an amount equal to or greater than the tax being collected. The
We, therefore see no reason why peHHoner should be collecHon of a tax cannot await the results of a lawsuit against the
enHtled to the payment of interest. government

G.  Taxes not Subject to Set-Off G.  Taxes not Subject to Set-Off
Francia v. IAC BIR Rul. 415-93

§  This rule was reiterated in the case of Cordero v. §  Ruling request for automaHc offsewng of claims
Gonda (18 SCRA 331) where we stated that: ". . . for excess input VAT against excise tax liability
internal revenue taxes can not be the subject of denied
compensaHon: Reason: government and taxpayer
'are not mutually creditors and debtors of each §  Claim subject to verificaHon and final
other' under ArHcle 1278 of the Civil Code and a determinaHon before issuance of TCC
"claim for taxes is not such a debt, demand,
contract or judgment as is allowed to be set-off.“
§  Moreover, RPT was due to an LGU while the
expropriaHon was effected by the naHonal
government

G.  Taxes not Subject to Set-Off
Summary –
1.  Government invokes set-off (denies refund on account of
pending assessment):
§  Doctrine: government cannot defeat TP’s enHtlement
to refund on account of a proposed assessment
v  OpHons available to the government:
–  Formalize/finalize assessment (i.e., issue FAN),
then invoke Cebu Portland
–  If there is a final judgment awarding the refund
claim, distrain judgment debt
2.  TP invokes set-off (refuses to pay assessment on account
of pending refund claim):
VI.  APPEAL IN CASE OF DENIAL OF
§  No set-off rule in RP v. Mambulao: collecHon of taxes REFUND/TAX CREDIT CLAIM
cannot await result of a lawsuit determining propriety
of refund claim
A"y. Terence Conrad H. Bello Slide No. 69 A"y. Terence Conrad H. Bello 70
A.  Appeal in Case of Denial of Refund/Tax Credit Claim
1.  Appeal to CTA/SC same as appeal of denial of

protest
VII.  DECISION ON “OTHER MATTERS”
Decision on “Other Ma"ers” Decision on “Other Ma"ers”
1.  What may be appealed to the CTA pursuant to par. Rodriguez v. Blaquera
2, Sec. 4 of the NIRC and Sec. 7(a)(1) of RA 9282? §  Decision of the CIR on the ma"er of an enforcement
§  Decisions on: of the NaHonal Internal Revenue Code
Ø  Disputed assessments
Ø  Disputed refund
Ø  Other ma"ers arising under the NIRC and
other tax laws
PNOC v. CA Phil. Journalists, Inc. v. CIR

§  CTA had jurisdicHon to review decisions of CIR to §  Decision to issue a warrant of distraint and levy to
enter into a compromise agreement with PNOC and enforce collecHon of an assessment that was
to reject the informer’s claim for addiHonal reward already barred by prescripHon
w h e r e i n q u e s H o n s o f l a w i n v o l v i n g t h e
interpretaHon and applicaHon of the NIRC and E.O.
No. 44 and its implemenHng rules and regulaHons
were at issue
Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
§  If the BIR issues a Rev. Regs., RMO or RMC that is §  Sec. 4, par. 1
perceived to be contrary to law, what is the Ø  Power to interpret the provisions of the Tax
taxpayer’s appeal remedy?
Code and other tax laws
§  ConflicHng decisions on proper remedy
Ø  subject to review by the Sec. of Finance

§  Sec. 4, par. 2
Ø  Power to decide disputed assessments,
refunds, or other mahers arising under the
Tax Code and other tax laws
Ø  Subject to appellate jurisdicHon of the CTA
§  If exercise of power is quasi-legislaHve in §  Quasi-legislaGve – power to make rules and

nature – appeal is to DOF (Sec. 4, 1st par.) regulaHons of general applicability
§  If exercise of power is quasi-judicial in nature §  Quasi-judicial – power to hear and determine
– appeal is to CTA (Sec. 4, 2nd par.; Sec. 7, RA quesHons of fact to which the legislaHve
9282) policy is to apply and to decide in accordance
with the standards laid down by law; exercise
of power results to a decision or order
affecHng a named person or applying to a
specific situaHon and becoming final and
executory aser the lapse of a certain period
§  What is the scope of the DOF’s review power under §  CTA has appellate jurisdicHon over decisions
Sec. 4? of the CIR on “other ma"ers arising under the
–  The Sec. of Finance only has the power of review Tax Code or other laws administered by the
over interpretaHons of the CIR of the provisions of
the NIRC or other tax laws
[BIR]” (Sec. 4, 2nd par.)
§  What is covered by the CIR’s power of interpretaHon?
–  Decision of CIR on “other ma"ers” should be
quasi-judicial in nature for the 2nd par. of Sec. 4
–  The power of administraHve agencies, such as the
to apply
BIR, to interpret and construe the statutes
entrusted to them for implementaHon is an –  See, however, CIR v. Leal (SC held that CTA has
exercise of the quasi-legislaHve power of jurisdicHon over RMCs issued by BIR)
administraHve agencies as disHnguished from their
quasi-judicial power
Types of BIR Issuances Appeal Remedy vs. Challenged BIR Issuances

1.  Rulings – refer to rulings, opinions and interpretations of the CIR with
respect to provisions of the Tax Code and other tax laws, which are issued CIR v. Leal, 392 SCRA 9 (2002)
in response to a specific request for ruling filed by a TP with the BIR
2.  Rev. Regs. – contain all needful rules and regulations for the effective
§  Challenged RMOs/RMCs are actually rulings or
enforcement of the provisions of the NIRC. Promulgated by the Sec. of opinions of the CIR implemenHng the Tax Code on
Finance, upon recommendation of the Commissioner of Internal Revenue
taxability of pawn shops
3.  RMO – contains directives or instructions outlining procedures, techniques,
methods, etc. which are necessary to carry out programs or to achieve §  JurisdicHon to review rulings of the CIR, such as
policy goals and objectives. Promulgated by Commissioner of Internal
Revenue RMOs/RMCs, pertains to CTA, not RTC
4.  RMC – disseminate and embody pertinent and applicable portions, as well §  CTA has jurisdicHon over decisions of the CIR on
as amplifications, of the rules, precedents, laws, regulations, opinions and
other orders and directives issued by the CIR, and by other offices and “other ma"ers” arising under the Tax Code
agencies, for the information, guidance or compliance of revenue personnel.
Promulgated by CIR

look up exceptions to exhaustion fo admin remedies

BriGsh American Tobacco v. Camacho, G.R. 163583, Aug. 20, 2008
Asia Int’l AucGoneers v. Parayno, G.R. 163445, Dec. 18, §  While RA 9282 confers on CTA jurisdicHon to resolve tax disputes
2007 in general, this does not include case where the consHtuHonality
§  CiHng Leal, Blaquera, SC held that assailed RMC is a of a law or rule is challenged
ruling or opinion of the CIR on the tax treatment of §  Where what is assailed is the validity or consHtuHonality of a law,
or a rule or regulaHon issued by the administraHve agency in the
sale of motor vehicles in public aucHon within SBF performance of its quasi-legislaHve funcHon, the regular courts
appealable to CTA have jurisdicHon to pass upon the same
§  Also held that failure of TPs to ask for §  The determinaHon of whether a specific rule or set of rules issued
by an administraHve agency contravenes the law or the
reconsideraHon of the assailed issuances is another
consHtuHon is within the jurisdicHon of the regular courts
reason for dismissal of the case

Sunlife of Canada v. CIR, CTA Case No. 7833, Jan. 12, Gorospe v. Vinzons-Chato, G.R. 132228, Jan. 21,
2009 2003
§  Decision of CIR to issue RMC clarifying taxability of §  PeHHon before SC assailing validity of RMC
insurance companies for MCIT, business tax and DST dismissed for non-exhausHon of administraHve
purposes not a “decision” contemplated by Sec. 7 of remedies. SC held, ciHng Sec. 4:
RA 1125 that is appealable to the CTA
Ø  PeHHoners should have asked CIR for a
§  Since principal relief sought is to declare null and
reconsideraHon
void RMC 30-2008, the same is outside jurisdicHon
of CTA (ciHng BriGsh American Tobacco) Ø  If acHon on reconsideraHon is adverse, denial
should have been appealed to SecFin
Philamlife v. Sec. of Finance, G.R. 210987, Nov. 24, 2014 Philamlife v. Sec. of Finance, G.R. 210987, Nov. 24, 2014
§  BIR issued a ruling denying the request of TP that the §  Held: Reviews by the Secretary of Finance pursuant to Sec. 4
sale of shares at a price below FMV is not subject to of the NIRC are appealable to the CTA under “other ma"ers”
donor’s tax §  Appellate power of the CTA includes cerHorari pursuant to
City of Manila v. Grecia-Cuerdo, G.R. 175723, Feb. 4, 2014
§  BIR anchored denial on Rev. Regs 6-2008 which treats
sale of shares at below FMV as “deemed donaHons” §  City of Manila diametrically opposes BriGsh American
subject to donor’s tax Tobacco to the effect that it is now within the power of the
CTA, through its power of cerHorari, to rule on the validity of
§  TP’s Sec. 4 appeal of the adverse ruling to the Sec. of a parHcular administraHve rule or regulaHon so long as it is
Finance denied within its appellate jurisdicHon. Hence, it can now rule not
§  TP appealed decision of the Sec. of Finance to the CA only on the propriety of an assessment or tax treatment of
(instead of the CTA), where it sought to invalidate a certain transacCon, but also on the validity of the revenue
regulaCon or RMC on which the assessment is based
Banco de Oro v. RP, G.R. 198756, Jan. 13, 2015 Recap:
§  BIR rulings subjecHng to withholding tax on maturity of
the so-called PEACe Bonds appealed directly to SC
1.  Indirect (Collateral) A"ack: e.g., denial of protest on
§  SC held that non-exhausHon of administraHve remedies
an assessment for alleged deficiency income tax and
proper (purely quesHon of law and urgency of judicial VAT on condominium dues on the basis of RMC
intervenHon excepHons) 65-2012 – appeal denial to CTA
§  Appeal of the quesHoned tax rulings to the Secretary of
Finance would have been proper remedy (ciHng 1st par.
of Sec. 4)
§  SC agreed with BIR that jurisdicHon to review rulings of
the CIR pertains to the CTA, ciHng Leal and Blaquera
Decision on “Other Ma"ers”
Appeal Remedy vs. Challenged BIR Issuances

Recap:
2.  Direct A"ack:
§  Appeal RMC/RMO/Rev. Regs. to Secretary of Finance
pursuant to Sec. 4, 1st par.; then appeal denial by
S e c F i n t o C T A o n t h e b a s i s o f “ o t h e r
ma"ers” (Philam Life and BDO/PEACe bonds case)
§  When what is involved is the consHtuHonality of an
RMC/RMO/Rev. Regs., file peHHon for declaratory
relief or peHHon for prohibiHon with RTC (aser VIII.  STATUTE OF LIMITATIONS
exhausHng administraHve remedies, e.g., request for
reconsideraHon with BIR) (BriGsh American Tobacco;
Clark Investors and Locators Ass’n)
A.  Period to Assess A.  Period to Assess
1.  When is an assessment deemed made? 2.  Effect of filing an amended return
Basilan Estates, Inc. v. CIR §  What is the effect of filing an amended return?
§  Besides, even granHng that noHce had been –  It has the effect of extending the prescripHve
received by the TP late, as alleged, under SecHon period to assess, if the amendment is
substanHal
331 of the Tax Code requiring five years within
which to assess deficiency taxes, the assessment
is deemed made when noHce to this effect is
released, mailed or sent by the Collector to the
taxpayer and it is not required that the noHce be
r e c e i v e d b y t h e t a x p a y e r w i t h i n t h e
aforemenHoned five-year period
2.  Effect of filing an amended return 2.  Effect of filing an amended return
CIR v. Phoenix Assurance Co.
CIR v. Phoenix Assurance Co.
§  The changes and alteraHons embodied in the amended
ITR consisted of the exclusion of reinsurance premiums §  Ra*onale:
received from domesHc insurance companies by TP’s –  To strengthen our opinion, we believe that to hold
London head office, reinsurance premiums ceded to
foreign reinsurers not doing business in the Philippines otherwise, we would be paving the way for TPs to
and various items of deducHon a"ributable to such evade the payment of taxes by simply reporHng in
excluded reinsurance premiums, thereby substanCally their original return heavy losses and amending the
modifying the original return
same more than five years later when the CIR has
§  Considering that the deficiency assessment was based on
the amended return which, as aforestated, is lost his authority to assess the proper tax
substanCally different from the original return, the thereunder. The object of the Tax Code is to
period of limitaHon of the right to issue the same should impose taxes for the needs of the Government, not
be counted from the filing of the amended income tax
return to enhance tax avoidance to its prejudice
3.  Effect of filing a wrong return 3.  Effect of filing a wrong return
§  What is the effect of filing a wrong return? Butuan Sawmill, Inc. v. CTA
–  The effect is as if no return is filed (thus the §  Held: an ITR cannot be considered as a return for
applicable prescripHve is 10 yrs. from compensaHng tax for purposes of compuHng the
discovery of the omission to file a return, period of prescripHon under SecHon 331 of the Tax
rather than the 3-year ordinary prescripHve Code, and that the TP must file a return for the
period) parHcular tax required by law in order to avail
himself of the benefits of SecHon 331 of the Tax
Code;
§  Otherwise, if he does not file a return, an
assessment may be made within the Hme stated in
SecHon 332(a) of the same Code
4.  How prescripHve period counted 5.  Gen. rule: 3 years (ordinary prescripHon) – Sec. 203
CIR v. Primetown Prop. Group, Inc. 6.  ExcepHons: 10 years (extraordinary prescripHon)
§  When the law speaks of a “year,” it is understood to be §  False/fraudulent return or no return – Sec.
12 calendar months
222(a)
§  A calendar month is “a month designated in the
calendar without regard to the number of days it may §  Waiver of prescripHve period – Sec. 222(b)
contain” §  Suspension of prescripHve period – Sec. 223
§  It is the “period of Hme running from the beginning of -  CIR prohibited from assessing or collecHng + 60 days
a certain numbered day up to, including, the -  Request for reinvesHgaHon by TP which is granted
corresponding numbered day of the next month, and if -  TP cannot be located in address given in return
there is not a sufficient number of days in the next
-  No property to saHsfy WDL
month, then up to and including the last day of that
-  TP is out of the Philippines
month”
6.  ExcepHon: false/fraudulent return or no return (10 6.  ExcepHon: false/fraudulent return or no return (10
years) years)
§  Ques*on: what are the instances when the 10- Taligaman Lumber Co. v. CIR
year prescripHve period applies? §  TP assessed deficiency sales tax
–  False/fraudulent return with intent to evade §  TP argued that assessment prescribed
payment of taxes §  BIR argued that TP did not file returns, hence, the 10-year
period applies
–  No return §  Held: no showing that returns were filed, hence, 10-year
§  Ques*on: when do you start counHng the 10- period applies
year period? §  TP objects to the applicaHon of the 10-year prescripHve
period upon the ground that there is no affirmaHve
–  Counted from discovery of falsity, fraud or evidence that it had not filed the corresponding returns for
omission the years 1948-1949
OM: doesn’t need to be willful neglect for the 10yr assessment period to set i
wilfulness only applies to FRAUD

6.  ExcepHon: false/fraudulent return or no return (10 6.  ExcepHon: false/fraudulent return or no return (10 years)
years) Aznar v. CTA
Taligaman Lumber Co. v. CIR §  Ruling of CTA: 10-year period applies; substanHal under-
declaraHons of income for 6 consecuHve years
§  Thus the issue boils down to which of the two parHes had demonstrate the falsity or fraudulence of the ITRs
the burden of proving such failure to file said returns. §  Held: 10-year period applies; return of TP “false”
§  It is, however, clear that since prescripHon is one of the §  3 instances jusHfying applicaHon of 10-year period: (a)
affirmaHve defenses set up by TP herein, it was incumbent false return, (2) fraudulent return with intent to evade
upon the la"er, if it wanted to avail itself of the benefits of payment of taxes, and (3) failure to file a return
SecHon 331 (5-year prescripHve period), to prove that it had §  There is a difference between “false return” and
submi"ed said returns, and that, having failed to do so, the “fraudulent return”
conclusion must be that no such returns had been filed and §  “False return” implies deviaHon from the truth, whether
that the Government had 10 years within which to make intenHonal or not
the corresponding assessments, as it did in this case
§  “Fraudulent return” implies intenHonal or deceizul entry
with intent to evade the taxes due
if prescription is alleged, submit ITR
6.  ExcepHon: false/fraudulent return or no return (10 years) 6.  ExcepHon: false/fraudulent return or no return (10 years)
Aznar v. CTA CIR v. B.F. Goodrich
§  The ordinary period of prescripHon of 5 years within
which to assess tax liabiliHes under Sec. 331 of the §  CIR insists that TP commi"ed “falsity” when it
NIRC should be applicable to normal circumstances, sold the property for a price lesser than its
but whenever the government is placed at a declared FMV
disadvantage so as to prevent its lawful agents from
proper assessment of tax liabiliHes due to false §  This fact alone did not consHtute a false return
returns, fraudulent return intended to evade payment which contains wrong informaHon due to
of tax or failure to file returns, the period of ten years
provided for in Sec. 332 (a) NIRC, from the Hme of the mistake, carelessness or ignorance
discovery of the falsity, fraud or omission even seems
to be inadequate and should be the one enforced v  This case thus establishes the rule that not all
§  Issue: W/N the 50% fraud surcharge should apply erroneous entries in the return will render the
(which the CTA imposed) same “false” for purposes of applying the 10-yr.
§  Held: No prescripHve period
CTA CASES: there must be culpable negligence to be “FALSE”
6.  ExcepHon: false/fraudulent return or no return (10 years) 6.  ExcepHon: false/fraudulent return or no return (10
Telesat, Inc. v. CIR years)
§  In order to render a return made by TP a “false return” Estate of Reyes. v. CIR
within the meaning of Sec. 223, there must appear a §  TP conten*on: phrase “with intent to evade tax”
design to mislead or deceive on the part of the TP, or at qualifies both false and fraudulent returns; their
least culpable negligence
supposed good faith in commiwng errors negates
§  A mistake not culpable in respect of its value would not intent to evade
consHtute a false return
§  In fact SC has held that mere falsity of a return does not §  Held: pursuant to Aznar, false return do not
merit the applicaHon of the 10-year prescripHve period necessarily mean with intent to evade taxes,
otherwise, there will be no disHncHon between false
§  The element of fraud as in the case of TP’s intent to and fraudulent returns
evade payment of the correct amount of tax, must be
clearly established §  Returns “false” because there were substanHal
§  TP was able to explain discrepancy as merely a Hming underdeclaraHons of properHes and substanHal
difference due to accounHng method overstatement of deducHons
6.  ExcepHon: waiver of prescripHve period 6.  ExcepHon: waiver of prescripHve period
RP v. Acebedo CIR v. CA
§  Even the waiver signed by TP on Dec. 17, 1959 §  Conten*on of BIR: waivers valid even if not signed by CIR
could no longer revive the right of acHon, for because (a) when RO extended the period to conduct audit,
under the law such waiver must be executed CIR gave implied consent, (b) signature of CIR mere formality
within the original five-year period within which and the lack of it does not viHate the binding effect of the
suit could be commenced waiver, (c) waiver is not a contract but a unilateral act of
renouncing one’s right to avail of the defense of prescripHon
§  Held: the waiver of the prescripHve period must be in wriHng
and signed by both the TP and the CIR; the waivers are invalid
and without binding effect on TP for lack of CIR’s consent
§  It is the very signatures of the TP and CIR that give birth to a
valid agreement
Phil. Journalists, Inc. v. CIR Phil. Journalists, Inc. v. CIR
§  Held: assessment prescribed as waiver did not §  Waiver unlimited
comply with RMO 20-90 §  Waiver not signed by CIR (only RD Officer)
§  Waiver of statute of limitaHons not a waiver of §  Waiver bilateral act not unilateral
the right to invoke defense of prescripHon §  Date of acceptance not stated (thus, not clear if waiver
executed before expiraHon of prescripHve period)
§  TP not furnished copy of duly accepted waiver (which
effecHvely noHfies TP that waiver was accepted)
§  Conclusion: (1) waiver defecHve, hence, did not operate to
extend prescripHve period; (2) consequently, assessment
invalid because it was issued beyond prescripHve period;
and (3) WDL null and void for having been issued on the
basis of an invalid assessment
if BIR signed would it be sufficient?
Must it always be the Commissioner to sign the waiver? RMO 20-90

provides that
The Waiver is still void because Date of acceptance should be indicated

(most important requirement) PURPOSE: to indicate that the waiver was
entered into before prescription set in
CIR v. Kudos Metal: Reqt’s of valid waiver CIR v. Next Mobile, Inc.: doctrine of equitable estoppel
a)  Waiver must be in proper form prescribed by RMO 20-90
•  CTA found the following flaws in mulHple waivers executed
b)  Waiver must be signed by TP himself or his duly authorized by the TP: (i) lack of notarized board authority; (ii) dates of
representaHve. In case of corporaHon, authority of person
signing waiver must be in wriHng and duly notarized acceptance by the BIR not indicated; (iii) fact of receipt by
the TP not indicated
c)  Waiver should be duly notarized
d)  CIR or his duly authorized representaHve must sign the waiver •  Instead of ruling in the same manner as Kudos Metal, SC
indicaHng acceptance. Date of acceptance should be indicated applied the doctrine of equitable estoppel and disregarded
e)  Both date of execuHon and date of acceptance must be before the obvious deficiencies in the waivers and sided with the
prescripHve period lapses BIR
f)  Waiver must be executed in three copies: original to docket; 2nd •  SC observed that both parHes at fault and that TP knew of
copy to TP; 3rd copy to Office accepHng waiver. Fact of receipt of the defects in the waivers, yet did nothing to correct them,
TP’s copy should be indicated in the original copy to show that TP and instead quesHoned later on the very same deficiencies
was noHfied of acceptance by BIR and perfecHon of agreement
that the TP caused to avoid liability
6.  ExcepHon: waiver of prescripHve period 6.  ExcepHon: suspension of prescripHve period
RCBC v. CIR: Estoppel to quesHon validity of waivers
•  TP executed waivers a.  What are the instances which will suspend the
•  Received FAN/FLDs for deficiency income tax, GRT, FWT, final tax on FCDU prescripHve period to assess, begin distraint/levy and
onshore income, EWT and DST
•  Protest, then later on appealed the inacHon to the CTA
file a civil suit for collecHon?
•  Subsequently, TP received a revised FLD/FAN following the request for i.  CIR is prohibited from assessing, beginning
reinvesHgaHon requested by TP reducing the amount of the original assessment
•  TP paid deficiency income tax, GRT, FWT, EWT and DST
distraint/levy or proceeding in court and for 60
•  TP refused to pay final tax on FCDU onshore income and DST which remained the days thereaser
subject of the CTA peHHon
•  TP argued that waivers void
ii.  When TP requests reinvesHgaHon which is granted
•  Held: TP estopped from quesHoning validity of waivers. Through its parHal by the CIR
payment of the amount assessed within the extended period as provided in the iii.  TP cannot be located
waivers, TP impliedly admi"ed the validity of the waivers
•  Had TP truly believed that the waivers were invalid and the assessments barred by iv.  When WDL is duly served and no property could be
prescripHon, then it should not have paid the reduced amount of taxes in the located
revised assessments
v.  When TP is out of the Philippines (§ 223)

A.  Period to Assess B.  Period to Collect
6.  ExcepHon: suspension of prescripHve period §  Taxes assessed within prescripHve period
ConGnental Micronesia, Inc. v. CIR
§  While We have noted that the request for reinvesHgaHon which was
may be collected by distraint or levy or by a
granted by the CIR in the case at bar was on the PAN and not on the proceeding in court within 5 years following
FAN, sHll, § 223 applies. the assessment of the tax – Sec 223(c)
§  § 223 of the Code makes no disHncHon as to whether the request for
reinvesHgaHon of an assessment against the taxpayer is on a PAN or §  5-year period could be extended by
FAN. It is a well-known maxim in statutory construcHon that where agreement of the CIR and the TP – Sec.
the law does not disHnguish, We should not disHnguish.
§  Thus, for as long as the request for reinvesHgaHon is granted by the
223(d)
CIR, the running of statute of limitaHons to issue an assessment
under § § 203 and 223 is suspended.
§  It is further worthy to stress that the suspension of the running of
Statute of LimitaHons provided in § § 203 and 222 refers to the
phrase "on the making of assessment" which phrase refers to the
three-year or ten year period, as the case may be, which includes the
issuance of a PAN. Hence, when TP requested for a reinvesHgaHon
on the PAN, the making of the assessment was tolled
B.  Period to Collect B.  Period to Collect
1.  Cases – 1.  Cases –

Palanca v. CIR
RP v. Ablaza
§  Following assessment of deficiency estate tax, WDL served on
Ra*onale for prescrip*ve period: TP, which was however not executed due to various requests
§  To obligate the government to act promptly in for reinvesHgaHon/re-computaHon filed by TP
the making of assessment §  Aser repeated requests were denied and CIR was undertaking
steps to collect the deficiency (via execuHon of the WDL), TP
§  To protect TPs from unscrupulous tax agents argued that right of BIR to collect prescribed already
§  Held: right to collect not yet prescribed
§  All that is required to stop the running of the period of
limitaHon therein prescribed is to distraint or levy, or insHtute
a proceeding in court, within 5 years aser the assessment of
the tax. A judicial acHon for the collecHon of a tax is begun by
the filing of a complaint with the proper CFI, or where the
assessment is appealed to the CTA, by filing an answer to the
TP’s peHHon for review wherein payment of the tax is prayed
for

Palanca v. CIR RP v. Ker: Pendency of appeal bars BIR from enforcing collecHon
§  Summary remedy of distraint and levy is begun by the via civil acHon
issuance of a WDL. §  Feb. 16, 1953: TP assessed for tax years 1948 to 1950
§  The right of the CIR to collect by summary method has §  July 23, 1953: TP assessed for tax year 1947
the effect of stopping the running of prescripHon once a §  Jan. 5, 1954: Upon reinvesHgaHon at the request of TP, revised
WDL is issued assessment issued reducing 1947 and 1950 assessments; 1948
§  The issuance of the WDL begins the summary remedy of and 1949 assessments remained the same
distraint and levy and that it is not necessary that it be §  Mar. 1, 1956: TP filed peHHon for review with CTA (dismissed
actually executed to be made effecHve; not essenHal that by CTA for being Hme-barred; dismissal affirmed by SC)
the WDL be fully executed in order that it may have the
§  Mar. 27, 1962: acHon for collecHon (lower court dismissed
effect of suspending the running of the statute of
1947 claim but ordered TP to pay 1948 – 1950 tax liabiliHes)
limitaHon upon collecHon of the tax
§  Held: 1947 assessment prescribed; BIR failed to prove fraud

RP v. Ker RP v. Hizon
§  TP Conten*on: since RP filed the complaint for the collecHon of the
deficiency income tax for the years 1948 – 1950 only on March 27, 1962,
§  July 18, 1986: assessment (became final and executory for
or 9 years, 1 month and 11 days from Feb. 16, 1953, the date the tax failure to contest)
was assessed, the right to collect the same has prescribed §  Jan. 12, 1989: WDL issued, but not executed
§  BIR Conten*on: the running of the prescripHve period was interrupted §  Nov. 3, 1992: TP sought recon of assessment (denied by BIR on
by the filing of the TP’s peHHon for review in the CTA on March 1, 1956 Aug. 11, 1994)
§  Held: Did the pendency of the TP’s appeal in the CTA and in the SC have
the effect of legally prevenHng the CIR from insHtuHng an acHon in the
§  Jan. 1, 1997: collecHon case
CFI for the collecHon of the tax? Our view is that it did. §  Held: collecHon enforcement by judicial acHon prescribed
§  From March 1, 1956 when TP filed a peHHon for review in the CTA (out-of-Hme protest did not suspend period; assessment
contesHng the legality of the assessments in quesHon, unHl the already demandable)
terminaHon of its appeal in the SC, the CIR was prevented from filing an
ordinary acHon in the CFI to collect the tax. Besides, to do so would be
§  BIR, however, can sHll execute WDL having been Hmely issued
to violate the judicial policy of avoiding mulHplicity of suits and the rule (sufficient that WDL issued before expiraHon of prescripHve
on lis pendens period; not necessary that WDL be executed)

CIR v. Wyeth Suaco Laboratories CIR v. Wyeth Suaco Laboratories
§  Dec. 19, 1974: TP received 2 assessment noHces for deficiency §  Although the protest le"ers prepared by SGV & Co. in
FWT on royalty payments and deficiency advance sales tax behalf of TP did not categorically state or use the words
§  Jan. 17 and Feb. 8, 1975: protest le"ers on the 2 assessments “reinvesHgaHon” and “reconsideraHon,” the same are to be
§  Jan. 2, 1980: protest denied in part; revised assessment issued treated as le"ers of reinvesHgaHon and reconsideraHon.
prompHng TP to appeal to CTA §  By virtue of these le"ers, the BIR ordered its Manufacturing
§  Feb. 7, 1980: WDL issued (enjoined by CTA) Audit Division to review the assessments made.
§  Held: se"led is the rule that the prescripHve period to collect Furthermore, TP’s claim that it did not seek reinvesHgaHon
by distraint or levy or by a proceeding in court is interrupted or reconsideraHon of the assessments is belied by the
once a TP requests for reinvesHgaHon or reconsideraHon of subsequent correspondence or le"ers wri"en by its
the assessment officers, as shown above.
§  These le"ers of TP interrupted the running of the 5-year
prescripHve period to collect the deficiency taxes.

CIR v. Wyeth Suaco Laboratories BPI v. CIR
§  Verily, the original assessments dated December 16 §  Oct. 20, 1989: TP received FAN dated Oct. 10, 1989 for
and 17, 1974 were both received by TP on December tax year 1985
19, 1974. However, when TP protested the §  Nov. 17, 1989: TP filed protest requesHng that
assessments and sought its reconsideraHon in two assessment be “revoked and cancelled”
(2) le"ers received by the BIR on January 20 and §  Oct. 23, 1992: TP received WDL dated Oct. 15, 1992 (not
February 10, 1975, the prescripHve period was executed however)
interrupted. §  Sept. 11, 1997: BIR denied protest (prompHng TP to
§  This period started to run again when the BIR served appeal to CTA)
the final assessment to TP on January 2, 1980. Since §  CTA ruled that right to collect not yet prescribed; request
the WDL were served on TP on March 12, 1980, for reinvesHgaHon is granted when the BIR entertains the
then, only about four (4) months of the five-year request by not issuing a WDL
prescripHve period was used. §  Issue: W/N right of government to collect has prescribed
§  Held: Yes

BPI v. CIR Hambrecht & Quist v. CIR
§  Service of WDL on TP on Oct. 23, 1992 was Hme-barred (BIR only §  Feb. 15, 1993: TP informed BIR of change of business address
had unHl Oct. 19, 1992 to enforce collecHon) §  Nov. 4, 1993: TP received “tracer-le"er” from A/R & Billing
§  PrescripHve period for collecHon of taxes can only be suspended Division of BIR demanding payment of deficiency taxes for 1989
by a request for reinvesHgaHon (which is granted), not a request §  Dec. 3, 1993: TP protested deficiency assessment as set forth in
for reconsideraHon tracer-le"er
§  Protest filed by TP did not consHtute a request for reinvesHgaHon §  Nov. 7, 2001: nearly 8 years later, TP received decision from BIR
§  Request for reconsideraGon refers to a plea for a re-evaluaHon of denying the protest on the ground that the protest was Hme-
an assessment on the basis of exis*ng records without need of barred
addiHonal evidence. It may involve both a quesHon of fact or of §  Dec. 6, 2001: appeal to CTA (in a decision dated Sept. 24, 2004,
law or both.
CTA held that that although the subject assessment noHce sent
§  Request for reinvesGgaGon refers to a plea for re-evaluaHon of an by registered mail to TP’s former place of business has become
assessment on the basis of newly-discovered or addi*onal
evidence that a taxpayer intends to present in the final and unappealable for failure to protest the same within the
reinvesHgaHon. It may also involve a quesHon of fact or law or period provided by law, nevertheless, the right of CIR in said case
both to collect the assessed taxes has already prescribed)
§  Wyeth Suaco clarified

Hambrecht & Quist v. CIR Hambrecht & Quist v. CIR
§  Issue: W/N CTA has jurisdicHon to rule that right to collect has §  As correctly pointed out by TP, a tax assessment deals with
prescribed
how much taxes are due from a TP, while tax collecHon deals
§  BIR Conten*on: when the law says that CTA has jurisdicHon over
with the whole process of collecHng the same from the TPs.
“other ma"ers,” it presupposes that the assessment has not become
final and unappealable. Thus, if the assessment has become final and Therefore, it can really happen, as in this case, that while
unappealable, CTA has no jurisdicHon to decide “other ma"ers” there may no longer be any dispute on the assessment as it
related to the assessment, such as, the issue on the right to collect has become final, there is sHll an exisHng controversy
the same pertaining to the right of the BIR to legally collect the assessed
§  Held: CTA has jurisdicHon taxes
§  We do not agree. Nowhere in the law does any limitaHon appear as §  CIR must make a tax assessment within 3 years aser the
to the extent of the jurisdicHon of the Court over “other ma"ers” correspondent return is filed. However, no acHon can be
§  The appellate jurisdicHon of the CTA is not limited to cases which brought by it for the recovery of the tax aser the lapse of that
involve disputed assessments. The second part also covers other period in case no assessment has been made. Any tax
cases that arise out of the NIRC or other related laws administered assessed must in turn be collected by the remedies provided
by the BIR by law, i.e. distraint or levy, within 3 years following the
assessment save in cases specified by law
B.  Period to Collect C.  Period to File Protest

Hambrecht & Quist v. CIR
§  A request for reconsideraHon or reinvesHgaHon filed by a taxpayer, Pantranco v. Blaquera
which has not been seasonably filed, does not interrupt the §  30-day appeal period is jurisdicHonal and non-
prescripHve period to collect taxes appropriately assessed
§  In the instant case, the Original Division of this Court found the
extendible
assessment issued against herein respondent, HQPI to be final and
unappealable because its moHon for reconsideraHon/reinvesHgaHon
was filed out of Hme. This being so, CIR should have insHtuted
collecHon proceedings within the 3-year period from assessment,
either by distraint or levy, or by judicial acHon. Apparently, the BIR
did not iniHate collecHon proceedings within the period provided by
law to enforce the assessment, and the TP had the legal right to
assail the same when it filed the peHHon
§  Correspondingly, the Original Division of this Court appropriately
possessed the jurisdicHon to act on said case because the officers of
the BIR should not be allowed to benefit from their neglect in
collecHng taxes from the TP within the reglementary period
D.  Period to Appeal Decision on Disputed Assessment E.  Period to File Refund Claim
1.  See III(D) 1.  Cases –

Collector v. Sweeney
§  TP, a non-stock, non-profit corporaHon, was assessed
deficiency fixed and percentage taxes for operaHng a bar
exclusively for its members
§  TP protested assessment (while protest pending, Club was
dissolved)
§  CIR denied protest; sought to collect deficiency taxes from
past presidents of Club
§  Under threat of criminal prosecuHon for tax evasion, past
presidents paid the taxes under protest; on the same day,
past presidents filed refund claim
§  Due to inacHon of CIR on refund claim, past presidents
appealed claim to CTA
§  CIR Conten*on: CTA has no jurisdicHon over the case
because the CIR has yet to rule on the refund claim
E.  Period to File Refund Claim E.  Period to File Refund Claim

Collector v. Sweeney
§  Held: as to the propriety of taking the case to the CTA Collector v. Sweeney
before TPs received any advice as to the acHon taken, if §  Indeed, it must be observed that under said
any, on their peHHon for refund, this quesHon has already provisions, the TP’s failure to comply with the
been ruled upon by Us to the effect that TPs need not wait
for the acHon of the CIR on the request for refund before
requirement regarding the insHtuHon of the
taking the ma"er to court acHon or proceeding in court within 2 years aser
§  Nowhere does the law imply that the CIR must act upon the the payment of the taxes bars him from the
claim or that the TP shall not go to court before he is recovery of the same, irrespecGve of whether a
noGfied of the CIR's acGon. Having filed his claim and the claim for the refund of such taxes filed with the
CIR having had ample Hme to study it, the claimant may, CIR is sGll pending acGon of the laher
indeed should, within the statutory period of 2 years
proceed with his suit without waiGng for the CIR's decision

Gibbs v. CIR Gibbs v. CIR
§  TP assessed (protested; denied) §  NIRC § 306 should be construed together with § 11 of RA
1125. In fine, a TP who has paid the tax, whether under
§  Oct. 3, 1956: TP paid tax under protest; at the same Hme, protest or not, and who is claiming a refund of the same, must
sought immediate refund comply with the requirements of both secHons, that is, he
§  Oct. 26, 1956: CIR denied refund claim (denial received must file a claim for refund with the CIR within 2 years from
by TP on Nov. 14, 1956) the date of his payment of the tax, as required by said NIRC §
306, and appeal to the CTA within 30 days from receipt of the
§  Sept. 26, 1957: 10 mos. aser receiving the denial, TP CIR's decision or ruling denying his claim for refund, as
filed peHHon for review with CTA (dismissed by CTA; required by said § 11 of RA 1125. If however, the CIR takes
appeal filed more than 30 days from receipt of denial) Hme in deciding the claim, and the period of 2 years is about
§  Issue: W/N judicial refund claim filed on Hme to end, the suit or proceeding must be started in the CTA
§  Held: No, Hme-barred before the end of the two-year period without awaiHng the
decision of the CIR. This is so because of the posiHve
§  TP Conten*on: although appeal was filed beyond 30-day requirement of § 306 and the doctrine that delay of the CIR in
period, CTA sHll had jurisdicHon over the same, by virtue rendering decision does not extend the peremptory period
of NIRC § 306 (now § 229) fixed by the statute

CIR v. CA CIR v. CA
§  April 2, 1986: TP filed annual ITR for tax year 1985
§  In the context of § 230, which provides for a 2-year
§  ITR showed over-payment of quarterly income tax by P65k
period of prescripHon counted “from the date of
§  April 14, 1988: administraHve refund claim
payment of the tax” for acHons for refund of corporate
§  April 15, 1988: judicial refund claim
income tax, the 2-year period should be computed
§  Issue: whether the 2-year period of prescripHon for filing a
claim for refund, as provided in § 230, is to be counted from the Hme of actual filing of the Adjustment Return
from April 2, 1986 when the corporate income tax return or Annual Income Tax Return. This is so because at
was actually filed or from April 15, 1986 when, according to that point, it can already be determined whether there
§ 70(b), the final adjustment return could sHll be filed has been an overpayment by the TP. Moreover, under
without incurring any penalty § 49(a) of the NIRC, payment is made at the Hme the
§  Held: from April 2, 1986; hence, admin claim and judicial return is filed
claim barred by prescripHon

ACCRA Investments Corp. v. CA ACCRA Investments Corp. v. CA
§  April 15, 1982: TP filed annual ITR showing overpaid income §  A TP whose income is withheld at source will be deemed to
tax arising from excess creditable withholding tax (withholding have paid his tax liability when the same falls due at the
agents remi"ed taxes withheld from income payments to TP end of the tax year. It is from this la"er date then, or when
from Feb. to Dec. 1981) the tax liability falls due, that the 2-year prescripHve period
under § 306 (now part of § 230) starts to run with respect
§  Dec. 29, 1983: refund claim with BIR (no BIR acHon) to payments effected through the withholding tax system
§  April 13, 1984: peHHon for review (dismissed by CTA; (Gibbs v. CIR)
reckoning point of 2-year prescripHve period is Dec. 31, 1981, §  W/N the TP is enHtled to a refund is determined when the
when taxes withheld were paid to BIR, not April 15, 1982, TP files its annual ITR on or before April 15, 1982 when its
when TP filed annual ITR) tax liability for 1981 fell due
§  Held: 2-year prescripHve period is counted from April 15, 1982 §  If we were to uphold the respondent appellate court in
§  As regards excess CWT, the 2-year period from the “date of making the “date of payment” coincide with the “end of
payment of the tax” is reckoned “when the tax liability falls the taxable year,” the TP at the end of the 1981 taxable
year was in no posiHon then to determine whether it was
due” liable or not for the payment of its 1981 income tax

CIR v. TMX Sales, Inc.
ACCRA Investments Corp. v. CA §  Issue: In a case involving overpaid corporate quarterly
§  It bears emphasis at this point that the raHonale in income tax, does the 2-year prescripHve period to claim
a refund of erroneously collected tax provided for in §
compuHng the 2-year prescripHve period with 292 (now § 229) commence to run from the date the
respect to the TP’s claim for refund from the Hme quarterly income tax was paid, or from the date of filing
it filed its FAR is the fact that it was only then that of the Final Adjustment Return (final payment)?
§  Facts: May 15, 1981: TP filed quarterly income tax return
the TP could ascertain whether it made profits or reporHng income of P571k and paying income tax of
incurred losses in its business operaHons. The P247k
“date of payment,” therefore, in the herein TP’s §  During subsequent quarters TP suffered net losses such
that when it filed its annual ITR on April 15, 1982, it
case was when its tax liability, if any, fell due upon reported a negaHve tax posiHon
its filing of its final adjustment return on April 15, §  July 9, 1982: refund claim (not acted upon)
1982 §  March 14, 1984: peHHon for review

§  Held: the most reasonable and logical applicaHon of the law
would be to compute the 2-year prescripHve period at the §  In the case of Collector v. Prieto (2 SCRA 1007
Hme of filing the FAR or the Annual Income Tax Return, [1961]), this Court held that when a tax is paid in
when it can be finally ascertained if the TP has sHll to pay installments, the 2-year prescripHve period should
addiHonal income tax or if he is enHtled to a refund of
overpaid income tax be counted from the date of the final payment. This
§  The filing of a quarterly ITRs and payment of quarterly ruling is reiterated in CIR v. Palanca (18 SCRA 496
income tax should only be considered mere installments of [1966]), wherein this Court stated that where the tax
the annual tax due. These quarterly tax payments which are account was paid on installment, the computaHon of
computed based on the cumulaHve figures of gross receipts the 2-year prescripHve period should be from the
and deducHons in order to arrive at a net taxable income,
should be treated as advances or porHons of the annual date of the last installment
income tax due, to be adjusted at the end of the calendar
or fiscal year
B.  Non-RetroacHvity of Rulings/Regs.
§  Gen. rule: the government is not bound by

the mistakes of its agents
§  ExcepHon: Sec. 246
§  RaHonale: jusHce and fair play
–  Because the “opinion or ruling of the
Commissioner of Internal Revenue, the agency
tasked with the enforcement of tax laws, is
accorded much weight and even finality, when
IX.  NON-RETROACTIVITY OF there is no showing that it is patently wrong,” “a
RULINGS OR REGULATIONS taxpayer cannot be convicted for taking the tax
authoriHes at their word
B.  Non-RetroacHvity of Rulings/Regs. B.  Non-RetroacHvity of Rulings/Regs.
§  AdministraHve agencies, such as the BIR, are CIR v. Burroughs, Ltd.

not bound by precedents and may overrule §  TP remi"ed branch profits to parent; paid 15%
BPRT based on total branch profits out of which
o r a b a n d o n t h e i r o w n r u l i n g s o r remi"ance was made
interpretaHons of the law or those of their §  Subsequent BIR ruling that 15% BPRT should be
predecessors in favor of new ones which are based on amount actually remi"ed, not on total
branch profits out of which remi"ance is to be
deemed more consonant with the le"er and made
spirit of the law §  Refund claim
–  The power to abandon rulings, however, are §  RMC revoking BIR ruling
limited by Sec. 246 §  TP enHtled to refund since revocatory RMC
§  What is the danger if Sec. 246 is not in place? cannot be given retroacHve effect
B.  Non-RetroacHvity of Rulings/Regs. B.  Non-RetroacHvity of Rulings/Regs.
PBCom v. CIR 1.  Cases –

§  Issue was whether refund claim of TP was filed out ABS-CBN v. CTA
of Hme
§  TP relied on RMC which changed period of
prescripHon for overpaid quarterly income tax from
2 years to 10 years
§  SC did not apply Sec. 246
–  Taxes are the lifeblood of the naHon BS
–  State is not estopped by the mistakes of its agents
–  Sec. 246 not applicable because nullity of RMC was
declared by the court and not by the CIR

Remedies of TP

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Remedies of TP

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TAX

Rights and Remedies of Taxpayers

A"y. Terence Conrad H. Bello 2

A. Amend Tax Return A. Amend Tax Return

What is the procedure for protesHng an assessment?

C. PAN C. PAN

C. PAN C. PAN

lack of PAN is fatal

superseded by CIR v Metro Star Superama

§ Lack of PAN is fatal § What is the eﬀect if the BIR fails to

CIR v. Reyes § In what form should the “informing” take?

Australasia Cylinder Corp. v. CIR PNZ MarkeGng v. CIR

Phil. Mining Service Corp. v. CIR Oceanic Wireless Network v. CIR

Recap: CIR v. Enron Subic Power Corp.

H. TambunGng Pawnshop, Inc. v. CIR CIR v. First Express Pawnshop

E. Submission of SupporHng Documents F. Eﬀect of Failure to File Protest

§ What is the BIR’s remedy then if it feels that Dayrit v. Cruz

Scope of jurisdicHon of the CTA:

Scope of jurisdicHon of the CTA: Scope of jurisdicHon of the CTA:

Scope of jurisdicHon of the CTA: CIR v. Villa

Lascona Land Co. v. CIR § Lascona aﬃrmed by SC

RCBC v. CIR 1. General rule: FDDA

3. Final NoHce Before Seizure 4. Final Demand Le"er

4. Final Demand Le"er 4. Final Demand Le"er

4. Final Demand Le"er 4. Final Demand Le"er

5. Filing of collecHon suit 5. Filing of collecHon suit

7. Issuance of WDL – 7. Issuance of WDL –

7. Issuance of WDL – Basa v. RP

file MR CTA en banc

IV. APPEAL TO SC V. REFUND AND/OR TAX CREDIT OF

1. Cases – • What can be refunded or credited is a tax that is

if inaction, deemed a denial

B. Requirement to File AdministraHve Claim D. Eﬀect of Supervening Event

1. Cases – 1. CIR v. Central Azucarera Don Pedro

2. Case – 1. Cases –

Philex Mining Corp. v. CIR Francia v. IAC

Francia v. IAC BIR Rul. 415-93

A. Appeal in Case of Denial of Refund/Tax Credit Claim

1. Appeal to CTA/SC same as appeal of denial of

VII. DECISION ON “OTHER MATTERS”

Decision on “Other Ma"ers” Decision on “Other Ma"ers”

PNOC v. CA Phil. Journalists, Inc. v. CIR

Decision on “Other Ma"ers” Decision on “Other Ma"ers”

§ If exercise of power is quasi-legislaHve in § Quasi-legislaGve – power to make rules and

Decision on “Other Ma"ers” Decision on “Other Ma"ers”

Types of BIR Issuances Appeal Remedy vs. Challenged BIR Issuances

look up exceptions to exhaustion fo admin remedies

Decision on “Other Ma"ers” Decision on “Other Ma"ers”

Decision on “Other Ma"ers” Decision on “Other Ma"ers”

Appeal Remedy vs. Challenged BIR Issuances

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

wilfulness only applies to FRAUD

if prescription is alleged, submit ITR

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

A. Period to Assess A. Period to Assess

if BIR signed would it be sufficient?

Must it always be the Commissioner to sign the waiver? RMO 20-90

The Waiver is still void because Date of acceptance should be indicated

A. Period to Assess A. Period to Assess

A. Period to Assess B. Period to Collect

A.  Amend Tax Return A.  Amend Tax Return

C.  PAN C.  PAN

C.  PAN C.  PAN

§  Lack of PAN is fatal §  What is the eﬀect if the BIR fails to

CIR v. Reyes §  In what form should the “informing” take?

E.  Submission of SupporHng Documents F.  Eﬀect of Failure to File Protest

§  What is the BIR’s remedy then if it feels that Dayrit v. Cruz

Lascona Land Co. v. CIR §  Lascona aﬃrmed by SC

RCBC v. CIR 1.  General rule: FDDA

3.  Final NoHce Before Seizure 4.  Final Demand Le"er

4.  Final Demand Le"er 4.  Final Demand Le"er

4.  Final Demand Le"er 4.  Final Demand Le"er

5.  Filing of collecHon suit 5.  Filing of collecHon suit

7.  Issuance of WDL – 7.  Issuance of WDL –

7.  Issuance of WDL – Basa v. RP

IV.  APPEAL TO SC V.  REFUND AND/OR TAX CREDIT OF

1.  Cases – •  What can be refunded or credited is a tax that is

B.  Requirement to File AdministraHve Claim D.  Eﬀect of Supervening Event

1.  Cases – 1.  CIR v. Central Azucarera Don Pedro

2.  Case – 1.  Cases –

A.  Appeal in Case of Denial of Refund/Tax Credit Claim

1.  Appeal to CTA/SC same as appeal of denial of

VII.  DECISION ON “OTHER MATTERS”

§  If exercise of power is quasi-legislaHve in §  Quasi-legislaGve – power to make rules and

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess A.  Period to Assess

A.  Period to Assess B.  Period to Collect

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

B.  Period to Collect B.  Period to Collect

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

B.  Period to Collect C.  Period to File Protest

1.  Cases – 1.  Cases –

1.  See III(D) 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

1.  Cases – 1.  Cases –

B.  Non-RetroacHvity of Rulings/Regs.

§  Gen. rule: the government is not bound by

§  AdministraHve agencies, such as the BIR, are CIR v. Burroughs, Ltd.

B.  Non-RetroacHvity of Rulings/Regs. B.  Non-RetroacHvity of Rulings/Regs.

PBCom v. CIR 1.  Cases –