2014 LECTURE

A. COURT OF TAX APPEALS (CTA)

1. Laws and Implementing rules
2. Special and Limited Jurisdiction
3. CTA has no power or authority to deviate from
the ruling of the Supreme Court
B. CTAS JURISDICTION
1.

CTA DIVISION

2.

CTA EN BANC

3.

PERIOD TO APPEAL TO CTA

C. GENERAL PRINCIPLES ON TAX REMEDIES

UNDER NIRC
PRESCRIPTIVE PERIODS
1.

ASSESSMENT

2.

REFUND

3.

CRIMINAL OFFENSES

D. REMEDIES OF THE GOVERNMENT

E. REMEDIES OF THE TAXPAYER
1.

ADMINISTRATIVE PROTEST

2.

CLAIM FOR REFUND

F. OTHER RECENT SIGNIFICANT CASES

A.

COURT OF TAX APPEALS (CTA)

1.

LAWS AND IMPLEMENTING RULES

a. Republic Act No. (RA) 1125 - AN ACT CREATING THE
COURT OF TAX APPEALS
KEY ELEMENTS:

CREATION

SPECIAL AND LIMITED JURISDICTION

EFFECTIVE:

JUNE 16, 1954

b. RA 9282 AN ACT EXPANDING THE JURISDICTION

OF THE COURT OF TAX APPEALS (CTA),
ELEVATING ITS RANK TO THE LEVEL OF A
COLLEGIATE COURT WITH SPECIAL JURISDICTION
AND ENLARGING ITS MEMBERSHIP, AMENDING
FOR THE PURPOSE CERTAIN SECTIONS OF
REPUBLIC ACT NO. 1125, AS AMENDED OTHERWISE
KNOWN AS THE LAW CREATING THE COURT OF
TAX APPEALS, AND FOR OTHER PURPOSES.
KEY ELEMENTS:

EXPANDED JURISDICTION

SAME RANK AS COURT OF APPEALS (CA)

ENLARGEMENT OF MEMBERSHIP

CREATION OF CTA EN BANC

AMENDS RA 1125 An Act Creating the Court of

Tax Appeals
EFFECTIVE:

APRIL 23, 2004

c. RA 9503 AN
ACT
ENLARGING
THE
ORGANIZATIONAL STRUCTURE OF THE COURT OF
TAX APPEALS, AMENDING FOR THE PURPOSE
CERTAIN SECTIONS OF THE LAW CREATING THE
COURT OF TAX APPEALS, AND FOR OTHER
PURPOSES.
KEY ELEMENTS:

ENLARGEMENT OF MEMBERSHIP

CREATION OF THIRD DIVISION

EFFECTIVE:

JULY 5, 2008.

IMPLEMENTING RULES The Revised Rules of the Court of Tax

Appeals (RRCTA) [A.M. No. 05-11-07-SC].

2.

Special and Limited Jurisdiction

As a specialized court dedicated exclusively to the study and
resolution of tax issues, the CTA has developed an expertise
on the subject of taxation. The Court cannot be compelled
to set aside its decisions, unless there is a finding that the
questioned decision is not supported by substantial evidence
or there is a showing of abuse or improvident exercise of
authority. Therefore, its findings are accorded the highest
respect and are generally conclusive upon this court, in the
absence of grave abuse of discretion or palpable error.
GULF AIR COMPANY, PHILIPPINE BRANCH (GF) vs.
COMMISSIONER OF INTERNAL REVENUE G.R. No.
182045. September 19, 2012.
The CA and the CTA are now of the same level pursuant to
RA 9282. Decisions of the CA are thus no longer superior to
nor reversive of those of the CTA. xxx all rulings of this
Court on questions of law are conclusive and binding on all
courts including the CA. All courts must take their bearings
from the decisions of this Court. Systra Philippines,
Incorporated v. CIR, GR 176290, Res. Sept. 21, 2007, 533
SCRA 776.
CTA, as a court of record, is required to conduct a formal
trial (trial de novo) to prove every minute aspect of the claim
citing CIR v. Manila Mining Corporation, G.R. No. 153204,
August 31, 2005, 468 SCRA 571, 588-589. Kepco Phil.
Corp. vs. CIR, GR 179356, December 14, 2009.

3.

CTA has no power nor authority to deviate from the ruling of

the Supreme Court; Dispositive portion prevails over body

Facts: In the consolidated refund cases, the dispositive

portion of a Supreme Court Decision originally consisting of
three CTA cases docketed as CTA 6365, 6383 & 6612, only the
CA Case 80675 (covering CTA 6365 & 6383) was mentioned
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without reference to CA 83165 (CTA 6612). After CTA issued

a writ of execution covering CTA cases 6365 & 6383, Fortune
Tobacco Corporation filed a motion for the issuance of
additional writ of execution for CTA case 6612 which was
denied by both CTA Division and en banc.
Ruling:
The dispositive portion of the SC decision was
corrected to reflect the omitted case. CTA cannot be faulted for
denying FTCs Motion for Additional Writ of Execution filed
in CTA Case Nos. 6365, 6383 and 6612 for it has no power
nor authority to deviate from the wording of the dispositive
portion of Our July 21, 2008 Decision in G.R. Nos. 167274-75.
To reiterate, the CTA simply followed the all too familiar
doctrine that when there is a conflict between the dispositive
portion of the decision and the body thereof, the dispositive
portion controls irrespective of what appears in the body of the
decision. Veering away from the fallo might even be viewed as
irregular and may give rise to a charge of breach of the Code of
Judicial Conduct. CIR v. Fortune Tobacco Corporation, GR
167274-75 & 192576, Sept. 11, 2013.

B.

CTAS JURISDICTION ON CASES INVOLVING NIRC

1.
(a)

CTA DIVISION
EXCLUSIVE APPELLATE JURISDICTION to review by

appeal:
(1) Decisions of the Commissioner of Internal Revenue
(CIR) in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relation thereto, or
other matters arising under the National Internal Revenue Code
(NIRC) or other laws administered by the Bureau of Internal
Revenue (BIR).

Exclusive & Original power to interpret the provisions of the

NIRC & other tax laws is vested with the CIR, subject to
review by Sec. of Finance. Sec. 4, NIRC. CTAs jurisdiction to
resolve tax disputes excludes the power to rule on the
constitutionality or validity of a law, rule of regulation, which is
vested in the regular courts. British American Tobacco vs.
Jose Isidro Camacho, et al, G.R. No. 163583, Aug. 20, 2008.

CIRs denial of taxpayers entitlement to amnesty program is a

decision appealable to the CTA under decisions on other
matters arising from other laws administered by the BIR, in

this case it is RA 9480, the Tax Amnesty Law. Philippine

Aluminum Wheels, Inc. vs. CIR, CTA 7817, Nov. 12, 2012.

Issue on prescription of the BIRs right to collect taxes fall

under other matters over which the CTA has appellate
jurisdiction. CIR vs. Hambrecht & Quist, G.R. 165229, Nov.
17, 2010.

FINAL DECISION APPEALABLE TO CTA

Final Decision on Disputed Assessment (FDDA)

issued by Deputy Commissioner, a duly authorized
representative of CIR, may still be elevated to the CIR
within 30 days from receipt and said FDDA shall not
attain finality. [Sec. 3.1.5, RR 12-99] College Assurance
Plan Phils., Inc., represented by its Vice-President for
Accounting Services, Mr. Alfeo S. Pelayo v. CIR, CTA
7190, Aug. 16, 2013.

A letter issued by Revenue District Officer which

is still subject to approval of CIR is not a final decision
appealable to CTA. Brixton Investment Corporation v.
CIR, CTA Case 8379, Aug. 12, 2013.

A demand letter for payment of delinquent taxes is

the Final Decision on disputed assessment appealable to
CTA. [citing Oceanic Wireless Network, Inc. v. CIR, et
al., GR 148380, Dec. 9, 2005, 477 SCRA 205] Cagayan
Corn Products Corporation v. CIR, CTA Case 8491,
July 8, 2013.

(2) INACTION by the CIR in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges,
penalties in relation thereto, or other matters arising under the NIRC
or other laws administered by the Bureau of Internal Revenue, where
the NIRC provides a specific period for action.

[OPTIONAL NOT MANDATORY in the case of disputed

assessments but MANDATORY in the case of claims for refund.
Sections 228 & 229, NIRC; Section 3(a)(2), Rule 4, RRCTA;
Lascona vs. CIR, G.R. No. 171251, March 5, 2012 reversed CA in
CA-G.R. SP No. 58061, Oct. 25, 2005 & reinstated the Decision and
Res. of CTA in Case No. 5777, Jan. 4, 2000.]
CTAs JURISDICTION; TAXPAYER MAY AWAIT THE
FINAL DECISION OF THE CIR EVEN AFTER THE LAPSE
OF THE 180-DAY PERIOD UNDER SEC 228 OF THE NIRC

On March 27, 1998, the CIR issued an assessment against

Lascona Land Co., Inc. (Lascona) informing the latter of its alleged
deficiency income tax for the year 1993 in the amount of
P753,266.56. On April 20, 1998, Lascona filed a letter protest which
was denied by BIR Regional Director, RR No. 8, Makati City, in his
Letter dated March 3, 1999.
The SC held that the disputed
assessment did not become final and executory when Lascona decided
to await the final decision of the CIR. In case of CIRs inaction on the
protested assessment, the taxpayer may (1) file a petition for review
with the CTA within 30 days after the expiration of the 180-day
period; or (2) await the final decision of the Commissioner on the
disputed assessment and appeal such final decision to the CTA within
30 days after the receipt of the decision citing RCBC vs. CIR, G.R.
No. 168498, April 24, 2007 and Section 3 A (2), Rule 4 of the Revised
Rules of the CTA.
These options are mutually exclusive and resort to one bars the
application of the other. Lascona Land Co., Inc. vs. CIR, G.R. No.
171251, March 5, 2012.
(3) Decisions, orders or resolutions of the Regional Trial
Courts (RTCs) in LOCAL TAX CASES originally decided or
resolved by them in the exercise of their original jurisdiction.
CTA has jurisdiction over a special civil action for
certiorari assailing an interlocutory order issued by the
RTC in a local tax case. The City of Manila, represented
by Mayor Jose L. Atienza, Jr. and Ms. Liberty M.
Toledo, in her capacity as the City Treasurer of Manila
vs. Hon Caridad H. Grecia-Cuerdo, et al., GR 175723,
Feb. 4, 2014.
(4) Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money charges,
seizure, detention or release of property affected, fines, forfeitures or
other penalties in relation thereto, or other matters arising under the
Customs Law or other laws administered by the Bureau of Customs.
[Rule 4, Section 3(a)(4), RRCTA; Secs. 2313 & 2402, TCCP; R.V.
Marzan Freight, Inc. v. CA, G.R. No. 128064, March 4, 2004,
abandonment; Nestle Philippines, Inc. v. CA, G.R. No. 134114, July
6, 2001, exception to rule that appeal must be from the decision of the
Commissioner of Customs; El Greco Manning and Management
Corp. v. CIR, GR 177188, Dec. 4, 2008.]
(5) Decisions of the Secretary of Finance on customs cases
elevated to him automatically for review from decisions of the
Commissioner of Customs, which are adverse to the Government

under Section 2315 of the Tariff and Customs Code of the Philippines
(TCCP). [Rule 4, Section 3(a)(5), RRCTA; mere clarification.]
(6) Decisions of the Secretary of Trade and Industry, in the
case of nonagricultural product, commodity or article, and the
Secretary of Agriculture, in the case of agricultural product,
commodity or article, involving dumping and countervailing duties
under Sections 301 and 302, respectively, of the TCC, and safeguard
measures under Republic Act No. 8800, where either party may
appeal the decision to impose or not to impose said duties. [Rule 4,
Section 3(a)(6), RRCTA; Southern Cross Cement Corp. v. The
Phil. Cement Manufacturers Corp., G.R. No. 158540, July 8, 2004,
2nd Div. & en banc Resolution, August 3, 2005]
(b)

JURISDICTION OVER TAX COLLECTION CASES:

(1) Exclusive original jurisdiction in TAX COLLECTION

cases involving final and executory assessments for taxes, fees,
charges and penalties, where the principal amount of taxes and fees,
exclusive of charges and penalties claimed is One million pesos
(P1,000,000.00) or more. Principal less than P1,000,000 or no
specified amount = regular courts.

(2) Exclusive appellate jurisdiction over appeals from the

judgments, resolutions or orders of the RTCs in TAX COLLECTION
cases originally decided by them, in their respective territorial
jurisdiction.
(c)

CRIMINAL JURISDICTION:

(1) Exclusive original jurisdiction over all CRIMINAL

OFFENSES arising from violations of the NIRC or TCCP and other
laws administered by the BIR or the Bureau of Customs, where the
principal amount of taxes and fees, exclusive of charges and penalties
claimed is One million pesos (P1,000,000.00) or more.
Criminal action includes civil action for recovery of taxes.
Principal less than P1,000,000 or no specified amount =
regular courts [People v. Tan, G.R. No. 144707, Resolution Dec. 1,
2004]
(2) Exclusive appellate jurisdiction in CRIMINAL
OFFENSES over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax cases originally decided by them,
in their respective territorial jurisdiction.

2.

CTA EN BANC

The Court en banc shall exercise exclusive appellate

jurisdiction over:
(a)

CTA DIVISION [Rule 4, Section 2(a), RRCTA]

Decisions or resolutions on Motions for Reconsideration or

New Trial of a Division of the Court.
Note: Only the resolutions on Motions for Reconsideration
or New Trial may be directly appealed to CTA en banc. Section 18,
RA 1125, as amended by RA 9282.
(b)

CENTRAL BOARD OF ASSESSMENT

(CBAA) [Rule 4, Section 2(e), RRCTA]

APPEALS

Decisions or rulings of the CBAA in the exercise of its

appellate jurisdiction over cases involving the assessment and
taxation of real property originally decided by the provincial or city
board of assessment appeals.
(c)

LOCAL TAX CASES

2(b), RRCTA]

- RTC (appellate) [Rule 4, Section

Decisions, orders or resolutions of the RTCs over LOCAL TAX

CASES originally decided or resolved by them in the exercise of their
appellate jurisdiction.
(d)

TAX COLLECTION CASES

- RTC (appellate
jurisdiction) [Rule 4, Section 2(c), RRCTA]

In TAX COLLECTION cases involving final and executory

assessments for taxes, fees, charges and penalties, judgments,
resolutions or orders of the RTCs in the exercise of their appellate
jurisdiction over tax cases originally decided by the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Courts in
their respective jurisdiction.
(e)

CRIMINAL CASES
- CTA DIVISION (original &
appellate jurisdiction) [Rule 4, Section 2(f) & (g), RRCTA]

In cases involving CRIMINAL OFFENSES arising from

violations of the NIRC or TCCP and other laws administered by the
BIR or the Bureau of Customs, decisions, resolutions or orders on
motion for reconsideration or new trial of the CTA in Division in
the exercise of original or appellate jurisdiction
(f)

CRIMINAL CASES - RTC (appellate)

[Rule 4, Section 2(h), RRCTA]

In cases involving CRIMINAL OFFENSES arising from

violations of the NIRC or TCCP and other laws administered by the
BIR or the Bureau of Customs, judgments, resolutions or orders of
the RTCs in the exercise of their appellate jurisdiction over tax cases
originally decided by the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Courts in their respective jurisdiction.
E.
(a)

APPEAL
1.
PERIOD OF APPEAL TO CTA DIVISION -

In civil cases, 30 days from receipt of decision or ruling or after

the expiration of period fixed by law for action. (Sec. 11, RA 1125, as
amended by Sec. 9, RA 9282; Rule 8, Sec. 3, RRCTA; Sec. 228,
NIRC).
In case of claims for refund
1. Under Section 229, the appeal must also be filed within 2
years from payment of tax.
2. Under Section 112, the appeal is within 30 days from receipt
of decision or ruling or after the expiration of the 120-day.
In criminal cases, 15 days from receipt of decision or final
order appealed from. (Rule 9, Sec. 9, RRCTA)
(b)

EN BANC

15 days from receipt of decision or resolution of CTA in

Division on motion for reconsideration or new trial. (Rule 8, Sec. 1 &
Sec. 4 (b), RRCTA; Rule 43, Sec. 4, Revised Rules of Court)
30 days from receipt of decision of CBAA, RTC (Sec. 11, RA
1125, am. by Sec. 9, RA 9282)
A party adversely affected by a resolution of a Division of the
CTA on a motion for reconsideration or new trial, may file a petition
for review with the CTA en banc. (Sec. 18, RA 1125, as amended by
Sec. 11, RA 9282)
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REQUIREMENTS ON APPEAL
FOLLOWED

MUST BE STRICTLY

PNB filed its petition with the CTA en banc 4 days beyond the
extended period granted it to file such petition; without attaching
to the petition the duplicate original or certified true copy of the
CTA Divisions decision and resolution as well as an affidavit of
service. The petition was dismissed for failure to observe three
procedural rules under the Rules of the CTA and Rules of Court.
A pleading filed by ordinary mail or by private messengerial
service xxx is deemed filed on the day it is actually received by
the court, and not on the day it was mailed or delivered to the
messengerial service. Attaching duplicate originals or certified
true copies of the assailed decision to a petition is mandatory as
non-observance of the rule is a ground for the dismissal of the
petition. Although the failure to attach the required affidavit of
service is not fatal if the registry receipt attached to the petition
clearly shows service to the other party, it must be remembered
that this was not the only rule of procedure PNB failed to satisfy.
PNB vs. CIR, G.R. No. 172458, Dec. 14, 2011.

(c)

Filing of Motion for Reconsideration or New Trial-

15 days from the date of receipt of notice of the decision,

resolution or order of the Court in question. (Sec. 1, Rule 15, RRCTA)

15-day period to file a motion for reconsideration of the

decision of the Court in Division is mandatory and nonextendible. Petitioners Motion for Partial Reconsideration was
filed one day late. First Sumiden Realty, Inc. vs. CIR, CTA
8151, Res. Dec. 21, 2012.

15-day period for filing MR is mandatory and jurisdictional. It

had 15 days or until December 11, 2010 to file its MR,
however, its MR was only filed on December 22, 2010. Luzon
Hydro Corporation vs. CIR, CTA EB No. 722, Jan. 6, 2012 &
Res. May 7, 2012.

(d)

In case of reversal of Decision of CTA Division

(Sec. 2, RA 1125, am. By RA 9282 & further amended
by Sec.2, RA 9503)

The affirmative votes of 5 members of the Court en

banc shall be necessary to reverse a decision of a
Division. Applying the Aichi case, the Court En Banc
reversed the decision of CTA Division with 4-1-2 votes
10

(2 others on leave). 4 voted on prematurity of judicial

claim, 1 voted to deny the judicial petition for failure to
present original VAT returns & 2 voted that prematurity
is not jurisdictional. CIR vs. Takasago Philippines,
Inc., CTA EB 835, Oct. 15, 2012, & Res. Feb. 14,
2013.
2.

MODE OF APPEAL TO CTA -

Petition for Review under Rule 42 for appeal to CTA in

Division and under Rule 43 of the Revised Rules of Court for appeal
to CTA en banc. However, in criminal cases, the general rule
applicable in regular courts in matters of appeal and prosecution shall
apply (Sec. 11, RA 1125, amended by Sec. 9, RA 9282). Rule 122 and
Rule 124 of the Revised Rules of Court apply. In tax collection cases,
Rules 8 and 41 of the Revised Rules of Court may apply.
3.
APPEAL TO SUPREME COURT - Only judgments,
final orders or resolutions of CTA en banc are appealable by a
verified petition for review on certiorari pursuant to Rule 45 of the
Rules of Court, as amended. (Sec. 19, RA 1125, amended by Sec. 12,
RA 9282)

C. GENERAL PRINCIPLES ON REMEDIES

1. General rule on the prescriptive period for assessment.
Section 203, NIRC
SECTION 203. Period of Limitation Upon Assessment
and Collection. Except as provided in Section 222, internal
revenue taxes shall be assessed within three (3) years after the
last day prescribed by law for the filing of the return, and no
proceeding in court without assessment for the collection of
such taxes shall be begun after the expiration of such period:
Provided, That in a case where a return is filed beyond the
period prescribed by law, the three (3)-year period shall be
counted from the day the return was filed. For purposes of this
Section, a return filed before the last day prescribed by law for
the filing thereof shall be considered as filed on such last day.
Exception to the general rule
SECTION 222. Exceptions as to Period of Limitation
of Assessment and Collection of Taxes.

11

(a) In the case of a false or fraudulent return with

intent to evade tax or of failure to file a return, the tax may be
assessed, or a proceeding in court for the collection of such tax
may be filed without assessment, at any time within ten (10)
years after the discovery of the falsity, fraud or omission:
Provided, That in a fraud assessment which has become final
and executory, the fact of fraud shall be judicially taken
cognizance of in the civil or criminal action for the collection
thereof.
(b) If before the expiration of the time prescribed in
Section 203 for the assessment of the tax, both the
Commissioner and the taxpayer have agreed in writing to its
assessment after such time, the tax may be assessed within the
period agreed upon. The period so agreed upon may be
extended by subsequent written agreement made before the
expiration of the period previously agreed upon.
(c) Any internal revenue tax which has been assessed
within the period of limitation as prescribed in paragraph (a)
hereof may be collected by distraint or levy or by a proceeding
in court within five (5) years following the assessment of the
tax.
(d) Any internal revenue tax, which has been assessed
within the period agreed upon as provided in paragraph (b)
hereinabove, may be collected by distraint or levy or by a
proceeding in court within the period agreed upon in writing
before the expiration of the five (5)-year period. The period so
agreed upon may be extended by subsequent written
agreements made before the expiration of the period previously
agreed upon.
(e) Provided, however, That nothing in the
immediately preceding Section and paragraph (a) hereof shall
be construed to authorize the examination and investigation or
inquiry into any tax return filed in accordance with the
provisions of any tax amnesty law or decree.
2. Construction of law on prescription. Prescription, being a remedial
measure, should be liberally construed in order to afford taxpayers
such protection. As a corollary, the exceptions to the law on
prescription should perforce be strictly construed. CIR vs. B.F.
Goodrich Phils., Inc. & CA, G.R. 104171 Feb. 24, 1999.
Rationale : The law prescribing a limitation of actions for the
collection of the income tax is beneficial both to the Government
and to its citizens; to the Government because tax officers would
be obliged to act promptly in the making of assessment, and to
citizens because after the lapse of the period of prescription
citizens would have a feeling of security against unscrupulous tax
agents who will always find an excuse to inspect the books of
taxpayers, not to determine the latter's real liability, but to take
12

advantage of every opportunity to molest peaceful, law-abiding

citizens. RP vs. Ablaza, L-14519, July 26, 1960.
3. What is an Assessment?
An assessment is a written notice and demand made by the BIR on
the taxpayer for the settlement of a due tax liability that is there
definitely set and fixed. It also signals the time when penalties and
interests begin to accrue against the taxpayer. A definite period or
a date certain for the payment of tax liabilities is indispensable in
an assessment. FAN was declared invalid. Fitness By Design Inc.
vs. CIR, CTA 7160, July 10, 2012; Adamson vs. CA, G.R. 120935
& 124557, May 21, 2009; Estate of the Late J.D. Vda. De
Gabriel vs. CIR, G.R. 155541, Jan. 27, 2004. CIR vs. Pascor
Realty and Development Corporation, et al., G.R. 128315, June
29, 1999; Ungab vs. Cusi, G.R. L-41919-24, May 30, 1980.
A written communication containing a computation by a revenue
officer of the tax liability of a taxpayer and giving him an
opportunity to contest or disprove the BIR examiner's findings is
NOT an assessment since it is yet indefinite. CIR Letter
recommending criminal prosecution is NOT an assessment.
Adamson vs. CA, supra.
The formality of a control number in the assessment notice is
not a requirement for its validity but rather the contents thereof
which should inform the taxpayer of the declaration of deficiency
tax against said taxpayer. Commissioner of Internal Revenue vs.
Hon. Raul M. Gonzalez, et al, G.R. No. 177279, October 13,
2010.
4. No injuction to restrain tax collection
Section 218, NIRC
SECTION 218. Injunction not Available to Restrain Collection of
Tax. No court shall have the authority to grant an injunction to
restrain the collection of any national internal revenue tax, fee or
charge imposed by this Code.
Exception
Section 11, RA 1125 as amended by RA 9282
xxx Provided, however, That when in the opinion of the Court the
collection by the aforementioned government agencies may
jeopardize the interest of the Government and/or the taxpayer the
Court at any stage of the proceeding may suspend the said
collection and require the taxpayer either to deposit the amount

13

claimed or to file a surety bond for not more than double the
amount with the Court.
5. The assessment of the tax is deemed made on the date the
assessment notice had been released, mailed or sent to the
taxpayer. BPI vs. CIR, G.R. 174942, March 7, 2008. Receipt
thereof by the taxpayer within the prescriptive period is not
necessary. Barcelon, Roxas Securities, Inc. vs. CIR, G.R. 157064,
Aug. 7, 2006; CIR vs. Philippine Global Communications, Inc.,
G.R. 167146, Oct. 31, 2006.
6. Disputable presumption of receipt of mail.
Where there is denial of receipt of PAN & FAN, burden of proof
of receipt is shifted to CIR. Even granting PAN and FAN were
sent on the dates issued, the assessments were issued beyond the 3year prescriptive period. Waivers were mere photocopies while the
original waiver attached to BIR Records was not authenticated by
competent witness and not formally offered. La Flor Dela Isabela,
Inc. vs. CIR, CTA 8132, Sept. 25, 2012 citing Barcelon, Roxas
Securities, Inc. vs. CIR, G.R. 157064, Aug. 7, 2006.
7. Waiver of prescription.
Defective waiver does not extend the prescriptive period to assess.
Authority to sign waiver should be in writing and duly notarized;
waiver must indicate the date of acceptance by the authorized
representative of the BIR; 1st and 3rd waivers were received on the
same day, May 23, 2005. 4th and 5th waivers were received on the
same day, May 13, 2005. Next Mobile, Inc. (formerly Nextel
Communications Phils., Inc.) vs. CIR, CTA 7965, Dec. 11, 2012;
Belle Corp. vs. CIR, CTA 8175, Sept. 18, 2012, affirmed in Res.
Nov. 19, 2012; CIR vs. Kudos Metal Corporation, G.R. No.
178087, May 5, 2010; CIR vs. FMF Devt. Corp., G.R. 167765,
June 30, 2008
Failure to indicate the kind and amount of tax involved in the
Waiver of the Statute of Limitations rendered it defective. La Flor
dela Isabela, Inc. vs. CIR, CTA 8154, Aug. 3, 2012, affirmed Res.
Oct. 5, 2012.
The requirement to furnish the taxpayer with a copy of the
accepted waiver is to give notice not only of the existence of the
document but of the acceptance by the BIR and perfection of the
agreement. Philippine Journalists, Inc. vs. CIR, G.R.162852,
Dec. 16, 2004.
8. Request for reinvestigation vis a vis request for reconsideration
14

Request for reconsideration filed by petitioner cannot suspend the

statute of limitation. The prescriptive period to collect is
interrupted when taxpayer requests for reinvestigation of the
assessment and the same is granted by the CIR. Burden of proof
that the request has been granted is on the CIR. Bravo Alabang,
Inc. vs. CIR, CTA 8199, Nov. 29, 2012; BPI vs. CIR, G.R.
174942, March 7, 2008.
9. Prescriptive Periods for Refund
For erroneously or illegally collected taxes.
SECTION 229. Recovery of Tax Erroneously or Illegally
Collected. No suit or proceeding shall be maintained in any
court for the recovery of any national internal revenue tax
hereafter alleged to have been erroneously or illegally assessed
or collected, or of any penalty claimed to have been collected
without authority, or of any sum alleged to have been
excessively or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained,
whether or not such tax, penalty, or sum has been paid under
protest or duress.
In any case, no such suit or proceeding shall be filed after the
expiration of two (2) years from the date of payment of the tax
or penalty regardless of any supervening cause that may arise
after payment: Provided, however, That the Commissioner
may, even without a written claim therefor, refund or credit any
tax, where on the face of the return upon which payment was
made, such payment appears clearly to have been erroneously
paid.
For unutilized input VAT arising from zero-rates sales.
(A) Zero-Rated or Effectively Zero-Rated Sales. Any
VAT-registered person, whose sales are zero-rated or
effectively zero-rated may, within two (2) years after the close
of the taxable quarter when the sales were made, apply for the
issuance of a tax credit certificate or refund of creditable input
tax due or paid attributable to such sales, except transitional
input tax, to the extent that such input tax has not been applied
against output tax: Provide, however, That in the case of zerorated sales under Section 106(A)(2)(a)(1), (2) and (b) and
Section 108(B)(1) and (2), the acceptable foreign currency
exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral
ng Pilipinas (BSP): Provided, further, That where the taxpayer
15

is engaged in zero-rated or effectively zero-rated sale and also

in taxable or exempt sale of goods or properties or services, and
the amount of creditable input tax due or paid cannot be directly
and entirely attributed to any one of the transactions, it shall be
allocated proportionately on the basis of the volume of sales:
Provided, finally, That for a person making sales that are zerorated under Section 108(B)(6), the input taxes shall be allocated
ratably between his zero-rated and non-zero-rated sales.
(B) Cancellation of VAT Registration. A person whose
registration has been cancelled due to retirement from or
cessation of business, or due to changes in or cessation of status
under Section 106(C) of this Code may, within two (2) years
from the date of cancellation, apply for the issuance of a tax
credit certificate for any unused input tax which may be used in
payment of his other internal revenue taxes.
(C) Period within which Refund or Tax Credit of Input Taxes
shall be Made. In proper cases, the Commissioner shall grant
a refund or issue the tax credit certificate for creditable input
taxes within one hundred twenty (120) days from the date of
submission of complete documents in support of the application
filed in accordance with Subsection (A) hereof.
In case of full or partial denial of the claim for tax refund or tax
credit, or the failure on the part of the Commissioner to act on
the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the
decision denying the claim or after the expiration of the one
hundred twenty day-period, appeal the decision or the unacted
claim with the Court of Tax Appeals.
(D) Manner of Giving Refund. Refunds shall be made
upon warrants drawn by the Commissioner or by his duly
authorized representative without the necessity of being
countersigned by the Chairman, Commission on Audit, the
provisions of the Administrative Code of 1987 to the contrary
notwithstanding: Provided, That refunds under this paragraph
shall be subject to post audit by the Commission on Audit."
10.Prescriptive periods for unutilized input VAT arising from zerorated sales.
Summary of Rules on Prescriptive Periods Involving VAT
(1) An administrative claim must be filed with the CIR within two
years after the close of the taxable quarter when the zero-rated
or effectively zero-rated sales were made.
(2) CIR has 120 days from the date of submission of complete
documents to decide whether to grant a refund or issue a tax
16

(3)

(4)

credit certificate. The 120-day period may extend beyond the

two-year period from the filing of the administrative claim if
the claim is filed in the later part of the two-year period. If the
120-day period expires without any decision from the CIR, then
the administrative claim may be considered to be denied by
inaction.
A judicial claim must be filed with the CTA within 30 days
from the receipt of the CIR's decision denying the
administrative claim or from the expiration of the 120-day
period without any action from the CIR.
Exception to the mandatory and jurisdictional 120+30 day
periods. All taxpayers can rely on BIR Ruling No. DA-489-03
from the time of its issuance on 10 December 2003 up to its
reversal by this Court in Aichi on 6 October 2010.
120+30 day periods are mandatory and jurisdictional.
It is indisputable that compliance with the 120-day
waiting period is mandatory and jurisdictional. The
waiting period, originally fixed at 60 days only, was part
of the provisions of the first VAT law, Executive Order
No. 273, which took effect on 1 January 1988. The
waiting period was extended to 120 days effective 1
January 1998 under RA 8424 or the Tax Reform Act of
1997. Thus, the waiting period has been in our statute
books for more than fifteen (15) years before San
Roque filed its judicial claim.
Failure to comply with the 120-day waiting period
violates a mandatory provision of law. It violates the
doctrine of exhaustion of administrative remedies and
renders the petition premature and thus without a cause
of action, with the effect that the CTA does not acquire
jurisdiction over the taxpayer's petition. Philippine
jurisprudence is replete with cases upholding and
reiterating these doctrinal principles.
BIR Ruling No. DA-489-03, a general interpretative rule,
was an erroneous interpretation of law but was given effect
by equitable estoppel
BIR Ruling No. DA-489-03 does provide a valid claim
for equitable estoppel under Section 246 of the Tax
Code. xxx
However, BIR Ruling No. DA-489-03 cannot be given
retroactive effect for four reasons: first, it is admittedly
an erroneous interpretation of the law; second, prior to its
issuance, the BIR held that the 120-day period was
17

mandatory and jurisdictional, which is the correct

interpretation of the law; third, prior to its issuance, no
taxpayer can claim that it was misled by the BIR into
filing a judicial claim prematurely; and fourth, a claim
for tax refund or credit, like a claim for tax exemption, is
strictly construed against the taxpayer.
Excess input VAT is not excessively collected tax under
Section 229
In a claim for refund or credit of "excess" input VAT
under Section 110 (B) and Section 112 (A), the input
VAT is not "excessively" collected as understood under
Section 229. At the time of payment of the input VAT
the amount paid is the correct and proper amount.
CTA decisions do not constitute precedents
There is also the claim that there are numerous CTA
decisions allegedly supporting the argument that the
filing dates of the administrative and judicial claims are
inconsequential, as long as they are within the two-year
prescriptive period. Suffice it to state that CTA decisions
do not constitute precedents, and do not bind this
Court or the public. That is why CTA decisions are
appealable to this Court, which may affirm, reverse or
modify the CTA decisions as the facts and the law may
warrant. Only decisions of this Court constitute
binding precedents, forming part of the Philippine
legal system.
CIR v. San Roque Power Corp., GR 187485, 196113 &
197156, Feb. 12, 2013, 690 SCRA 336. Affirmed with finality
Res. Oct. 8, 2013. As a general rule, a void law or
administrative act cannot be the source of legal rights or duties.
Exception: Doctrine of Operative Fact where judicial
declaration of invalidity may not necessarily obliterate all the
effects of a void act prior to such declaration. The doctrine
applies to BIR Ruling No. DA-489-03 but NOT on BIRs mere
administrative practice prior to its issuance of the said ruling;
there must be legislative or executive measure. Sec. 246,
1997 NIRC (Non-retroactivity of Rulings) adopts the operative
fact doctrine but CTA rulings are NOT executive issuances
within its meaning.
See also Mindanao II Geothermal Partnership v. CIR, GR
193301, March 11, 2013, 693 SCRA 49. Premature, did not fall
within the period of exception. Judicial claim was filed on April
18

25, 2003 (administrative claim was filed on April 24, 2003).

Nippon Express (Phils.) Corp. v. CIR, G.R. No. 196907,
March 13, 2013, 693 SCRA 456. Team Energy Corporation
(Formerly Mirant Pagbilao Corporation) vs. CIR, GR 197760,
Jan. 13, 2014; Team Energy Corporation (Formerly Mirant
Pagbilao Corporation) vs. CIR, GR 190928, Jan. 13, 2014.
Claim for refund covering 3rd and 4th quarters of 2001. 3rd Q
premature while 4th Q fell within the window period. CIR vs.
Toledo Power, Inc., GR 183880, January 20, 2014. CIR vs.
Mindanao II Geothermal Partnership, GR 191498, Jan. 15,
2014.
Principle of Solutio Indebiti is not applicable in a claim for
refund of unutilized input VAT. CBK Power Company Limited
vs. CIR, GR 198729-30, Jan. 15, 2014.
11.Prescriptive period for refund of unutilized input VAT arising from
cessation of business.
The business operations ceased on Dec. 31, 2007. Petitioner filed
an Application for Registration Information Update on July 1,
2008. The effectivity date of petitioner's formal cessation of
business is reckoned on Aug. 1, 2008. Counting the two (2)-year
period from August 1, 2008, petitioner may apply for the issuance
of a tax credit certificate of its unutilized input tax until August 1,
2010. However, in the case of the petitioner, it filed its
administrative claim as early as July 7, 2008, hence, premature. A
taxpayer whose registration has been cancelled due to, among
others, cessation of business, may, within two (2) years from the
date of cancellation of its registration, apply for the issuance of a
TCC for any unused input tax which may be used to pay other
internal revenue taxes. The two (2)-year prescriptive period is
reckoned from the date of the cancellation of the taxpayer's
registration under Section 236(F)(l) & (2)(b), NIRC which will
take effect only from the first day of the following month.
Associated Swedish Steels Phils., Inc. vs. CIR, CTA EB 854, Aug.
23, 2012 & Res. Jan. 21, 2013.
12.Prescriptive period for erroneously paid input VAT.
In a claim for refund based on mistake of paying excess input
VAT, the applicable prescriptive period is Section 229 and not
Section 112 of the 1997 NIRC. Ericsson Telecommunications,
Inc. vs. CIR, CTA Case No. 8027, May 7, 2012. Amended
Decision, Aug. 2, 2012. It is sufficient to rely on petitioners VAT
return and confirmation payment generated under the EFPS
payment system of the BIR to determine the actual amount
remitted.

19

13. Prescriptive period for erroneously paid advance VAT is the 2year period under Sections 204 and 229 of the 1997 NIRC. CIR vs.
Negros Sugar Farmers Multi-Purpose Cooperative, CTA EB 877,
Feb. 14, 2013.
14.Prescription of criminal offenses under the NIRC is 5 years from
commission of violation or discovery and institution of judicial
proceedings.
Section 281 of the 1997 NIRC provides:
SEC. 281. Prescription for Violations of any Provision of
This Code. All violations of any provision of this Code
shall prescribe after five (5) years.
Prescription shall begin to run from the day of the
commission of the violation of the law, and if the same be
not known at the time, from the discovery thereof and the
institution of judicial proceedings for its investigation and
punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty persons and shall begin to run
again if the proceedings are dismissed for reasons not
constituting jeopardy.
The term for prescription shall not run when the offender is
absent from the Philippines.
Interpreting then Section 354 (now Section 281) of the NIRC, the
Supreme Court affirmed the conjunctive condition, making tax offenses
practically imprescriptible. In criminal cases, statutes of limitations are an
act of grace, constituting a surrender of sovereignty. Hence, they receive a
strict construction in favor of the government. Emilio E. Lim, Sr. v. CA &
People, G.R. Nos. 48134-37, October 18, 1990.
x x x The Solicitor General stresses that Section 354
speaks not only of discovery of the fraud but also institution of
judicial proceedings. Note the conjunctive word "and" between
the phrases "the discovery thereof" and "the institution of
judicial proceedings for its investigation and proceedings". In
other words, in addition to the fact of discovery, there must be a
judicial proceeding for the investigation and punishment of the
tax offense before the five-year limiting period begins to run. It
was on September 1, 1969 that the offenses subject of Criminal
Cases Nos. 1790 and 1791 were indorsed to the Fiscal's Office
for preliminary investigation. Inasmuch as a preliminary
investigation is a proceeding for investigation and punishment

20

of a crime, it was only on September 1, 1969 that the

prescriptive period commenced.
xxx
The Court is inclined to adopt the view of the Solicitor
General. For while that particular point might have been raised
in the Ching Lak case, the Court, at that time, did not give a
definitive ruling which would have settled the question once
and for all. As Section 354 stands in the statute book (and to
this day it has remained unchanged) it would indeed seem that
tax cases, such as the present ones, are practically
imprescriptible for as long as the period from the discovery and
institution of judicial proceedings for its investigation and
punishment, up to the filing of the information in court does not
exceed five (5) years.
xxx
Unless amended by the Legislature, Section 354 stays in
the Tax Code as it was written during the days of the
Commonwealth. And as it is, must be applied regardless of its
apparent one-sidedness in favor of the Government. In
criminal cases, statutes of limitations are acts of grace, a
surrendering by the sovereign of its right to prosecute. They
receive a strict construction in favor of the Government and
limitations in such cases will not be presumed in the absence of
clear legislation. Emilio E. Lim, Sr. v. CA & People, ibid.
D. REMEDIES OF THE GOVERNMENT
a.

Distraint of personal property(Sections 205)

b.

Actual (Section 207-208)

c.

Constructive (Section 206)

d.

Levy of real property (Section 207)

e.

Civil Action

f.

Criminal Action (Sections 220, 221, 229)

g.

Imposition of penalties and interests (Sections 248, 249)

1. Assessment on EWT on management fees paid to alleged nonresident foreign corporation was sustained since performance of
services outside the Philippines was not proven. Thunderbird

21

Pilipinas Hotels And Resorts, Inc. vs CIR, CTA 7902, July 18,
2012 citing CIR vs. Baier-Nickel, G.R. 153793, Aug. 29, 2006.
2. In case of acquittal, the accused may still be adjudged civilly
liable.
For failure to protest the Formal Letter of Demand, accused was
held civilly liable for deficiency income tax. The extinction of the
penal action does not carry with it the extinction of the civil action
where: (a) the acquittal is based on reasonable doubt as only
preponderance of evidence is required; (b) the court declares that
the liability of the accused is only civil; and (c) the civil liability of
the accused does not arise from or is not based upon the crime of
which the accused was acquitted. People vs. Judy Anne Santos y
Lumagui, CTA Crim O-012, Jan. 16, 2013.
3. Remedy of Certiorari under Rule 65 in Criminal Case
A petition for certiorari under Rule 65, not appeal is the
remedy to question a verdict of acquittal whether at the trial
court or at the appellate level. In our jurisdiction, we adhere to
finality-of-acquittal doctrine, i.e., judgment of acquittal is
final and unappealable. The rule however, is not without
exception. In several cases, the court has entertained petitions
for certiorari questioning the acquittal of the accused in, or the
dismissals of, criminal cases. Jerome Castro vs. People, G.R.
180832, July 23, 2008; Yuchengco vs. CA, 427 Phil 11; &
Galman vs. Sandiganbayan, 144 SCRA 43 (1986).
4. Criminal action includes civil action; Spouse liability.
Accused Gloria V. Kintanar was found criminally and civilly liable
for failure to file her ITRs for taxable years 2000 and 2001 in
violation of Sec. 255 of 1997 NIRC, as amended. Criminal action
includes civil action for recovery of taxes. Accused's reliance on
her husband to file the required ITRs without ensuring full
compliance is considered willful act on her part tantamount to
"deliberate ignorance" or "conscious avoidance" of her legal duty.
People v. Gloria Kintanar, CTA Crim Case No. O-033, Aug. 26,
2009, w/ cdo (civil liability only, no willfulness proven).
AFFIRMED in CTA EB Crim. No. 006, Dec. 3, 2010, & Res. March
29, 2011& by SC Minute Res. Aug. 15, 2011 & Nov. 16, 2011.
EOJ Jan. 19, 2012.
5. Best Evidence; Assessment is NOT necessary before criminal
prosecution.

22

Accused Joel C. Mendez was convicted for willful failure to file

income tax return for 2002 and for willful failure to supply the
correct and accurate information in the return for 2003. No civil
liability was imposed for lack of assessment. Circumstantial
evidence using the best evidence (contract of lease of building,
certification of advertising placements with Phil. Daily Inquirer,
Letter from PAL showing 41 travels from 1995-2000, Letter from
LTO showing purchases of vehicles, etc.) obtained are sufficient to
support his guilty beyond reasonable doubt. Willful blindness
doctrine was applied. Issuance of subpoena duces tecum is not a
condition precedent in resorting to best evidence. Assessment is
not necessary before a criminal prosecution, People vs. Joel C.
Mendez CTA Crim Case Nos. O-013 and O-015, Jan. 5, 2011&
Res. May 27, 2011, w/ dissenting based on lack of jurisdiction.
AFFIRMED in CTA EB Crim. No. 014 &015, Dec. 11, 2012 citing
Soliven vs. Fastforms Philippines, Inc., G.R. 139031, Oct. 18,
2004.
6. Responsible officer was held criminally liable while corporation
was civilly liable; Service of Assessment to the corporation is
sufficient
Accused (Wong Yan Tak), President of Pic N Pac Mart, Inc., was
held criminally for the corporations failure to pay VAT. Service
of assessment to the actual taxpayer (corporation) is sufficient,
even without service to the persons behind the company. Sale of
the convenience store will not divest the accused of his
responsibility as President of the corporation. It would be different
had it been the sale/assignment of shares of the corp. Accused was
sentenced to 1 yr. to 2 yrs. imprisonment, & fine of P10,000, plus
payment of deficiency VAT of P3,552,716.81 with 20% interest.
Corporation was ordered to pay P50,000. People vs. Wong Yan
Tak, Geralyn Bobier and Pic N Pac Mart, Inc., CTA Crim O090, Oct. 17, 2012. Amended Decision, Jan. 8, 2013, civil liability
should be collected from Pic N Pac Mart, Inc not against the
accused. No allegation was made that the corp. was used merely as
an adjunct by its stockholders. See also People vs. Rogelio A. Tan,
CTA Crim O-064 & O-065, June 27, 2012. The Court applied the
willful blindness doctrine in convicting the President and Gen.
Mgr. of Jadewell Parking Systems Corp. for failure to supply
correct and accurate information in the corp.s ITR.
7. Simultaneous imposition of deficiency interest and delinquency
interest.
Deficiency interest is imposed for the shortage of taxes paid,
while delinquency interest is imposed for the delay in payment of
23

taxes. The law itself allows the simultaneous imposition of these

two kinds of interests. Deficiency interest under Section 249(B) of
the 1997 NIRC applies to all internal revenue taxes imposed by
NIRC including deficiency expanded withholding tax. Takenaka
Corporation v. CIR, CTA EB 745, Sept. 4, 2012 & Res. Feb. 4,
2013. Dissent PJ EDA, The imposition of deficiency interest and
delinquency interest simultaneously for a given period of time is
grossly excessive and unconscionable; it becomes penal, rather
than compensatory.
8. Reckoning point of deficiency interest and delinquency interest.
Section 249(B) and (C)(3) of the 1997 NIRC, reckons the
imposition of deficiency interest on any deficiency tax ''from the
date prescribed for its payment until the full payment thereof:
while the assessment of the delinquency interest that is imposed
upon failure to pay a deficiency tax, or any surcharge or interest
thereon, shall be reckoned from ''the due date appearing in the
notice and demand of the Commissioner until the amount is fully
paid. Takenaka Corporation v. CIR, CTA EB 745, Sept. 4, 2012
& Res. Feb. 4, 2013. Dissent PJ EDA.
9. Waiver of surcharge, deficiency and delinquency interest.
The surcharge, deficiency and delinquency interest were not
waived. There was no showing that the nature of disputed VAT
assessment is controversial. First Sumiden Realty, Inc. vs. CIR,
CTA 8151, Res. Dec. 21, 2012. Advertising Associates, Inc. vs.
CIR, G.R. 59758, Dec. 26, 1984; Cagayan Electric Power &
Light Co., Inc. vs. CIR & CTA, G.R. 60126. Sept. 25, 1985.
E. REMEDIES OF THE TAXPAYER
Administrative Protest
Section 228, NIRC
SECTION 228. Protesting of Assessment. When the
Commissioner or his duly authorized representative finds that proper
taxes should be assessed, he shall first notify the taxpayer of his
findings: Provided, however, That a preassessment notice shall not be
required in the following cases:
(a) When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax as appearing on the
face of the return; or
(b) When a discrepancy has been determined between the tax
withheld and the amount actually remitted by the withholding agent;
or

24

(c) When a taxpayer who opted to claim a refund or tax

credit of excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the same
amount claimed against the estimated tax liabilities for the taxable
quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable articles has not
been paid; or
(e) When an article locally purchased or imported by an
exempt person, such as, but not limited to, vehicles, capital
equipment, machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
The taxpayers shall be informed in writing of the law and the
facts on which the assessment is made; otherwise, the assessment
shall be void.
Within a period to be prescribed by implementing rules and
regulations, the taxpayer shall be required to respond to said notice. If
the taxpayer fails to respond, the Commissioner or his duly authorized
representative shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a
request for reconsideration or reinvestigation within thirty (30) days
from receipt of the assessment in such form and manner as may be
prescribed by implementing rules and regulations. Within sixty (60)
days from filing of the protest, all relevant supporting documents shall
have been submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon
within one hundred eighty (180) days from submission of documents,
the taxpayer adversely affected by the decision or inaction may appeal
to the Court of Tax Appeals within thirty (30) days from receipt of the
said decision, or from the lapse of the one hundred eighty (180)-day
period; otherwise, the decision shall become final, executory and
demandable.
1. Administrative protest is the proper remedy to question validity of
PAN & FAN, NOT a request for ruling.
FAN & FLD became final, executory & demandable when
petitioner failed to file an administrative protest within the
prescribed 30-day period. A request for ruling is not the proper
remedy to question the validity of PAN & FAN after they attained
finality. Abelardo K. Pagente v. Hon. Esmeralda Tabule, et al.,
CTA Case No. 8280, Feb. 5, 2013.
2. CIR was able to prove the taxpayers receipt of PAN, Final
Demand Letter (FLD) & FAN.
CIR sufficiently established that FLD & FAN were sent by registered
mail and received by the taxpayer while receipt of PAN was never
25

questioned. In Metro Star Superama case, Metro Star Superama was

deprived of the opportunity to be heard due to BIRs failure to prove
that the taxpayer actually received the PAN. Thus, in that case the
assessment was invalidated. In this case, it is undisputed that a PAN
dated January 7, 2009 was issued by Mr. Gandarosa. Petitioner does
not claim that the PAN was not served upon him or that he did not
receive the PAN. Abelardo K. Pagente v. Hon. Esmeralda Tabule, et
al., CTA Case No. 8280, Feb. 5, 2013. CIR vs. Metro Star
Superama, Inc., G.R. No. 185371, Dec. 8, 2010.
3. Failure to prove that FAN was personally served on taxpayer or
any duly authorized representative.
Attempted service to an Acctg. Adm. Asst. is not a valid service as
she is not authorized & refusal will not give rise to constructive
service, even though witnessed by 2 other revenue officers. Under
Section 3.1.7, RR 12-99, constructive service of FAN is effected
by leaving the FAN to the taxpayers premises, attested to,
witnessed and signed by at least 2 revenue officers other than the
revenue officer who constructively served the same with written
report of the service. Gallardo And Associates vs. CIR, CTA
7920, Nov. 12, 2012.
4. Taxpayer may await the Final Decision of the CIR even after the
lapse of the 180-day period under Sec. 228 of the NIRC.
On March 27, 1998, the CIR issued an assessment against Lascona
Land Co., Inc. (Lascona) informing the latter of its alleged
deficiency income tax for the year 1993 in the amount of
P753,266.56. On April 20, 1998, Lascona filed a letter protest
which was denied by BIR Regional Director, RR No. 8, Makati
City, in his Letter dated March 3, 1999. The SC held that the
disputed assessment did not become final and executory when
Lascona decided to await the final decision of the CIR. In case of
CIRs inaction on the protested assessment, the taxpayer may (1)
file a petition for review with the CTA within 30 days after the
expiration of the 180-day period; or (2) await the final decision of
the Commissioner on the disputed assessment and appeal such
final decision to the CTA within 30 days after the receipt of the
decision citing RCBC vs. CIR, G.R. No. 168498, April 24, 2007
and Section 3 A (2), Rule 4 of the Revised Rules of the CTA.
These options are mutually exclusive and resort to one bars the
application of the other. Lascona Land Co., Inc. vs. CIR, G.R.
No. 171251, March 5, 2012.
5. Failure to appeal the inaction of CIR on disputed assessment
rendered the assessment final, executory & demandable.
26

Defenses of legality or validity and prescription can no longer be

interposed when assessment attained finality due to petitioners
failure to timely file an appeal. Also, the options to file a petition
due to CIRs inaction or to await the decision of the CIR are
mutually exclusive. It has been settled that when a taxpayer
appeals CIRs inaction on disputed assessment before the CTA but
which appeal is dismissed for being filed out of time, the taxpayer
can no longer resort to the second option of awaiting the decision
of the CIR and appeal the same to CTA. Philippine Dream
Company, Inc. vs. BIR, CTA 7700, Dec. 6, 2012 & Res. Feb. 6,
2013. Citing RCBC vs. CIR, G.R. No. 168498, April 24, 2007.
6. PAN is part of due process.
Taxpayer was not accorded due process in the absence of proof of
actual receipt of undated PAN. Taxpayers direct denial of the
receipt of PAN shifts the burden upon the CIR to prove that PAN
was actually received by the former. Laurence Lee V. Luang vs.
Hon. Sixto S. Esquivias IV, in his capacity as CIR, CTA Case
No. 7967, Jan. 5, 2012 & Res. Feb. 23, 2012 citing CIR vs. Metro
Star Superama, Inc., G.R. No. 185371, Dec. 8, 2010. People vs.
Katherine M. Lim and Edelyn Coronacion, CTA Crim Case No.
O-113, Dec. 12, 2011 & Res. Jan. 27, 2012. People vs. Joseph
Typingco, CTA Crim O-114, May 16, 2012 & Res. July 2, 2012.
7.

Final Decision on Disputed Assessment (FDDA) is void for

failure to state the facts and the law on which it is based.
EWT, WTC & FBT assessments for 2005. As original EWT &
FBT assessments were merely reiterated in FDDA, despite
satisfactory explanation of portions of the assessments, there is
lack of due process & thus the same are void. The requirement that
the taxpayer shall be informed in writing of the law and the facts
on which the assessment is made; otherwise, the assessment shall
be void is also applicable to FDDA. Ultimately it is FDDA, at the
administrative level, which will determine the final tax liability of
the taxpayer and which may be the subject of appeal before the
CTA. Liquigaz Philippines Corp. vs. CIR, CTA 8141, Nov. 22,
2012 & Res. Feb. 20, 2013.

8. Assessment is void when no sufficient evidence to support it. The

assessment was merely based on the BIRs computer generated
third party information which was not verified with other
externally sourced data; third parties controverted the allegations.
Fax N Parcel, Inc. vs. CIR, CTA EB 883, Feb. 14, 2013.

27

9. It is mandatory to state the factual and legal bases of the

assessment.
The disallowances of the BIR, among which were (1)
purchases-unsupported in the amount of P62,541,979; (2)
unaccounted expenses in the amount of P 3,422,592.90; & (3) rental
and professional fees in the amount of P1,635,104.32 lacked factual
bases. Petitioner was only able to obtain the details of the amount
under no. 1 after it requested from the Chief LTDO of Makati.
The law requires that the legal and factual bases of the
assessment be stated in the formal letter of demand and
assessment notice. Thus, such cannot be presumed.
Otherwise, the express provisions of Article 228 of the
NIRC and RR No. 12-99 would be rendered nugatory.
The alleged "factual bases" in the advice, preliminary
letter and "audit working papers" did not suffice. There
was no going around the mandate of the law that the
legal and factual bases of the assessment be stated in
writing in the formal letter of demand accompanying the
assessment notice.
We note that the old law merely required that the
taxpayer be notified of the assessment made by the CIR.
This was changed in 1998 and the taxpayer must now be
informed not only of the law but also of the facts on
which the assessment is made. 16 Such amendment is in
keeping with the constitutional principle that no person
shall be deprived of property without due process. 17 In
view of the absence of a fair opportunity for Enron to be
informed of the legal and factual bases of the assessment
against it, the assessment in question was void. We
reiterate our ruling in Reyes v. Almanzor, et al. Penn
Philippines, Inc. vs. CIR, CTA 7686, Dec. 11, 2012
citing CIR vs. Enron Subic Power Corp., G.R. 166387,
Jan. 19, 2009, 576 SCRA 212. Commissioner of
Internal Revenue vs. Hon. Raul M. Gonzalez, et al,
G.R. No. 177279, October 13, 2010.
10.Assessment must contain legal and factual bases. Surety bond
posted cannot be released until after the finality of the case.
The details in the PAN and Formal Letter of Demand with Details
of Discrepancies and Assessment Notice are NOT sufficient to
afford the taxpayer the opportunity to intelligently protest the
assessment. There was discrepancy in the amounts specified in the
PAN vis--vis the amounts in the computation sheet attached to the
PAN. CIR failed to provide taxpayer with the list of the alleged
undeclared importations which allegedly gave rise to the
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deficiency assessments issued against it. In view of the foregoing,

the assessment was held to be invalid; cannot give rise to an
obligation to pay deficiency taxes. BASF Philippines, Inc. vs.
CIR, CTA Case No. 8128, Nov. 22, 2011 & Res. Feb. 6, 2012
denied the release of bond until the case is finally decided,
resolved or terminated pursuant to Sec. VII, Circular No. 04-970SC.
11.The validity of the assessment itself is a separate and distinct issue
from the issue of whether the right of the BIR to collect tax has
prescribed. CIR vs. Hambrecht & Quist, G.R. 165229, Nov. 17,
2010.
Refund
Requisites in a claim for refund of unutilized Creditable Withholding
Tax
a.
b.

c.

12.

The claim was timely filed;

The fact of withholding must be established by a copy of
a statement duly issued by the payor to the payee
showing the amount paid and the amount of the tax
withheld;
It must be shown on the return that the income received
was declared as part of the gross income.

Failure to present sufficient evidence to support that income

received was declared as part of the gross income.
The court was not able to determine with veracity whether or not
the income payments related to the CWT of P66,597,813.06
formed part of the declared income/loss in the Annual ITR.
Petitioner failed to present detailed GL, reconciliation schedules or
any other documents that will help the court verify the discrepancy
and ascertain that the income payments related to the claimed
CWT were reported as part of the gross income in the ITR. UCPB
vs. CIR, CTA 8083, Dec. 12, 2012; Orix Auto Leasing Ph. Corp.
vs. CIR, CTA 8001, Nov. 8, 2012; Winebrenner & Iigo
Insurance Brokers, Inc. vs. CIR, CTA 8072, July 24, 2012.
13.

Irrevocability Rule applies only to the option of carryover.

The claim was denied despite both the administrative and judicial
claims were timely filed within the 2-year period. Section 76 of
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the 1997 NIRC clearly provides that the Irrevocability Rule

applies only to the option of carry-over. UPSI Management, Inc.
vs. CIR, CTA EB 828, Feb. 8, 2013, Dissent J EFV/CMG relied
on CIR vs. McGeorge Food Industries, Inc. G.R. No. 174 157,
Oct. 20,2010 that both options of refund or carry-over are
irrevocable; United Coconut Planters Bank vs. CIR, CTA EB
725, Aug. 23, 2012 Res. Nov. 21, 2012.
14. Input VAT which has been capitalized or charged to expense
cannot be claimed as tax credit during any taxable year
notwithstanding any adjustment made during the succeeding
taxable year per RMC 42-2003. Energy Development Corp. vs.
CIR, CTA 7792, Nov. 19, 2012.
15.OTHER RECENT SIGNIFICANT CASES
1. Willfull or deliberate failure to evade payment of tax cannot be
imputed to the accused when the computation and determination of
tax was approved by the BIR
Gaws misclassification of the land as capital assets when it paid
its CGT and DST was done with initial conformity or approval of
the BIR following the procedure under RMO 15-2003. Accused
was acquitted, however, CTA Case No. 8503 will continue in order
to thresh out his civil liability. People vs. Macario Lim Gaw, Jr.,
CTA Crim. O-206; O-207; CTA Case 8503, Res. Jan. 3, 2013.
2. Retroactive application of SC Ruling; Decision of the SC is part of
the law from the moment the law was passed
Accentures sale of services to its foreign clients did not qualify for
zero-rating sales for failure to prove that foreign clients (recipient
of service) are non-resident foreign corporation doing business
outside the Philippines. Effectively, the same ruling in the
Burmeister case (CIR vs. Burmeister and Scandinavian Contractor
Mindanao, Inc., GR No. 153205, Jan. 22, 2007) was retroactively
applied in this case. Amex case (CIR vs. American Express, 500
Phil. 586, 2005) was harmonized with Burmeister. In Amex, the
place of performance and/or consumption of the service is
immaterial. In Burmeister, the Court found that, although the place
of the consumption of the service does not affect the entitlement of
a transaction to zero-rating, the place where the recipient conduct
its business does. Recipient of service must be proven to be a nonresident foreign corp. Accenture, Inc. vs. CIR, GR No. 190102,
July 11, 2012.

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- End of Session -

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