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TAXATION II

ATTY. RIZALINA LUMBERA

REMEDIES UNDER THE NIRC

- Ang internal revenue tax ay pay as you file system.


- Self-assessment and pay as you file system.

Self-assessment - all the internal revenue taxes that we have, kayo ang nagco-compute, ang taxpayer. Kayo
ang nag-aassess sa sarili ninyo.

Pay as you file - Ibig sabihin as you file the return, you pay the tax due that you computed. Lahat yung
remedies, yung topic ng remedies will always start with you, the taxpayer.

Internal Revenue Taxes:

 Income tax
 Value-added tax
 Percentage tax
 Estate tax
 Donor’s tax

Anong fina-file?

- Return
o A verified and subscribed and sworn to statement made and prepared by the taxpayer
providing for the relevant information necessary or material to the kind of tax that you are
paying for.
o There is a presumption applied that all returns are prepared and filed in good faith. That is a
disputable presumption.

FILING OF RETURN:

When a return is filed, ang mga itatanong natin sa ating sarili ay ito:

1. What do you file?


o We file a return. For all kinds of internal revenue taxes there’s always the corresponding
return.
2. Where do you file?
o You file it before the Revenue District Office (RDO) which has jurisdiction ‘dun sa
transaction. Lahat kasi ng taxpayers registered lalung-lalo na kung income tax. Nakarehistro
kayo.
o Kapag mali ang venue ninyo kahit na tinanggap ang return at tinanggap ang bayad, it is as if
no return was filed and no tax was paid. Hindi ninyo pwedeng sabihin na kahit mali ang
venue total pare-pareho naman ang BIR ay credit nalang sa inyo sa tamang RDO. Walang
ganun dito.
 Anong remedy mo? Pwede mo bang sabihin, “Eh binayad ko naman po eh,” “Finile
ko naman ang return.”
 Hindi pwede ng estoppel sa gobyerno. Bawal yan, that is not acceptable.
 You have to pay again to the proper venue. File the correct return with the
proper venue, pay the same amount of tax and you file a refund for the
previously paid tax.
3. When do you file the return?
o Depende.

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TAXATION II
ATTY. RIZALINA LUMBERA

A. Income Tax

1. Individual (compensation income earner) – on or before April of the following year.


2. Individual (business income only or business income + compensation income earner) – 1, 2, 3
quarterly returns within 60 days from the close of the quarter plus one final consolidated return on
or before April 15 of the following year.
3. Corporation – 1, 2, 3 quarterly returns within 60 days from the close of each quarter.
a. Calendar year - the 4th return shall be filed on or before April of the succeeding year.
b. Fiscal year - 1,2,3 quarterly returns within 60 days from the close of the quarter and the final
consolidated return is due on or before the 15th day of the fourth month following the close
of the fiscal year.

NOTE: Ang lahat ng tao ay gumagamit ng calendar year whether compensation income ka or
business income ka, kaya ang returns mo kapag compensation isa lang on or before April 15 of
the following year.

Individual Compensation Earner

- So January to December 2016, the due date is April 15 2017.

Individual (business income only or business income + compensation income earner)

- 1,2,3 quarterly returns within 60 days from the close of each quarter + one final consolidated
return on or before April 15.
o January, February, March, first quarter ang return ay due kalian? Kailan ang return? May.
o Second Quarter: April, May, June? August.
o Third Quarter: July, August, September? November.
o Final Consolidated Return: April 15, 2017.

Corporation

- 1,2,3 quarterly returns + one final consolidated return


a. Calendar year - same as individual.
b. Fiscal Year
So let us say ung fiscal year mo nagsimula ng February 1.
o First Quarter: June.
o Second Quarter: May, June, July? September.
o Third Quarter: December.
o Final Consolidated Return: May 15.

B. Capital Gains Tax

- 30 days after transaction.

C. Withholding Taxes (Creditable Withholding Taxes, or Final Withholding Taxes)

Sinong nagfi-file ng return?

- Withholding agent.

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TAXATION II
ATTY. RIZALINA LUMBERA

Kailan ang due?

- Every 10th of the following month.

D. Value Added Tax

a. Monthly return
o on or before the 20th of the following month.
b. Quarterly returns
o on or before the 25th day after the close of the quarter.

So kung VAT returns:

VAT dalawang returns, monthly at quarterly. Monthly, every 20th of the following month. So kung January,
February 20. February, March 20. Dapat ang March meron April 20 pero tatanggalin mo na siya. ‘Yung
March hindi ka na magfi-file, nagiging quarterly return na siya sa tatlo. So April 25. Pagdating ng April, May
20. May, June 20. July di ka na magfi-file. Kalian? August 25. So on and so forth. So labindalawang returns
ang VAT na fina-file sa loob ng labindalawang buwan.

E. Percentage Tax

- Ang percentage tax ay katulad ng VAT. So ‘yan fina-file din ng ganyan (referring to VAT).

F. Estate Tax

- 6 months from death.

NOTE: Hindi iyan kino-convert sa 180 days.

Ang rule kung namatay ka ng February 14 - March 14, April 14, May 14, June 14, July 14, August 14. Gano’n
ang pagbilang. ‘Di ba tayo sa Civil Code, pag sinabing 1 x 30. So ang tendency lagi 180 days ay marami sa
Pilipino namamatay 1920 hindi sine-settle ang estate ngayon lang babayaran. So hahanap ka ng kalendaryo
nung 1920 bilang ng 180. Hindi na. Kung anong araw ng pagkamatay mo ‘yun ang bilang.

G. Donor’s Tax

- 30 days from gift.

NOTE: Ito naman kalendaryo ang katapat niyo. Hindi siya kino-convert ng araw.

May mga pilosopo 6 months. Eh Ma’am paano kung namatay February 29?

- Ay ‘ung susunod na buwan March 29 walang problema.

Ang problemahin paano pag namatay ng 30? Namatay ng August 30?

- ‘Di ang bilang mo ngayon, September 30, October 30, November 30, December 30, January
30, February 30. Wala akong 30. So ililipat ko ba ng March? Hindi, February 28. Kung leap
year ang tinapatan, February 29 ‘yun ang due date.

NOTE: So nagbibilang tayo depende sa due dates.

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TAXATION II
ATTY. RIZALINA LUMBERA

NOTE: So tandaan ninyo pag compensation income earner ka di mo kailangang mag-file ng return if qualified
or substituted filing.

Substituted filing

- Employer files for you and your behalf.

Requisites:

1. Isa lang ang employer mo sa isang taon


2. Wala kang ibang income other than compensation

So kung ikaw ay January to April nag-resign. Wala kang trabaho ng Mayo hanggang Hunyo. Na-employ ka
August.

- Hindi ka pwede ng substituted. Why? Because you have 2 employers in a year.

Kahit pa isang araw ka lang, na-employ ka ng December 30. December 31 holiday nga employed ka na eh ‘di
may sweldo.

- Hindi ka pwede ng substituted filing. Bakit? You have 2 employers in a year. Your employer B will
not file for you and your behalf. That will not be allowed.
- Bakit? ‘Pag ikaw ay nahuli ng isang segundo isang araw ang katapat mo agad ay penalty.
- Magkano? 25% of the principal amount of tax due plus for every day of delay beyond the due date
20% interest per annum computed daily.

And worse, when there is fraud or bad faith in the preparation or filing of return , 50% surcharge will be
imposed.

NOTE: Tandaan ninyo pag narinig niyo ang salitang surcharge sa isang problem ibig sabihin may element
of fraud or bad faith. That is a criminal offense already kaya 50% surcharge. So mahuli ka ng isang minuto
isang araw ang katapat nyan ay penalty of 25% of the principal amount of tax due plus interest 20% per
annum computed daily. I repeat if you are guilty of fraud or bad faith in the filing of the return and
consequently in the payment of the tax due as you assessed and computed 50% of the principal amount
of tax due will be imposed.

Deficiency interest - kulang ang binayaran.

Delinquency interest – late nagbayad.

Taxpayer, ano ang posibleng gawin ninyo?

1. File return in good faith


2. File return in bad faith or fraudulent return
3. No return was filed

NOTE: When you do not file any return, the BIR may even file a return for you and your behalf.

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ATTY. RIZALINA LUMBERA

NOTE: Ang topic ng remedies wala ditong mga third-party, intervention. Tayo lang ang nag-aaway. Isa lang
pinag-aawayan natin ayaw mong magbayad ng buwis, ako naniningil ng buwis. Ang cause of action ay
pagbabayad ng buwis.

NOTE: Tayong dalawa lang ang magka-away. Walang third-party, intervention, cross-claimant.

So the ball game is now on me, BIR. Finile niyo sa akin sa due dates. Anong gagawin ko? Eh ‘di aaralin si
return.

NOTE: We now have the Electronic Filing and Payment System (EFPS).

- BIR is now automated but only on income tax and offering it to certain taxpayers. Hindi pa siya full
100% so ang automated pa lang talaga sa atin sistema ay income tax system. The filing of income tax
returns at ang requirement ay hindi pa lahat ng klase ng taxpayers ay required ng automated, ng
EFPS.
- Pero lahat ng forms natin ay electronic forms. Meaning, lahat ng forms ay electronic downloadable
and you can fill-out manually and you can file manually except for certain taxpayers. ‘Yung ibang
taxpayers like top 5,000 corporations these are not in the Code, these are covered by BIR issuances.
Top 10,000 individuals, any taxpayer who enters into government contracts required yan mag-EFPS.
So nag-concentrate muna sila sa isang segment ng taxpayer.
- Advantage of using the EFPS: Sa halip na alas singko ng hapon, pwede kang mag-file kahit alas onse
ng gabi. Pero dahil pay as you file ay hindi ka makakabayad sa bangko kasi ung bangko kailangan ang
bayad mo ay diyan din sa due date. So nag-file ka computerized eh internet pumasok may
confirmation receipt eh paano ka pupunta ng bangko? Eh di ka rin nagbayad, may penalty ka pa din.

NOTE: On-line banking transaction and credit cards are allowed but in selected banks only and there is
service level agreement (SLA) entered into between the bank and the BIR.

- What’s the undertone in using credit card?


o There is a requirement that your data will be forwarded to BIR. The requirement of the BIR
in the SLA is that all the credit cards holders the data should be given to them to make sure
that the credit card use is through (computerized?) transaction. What happens kung tayo
may maling transaction? ‘Pag nagkamali ang remedy mo is refund which will take time.
Tapos lahat ng charges of the bank will be on top of the tax due.

There was an issue this year. Last year kasi may lumabas na BIR issuance on the use of debit card and credit
card. Ang sabi ‘dun is that, when did you pay the tax? Kasi ‘di ba may transaction today tapos kinaskas ‘yung
card mo. Hindi naman ‘yan agad nire-remit eh. Last year ang ruling ng BIR ay payment shall be treated as
effective payment only upon actual remittance. So kung ikaw last day mo ngayon nagkaskas ka using your
credit card ininput mo eh ‘di pumasok sa card mo today siyempre ‘di yan mare-remit ng credit card issuing
bank. Kailan? Delayed ka. Penalty will be imposed.

This year, Commissioner Dulay revised that regulation. Ang rule na ngayon is as long as ma-input mo
regardless of remittance. As long as there is remittance, treated as paid on the date of the transaction.
Which is I think is more reasonable kasi you will have to incur penalties and surcharges eh ‘di mo naman
kasalanan kung last day April 15 ginamit mo ung credit card mo. Eh ‘di ba April 15 ka nagbayad? Although
saka pa lang siya mare-remit ng issuing bank. So ngayon baliktad na which is tama lang na ayusin nila.

Apostol | Badua | Barras | Cojamco | De Leon | Ico | Miranda | Pedernal | Vicente

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TAXATION II
ATTY. RIZALINA LUMBERA

So eto na ‘ung return finile ninyo. Dapat finile ninyo sa:

- tamang lugar; at
- tamang panahon.

BIR’S ASSESSMENT OF THE RETURN:

So anong gagawin ko (BIR) dito (return)? Tititigan ko ‘to, aaralin ko ‘to. In other words, I’m going to
determine whether or not you filed the correct return. Even if you filed in good faith, it doesn’t mean that I
will not find anything wrong with the return that you filed. If you filed in bad faith, expect something from me
natural. So ang aking gagawin ay I will use all of the powers, duties and responsibilities under Sections 5-15
of the Tax Code.

- Issuance of subpoena duces tecum, ad testificandum.


- Require your employees to testify.
- Require you to submit documents.
- Use the net worth method.
- Provide for your presumptive gross sales or gross receipts based on the best evidence obtainable.
o Ibig sabihin ‘nun, ico-compare ko ang business mo sa business ng similarly situated
taxpayers. Alangan naman na pareho kayong parlor. Di ba uso sa Pilipinas sari-sari store
magkakatabi? Ang pinagtatakhan ko kung paano ka kumikita. Saka ung carinderia di ba? So
bakit ung carinderia ni Nanay 9 million ang kinita restaurant, ikaw 500,000? Anong meron?
So the BIR can use that on anything under Sec. 5-15 of the Tax Code.

If the BIR finds something wrong in the return that you filed,

1. I will issue a letter of authority (LA) and the first step is, letter of authority to investigate.
- You will be required to file a reply and produce the documents.
2. With or without the reply I will issue the Preliminary Assessment Notice (PAN).
- You will again be required to file a reply.
3. With or without the reply, I will issue the Final Assessment Notice (FAN).

When do we say that FAN is valid?

Requisites:

1. in writing
2. addressed to the taxpayer
3. providing for the basis in fact and in law of the assessment
4. the amount of tax due
5. the due date for the payment
6. the demand to pay
7. it must be signed by the duly authorized BIR representative
8. sent to and delivered to the taxpayer

NOTE: Pwede kayong walang PAN under Section 228 of the Tax Code.

NOTE: Tandaan din procedural requirements ito. Failure on the part of the BIR to follow the system, the
steps, is denial of due process. Napakarami na ng kaso ng BIR ang nadidismiss dahil dito. Steps 1,2,3 or 1,3, if
any of the circumstances under Sec. 228 is present. Pero hindi pwedeng 3, 2, 1 or 1, 3, 2 or 2, 3, 1. 1,2,3 dapat,
ang daming kaso niyan decided by the Supreme Court. Failure on the part of the BIR to comply with these

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ATTY. RIZALINA LUMBERA

shall be deemed the denial of due process and therefore the BIR will lose its right to issue an assessment and
collect.

So ‘pag kayo ay tinawagan, hindi kayo ngumiti wala pa. Hangga’t hindi kayo nakaka-tanggap ng in
writing, hindi yan valid. May mga kaso dito mga example nito sumulat dati si Commissioner Kim kay Leila
De Lima, DOJ Secretary. Ang nakasulat covering letter,

Dear Leila,

Please see the following attached complaint affidavits against various taxpayers. Please
facilitate the filing of tax evasion cases.

Love, Kim

Tapos may mga complaint affidavits, ay hindi ‘yan assessment kasi nakasulat dapat sa assessment ang
amount, anong basis, due date, demand to pay, signed by the Bureau of Internal Revenue duly
authorized representative.

What are the prescriptive periods for assessment? Until when can the BIR assess or issue the FAN?

1. Filed in good faith and the same is filed before due date – then BIR can issue the FAN, 3 years from
due date.
2. Exactly filed on due date – 3 years from due date.
3. Filed after due date – 3 years from actual date of filing.
4. Filed in bad faith or fraudulent return (regardless whether before, exactly, or after due date) –10
years from my discovery of the filing of fraudulent return.
5. Non-filing of return – 10 years from its discovery of the non-filing.

NOTE: There is another period covered by a valid waiver. What is a waiver of the prescriptive periods?

Waiver

- this is a contract entered into between the taxpayer and the BIR extending the periods of
assessment.

Ang tanong sa inyong sarili, bakit kayo papayag? Why would you waive? Ang ibig sabihin niyan
matatapos na ang periods na ‘yan, 3 at 10 hindi pa ako nakakapag-issue ng assessment. Sasabihin
ko sa’yo, pwede bang mag-execute ka ng waiver? Ay sasabihin mo, tanga ba ako? Hindi ako mage-
execute niyan para mag-expire iyang karapatan mo. Kasalanan mo iyan eh. Eh di ngingiti ka. Kasi if
I lose the right to issue the assessment I cannot collect by any other means from you. So I will ask you
to execute a waiver. And then you will say, why would I execute? Why would you sign the waiver? If
you don’t, it’s alright. Okay lang sa akin. Sabi ng BIR, okay fine ayaw mo okay lang. Here is the
Jeopardy Assessment (JA).

Jeopardy Assessment (JA)

- an assessment which is in the nature of a FAN and without giving you the benefit of
full audit of your operations.

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ATTY. RIZALINA LUMBERA

- issued by the BIR normally when the period of assessment is about to expire and the
taxpayer does not agree to execute a waiver.
- For all legal intents and purposes, the JA is in the nature of a FAN.
- BIR: “Ayaw mo, okay lang. Ayaw mo ng waiver, okay lang. JA ka ah. “

Requisites of a valid waiver:

1. The waiver should have been signed by the taxpayer and the BIR before the expiration of the
original period otherwise, there’s nothing more to extend.
2. The date of acceptance on the part of the taxpayer and the BIR should be indicated on the
face of the waiver.
3. The signature signifying the acceptance by the taxpayer and the agreement on the part of the
BIR should likewise be indicated on the face of the waiver.
4. Should be executed in 3 copies, 1 goes to the taxpayer, the other goes to the case files and the
last one goes to the BIR.

NOTE: Failure to comply with these very strict requirements on waiver, the waiver is not valid and
therefore the BIR loses forever its right to collect.

So nakatanggap ka ng FAN (taxpayer), anong gagawin mo? Kayo naman ulit ang ball game. Kailangan alam
niyo ‘ung due date. Eh kung lagpas ka ng due date, nag-file ka beyond, dapat alam mo pa rin para alam mo
kailan bibilangin. Madali kasi ang periods pero mahirap ang magbilang. Simulang bilangin saan? ‘Yun ang
kailangan dapat marunong kayong magbilang simula saan? Kasi kung hindi niyo alam ang due dates hindi
kayo makakasimula niyan.

Example: Compensation income.

Due date: 15 April 2017

Filed return: 14 February 2017.


BIR’s issuance of FAN (due date): 15 April 2020.

Filed return: Eksakto naman ang katamaran mo at kasipagan


BIR’s issuance of FAN (due date): 15 April 2020.

Filed return: 26 December 2017.


BIR’s issuance of FAN (due date): 26 December 2020.

Filed return: Fraudulent ang finile mo at finile mo on these due dates (referring to the 3 prior examples)
pero Discovery of fraudulent return: 2025
BIR’s issuance of FAN (due date): 2035

Non-filing of return
Discovery of non-filing of return: 2040.
BIR’s issuance of FAN (due date): 2050.

Waiver: Nag-agree tayo mag-eexpire na malapit na ito. Let us say March 29 hindi pa ako nakakapag-
issue. March 30, 2020 wala pa akong FAN. Sabi ko sa’yo, uy waiver nga kayo pwede? Eh ayoko
labinlimang araw na lang kung ‘di mo kayang tapusin problema mo,’iyan sabi niyo. O sige sige ayaw mo

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ATTY. RIZALINA LUMBERA

okay lang bigyan kita JA bago matapos ang April 15. Pero kung si JA in-issue ko April 30, 2020 hindi na
lagpas bawal na.

Anong ibig sabihin nito? Dapat ba ito na ma-issue o dapat mo na ma-receive prior to these dates?
Dapat kong ma-issue. So ‘yan ito dapat ang date ay April 15, 2020. Paano mo malalaman? Eh di
dapat nakasulat ang date. Pwede mo bang sabihin, uy niloloko niyo in-antedate niyo lang yan. Sige
may pruweba kayo? Internal ‘yan sa akin eh.

Is it necessary that you received this within on or before April 15, 2020?

No. Ang importante ma-issue ko on or before those dates. Last minute of that date. Hindi ninyo
kailangan matanggap. Kailangan kong ma-issue sa last day ng mga dates na yan.

SERVICE OF ASSESSMENT

1. Personal service

Who: To the taxpayer.

Let us take the case of an individual, Ms. A. How do I serve to Ms. A?

May counterpart ang sheriff, process server ang tawag nila doon.

Where? Registered address.

Eh paano dumating ako sa bahay mo wala si Ms. A. Kanino ko pwedeng iwan?

2. Substituted service
- Person of sufficient discretion.
o Any person who understands and comprehends the materiality of a FAN.
o So kanino? Kailangan bang 10? Kailangan bang 18? Walang ganun. Sufficient discretion.
o Burden of proof: BIR that it was properly served; that it was served personally to the
taxpayer or by substituted service to the taxpayer.

Katulong?

 Pwede basta may sufficient discretion.

Kapatid?

 Pwede.

So iniwanan ko ayaw tanggapin. Anong gagawin ko?

- Punta akong baranggay. Captain, baranggay officer i-serve ko sayo ayaw tanggapin. Witness ko kayo
na iniiwanan ko, isini-serve ko at ayaw tanggapin ung assessment.
- Pagbalik ko ng opisina gagawa ako ng return, parang return of summons.
o I-enumerate ko ung ginawa kong activities. Isusulat ko on this date, naka-detail iyan.
Personal service, wala doon nag-substituted service ako ayaw pa rin tanggapin. Kumuha po

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ATTY. RIZALINA LUMBERA

ako ng baranggay eto ang proof. Isusulat ko iyan. And that will form part of the records of the
case.

NOTE: If the taxpayer has not received any FAN it is as if no assessment was issued to him. Kailangan
matanggap niya ‘yan.

Service to Corporation

- Person of sufficient discretion:


1. President
2. Managing Partner
3. Treasurer
4. In-house Counsel
5. Corporate Secretary
6. General Manager

Eh wala sila, kanino?

- Substituted service to a person of sufficient discretion.

Pwede mo bang iwanan sa secretary ng Presidente?

o Yes.

Ayaw pa rin tanggapin. Anong gagawin ko na naman?

o Barangay, gano’n din.

When the personal service and the substituted service fail, what will I do?

o Registered mail. Ang BIR very few instances na nagre-resolve sila ng registered mail although
lately medyo effective na ulit sila sa registered mail. Pero kahit pa natanggap kung hindi kayang
i-prove ng BIR na ang tumanggap ay si Ms. A at sino si Ms. A in relation to the taxpayer,
mahihirapan pa rin ang BIR to prove that the taxpayer if he denies. All that he needs to do is
deny it eh. All that you need to do is deny receipt. The BIR is required to prove that you received
it either personally or by substituted service. So if the BIR cannot recognize the signature of star,
who is that star? Katulong ho yan. Eh sino bang katulong ko? Wala ho akong katulong nung araw
na yun. Gaganon lang yung taxpayer and that’s it. No assessment was received.

3. Mailing:

a. Registered mail

Now, when registered mail fails, is there any other alternative? Yes.

b. Regular mail
c. Fast courier

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ATTY. RIZALINA LUMBERA

Meron akong kliyente ang tumanggap ay OJT. Iniwanan ng BIR, in-assess ang kliyente ko. I am not denying that
it was received but it was received not by the duly authorized representative of the corporation. Therefore, nag-
prescribe si assessment kasi limang taon kaming nagbabalitaktakan eh ‘di lumagpas ‘yung prescriptive period.
Sabi nila ay Ma’am magre-reissue kami ng assessment. Sige mag-reissue kayo, anong ire-reissue mo eh
prescribed na ‘yan. Wala na silang magawa. ‘Yung service kasi very important of the FAN. Kasi ‘pag wala kayong
natatanggap through the proper service as provided by law it is as if no assessment was issued and therefore,
BIR cannot proceed against you.

Can the BIR issue several or successive assessment?

- Yes, you cannot prohibit.

Can you enjoin the BIR from issuing assessments?

- Never.

PROTEST

So natanggap mo na, anong gagawin mo dyan? Hindi reply ang tawag, PROTEST.

So nagpro-protesta ka, ilang araw?

- 30 days.

NOTE: ‘Pag hindi ka nagprotesta sa loob ng 30 days from your receipt then the FAN becomes final FAN
and you cannot question it anymore, anywhere else.

So you file the protest. Kanino ifi-file?

- BIR, ‘yung RDO na nag-issue niyan dun ka magfile ng protesta. ‘Di ka pwedeng umakyat sa BIR
Commissioner.

So what do I (BIR) do with this one?

1. Grant
o If I grant your protest it means I agree with your arguments against the assessment. ‘Pag
sinabing protest it is in writing providing for your basis in your arguments. So tapos na ang
pag-aaway natin. Cancel the assessment.
2. Deny
o Nakasimangot ka. Ikaw ang may remedy. Saan ka patungo? Hanggang dito administrative.
Pagkatapos dito judiciary.
o CTA Division – 30 days.
3. Partly grant or partly deny
4. Sit on it/Non-action

NOTE: In nos1, 2, and 3 – there is an actual decision issued by the BIR.


In no. 4 – no decision and what is being appealed is non-action on the part of the BIR.

How do we count the 180-day period?

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ATTY. RIZALINA LUMBERA

Receipt of FAN – you have 30 days to file the protest.

NOTE: Kung gusto mong umakyat, you may. If the BIR does not act on your protest within the period of 180
days from the filing of your protest, then you may go up to the CTA within 30 days after the expiration of the
180-day period. “May” not must. You may go up to the CTA within 30 days from the expiration of the 180-day
period. In other words, you may also not go up. Choice niyo ‘yan. If you do not go up then you just have to wait
for an actual decision by the BIR denying your protest so that you can go up on appeal and this may take a
long time.

The remedy of an appeal from a non-action on the part of the BIR and the remedy of an appeal from an actual
decision of the BIR denying your protest are mutually exclusive of each other.

Anong ibig sabihin nun? A leading case, let’s take this example, taxpayer bank from the receipt of the
final assessment notice bumilang ng 30 days, nag-file ng protesta. Lumipas ang 180. Pagkalipas ng 180,
umapila pero ang apila nasa 31st. Lampas na ng isang araw. So nag-avail siya ng remedy ng apila based
on non-action pero sobra ng isang araw. Ang ginawa ng CTA dinismiss for having been filed out of time.
Nakangiti si bangko, pag nagdesisyon ang BIR mag-aapila uli ako. That time kasi wala pang decided
case dito eh kasi wala iyan sa rules, sa internal rules ng CTA. Ang sabi ng taxpayer, ‘pag dumating ang
tunay na desisyon which I can do kasi technically wala pa naman desisyon then I will file an appeal
which it did. Ang sabi ng Supreme Court, “uy bangko iyang dalawang iyan mutually exclusive. ‘Pag nag-
avail ka dito, hindi ka na pwedeng mag-apila sa tunay na desisyon. ‘Pag di ka naman nag-apila dito,
ang remedy mo na lang ay maghintay ng tunay na desisyon para makapag-apila. That’s the meaning of
mutually exclusive of each other.”

The question in our minds is this, what if non-action, you made an immediate appeal, nandun ka na sa CTA. Is
the BIR prohibited from issuing an actual decision granting or denying your protest?

- No. BIR can issue.

What if the BIR issues a decision granting your protest and you have a pending appeal?

- Eh ’di ikaw ay ngumiti, at i-withdraw mo si appeal. Hindi naman mago-object si BIR for the
withdrawal of the appeal.
- Bakit? Ginrant na nga niya si protesta mo eh.

Eh pano kung denying eh may apila ka na. Magrerefile ka ba ng panibagong appeal?

- Hindi na. Punta ka ‘dun sa CTA nandun ka na eh. Hindi ka na rin magbabayad ng bagong filing fees.
Nandun ka na sasabihin mo lang sa CTA, hello justice meron na po akong desisyon. By way of
pleading.

Anong tawag pagdating sa CTA? Anong tawag sa parties? Sino ang nag-aapila?

NOTE: Taxpayer lang ang nag-aappeal, ‘di nag-aapila ang BIR dahil ang BIR di niya iaapila ang sarili niyang
desisyon. So pagtawid ng judicial procedures it is only the taxpayer who files an appeal to the CTA Division in
protest cases under the NIRC.

The proceeding before the CTA, sinong parties?

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1. Taxpayer - petitioner-appellant
2. BIR – appellee

Pero kahit ang tawag sa atin diyan ay appellant ka, appellee ako at iyan ay appeal.

NOTE: Proceedings before the CTA Division are trial de novo and we present evidence as if nasa RTC or
MTC. That is the first time that documentary evidence will be presented. From administrative tatawid ng CTA
trial de novo kaya nakapamadugo ang trial sa CTA Division.

CTA Division

- 30 days.
- There are instances that your protest is not complete.
- ‘Di ba nakalagay sa Code, in the event that your protest is not complete, you will be required to
submit documents within a period of 60 days.
o Kailangan ba 60? Pwede bang sabihin ng BIR 30 ka lang ha.
 Oo, walang bawal un.
 Maximum niyan 60 days.

Nag-issue ako ng FAN nareceive mo. You have 30 days to file the protest. So nag-file ka on the 10th. Your
protest is not complete kasi ‘di ka nagsumite ng dokumento. Kasalanan mo iyan. Bakit? When you are
arguing against my FAN you are supposed to know what documents are proper to be supporting
documents. Hindi kita sasabihan. You are supposed to know what documents are relevant to support
your arguments because you are protesting my FAN. So ‘pag mali ang dokumento mo at ni-require
kitang mag-sumite bahala kayo sa buhay niyo kung anong dokumentong kailangan niyo. ‘Pag mali ang
dokumento, problema niyo ‘yan di ko kayo aarugain. I will not require you to submit. In the first place,
when you filed the protest, you should have submitted those documents.

So in case of failure to submit as required by the BIR, what is the consequence?

- Sigurado denied ang protest niyo.

In the event you are required to submit documents like on the 10 th nag-submit ka ng protesta. Ni-require kita
syempre meron pa akong order requiring submission. In-email ko sa’yo, submit within 15 days. Kailan
bibilangin si 180?

- Ang word diyan ay actually received by the BIR. ‘Dun lang kayo magsimulang magbilang ng 180 ng
non-action.

Ikaw nasa Batanes ka, ang RDO nasa Aparri. Tatawid ka pa ng dagat. O ‘di minail mo na eh sa Rules of
Court date of mailing is the date of filing ung dokumento. Eh dun ka pa bibilang ng 180 maawa ka naman sa
BIR. Kailangan matanggap ko muna ung dokumento saka ka bumilang ng 180. ‘Pag hindi ako gumalaw,
non-action sa 180 saka ka pa lang magkakaroon ng 30. Napaka-unfair niyo naman kung pagka-mail ninyo
bilang ka na ng 180 tapos apila na kayo agad. Sino ba ang may kasalanan? Di ba kayo? Kaya dapat kayo
ang mag-suffer hindi ako. So in case of an instance in protest wherein the taxpayer is further required to
submit documents.

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Rules:

1. Failure to submit documents denied sigurado ang inyong protesta.


2. If you complied and submitted the documents we count the 180-day period from my receipt of the
documents as required.

Nandito ngayon sa CTA Division, hindi pwede dito ang non-action.

 Grant – nakangiti
 Deny – simangot
 Partly granted or partly denied

Whoever is the prejudiced party then the prejudiced party may file a motion for new trial or motion for
reconsideration within 15 days.

- And whoever is the prejudiced party kasi ‘pag ginrant ang MR, sino nag-file ng MR?
o Whoever is the prejudiced party will go up to the CTA En Banc within a period of 15 days.
o Whoever is the losing party will go to the Supreme Court within 15 days.
- Iyang prosesong yan hindi tumatawid. Ang tawag sa prosesong iyan protest cases under the NIRC.
Iyan ang tinatawag na protest cases.

From the illustration, jurisdiction of the CTA:

1. Exclusive appellate jurisdiction over decisions of the BIR denying the protest filed by the taxpayer.
2. Exclusive appellate jurisdiction over non-action of the BIR within 180 days from the filing of the
protest.

Suspension of Prescriptive Period:

- Section 222

Due date is April 15, 2017. Nag-file ka February 14, 2017. I find something wrong in the return that you filed.
Kailangan kong ma-issue si FAN ng April 15, 2020. Pagka-file mo ng return nag-issue na ako 2018 pa lang. Ay ‘di
kita makita dun sa registered address mo. Wala ka na ‘dun. Giba ang bahay lupa lang ang nakita ko. From
Aparri pa lang nasa Mindanao ka na at hindi mo ako nino-notify sa succeeding returns mo. Lahat ng succeeding
returns mo Aparri pa rin ang ginagamit mo. So I will never know where you are. But when I look at, punta ako sa
bahay mo to serve ay lupa na lang so suspended iyan.

So naka-isang taon na ako. In-issue ko ng 2018 eh. ‘Nung 2040 nag-file ka ng ITR, nasa Jolo ka na. Pwede pa ba
akong magserve?

- Oo.
- Ilang taon?
o Hanggang 2042. 1+ 2 =3. Kasi ‘pag hindi namin sinuspend iyan ang mangyayari sa inyo
pagkaka-file lilipat magtatago susulpot muli pagkatapos ng 3 taon o 10 taon.

Halimbawa diyan nagfile ka Feb. 14, 2017. Umalis ka ng bansa Feb. 15, 2017. Di ba dapat na-issue ko ang FAN
ng 2020? Eh di nga kita makita wala ka nga sa Pilipinas eh. Alangan naman na wala ka sa Pilipinas tumatakbo

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ang period. Eh di pagkatapos ng 2020 balik ka tapos na. Everybody will be doing that. So iyan ung suspension of
period. Memoryahin niyo yan 222, 223, 228 word for word niyo memoryahin iyan.

 Sec. 222 – exceptions


 Sec. 223 – suspension
 Sec. 228 – FAN

When is PAN not required?

1. When there is a mathematical error.


2. When there is a discrepancy between the tax withheld as reflected in the withholding tax certificates
and claimed in the return and the tax actually withheld and remitted.
3. Excise taxes

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PROCEDURE FOR PROTEST CASES

NO INJUNCTION RULE

- At any stage of the proceedings, ang gobyerno ay pwedeng mangolekta. Collection cases cannot be
enjoined because taxes are the lifeblood of the government (Lifeblood Theory). Pero may
repercussions ‘pag nangolekta ang gobyerno.

PRESCRIPTIVE PERIODS

When can the government collect? What are the prescriptive periods for the right of the government to
collect?

- Ang collection ng gobyerno ay pwedeng may ASSESSMENT (Notice of Deficiency Assessment), tapos
susunod ay COLLECT. Parang demand letter muna bago ka kokolekta sa korte.
- Meron din namang instances na walang ASSESSMENT, diretso ng COLLECT sa korte. Dito, the
complaint itself is a judicial demand.

Ano ang prescriptive period ng Deficiency Assessment?

- Three (3) years:


a. from due date, if filed before due date;
b. from due date also if filed exactly of due date; and
c. from actual date of filing if filed beyond due date.
- Ten (10) years:
a. From discovery of BIR of fraudulent return if return filed is false or fraudulent; or
b. From discovery of non-filing of return if no return was filed.

PERIOD OF WAIVER

The original period (3 or 10 years) can be extended prior to its expiration upon the execution of a valid
waiver between the government and the taxpayer.

Assuming that a notice of assessment has been issued by the BIR and the same is received by the taxpayer,
the collection period is 5 years from the time the taxpayer received the assessment.

However, there are instances when there is no need for the government (BIR) to issue an assessment. There
are two instances:

1. When the taxpayer files a false or fraudulent return; or


2. When the taxpayer did not file any return at all.

In these two cases, the BIR may directly collect and the period is ten (10) years from discovery by the BIR of
the fraudulent return or the non-filing of the return.

So in cases when the (a) return filed is false or fraudulent or if (b) no return was filed, the BIR has two
options:

1. They can issue an assessment within ten (10) years from discovery by the BIR of the fraudulent
return or the non-filing of the return; or
2. They can also collect immediately without issuing any assessment.

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If the BIR collects pursuant to an assessment, it can collect using administrative means or judicial means of
collection.

NOTE: If the BIR collects without an assessment, it can only collect by way of judicial means of collection.

ADMINISTRATIVE REMEDIES

What are the administrative means of collection on the part of BIR?

1. Lien,
2. Warrant of distraint;
3. Warrant of levy;
4. Notice of garnishment;
5. Compromise; or
6. Suspension of taxable periods. (Procedure: See Rule 39)
o ‘Pag nakatanggap ka ng “suspension of taxable periods”, hindi ka na makakapag-operate.

Sa judicial means of collection, ang BIR ay pupunta ng korte. Ang BIR ay nagf’file ng civil or criminal case.

When you receive an assessment, it triggers two things:

1. You will have the right to protest within 30 days from the receipt of the FAN; and
2. BIR will have the right to collect within the period of 5 years.

NOTE: Despite the taxpayer’s protest, the BIR has the right to collect within 5 years from the taxpayer’s
receipt of the FAN.

NOTE: When the taxpayer did not file any protest, then the FAN will become final and executory.

Suppose the taxpayer filed a protest and during its pendency the BIR decided to collect, whether
administrative or judicial.

- Protest is deemed denied.


- Remedy: appeal to CTA Division.

Suppose the taxpayer did not appeal before the CTA Division

- FAN will become final and executory.

Kung nag-appeal ang taxpayer sa CTA Division, magiging dalawa na ang proseso. Isa, yung administrative
collection at pangalawa, yung appeal (Judicial).

 Administrative: Taxpayer ang respondent.


 Judicial: BIR ang respondent.

Halimbawa, may pending protest si taxpayer, nag issue ang BIR ng warrant of distraint or levy.

- Deemed denied ang protest.

Ilang araw para mag appeal?

- 30 days.

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From when?

- From the receipt of warrant of distraint or levy. Kasi wala akong desisyon na actual.

CIVIL CASES

Civil case. BIR decided to file a civil case for collection. Anong title ng kaso?

- BIR vs. Taxpayer, for collection of deficiency tax.

Where to file?

MTC and other lower


RTC CTA
courts
P1,000,000.00 & above,
More than P400,000.00
Within Metro Manila P 0.00 to P400,000.00 exclusive of interest,
to below P1,000,000.00
penalties and surcharges
P1,000,000.00 & above,
More than P300,000.00
Outside Metro Manila P 0.00 to P300,000.00 exclusive of interest,
to below P1,000,000.00
penalties and surcharges

How do we determine jurisdictional amount? Totality rule?

Within metro manila, principal amount of P350,000, interest of P150,000 and penalties of P150,000. Saan if’file?

- MTC.

NOTE: If the main action is damages – inclusive of interests, penalties, etc.


If the main action is not damages – exclusive of interests, penalties, etc.

Does the CTA have exclusive original jurisdiction over tax collection cases?

- YES. But CTA will not consider “within” and “outside” Manila; For P1 Million and above, exclusive of
interest, penalties, and surcharges.

ILLUSTRATIONS:

1. Processor. Return (take not of due dates). Inaral ng BIR. Sabi ng BIR may kulang ka (taxpayer). Una, Letter of
Assessment (LA), then preliminary assessment notice (PAN), kung kailangan. Kung hindi, tawid ng final
assessment notice (FAN). Serve. Barangay. Duly received by the taxpayer.

Ikaw, gagawin mo, protest. Inaral ng BIR, deny or grant.

a. If granted, you smile, tapos na ang proseso.


b. If denied, teardrops, punta ka sa BIR within 30 days.
c. If partly denied and partly granted, punta ka pa rin sa BIR.
d. If BIR sat on it for a period of 180 days from filing of the protest, then you may go up to the CTA
Division immediately within 30 days from the expiration of the 180-day period. Tatawid na sa
judicial process.

Ang laman ng tax deficiency mo or ang principal amount is P250,000, interest is P100,000, penalty is P100,000.
Ang total ay P450,000. BIR decided na ayaw niya ng administrative.

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NOTE: Kasi wala ‘yan hieararchy. Pwede niya piliing administrative or judicial, or pwedeng sabay-sabay ‘yan.
You cannot prevent the BIR. He can exercise any or all at the same time.

- Walang protesta si taxpayer, thus, final, mangongolekta si BIR.


- May protesta ka, nangongolekta ako. ‘Pag may protesta ka, deemed denied, therefore, from your end,
akyat ka doon.

So let’s take the case of civil. BIR nag-file ng civil case. Nag-file ng complaint for collection of tax deficiency.

Saang court pupunta si BIR?

- Sa MTC (first-level courts).

Anong iisue ni MTC Judge?

- Summons.

In the meantime, hindi mo pa alam na nagfile ng civil case si BIR. The only time na malalaman mo ‘yan ay
‘pag the summons is served.

The whole proceedings continue and one does not stop. So hindi porke ay nandon ka ay titigil ka, because
BIR has the right to collect. As long as the filing of the civil case is within the period of 5 years.

If BIR filed this beyond the 5 years, then the defense of the taxpayer is prescription. But the taxpayer
cannot file a motion to dismiss on the ground of prescription, because this is a judge of a MTC, and motion
to dismiss is a prohibited pleading. Therefore, the summons, with the attached complaint, should be
answered and you must file an answer.

If you do not file an answer, what happens to BIR’s complaint?

- BIR will ask the judge to declare the defendant in default and will present evidence ex parte. And
definitely, the judge will issue a decision favorable to the BIR, and against the taxpayer.

When the taxpayer files any responsive pleading, motion to dismiss will not be entertained, because that
is a prohibited pleading before the MTC Judge. If the taxpayer does not file an answer, talo siya sigurado,
kasi si BIR lang ang pakikinggan, unless, hindi nagpresenta ng ebidensya si BIR (failure to prosecute),
then dismissed ‘yan.

NOTE: Walang damages sa tax deficiency cases.

Now let us say si Judge ay nagdesisyon, pero tumatakbo pa din ang proceedings. Does the decision of the
judge favorable to the BIR affect the decision of the CTA Division?

- NO. They are completely separate and independent of each other.

Anong remedy ni taxpayer?

- File an appeal before the RTC within 15 days (in the meantime, nag-aaway pa din sa CTA
Division, tuloy-tuloy pa din ‘yan).

Nanalo ngayon ang taxpayer, ni-reverse. Pwedeng reversal or affirmation. Paano kung talo pa din si
taxpayer, pumunta siya ngayon sa CTA. Magpapanagpo ngayon sa CTA. Anong CTA?

Sa CTA, 2 hakbang: Division and En banc. There are 2 instances that you go directly to the CTA En
banc.

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1. If the decision being appealed is a decision rendered by the prior court or agency in the
exercise of appellate jurisdiction.
2. In the case of decisions of the Central Board of Assessment Appeals in real property taxation.

So, the losing party (taxpayer) sa RTC, pupunta sa CTA En banc within how many days?

‘Di ba sa CTA, dalawang hakbang:

1. Sa unang hakbang, within 30 days,


2. Sa pangalawang hakbang, within 15 days.

Dito sa CTA En banc, isang hakbang lang. Within 30 days ‘yan.

NOTE: Basta humakbang ng isa sa CTA, within 30 days. ‘Pag may pangalawa, doon lang magiging within
15 days.

Assuming that the taxpayer has a pending appeal before the CTA because of the protest, then these cases will
be consolidated, to avoid the possibility of contradicting decisions. In whatever stage, either with the CTA
Division or CTA En banc, arising from the protest case and at the same time, there is a civil case for collection
wherein the taxpayer makes an appeal to the CTA, as long as it reaches the CTA, these cases will be
consolidated and the CTA will decide on these cases as a whole. Whoever loses in these cases, he will have to
go to the SC within 15 days from receipt of the prejudicial decision.

2. Principal amount due is P450,000, interest is P100,000, surcharge is P100,000.

So saang korte ka pupunta si BIR?

- RTC.

This time, si Judge mag-iissue ng summons with the attached copy of the complaint., served by the sheriff. BIR
should be filing that complaint within 5 years from the taxpayer’s receipt of the assessment, which is already
subjected to a protest.

Nag-file ng answer si taxpayer, ‘pag di siya nag-file, default. Same rule. ‘Pag di siya sumagot, default, talo siya,
then pwede siya mag-appeal before the CTA Division, because the RTC decision is rendered in the exercise of
the original jurisdiction. Appeal before the CTA Division within 30 days. Then, to CTA En banc within 15 days.

Pero, pay may pending sa CTA na isa pang case, then may consolidation ulit, under the expanded jurisdiction
of the CTA.

3. What if the taxpayer has a pending protest based on that action. This is the scenario: You have a protest
case. You filed it within 30 days. BIR sat on it. So, the taxpayer is immediately before the CTA. Nag-issue ng
decision ang BIR after, granting the protest. What will the taxpayer do?

- The taxpayer will withdraw the appeal.

But very rare nangyayari ito. Kasi ang proceedings sa CTA ay trial de novo, ibig sabihin may presentation of
evidence.

Bakit trial de novo eh ‘yan ay appeal?

- Kasi when you look at the proceedings, prior to akyat sa CTA, administrative ‘yan. This is the first
time that the case reaches a court, that’s why trial de novo ang nature ng proceedings sa CTA, if it
involves a protest case. But, all other cases, such as appeal in civil cases, hindi ‘yan trial de novo,
kasi may korte na nagdesisyon at naghear na ng evidence.

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4. The amount being collected is P2,000,000.00, plus interest and penalties.

Saan mag-fifile si BIR?

- CTA.

In the above-mentioned cases, the CTA exercises its appellate jurisdiction. Dito, when the principal amount of
the tax due is P1 Million and above, the BIR will file the tax collection case with the CTA Division in the
exercise of its original jurisdiction. Isang CTA Justice ang i-aassign acting as a trial court. So, whoever loses sa
CTA Justice, aakyat sa CTA En banc within 15 days, kasi original jurisdiction ng CTA, hanggang sa makarating
sa SC.

JURISDICTION OF CTA IN TAX COLLECTION CASES:

1. Exclusive appellate jurisdiction over decisions of RTC rendered in the exercise of either original
jurisdiction or appellate jurisdiction;
2. Exclusive original jurisdiction over tax collection cases when the principal amount of the tax due is
P1,000,000.00 and above, exclusive of interest, penalties and surcharges;
3. Exclusive appellate jurisdiction over decisions of the BIR denying the protest of the taxpayer; and
4. Exclusive appellate jurisdiction over BIR’s non-action on a protest filed by the taxpayer.

Does the CTA have jurisdiction over petitions for certiorari (Rule 65) involving interlocutory orders of the
MTC or RTC?

Let us assume na nag-issue si RTC ng interlocutory order, such as denial of motion to declare in default. So
can the BIR go to the CTA and file a petition for certiorari? Or dapat ba pumunta siya sa CA under the Rules on
Civil Procedure? Definitely, the BIR can file a petition for certiorari pero saan siya pupunta?

- The BIR can file a petition for certiorari before the CTA under the expanded jurisdiction of the CTA
and under the internal rules of the CTA.

NOTE: Even the CTA will have jurisdiction over petitions for certiorari questioning or assailing an
interlocutory order issued by ordinary courts in tax collection cases.

- The CTA is a court, an appellate court as well. Why are we not applying the Rules of Court, eh
nakalaagay sa internal rules ng CTA, “The Rules of Court are applied in a suppletory character.”
- Petitions for certiorari under Rule 65 must be filed within 60 days from receipt of interlocutory order
or receipt of the denial of MR of the interlocutory order.

DOCTRINE OF ADMINISTRATIVE REMEDIES

Ikaw nakatanggap ka ng assessment. Doctrine of exhaustion of administrative remedies. This is a decided case.
Sabi mo, “Hindi muna ako maggprotesta.” Ang BIR, and RDO nag-issue niyan (assessment). “Aakyat muna ako,
papa-MR ako kay Commissioner Dulay.” Denied. “Mag-aapela ako sa Sec. of DOF.” Denied. “Akyat ako ng Office of
the President.” Can you do that?

- Yes. The law does not prohibit you from doing that.

What is the effect of you availing of exhaustion of administrative remedies to the sine qua non requirement of
an appeal to the CTA. Is it put on hold?

- No. Ibig sabihin, kung gusto mong umakyat, mag-exhaust, you are free to do so. But it will not
suspend the 30-day period to go up on appeal to the CTA Division.

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- Gawin mo pareho kung gusto mo. Kung hindi mo ginawa ito (protest), kahit manalo ka dito
(administrative), isa lang sasabihin ng BIR sa’yo, “Hello, talo ka. Hindi ka nag-appeal eh.”

NOTE: Failure to file the protest within the required 20-day period, BIR , TX .

How did the SC reconcile the Administrative Code providing for the Doctrine of Exhaustion of Administrative
Remedies and the appeal to the CTA:

- We recognize the right of every taxpayer to go up on appeal, or by way of exhaustion of


administrative remedies. But the CTA is the court which has technical expertise on all tax matters.
Therefore, we uphold the jurisdiction of the CTA.

If you have a pending protest and you receive summons with attached copy of the complaint, protest is
deemed denied. Therefore you must go up to the CTA division by way of an appeal in the protest case.
Deemed denied if hindi nakatanggap ng summons dito sa 2 judges. Deemed denied ang protest.

Sagutin mo ‘yan, umakyat ka ng CTA. Otherwise, FAN becomes final-final and therefore judgment on the
pleadings may be made.

Mas mahirap ang tax collection cases on the part of the taxpayer because tax is the lifeblood of the
government.

CRIMINAL CASES

Mode of collection.

There are 2 kinds of offenses under the NIRC:

1. Does not result in tax deficiency


o (eg). failure to obey subpoena
2. Offense which results in tax deficiency
o (eg) failure to issue receipt.

If hindi ka nag-issue ng receipt, hindi mo dinedeclare ‘yun sales sa gross income, may violation ka for failure to
issue receipt and at the same time may tax deficiency ka kasi hindi mo sinama sa gross income mo.

NOTE: In Criminal cases, venue is jurisdictional.

Steps:

1. Draft complaint-affidavit by BIR.


2. Filing before the fiscal.
3. Fiscal determines probable cause.

If no probable cause = dismissed complaint (BIR loses).

4. BIR goes to DOJ Secretary and file a petition for review.

DOJ: File information, there is finding of probable cause.

Sino mang matalo sa’tin sa preliminary investigation resolution, aakyat kay Secretary.

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Secretary -> Court of Appeals -> SC


Offenses under the RPC = goes to CA -> SC
Offenses under NIRC = goes to CTA -> SC

Fiscal files information before the: (depends on penalty)

 RTC: if the prescribed penalty in NIRC is more than 6 years


 MTC, MeTC, MTCC: if the prescribed penalty in NIRC is below 6 years

Situation no. 1:

Let us say the prescribed penalty under the NIRC is 4 years and 1 day. Fiscal files in MTC.
Judge holds hearing of the case. Convicted.
RTC, exercise of appellate jurisdiction. Convicted.
CTA En Banc, because appellate jurisdiction. 30 days. Convicted.
SC.

Situation no. 2:

MTC dismissed, acquitted.


- BIR has no remedy.
- BIR cannot appeal.

Situation no.3:

MTC convicted. RTC acquitted.

Is there a difference if the acquittal is rendered by the court of origin or appellate court? Is res judicata
applicable? When does res judicata apply? Does it apply to an acquittal to an acquittal by court of origin or
does it also apply to an acquittal by the appellate court?

- BOTH. Once acquitted, always acquitted. BIR cannot appeal anymore.

Meron bang exclusive original jurisdiction ang CTA?

In criminal cases, when the offense does not result in tax deficiency, CTA has no exclusive original
jurisdiction.

NOTE: When the offense does not result to a tax deficiency, the CTA does not exercise any exclusive original
jurisdiction. It can only exercise exclusive appellate jurisdiction based on the judgment of the conviction of
the RTC rendered either in the exercise of original or appellate jurisdiction.

What if the offense resulted to tax deficiency? (eg. Estafa, robbery, theft)

- Criminal case + civil liability


- (eg). Failure to issue receipt (P10,000,000.00) sigurado malaki ang tax deficiency mo. Saan iffile ng
fiscal and information?

NOTE: No. 1 rule, if the offense results in a tax deficiency, the civil liability is always incorporated in the
criminal case. They caanot be filed separately. No need for reservation.

Apostol | Badua | Barras | Cojamco | De Leon | Ico | Miranda | Pedernal | Vicente

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TAXATION II
ATTY. RIZALINA LUMBERA

NOTE: You base the jurisdiction of the court in the amount in the tax liability such that if the principal amount
of tax due is P1,000,000.00 and above exclusive of interests and penalties, CTA can exercise exclusive original
jurisdicition in criminal cases involving tax deficiency.

SUMMARY:

 If the offense does not result in any tax deficiency, CTA exercises only appellate jurisdiction.
 If the offense results in tax deficiency, CTA may exercise original jurisdiction exclusive of that when
the principal amount of tax deficiency P1,000,000.00 and above exclusive of interests, penalties, and
surcharges.

Ikaw A, nagfile ka ng fraudulent return. Mag-expect ka ng tax deficiency. Or no return was filed. What will BIR
do? BIR discovered fraudulent return/non-filing of return.

- Only remedy is go to court. Ang remedy ko ay pwede akong mag-assessment sa’yo or wala ‘yan.

Kung wala ang assessment,

- Remedy: Pumunta kay judge (MTC/RTC). Kasi tax collection case judicial ‘yan.

Within what period of time?

- 10 years from BIR’s discovery of filing of fraudulent return/non-filing of return.

DIFFERENCE:

- BIR did not issue FAN.

Without any assessment, that cannot happen in criminal cases.

Sa criminal cases ba required na may assessment?

NOTE: NO. The issuance of FAN or finality of the FAN is not a sine qua non requirement before the
BIR can file a criminal case.

In civil cases as well, the issuance of an assessment is not necessary when the taxpayer did not file any return
at all or filed a fraudulent return.

Whether the BIR issued an assessment prior to collection within those periods of time or did not issue any
assessment under the exceptional circumstance, fraudulent return/non-filing of return, these periods of
assessment and collection, or collection only, may be suspended independently of each other when any of the
grounds provided under Sec. 223 of the NIRC is present.

It may be suspended independently of each other.

- Pwedeng assessment lang ang nasuspend at ang collection ay hindi.


- Pwedeng collection lang ang nasuspend at ang assessment ay hindi.
- Pwedeng parehong nasuspend kung during the period of collection any of the grounds under Sec. 223
is present.

Apostol | Badua | Barras | Cojamco | De Leon | Ico | Miranda | Pedernal | Vicente

24
TAXATION II
ATTY. RIZALINA LUMBERA

Kung walang assessment, the period of 10 years may be suspended as well when any of the grounds under
Sec. 223 of NIRC is present.

Apostol | Badua | Barras | Cojamco | De Leon | Ico | Miranda | Pedernal | Vicente

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