Taxation Law Ii Review: Transfer Taxes

TAXATION LAW II REVIEW
Dean Manuel P. Quibod || 4 Manresa 2018-2019
29 JANUARY 2019 GROSS ESTATE OF THE DECEDENT

Vega & Amparo
a. Citizen and resident alien decedents: Value at the time of
TRANSFER TAXES death of all properties (real or personal, tangible or
intangible) wherever situated.
Transfer taxes are taxes imposed on the gratuitous transfer of b. Non-resident alien decedent: Only properties located and
property brought about by death or way of gift. situated in the Philippines.
Transfer from estate to the heirs, and from donor to the donee.
PROPERTIES THAT FORM PART OF THE TAXABLE ESTATE (Sec. 85, Sec
Transfer taxes can either be: 104 of NIRC):
1. Estate tax; or
2. Donor’s tax SECTION 85. Gross Estate. – The value of the gross estate of the
decedent shall be determined by including the value at the time
There is no more inheritance tax. of his death of all property, real or personal, tangible or
intangible, wherever situated: Provided, however, that in the
ESTATE TAX VS. DONORS TAX case of a nonresident decedent who at the time of his death was
not a citizen of the Philippines, only that part of the entire gross
estate which is situated in the Philippines shall be included in his
ESTATE DONOR’S
taxable estate.
Rate 6% (after standard 6% above Php
deduction of 5 million 250,000
A. Decedent’s Interest
and family home upto
10 million)
Time of Upon death During lifetime (A) Decedent's Interest. – To the extent of the interest therein of
transmission the decedent at the time of his death;
Notice Notice of death is Not required
required Covers all properties at the time of death.
Exemption 5 million (standard 250,000
deduction)
Purpose Prevent undue Prevent avoidance of B. Transfers in Contemplation of Death
accumulation or the estate tax by
concentration of transfer during the (B) Transfer in Contemplation of Death. – To the extent of any
wealth lifetime interest therein of which the decedent has at any time made a
Filing and 1 year from death 30 days from transfer, by trust or otherwise, in contemplation of or intended
payment donation/gift to take effect in possession or enjoyment at or after death, or of
which he has at any time made a transfer, by trust or otherwise,
ESTATE TAXATION under which he has retained for his life or for any period which
does not in fact end before his death (1) the possession or
enjoyment of, or the right to the income from the property, or (2)
Under TRAIN and before TRAIN
the right, either alone or in conjunction with any person, to
designate the person who shall possess or enjoy the property or
BEFORE TRAIN the income therefrom; except in case of a bona fide sale for an
Progressive rate of 5 to 20% A flat rate of 6% of taxable adequate and full consideration in money or money's worth.
estate
Exemption of family home – 1 Exemption of family home – 10 These are transfers induce by the thought of death, regardless
million million
whether the death is impending or forthcoming.
Standard deduction – 1 million Standard deduction – 5
million*
Deadline – within 6 months Deadline – within 1 year
Transfers conditioned on survivorship
* If the decedent left an estate with a value of 5 million, practically, it
There is a transfer made but, meanwhile, the transferor is still around
is not taxable anymore because it will be entitled to the outright 5
and continues to enjoy and make use or utilize the property. It can
million deduction
only be enjoyed by the transferee upon death of the transferee. There
is no full and complete transfer. In such case, the property will still be
part of the estate of the transferor.
ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |1
Transfers with retention or reservation of rights General power of appointment is an unrestricted authority to
appoint or designate any person as beneficiary or successor to a
You transferred a property but there is a condition that you retain or property entrusted to the decedent.
reserve right of enjoyment and possession of the property. In the
event of death, since there is an incomplete transfer, it is part of the During the lifetime of the decedent, he received a property passed on
gross estate. to him under a general power of appointment. In the event of death,
that property will be part of his estate.
C. Revocable Transfer But if the property was passed on to him under a special power of
appointment, it is excluded because there is a restriction as to who
(1) To the extent of any interest therein, of which the decedent will succeed the property.
has at any time made a transfer (except in case of a bona fide sale
for an adequate and full consideration in money or money's
worth) by trust or otherwise, where the enjoyment thereof was E. Proceeds of life insurance
subject at the date of his death to any change through the
exercise of a power (in whatever capacity exercisable) by the (E) Proceeds of Life Insurance. – To the extent of the amount
decedent alone or by the decedent in conjunction with any other receivable by the estate of the deceased, his executor, or
person (without regard to when or from what source the administrator, as insurance under policies taken out by the
decedent acquired such power), to alter, amend, revoke, or decedent upon his own life, irrespective of whether or not the
terminate, or where any such power is relinquished in insured retained the power of revocation, or to the extent of the
contemplation of the decedent's death. amount receivable by any beneficiary designated in the policy of
insurance, except when it is expressly stipulated that the
(2) For the purpose of this Subsection, the power to alter, amend designation of the beneficiary is irrevocable.
or revoke shall be considered to exist on the date of the
decedent's death even though the exercise of the power is
Included in the estate except when there is an express designation of
subject to a precedent giving of notice or even though the
alteration, amendment or revocation takes effect only on the irrevocable beneficiaries.
expiration of a stated period after the exercise of the power,
whether or not on or before the date of the decedent's death If the proceeds of the insurance received by the estate is not taken
notice has been given or the power has been exercised. In such out by the decedent upon his own life, that is excluded.
cases, proper adjustment shall be made representing the
interests which would have been excluded from the power if the
decedent had lived, and for such purpose if the notice has not F. Prior Interest
been given or the power has not been exercised on or before the
date of his death, such notice shall be considered to have been (F) Prior Interests. – Except as otherwise specifically provided
given, or the power exercised, on the date of death. therein, Subsections (B), (C) and (E) of this Section shall apply to
the transfers, trusts, estates, interests, rights, powers and
This is a transfer made but the transferor has the right to alter, relinquishment of powers, as severally enumerated and
amend, terminate or revoke the transfer during his life time. In the described therein, whether made, created, arising, existing,
event of death, being a revocable transfer, forms part of the estate. exercised or relinquished before or after the effectivity of this
D. Property Passing Under General Power of Appointment Code.
(D) Property Passing Under General Power of Appointment. – To

the extent of any property passing under a general power of G. Transfers for Insufficient Consideration
appointment exercised by the decedent: (1) by will, or (2) by deed
executed in contemplation of, or intended to take effect in (G) Transfers for Insufficient Consideration. – If any one of the
possession or enjoyment at, or after his death, or (3) by deed transfers, trusts, interests, rights or powers enumerated and
under which he has retained for his life or any period not described in Subsections (B), (C) and (D) of this Section is made,
ascertainable without reference to his death or for any period created, exercised or relinquished for a consideration in money
which does not in fact end before his death (a) the possession or or money's worth, but is not a bona fide sale for an adequate and
enjoyment of, or the right to the income from, the property, or full consideration in money or money's worth, there shall be
(b) the right, either alone or in conjunction with any person, to included in the gross estate only the excess of the fair market
designate the persons who shall possess or enjoy the property or value, at the time of death, of the property otherwise to be
the income therefrom; except in case of a bona fide sale for an included on account of such transaction, over the value of the
adequate and full consideration in money or money's worth. consideration received therefor by the decedent.
This is not a bona fide sale for full consideration in money or money’s Provided, still further, that no tax shall be collected under this
worth. The excess of the fair market value the property transferred at Title in respect of intangible personal property:
the time of death over the amount of consideration received at the
date of transfer will be the balance of the difference and will be (a) if the decedent at the time of his death or the donor at
included in the gross estate. the time of the donation was a citizen and resident of a
foreign country which at the time of his death or
donation did not impose a transfer tax of any character,
in respect of intangible personal property of citizens of
H. Capital/Exclusive property of surviving spouse
the Philippines not residing in that foreign country, or
(H) Capital of the Surviving Spouse. – The capital of the surviving (b) if the laws of the foreign country of which the decedent
spouse of a decedent shall not, for the purpose of this Chapter, or donor was a citizen and resident at the time of his
be deemed a part of his or her gross estate. death or donation allows a similar exemption from
transfer or death taxes of every character or
Excluded from Gross estate. It is owned by the surviving spouse and description in respect of intangible personal property
is exclusive to him/her. In other words, the absolute community or owned by citizens of the Philippines not residing in that
conjugal of property will be included in the gross estate. Later na foreign country.
bawasan ng half of the share of surviving spouse after all the
deductions have been made. In other words, on the basis of reciprocity where we do not tax the
intangible property of the non-resident alien.
SECTION 104. PROPERTIES SITUATED IN THE PHILIPPINES AND IS

PART OF THE GROSS ESTATE VALUATION
SECTION 104. Definitions. – For purposes of this Title, the terms SECTION 86. Computation of Net Estate. – For the purpose of the
'gross estate' and 'gifts' include real and personal property, tax imposed in this Chapter, the value of the net estate shall be
whether tangible or intangible, or mixed, wherever situated: determined:
Provided, however, That where the decedent or donor was a
nonresident alien at the time of his death or donation, as the case Valuation of the properties composing the estate is the fair market
may be, his real and personal property so transferred but which value at the time of death. (Principle of date of death valuation)
are situated outside the Philippines shall not be included as part
of his 'gross estate' or 'gross gift’: Provided, further, For Real Properties – what is used is the zonal value of the property
at the time of death.
1. That franchise which must be exercised in the
Philippines;
2. Shares, obligations or bonds issued by any corporation DEDUCTIONS
or sociedad anonima organized or constituted in the
Philippines in accordance with its laws; (A) Deductions allowed to the estate of a citizen or a resident
3. Shares, obligations or bonds by any foreign corporation
eighty-five percent (85%) of the business of which is (A) Deductions Allowed to the Estate of Citizen or a Resident. - In
located in the Philippines; the case of a citizen or resident of the Philippines, by deducting
4. Shares, obligations or bonds issued by any foreign from the value of the gross estate -
corporation if such shares, obligations or bonds have
acquired a business situs in the Philippines;
5. shares or rights in any partnership, business or industry
1. Standard deduction
established in the Philippines, shall be considered as
situated in the Philippines:
(1) Standard Deduction. – An amount equivalent to Five million
Properties of non-resident alien decedents situated outside the pesos (P5,000,000.00).
Philippines are not part of his gross estate in the Philippines.
 No question asked deduction of 5 million
Intangible personal property of the estate of a non-resident-alien  There is no longer deduction for funeral expenses, expenses
decedent, shall not be taxable in the Philippines if: for settlement of the estate and other expenses.
 If the estate left is less than 5 million, it will be a non-taxable
estate.
2. Claims against the estate 5. Deduction of property previously taxed (Vanishing

deduction)
(2) For claims against the estate: Provided, That at the time of
indebtedness was incurred that debt instrument was duly (5) Property Previously Taxed. – An amount equal to the value
notarized and, if the loan was contracted within three (3) years specified below of any property forming part of the gross estate
before the death of the decedent, the administrator or executor situated in the Philippines of any person who died within five (5)
shall submit a statement showing the disposition of the proceeds years prior to the death of the decedent, or transferred to the
of the loan. decedent by gift within five (5) years prior to his death, where
such property can be identified as having been received by the
 These are “utang” of the estate decedent from the donor by gift, or from such prior decedent by
 Debts should be collected against the estate gift, bequest, devise or inheritance, or which can be identified as
having been acquired in exchange for property so received:
(a) One hundred percent (100%) of the value, if the prior

3. Claims of the deceased against insolvent persons
decedent died within one (1) year prior to the death of
the decedent, or if the property was transferred to him
(3) For claims of the deceased against the insolvent persons by gift, within the same period prior to his death;
where the value of decedent’s interest therein is included in the
value of the gross estate. (b) Eighty percent (80%) of the value, if the prior decedent
died more than one (1) year but not more than two (2)
 These are collectibles of the deceased during his life time years prior to the death of the decedent, or if the
but it turned out na the debtor is an insolvent person. property was transferred to him by gift within the same
 These receivables are part of gross estate but a deduction. period prior to his death;
So, zero out.
(c) Sixty percent (60%) of the value, if the prior decedent
died more than two (2) years but not more than three
4. Deduction for unpaid mortgages, indebtedness, taxes, (3) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same
casualty losses.
period prior to his death;
(4) For unpaid mortgages upon, or any indebtedness in respect (d) Forty percent (40%) of the value, if the prior decedent
to, property where the value of decedent’s interest therein, died more than three (3) years but not more than four
undiminished by such mortgage or indebtedness, is included in (4) years prior to the death of the decedent, or if the
the value of the gross estate, but not including any income tax property was transferred to him by gift within the same
upon income received after the death of the decedent, or period prior to his death; and
property taxes not accrued before his death, or any estate tax.
The deduction herein allowed in the case of claims against the (e) Twenty percent (20%) of the value, if the prior
estate, unpaid mortgages or any indebtedness shall, when decedent died more than four (4) years but not more
founded upon a promise or agreement, be limited to the extent than five (5) years prior to the death of the decedent,
that they were contracted bona fide and for an adequate and full or if the property was transferred to him by gift within
consideration in money or money’s worth. There shall also de the same period prior to his death.
deducted losses incurred during the settlement of the estate
arising from fires, storms, shipwreck, or other casualties, or from These deductions shall be allowed only where a donor's tax or
robbery, theft, or embezzlement, when such losses are not estate tax imposed under this Title was finally determined and
compensated for by insurance or otherwise, and if at the time of paid by or on behalf of such donor, or the estate of such prior
the filing of the return such losses have not been claimed as decedent, as the case may be, and only in the amount finally
deduction for the income tax purposes in an income tax return, determined as the value of such property in determining the
and provided that such losses were incurred not later than the value of the gift, or the gross estate of such prior decedent, and
last day for the payment of the estate tax as prescribed in only to the extent that the value of such property is included in
Subsection (A) of Section 91. the decedent's gross estate, and only if in determining the value
of the estate of the prior decedent, no deduction was allowable
 As long as not compensated with insurance under paragraph (5) in respect of the property or properties given
in exchange therefor. Where a deduction was allowed of any
mortgage or other lien in determining the donor's tax, or the
estate tax of the prior decedent, which was paid in whole or in
part prior to the decedent's death, then the deduction allowable
under said Subsection shall be reduced by the amount so paid.
Such deduction allowable shall be reduced by an amount which
bears the same ratio to the amounts allowed as deductions under
paragraphs (2), (3), (4), and (6) of this Subsection as the amount 8. Amount Received by Heirs Under Republic Act No. 4917
otherwise deductible under said paragraph (5) bears to the value
of the decedent's estate. Where the property referred to consists (8) Amount Received by Heirs Under Republic Act No. 4917. – Any
of two or more items, the aggregate value of such items shall be amount received by the heirs from the decedent’s employee as a
used for the purpose of computing the deduction. consequence of the death of the decedent-employee in
accordance with Republic Act No. 4917: Provided, That such
amount is included in the gross estate of the decedent.
Requisites:
 Added as part of gross estate, then claimed as a deduction.
1. This property is situated in the Philippines. If it is outside, there
is no vanishing deduction.
2. It is transferred to the decedent during his life time and there (B) DEDUCTIONS FOR NON-RESIDENT ESTATES
was a taxed paid. That is why it is a property previously taxed.
3. Then he was able to hold to that property within 5 years or (B) Deductions Allowed to Nonresident Estates. — In the case of a
less before his death. nonresident not a citizen of the Philippines, by deducting from the
value of that part of his gross estate which at the time of his death
The estate could claim an equivalent deduction. So the property is situated in the Philippines:
previously taxed is part of the gross estate then claimed as a
deduction on the value at the time of death of that period of time he
1. Standard Deduction – The estate may claim only as much
was able to hold on that property for 5 years or less. If held to that
as P500,000.
property over 5 years, part of gross estate but no deduction for
vanishing.
Sa citizen or resident alien, the deduction is as much as
P5,000,000.
Q: How much is the deduction?
(1) Standard Deduction. — An amount equivalent to Five hundred

1. Held 1 year or less – 100% of the value
thousand pesos (₱500,000);
2. More than 1 but not more than 2 years – 80%
3. More than 2 but not more than 3 years – 60%
4. More than 3 but not more than 4 years – 40% 2. Proportionate Deduction to be claimed by the estate in
5. More than 3 but not more than 5 years – 20% proportion to the Philippine estate against his total gross.
So, in proportion ng claims against the estate of insolvent

6. Transfers for public use person, the losses, indebtedness, and taxes. Only the
proportion.
(6) Transfers for Public Use. – The amount of all the bequests,
legacies, devises or transfers to or for the use of the Government (2) That proportion of the deductions specified in paragraphs (2), (3),
of the Republic of the Philippines, or any political subdivision and (4) of Subsection (A) of this Section which the value of such part
thereof, for exclusively public purposes. bears to the value of his entire gross estate wherever situated;
 This is part of the gross but claimed as deduction

3. Property Previously Taxed (Vanishing Deduction) – For
the properties situated in the Philippines being a non-
7. Family Home resident alien.
(7) The Family Home. – An amount equivalent to the current fair (3) Property Previously Taxed. – An amount equal to the value
market value of the decedent's family home: Provided, however, specified below of any property forming part of the gross estate
That if the said current fair market value exceeds Ten million situated in the Philippines of any person who died within five (5)
pesos (P10,000,000), the excess shall be subject to estate tax.
years prior to the death of the decedent, or transferred to the
decedent by gift within five (5) years prior to his death, where such
 Amount not to exceeding 10 million
property can be identified as having been received by the decedent
from the donor by gift, or from such prior decedent by gift, bequest,
devise or inheritance, or which can be identified as having been
acquired in exchange for property so received:One hundred percent
(100%) of the value if the prior decedent died within one (1) year
prior to the death of the decedent, or if the property was transferred
to him by gift, within the same period prior to his death; Eighty (C) SHARE IN THE CONJUGAL/COMMUNITY PROPERTY
percent (80%) of the value, if the prior decedent died more than one
(1) year but not more than two (2) years prior to the death of the The ½ share of the surviving spouse on the conjugal or community
decedent, or if the property was transferred to him by gift within the property will be deducted against the net conjugal or community
same period prior to his death;Sixty percent (60%) of the value, if estate.
the prior decedent died more than two (2) years but not more than
three (3) years prior to the death of the decedent, or if the property (C) Share in the Conjugal Property.— The net share of the surviving
was transferred to him by gift within the same period prior to his spouse in the conjugal partnership property as diminished by the
death;Forty percent (40%) of the value, if the prior decedent died obligations properly chargeable to such property shall, for the
more than three (3) years but not more than four (4) years prior to purpose of this Section, be deducted from the net estate of the
the death of the decedent, or if the property was transferred to him decedent.
by gift within the same period prior to his death; andTwenty percent
(20%) of the value, if the prior decedent died more than four (4)
years but not more than five (5) years prior to the death of the
decedent, or if the property was transferred to him by gift within the
(D) FOREIGN ESTATE TAX
same period prior to his death.These deductions shall be allowed
only where a donor's tax, or estate tax imposed under this Title is
(D) Tax Credit for Estate Taxes Paid to a Foreign Country.—
finally determined and paid by or on behalf of such donor, or the
estate of such prior decedent, as the case may be, and only in the
“(1) In General. — The tax imposed by this Title shall be credited
amount finally determined as the value of such property in with the amounts of any estate tax imposed by the authority of
determining the value of the gift, or the gross estate of such prior a foreign country.
decedent, and only to the extent that the value of such property is
included in that part of the decedent's gross estate which at the time “(2) Limitations on Credit. — The amount of the credit taken
of his death is situated in the Philippines; and only if, in determining under this Section shall be subject to each of the following
the value of the net estate of the prior decedent, no deduction is limitations:
allowable under paragraph (2) of Subsection (B) of this Section, in
respect of the property or properties given in exchange therefore. “(a) The amount of the credit in respect to the tax paid to
any country shall not exceed the same proportion of the
Where a deduction was allowed of any mortgage or other lien in tax against which such credit is taken, which the
determining the donor's tax, or the estate tax of the prior decedent, decedent’s net estate situated within such country
taxable under this Title bears to his entire net estate; and
which was paid in whole or in part prior to the decedent's death,
then the deduction allowable under said paragraph shall be reduced
“(b) The total amount of the credit shall not exceed the
by the amount so paid. same proportion of the tax against which such credit is
taken, which the decedent’s net estate situated outside
Such deduction allowable shall be reduced by an amount which the Philippines taxable under this Title bears to his entire
bears the same ratio to the amounts allowed as deductions under net estate.”
paragraphs (1) and (3) of this Subsection as the amount otherwise
deductible under paragraph (2) bears to the value of that part of the Since the citizens and resident decedents’ estates will cover all
decedent's gross estate which at the time of his death is situated in properties within and without, all sources or properties wherever
the Philippines. situated (sa citizens lang gurow?) Their properties abroad, the estate
will pay a foreign estate tax.
Where the property referred to consists of two (2) or more items,
the aggregate value of such items shall be used for the purpose of The same properties abroad will be reported also here in the
computing the deduction. Philippines for estate tax purposes. So, dalawang tax ang babayaran.
Doon sa place where the property is located, and here where the
decedent is a citizen or a resident alien.
4. Transfers for public use;
What will the estate do with the foreign estate tax? The estate will
(4) Transfers for Public Use. — The amount of all bequests, legacies, claim it by way of tax credit.
devises or transfers to or for the use of the Government of the
Republic of the Philippines or any political subdivision thereof, for
exclusively public purposes. EXEMPTED ACQUISITIONS AND TRANSMISSIONS
 Here, there is actually no transfer.
SEC. 87. Exemption of Certain Acquisitions and Transmissions. – The Philippines, of that part of his gross estate situated in the
following shall not be taxed: Philippines;
(A) The merger of usufruct in the owner of the naked title; (2) The deductions allowed from gross estate in determining
the estate as defined in Section 86; and
When the owner holding a usufructuary right over a property dies, (3) Such part of such information as may at the time be
the usufruct is also extinguished. You are the beneficial owner holding ascertainable and such supplemental data as may be
that property, and the usufruct is extinguished, isuli na (ang usufruct) necessary to establish the correct taxes.
sa owner of the naked title (not a naked owner).
“Provided, however, That estate tax returns showing a gross
Because of that merger, there is no taxable transfer. That will not be value exceeding Five million pesos (₱5,000,000) shall be
part of the estate. supported with a statement duly certified to by a Certified Public
Accountant containing the following:
(B) The transmission or delivery of the inheritance or legacy by the
(a) Itemized assets of the decedent with their
fiduciary heir or legatee to the fideicommissary;
corresponding gross value at the time of his death, or
in the case of a nonresident, not a citizen of the
Transmission lang ito. Kase yung transfer will be emanating from the Philippines, of that part of his gross estate situated in
estate of the decedent to the beneficiaries. Pag deliver nyan sa the Philippines;
beneficiaries by the fiduciary, then there is no taxable transfer kase (b) Itemized deductions from gross estate allowed in
binayaran na yung tax from the transfer emanating (on account of the Section 86; and
death?) Yun yung taxable transmission, not the delivery of the (c) The amount of tax due whether paid or still due and
inheritance to the beneficiaries. outstanding.
(B) Time for Filing.— For the purpose of determining the estate
(C) The transmission from the first heir, legatee or donee in favor of
tax provided for in Section 84 of this Code, the estate tax return
another beneficiary, in accordance with the desire of the
required under the preceding Subsection (A) shall be filed within
predecessor; and one (1) year from the decedent’s death.
A certified copy of the schedule of partition and the order of
(D) All bequests, devises, legacies or transfers to social welfare, the court approving the same shall be furnished the
cultural and charitable institutions, no part of the net income of Commissioner within thirty (30) after the promulgation of such
which insures to the benefit of any individual: Provided, however, order.
That not more than thirty percent (30%) of the said bequests,
devises, legacies or transfers shall be used by such institutions for (C) Extension of Time. - The Commissioner shall have authority to
grant, in meritorious cases, a reasonable extension not exceeding
administration purposes.
thirty (30) days for filing the return.
Notice of Death under SEC. 89 is already repealed. (D) Place of Filing. - Except in cases where the Commissioner
otherwise permits, the return required under Subsection (A) shall
be filed with an authorized agent bank, or Revenue District
FILING AND PAYMENT Officer, Collection Officer, or duly authorized Treasurer of the city
or municipality in which the decedent was domiciled at the time
 Within one (1) year from the death. of his death or if there be no legal residence in the Philippines,
with the Office of the Commissioner.
Sec. 90. Estate Tax Returns. — “(A) Requirements.— In all cases
of transfers subject to the tax imposed herein, or regardless of SEC. 91. Payment of Tax. –
the gross value of the estate, where the said estate consists of
registered or registrable property such as real property, motor (A) Time of Payment. - The estate tax imposed by Section 84 shall be
vehicle, shares of stock or other similar property for which a paid at the time the return is filed by the executor, administrator or
clearance from the Bureau of Internal Revenue is required as a the heirs.
condition precedent for the transfer of ownership thereof in the
name of the transferee, the executor, or the administrator, or (B) Extension of Time. - When the Commissioner finds that the
any of the legal heirs, as the case may be, shall file a return under
payment on the due date of the estate tax or of any part thereof
oath in duplicate, setting forth:
would impose undue hardship upon the estate or any of the heirs,
“(1) The value of the gross estate of the decedent at the time he may extend the time for payment of such tax or any part thereof
of his death, or in case of a nonresident, not a citizen of the not to exceed five (5) years, in case the estate is settled through the
courts, or two (2) years in case the estate is settled extrajudicially.
PAYMENT BY INSTALLMENT ADMINISTRATIVE RESTRICTIONS

 If there is no available cash, there may be payment by
installment. No delivery of the inheritance to the beneficiaries unless the estate
tax has been paid and it has been cleared. Estate tax clearance.
(C) Payment by Installment. — In case the available cash of the SEC. 95. Duties of Certain Officers and Debtors. – Registers of Deeds
estate is insufficient to pay the total estate tax due, payment by shall not register in the Registry of Property any document
installment shall be allowed within two (2) years from the statutory transferring real property or real rights therein or any chattel
date for its payment without civil penalty and interest. mortgage, by way of gifts inter vivos or mortis causa, legacy or
inheritance, unless a certification from the Commissioner that the
This is new. Take note, the legislative word is “cash”. So, issue ka ng tax fixed in this Title and actually due thereon had been paid is show,
24 post-dated checks. and they shall immediately notify the Commissioner, Regional
Director, Revenue District Officer, or Revenue Collection Officer or
(D) Liability for Payment. – The estate tax imposed by Section 84 shall Treasurer of the city or municipality where their offices are located,
be paid by the executor or administrator before delivery to any of the non payment of the tax discovered by them.
beneficiary of his distributive share of the estate.
Such beneficiary shall to the extent of his distributive share of the Any lawyer, notary public, or any government officer who, by reason
estate, be subsidiarily liable for the payment of such portion of the of his official duties, intervenes in the preparation or
estate tax as his distributive share bears to the value of the total net acknowledgment of documents regarding partition or disposal of
estate. donation inter vivos or mortis causa, legacy or inheritance, shall
For the purpose of this Chapter, the term "executor" or have the duty of furnishing the Commissioner, Regional Director,
"administrator" means the executor or administrator of the decedent, Revenue District Officer or Revenue Collection Officer of the place
or if there is no executor or administrator appointed, qualified, and where he may have his principal office, with copies of such
acting within the Philippines, then any person in actual or constructive documents and any information whatsoever which may facilitate
possession of any property of the decedent. the collection of the aforementioned tax.
Neither shall a debtor of the deceased pay his debts to the heirs,
Liability for payment of estate tax that is principal and primary legatee, executor or administrator of his creditor, unless the
liability. certification of the Commissioner that the tax fixed in this Chapter
had been paid is shown; but he may pay the executor or judicial
In the event later on merong nakaligtaan, there was a property within administrator without said certification if the credit is included in
which no estate tax was paid. Then the subsidiary liability will come the inventory of the estate of the deceased.
in. The heirs will be subsidiarily liable in proportion to the distributive
share in the estate. SEC. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds
or Rights. — There shall not be transferred to any new owner in the
books of any corporation, sociedad anonima, partnership, business,
APPLICATION FOR THE DISCHARGE or industry organized or established in the Philippines any share,
obligation, bond or right by way of gift inter vivos or mortis causa,
SEC. 92. Discharge of Executor or Administrator from Personal Liability. legacy or inheritance, unless a certification from the Commissioner
– If the executor or administrator makes a written application to the that the taxes fixed in this Title and due thereon have been paid is
Commissioner for determination of the amount of the estate tax and shown.
discharge from personal liability therefore, the Commissioner (as soon
If a bank has knowledge of the death of a person, who maintained
as possible, and in any event within one (1) year after the making of
a bank deposit account alone, or jointly with another, it shall allow
such application, or if the application is made before the return is filed, any withdrawal from the said deposit account, subject to a final
then within one (1) year after the return is filed, but not after the withholding tax of six percent (6%). For this purpose, all withdrawal
expiration of the period prescribed for the assessment of the tax in slips shall contain a statement to the effect that all of the joint
Section 203 shall not notify the executor or administrator of the depositors are still living at the time of withdrawal by any one of the
amount of the tax. joint depositors and such statement shall be under oath by the said
The executor or administrator, upon payment of the amount of depositors.
which he is notified, shall be discharged from personal liability for any
deficiency in the tax thereafter found to be due and shall be entitled This is a new feature.
to a receipt or writing showing such discharge.
More often than not, ang usual na iiwan ng namatay is his or her bank
deposits to the point na hindi maka withdraw from the bank para
pambayad sa funeral expenses.
Prior to TRAIN, the maximum amount you could take out is only up to KINDS:
P10,000.
1. Donation inter vivos – made and to take effect during the
Under the new Section 97, pwede mo na i-withdraw lahat subject to lifetime of the donor (gift tax)
6% withholding tax. i-withhold ng bank yung 6%, then you can get the
94% without paying the tax anymore because that is now a final 2. Donation mortis causa - made during the lifetime but to take
withholding tax. effect upon death (estate tax being in the nature of
testamentary disposition). So, there is estate tax, not donor’s
Meron syang sworn statement na gagawin under Sec. 97 na i- tax.
withdraw na nya lahat then bawasan na nang bank yung 6%. Then,
there is no need to declare that in your regular estate tax return. Kase, The donors may be a natural or juridical persons.
the tax there is already a final withholding tax.
CITIZEN AND RESIDENT ALIEN DONORS

For purposes of computation:
 They are liable on the donation/gift made within and
Gross estate Pxxx without (properties wherever situated)
Less Deductions Pxxx
Net Taxable Estate Pxxx
NON-RESIDENT ALIEN DONORS
Estate tax due Pxxx
Less credits Pxxx  They are liable on the donation/gift made on the
Amount due P xxx properties within the Philippines.
OTHER RULES DONOR’S TAX RATES
(a) Waiver of hereditary shares is NOT a taxable donation. “Sec. 99. Rate of Tax Payable by Donor.—
You are one of the heirs. Let’s say you are entitled to 1/5 of the estate. “(A) In General. — The tax for each calendar year shall be six percent
You waived your 1/5 in favor of your co-heirs. That is not a taxable (6%) computed on the basis of the total gifts in excess of Two
donation. hundred fifty thousand pesos (₱250,000) exempt gift made during
the calendar year.
(b) Waiver by the surviving spouse of her of his conjugal or
community share is a taxable donation. “(B) Any contribution in cash or in kind to any candidate, political
party or coalition of parties for campaign purposes shall be
Taxable estate governed by the Election Code, as amended.”
LESS ½ share of the surviving spouse
NET taxable estate pertaining to the share of the decedent. Yun yung No more distinction of relationship between the donor and the
i-taxed. donee. If the donee is a stranger, the rate is still 6%.
Pag distribute nyan, in your rules on succession, the surviving spouse Taxable Donation of real property is now subject to documentary
gets ½ of the property + his/her share in the estate of the decedent. stamp tax unless it is an exempted donation. (SEC. 196)
If lima sila, pang anim yung surviving spouse, the spouse gets ½ of the
SEC. 196. Stamp Tax on Deeds of Sale, Conveyances and Donation of
estate and 1/6 of the estate.
Real Property.— On all conveyances, donations, deeds, instruments,
or writings, other than grants, patents or original certificates of
Again, if the surviving spouse will waive his or her ½ share in the estate
adjudication issued by the Government, whereby any land,
in favor of his or her co-heirs, that is already a taxable donation.
tenement, or other realty sold shall be granted, assigned,
transferred, donated or otherwise conveyed to the purchaser, or
Pero kung gi waive ni surviving spouse is yung kanyang 1/6 share, then
purchasers, or to any other person or persons designated by such
it is non-taxable.
purchaser or purchasers, or donee, there shall be collected a
documentary stamp tax, at the rates herein below prescribed, based
DONOR’S/GIFT TAX on the consideration contracted to be paid for such realty or on its
fair market value determined in accordance with Section 6(E) of this
Donor’s tax is one imposed on the privilege of transferring property Code, whichever is higher: Provided, That when one of the
by way of donation or gift. contracting parties is the Government, the tax herein imposed shall
be based on the actual consideration:
“(a) When the consideration, or value received or contracted to be That a sale, exchange, or other transfer of property made in the
paid for such realty, after making proper allowance of any ordinary course of business (a transaction which is a bona fide, at
encumbrance, does not exceed One thousand pesos (₱1,000), arm’s length, and free from any donative intent), will be considered
Fifteen pesos (₱15.00). as made for an adequate and full consideration in money or money’s
worth.”
“(b) For each additional One thousand pesos (₱1,000), or fractional
part thereof in excess of One thousand pesos (₱1,000) of such  GR: The difference in value shall be deemed (by operation of
consideration or value, Fifteen pesos (₱15.00). law) a gift subject to gift tax;
 EXC: Sale of real property under SEC. 24 (D) subject to capital
“Transfers exempt from donor’s tax under Section 101(a) and (b) of gains tax.
this Code shall be exempt from the tax imposed under this Section.
If you transfer a property for insufficient consideration, then the
“When it appears that the amount of the documentary stamp tax difference will be treated as a gift subject to gift tax
payable hereunder has been reduced by an incorrect statement of
the consideration in any conveyance, deed, instrument or writing except sale real property which is subject to capital gains tax even
subject to such tax the Commissioner, provincial or city Treasurer, though it is sold at less than adequate consideration (inaudible)
or other revenue officer shall. From the assessment rolls or other
reliable source of information, assess the property of its true market  FURTHER EXCEPTION: unless it is a bonafide sale and at arm’s
value and collect the proper tax thereon.” length and free from donative intent – the difference in value
not a donation. It is not subject to the donor’s tax.
Sa deed of sale, merong docs stamp (inaudible). Sa deed of donation
dati, walang docs stamp. Ngayon may docs stamp na yung donation Example: A watch is used to be sold at P100K, due to lapse of time
of real property which is a taxable donation. and other factors, di nabenta, the watch is sold at P9K. That is a
bonafide sale, arm’s length and free from donative intent. Then the
The documentary stamp tax will come in if the donation of real difference in value will not be considered as a taxable donation. It will
property is taxable. But if the donation of real property is tax-free, not subject to donor’s tax.
then walang documentary stamp tax.
SEC. 101. Exemption of Certain Gifts. — The following gifts or
 Donation to a legally adopted child is not a donation to a donations shall be exempt from the tax provided for in this Chapter:
stranger, he is entitled to all the rights of a legitimate child.
Still 6%. “(A) In the Case of Gifts Made by a Resident.—
Pwede ka nga mag donate sa di mo related, much more if adopted. OLD LAW: Donation propter nuptias or Donation on account of
Still at 6%. marriage – repealed under TRAIN
 Donations made between business organizations and Yung P10,000, wala na yan kase may first P250,000 kana that’s
between individual and a business organization are excluded. When both spouses will make a donation, may kanya-kanya
considered donation to a stranger (6% donor’s tax, unless silang P250,000.
exempted donation) even if they are (inaudible)
(1) Gifts made to or for the use of the National Government or any
 Donation/Contribution made during election to any entity created by any of its agencies which is not conducted for
candidate, political party, or coalition of parties (Election profit, or to any political subdivision of the said Government; and
code) – not taxable.
- After election, the donor shall submit to COMELEC (2) Gifts in favor of an educational and/or charitable, religious,
statement of contributions and expenses, any excess cultural or social welfare corporation, institution, accredited
or unspent contribution should be returned to donor; nongovernment organization, trust or philanthropic organization or
otherwise, it shall be a taxable income. research institution or organization: Provided, however, That not
more than thirty percent (30%) of said gifts shall be used by such
donee for administration purposes. For the purpose of this
TRANSFER FOR LESS THAN ADEQUATE AND FULL CONSIDERATION exemption, a ‘non-profit educational and/or charitable corporation,
institution, accredited nongovernment organization, trust or
SEC. 100. Transfer for Less Than Adequate and Full Consideration.— philanthropic organization and/or research institution or
Where property, other than real property referred to in Section organization’ is a school, college or university and/or charitable
24(D), is transferred for less than an adequate and full consideration corporation, accredited nongovernment organization, trust or
in money or money’s worth, then the amount by which the fair philanthropic organization and/ or research institution or
market value of the property exceeded the value of the organization, incorporated as a nonstock entity, paying no
consideration shall, for the purpose of the tax imposed by this dividends, governed by trustees who receive no compensation, and
Chapter, be deemed a gift, and shall be included in computing the devoting all its income, whether students’ fees or gifts, donation,
amount of gifts made during the calendar year: Provided, however, subsidies or other forms of philanthropy, to the accomplishment
and promotion of the purposes enumerated in its Articles of was domiciled at the time of the transfer, or if there be no legal
Incorporation. residence in the Philippines, with the Office of the Commissioner.
(B) In the Case of Gifts Made by a Nonresident Not a Citizen of the In the case of gifts made by a nonresident, the return may be filed
Philippines. – with the Philippine Embassy or Consulate in the country where
he is domiciled at the time of the transfer, or directly with the
(1) Gifts made to or for the use of the National Government or any Office of the Commissioner.
entity created by any of its agencies which is not conducted for
profit, or to any political subdivision of the said Government. Filing of Return: Within 30 days after the gift/donation was made.
(2) Gifts in favor of an educational and/or charitable, religious, Computation: is done cumulatively during the calendar year.
cultural or social welfare corporation, institution, foundation, trust
or philanthropic organization or research institution or organization: The P250,000 exempt gift is availed only one time during the calendar
Provided, however, That not more than thirty percent (30%) of said year and the excess of which will be subject to the 6% tax.
gifts shall be used by such donee for administration purposes.
For every donation that will be made, you have to report the previous
Valuation: donation because you will only subtract the P250,000 once. The
excess will be subject to the 6% tax less whatever taxes that you have
Fair Market Value (FMV) at the time of death (date of death valuation) paid in the previous (inaudible)
(SEC. 88)
BEFORE TRAIN
Real Properties: CIR (Zonal Value) at the time of death. 0%- 15% 6% in excess of P250,000
regardless of relationship.
SEC. 88. (B) Properties. – The estate shall be appraised at its fair 30% on donations to strangers
market value as of the time of death.
12 FEBRUARY 2019
However, the appraised value of real property as of the time of Confesor & Abad
death shall be, whichever is higher of:
(1) The fair market value as determined by the VALUE-ADDED TAX
Commissioner, or
(2) The fair market value as shown in the schedule of Overview
values fixed by the Provincial and City Assessors.  Revenue Regulations 13-2018. This is the revenue
regulation for the VAT relative to the amendments. One of
SEC. 103. Filing of Return and Payment of Tax. – (A) the provisions amended by RA 10963 is the VAT.
Requirements. – Any individual who makes any transfer by gift
(except those which, under Section 101, are exempt from the tax o It clarified some titles, removed about 50
provided for in this Chapter) shall, for the purpose of the said tax, legislations which granted exemptions from VAT
make a return under oath in duplicate. and these exemptions were repealed, so they are
now part of the VAT system. If you have the law
The return shall set forth: under 10963 on the last part, you have there the
repealing clause, the provisions of RA 10963
(1) Each gift made during the calendar year which is to be which repealed the exempted transactions for
included in computing net gifts; VAT purposes and made them now part of the
(2) The deductions claimed and allowable; VAT system.
(3) Any previous net gifts made during the same calendar
year; o It also provides shorter period for claiming refund
(4) The name of the donee; and for zero-rated transactions.
(5) Such further information as may be required by rules
and regulations made pursuant to law. SECTION 105. Persons Liable. – Any person who, in the course of
trade or business, sells barters, exchanges, leases goods or
(B) Time and Place of Filing and Payment. - The return of the properties, renders services, and any person who imports goods
donor required in this Section shall be filed within thirty (30) days shall be subject to the value-added tax (VAT) imposed in Sections
after the date the gift is made and the tax due thereon shall be 106 to 108 of this Code.
paid at the time of filing.
The value-added tax is an indirect tax and the amount of tax may
Except in cases where the Commissioner otherwise permits, the be shifted or passed on to the buyer, transferee or lessee of the
return shall be filed and the tax paid to an authorized agent bank, goods, properties or services. *
the Revenue District Officer, Revenue Collection Officer or duly
authorized Treasurer of the city or municipality where the donor
This rule shall likewise apply to existing contracts of sale or lease Transactions under the VAT system
of goods, properties or services at the time of the effectivity of
Republic Act No. 7716.** a. 12% VAT
b. zero rated or 0% VAT
The phrase "in the course of trade or business" means the regular c. Exempted transactions (not subject to 12% or 0%; but it
conduct or pursuit of a commercial or an economic activity, may be taxed under a different category or another type of
including transactions incidental thereto***, by any person tax like other percentage tax or another tax treatment, or
regardless of whether or not the person engaged therein is a another type of excise, but not VAT; or it may be non-
nonstock, nonprofit private organization (irrespective of the taxable at all)
disposition of its net income and whether or not it sells
exclusively to members or their guests), or government entity.
PRINCIPLE OF DESTINATION: GUIDING RULE TO DETERMINE IF
The rule of regularity, to the contrary notwithstanding, services SUBJECT TO 12% OR 0%.
as defined in this Code rendered in the Philippines by
nonresident foreign persons shall be considered as being course One guiding rule in determining whether the transaction or sales of
of trade or business. goods or services is subject to 12% or zero-rated is the Rule on
Destination.
VAT IS AN INDIRECT TAX
(1) If the goods are sold or consumed locally, or the service is
* So you have in your study of tax principles that the nature of indirect done locally – subject to 12% VAT
taxes is that they are allowed to be shifted. So the statutory tax payer,
the VAT registered person is allowed to shift the burden of the tax to (2) If the goods or services are destined outside the territory.
the purchaser or buyer of the goods or services. So the purchaser or The services are done here but the product on which the
buyer pays the product or services already inclusive of the VAT or tax. services were made are to be brought out of the country
So the amount of tax may be shifted or passed on to the byer, for export – the sale is subject to 0% VAT because of
transferee or lessee of the goods, properties, or services. destination. The finished product wherein the services
were rendered are destined outside the territory.
**This is the E-VAT or the Expanded Value Added Tax. Well, the ruling
on the case of Tolentino vs. Secretary of Finance, that is the law that So following the rule on destination, since they are not to be sold or
was challenged there. consumed locally, then they will be zero-rated. So those goods or
services to be sold or performed domestically or locally or within, the
***So, the VAT is not only applied to those regular conduct or pursuit sale could be subject to 12% VAT.
of a commercial or an economic activity, but also those transactions
incidental thereto. GENERAL RULE: As a general rule, the VAT system uses the
destination principle. It means that the destination of the goods
determines the taxation or exemption from the VAT. Goods and
INCIDENTAL TO THE TRADE OR BUSINESS services are taxed only in the country where they are consumed.
Thus, exports are zero-rated, while imports are taxed. In the case of
Now, in one case what is the jurisprudence on the term “incidental to imported goods, they are brought in. so, there is VAT. But when you
the trade or business”, so the CTA defined the term incidental as– bring the goods out or they are for export, then the other
something as primary, necessary, appertaining to or depending upon consumptions to be done outside, they will be zero-rated. (Toshiba
another, termed the principal. Thus, an isolated transaction would Information Equipment vs CIR, G.R. No. 157594, March 9, 2010; CIR vs
not be automatically considered as incidentally made in the course of Seagate Technology, G.R. No., 153866, February 11, 2005)
trade or business.
Remember in one case, there was this VAT-registered company. In its MEANING OF CONSUMPTION AS APPLIED TO SERVICES
regular conduct of business, the sales of its products are subject to
VAT. And there was a time that they defleeted their service vehicles Confusion in zero rating arises (when one) equates the performance
to their medical representatives and sold the old units. ISSUE: of a particular type of service with the consumption of its output
whether the sale of the 2nd hand units of cars are subject to VAT? SC: abroad. The consumption contemplated by law does not imply that
The sale is subject to VAT as it is incidental to the business. the service be done abroad in order to be zero-rated.
 Kasi dito, the service is done here, kaso the destination of the
MEANING OF “IN THE COURSE OF TRADE OR BUSINESS” – the regular product for which the services are rendered are to be
conduct or pursuit of a commercial or an economic activity, including destined outside. That is the reason why it’s zero-rated.
transactions incidental thereto  In other words, do not be confused that since the services
were done here, it will be consumed here. So if the services
were done here and the products are destined or to be sold
outside, then the zero-rating is applied.
 If the services were done here to the product on which the VAT being indirect. Under the law, it is the seller who is statutorily
services were rendered and to be sold here, then you apply liable.
12%.
Consumption is the use of a thing in a way that thereby exhausts it. 2. SEC. 106(B)(1): VAT on transactions deemed sale of goods
As Applied to services, the term means the performance or successful
completion of a contractual duty, usually resulting in the performer’s SECTION 106. (B) Transactions Deemed Sale. – The following
release from any past or future liability. transactions shall be deemed sale:
Unlike goods, services cannot be physically used in or bound for a (1) Transfer, use or consumption not in the course of
specific place when their destination is determined. Instead, there business of goods or properties originally intended for
can only be a predetermined end of a course when determining the sale or for use in the course of business;*
service, location, or position for legal purposes.
(2) Distribution or transfer to:
EXCEPTION: Zero-Rated Transaction (a) Shareholders or investors as share in the

profits of the VAT-registered persons; **or
However, the law clearly provides for an exception to the destination (b) Creditors in payment of debt***;
principle; that is, for a zero percent VAT rate for:
(3) Consignment of goods if actual sale is not made within
1. Services that are performed in the Philippines, sixty (60) days following the date such goods were
2. Paid for in acceptable foreign currency and consigned****; and
3. Accounted for in accordance with the rules and regulations
of the Bangko Sentral. (4) Retirement from or cessation of business, with respect
to inventories of taxable goods existing as of such
So, even if the goods are sold here. Because ordinarily, the goods sold retirement or cessation.*****
here are to be subject to 12%. But, there are sale of goods sold here
but paid for in acceptable foreign currency, then we zero-rate the The provisions here are exclusive and have not been amended by
transaction and consider as deemed for export. Because under the TRAIN.
law, when the sale of goods and services are paid for in acceptable
foreign currency, then we zero rate it. *So these are products regularly sold by the VAT-registered taxpayer
(seller), however instead of selling these products, the VAT-registered
seller uses or consumes these goods. EX: Hardware store, nagbebenta
For the supply of service to be zero-rated as an exception, the law sya ng cement or construction materials, ordinary when they are sold
merely requires that: – 12%, however this taxpayer constructed a new warehouse, so
gagamit sya ng construction materials. So there is use and
1. The service be performed here in the Philippines; consumption of their own products. So the use and consumption of
2. The service fall under any of the categories in Section 102(b) their own products, even though not considered in the course of trade
[now Sec. 108(B)] of the Tax Code; or business will be considered as deemed sale. Therefore, it will be
3. It be paid in acceptable foreign currency accounted for in subject to VAT.
accordance with BSP rules and regulations [CIR vs American
Express, G.R. No. 152609, June 29, 2005] ** Instead of using cash dividends, ang ididistribute mong dividend
are goods. Say a corporation is a manufacturer of canned goods, so
they declared dividends. Instead of declaring cash dividends, the
TRANSACTIONS SUBJECT TO 12% VAT products they manufactured for sale are the ones being distributed
as share of profits or by way of dividends to their shareholders. So
1. SEC. 106(A)(1): VAT on the sale of goods and properties that distribution or transfer may be considered as deemed sale. There
(includes barter or exchange) will be VAT charged and collected against the taxpayer there, the
corporation.
SECTION 106. Value-Added Tax on Sale of Goods or Properties. –
(A) Rate and Base of Tax. - There shall be levied, assessed and *** By way of dacion en pago, instead of paying cash, you pay your
collected on every sale, barter or exchange of goods or creditors your own products you produce or manufacture, so that is
properties, value-added tax equivalent to twelve percent (12%) also considered as deemed sale.
of the gross selling price or gross value in money of the goods or
properties sold, bartered or exchanged, such tax to be paid by **** Before the 60 day period will lapse, return the goods to the
the seller or transferor. xxx consignor so that the consignee, where the goods have been left for
consignment, will not be liable for the VAT arising from a transaction
The buyer buys the product inclusive already of the VAT because the deemed sale.
tax is already built-in to the selling price because of the nature of the
***** Like a VAT-registered person has been incurring losses, so The tax due on such importation shall constitute a lien on the
instead of continuing the business, he decided to cease operating. goods superior to all charges or liens on the goods, irrespective
What happens now to the unsold merchandise? By reason of the of the possessor thereof.
retirement from or cessation of business, yung kanilang unsold
inventories will be considered as transactions deemed sale. They will All goods that are brought in coming from abroad, whether for
recur a VAT-remittance on these unsold inventories. personal use or for trade or business, it will be subject to the 12% VAT
in addition to the customs duties. So the 12% is based on the dutiable
value. So the tax that you are going to pay is the VAT plus the tariff or
DETERMINATION OF VAT the customs duties.
GR: VAT is already deemed included in the selling price and you are
not allowed to bill the VAT as a separate item from the goods. While 4. SEC. 108. VAT on the sale or exchange of services,
there is an unbundling that will be reflected in the invoice, it should including the use or lease of properties
not be billed separately. So kung ano yung presyo, yung tagged price
appearing, that should be the price that you are going to pay. SECTION 108. Value-added Tax on Sale of Services and Use or
Lease of Properties. – (A) Rate and Base of Tax. - There shall be
Legend: levied, assessed and collected, a value-added tax equivalent to
twelve percent (12%) of gross receipts derived from the sale or
GSP = Gross Selling Price exchange of services, including the use or lease of properties xxx
GVM = Gross Value in Money
Net Price = GSP/GVM divided by 112%
ZERO-RATED TRANSACTIONS: VAT AT 0% [RULE ON DESTINATION]
Formula: two ways of unbundling or determining the 12% VAT.
1. 12% VAT = GSP/GVM x 1/9. 333333333; or 1. 106(A)(2): Zero Rated sales of goods or properties
2. 12% VAT = GSP/GVM less/minus Net Price
(a) Export Sales: Sec. 106(A)(2)(a) 1, 3, 4, 5, & 6
3. SEC. 107:VAT on the importation of goods (whether for (1) The sale and actual shipment of goods from the
personal use or for trade or business) Philippines to a foreign country, irrespective of any
shipping arrangement that may be agreed upon
[12% x Dutiable Value = VAT] which may influence or determine the transfer of
ownership of the goods so exported and paid for in
SEC. 107. Value-Added Tax on Importation of Goods. – acceptable foreign currency or its equivalent in
goods or services, and accounted for in accordance
A. In General. - There shall be levied, assessed and with the rules and regulations of the Bangko Sentral
collected on every importation of goods a value-added ng Pilipinas (BSP);
tax equivalent to twelve percent (12%) based on the (2) (item 2 repealed by RA 10963)
total value used by the Bureau of Customs in (3) Sale of raw materials or packaging materials to
determining tariff and customs duties plus customs export-oriented enterprise whose export sales
duties, excise taxes, if any, and other charges, such tax exceed seventy percent (70%) of total annual
to be paid by the importer prior to the release of such production;
goods from customs custody: Provided, That where the (4) Sale of gold to the Bangko Sentral ng Pilipinas (BSP);
customs duties are determined on the basis of the (5) Those considered export sales under Executive
quantity or volume of the goods, the value-added tax Order No. 226, otherwise known as the Omnibus
shall be based on the landed cost plus excise taxes, If Investment Code of 1987, and other special laws;
any. and
(6) The sale of goods, supplies, equipment and fuel to
B. Transfer of Goods by Tax-Exempt Persons. - In the case persons engaged in international shipping or
of tax-free importation of goods into the Philippines by international transport operations: Provided, that
persons, entities or agencies exempt from tax where the goods, supplies, equipment and fuel shall be
such goods are subsequently sold, transferred or used for international shipping or air transport
exchanged in the Philippines to non-exempt persons or operations.
entities, the purchasers, transferees or recipients shall
be considered the importers thereof, who shall be Provided, that subparagraphs (3), (4), and (5) hereof shall be
liable for any internal revenue tax on such importation. subject to the 12 % VAT and no longer be considered export sales
subject to 0% VAT rate upon satisfaction of the following
conditions:

(1) Successful establishment and implementation of an b. Section 108 (b): Transactions and services subject to
enhanced VAT refund system that grants refunds of 0% rate: services performed in the Phils. By VAT
creditable input tax within 90 days* from the filing of registered persons [Sec. 108(b)(1) to (7)]
the VAT refund application with the Bureau: Provided,
that, to determine the effectivity of item no.1, all (B) Transactions Subject to Zero Percent (0%) Rate. – The
applications filed from January 1, 2018 shall be following services performed in the Philippines by VAT registered
processed and must be decided within 90 days from the persons shall be subject to zero percent (0%) rate.
filing of the VAT refund application;
(2) All pending VAT refund claims as of December 31, 2017 (1) Processing, manufacturing or repacking of goods for
shall be fully paid in cash by Dec. 31, 2019. **xxx other persons doing business outside the Philippines
which goods are subsequently exported, where the
* Supposedly, beginning 2019, this year, when you apply for a VAT services are paid for in acceptable foreign currency and
refund, dapat 90 days lang yung period within which to decide. It used accounted for in accordance with the rules and
to be 120days under the old law. We have to await for regulations for regulations of the Bangko Sentral ng Pilipinas (BSP);
this kung in place na ba ito. Kasi pag inplaced na yung system, then
this export sales on raw materials or packaging materials which are (2) Services other than those mentioned in the preceding
destined for exportation, then those considered export sales under paragraph rendered to a person engaged in business
the Omnibus Investment Code, these sales are no longer zero rated, conducted outside the Philippines or to a non-resident
but back to 12% VAT. person not engaged in trade or business who is outside
the Philippines when the services are performed, the
Kasi remember what we presented a while ago, the exception to the consideration for which is paid for in acceptable foreign
zero-rated. Because here, the sales were done in the Philippines. Kasi currency and accounted for in accordance with the rules
nagbenta ka ng raw materials to the export-oriented enterprise, tapos and regulations of the Bangko Sentral ng Pilipinas (BSP);
nagbenta ka ng gaments tapos you produced jeans, tapos yung
finished product mong jeans are exported. Under the rule on (3) Services rendered to persons or entities whose
destination, the sale of raw materials are done here. But, the finished exemption under special laws or international
product is exported outside, so we zero-rate that as an exception to agreements to which the Philippines is a signatory
the rule on destination because what is being sold here is the raw effectively subjects the supply of such services to zero
materials. Iba naman yung sa finished product. It’s the sale of raw percent (0%) rate;
materials or packaging materials yung na gagamitin sa finished
products (jeans). These are sold to export-oriented enterprise in Ph. (4) Services rendered to persons engaged in international
So yung buong finished product are now exported. So, zero-rated shipping or international air-transport operations,
yung sale nay un. But ang question ngayon is the sale of raw or including leases of property for use thereof; Provided,
packaging materials. Is that VATable? Or zero-rated? So it is zero- that these services shall be exclusively for international
rated. But, there will now be a 12% VAT when the following conditions shipping or air transport operations; (As amended by
are now satisfied. When they’re now enhanced VAT system will now Section 33 of RA 10963)
be implemented.
(5) Services performed by subcontractors and/or
There’s no word yet from the BIR, if they are already using the contractors in processing, converting, of manufacturing
enhanced VAT-refund system. Because under the law, if hindi nila goods for an enterprise whose export sales exceed
narefund within 90 days, what will happen to the revenue officer? seventy percent (70%) of total annual production;
Under 112, malintikan ang revenue officer.
(6) Transport of passengers and cargo by air or sea vessels
SECTION 112 xxx provided however, that failure on the part of from the Philippines to a foreign country; *and
any official, agent, employee of the BIR to act on the application
within 90 day period shall be punishable under section 269 of this (7) Sale of power or fuel generated through renewable
Code. sources of energy such as but not limited to biomass,
solar, wind, hydropower, geothermal, ocean energy,
**meanwhile, zero-rated muna until they are able to set up an and other merging energy sources using technologies
enhanced VAT-refund system. such as fuel cells and hydrogen fuels.
(b) Sales to persons or entities whose exemption under special (8) Vetoed **
laws or international agreements to which the Philippines or is a
signatory effectively subject such sale to zero rate (effectively Provided, that subparagraphs (B)(1) and (B) (5) hereof shall be
zero rated sale of goods and properties) sec. 106 (A) (2) (b) subject to the 12% VAT and no longer subject to 0% VAT rate
upon satisfaction of the following conditions:
(1) Successful establishment and implementation of an

enhanced VAT refund system that grants refunds of

creditable input tax within 90 days from the filing of the horses, fighting cocks, aquarium fish, zoo animals and other
VAT refund application within the Bureau: Provided animals generally considered as pets);
that, to determine the effectivity of item no. 1, all
applications filed from January 1, 2018 shall be (C) Importation of personal and household effects belonging to
processed and must be decided within 90 days from the residents of the Philippines returning from abroad and non-
filing of the refund application; resident citizens coming to resettle in the Philippines: Provided,
(2) All pending VAT refund claims as of December 31, 2017 That such goods are exempt from customs duties under the Tariff
shall be fully paid in cash by December 31, 2019. and Customs Code of the Philippines;
* If you are a domestic carrier by air or by sea within, VAT; Importation of personal and household effects belonging to the
If domestic carrier with International flights, zero-rated. residents, of balikbayans, so they are also exempted from the VAT.
** Services rendered to the export-processing zones are now VATable (D) Importation of professional instruments and implements,
and no longer zero-rated. tools of trade, occupation or employment, wearing apparel,
domestic animals, and personal and household effects belonging
(B)(1) and (B)(5) pertains to the Processing, manufacturing or to persons coming to settle in the Philippines or Filipinos or their
repacking of goods; and (B)(5) Services performed by subcontractors families and descendants who are now residents or citizens of
and/or contractors, they will now be subject to 12% in the event the other countries, such parties hereinafter referred to as overseas
BIR has set-up an enhanced refund system. If wala, still zero-rated. Filipinos, in quantities and of the class suitable to the profession,
Pag naset-up na ng BIR yung VAT-refund system, in so far as these rank or position of the persons importing said items, for their
items, the sale of services will be subject to 12% VAT, not anymore own use and not for barter or sale, accompanying such persons,
zero-rated. or arriving within a reasonable time xxx
EXEMPTED TRANSACTIONS (Sec 109) (E) Services subject to percentage tax under Title V;
Section 109 listings used to be from A to W, by virtue of TRAIN, it is (F) Services by agricultural contract growers and milling for
now from A to BB. Nadagdagan. These are the transactions that are others of palay into rice, corn into grits and sugar cane into raw
exempted from VAT, either the 12% or 0%. What are these sugar or raw cane sugar;
transactions?
Pero yung raw sugar or raw cane sugar **** to become refined sugar,
SECTION 109. Exempt Transactions. – may VAT na yan.
(A) Sale or importation of agricultural and marine food products (G) Medical, dental, hospital and veterinary services except those
in their original state, livestock and poultry of a kind generally rendered by professionals;
uses as, or yielding or producing foods for human consumption;
and breeding stock and genetic materials therefor. (H) Educational services rendered by private educational
institutions, duly accredited by the DepEd, CHED, TESDA and
Products classified under this paragraph shall be considered in those rendered by government educational institutions;
their original state even if they have undergone the simple
processes of preparation or preservation for the market, such as (I) Services rendered by individuals pursuant to an employer-
freezing, drying, salting, broiling, roasting, smoking or stripping. employee relationship;
Polished and/or hushed rice, corn grits, raw sugar or raw cane
sugar and molasses, ordinary salt and copra shall be considered (J) Services rendered by regional or area headquarters
in their original state. established in the Philippines by multinational corporations
which act as supervisory, communications and coordinating
For this purpose, notwithstanding the process/es involved its centers for their affiliates , subsidiaries or branches in the Asia-
production, “raw sugar or raw cane sugar” means sugar whose Pacific Region and do not earn or derive income from the
content or sucrose by weight, in the dry state, corresponds to a Philippines;
polarimeter of less than 99.5 degrees.”
(K) Transactions which are exempt under International
The amendment by TRAIN is in the 3rd paragraph. When the raw sugar agreements to which the Philippines is a signatory or under
or raw cane sugar, becomes now refined sugar, it is not anymore special laws, except those under Presidential Decree No. 529;
exempt.
(L) Sales by agricultural cooperatives duly registered with the
(B) Sale or importation of fertilizers; seeds, seedlings and Cooperative Development Authority to their members as well as
fingerlings: fish, prawn, livestock and poultry feeds, including sale of their products, whether in its original state or processed
ingredients, whether locally produced or imported, used in the form, to non-members; their importation of direct farm inputs,
manufacture of finished feeds (except specialty feeds for race machineries and equipment, including spare parts thereof, to be

used directly and exclusively in the production and/or processing (T) Sale, importation or lease of passenger or cargo vessels and
of their produce; aircraft, including engine, equipment and spare parts thereof for
domestic or international transport operations;
(M) Gross receipts from lending activities by credit or multi-
purpose cooperatives duly registered with the Cooperative (U) Importation of fuel, goods and supplies by persons engaged
Development Authority; in international shipping or air transport operations: Provided,
that the fuel, goods, and supplies shall be used for international
(N) Sales by non-agricultural, non-electric and non-credit shipping or air transport operations;
cooperatives duly registered with the Cooperative Development
Authority: Provided, That the share capital contribution of each (V) Services of bank, non-bank financial intermediaries
member does not exceed P15,000 and regardless of the performing quasi-banking functions, and other non-bank
aggregate capital and net surplus ratably distributed among financial intermediaries;
members;
Services of bank, non-bank financial intermediaries, they are
(O) Export sales by persons who are not VAT-registered; exempted because they are subject to the gross receipts tax or the
percentage tax.
(P) Sale of real properties not primarily held for sale to customers
or held for lease in the ordinary course of trade or business, or (W) Sale or lease of goods and services to senior citizens and
real property utilized for low-cost and socialized housing as persons with disabilities xxx
defined by RA 7279 (Urban Development and Housing Act of
1992), and other related laws, residential lot valued at (X) Transfer of property under Section 40 (C) (2) of the NIRC, as
P1,500,000 and below; house and lot, and other residential amended.
dwellings valued at P2,500,000 and below; Xxx
Section 40. (C) Exchange of Property
As to the sale of real properties not primarily held for sale to
customers, you have there the threshold at P1,500,000 and below. (2) Exception. – No gain or loss shall be recognized if in
pursuance of a plan of merger or consolidation –
(Q) Lease of a residential unit with a monthly rental not
exceeding P15,000; (a) A corporation, which is a party to a merger or
consolidation, exchanges property solely for
Take note here that it is the lease of a residential unit. stock in a corporation, which is a party to the
merger or consolidation; or
If you have several residential units, for as long as the lease does not (b) A shareholder exchanges stock in a
exceed P15,000, exempted yan. corporation, which is a party to the merger or
consolidation, solely for the stock of another
Even if the total collection, the total monthly rentals that you could corporation, also to the merger or
generate is 10 Million per month, for as long as each unit owned and consolidation; or
rented out is P15,000 or below, you are exempted. Because the law (c) A security holder of a corporation, which is a
states that the exemption is lease of a residential unit with a monthly party to the merger or consolidation,
rental not exceeding P15,000. exchanges his securities in such corporation,
solely for stock or securities in another
(R) Sale, importation, printing or publication of books and any corporation, a party to the merger or
newspaper, magazine, review or bulletin which appears at consolidation. xxx
regular intervals with fixed prices for subscription and sale and
which is not devoted principally to the publication of paid Under Section 40, you have the no gain or loss recognition, wherein
advertisements; properties are exchanged for shares of stocks. Ordinarily, when
properties are transferred in exchange for shares of stocks, they will
(S) Transport of passengers by international carriers; be subject to the VAT. And there was a time when they were subject
to a documentary stamp tax (DST). Now, there is no gain or loss, not
 If it is an International Carrier transporting passengers, it is subject to income, and not subject to DST by reason of the exchange,
exempted from the VAT. so the transfer is also not subject to the VAT.
 But if it is a Domestic Carrier transporting passengers on (Y) Association dues, membership fees, and other assessments
international flight of destination, it is Zero-rated. and charges collected by homeowners associations and
condominium corporations;
 If it is a Domestic Carrier transporting passengers or cargo,
domestic or local, then there is a ***** (Dean literally (Z) Sale of gold to the Bangko Sentral ng Pilipinas.
murmured )
This used to be zero rated. Under TRAIN, it is now exempted.
(AA) Sale of drugs and medicines prescribed for diabetes, high While the Output VAT is the VAT due on the sale or lease of taxable
cholesterol, and hypertension beginning January 1, 2019. goods or properties or services by any person registered or required
under Section 236.
(BB) Sale or lease of goods or properties or the performance of
services other than the transactions mentioned in the preceding
paragraphs, the gross annual sales and/or receipts do not exceed Sources of Input VAT:
the amount of 3 Million pesos.
a. Purchase of importation of goods
CURRENT THRESHOLD b. Purchase of real properties where VAT is paid
c. Purchase of services where VAT is paid
Ito yung bagong threshold – 3 MILLION. d. Transactions deemed sale
e. Transitional Input VAT ( Sec. 111)
If you exceed 3M, the transaction now will be part of the 12% VAT f. Presumptive Input VAT (Sec. 111)
system.
So the seller, being exempted from VAT, is not allowed any Input VAT Now, if a VAT registered person is engaged in VAT and Non-VAT
Tax Credit. This is because he is not covered by the Ouput VAT minus activities, he shall be allowed Input VAT credits:
the Input VAT in so far as the exempted transaction.
a. Input VAT directly attributable to the VAT transaction, and
So, the threshold for VAT purposes beginning January 1, 2018 is 3 b. Ratable portion of any Input VAT which cannot be directly
Million. If your gross sales would exceed 3M at any time during the attributed to either activity (allocating or pro-rating for VAT
year where you used to be Non-VAT, you need to shift from being a and Non-VAT)
Non-VAT to VAT.
If your business is subject to VAT and Non-VAT, then meron kang
input VAT which is being used both by your VAT and Non-VAT
REGISTRATION REQUIREMENTS activities.
VAT and Non-VAT persons shall register as such and pay a registration Example, meron kang warehouse which is being used both by your
fee of P500 annually. VAT and Non-VAT activities, in it meron kang guardiya. The security
guard services is subject to the 12% VAT. So the VAT passed on to you,
The deadline of annual registration is on January 20. are you allowed to claim 100% input VAT or the VAT passed on from
the services to your 12% VAT activity? You are not allowed to do that
because you have to make a ratable portion, kung saan yung icharge
COMPUTATION OF VAT LIABILITY to Non-VAT and saan mo ichacharge so 12% VAT.
Output VAT (12% from sales) GSP/GVM/GR P xxx Let us say, it will be based on the attribution, what is the percentage
Less: Input VAT (12% VAT passed on/shifted of your total sales – 60% accounts for you VAT activities, 40% accounts
on Account of purchases or importation) P xxx for Non-VAT activities. Unless you can determine that the input is
directly attributable to a VAT activity then you apply accordingly. If it
VATDue/Payable P xxx accounts for both, then you make a ratable distribution or prorating
system so that you will have a more accurate presentation of your
Determine the Output VAT (the 12% VAT from the sales) taken from VAT payable.
the gross selling price, gross value in money or gross receipts, less the
Input VAT (that is the VAT which is passed on or shifted to the seller
on account of purchases or importation). That is how you obtain the VAT RETURNS
VAT due or payable
In so far as the VAT returns, there is a:
a. Monthly return
SOURCES OF INPUT VAT CREDITS (Section 110) b. Quarterly return
Q: What is an Input and Output VAT? The Monthly returns are VAT monthly declarations within 20 days
following the end of the month.
Input VAT is the VAT due or paid by the VAT registered person in the
course of trade or business on importation of goods or local purchases The monthly returns will cover the first 2 months of the quarter, while
of goods or services, including lease or use of property from a VAT the 3rd month will be the Quarterly VAT return made within 25 days
registered person, including further the transitional input VAT under from the close of its taxable quarter.
Section 111.

12% VAT taxpayer: of your unsold inventory. (Kasi you will now be part of the VAT system,
Output VAT P xxx you will be paying output less input equals the VAT payable.)
Less: Input VAT P xxx
(Excess output VAT) Pay VAT due P xxx The law gives you a 2% of the VAT or the actual VAT. If you have the
receipts and you could trace (for the unsold merchandise) ano yung
So the 12% VAT taxpayer pays the tax through the Output VAT corresponding input VAT, then you are allowed because that is higher.
generated from the 12% of their sales, less the Input VAT of the VAT
passed on to the tax payer. So, pag nabenta yung unsold merchandise mo, then, when you will
now make a remittance, you are now entitled to claim an input VAT,
Kung may excess output, you pay the VAT due. because it would be unfair na may VAT ka pero di ka allowed to claim
an input VAT by reason that you shifted.
Pero kung mas malaki yung input vat kesa sa output VAT, then there
is an excess Input VAT. SEC 111. Transitional/Presumptive Input Tax Credits. – xxx
For the 12% VAT taxpayer he is not allowed to apply for a refund. The (B) Presumptive Input Tax Credits. – Persons or firms engaged in
excess input shall be carried over to the succeeding quarter or the processing of sardines, mackerel and milk, and in
quarters. manufacturing refined sugar, cooking oil and packed noodle
based instant meals, shall be allowed a presumptive input tax,
Zero-rated VAT taxpayer: creditable against the output tax, equivalent to 4% of the gross
Output VAT (0%) P xxx value in money of their purchases of primary agricultural
Less: Input VAT P xxx products which are used as inputs to their production.
(Excess input VAT) No VAT due P xxx
As used in this Subsection, the term “processing” shall mean
In so far as the zero rated, wala siyang output kasi 0%, he has an input pasteurization, canning and activities which through physical or
VAT, so what he does to these input is he will apply for a refund or a chemical process alter the exterior texture or form or inner
tax credit certificate under Section 112. substance of a product in such manner as to prepare it for special
use to which it could not have been put in its original form or
condition.
INPUT VAT: TRANSITIONAL AND PRESUMPTIVE (Section 111)
Yung presumptive naman are those who manufacture or produce
SEC 111. Transitional/Presumptive Input Tax Credits. – products using raw materials which are exempted from VAT. These
are persons or firms engaged in the processing of sardines, kasi yung
(A) Transitional Input Tax Credits. – A person who becomes liable marine food products wala man yang VAT. So, iprocess mo, gawin
to VAT or any person who elects to be a VAT-registered person, mong sardinas, then nasa lata na. Then may VAT naman yan on sale,
shall, subject to the filing of an inventory according to rules and pero, you are not allowed to avail of the input, so the law now gives
regulations prescribed by the Secretary of Finance, upon you this presumptive input tax credit – Allowing you 4% of the gross
recommendation of the Commissioner, be allowed input tax on value in money of their purchases of primary agricultural products
his beginning inventory of goods, materials and supplies which are used as inputs or raw materials to their production. So, the
equivalent to 2% of the value of such inventory or the actual VAT law provides for the certain activities.
paid on such goods, materials and supplies, whichever is higher,
which shall be creditable against output tax. xxx
REFUNDS OR TAX CREDITS OF INPUT VAT BY ZERO-RATED
We have Section 111, this has not been amended, this is still the same TAXPAYERS (Section 112)
law before.
SEC. 112. Refunds or Tax Credits of Input Tax. –
Yung transitional is when you shifted from Non-VAT to VAT. Such
taxpayer who shifted would then be allowed to bring a transitional (A) Zero-Rated or Effectively Zero-Rated Sales. – Any VAT-
input VAT equivalent to 2% of the value of such goods, or kung ma registered person, whose sales are zero rated or effectively zero
account niya yung input – then the actual VAT paid on such goods, rated may, within 2 years after the close of the taxable quarter
materials and supplies. when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid
So, ang nangyari dito, during the year, you’ve reached the 3M attributable to such sales, except transitional input tax, to the
threshold kasi you started the year as Non-VAT. February pa lang, you extent that such input tax has not been applied against output
exceeded na sa 3M, so the law will require you to shift from Non-VAT tax: xxx
to VAT. So magregister ka ngayon as VAT registered, so ngayon 12%
ka na. Now, in your unsold merchandise or unsold inventory, pag Then you have the refunds.
nabenta yang mga unsold inventory mo at the time of cut-off, vatable
na yang sales mo. So, the law now gives you a transitional input VAT Q: How were the refunds prior to TRAIN?

The refunds or tax credits of Input VAT by Zero-rated Taxpayers So, the BIR personnel is given 90 day period to decide, kung hindi siya
(Section 112), kasi for them, the input VAT they accumulate cannot magdecide, may mangyayari sa kanya. Then you have to wait for the
be used as a carry over to the next returns. They will just continue decision.
accumulating Input VAT because their Output VAT is zero. Under
Section 112, they are allowed to file a refund. Could you speculate that after the lapse of the 90 day period you
would now go to the CTA, within 30 days from the lapse of the 90 day
Q: When to file? period? To my mind, you could still do that without waiting for the
decision if the 90 day period lapses. Anong basis mo? Your basis would
The application of the refund is filed with the Commissioner within 2 now be the CTA, another law – because under the law creating the
years after the close of the taxable quarter when the sales were CTA, you have there the jurisdiction in cases of inaction. In case of an
made. So, every taxable quarter kung may input VAT ka, you should inaction and there is a period to decide, then you may go to the CTA.
have been given 2 years from the close of the taxable quarter,
whether that be calendar or fiscal quarter, to file the refund. Either you will wait for the decision even beyond the 90 day period,
or you may go to the CTA within 30 days from the lapse of the 90 day
Q: What is the period for the BIR to decide? period.
In the hands of the BIR, they are given 120 days, now 90 days nalang (In the absence that the law does not say that you could go from the
under the TRAIN law, to decide from the date of submission of lapse) If you base it from the statutory provisions under Section 112,
complete documents in support of the application. you must wait for the decision, without prejudice to the
administrative action or the sanctions that would be done to the BIR
In case the refund is denied, or there is an inaction, the Zero-rated personnel.
VAT taxpayer has 30 days from receipt of the denial or after the
expiration of the 120 (now 90) day period to decide, to appeal to the
Court of Tax Appeals (CTA). Refund CTA EN
CIR CTA DIV SC
Claim BANC
SEC. 112. Refunds or Tax Credits of Input Tax. –
(C) Period within which Refund or Tax Credit of Input Taxes shall (For Sections 113-115, Dean did not discuss but is enumerated only in
be Made. – In proper cases, the Commissioner shall grant a his powerpoint)
refund for creditable input taxes within 90 days from the date of
submission of the official receipt or invoices and other
documents in support of the application filed in accordance with INVOICING AND ACCOUNTING REQUIREMENTS (Section 113)
Subsection (A) and (B) hereof; Provided, That should the
Commissioner find that the grant of refund is not proper, the SEC. 113. Invoicing and Accounting Requirements for VAT-
Commissioner must state in writing the legal and factual basis for Registered Persons. –
the denial.
(A) Invoicing Requirements. – A VAT-registered person shall
In case of full or partial denial of the claim for tax refund, the issue:
taxpayer affected may, within 30 days from the receipt of the
decision denying the claim, appeal the decision with the CTA: (1) A VAT invoice for every sale, barter or exchange of
Provided, however, That failure on the part of any official, agent goods or properties; and
or employee of the BIR to act on the application within the 90 day (2) A VAT official receipt for every lease of goods or
period shall be punishable under Section 269 of this Code. properties, and for every sale, barter or exchange of
services.
In proper cases, the Commissioner shall grant a refund for creditable
input taxes within 90 days. (B) Information Contained in the VAT Invoice or VAT Official
Receipt. – The following information shall be indicated in the
What is Section 269? Violations Committed by Government VAT invoice or VAT official receipt:
Enforcement Officers. They shall be punished by a fine of not less than
50T but not more than 100T and suffer imprisonment of not less than (1) A statement that the seller is a VAT-registered
10 years but not more than 15 years and shall likewise suffer an person, followed by his Taxpayer's Identification
additional penalty of perpetual disqualification to hold public office, Number (TIN); and
to vote, and to participate in any public election. (2) The total amount which the purchaser pays or is
obligated to pay to the seller with the indication that
So, while the **** BIR personnel will suffer, what about the claim na such amount includes the value-added tax. Provided,
hindi niya inactionan? In other words, should you wait for the That:
decision? Yes, because the new statute does not say that in case of
the lapse of the 90day period, unlike the old law na when the 120 day (a) The amount of the tax shall be known as a
lapses you can go to the CTA. Now, you have to wait for the decision. separate item in the invoice or receipt;

(b) If the sale is exempt from value-added tax, (b) The VAT shall, if the other requisite
the term “VAT-exempt sale: shall be written information required under Subsection
or printed prominently on the invoice or (B) hereof is shown on the invoice or
receipt; receipt, be recognized as an input tax
(c) If the sale is subject to zero percent (0%) credit to the purchaser under Section
value-added tax, the term “zero-rated sale” 110 of this Code.
shall be written or printed prominently on
the invoice or receipt.
(d) If the sale involved goods, properties or (2) If a VAT-registered person issues a VAT invoice
services some of which are subject to and or VAT official receipt for a VAT-exempt
some of which are VAT zero-rated or Vat transaction, but fails to display prominently on
exempt, the invoice or receipt shall clearly the invoice or receipt the term ‘VAT exempt
indicate the break-down of the sale price sale,’ the issuer shall be liable to account for the
between its taxable, exempt and zero-rated tax imposed in section 106 or 108 as if Section
components, and the calculation of the 109 did not apply.
value-added tax on each portion of the sale
shall be known on the invoice or receipt: (E) Transitional Period. – Notwithstanding Subsection (B)
Provided, That the seller may issue hereof, taxpayers may continue to issue VAT invoices and VAT
separate invoices or receipts for the official receipt for the period July 1, 2005 to December 31, 2005
taxable, exempt, and zero-rated in accordance with Bureau of Internal Revenue administrative
components of the sale. practices that existed as of December 31, 2004.
(3) The date of transaction, quantity, unit cost and Here, you must indicate na VAT yan or Non VAT or Zero-rated.
description of the goods or properties or nature of
the service; and
(4) In the case of sales in the amount of One thousand RETURN AND PAYMENT OF THE VAT (Section 114)
pesos (P1,000) or more where the sale or transfer is
made to a VAT-registered person, the name, business SEC. 114. Return and Payment of Value-Added Tax. –
style, if any, address and Taxpayer Identification
Number (TIN) of the purchaser, customer or client. (A) In General. – Every person liable to pay the value-added tax
imposed under this Title shall file a quarterly return of the
(C) Accounting Requirements. – Notwithstanding the provisions amount of his gross sales or receipts within twenty-five (25) days
of Section 233, all persons subject to the value-added tax under following the close of each taxable quarter prescribed for each
Sections 106 and 108 shall, in addition to the regular accounting taxpayer: Provided, however, That VAT-registered persons shall
records required, maintain a subsidiary sales journal and pay the value-added tax on a monthly basis: Provided, finally,
subsidiary purchase journal on which the daily sales and That beginning January 1, 2023, the filing and payment required
purchases are recorded. The subsidiary journals shall contain under this Subsection shall be done within 25 days following the
such information as may be required by the Secretary of close of each taxable quarter.
Finance.
Any person, whose registration has been cancelled in accordance
(D) Consequence of Issuing Erroneous VAT Invoice or VAT with Section 236, shall file a return and pay the tax due thereon
Official Receipt. – within 25 days from the date of cancellation of registration:
Provided, That only one consolidated return shall be filed by the
(1) If a person who is not a VAT-registered person taxpayer for his principal place of business or head office and all
issues an invoice or receipt showing his Taxpayer branches.
Identification Number (TIN), followed by the
word “VAT”; (B) Where to File the Return and Pay the Tax. – Except as the
Commissioner otherwise permits, the return shall be filed with
(a) The issuer shall, in addition to any and the tax paid to an authorized agent bank, Revenue Collection
liability to other percentage taxes, be Officer or duly authorized city or municipal Treasurer in the
liable to: Philippines located within the revenue district where the
i. The tax imposed in Section taxpayer is registered or required to register.
106 or 108 without the
benefit of any input tax (C) Withholding of Creditable Value-added Tax. – The
credit; and Government or any of its political subdivisions, instrumentalities
ii. A 50% surcharge under or agencies, including government-owned or -controlled
Section 248(B) of this Code; corporations (GOCCs) shall, before making payment on account
of each purchase of goods and services which are subject to the
value-added tax imposed in Sections 106 and 108 of this Code,
deduct and withhold the value-added tax imposed in Sections 19 FEBRRUARY 2019
106 and 108 of this Code, deduct and withhold a final value- Jardnel & Ceballos
added tax at the rate of 5% of the gross payment thereof:
Provided, That beginning January 1, 2021, the VAT withholding
system under this Subsection shall shift from final to creditable RULES ON THE REMEDIES IN THE NIRC
system: Provided, further, That the payment for lease or use of
properties or property rights to nonresident owners shall be We will jump from VAT and then we will go to Title 8 which is
subject to 12% withholding tax at the time of payment. Provided, Remedies under the NIRC.
however, that payments for purchases of goods and services
arising from projects funded by Official Development Assistance
(ODA) as defined under RA No. 8182, otherwise known as the SELF-ASSESSING TAXES vs. NON SELF-ASSESSING TAXES
Official Development Assistance Act of 1996, as amended, shall
not be subject to the final withholding tax system as imposed in It does not follow that after the filing of the returns, the return that
this Subsection. For purposes of this Section, the payor or person you have complied and the tax that you have paid, your liability for
in control of the payment shall be considered as the withholding taxes ends. It does not always follow, because the nature of the taxes
agent. in the NIRC are what we called self-assessing taxes as against the non-
assessing taxes.
The value-added tax withheld under this Section shall be
remitted within 10 days following the end of the month the The nature of the taxes under the NIRC is self-assessing because it is
withholding was made. the taxpayer who files a return, determines his liability or the
corporation’s liability or determines the tax that he/she/it is going to
pay. So, there is a self-assessment.
POWER OF THE CIR TO SUSPEND BUSINESS OPERATIONS FOR VAT
VIOLATIONS (Section 115) Considering that there is a self-assessment, the government now
comes in to determine whether the returns that you have filed were
SEC. 115. Power of the Commissioner to Suspend the Business accurate and correct compared to the non-self-assessing wherein
Operations of a Taxpayer. – The Commissioner or his authorized there is already a government intervention that comes in to assist
representative is hereby empowered to suspend the business you in determining liability. So more or less tama yun kasi may other
operations and temporarily close the business establishment of party involved or government agency to assist you in determining
any person for any of the following violations: your liability like in the case of Real Property Tax (RPT).
(a) In the case of a VAT-registered Person. – IN CASE OF REAL PROPERTY TAX

(1) Failure to issue receipts or invoices;
(2) Failure to file a value-added tax return as required In the case of RPT, the taxpayer or property owner would not know
under Section 114; or the tax liability because there is an intervention by the Office of the
(3) Understatement of taxable sales or receipts by assessor who determines the Fair market Value (FMV) of the real
thirty percent (30%) or more of his correct taxable property and the assessed value. The taxpayer would not know the
sales or receipts for the taxable quarter. assessed value unless there is an intervention from the assessor’s
office.
(b) Failure of any Person to Register as Required under Section
236. In the case of RPT, the assessor determines FMV as well as the
assessed value of the property and the taxpayer does not know it
The temporary closure of the establishment shall be for the because there is a percentage provided by law in determining the
duration of not less than five (5) days and shall be lifted only upon classification of the real property and the local treasurer now collects
compliance with whatever requirements prescribed by the the tax on the basis of the assessed value of the property times the
Commissioner in the closure order. rate. So this is the nature of the non-self-assessing.
So, reminder lang, the Revenue Regulations for the VAT, you have RR
13-2018. IN CASE OF TARIFF AND CUSTOMS CODE
From VAT, we will go to REMEDIES next meeting. We will not anymore The same thing goes to the Tariff and Customs Code (TCC). In the
take up Excise. Tariff and customs duties where the collector comes in to determine
the dutiable value and assess what would be the corresponding duties
and tariff of that imported article. So the importer does not make a
self-assessment. He brings in documents by way of import entries to
the collector. The collector through the custom’s appraiser and
examiner will examine the imported articles whether the articles

would correspond to what we call the import entry and the bill of SECTION 203. Period of Limitation Upon Assessment and
lading whether they are consistent. Collection. – Except as provided in Section 222, internal revenue
taxes shall be assessed within three (3) years after the last day
So if the actual articles and the documents are consistent, it will now prescribed by law for the filing of the return, and no proceeding
determine the dutiable value. And from the dutiable value, we’ll now in court without assessment for the collection of such taxes shall
impose the corresponding duty, whether it is an ad valorem rate or be begun after the expiration of such period: Provided, That in a
specific rate or some other rate or prompt measurement under the case where a return is filed beyond the period prescribed by law,
TCC. Then now the collector will inform the collector na ito yung the three (3)-year period shall be counted from the day the
duties and taxes na babayaran mo. These are not self-assessing. return was filed.
For purposes of this Section, a return filed before the last day
Unlike in the NIRC, most of the taxes there almost fall, when we go to prescribed by law for the filing thereof shall be considered as
income, the taxpayer there files an ITR, He determines kung ano ang filed on such last day.
income nya then he computes the tax.
So you have the provision of your Section 203 that taxes shall be
assessed within 3 years after the last day prescribed by law for the
IN CASE OF ESTATE AND DONOR’S TAX 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
In estate tax, estate of the heirs, the executor or administrator makes periods.
an inventory of the properties owned by the estate and then
determines what would be the taxable value and the interests and tax In other words, the government cannot collect unless there is a prior
that they should pay. The same thing with donor or the one giving the assessment. Dapat mauna yung assessment.
gift files the gift tax return and determines the taxable value of the
donation and makes an assessment of the tax. Those are the same
with VAT, the excise tax whether alcohol, the cigarettes or tobacco or LETTER OF AUTHORITY (LOA)
excise tax on the petroleum products or on the other excise tax like
the tax on sweetened beverages or the documentary stamp tax. The In the assessment process, the government through the revenue
taxpayer makes a self-assessment. examiners will serve the Letter of Authority (LOA). It is the document
that is served upon the taxpayer that is now under investigation and
audit for a certain tax year. The LOA should determine the tax period
ASSESSMENT STAGE of which the taxpayer is subject to assessment. So if there is the LOA,
the taxpayer should submit his books and business records because
Since the government now has to figure out and determine whether these will now be subject to an audit and examination as well as
the returns were correct and accurate, these returns now will be investigation of the records of the taxpayer to find out whether the
subject to what we call an assessment, whether meron kang return was correct. Otherwise, you will be notified of the findings of
deficiency tax na babayaran on the basis of the return kung tama ba deficiency.
yung return niya kasi kung tama, then you will notified na “ okay,
there is no deficiency here or if there is a deficiency then you will be
notified.” PROCESS:
So from the filing of the return, the government is given the 1. LOA
prescriptive period to make an assessment and you have under 2. Taxpayer (TP) submits:
Section 203, the period which the government is asked to make an a. Books
assessment. So the assessment is that process given as the power of b. Business records
the government through the Commissioner on Internal Revenue to 3. Audit, examination and investigation
determine whether there is still a deficiency tax after the filing of the 4. Finding of deficiency
return.
NOTICE TO TAXPAYER:
PRESCRIPTIVE PERIOD FOR ASSESSMENT AND COLLECTION
1. Notice of informal conference
Under the NIRC, there is a prescriptive period. This is for purposes of 2. PAN
protecting the taxpayer. Di pwede na you’ll be open for investigation 3. FAN
for so many years and that would be now unfair on the part of the
taxpayer. So there is a period within which the government is allowed
to make an assessment under Section 203 for the general prescriptive This will take place during the 3-year period to make the assessment.
periods of 3 years for the filing of the returns. After 3 years and there is no assessment, the government is barred.
TAKE NOTE that the counting of the period is 3 years from the last day
prescribed by law for the filing of the return.
Whether you file the return before or during the deadline, the If the taxpayer fails to respond, the Commissioner or his duly
counting will be after the deadline. In our income tax, for the calendar authorized representative shall issue an assessment based on his
year you have April 15 which is the deadline for the return of the findings.
annual return for the previous year. If 2018 yung tax period, the Such assessment may be protested administratively by filing
deadline of the annual will be April 15, 2019. Beginning April 16 a request for reconsideration or reinvestigation within thirty (30)
onwards up to 3 years is the 3-year period within which to make an days from receipt of the assessment in such form and manner as
assessment. may be prescribed by implementing rules and regulations.
Within sixty (60) days from filing of the protest, all relevant
To continue with that process, there is a finding of deficiency then supporting documents shall have been submitted; otherwise, the
there will be notice to the taxpayer. The taxpayer will be notified and assessment shall become final.
the notice, the procedural aspect will be governed by the Revenue If the protest is denied in whole or in part, or is not acted
Regulations, RR 18-2013 then the amendment in RR 7-30. These are upon within one hundred eighty (180) days from submission of
the revenue regulations providing the procedure for the assessment. documents, the taxpayer adversely affected by the decision or
The notices which the taxpayer will receive will be the NOTICE OF inaction may appeal to the Court of Tax Appeals within thirty (30)
INFORMAL CONFERENCE. This was taken out in RR 18-2013. days from receipt of the said decision, or from the lapse of one
hundred eighty (180)-day period; otherwise, the decision shall
Ang requirement nila diretso na PAN once there is a finding of become final, executory and demandable.
deficiency.
The revenue regulations providing for that process, you have RR 18-
In 2018, they came out with an amendment na ibinalik ang notice of 2013 and 7-2018.
informal conference so balik ito ngayon. Then if that is ignored, you
have the PAN, the pre-assessment notice or Preliminary Assessment
Notice, you have section 228. Then they file an assessment notice SUMMARY:
under section 228.
(1) The filing of return then see table for the subsequent
SECTION 228. Protesting of Assessment. – When the process.
Commissioner or his duly authorized representative finds that
proper taxes should be assessed, he shall first notify the taxpayer PRIOR TO RR 18- DURING RR 18- DURING 2018
of his findings: Provided, however, That a pre-assessment notice 2013 2013 AMENDMENT
shall not be required in the following cases:
Finding of Finding of Finding of
(a) When the finding for any deficiency tax is the result of deficiency deficiency deficiency
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 Notice of Notice of Notice of
withholding agent; or Informal Informal Informal
(c) When a taxpayer who opted to claim a refund or tax Conference Conference Conference
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 PAN PAN PAN
quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not
been paid; or
(e) When the article locally purchased or imported by an FAN FAN FAN
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. Collection Collection Collection
The taxpayers shall be informed in writing of the law and the

facts on which the assessment is made; otherwise, the These notices should happen within the 3-Year period. So, prior to the
assessment shall be void. end within the 3-year period to make an assessment, the notice of
Within a period to be prescribed by implementing rules and informal conference should be made. If a notice of informal
regulations, the taxpayer shall be required to respond to said conference was released like 2015 tax year, the deadline is April 15,
notice. 2016 for the ITR. The assessment period will be from April 16, 2016 to
April 15, 2019 = 3 years. So when the notice of informal conference
was released on April 16 by me, the same thing goes with the rest of
the notices. Kung ang PAN was released on April 16 including the FAN, agreement made before the expiration of the period
then prescribed na rin. previously agreed upon.
These notices were released let’s say on April 15 - the deadline, even (c) Any internal revenue tax which has been assessed
though it was received by the taxpayer on April 20, the prescription within the period of limitation as prescribed in
has not yet set in because the notices were released on or before the paragraph (a) hereof may be collected by distraint or
deadline. In other words, even if the notices were received after the levy or by a proceeding in court within five (5) years
deadline for as long as they were released and sent on or before the following the assessment of the tax.
deadline, the prescription has not yet set in, meaning the notices
have not yet prescribed. So you have that period within which to (d) Any internal revenue tax, which has been assessed
make an assessment – 3 years. within the period agreed upon as provided in
paragraph (b) hereinabove, may be collected by
In so far as collection, the government cannot collect without these distraint or levy or by a proceeding in court within the
assessment notices kasi what is your basis of collecting kung wala period agreed upon in writing before the expiration of
naming deficiency. These are requirements of due process. For the five (5) -year period. The period so agreed upon
purposes of due process, the taxpayer must be notified that there is may be extended by subsequent written agreements
a finding of deficiency bago ka magcollect. If the government made before the expiration of the period previously
institutes a collection proceeding without a valid prior assessment agreed upon.
then that is a defense. No administrative collection or a proceeding in
court after the 3-year period. (e) Provided, however, That nothing in the immediately
preceding and paragraph (a) hereof shall be construed
So you have the general prescriptive period – 3 years. 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.
EXCEPTION
These are the exceptions then the tax or proceeding for the collection
By way of exception, you have Section 222 which provides for the of such tax may proceed without assessment at anytime within 10
exception to the general prescriptive period. years from the discovery of the falsity, fraud or omission.
GR: Section 203 (3 years)
EXC: Section 222 (10 years) EXC to EXC: SECTION 223 (PRINCIPLE OF IMPRESCRIPTIBILITY)
1. False return;
2. Fraudulent return with intent to evade the tax; or In these exceptions, the period to file without assessment is 10 years.
3. Failure to file a return The exception to the exception is Section 223 where you have this
Principle of Imprescriptibility. Ordinarily, there is prescription in the
EXC to EXC: Section 223 assessment of taxes. There is prescription of 3 years, there is
prescription of 10 years but there is imprescriptibility.
TEN YEARS ASSESSMENT AND COLLECTION You have the instance of imprescriptibility of taxes under section
223. Before we proceed to that we have the things that will happen
SECTION 222. Exceptions as to Period of Limitation of Assessment during the assessment.
and Collection of Taxes.
Q: In case of the 10 year period for false return, fraudulent return
(a) In the case of a false or fraudulent return with intent to with intent to evade and failure to file a return, in 222-b, since the
evade tax or of failure to file a return, the tax may be government is given 3 years to make an assessment, can the
assessed, or a preceding in court for the collection of government ask for an extension of the 3-year prescriptive period?
such tax may be filed without assessment, at any time
within ten (10) years after the discovery of the falsity, YES. Under Section 222-b if before the expiration of the time
fraud or omission: Provided, That in a fraud assessment prescribed in section 203 of NIRC, both the commissioner and
which has become final and executory, the fact of fraud taxpayer have agreed in writing for the assessment after such time,
shall be judicially taken cognizance of in the civil or the tax may be assessed within the period agreed upon.
criminal action for the collection thereof.
(b) If before the expiration of the time prescribed in CONDITIONS

Section 203 for the assessment of the tax, both the
Commissioner and the taxpayer have agreed in writing In other words, the government, the commissioner and the taxpayer
to its assessment after such time, the tax may be should agree. It’s not unilateral, it’s an agreement by both. Provided
assessed within the period agreed upon. The period so that we have the conditions:
agreed upon may be extended by subsequent written

1. It must be made before the expiration; You have the tax returns, the assessment wherein you have the notice
2. It must be agreed in writing both by the commissioner and of informal conference, from the notice of informal conference to
the taxpayer; Pre-assessment Notice (PAN) then after that, the final assessment
3. Provide for the certainty of the period of the extension. notice (FAN).
Hindi pwede yung kapag pumirma ka ng waiver of the period of

prescription, statutory waiver. The valid extension should provide a PROTEST
period certain agreed by the commissioner and the taxpayer.
You have section 228 governing the procedure as well as the
Q: Can they extend more years or can they make further extensions regulations on what the taxpayer should do. While there is no fatal
after making one, second or third extension? consequence when you would ignore the notice of informal
conference and the PAN, you can ignore those but not the FAN. In the
YES as long as the commissioner and the taxpayer have agreed. event that you ignore the FAN, meaning, you will not protest, then
the assessment becomes final and executory.
In one case (title not given), the commissioner has asked for an
extension then pumayag yung taxpayer tapos nag asked ng another When you receive the PAN, the remedy is to protest. While you could
extension then a third one, after that nagpadala na ng assessment protest at the onset, and rebut the findings of the notice of informal
notice of the finding of deficiency. conference, you can do that using the procedure laid down in the
regulations.
The taxpayer invoked the defense of prescription contending that
while the extension was signed by the taxpayer, the same was not Of course the BIR will not agree. They will proceed to notify you of the
signed by the commissioner. The commissioner argued that there is pre-assessment and insist on their findings tapos sumagot ka ulit
no need kasi pumirma na nga yung taxpayer eh. The SC in that case denying their claim. You will explain your basis pero, denied yung pre-
denied the argument of the BIR because of the strict and mandatory assessment mo so Final Assessment is the next notice that you will
requirements of section 222-b. It must be in writing and signed by receive.
both the commissioner and the taxpayer.
This time, the remedy is to protest. Again, you may ignore answering
Here, although it was signed by taxpayer, there was no conformity or the NIC & PAN but not the FAN.
consent by the commissioner. So the extension is null and void. There
was prescription so the assessment becomes null and void by reason The taxpayer will protest. He is given 30 days to make the protest.
of the prescription. He may file for a Motion for reconsideration (MR) or a Motion for
Reinvestigation under Section 228.
Now after making the assessment, the next thing that will happen is
the collection. In Section 228, you have the manner of the protest.
When the commissioner or his duly authorized representative

IN THE ASSESSMENT PROCESS: finds that the proper taxes should be assessed, he shall first notify
the taxpayer of his findings.
DEAN: That is the notice of informal conference.

Tax Return
Provided however that a pre-assessment notice shall not be
required in the following cases:
1. When the finding of the deficiency tax is the result of the
Assessment
error in computation;
(NIC) 2. When the discrepancy has been determined between
the tax withheld and the amount actually remitted;
3. When the excise tax due on the excisable articles has not
been paid;
PAN
4. When an article locally purchased or imported by an
exempt person has been sold, traded or transferred to a
non-exempt.
FAN
DEAN: because they are deemed considered imported. They have to
pay the taxes.
Protest w/in 30
days from
Those are the exceptions where there is no need for PAN.
receipt

In the PAN, the taxpayer should be informed in writing of the law and There is a legislative flaw on this provision on the second to the last
of the facts on which the assessment is based. Otherwise, it shall be paragraph of section 228.
VOID.
xxx
The notice of assessment should contain the facts and the law to Otherwise the assessment becomes final.
which the assessment was based. Otherwise upon the scrutiny of the xxx
assessment it was just a mere demand then you could invoke
invalidity, that the assessment is null and void because it fails to What assessment will become final if there is no decision? There is
comply under section 228. no assessment there that will become final.
Within the period prescribed, the taxpayer is required to respond In other words, the commissioner may either decide on the protest or
to such notice. If the taxpayer fails to respond then he shall issue will not act on the protest. If there is inaction, from the lapse of the
an assessment based on his findings. 180 period, the taxpayer is given 30 days to go to the CTA or the
taxpayer will wait for the decision.
Kung inignore mo ang PAN, you fail to respond to the PAN, then you
have now the FAN. If he will wait, then the taxpayer after the receipt of the denial still
has 30 days to go to the CTA. Here, in case there is a decision during
Q: What will you do now if you receive the FAN? the 180 day period or while waiting for the decision after the 180
days, and it is a denial, the remedy is appeal to the CTA.
Such assessment must be protested administratively. There is an
administrative process by filing an MR or motion for reinvestigation From the CTA division (div), then to the CTA en banc then to the SC.
within 30 days from receipt of notice. You have section 228 providing for the substantive aspect.
When all these procedural process will attain finality then you have
Motion for Reconsideration – no additional 60d the collection. Your assessment will go through an administrative and
PROTEST judicial process. There is an exhaustion of the administrative process.
In the hands now of the commissioner, if it is unfavourable to the
Motion for Reinvestigation – additional 60d taxpayer, it goes now to judicial review. Then the judicial review is
lodge before the CTA, first to the division then to the en banc then
finally to the SC.
If you file for a motion for reinvestigation, you are given an additional
period of 60 days from the filing of you MR to submit additional So will go to administrative and judicial. After that process then you
documents because the reinvestigation will require the submission of have the collection.
documents. Sa MR, dili. So tatanungin ka nyan ano ba ang protest mo?
MR o reinvestigation? You must be certain with the remedy that you
are availing. COLLECTION REMEDIES
If you availed of the motion for reinvestigation which should be filed In the collection remedies, what is the period to collect? You have
within 30 days from the receipt of the FAN, then you have additional section 222. The collection period is 5 years. Section 222(c), the
60 days from the filing of your motion for reinvestigation to submit prescriptive period to collect is 5 years.
additional documents.
DEAN reads:
That additional 60 days is not true to the MR. From the filing of the
recon and from the filing of the additional documents, the Any internal revenue tax that has been assessed within the period
government now or the commissioner has 180 days from submission may be collected by distraint or levy or by a proceeding in court. We
of documents or from the filing of the MR to decide. 180 days to have administrative and judicial collection within 5 years following
make a decision. the assessment.
The CIR now makes a decision. The period to decide is 180 days. The If they agreed to extend the collection under paragraph d, still it must
decision will be to grant your motion for reconsideration or be in writing and approved by the commissioner and the taxpayer so
reinvestigation or to deny. that they could collect outside the 5-year period.
Q: What happens if there is inaction?

TAX AMNESTY
So there is a decision or an inaction during the 180 period. If there is
inaction on the part of the commissioner, you have two options: The last paragraph of section 222 (e), in the event that there is a tax
1. In case of an inaction, you may appeal to the CTA; or amnesty that is extended by the government, the taxpayer has the
2. Wait for the decision. opportunity to avail the amnesty.

In the congress now, we have the tax amnesty bill. The president now SECTION 218. Injunction not Available to Restrain Collection of
wants that when the tax amnesty will come out, is the repeal of the Tax. – No court shall have the authority to grant an injunction to
bank secrecy law on taxation because right now the BIR could not restrain the collection of any national internal revenue tax, fee
inquire on bank accounts except for estate tax purposes or in case or charge imposed by this Code.
when you enter to a compromise in case of financial difficulty.
Dalawang instances lang. The president want that repeal so that the INJUNCTION
government could inquire the bank account to know if you’re paying
only this much when you have substantial accounts. If hindi ma justify One important principle in the assessment and collection of taxes is
ng bank account mo the tax that you’re paying so merong leakage. section 218, INJUNCTION.
Probably there was an income that has not been taxed.
Injunction is not available to restrain the collection of taxes. Again,
taxes are the lifeblood of the government. No court has the authority
IMPRESCRIPTIBILITY OF TAXES to grant injunction to restrain the collection of any internal revenue
tax, fee, charge or imposed.
Going back to section 223 that is the imprescriptibility of taxes, this
will cover both assessment and collection. In the collection, we have section 205 providing the remedies for
collection. We have the administrative and the judicial.
In 223, the running of the statute of limitations on general
prescriptive period is 3 years and section 222 in case of false,
fraudulent return and failure to file a return. DELINQUENT TAXES
The making of the assessment, distraint or levy or the proceeding SECTION 205. Remedies for the Collection of Delinquent Taxes. –
for the collection shall be suspended for the period: The civil remedies for the collection of internal revenue taxes,
fees or charges, and any increment thereto resulting from
(1) First, during which the commissioner is prohibited from delinquency shall be:
making the assessment or bringing distraint or levy or the
proceeding for the collection for 60 days thereafter; (a) By distraint of goods, chattels, or effects, and other
personal property of whatever character, including
(2) Second will be the taxpayer’s request for the stocks and other securities, debts, credits, bank
reinvestigation. accounts and interest in and rights to personal
property, and by levy upon real property and interest
(3) Third, where the taxpayer cannot be located in the address in rights to real property; and
given because when the address provided on the basis of (b) By civil or criminal action.
the return it was not received by the taxpayer, yung
assessment mo – prescription will not set in because here Either of these remedies or both simultaneously may be
the taxpayer cannot be located in the last known address, pursued in the discretion of the authorities charged with the
whether that is an assessment or collection. collection of such taxes: Provided, however, That the remedies
of distraint and levy shall not be availed of where the amount of
Provided that if the taxpayer informs the commissioner of tax involve is not more than One hundred pesos (P100).
the change of address then there is no suspension of the The judgment in the criminal case shall not only impose the
running of the prescriptive period. Kasalanan na ng BIR if penalty but shall also order payment of the taxes subject of the
nagpadala sila ng notice sa kanyang last address in the criminal case as finally decided by the Commissioner.
return when the taxpayer so provided a new address. The Bureau of Internal Revenue shall advance the amounts
There, prescription will set in. But if the taxpayer will needed to defray costs of collection by means of civil or criminal
provide his new address and the notices will be sent on that action, including the preservation or transportation of personal
then that will be the exception of the imprescriptibility. If property distrained and the advertisement and sale thereof, as
the taxpayer receives that during the period of assessment well as of real property and improvements thereon.
then that is a valid service of the notice.
In the administrative collection of taxes we have the following:
(4) Fourth, w hen the warrant of distraint or levy is duly served 1. Civil remedies for the collection of internal revenue tax;
and no property could be located, suspended yung 2. The distraint of goods and levy on real property; or
collection. Nag institute na ng collection proceedings 3. By civil or criminal action.
through distraint or levy but no property could be found
then suspended yung collection. So you the administrative by way of the distraint or garnishment in
the case of bank account or levy on the real property.
(5) The last is when the taxpayer is out of the country, whether
there is collection or assessment notices, there will be no The judicial may either be a civil action or a criminal action.
prescription to set in. Those are the instances of
imprescriptibility.

In the institution of these remedies, the government is not barred The prescriptive period is 5 years to file the criminal case.
from pursuing either of this or both simultaneously. So the Remember that a filling of a criminal action is a collection
government may proceed by administrative as well as by judicial remedy.
remedies. They may be pursued even at the same time or
simultaneously. In other words, the government is not barred from The filing of a criminal action is the only exception where
pursuing one or more of several of these available remedies. no prior assessment is required. In other words, when you
In case of criminal action, the judgment in the criminal case shall not file a civil action to collect an administrative remedy to
only impose the penalty but shall also order payment of the tax. The collect, this will require a prior assessment.
filing of the criminal action is a collection remedy.
Hindi makakolekta by way of civil or administrative kung
hindi dumaan ng assessment but not in a criminal action.
ADMINISTRATIVE REMEDIES No need of an assessment because there is a separate
process.
(1) By way of distraint; There is a criminal complaint that will be filed by the BIR,
before the DOJ or the prosecutor’s office and following the
You have section 206 on constructive distraints and section rules on criminal procedure, the taxpayer is given the time
207 (a) on actual distraints. It follows the same procedure to file a counter affidavit and then in the submission of
in your Rule 39 of your ROC on the execution of judgment. papers, the prosecution or the DOJ will look for probable
You may run after the personal or real properties of the cause. If there is probable cause, there is the filing of the
judgment debtor, in this case, against the taxpayer to satisfy information.
the tax liability.
In other words, if the taxpayer receives a criminal
(2) Section 207 (b) on levy of real property; complaint, the remedy is not to protest. His remedy is to file
(3) Levy on the tax lien under section 219; a counter-affidavit because that is the procedure. When
(4) Remedy of forfeiture in section 224; you file a protest what you will receive is a decision. The
(5) The informer’s reward in section 282; criminal complaint where it contain the computation of
(6) Remedies under sections 215 and 216 of the NIRC; your tax liability is not an assessment notice. You have
a. Section 215, authority of the internal revenue several jurisprudence on that matter.
officers to make arrests and seizures.
(7) Section 5 and 6. If taxpayer receives a criminal complaint and finding them
a. Section 5 is the power of the commissioner to na ito pala yung tax na babayaran nya to which the
obtain permission. corresponding criminal liability, the remedy will be protest.
b. Section 6, the power of the commissioner to That is wrong because in a criminal action has no
make assessments, prescribe the different assessment notice. It does not require a prior assessment
requirements for tax administration and notice.
enforcement. These are the list of some of your
administrative remedies. It is simply the filing of the criminal complaint and the
determination of the probable cause. Then the information
is filed in court and then trial and the decision. The decision
JUDICIAL REMEDIES will cover the corresponding criminal liability if there is.
(1) By way of a civil action; If there is none, the corresponding civil liability—the tax
that it has to pay despite the failure to prove guilt beyond
The civil action to collect the tax is the filing of a sum of reasonable doubt on the criminal aspect because such is not
money. It is a mere collection case filed by the government the degree of proof if you are only to determine the civil
against the taxpayer on the basis of the sum of money liability.
determined on the jurisdictional amount. If the amount to
be collected on final and executor judgments is over 1 You have the basic that in the institution of the criminal
million for taxes and fees, the jurisdiction is to the CA. if less action, it carries with it also the civil liability. The judgment
than 1 million then it will be either to the MTC or to the in the criminal action whether that is a conviction or
RTC. acquittal has carried with it the finding of the civil liability
for the payment of the tax.
(2) Criminal action
In section 281, the period of filing the criminal action for
In the case of criminal action under section, you have the violation of the NIRC is 5 years.
prescriptive period under section 281 for violation of the
NIRC.

COLLECTION REMEDIES encumbrance on the property like there is mortgage. Nauna na yung
judgment creditor. So it becomes inferior.
We mention on distraint under Section 206. In distraint, we have
what we call (1) constructive distraint and (2) actual distraint. Unlike in real property tax where the claim of the government for
RPT liability is superior even though there is an existing
encumbrance or mortgage. The same thing on customs duties on the
CONSTRUCTIVE DISTRAINT imported articles. Even if there is a claimant of the imported article,
the claim of the government for duties and taxes is superior to other
In constructive distraint, this is similar to the rule on preliminary claimants but not in the case of the NIRC.
attachment because the government notices that the taxpayer is
hiding his property or concealing. To enforce the lien, the government must annotate its claim before
the ROD where the property is located. Kung may nakauna na, inferior
These are some of the grounds to ask for, like when you have the na yung gobyerno for purposes of taxes under the NIRC.
debtor concealing his property - you can ask for preliminary
attachment. That is the nature of the constructive distraint wherein This lien shall not be valid under Section 219 against any mortgage,
the taxpayer is concealing or hiding properties then you may ask for purchaser or judgment creditor until notice of such lien.
constructive distraint wherein the notice will be served to the
taxpayer to preserve his property until further notice or if there is a When the lien is enforced, or na annotate na yung lien then the next
third person holding a property or credit owned by the taxpayer then proceeding is the levy. Ibenta or auction of property. The proceeds
that person will be served of the distraint requiring him to preserved will be applied. Any excess ibalik to the taxpayer.
until further notice by the BIR.
If there is a finding of deficiency and the judgment has become final FORFEITURE
then the proceeding is actual na.
In the case of forfeiture, there is seizure of property. In the
enforcement of forfeiture under section 224, in case of personal
ACTUAL DISTRAINT property there is seizure then the subsequent sale. If the property
seized is unfit for consumption, illegal or contrary to public policy or
In actual distraint, there is actual seizure of the property. Then the other grounds of which there are properties which are illegal then
property will be sold at a public auction. The proceeds will be applied there will destruction of property.
to the liability. Pag kulang, further distraint. Kung sobra, return any
excess to the taxpayer. In case of real property which is being forfeited then you annotate
your claim before the ROD in favor of the government. In the case of
forfeiture, proceeds will all go to the government. Walang ibabalik sa
LEVY taxpayer. After seizing the property, there will be sale. Lahat ng
proceeds pupunta sa gobyerno whether that is personal or real.
In levy, what is being pursued is the real properties. So go to the
Register of Deeds (ROD) and inquire into the real properties of the Forfeiture is a proceeding in rem. It is directed on the property. What
taxpayer. Kung meron, i-annotate the levy and there will be a notice were seized were taxable imported articles. Yung napuslit na laman
of sale which will be published. ng containers are sacks of rice brought unlawfully to the country, so
lahat yan. Kung smuggled, wala talagang magkiclaim na kanya yan.
The property will be sold to the highest bidder then the certificate of Smuggled nga. When that will be sold, all proceeds will go to the
sale will be annotated to the ROD for purposes of counting the one government.
year period. If no redemption – final deed will be released to the
purchaser. If there is redemption then the property will be returned. Q: What happens to the mode of conveyance?
The amount paid will be applied to the taxes. Kung sobra yung auction
price than the tax liability, then you return the excess to the owner or Yan kasi in the course of forfeiture the mode of conveyance is also
taxpayer. Pag kulang, further levy. seized whether that is an airplane, a ship or any kind of
transportation. So those will be seized including the taxable items.
DISTRAINT AND LEVY MAY BE PURSUED SIMULTANEOUSLY BY THE
GOVERNMENT TO SATISFY THE TAX LIABILITY. The owner of these mode of conveyance could not invoke lack of
knowledge na yung kanyang sasakyan is used for illicit or illegal
purposes. That is not a defense. That is a personal defense if there is
ENFORCEMENT OF A TAX LIEN a prosecution of the criminal action not for purposes of forfeiture
because the purpose of forfeiture is to have the item seized to be
The other remedy is the enforcement of a tax lien under Section 219. brought into the hands of the government. There is seizure and then
Under the NIRC, the lien of the government for taxes in the properties forfeited in favor of the government. Lahat mapunta sa gobyerno.
of the taxpayer is inferior if there is already an annotation or an

COMPROMISE UNDER SECTION 204 But if from the filing of your initial return, you have been subjected to
assessment notice by reason of the service of the LOA, you cannot be
Another remedy, you have compromise under Section 204. In the allowed to amend anymore. Once you are served with LOA, the
course of the proceedings for the assessment or collection, at what taxpayer can no longer file any amendment.
point in time should you offer to compromise?
Any return, statement or declaration under SEC. 6 (a) 3rd paragraph,
The offer to compromise may be done by the taxpayer at anytime filed in any office, corporation shall not be withdrawn. Hindi mo
whether the assessment is still at the administrative or even in the iwithdraw mag file kalang ng amendment. Provided that within 3
judicial proceedings na or sa CTA na sya, the offer to compromise will years it may be modified, changed or amended. No notice for audit or
be pursued even at that point in time. Even if they’ve become final, investigation of such return statement or declaration asked in the
you may offer to compromise. meantime be actually served upon the taxpayer. For the meantime
wala pang notice if you are under investigation or under LOA, you will
Under section 204, you have the modes of offering a compromise, be examined. Once you been served with that you are no longer
authority of the commissioner to compromise, compromise payment allowed to make an amended return.
when there is reasonable doubt as to the validity of the tax claim
against the taxpayer. There is a doubt but then there is clear inability NOTE: Final exam will cover the estate, the donor’s, the VAT, the
to pay or difficulty to pay, compromise. Ang requirement is offer your remedies and then the CTA
bank accounts so that the government can inquire.
The compromise settlement of any tax liability shall be subject to: SUMMARY OF THE FLOW:
1. Cases of financial incapacity-10 %
2. Other cases like reasonable doubt-40 % FILE A RETURN
The taxes, the basic tax exceeds 1 million, the settlement offered is
less than the minimum, the compromise now will be subject to the
approval of the equal division court no longer in the hands of the FINDING OF DEFICIENCY
commissioner.
ABATEMENT OR CANCELLATION OF TAX LIABILITY NOTICE OF INFORMAL CONFERENCE
When the tax or portion thereof is unjust or excessive you may ask for
cancellation. Or when the administration or collection cost would not
justify the claim itself, in other words, yung deficiency findings nila is PAN
only 100k then they spent more than 100k to run after you to collect (You may or may not protest.)
the 100k from you, they’d rather abate. The cost of collection is more
than the amount to be collected so abate or cancel the tax liability.
 GR: All criminal violations, may be compromised maski FAN

nafile na ang criminal case for violation of the NIRC, it is still (Such assessment must be protested administratively. There is an
subject to compromise. administrative process by filing an MR or motion for reinvestigation
 EXC: Those already filed in court and those already in the within 30 days from receipt of notice.
textbook (?) but in practice even nakafile sya, nag go go
parin kasi yung interest ng gobyerno is revenue collection If you availed of the motion for reinvestigation which should be filed
not to go into litigation. So kung may compromise the within 30 days from the receipt of the FAN, then you have additional
government will accept. 60 days from the filing of your motion for reinvestigation to submit
additional documents. That additional 60 days is not true to the MR.)
AMENDED RETURN
If the filing the returns, the taxpayer is allowed to amend his return. DECISION
When you amend a return, you file a new return. Kung ano ang tax (From the filing of the recon and from the filing of the additional
mo na nabayaran sa first return, icredit mo lang. The taxpayer may documents, the government now or the commissioner has 180 days
amend the return at anytime within 3 years from the filing of the last from submission of documents or from the filing of the MR to decide.)
return, the first tax return.
What happens if there is inaction?
Why 3 years? Because after the 3-year period prescription will set in.
There is no need to amend pag nagprescribe na. So there is a decision or an inaction during the 180 period. If there is
inaction on the part of the commissioner, you have two options:

1. Appeal to the CTA; or within which the government is allowed by law to conduct an
2. Wait for the decision. examination should only within the prescriptive periods.
If he will wait, then the taxpayer after the receipt of the denial still If your deadline is April 15, the counting begins from such date and
has 30 days to go to the CTA. Here, in case there is a decision during not the actual date of filing. From then, the taxpayer may be served
the 180 day period or while waiting for the decision after the 180 with the LOA and under that he may be required to submit books of
days, and it is a denial, the remedy is appeal to the CTA. account, business records, etc.
From the CTA, so this is CTA by division then to the en banc then to
the SC.) Notice for Informal Conference
In the event that there is finding of deficiency or deficiency tax, there

will a notice for informal conference. In RR no. 12-99, to comply with
COLLECTION the requirement of due process, the procedure for informal
(The collection period is 5 years.) conference was provided. In RR no. 18-13, such requirement was,
however, repealed and so it was deleted. But in RR No. 7-18, it was
26 FEBRUARY 2019 again reinstated as follows:
Ibay & Geralde
SECTION. 3. Due Process Requirement in the lssuance of a
ASSESSMENT Deficiency Tax Assessment. –
SEC. 203. Period of Limitation Upon Assessment and 3.1 Mode of procedure in the issuance of a deficiency tax
Collection. - Except as provided in Section 222, internal revenue assessment:
taxes shall be assessed within three (3) years after the last day
prescribed by law for the filing of the return, and no proceeding 3.1.1 Notice for lnformal Conference. – The Revenue Officer who
in court without assessment for the collection of such taxes shall audited the taxpayer's records shall, among others, state in his
be begun after the expiration of such period: Provided, That in a report whether or not the taxpayer agrees with his findings that
case where a return is filed beyond the period prescribed by law, the taxpayer is liable for deficiency tax or taxes. lf the taxpayer is
the three (3)-year period shall be counted from the day the not amenable, based on the said Officer's submitted report of
return was filed. investigation, the taxpayer shall be informed, in writing, by the
Revenue District Office or by the Special investigation Division, as
For purposes of this Section, a return filed before the last day the case may be (in the case of Revenue Regional Offices) or by
prescribed by law for the filing thereof shall be considered as the Chief of Division concerned (in the case of the BIR National
filed on such last day. Office) of the discrepancy or discrepancies in the taxpayer’s
payment of his internal revenue taxes for the purpose of
The assessment comes in after the filing of the tax returns. The "lnformal Conference," in order to afford the taxpayer with an
purpose is to find out whether the returns filed is accurate and opportunity to present his side of the case.
correct. If it is not, there will be a finding of deficiency during the
period of assessment. The lnformal Conference shall in no case extend beyond thirty
(30) days from receipt of the notice for informal conference. lf it
is found that the taxpayer is still liable for deficiency tax or taxes
Assessment Period after presenting his side, and the taxpayer is not amenable, the
Revenue District Officer or the Chief of the Special investigation
Division of the Revenue Regional Office, or the Chief of Division
 3 years - general prescriptive period
in the National Office, as the case may be, shall endorse the case
 10 years - for false, fraudulent and omission of filing of
within seven (7) days from the conclusion of the lnformal
returns.
Conference to the Assessment Division of the Revenue Regional
Office or to the Commissioner or his duly authorized
representative for issuance of a deficiency tax assessment.
Letter of Authority
Failure on the part of Revenue Officers to comply with the
During such the periods, the government will issue an LOA or Letter
periods indicated herein shall be meted with penalty as provided
of Authority which the revenue examiner will serve upon the
by existing laws, rules and regulations."
taxpayer. It will inform him that for a particular period he will be
under investigation, audit and examination.
This is to inform the taxpayer of the findings of the examiner. He is
allowed at that level to rebut and to produce other documents to
The investigation, audit and examination should take place within the
counter the findings as regards the deficiency. So he may offer his
3-year period or 10-year period as the case may be. If it is done
evidence or ignore it altogether if he is not interested to contest the
outside the 3 year period, it will be null and void because the period
findings.
SEC. 228. Protesting of Assessment. – When the Commissioner or taxpayer is given the opportunity to rebut or to submit counter-
his duly authorized representative finds that proper taxes should evidence to the findings.
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: Final Assessment Notice (FAN)
(a) When the finding for any deficiency tax is the result of If this PAN is ignored by the taxpayer, a final assessment notice (FAN)
mathematical error in the computation of the tax as will thereafter be issued. It now comes with what is called a formal
appearing on the face of the return; or letter of demand. So, the FAN shall be sent with a formal letter of
(b) When a discrepancy has been determined between the demand. Because it used to be that the assessments notices were
tax withheld and the amount actually remitted by the only considered as demands and were not final. Also, the notice for
withholding agent; or informal conference, the PAN and FAN shall contain the facts and law
(c) When a taxpayer who opted to claim a refund or tax upon which the assessment was made.
credit of excess creditable withholding tax for a taxable
period was determined to have carried over and All these notices should be made within the 3-year period. Otherwise,
automatically applied the same amount claimed the taxpayer may invoke prescription. If the notice was sent on the
against the estimated tax liabilities for the taxable last day of the period, it is still valid even if the taxpayer received it
quarter or quarters of the succeeding taxable year; or outside such period. The validity depends on when the notices were
(d) When the excise tax due on exciseable articles has not sent.
been paid; or
(e) When the article locally purchased or imported by an
exempt person, such as, but not limited to, vehicles, PROTEST
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 Under Section 228, the remedy of the taxpayer is to protest to the
notice. If the taxpayer fails to respond, the Commissioner or his assessment. Otherwise, the assessment becomes final and executory
duly authorized representative shall issue an assessment based for failure to protest. The assessment protested here is the FAN.
on his findings.
When to protest – The protest shall be within 30 days from the
Such assessment may be protested administratively by filing a receipt of the assessment.
request for reconsideration or reinvestigation within thirty (30)
days from receipt of the assessment in such form and manner as How to protest – There are two modes of protest under Section 228.
may be prescribed by implementing rules and regulations. Within
sixty (60) days from filing of the protest, all relevant supporting  Motion for reconsideration or
documents shall have been submitted; otherwise, the  Motion for reinvestigation
assessment shall become final.
Under RR No. 18-13, the taxpayer shall state the nature or mode of
If the protest is denied in whole or in part, or is not acted upon protest. If the nature is reconsideration, the taxpayer is not allowed
within one hundred eighty (180) days from submission of anymore to submit additional documents or evidence, unlike
documents, the taxpayer adversely affected by the decision or reinvestigation.
inaction may appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision, or from the lapse of one When what is filed is a reconsideration, all the documents shall be
hundred eighty (180)-day period; otherwise, the decision shall filed with the protest within the 30-day period to file a protest. But if
become final, executory and demandable. it is reinvestigation, there is still an additional 60days from the date
filing of the protest to submit additional documents.
Preliminary Assessment Notice (PAN) Period to decide –The CIR or his duly authorized representative is
given a period of 180 days from the submission of documents to
If there is no contest on the findings, the next to be issued is the decide. Within the period, there may be a decision or inaction.
preassessment notice or the preliminary assessment notice (PAN).
The PAN will involve the same findings of deficiency and again the

REMEDIES FROM THE CIR DIAGRAM
Notice for
Tax Return Assessment Informal PAN
Conference
CTA in CTA en
FAN Protest SC
Division Banc
COLLECTION
SEC. 205. Remedies for the Collection of Delinquent Taxes. – The
If there is a Denial of Protest – The taxpayer may appeal to the CTA civil remedies for the collection of internal revenue taxes, fees or
within 30 days from the receipt of decision. charges, and any increment thereto resulting from delinquency
shall be:
(a) By distraint of goods, chattels, or effects, and other
If the Protest Not Acted Upon (Inaction) personal property of whatever character, including
stocks and other securities, debts, credits, bank
The taxpayer has two options: accounts and interest in and rights to personal
property, and by levy upon real property and interest
a. He may wait for the decision even after the lapse of the 180- in rights to real property; and
day period and appeal to the CTA in case of denial of protest (b) By civil or criminal action.
within 30 days from receipt decision; or Either of these remedies or both simultaneously may be pursued
in the discretion of the authorities charged with the collection of
b. Appeal with the CTA within 30 days after the expiration of such taxes: Provided, however, That the remedies of distraint and
the 180 days to decide (appeal to the CTA cannot be levy shall not be availed of where the amount of tax involve is
withdrawn even if the taxpayer later on decide to wait for not more than One hundred pesos (P100).
the decision of the CIR).
The judgment in the criminal case shall not only impose the
penalty but shall also order payment of the taxes subject of the
PROCEDURE IN THE CTA criminal case as finally decided by the Commissioner.
The Bureau of Internal Revenue shall advance the amounts

needed to defray costs of collection by means of civil or criminal
action, including the preservation or transportation of personal
property distrained and the advertisement and sale thereof, as
well as of real property and improvements thereon.
SEC. 281. Prescription for Violations of any Provision of this Code.

All cases appealed to the CTA shall be decided by division and after
– All violations of any provision of this Code shall prescribe after
that en banc. However, there should first be an MR with the division
Five (5) years.
before going to the en banc. Also, there should also be an MR of the
en banc decision before elevating to the SC.
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
Thereafter, the appeal shall be to the Supreme Court. Only decisions
time, from the discovery thereof and the institution of judicial
of the CTA en banc are elevated to the SC. Decisions of the CTA
proceedings for its investigation and punishment.
division is not appealable to the SC even if it is a pure question of law.
The prescription shall be interrupted when proceedings are
When shall the assessment period terminate?
instituted against the guilty persons and shall begin to run again
if the proceedings are dismissed for reasons not constituting
The assessment period shall end after the service of the FAN.
jeopardy.

The term of prescription shall not run when the offender is filling of such civil action separately from the criminal action will
absent from the Philippines. be recognized.
 CTA - when the amount of taxes to be collected in a criminal

Modes of Collecting Deficiency Tax or civil action on final and executor assessment is
P1,000,000 or more, the CTA has exclusive original
 Administrative jurisdiction
o distraint of personal property
o levy upon real property  Regular Courts - Less than that, the jurisdiction is with the
o forfeiture or enforcement of a tax lien regular courts.
 Judicial action There is also one important feature in the course of collection is
o criminal action under section 281 injunction:
o civil action in case of final and executory
assessments SEC. 218. Injunction not Available to Restrain Collection of Tax.
– No court shall have the authority to grant an injunction to
Criminal actions will not require any prior assessment. But if the restrain the collection of any national internal revenue tax, fee or
remedies availed of are the administrative actions and civil actions, charge imposed by this Code.
prior assessment is required because of the requirement of due
process to allow him to protest. This is because of the principle that tax is the lifeblood of the
government.
The government may avail of one or more or all of these remedies
simultaneously, whether administrative and/or judicial.
Claim for Refunds
Prescriptive Period: 5 years
SEC. 229. Recovery of Tax Erroneously or Illegally Collected. – No
During the period of assessment or when the case is pending in the suit or proceeding shall be maintained in any court for the
CTA, the taxpayer is given the opportunity to compromise. It may also recovery of any national internal revenue tax hereafter alleged
be entered into when the government avails either administrative or to have been erroneously or illegally assessed or collected, or of
judicial action for collection. 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
Where to file judicial action for collection – duly filed with the Commissioner; but such suit or proceeding
may be maintained, whether or not such tax, penalty, or sum has
RA 9282, Section 7 been paid under protest or duress.
Jurisdiction. - The CTA shall exercise: 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
xxxx or penalty regardless of any supervening cause that may arise
after payment: Provided, however, That the Commissioner may,
b. Jurisdiction over cases involving criminal offenses as herein even without a written claim therefor, refund or credit any tax,
provided: where on the face of the return upon which payment was made,
such payment appears clearly to have been erroneously paid.
"1. Exclusive original jurisdiction over all criminal offenses arising
from violations of the National Internal Revenue Code or Tariff Ground for refund: erroneously or illegally assessed or collected taxes
and Customs Code and other laws administered by the Bureau of
Internal Revenue or the Bureau of Customs: Provided, however, Note: The remedy under Section 229 covers only refund for
That offenses or felonies mentioned in this paragraph where the erroneously or illegally collected tax. There is also another provision
principal amount of taxes and fees, exclusive of charges and for tax refund which is under Section 112 but this only covers taxes of
penalties, claimed is less than One million pesos (P1,000,000.00) zero-rated VAT taxpayers. The latter is a claim for tax credit or refund
or where there is no specified amount claimed shall be tried by of input VAT taxes.
the regular Courts and the jurisdiction of the CTA shall be
appellate. Any provision of law or the Rules of Court to the
contrary notwithstanding, the criminal action and the Q: What are covered under Section 229 –
corresponding civil action for the recovery of civil liability for
taxes and penalties shall at all times be simultaneously instituted a. Tax hereafter alleged to have been erroneously or illegally
with, and jointly determined in the same proceeding by the CTA, assessed or collected;
the filing of the criminal action being deemed to necessarily carry b. Any penalty claimed to have been collected without
with it the filing of the civil action, and no right to reserve the authority; or
c. Any sum alleged to have been excessively or in any manner with the CIR within the 2 year period and there is a denial, it will now
wrongfully collected. have a judicial claim to the CTA (also within the 2 year period).
Protest not required - When claiming a refund under Section 2s29, In the event that there is no decision from the CIR after filing the
there is no requirement of making a prior protest or payment under administrative claim and the 2 year period is about to lapse, do not
protest because “such suit or proceeding may be maintained, wait for the expiration of the period. Within reasonable time, the
whether or not such tax, penalty, or sum has been paid under protest claim can be brought to the CTA in Division through an appeal. That is
or duress”. part of the exclusive appellate jurisdiction of the CTA.
The protest counts only during the assessment when there is a finding JURISDICTION OF THE COURT OF TAX APPEALS
of deficiency tax. Also, in case of Real Property Tax, there is a
requirement to pay under protest. However, when it is a claim for HISTORY
refund, protest is not required.
The CTA which was created as early as June 16, 1954 under RA 1125
(An Act Creating the Court of Tax Appeals).
Q: What is the period for filing –
 It shall be 2 years from the date of payment. The objectives of the creation of the CTA under RA 1125:
 In case of excessive tax payment or tax credits, it is 2 years
from the actual date of the filing of the annual return. 1. to entrust tax cases to a special court composed of men
technically qualified in the field of taxation and to develop
*Tax credit means there is an excess tax payment because expertise in the subject
the tax payments for the year exceeded the annual tax 2. to expedite the disposition of tax cases, hasten the
liability. There is an overpayment of taxes. collection of taxes, and provide an adequate and speedy
remedy to the taxpayers
Note: Do not confuse this with the assessment counting because that
is 3 years from the last day prescribed by law for the filing of the
return. In case of refunds, it is 2 years from the date of payment of Reconfiguration of the CTA under RA 9282
the actual date of filing.
It was only in March 30, 2004 under RA 9282 (An Act Expanding the
The claim for refund may be claimed in an administrative action with Jurisdiction of the CTA xxx), when the CTA was substantially
the CIR PRIOR to a judicial action with the CTA (RA 9282). However, restructured. The CTA is no longer equivalent with the RTC. This time,
both these actions shall be brought within the 2-year period. If the the CTA is equivalent to CA. The magistrates are no longer called
refund is claimed with the CIR and such was denied, the remedy is “judges”, they are already called “justices”.
with the CTA.
Even if the administrative action is brought within 2 years but the Recent Amendment by RA 9503
judicial action is not filed within 2 years, the claim shall be dismissed.
The most recent was RA 9503 (An Act Enlarging The Organizational
Q: What if there is inaction? Structure of the CTA xxx), in June 12, 2008 where there was an
increase in the Division of the court.
A: If there is inaction by the CIR, then the taxpayer should appeal
within a reasonable time with the CTA before the lapse of the 2-year
period. Both actions also must be brought within the same period JURISDICTION
similar to above.
The CTA has the:
When the case is already with the CTA because of an adverse decision  Exclusive appellate jurisdiction and
or inaction by the CIR, it shall be decided by division. Appeal may be  Exclusive original jurisdiction.
made with the en banc and after that to the SC.
In the assessment and refunds, when they are now in the judicial Exclusive Appellate Jurisdiction
process (already in the CTA), there is no period within which the
courts are to decide. In other words, antayin mo ang decision ng One of its exclusive appellate jurisdiction is to review on appeal
courts. There is no statutory requirement of the period within which decisions of the CIR in cases involving disputed assessments
for the CTA to decide.
RA 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
In the claim for refund, both administrative and judicial remedies
must be within the 2 year period. When the claim for refund is filed "a. Exclusive appellate jurisdiction to review by appeal, as herein
provided:
"1. Decisions of the Commissioner of Internal Revenue in cases You are given the option to:
involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto, or other  Bring the action to the CTA within 30 days from the lapse
matters arising under the National Internal Revenue or other laws of the 180 day period. There is deemed an inaction which
administered by the Bureau of Internal Revenue; is equivalent to a denial. The CTA has exclusive appellate
jurisdiction over the matter.
Take note that here, there are disputed assessments. Disputed
Assessment here refers to those assessments that are protested and Again, in the event the matter is brought to the CTA by
is already decided by the CIR. In other words, if you are going to reason of inaction, the action can no longer be withdrawn.
protest an assessment from the service of that notice of finding of a OR
deficiency with the CIR, the protest should not be lodged to the CTA.
It must first be lodged to the CIR. This is because the jurisdiction of  The other option is to wait for the decision. In which case
the CTA pertains to the decisions of the CIR. Section 7(a)(1) applies.
Likewise, on refund cases, the CTA will also have exclusive appellate In case the disputed assessment is decided against the
jurisdiction from the decision of the CIR and all other matters relating taxpayer, it can be brought to the CTA.
to the NIRC and other laws administered by the BIR.
In the refund claims, there is a statutory period of 2 years from
Example: Opinions under “other matters arising under the National payment. The law requires that both the administrative and judicial
Internal Revenue”. The taxpayer would ask for a tax ruling (CIR claim must be made within the 2 year period (Section 229).
determines if a transaction is taxable or not). In the event that the CIR
issues an adverse ruling, where will the taxpayer go? Where will he Q: What happens if there is inaction by the CIR and the 2 year period
appeal? is about to lapse?
Jurisprudence provided by Dean: A: The inaction is deemed a DENIAL. Then the matter may now be
brought to the CTA. The CTA having exclusive appellate jurisdiction.
A Tax Ruling (whether taxable or not) was sought from the BIR in
connection to a pawnshop business. The BIR gave an adverse "3. Decisions, orders or resolutions of the Regional Trial Courts in
ruling and declared the pawnshop to be taxable. The matter was local tax cases originally decided or resolved by them in the
brought to the RTC for appeal. exercise of their original or appellate jurisdiction;
The SC held that the remedy should be an appeal to the CTA. Q: What are the LOCAL TAX CASES that are brought to the CTA?
Under RA 9282, the decisions that are appealed to the CTA are not A:
only DECISIONS OF THE CIR, but also RULINGS of the CIR.
1. Legality of Tax Ordinance - question on the constitutionality
If the CIR makes an adverse ruling, the remedy is not with the regular and legality of a tax ordinance
courts. The remedy is with the CTA. This is based on the phrase “or 2. Local Tax Assessment - protesting an assessment on local
other matters arising under the National Internal Revenue or other tax cases
laws administered by the Bureau of Internal Revenue” 3. Claim for Refunds – filing a claim for refund on local taxes
"2. Inaction by the Commissioner of Internal Revenue in cases What is brought to the CTA is either:
involving disputed assessments, refunds of internal revenue  the decision of the RTC in its exclusive appellate jurisdiction
taxes, fees or other charges, penalties in relations thereto, or  the matter is brought in its exclusive original jurisdiction
other matters arising under the National Internal Revenue Code
or other laws administered by the Bureau of Internal Revenue, I. Legality of Tax Ordinance
where the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be deemed a
denial;
There is now a statutory provision that states that the inaction is

deemed as a denial. Under the Local Government Code, when you question the validity or
legality of an ordinance, the action is brought to the DOJ. The question
Situation: In case of disputed assessments, there is a situation where may be brought to the DOJ within 30 days from the effectivity of the
after filing the protest, the BIR is given 180 days to decide and the CIR ordinance. This is to have an administrative remedy first before
will not act on your protest. So the 180 days had lapsed. resorting to judicial remedies. The DOJ shall render a decision within
60 days.

Within 30 days from receipt of an unfavorable decision or within 30 So the local treasurer shall send this notice of assessment to the local
days from the lapse of the period to decide, the remedy of the taxpayer of the local taxes he failed to pay, the remedy now is protest.
taxpayer is to bring it to the RTC. So that is the local treasurer sending the assessment notice, then the
protest of the taxpayer and then you have the decision of the
Q: Why the RTC? (courts?) whether to grant or deny the protest.
It is because the action questioning the legality or constitutionality of SECTION 195. Protest of Assessment. – When the local treasurer
the tax ordinance does not involve any pecuniary estimation. or his duly authorized representative finds that correct taxes,
fees, or charges have not been paid, he shall issue a notice of
From the RTC, the next remedy is to bring it to the CTA. CTA in Division assessment stating the nature of the tax, fee, or charge, the
then to CTA en Banc and finally to the Supreme Court. amount of deficiency, the surcharges, interests and penalties.
Within sixty (60) days from the receipt of the notice of
Q: Why the CTA? assessment, the taxpayer may file a written protest with the local
treasurer contesting the assessment; otherwise, the assessment
The CTA has jurisdiction over decisions or orders of the RTC in local shall become final and executory. The local treasurer shall decide
tax cases originally decided. the protest within sixty (60) days from the time of its filing. If the
local treasurer finds the protest to be wholly or partly
Another local tax case involves assessment, local tax assessments. meritorious, he shall issue a notice cancelling wholly or partially
the assessment. However, if the local treasurer finds the
In local taxation, the counterpart of the BIR is your local treasurer of assessment to be wholly or partly correct, he shall deny the
the LGU. The local treasurer will send to the local taxpayer the notice protest wholly or partly with notice to the taxpayer. The taxpayer
of assessment. shall have thirty (30) days from the receipt of the denial of the
protest or from the lapse of the sixty (60) day period prescribed
SECTION 194. Periods of Assessment and Collection. – herein within which to appeal with the court of competent
jurisdiction otherwise the assessment becomes conclusive and
(a) Local taxes, fees, or charges shall be assessed within unappealable.
five (5) years from the date they became due. No action
for the collection of such taxes, fees, or charges, In case of denial you appeal to the regular courts or there is inaction
whether administrative or judicial, shall be instituted within the lapse of the 60 day period upon failure to act on the
after the expiration of such period: Provided, That. protest. The inaction shall be treated as an equivalent to denial, so
taxes, fees or charges which have accrued before the your remedy now is go to the regular courts.
effectivity of this Code may be assessed within a period
of three (3) years from the date they became due. Since this time there is now pecuniary amount involved then you have
now the proper or appropriate regular courts depending on the
(b) In case of fraud or intent to evade the payment of jurisdictional amount. So the regular courts may be the RTC or the
taxes, fees, or charges, the same may be assessed MTC.
within ten (10) years from discovery of the fraud or
intent to evade payment. If it is the RTC in local tax case, the appeal is in the CTA. This is by
division then go to CTA En Banc and then to the Supreme Court.
(c) Local taxes, fees, or charges may be collected within
five (5) years from the date of assessment by If the jurisdictional amount is in the MTC, then you file that with the
administrative or judicial action. No such action shall be MTC, now, as a matter of procedure the next level court from the
instituted after the expiration of said period: Provided, decision of the MTC you appeal it to the RTC, the RTC in its appellate
however, That, taxes, fees or charges assessed before jurisdiction.
the effectivity of this Code may be collected within a
period of three (3) years from the date of assessment. So the appeal from the RTC exercising its appellate jurisdiction
originating from the MTC, the appeal from RTC is from the CTA, this
(d) The running of the periods of prescription provided in time it is to the CTA en banc not anymore in the CTA division because
the preceding paragraphs shall be suspended for the of the “Layering”. It has already gone two judicial layer, from MTC to
time during which: RTC still falling within the substantive requirements. (1:05:17)
(1) The treasurer is legally prevented from making Now as a rule of thumb, when the RTC decides in its appellate
the assessment of collection; jurisdiction, the tax case is brought to the CTA en banc na. Cases
(2) The taxpayer requests for a reinvestigation decided in RTC’s original jurisdiction doon yan i-akyat sa CTA division.
and executes a waiver in writing before
expiration of the period within which to assess The third is claim for refund, in the claim for refund. In your local
or collect; and government code the claim for refund must be made within TWO
(3) The taxpayer is out of the country or otherwise YEARS from payment, so at the onset the claim for refund must be
cannot be located.

filed with the trearuer. The administrative claim, it is before the local for the protection of government revenue and
treasurer within two years from the date of payment. prevention of entry of contraband;
(i) Conduct a compensation study with the end view of
SECTION 196. Claim for Refund of Tax Credit. – No case or developing and recommending to the President a
proceeding shall be maintained in any court for the recovery of competitive compensation and remuneration system
any tax, fee, or charge erroneously or illegally collected until a to attract and retain highly qualified personnel, while
written claim for refund or credit has been filed with the local ensuring that the Bureau remains financially sound and
treasurer. No case or proceeding shall be entertained in any court sustainable;
after the expiration of two (2) years from the date of the payment (j) Exercise of exclusive original jurisdiction over forfeiture
of such tax, fee, or charge, or from the date the taxpayer is cases under this Act; and
entitled to a refund or credit. (k) Enforcement of this Act and all other laws, rules and
regulations related to customs administration.
From the local treasurer now you appeal to the regular courts. Sa
regular courts, since there is now subject to pecuniary estimation the SECTION 201. Powers and Functions of the Commissioner. – The
amount will now depend whether the jurisdictional amount is on the Commissioner shall have the following powers and functions:
RTC or MTC. So if the jurisdictional amount for the claim is on the RTC,
the jurisdiction of the RTC is on the original. If the jurisdictional (a) Exclusive and original jurisdiction, to interpret the
amount falls within the MTC, the original action of the claim is on the provisions of this Act, in collaboration with other
MTC. relevant government agencies, subject to review by the
Secretary of Finance;
From RTC in its original jurisdiction then CTA division to the En banc. (b) Exercise any customs power, duties and functions,
If MTC ang original then you bring it to the RTC then from RTC appeal directly or indirectly;
to CTA En banc. You have the local tax cases. (c) Review any action or decision of any customs officer
performed pursuant to the provisions of this Act;
SECTION 200. Chief Officials of the Bureau. – The Bureau shall be (d) Review and decide disputed assessments and other
headed by a Commissioner and shall be assisted by at least four matters related thereto, subject to review by the
(4) but not more than six (6) Deputy Commissioners. Secretary of Finance and exclusive appellate
jurisdiction of the Court of Tax Appeals (CTA);
The Commissioner shall be appointed by the President of the (e) Delegate the powers vested under this Act to any
Philippines. customs officer with the rank equivalent to division
chief or higher, except for the following powers and
The Deputy Commissioners shall also be appointed by the functions:
President and at least majority of whom shall come from the (1) Promulgation of rules and regulations;
ranks of the Bureau. (2) Issuance, revocation or modification of rulings;
and
SECTION 202. Functions of the Bureau. – The Bureau shall (3) Compromise or abate of customs obligations.
exercise the following duties and functions:
(f) Assignment or reassignment of any customs officer
(a) Assessment and collection of customs revenues from subject to the approval of the Secretary of
imported goods and other dues, fees, charges, fines Finance: Provided, That District Collectors and other
and penalties accruing under this Act; customs officers that perform assessment functions
(b) Simplification and harmonization of customs shall not remain in the same area of assignment for
procedures to facilitate movement of goods in more than three (3) years; and
international trade; (g) Perform all other duties and functions as may be
(c) Border control to prevent entry of smuggled goods; necessary for the effective implementation of this Act
(d) Prevention and suppression of smuggling and other and other customs related laws.
customs fraud;
(e) Facilitation and security of international trade and SECTION 214. Persons Exercising Police Authority. – For the
commerce through an informed compliance program; effective implementation of this Act, the following persons are
(f) Supervision and control over the entrance and authorized to effect search, seizure, and arrest:
clearance of vessels and aircraft engaged in foreign
commerce; (a) Officials of the Bureau, District Collectors, Deputy
(g) Supervision and control over the handling of foreign District Collectors, police officers, agents, inspectors
mails arriving in the Philippines for the purpose of and guards of the Bureau;
collecting revenues and preventing the entry of (b) Upon authorization of the Commissioner, officers and
contraband; members of the Armed Forces of the Philippines (AFP)
(h) Supervision and control on all import and export and national law enforcement agencies; and
cargoes, landed or stored in piers, airports, terminal
facilities, including container yards and freight stations
(c) Officials of the BIR on all cases falling within the regular from the date of final payment of duties and taxes, or upon
performance of their duties, when payment of internal completion of the post clearance audit.
revenue taxes is involved.
Then you have decisions to the Commissioner of Customs under the
All officers authorized by the Commissioner to exercise police Tariff and Customs Code or under the Customs Modernization Act.
authority shall at all times coordinate with the Commissioner. Decisions of the commissioner for liability under customs duties.
Goods seized by deputized officers pursuant to this section shall The seizure and forfeiture proceeding and all other matters arising
be physically turned-over immediately to the Bureau, unless from customs law and other laws administered by the BOC. Under the
provided under existing laws, rules and regulations. Tariff and customs code, the common cases encountered you have
the protest cases, wherein that is the issue of ascertainment on the
For this purpose, mission orders shall clearly indicate the specific importation being protested by the importer. Here, in the Tariff and
name carrying out the mission and the tasks to be carried out. customs code, you have the protest of assessment.
Subject to the approval of the Secretary of Finance, the SECTION 1106. Protest – When a ruling or decision of the District
Commissioner shah1 define the scope, areas covered, procedures Collector or customs officer involving goods with valuation, rules
and conditions governing the exercise of such police authority of origin, and other customs issues is made, except the fixing of
including custody and responsibility for the seized goods. The fines in seizure cases, the party adversely affected may appeal by
rules and regulations to this effect shall be furnished to the way of protest against such ruling or decision by presenting to
concerned government agencies and personnel for guidance and the Commissioner at the time when payment of the amount
compliance. claimed to be due the government is made, or within fifteen (15)
days thereafter, a written protest setting forth the objection to
All seizures pursuant to this section must be effected in the ruling or decision in question and the reasons therefore.
accordance with the provisions on the conduct of seizure
proceedings provided for in Chapters 3 and 4 of Title XI of this PROTEST
Act.
In protesting assessment in the determination of the duties, the
SECTION 216. Exercise of Power of Seizure. – Any person (launchment? Launching?) of the protest is filed before the Collector
exercising police authority under this Act has the power and duty of customs. Our country has been divided into collection districts. One
to seize any vessel, aircraft, cargo, goods, animal or any other of which is you have the port of Davao, the one incharge there is the
movable property when the same is subject to forfeiture or when collector of the customs of port of davao. When you say port of davao
they are subject of a fine imposed under this Act. it does not only involve sasa port. It also includes airport, so port of
entry whether by sea or by air. So you have the customs collector
SECTION 424. Duty of Customs Officer Tasked to Assess Imported incharge of that in the assessment and collection of duties.
Goods. – For purposes of assessing duties and taxes on imported
goods, the customs officer shall classify, value, and determine the 2016 TSN * exhaust all administrative remedies before you go to the
duties and taxes to be paid. The customs officer shall prepare and Court of Tax Appeals
submit an assessment report as established under this Act.
As regards the finding of the collector of the duties assessed against
SECTION 425. Tentative Assessment of Goods Subject to Dispute the importer, the importer MUST pay first WITHOUT NEED OF
Settlement. – Assessment shall be deemed tentative if the duties PROTESTING PAYMENT, then you pursue now the protest. So it is
and taxes initially assessed are disputed by the importer. The lodged before the collector of customs, from the collector it is
assessment shall be completed upon final readjustment based on brought to the commissioner of customs then to the CTA Division
the tariff ruling in case of classification dispute, or the final then to CTA En banc and finally to the Supreme Court.
resolution of the protest case involving valuation, rules of origin,
and other customs issues. SECTION 1113. Property Subject to Seizure and Forfeiture. –
Property that shall be subject to seizure and forfeiture include:
The District Collector may allow the release of the imported
goods under tentative assessment upon the posting of sufficient (a) Any vehicle, vessel or aircraft, including cargo, which
security to cover the applicable duties and taxes equivalent to shall be used unlawfully in the importation or
the amount that is disputed. exportation of goods or in conveying or transporting
smuggled goods in commercial quantities into or from
SECTION 429. Final Assessment. – Assessment shall be deemed any Philippine port or place. The mere carrying or
final fifteen (15) days after receipt of the notice of assessment by holding on board of smuggled goods in commercial
the importer or consignee quantities shall subject such vehicle, vessel, aircraft, or
any other craft to forfeiture: Provided, That the vehicle,
SECTION 430. Period of Limitation. – In the absence of fraud and vessel, aircraft or any other craft is not used as a
when the goods have been finally assessed and released, the common carrier which has been chartered or leased for
assessment shall be conclusive upon all parties three (3) years
purposes of conveying or transporting persons or (k) Any conveyance actually used for the transport of
cargo; goods subject to forfeiture under this Act, with its
equipage or trappings, and any vehicle similarly used,
(b) Any vessel engaging in the coastwise trade which shall together with its equipment and appurtenances. The
have on board goods of foreign growth, produce, or mere conveyance of smuggled goods by such transport
manufacture in excess of the amount necessary for sea vehicle shall be sufficient cause for the outright seizure
stores, without such goods having been properly and confiscation of such transport vehicle but the
entered or legally imported; forfeiture shall not be effected if it is established that
the owner of the means of conveyance used as
(c) Any vessel or aircraft into which shall be transferred aforesaid, is engaged as common carrier and not
cargo unloaded contrary to law prior to the arrival of chartered or leased, or that the agent in charge thereof
the importing vessel or aircraft at the port of at the time, has no knowledge of the unlawful act; and
destination;
(l) Goods sought to be imported or exported:
(d) Any part of the cargo, stores, or supplies of a vessel or
aircraft arriving from a foreign port which is unloaded (1) Without going through a customs office,
before arrival at the vessel's or aircraft's port of whether the act was consummated,
destination and without authority from the customs frustrated, or attempted;
officer; but such cargo, ship, or aircraft stores and (2) Found in the baggage of a person arriving from
supplies shall not be forfeited if such unloading was abroad and undeclared by such person;
due to accident, stress of weather, or other necessity (3) Through a false declaration or affidavit
and is subsequently approved by the District Collector; executed by the owner, importer, exporter, or
consignee concerning the importation of such,
(e) Goods which are fraudulently concealed in or removed goods;
contrary to law from any public or private warehouse, (4) On the strength of a false invoice or other
container yard, or container freight station under document executed by the owner, importer,
customs supervision; exporter, or consignee concerning the
importation or exportation of such goods; or
(f) Goods, the importation or exportation of which are (5) Through any other practice or device contrary
effected or attempted contrary to law, or any goods of to law by means of which such goods entered
prohibited importation or exportation, and all other through a customs office to the prejudice of
goods which, in the opinion of the District Collector, the government.
have been used, are or were entered to be used as
instruments in the importation or the exportation of SEIZURE AND FORFEITURES
the former;
The second pertains to seizure and forfeiture cases, now seizure and
(g) Unmanifested goods found on any vessel or aircraft if forfeiture cases involves the seizure of imported article as well as the
manifest therefor is required; mode of conveyance, whether by sea, air or land transportation
where imported articles are brought in the country in violation of the
(h) Sea stores or aircraft stores adjudged by the District customs law. So the articles as well as the mode of conveyance will be
Collector to be excessive, when the duties and taxes the subject of seizure. So they are both proceeding in rem, it is
assessed by the District Collector thereon are not paid directed on the object not on the person or importer. It is directed on
or secured forthwith upon assessment of the same; the object including the mode of conveyance.
(i) Any package of imported goods which is found upon Again, the (Lodgment?) seizure proceeding is pursued now at the
examination to contain goods not specified in the onset at the port by the Collector of Customs.
invoice or goods declaration including all other
packages purportedly containing imported goods If the decision of the District Collector is adverse:
similar to those declared in the invoice or goods
declaration to be the contents of the misdeclared SECTION 1126. Appeal to the Commissioner. – In forfeiture cases,
package; the person aggrieved by the decision of a District Collector may,
within fifteen (15) days or five (5) days in case of perishable
(j) Boxes, cases, trunks, envelopes, and other containers goods, from receipt of the decision, file a written notice of
of whatever character used as receptacle or as device appeal, together with the required appeal fee to the District
to conceal goods which are subject to forfeiture under Collector, furnishing a copy to the Commissioner. The District
this Act or which are so designed as to conceal the Collector shall immediately transmit all the records of the
character of such goods; proceedings to the Commissioner, who shall review and decide
on the appeal within thirty (30) days from receipt of the records,
or fifteen (15) days in the case of perishable goods: Provided,
That if within thirty (30) days, no decision is rendered, the There are instances where the collector will decide after asking for an
decision of the District Collector under appeal shall be deemed opinion from the commissioner, so since he will be guided by the
affirmed. An appeal filed beyond the period herein prescribed opinion of the commissioner the importer now ill appeal to the CTA
shall be dismissed. and by-pass the commissioner, THAT IS NOT ALLOWED. Even though
the collector decided from the opinion of the commissioner, what is
Appeals to protest cases shall be governed by Section 114 of this the legal requirement is the decision of the commissioner which is
Act. appealed now to the CTA. Bring it first to the commissioner before
going to the CTA.
The decision of the Commissioner may be served through the
recognized modes of service under existing law.
CENTRAL BOARD OF ASSESSMENT APPEALS
So in the seizure and forfeiture, one of the issue here is the legality of
the importation, unlike in the protest is the correctness of the Fifth, you have decision of the Central Board of Assessment Appeals
assessment of the collection. The collector of customs will institute this now involves realty tax. In the exercise of its appellate jurisdiction
the seizure and forfeiture proceeding. The collector will conduct the over cases involving assessment or taxation involving real property
proceeding and if the decision is adverse to the importer the remedy originally decided with the provincial or city board assessment
is to appeal to the commissioner of customs and judicial review is appeals.
brought to the CTA.
SECTION 226. Local Board of Assessment Appeals. – Any owner
In claims for refund, it is also lodged in the Collector of Customs. or person having legal interest in the property who is not satisfied
with the action of the provincial, city or municipal assessor in the
assessment of his property may, within sixty (60) days from the
ABANDONMENT date of receipt of the written notice of assessment, appeal to the
Board of Assessment Appeals of the provincial or city by filing a
Then you have also this remedy of abandonment, whether express or petition under oath in the form prescribed for the purpose,
implied. Prior to the new law customs modernization and tariff act, together with copies of the tax declarations and such affidavits
once you have already abandoned whether express or implied, you or documents submitted in support of the appeal.
cannot anymore recover. Now under the new law, there is still a
window of recovery if you abandoned. So in real property taxation cases will involve protesting the
assessment made by the local assessor. In real property taxation what
SECTION 1130. Treatment and Disposition of Abandoned Goods. is the issue here is the assessment of the RPT, but prior to the
– Expressly abandoned goods under paragraph (a) of Section assessment if the determination of the value of the real property. The
1129 of this Act shall ipso facto be deemed the property of the RPT is determined by the assess value times the rate. Whether to
government and shall be disposed of in accordance with the come up with the assess value, there must be a determination of the
provisions of this Act. FMV times the assessment rate depending on the classification of the
real property.
If the Bureau has not disposed of the abandoned goods, the
owner or importer of goods impliedly abandoned may, at any In the case of real property taxation, one of the issues involved is
time within thirty (30) days after the lapse of the prescribed protesting assessment of the local assessor. The local assessor
period to file the declaration, reclaim the goods provided that all determines the FMV so that you will arrive at your assess value, the
legal requirements have been complied with and the assess level is provided by law, your local tax code depending on the
corresponding duties, taxes and other charges, without prejudice classification. So if there is now controversy of the property owner
to charges and fees due to the port or terminal operator, as well and the local assessor on the assessed value, the remedy now is to
as expenses incurred have been paid before the release of the protest the assessment of the assessor. Where will you bring your
goods from customs custody. protest? You will bring it to the local board of assessment appeals.
When the Bureau sells goods which have been impliedly SECTION 229. Action by the Local Board of Assessment Appeals. -
abandoned, although no offense has been discovered, the
proceeds of the sale, after deduction of any duty and tax and all (a) The Board shall decide the appeal within one hundred
other charges and expenses incurred as provided in Section 1143 twenty (120) days from the date of receipt of such
of this Act, shall be turned over to those persons entitled to appeal. The Board, after hearing, shall render its
receive them or, when this is not possible, held at their disposal decision based on substantial evidence or such relevant
for a specified period. After the lapse of the specified period, the evidence on record as a reasonable mind might accept
balance shall be transferred to the forfeiture fund as provided in as adequate to support the conclusion.
Section 1151 of this Act.
(b) In the exercise of its appellate jurisdiction, the Board
So you have now decision of the Commissioner of Customs not the shall have the power to summon witnesses, administer
decision of the Collector of Customs. oaths, conduct ocular inspection, take depositions, and
issue subpoena and subpoena duces tecum. The
proceedings of the Board shall be conducted solely for appeals, from the local board to the central board then to the CTA En
the purpose of ascertaining the facts without banc then to the Supreme Court.
necessarily adhering to technical rules applicable in
judicial proceedings.
REFUND
(c) The secretary of the Board shall furnish the owner of
the property or the person having legal interest therein Fourth, claim for refund on real property tax. So again doon parin yan
and the provincial or city assessor with a copy of the sa local treasurer when you are now asking or you believe that you
decision of the Board. In case the provincial or city have overpaid or erroneously or illegally collected then fil a claim for
assessor concurs in the revision or the assessment, it refund with the local treasurer. The filing the claim for refund is 2
shall be his duty to notify the owner of the property or years. Take note that the claim for refund in the NIRC, the local
the person having legal interest therein of such fact property tax and real property tax is 2 years from payment. Bring that
using the form prescribed for the purpose. The owner up to the local treasurer then there is a decision then local board to
of the property or the person having legal interest the central board then to the CTA En banc and finally to the Supreme
therein or the assessor who is not satisfied with the Court.
decision of the Board, may, within thirty (30) days after
receipt of the decision of said Board, appeal to the
Central Board of Assessment Appeals, as herein SECRETARY OF FINANCE
provided. The decision of the Central Board shall be
final and executory. Then you have the decisions of the Secretary of Finance on customs
cases elevated to him automatically for review on the decisions of the
So the remedy is NOT to FILE a motion for reconsideration, because customs commissioner which are adverse to the Government under
the assessor insisted that it is the FMV, your remedy is to file now the section 2315 of the tariff and customs code.
protest before the local board of assessment appeals. From the local
board it is brought now to the central board of assessment appeals You have the Collector of Customs, there is a case filed before the
there is one board each in Luzon, Visayas and Mindanao. Then from Collector of Customs, the Collector of Customs decides against the
the central board it is brought to the CTA en banc, hindi na sya sa government, so the remedy is to appeal to the commissioner of
division, the finally to the Supreme Court. customs by automatic review. Now the commissioner of customs
again decides against the government then there is automatic review
against the secretary of finance. When the Secretary of finance
PROTESTING SPECIAL LEVY decides now in favor of the government then the remedy stops.
(unclear). If the decision now of the secretary of finance is now
Another is protesting special levy. The special levy under real property adverse to the taxpayer, the remedy now is to appeal to the CTA.
taxation occurs when your LGU will introduce public works project (dean did not mention division or en banc)
and infrastructure developments and would like to recover
investment by assessing real property owners over that development,
gusto nilang babawiin yung expenses made by the LGU so they will DEPARTMENT OF TRADE AND INDUSTRY
pass an ordinance imposing a levy or special assessment that is NOT
tax, it is time bound as there is a period to which is to collect that is Number seven, decision of the DTI in case of the non-agri products
the recovery period. After recovery, the collection stops. The and DA in case of agri products involving dumping and countervailing
assessment of the tax will be the property owners benefitted by the duties under safeguard measure. Now the dumping duty is a special
development, if you did not benefit from the development you will duty imposed by the BOC or DTI or DA, if the imported article is being
not be assessed special levy. The same procedure you bring it to the brought in the country and sold at less than its normal value. When
local board of assessment appeals. an imported article is sold at the country of destination at less than
its normal value it is a case of dumping. There is countervailing when
Third is protesting (payment??) so this time since it involves payment, the imported article enjoys a subsidy or bounty in the country of
it is required when you protest the payment the local assessor will origin where they are manufactured. So when they are brought in the
prepare the real property tax declaration. The tax declaration is now country of destination they will now compute and injure the locally
brought to the local treasurer that is his guide in determining the real products. Now if it is non-agri DTI will recommend a countervailing,
property tax. There is a requirement of paying under protest, after the countervailing is to offset that advantage. If agri yan sya that will
paying you indicate in the receipts that you are paying under protest be the DA that will recommend the countervailing.
that you file your protest within 30 days after payment.
Decisions of the Secretary of Trade and Industry, in the case of
The local treasurer shall decide within 60 days, if the protest is non-agricultural product, commodity or article, and the Secretary
meritorious then you will be refunded, or the payment will be applied of Agriculture in the case of agricultural product, commodity or
as tax credit to the future. If the protest is denied or if there is no article, involving dumping and countervailing duties under
action within 60 days, here the protest to the local treasurer in case Section 301 and 302, respectively, of the Tariff and Customs
of denial or inaction the remedy is go to the local board of assessment Code, and safeguard measures under Republic Act No. 8800,

where either party may appeal the decision to impose or not to amount is less than 1,000,000 the jurisdiction depending on the
impose said duties. penalty will be on the RTC or MTC. The jurisdiction of the CTA now
becomes appellate.
SECTION 713. Countervailing Duty. – The provisions of Republic
Act No. 8751, otherwise known as "An Act Strengthening the  If RTC has the original jurisdiction appeal to the CTA Division
Mechanisms for the Imposition of Countervailing Duties on to the CTA En banc and finally to the Supreme Court.
Imported Subsidized Products, Commodities or Articles of
Commerce in Order to Protect Domestic Industries from Unfair  If the MTC has the original jurisdiction appeal is to the RTC
Trade Competition, Amending for the Purpose Section 302, Part then to the CTA En banc and lastly to the Supreme Court.
2, Title II, Book I of Presidential Decree No. 1464", otherwise
known as the "Tariff and Customs Code of the Philippines, as Number 8 is decision of the RTC in its original or exclusive appellate
Amended", are hereby adopted. jurisdiction in criminal cases where the amount involved for taxes and
fees is less than 1,000,000. Where the criminal action involved has an
amount of 1,000,000 or more then the CTA has original and exclusive
SAFEGUARD MEASURES jurisdiction. The original jurisdiction here is the CTA Division to CTA
en banc and to the Supreme Court.
The third one is the safeguard measure, it is impose by DTI if there is
a surging of imported article of which there is no dumping nor Then you have number 9, the jurisdiction over tax collection cases.
countervailing. So there is a heavy importation, an example of that is When you are dealing with final and executory assessment, the
the case of cement several years ago, when there was heavy exclusive original is with the CTA division then to En banc and now to
importation of cement. There was no dumping or countervailing but the SC. Final and executory assessment and the amount of tax
there was surging and so there was a recommendation of imposing involved is 1,000,000 or more. If less than 1,000,000 then you go to
safeguard measures. Here you have the dumping, countervailing and either RTC or MTC.
safeguard measure imposed now by DTI in non-agri.
You have the appellate jurisdiction over tax collection cases, the RTC
If imposed, the protest now is brought to the CTA. The decision of the appellate jurisdiction to the CTA En banc then to the SC.
secretary recommending the imposition of dumping, countervailing
or safeguard measure whether the DTI or DA will now appeal to the When you bring now the action to the Supreme Court from the CTA it
CTA division to the CTA En Banc and to the Supreme Court. is under rule 45 review by certiorari, whether it is the CTA deciding in
its exclusive original or exclusive appellate, the appeal from the
Now, in letter B in jurisdiction involving criminal offenses. We Supreme Court is under rule 45 or review by certiorari not rule 65.
mention that the filing of criminal action is one of the mode of
collection of the tax which will not require any prior assessment. 05 MARCH 2019
Narca & Candolita
"Sec. 7. Jurisdiction. – The CTA shall exercise: xxx
Take note of the amendments of the VAT under TRAIN because under
Exclusive original jurisdiction over all criminal offenses arising Section 86 (R.A 10963) there are list of the amendments of the VAT.
from violations of the National Internal Revenue Code or Tariff
and Customs Code and other laws administered by the Bureau of All these items are now part of the 12% VAT. Any transactions
Internal Revenue or the Bureau of Customs: Provided, however, involving will be now subject to the VAT.
That offenses or felonies mentioned in this paragraph where the
principal amount o taxes and fees, exclusive of charges and SECTION 86. Repealing Clause.— The following laws or provisions
penalties, claimed is less than One million pesos (P1,000,000.00) of laws are hereby repealed and the persons and/or transactions
or where there is no specified amount claimed shall be tried by affected herein are made subject to the VAT provision of Title IV
the regular Courts and the jurisdiction of the CTA shall be of the NIRC, as amended:
appellate. Any provision of law or the Rules of Court to the
contrary notwithstanding, the criminal action and the (a) Section 3 of Presidential Decree (P.D.). 1972, s. 1985, as
corresponding civil action for the recovery of civil liability for amended, Sections 4 and 5 of Executive Order No.
taxes and penalties shall at all times be simultaneously instituted (E.O.) 1057, s. 1985, and Section 4 of E.O. 1064, s. 1985,
with, and jointly determined in the same proceeding by the CTA, insofar as the VAT tax exemption and tax credit is
the filing of the criminal action being deemed to necessarily carry concerned;
with it the filing of the civil action, and no right to reserve the
filling of such civil action separately from the criminal action will (b) Section 10, insofar as VAT exemption is concerned, of
be recognized. Republic Act No. (R.A.) 6807 or An Act Converting the
Mati Community College into a State College to be
CTA EXCLUSIVE ORIGINAL JURISDICTION known as the Davao Oriental State College of Science
and Technology, Providing for a Charter for this
Here there is exclusive original jurisdiction in the CTA where the claim Purpose, Expanding its Curricular Offerings, Redirecting
of that amount for taxes and fees is 1,000,000 or more. When the its Objectives, and Appropriating Funds Therefor;
Philippines a Franchise to Construct, Install, Operate

(c) Sections 18 and 19, insofar as VAT exemption is and Maintain for Educational and Other Related
concerned, of R.A. 6847 or The Philippine Sports Purposes, Radio and Television Broadcasting Stations
Commission Act; Within the University of the Philippines and in Such
Other Areas Within the Scope of its Operation;
(d) Section 8(d), last paragraph, insofar as VAT exemption
is concerned, of R.A. 7278 or An Act Amending (q) Sections 2 and 16, insofar as VAT exemption is
Commonwealth Act No. 111, as Amended by P.D. 460, concerned, of R.A. 8282 or The Social Security Act of
entitled An Act to Create a Public Corporation to be 1997;
Known as the Boy Scouts of the Philippines, and to
Define its Powers and Purposes, by Strengthening the (r) Section 39, insofar as VAT exemption is concerned, of
Volunteer and Democratic Character of the Boy Scouts R.A. 8291 or The Government Service Insurance System
of the Philippines and for Other Purposes; Act of 1997;
(e) Section 1, insofar as VAT exemption is concerned, of (s) Section 4(c) and (f), insofar as VAT exemption is
R.A. 7291 or An Act Restoring the Tax and Duty concerned, of R.A. 8292 or the Higher Education
Incentives Previously Enjoyed by the Veterans Modernization Act of 1997;
Federation of the Philippines under Republic Act
Numbered Twenty-Six Hundred and Forty; (t) Section 25, insofar as VAT exemption is concerned, of
R.A. 8492 or the National Museum Act of 1998;
(f) Section 21, insofar as VAT exemption is concerned, of
R.A. 7306 or the Charter of the People’s Television (u) Section 3(h), insofar as VAT exemption is concerned, of
Network, Inc.; R.A. 8502 or the Jewelry Industry Development Act of
1998;
(g) Section 14, insofar as VAT exemption is concerned, of
R.A. 7354 or the Postal Service Act of 1992; (v) Article 65, insofar as VAT exemption and zero rating is
concerned, of regional or area headquarters and zero-
(h) Section 9(c), insofar as VAT exemption is concerned, of rating of the sale or lease of goods and property and
R.A. 7355 or the Manlilikha ng Bayan Act; the rendition of services to regional or area
headquarters, and Article 67, insofar as VAT exemption
(i) Section 21, insofar as VAT exemption is concerned. of is concerned, of R.A. 8756; Provided, That existing
RA 7366 or the Law Creating the National Commission RHQs and ROHQs enjoying VAT exemption and zero-
for Culture and the Arts; rating at the time of the effectivity of TRAIN shall not
be affected;
(j) Section 7(f), insofar as VAT exemption is concerned, of
R.A. 7371 or An Act Converting the Aklan Agricultural (w) Section 7(c), insofar as VAT exemption is concerned, of
College into Ak1an State College of Agriculture, and R.A. 9045 or An Act Creating the Batangas State
Appropriating Funds Therefor; University;
(k) Section 12, second sentence, insofar as VAT exemption (x) Section 7(c), insofar as VAT exemption is concerned, of
is concerned, of R.A. 7373 or An Act Establishing the R.A. 9055 or An Act Converting the A1tlan State College
Eastern Visayas Science High School; of Agriculture into the Aldan State University;
(l) Section 11(j), insofar as VAT exemption is concerned, of (y) Section 13, insofar as VAT exemption is concerned of
R.A. 7605 or the Charter of the Philippine State College R.A. 9083 or An Act Establishing the Sta. Rosa Science
of Aeronautics; and Technology High School in Sta. Rosa Laguna;
(m) Section 126, insofar as VAT exemption is concerned, of (z) Section 7(c) and (f), insofar as VAT exemption is
R.A. 7653 or The New Central Bank Act; concerned, of RA 9138 or An Act Establishing the
Guimaras State College;
(n) Section 14, insofar as VAT exemption is concerned, of
R.A. 7875 or the National Health Insurance Act of 1995; (aa) Section 7(c), insofar as VAT exemption is concerned, of
R.A. 9141 or An Act Converting the Negros Occidental
(o) Section 18, insofar as VAT exemption is concerned, and Agricultural College into State College to be known as
Section 18, last paragraph of R.A. 7884 or the National the Negros Occidental Agricultural College;
Dairy Development Act of 1995;
(bb) Section 16, insofar as VAT exemption is concerned, of
(p) Section 8, insofar as VAT exemption is concerned, R.A. R.A. 9497 or The Civil Aviation Authority Act of 2008;
8160 or An Act Granting the University of the

(cc) Section 25(b) and (c), insofar as VAT exemption is (oo) Section 13, second paragraph, with respect to VAT, of
concerned, and (d), insofar as VAT zero rating is R.A. 10817 or the Philippine Halal Export
concerned, of R.A. 9500 or the University of the Development and Promotion Act of 2016;
Philippines Charter of 2008;
(pp) Section 9(3), (4), and (8), with respect to VAT, of R.A.
(dd) Section 25(b) and (c), insofar as VAT exemption is 8479 or the Downstream Oil Industry Deregulation
concerned, and (d) insofar as VAT zero-rating is Act of 1998;
concerned, of R.A. 9519 or An Act Converting Mindanao
Polytechnic State College into a State University to be (qq) Section 6(c) and (d), with respect to VAT, of R.A. 7103
Known as the Mindanao University of Science and or the Iron and Steel Industry Act;
Technology;
(rr) Section 10, with respect to VAT, of R.A. 7718 or An Act
(ee) Section 17(c), insofar as VAT exemption is concerned, Amending R.A. No. 6957;
of R.A. 3591, otherwise known as the PDIC Charter, as
amended by Section 8 of R.A. 9576, otherwise known (ss) Section 26(B)(3), with respect to VAT, of R.A. 9275 or
as An Act Increasing the Maximum Deposit Insurance the Philippine Clean Water Act of 2004;
Coverage, and in Connection Therewith, to Strengthen
the Regulatory and Administrative Authority, and (tt) Section 20(d)(3) of R.A. 7279 or the Urban
Financial Capability of the Philippine Deposit Insurance Development and Housing Act of 1992;
Corporation (PDIC), Amending for this Purpose
Republic Act Numbered Three Thousand Five Hundred (uu) Section 20(d)(3) of R.A. 10884 or An Act
Ninety-One, as Amended, Otherwise Known as the Strengthening the Balanced Housing Development
PDIC Charter, and for Other Purposes; Program, Amending for the Purpose RA 7279, as
Amended, Otherwise Known as the Urban
(ff) Sections 2 and 19, insofar as VAT exemption is Development and Housing Act of 1992;
concerned, of R.A. 9679 or An Act Further
Strengthening the Home Development Mutual Fund, (vv) Section 14, with respect to VAT, of R.A. 8423 or the
and for Other Purposes; Traditional and Alternative Medicine Act (TAMA) of
1997;
(gg) Section 23, insofar as VAT exemption is concerned of
the National Historical Commission of the Philippines, (ww) Section 22(b) of R.A. 10747 or the Rare Diseases of the
of R.A. 10086, or the Strengthening Peoples’ Philippines;
Nationalism Through Philippine History Act;
(xx) Section 45(a), (b), and (c), with respect to VAT, of R.A.
(hh) Section 7(b) and (c), insofar as VAT exemption is 9003 or the Ecological Solid Waste Management Act
concerned, and (d), insofar as VAT zero-rating is of 2000;
concerned, of R.A. 9647 or the Philippine Normal
University Modernization Act of 2009; (yy) Section 5(b), with respect to VAT, of R.A. 10771 or the
Philippine Green Jobs Act of 2016;
(ii) Section 17, insofar as VAT exemption is concerned, of
R.A. 7898, as amended by R.A. 10349, Establishing the (zz) Section 6, with respect to VAT, of R.A. 7459 or the
Revised AFP Modernization Program and for Other Investors and Inventions Incentives Act of the
Purposes; Philippines;
(jj) Section 56, insofar as VAT exemption is concerned, of (aaa) Section 24, insofar as VAT exemption of foundations
R.A. 10801 or the Overseas Workers Welfare for scientific advancements is concerned, of R.A.
Administration Act; 2067, as amended, or the Science Act of 1958; and
(kk) Section 9(e)(2) and (j), with respect to VAT, of R.A. 7900 (bbb) Section 9, with respect to VAT, of R.A. 9511 or the
or the High-Value Crops Development Act of 1995; National Grid Corporation of the Philippines Act.
(ll) Section 24(e) of R.A. 10068 or the Organic Agriculture Provided, That the VAT obligations of government owned and-
Act of 2010; controlled corporations, state universities and colleges, and
other government instrumentalities whose VAT exemption has
(mm) Section 14(b), with respect to VAT, R.A. 7308 or the been repealed under this Act shall be chargeable to the Tax
Seed Industry Development Act of 1992; Expenditure Fund (TEF) provided for in the annual General
Appropriations Act: Provided, further, That VAT exemption, VAT
(nn) Section 35 (b)(c), with respect to VAT, of R.A. 8550 or zero-rating, and VAT credit granted to state universities and
The Philippine Fisheries Code of 1998; colleges on their purchases and importations are hereby

repealed and the transactions affected herein are made subject RECENT TAX JURISPRUDENCE 2018
to the VAT provisions of Title IV of the NIRC, as amended.
Provided, That, with respect to income tax, the following laws or VALUE ADDED TAX
provisions of laws are hereby repealed or amended:
You have the rule under Section 112 prior to the amendment. Prior to
(a) Section 33(A) of R.A. 7277, as amended by R.A. 10754 the TRAIN or prior to the 2018:
or the Magna Carta for Persons with Disability;
(b) Section 22(B) of R.A. 10165 or the Foster Care Act of Prior to TRAIN
2012;
(c) Section 4 of R.A. 1169 or An Act Providing for Charity Section 112. Refunds or Tax Credits of Input Tax. – (A) Zero-rated
Sweepstakes, Horse Races and Lotteries: or Effectively Zero-rated Sales. - any VAT-registered person,
whose sales are zero-rated or effectively zero-rated may, within
“Sec. 4. Holding of sweepstakes.— The Office shall bold two (2) years after the close of the taxable quarter when the sales
charity horse race sweepstakes under such regulations were made, apply for the issuance of a tax credit certificate or
as shall be promulgated by the Board in accordance refund of creditable input tax due or paid attributable to such
with Republic Act Numbered Three hundred and nine: sales, except transitional input tax, to the extent that such input
Provided, however, That when the holding of a tax has not been applied against output tax: Provided, however,
sweepstakes race to determine prizes is impossible due That in the case of zero-rated sales under Section 106(A)(2)(a)(1),
to war, public calamity, or other unforeseen or (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign
fortuitous event or when there is no sufficient number currency exchange proceeds thereof had been duly accounted for
of horses to determine the major prizes, the Board of in accordance with the rules and regulations of the Bangko Sentral
Directors may determine the procedure to be followed ng Pilipinas (BSP): Provided, further, That where the taxpayer is
in the distribution of prizes in the most just, equitable engaged in zero-rated or effectively zero-rated sale and also in
and expeditious manner. The horse races and the sale taxable or exempt sale of goods of properties or services, and the
of tickets in the said sweepstakes shall be exempt from amount of creditable input tax due or paid cannot be directly and
all taxes, except that each ticket shall bear a twelve- entirely attributed to any one of the transactions, it shall be
centavo internal revenue stamp. The tickets shall be allocated proportionately on the basis of the volume of sales.
printed by the Government and shall be considered
government securities for the purposes of penalizing xxx
forgery or alteration.”
(D) Period within which Refund or Tax Credit of Input Taxes shall be
(d) Section 5 of R.A. 8756 or An Act Providing for the Made. - In proper cases, the Commissioner shall grant a refund or
Terms, Conditions and Licensing Requirements of issue the tax credit certificate for creditable input taxes within
Regional or Area Headquarters, Regional Operating one hundred twenty (120) days from the date of submission of
Headquarters, and Regional Warehouses of compete documents in support of the application filed in
Multinational Companies, An;tending for the Purpose accordance with Subsections (A) and (B) hereof.
Certain Provisions of Executive Order No. 226 or The
Omnibus Investments Code of 1987: Provided, That In case of full or partial denial of the claim for tax refund or tax
existing Regional or Area Headquarters, Regional credit, or the failure on the part of the Commissioner to act on
Operating Headquarters, and Regional Warehouses of the application within the period prescribed above, the taxpayer
Multinational Companies enjoying the preferential affected may, within thirty (30) days from the receipt of the
income tax rate at the time of the effectivity of the decision denying the claim or after the expiration of the one
TRAIN shall not be affected; hundred twenty day-period, appeal the decision or the unacted
(e) Section 2 of P.D. 1354, s. 1978 or Imposing Final Income claim with the Court of Tax Appeals. xxxx
Tax on Subcontractors and Alien Employees of Service
Contractors and Subcontractors Engaged in Petroleum Under 2018 or the TRAIN Law:
Operations in the Philippines under Presidential Decree
No. 87: Provided, That service contractors and The period is still 2 years but the claim must be decided within 90
subcontractors enjoying the preferential income tax days. What if there is no decision within 90 days? Are you going to
rate at the time of the effectivity of the TRAIN shall not wait or should you go to the CTA?
be affected; and
(f) Section 7 of P.D. 1034, s. 1976, or Authorizing the ➢ Prior to TRAIN, upon the lapse of the 120-period, you can
Establishment of an Offshore Banking System in the treat that as a denial.
Philippines: Provided, That service contractors and ➢ However under the TRAIN, if there is no decision within 90
subcontractors enjoying the preferential income tax days, the officer will be subject to the penalty for not
rate at the time of the effectivity of the TRAIN shall not making a decision.
be affected.

However in the regulation that came out: of the 120 day period to decide and no decision 
judicial appeal to the CTA,div.  CTA en banc SC
➢ If there a decision within the 90-day period and if it is a
denial, then you appeal now to the CTA within 30 days. Exception is BIR Ruling No. DA-489-03. The judicial claim
➢ If there is no decision and the 90-day period has lapsed, need not await the expiration of the 120-day period, if
you do not go to the CTA because there is no statutory such was filed from December 10, 2003(issuance of BIR
provision that you would go to the CTA in the event the 90- Ruling No. DA-489-03) to October 6, 2010 (promulgation
day period would lapsed. Walang law provided. The law is of Aichi).
silent. In other words, you have to wait without prejudice of
the administrative action which the BIR may pursue against
the officer in charge. MEDICARD PHILS. vs. CIR
822 SCRA 444 | 2017
You have to wait for the decision even beyond the 90-day period. If [VAT exemption of HMO]
there is now a decision and if it is a denial, then you go now to the
CTA. HMO is exempt from VAT under Sec. 109(G), NIRC. The
amounts earmarked and eventually paid by MEDICARD
to the medical service providers do not form part of
Under TRAIN gross receipts for VAT purposes. An HMO like
MEDICARD is principally engaged in the sale of services.
SECTION 36. Section 112 of the NIRC, as amended, is hereby Its VAT base and corresponding liability is, thus,
further amended to read as follows: determined under Section 108(A) of the NIRC as
amended by RA No. 9337.
“SEC. 112. Refunds or Tax Credits of Input Tax.—
MEDICARD is primarily engaged in arranging for
“(A) x x x coverage or designated managed care services that are
“(B) x x x needed by plan holders/members for fixed prepaid
“(C) Period within which Refund of Input Taxes shall be membership fees and for a specified period of time, then
Made.— In proper cases, the Commissioner shall grant a refund MEDICARD is principally engaged in the sale of services.
for creditable input taxes within ninety (90) days from the date HMO engaged in preventive, diagnostic and curative
of submission of the official receipts or invoices and other medical services is not engaged in the business of an
documents in support of the application filed in accordance with insurance.
Subsections (A) and (B) hereof: Provided, That should the
Commissioner find that the grant of refund is not proper, the The definition of “gross receipts” of an HMO under RR
Commissioner must state in writing the legal and factual basis for No. 16-2005 merely presumed that the amount received
the denial. by an HMO as membership fee is the HMO’s
compensation for their services. As a mere presumption,
“In case of full or partial denial of the claim for tax refund, the an HMO is allowed to establish that a portion of the
taxpayer affected may, within thirty (30) days from the receipt of amount it received as membership fee does NOT actually
the decision denying the claim, appeal the decision with the compensate it but some other person, which in this case
Court of Tax Appeals: Provided, however, That failure on the part are the medical service providers themselves. In the
of any official, agent, or employee of the BIR to act on the course of its business, its members can either avail of
application within the ninety (90)-day period shall be punishable medical services from MEDICARD’s accredited
under Section 269 of this Code. xxx healthcare providers or directly from MEDICARD. In the
former, MEDICARD would not be actually providing the
actual healthcare service; Thus based on industry
SITEL PHILS. CORP. vs. CIR practice, MEDICARD informs its would-be member
817 SCRA 193 | 2017 beforehand that 80% of the membership fee would be
[Refund of excess input VAT on zero-rated VAT taxpayers] earmarked for medical utilization and only 20%
comprises its service fee. In the latter case,
Sec. 112, NIRC: procedure to file claim for refund/ tax MEDICARD’s sale of its sale of its services is exempt
credit certificate for the excess input VAT of the zero- from VAT under Section 109(G) of the NIRC.
rated taxpayers; (excess input VAT of the 12% VAT
taxpayers is to carry-over not refund). The amounts earmarked and eventually paid by
MEDICARD to the medical service providers do not form
File administrative claim within 2 years from the end of part of gross receipts for VAT purposes. Since an HMO
the taxable quarter when sales were made  CIR  like MEDICARD is primarily engaged in arranging for
decide within 120 days from submission of documents coverage or designated managed care services that are
 grant or deny the claim; in case of denial or the lapse needed by plan holders/members for fixed prepaid

membership fees and for a specified period of time, then under the highest tax classification of any variant of the
MEDICARD is principally engaged in the sale of services. brand. On the other hand, new brands are initially
classified and taxed according to their suggested net
In Philippine Health Care Providers, Inc. vs. Commissioner retail price, until a survey is conducted by the Bureau of
of Internal Revenue, the Court adopted the principal Internal Revenue to determine their current net retail
object and purpose object in determining whether the price in accordance with the specified procedure.
MEDICARD therein is engaged in the business of
insurance and therefore liable for documentary stamp San Mig Light is a new brand and not a variant of
tax. The Court held therein that an HMO engaged in existing brand. BIR’s reclassification of San Mig Light
preventive, diagnostic and curative medical services is from new brand to variant of existing brand is not
not engaged in the business of an insurance. In sum, the authorized due to the reclassification freeze under Sec.
Court said that the main difference between an HMO 143, NIRC (as amended by RA 9334). The reclassification
and an insurance company is that HMOs undertake to of fermented liquors should be by Congress not by BIR.
provide or arrange for the provision of medical services
through participating physicians while insurance A variant under the Tax Code has a technical meaning. It
companies simply undertake to indemnify the insured is determined by the brand (name) or logo of the beer
for medical expenses incurred up to a pre-agreed limit. product. A variant is determined by the brand (name) of
In the present case, the VAT is a tax on the value added the beer product, whether it was formed by prefixing or
by the performance of the service by the taxpayer. It is, suffixing a modifier to the root name of the alleged
thus, this service and the value charged thereof by the parent brand, or whether it carries the same logo or
taxpayer that is taxable under the NIRC. For this Court design.
to subject the entire amount of MEDICARD's gross
receipts without exclusion, the authority should have "San Mig Light" and "Pale Pilsen" do not share a root
been reasonably founded on the language of the word. Neither is there an existing brand in the list
statute. That language is wanting in this case. (Annexes C-1 and C-2 of the Tax Code) called "San Mig"
to conclude that "Light" is a suffix rendering "San Mig
Light" as its "variant." "San Mig Light" should be
POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP. vs. CIR considered as one brand name.
835 SCRA 235 | 2017
[Sale of business assets under EPIRA VAT exempt] The purpose behind the definition was to properly tax
brands that were presumed to be riding on the
Sale of business assets not in the course of trade or popularity of previously registered brands by being
business or incident thereto is not subject to VAT. The marketed under an almost identical name with a prefix,
sale of the Pantabangan-Masiway and Magat Power suffix, or a variant. It seeks to address price differentials
Plants by PSALM to private entities is not subject to VAT employed by a manufacturer on similar products
since the sale was made pursuant to PSALM's mandate differentiated only in brand or design. Specifically, the
to privatize NPC generation assets, and was not provision was meant to obviate any tax avoidance by
undertaken in the course of trade or business. In selling manufacturing firms from the sale of lower priced
the power plants, PSALM was merely exercising a variants of its existing beer brands, thus, falling in the
governmental function for which it was created under lower tax bracket with lower excise tax rates. To favor
the EPIRA law. government, a variant of a brand is taxed according to
the highest rate of tax for that particular brand.
EXCISE TAXES
CIR vs. SMC PURISIMA vs. PHIL. TOBACCO INSTITUTE
815 SCRA 563 | 2017 822 SCRA 632 | 2017
[Excise tax on San Mig Light as a new brand not a variant of Pale [Excise tax on cigarettes packed in 20s, taxing in less than 20s is
Pilsen; Reclassification made by BIR is void] void]
Excise taxes are imposed on the production, sale or Sec. 145(C), NIRC: The excise tax on cigarettes packed by
consumption of specific goods; the excise tax on beer is machine is imposed per packed of 20 sticks. In case of
a specific tax based on volume, or on a per liter basis; any cigarettes packed in not more than 20 sticks, whether in
reclassification of fermented liquor products should be 5 sticks, 10 sticks, and other packaging combinations
by act of Congress. below 20 sticks, the net retail price of each individual
package of 5s, 10s, ect. shall be the basis of imposing the
How a new beer product is taxed depends on its tax rate provided they are bundled together by not more
classification, i.e. whether it is a variant of an existing than 20 sticks: (4 x5s), or (2 x 10s). The lawmakers
brand or a new brand. Variants of a brand that were intended to impose the excise tax on every pack of
introduced in the market after January 1, 1997 are taxed cigarettes that come in 20 sticks.

The BIR regulation imposing the tax in packs less than 20 investigations and thus, it must be carefully and strictly
sticks is null and void and without authority. It amended construed. Since the three Waivers in this case are
the law. defective, they do not produce any effect and did not
suspend the three-year prescriptive period under
TAX REMEDIES Section 203 of the NIRC.
CIR vs. ASALUS CORP.

818 SCRA 543 | 2017 MEDICARD PHILS. vs. CIR
[Assessment 3 years, exception 10 years] 822 SCRA 444 | 2017
[LOA is a pre-requisite to an assessment not an LN]
GENERAL RULE: Sec. 203, NIRC 1997: prescriptive period
to make an assessment, 3 years after the last day Letter of Authority (LOA) is essential and required
prescribed by law for the filing of the return; before an examination/assessment be ordinarily
undertaken upon the taxpayer. An assessment issued
EXCEPTION: Sec. 222 (A), false or fraudulent return with without an LOA is void being a violation of due process.
intent to evade tax or of failure to file a return, period is The letter notice (LN) cannot be converted into an LOA
10 years from the discovery of the falsity, fraud or even if issued by the CIR. Sec. 6, NIRC allows the
omission. taxpayer to be assessed through best-evidence
obtainable, inventory taking, or surveillance among
Sec. 248(B), NIRC: there is prima facie evidence of a false others has nothing to do with the LOA. They are methods
return if there is a substantial under declaration of of examining the taxpayer to arrive at the correct taxes.
taxable sales, receipt or income in an amount exceeding There is a great difference between an LOA and LN. PAN
30% of what is declared in the returns. and FAN are null and void if no LOA was issued in the
conduct of the examination even done under Sec. 6,
NIRC.
CIR v. PDI
821 SCRA 350 | 2017
[Prescriptive period to make assessment; Defective waiver will not DEAN: Remember that before an examiner could institute the
toll prescriptive period] assessment proceedings, the examiner should be armed of what we
call a Letter of Authority (LOA).
Sec. 203, NIRC 1997: Prescriptive period to assess is 3
years subject to exceptions under Sec. 222, NIRC. But The LOA is a prerequisite to an assessment, not the Letter Notice (LN).
filing of a fraudulent return implies that the act is There is a Letter Notice that you will be under examination. Is that
intentional and done with intent to evade the taxes, the already a valid authority to conduct an examination? SC said NO
filing of a false return can be intentional or due to honest because the prerequisite to a valid assessment before examining the
mistake. business records of a taxpayer, you must serve upon the taxpayer a
LOA not LN.
The entry of wrong information due to mistake,
carelessness, or ignorance, without intent to evade tax,
does not constitute a false return. In this case, there is METRO BANK vs. CIR
no enough evidence to prove fraud or intentional falsity 822 SCRA 496 | 2017
on the part of PDI. Indeed, the Waivers executed by the [Claim for refund under Sec. 229 NIRC is 2 years from payment or
BIR and PDI were meant to extend the three-year filing of the tax returns]
prescriptive period, and would have extended such
period were it not for the defects found. This further Sec. 229, NIRC 1997, period to file claim for refund is 2
shows that at the outset, the BIR did not find any ground years from payment or filing of the Final or Annual ITR
that would make the assessment fall under the where the refund is ascertained, and not upon the
exceptions. Clearly, the defects in the Waivers resulted discovery by the taxpayer of the erroneous or excessive
to the non-extension of the period to assess or collect payment of taxes.
taxes, and made the assessments issued by the BIR
beyond the three-year prescriptive period void. Sec. 204, NIRC: CIR has the authority to grant refunds.
But the claimant must first file an administrative claim
BIR cannot shift the blame to the taxpayer for issuing before the CIR prior to the filing of a judicial claim before
defective waivers. The Court has ruled that the BIR the CTA (Sec. 229, NIRC and RA 9282-exclusive appellate
cannot hide behind the doctrine of estoppel to cover its jurisdiction of CTA on refund).
failure to comply with RMO 20-90 and RDAO 05-01
which were issued by the BIR itself. A waiver of the Under Section 204, NIRC, no credit or refund of taxes or
statute of limitations is a derogation of the taxpayer's penalties shall be allowed unless the taxpayer files in
right to security against prolonged and unscrupulous writing with the Commissioner a claim for credit or

refund within two (2) years after the payment of the tax seek judicial recourse should the two (2)-year
or penalty: Provided, however, that a return filed prescriptive period expire without the appropriate
showing an overpayment shall be considered as a judicial claim being filed.
written claim for credit or refund.
A claimant for refund must first file an administrative DEAN: We discussed last time that in the filing of a claim for refund
claim for refund before the CIR, prior to filing a judicial under Section 229, this is different from the refund of the zero-rated
claim before the CTA. Notably, both the administrative VAT of the NIRC. What is in 229 is for those excessive and erroneously
and judicial claims for refund should be filed within the collected taxes. The period is 2 years from the payment or filing of
two (2)-year prescriptive period. annual tax returns and not upon the discovery of the taxpayer of the
erroneous or excessive payment of taxes.
As per Section 229 of the NIRC, the claimant is allowed
to file the latter even without waiting for the resolution So if you discovered later on that you erroneously paid taxes and
of the former in order to prevent the forfeiture of its lumampas na sya from 2 years since you made the payment or 2 years
claim through prescription. from the filing of the annual tax return, then your claim for refund is
already barred because it is not counted from discovery.
In cases involving a final withholding tax, the 2-year
period commences to run from the time the refund is Remember that both your administrative claim for refund and your
ascertained, i.e., the date such tax was paid, and not judicial claim should fall within the 2 year period. Unlike in VAT where
upon the discovery by the taxpayer of the erroneous or the period for the administrative claim is 2 years and the judicial claim
excessive payment of taxes. On the other hand, in cases may or may not be filed within the same 2 year period. So it's not
involving corporate income taxes, the period is reckoned mandatory that the judicial claim for the excess input VAT claim
from the time the Final Adjustment Return or the Annual should be invoked within the 2 year period. That requirement
Income Tax Return was filed since only then would it be however, is mandatory for Section 229.
possible to determine whether it paid an amount
exceeding its annual income tax liability. In this case of Metrobank, while the BIR has the authority to grant
refund claims, the claimant must first file an administrative claim
The six (6)-year period provided under the principle of before the BIR commissioner prior to filing a judicial claim before the
solutio indebiti does not apply in tax refund cases CTA.
because there is a binding relation between the taxing
authority and the withholding agent. Moreover, the The 6 year period under solutio indebiti or the principle of unjust
NIRC, a special law, explicitly provides for a mandatory enrichment does not apply to tax cases because there is a binding
period for claiming a refund or taxes erroneously paid. relationship between the taxing authority and the taxpayer.
Moreover, special law ang NIRC and so the specific period under it
Section 204, NIRC, provides the CIR with, inter alia, the should be followed.
authority to grant tax refunds. In this relation, Section
229 of the same Code provides for the proper procedure
in order to claim for such refunds. As may be gleaned ASIATRUST DEV’T BANK vs. CIR
from the foregoing provisions, a claimant for refund 823 SCRA 648 | 2017
must first file an administrative claim for refund before [Abatement of tax liability; MR mandatory before going to CTA en
the CIR, prior to filing a judicial claim before the CTA. banc]
Notably, both the administrative and judicial claims for Tax abatement; Sec. 204 (B), NIRC; tax abatement
refund should be filed within the two (2)-year application will be deemed approved only upon issuance
prescriptive period indicated therein, and that the of a termination letter to consider the tax assessment
claimant is allowed to file the latter even without waiting closed and terminated. CIR has the power to abate or
for the resolution of the former in order to prevent the cancel a tax liability.
forfeiture of its claim through prescription. In this regard,
case law states that "the primary purpose of filing an MR is mandatory before going to CTA en banc. In order
administrative claim [is] to serve as a notice of warning for the CTA En Banc to take cognizance of an appeal via
to the CIR that court action would follow unless the tax a petition for review, a timely motion for reconsideration
or penalty alleged to have been collected erroneously or or new trial must first be filed with the CTA Division that
illegally is refunded. issued the assailed decision or resolution. Failure to do
so is a ground for the dismissal of the appeal as the word
To clarify, Section 229 of the Tax Code -then Section 306 “must” indicates that the filing of a prior motion for
of the old Tax Code -however does not mean that the reconsideration is mandatory, and not merely directory.
taxpayer must await the final resolution of its
administrative claim for refund, since doing so would be The same is true in the case of an amended decision.
tantamount to the taxpayer's forfeiture of its right to Section 3, Rule 14 of the same rules defines an amended

decision as “any action modifying or reversing a decision the parties but may also rule upon related issues
of the Court En Bank or in Division.” As explained in CE necessary to achieve an orderly disposition of the case.
Luzon Geothermal Power Company, Inc. v. Commissioner Thus, the CTA Division was, therefore, well within its
of Internal Revenue, 768 SCRA 269 (2015), as amended authority to consider in its decision the question on the
decision is a different decision, and thus, is a proper scope of authority of the revenue officers who were
subject of a motion for reconsideration. In this case, the named in the LOA even though the parties had not raised
CIR’s failure to move for a consideration of the Amended the same in their pleadings or memoranda.
Decision of the CTA Division is a ground for the dismissal
of its Petition for Review before the CTA En Banc. Thus,
the CTA En Banc did not err in denying the CIR’s appeal DEAN: When there is a decision in the CTA and it is against the
on procedural grounds. Due to this procedural lapse, the taxpayer, or even when the decision is against the BIR, the remedy of
Amended Decision has attained finality insofar as the CIR the adverse party is to go to the CTA en banc. Prior to the CTA en banc,
is concerned. The CIR, therefore, may no longer question you must however, file an MR first before going to the CTA. This is
the merits of the case before this Court. mandatory. So the MR is not discretionary for the adverse party and
it is also required before going to the SC, na mag MR muna.
CIR v. LANCASTER PHILS. Example: Nag-decision yung CTA and favorable to Taxpayer so ang
831 SCRA 1 | 2017 mag-MR nito ay ang CIR. On MR, the CTA issued an amended decision
[Even with a valid LOA, assessment is void if it included a tax favorable to the CIR. Mag-MR ka pa ba? YES. Mag-MR muna ang
period not covered by LOA] taxpayer before going to the CTA.
A valid LOA does not necessarily clothe validity to an In CIR vs Lancaster, the LOA was valid pero the letter of authority kasi,
assessment issued on it, as when the revenue officers it should provide or state there the tax period you are being
designated in the LOA act in excess or outside of the investigated. In this case here, the assessment was void because it
authority granted them under said LOA. In the present included a tax period not covered by the LOA. Therefore the
case, the subject LOA specified that the examination assessment covering the different period, being outside the period
should be for the taxable year 1998 only but the specified in the LOA, the assessment issued against Lancaster is null
subsequent assessment issued against Lancaster and void.
involved disallowed expenses covering the next fiscal
year, or the period ending 31 March 1999. The taxable A procedural note:
year covered by the assessment being outside of the
period specified in the LOA in this case, the assessment Normally kasi when disputes arise between government agencies, it
issued against Lancaster is void. is settled and adjudicated by the DOJ, or SolGen or the GOCC. So what
happens if there is a tax dispute between government agencies? Dun
The CTA has jurisdiction to rule on the issue of the scope pa rin ba sa DOJ, SolGen or GOCC? No more. It is with the BIR. Because
of authority of the revenue officers to conduct the it has special jurisdiction on tax disputes.
examination of Lancaster’s books of accounts and
accounting records. The law vesting unto the CTA its
jurisdiction is Section 7 of RA No. 1125, as amended by POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP. vs. CIR
RA 9282, which provides that the jurisdiction of the CTA 835 SCRA 235 | 2017)
is not limited only to cases which involve decisions or [CIR has jurisdiction of tax dispute between gov’t agencies and BIR
inactions of the CIR on matters relating to assessments not DOJ, OSG & GOCC]
or refunds but also includes other matters arising from
the NIRC or related laws administered by the BIR. PD 242: all disputes and claims solely between
government agencies and offices, including GOCCs shall
It is clear that the issue on whether the revenue officers be administratively settled or adjudicated by the Sec. of
who had conducted the examination on Lancaster Justice, the SolGen, or the Gov’t Corporate Counsel,
exceeded their authority pursuant to LOA No. 00012289 depending on the issues and government agencies
may be considered as covered by the terms “other involved. Intragovernmental disputes are settled
matters” under Section 7 of RA No. 1125 or its administratively since the opposing government offices,
amendment, RA No. 9282. The authority to make an agencies and instrumentalities are all under the
examination or assessment, being a matter provided for President’s executive control and supervision.
by the NIRC, is well within the exclusive appellate
jurisdiction of the CTA. Tax issues/disputes under the NIRC involving
government entities and BIR (even if BIR is a government
The CTA can resolve an issue which was not raised by the agency) fall within the exclusive original jurisdiction of
parties. Under Section 1, Rule 14 of AM No. 05-11-07- the CIR and exclusive appellate jurisdiction of the CTA
CTA, or the Revised Rules of the Court of Tax Appeals, (Sec. 4, NIRC). PD 242 is a general law while NIRC is a
the CTA is not bound by the issues specifically raised by special law.

Tax dispute between PSALM and NPC (both GOCCs) and and deficiency VAT were not extended. The assessments
the BIR (gov’t office), over the imposition of the VAT on subject of this case, which were issued by the BIR beyond
the sale of the two power plants, is within the exclusive the three-year prescriptive, are therefore considered
original jurisdiction of the CIR. To allow the DOJ void and of no legal effect.
Secretary to settle the dispute is null and void.
DEAN: For a valid waiver of the statute of limitations for the

CIR v. SYSTEMS TECHNOLOGY INSTITUTE, INC.; assessment and collection of taxes under Section 222(b) of the NIRC,
G.R. NO. 220835 | 26 JULY 2017 the following procedures must be complied with:
[3 year assessment under Sec. 203 NIRC and waiver of the period] (1) The waiver must be in the proper form prescribed by BIR
issuance RMO 20- 90;
Section 203 of the NIRC of 1997, as amended, limits the (2) The waiver must be signed by the taxpayer himself or his
CIR's period to assess and collect internal revenue taxes duly authorized representative;
to three (3) years counted from the last day prescribed (3) The waiver should be duly notarized;
by law for the filing of the return or from the day the (4) The CIR or the revenue official authorized must sign the
return was filed, whichever comes later. Thus, waiver indicating that the BIR has accepted and agreed to
assessments issued after the expiration of such period the waiver;
are no longer valid and effective. (5) Both the date of execution by the taxpayer and date of
acceptance by the Bureau should be before the expiration
The primary reason behind the prescriptive period on of the period of prescription or before the lapse of the
the CIR's right to assess or collect internal revenue taxes period agreed upon in case a subsequent agreement is
is to safeguard the interests of taxpayers from executed; and
unreasonable investigation. Any extension or waiver of (6) The waiver must be executed in three copies.
the period to assess or collect should be before the
expiration of the period under Sec. 222, NIRC. Any
assessment made in violation thereof is void. PAL vs. CIR/CIR vs. PAL
G.R. NO. 206079-80/206309 | 17 JANUARY 2018
For a valid waiver of the statute of limitations for the [CTA can review matters on appeal including other factual matters
assessment and collection of taxes under Section not presented in the admin claim]
222(b) of the NIRC, the following procedures must be
complied with: (1) The waiver must be in the proper CTA can still review factual matters even not presented
form prescribed by BIR issuance RMO 20- 90; (2) The in the administrative claim before the CIR. While the
waiver must be signed by the taxpayer himself or his Commissioner has the right to hear a refund claim first,
duly authorized representative; (3) The waiver should if he or she fails to act on it, it will be treated as a denial
be duly notarized; (4) The CIR or the revenue official of the refund, and the Court of Tax Appeals is the only
authorized must sign the waiver indicating that the BIR entity that may review this ruling. This does not preclude
has accepted and agreed to the waiver; (5) Both the the appellate court from considering evidence that was
date of execution by the taxpayer and date of not presented in the administrative claim in the Bureau
acceptance by the Bureau should be before the of Internal Revenue in view of Republic Act No. 1125, as
expiration of the period of prescription or before the amended by RA 9282 stating that the Court of Tax
lapse of the period agreed upon in case a subsequent Appeals is a court of record. Thus, the review of the
agreement is executed; and (6) The waiver must be Court of Tax Appeals is not limited to whether or not the
executed in three copies. Commissioner committed gross abuse of discretion,
fraud, or error of law, as contended by the
These requirements are mandatory and must strictly be Commissioner. As evidence is considered and evaluated
followed. Tested against the requirements of RMO 20-90 again, the scope of the Court of Tax Appeals' review
and relevant jurisprudence, the waivers subject of this covers factual findings.
case suffer from the following defects: (1)At the time
when the first waiver took effect, the period for the CIR
to assess STI for deficiency EWT and deficiency VAT had DEAN: We already discussed the appellate jurisdiction of the CTA. This
already prescribed; (2) STI's signatory to the three will include other matters not brought up in the administrative claim
waivers had no notarized written authority from the and if raised on appeal before the CYA, can that be within the
corporation's board of directors; and (3) the waivers in jurisdiction? YES. Because review powers of CTA include all other
this case did not specify the kind of tax and the amount matters even though not presented in the administrative claim.
of tax due.
Considering the foregoing defects in the waivers

executed by STI, the periods for the CIR to assess or
collect the alleged deficiency income tax, deficiency EWT

CIR vs. PILIPINAS SHELL So when you pursue collection or administrative remedies like levy or
G.R. No. 197945 | 09 JULY 2018 distraint, this will require prior assessment. Unlike a criminal action
[ASSESSMENT & COLLECTION PERIODS, NO COLLECTION WITHOUT where there i s no need or assessment. In the normal course of tax
A PRIOR ASSESSMENT] collection and enforcement, the BIR must first make an assessment of
the tax to be collected. It is a preliminary step essential to warrant
Resort to summary administrative remedies without a distraint and to establish a cause for judicial action.
valid assessment is not in accordance with the
prescribed procedure and in violation of Shell’s right to
substantive due process. CIR's collection efforts is not GAW vs. CIR
valid institution of a judicial remedy for collection of G.R. No. 222837 | 23 JULY 2018
taxes without an assessment, and any such judicial [CIVIL LIABILITY IN CRIMINAL TAX CASE IS DIFFERENT FROM THE
remedy is now barred by prescription. CIVIL ACTION QUESTIONING THE TAX ASSESSMENT]
The Court dismisses the present petitions for it cannot The civil action filed by the petitioner to question the
allow the CIR to collect any excise tax deficiency from FDDA is not deemed instituted with the criminal case for
Shell by mere issuance of the 1998 and 2002 Collection tax evasion. Civil action to protest the tax assessment is
Letters. CIR had failed to comply with the prescribed different from the criminal action to collect the tax
procedure for collection of unpaid taxes through where the civil liability is deemed instituted.
summary administrative remedies and, thus, violated
taxpayer’s right to due process. What is deemed instituted with the criminal action is
only the action to recover civil liability arising from the
In the normal course of tax administration and crime. Civil liability arising from a different source of
enforcement, the BIR must first make an assessment obligation, such as when the obligation is created by law,
then enforce the collection of the amounts so assessed. such civil liability is not deemed instituted with the
"An assessment is not an action or proceeding for the criminal action. The remedy of the taxpayer to appeal
collection of taxes. x x x It is a step preliminary, but the disputed assessment is not deemed instituted with
essential to warrant distraint, if still feasible, and, also, the criminal case. To rule otherwise would be to render
to establish a cause for judicial action." nugatory the procedure in assailing the tax deficiency
assessment.
In the present case, it is clear from the wording of the
1998 and 2002 Collection Letters that the CIR intended It is well-settled that the taxpayer's obligation to pay the
to pursue, through said collection letters, summary tax is an obligation that is created by law and does not
administrative remedies for the collection of arise from the offense of tax evasion, as such, the same
respondents' alleged excise tax deficiencies for the is not deemed instituted in the criminal case.
Covered Years. In fact, in the respondent Shell's case, the
collection letters were already followed by the BIR's The civil action for the recovery of civil liability for taxes
issuance of Warrants of Garnishment and Distraint and penalties that is deemed instituted with the criminal
and/or Levy against it. action is not the Petition for Review Ad Cautelam filed by
taxpayer in disputing the assessment filed in the CTA.
Absent a previously issued assessment supporting the
1998 and 2002 Collection Letters, it is clear that Under Sections 254 and 255 of the NIRC, the government
petitioner's attempts to collect through said collection can file a criminal case for tax evasion against any
letters as well as the subsequent Warrants of taxpayer who willfully attempts in any manner to evade
Garnishment and Distraint and/or Levy are void and or defeat any tax imposed in the tax code or the payment
ineffectual. If an invalid assessment bears no valid fruit, thereof. The crime of tax evasion is committed by the
with more reason will no such fruit arise if there was no mere fact that the taxpayer knowingly and willfully filed
assessment in the first place. a fraudulent return with intent to evade and defeat a
part or all of the tax. It is therefore not required that a
Petitioner is already barred by prescription from issuing tax deficiency assessment must first be issued for a
an assessment against respondents for deficiency excise criminal prosecution for tax evasion to prosper.
taxes for the Covered Years. Resultantly, this also bars
petitioner from undertaking any summary While the tax evasion case is pending, the BIR is not
administrative remedies, i.e., distraint and/or levy, precluded from issuing a final decision on a disputed
against respondents for collection of the same taxes. assessment, such as what happened in this case. In order
to prevent the assessment from becoming final,
DEAN: So we have a basic rule in the case of CIR vs. Shell that the executory and demandable, Section 9 of R.A. No. 9282
government cannot collect without prior assessment. There is only allows the taxpayer to file with the CTA, a Petition for
one exception when no assessment is required and that is when it is Review within 30 days from receipt of the decision or the
for criminal action. inaction of the respondent.

The tax evasion case filed by the government against the Under Section 282 of the National Internal Revenue
erring taxpayer has, for its purpose, the imposition of Code of 1997, as amended, an information given by an
criminal liability on the latter. While the Petition for informer shall merit a reward only when it satisfies
Review filed by the petitioner was aimed to question the certain formal and qualitative parameters. As a matter of
FDDA and to prevent it from becoming final. The stark form and procedure, that information must be
difference between them is glaringly apparent. As such, voluntarily given, definite, and sworn to. Qualitatively,
the Petition for Review Ad Cautelam is not deemed that information must be novel and, subsequently, prove
instituted with the criminal case for tax evasion. itself effective.
The CTA recognized the separate and distinct character The objects of petitioner's attempts at obtaining an
of the Petition for Review from the criminal case. What informer's reward are not even tax cases. It is obvious
is deemed instituted with the criminal action is only the from the evolved statutory provisions-from Section 1 of
government's recovery of the taxes and penalties Republic Act No. 2338 to Section 282 of the National
relative to the criminal case. The remedy of the taxpayer Internal Revenue Code of 1997, as amended-that an
to appeal the disputed assessment is not deemed informer's reward under their auspices is proper only in
instituted with the criminal case. To rule otherwise cases of "frauds upon the internal revenue or customs
would be to render nugatory the procedure in assailing laws, or violations of any of the provisions thereof."
the tax deficiency assessment. Hence, not entitled to informer’s reward.
Information is novel when it is "not yet in the possession

DEAN: The civil liability in the criminal tax case is different from the of the Bureau of Internal Revenue" and "not refer[ring]
civil action questioning the tax assessment. In the criminal tax case, to a case already pending or previously investigated or
whether there is acquittal or conviction, there must be a finding or examined." Information has shown itself to be effective
determination of civil liability. not only when it leads "to the discovery of frauds upon
the internal revenue laws or violations of any of [its]
This is different from the civil action questioning the tax assessment. provisions," but also when that discovery in tum enables
The remedy of the taxpayer to appeal the disputed assessment is not "the recovery of revenues, surcharges and fees and/or
deemed instituted with the criminal case. the conviction of the guilty party and/or the imposition
of any of the fine or penalty." In lieu of enabling the
In other words, to rule otherwise would render nugatory the conviction of the guilty party and the imposition of fines
procedure in assailing the tax deficiency because these are 2 separate or penalties, information is also effective when the
remedies. While you are are disputing the assessment, you cannot discovery of tax offenses leads the offender to offer "to
prevent the government from running after you for violation of a tax compromise the violation." A mere offer, however, is not
law. Pwede yang sabayin. enough; it must have actually been accepted and
collected. Regardless of whether a compromise or
conviction ensues, actual recovery is indispensable:
LIHAYLIHAY vs. TREASURER OF THE PHILS "should no revenue, surcharges or fees be actually
G.R. No. 192223 | 23 JULY 2018 recovered or collected, such person shall not be entitled
[INFORMER’S REWARD] to a reward."
The grant of an informer's reward for the discovery,

conviction, and punishment of tax offenses is a DEAN: This case is nonsense. Si Marvic Leonen ang ponente. Lihay-
discretionary quasi-judicial matter that cannot be the lihay is asking for Informer’s Reward because he is the source of
subject of a writ of mandamus. It is not a legally information regarding Marcos wealth. He is asking for trillions as
mandated ministerial duty. Informer’s Reward. Dami nyang case finile. This case discusses the
basis for Informer’s Reward. A nuisance case. Umabot pa naman ng
This reward cannot be given to a person who only makes SCRA. 😂
sweeping averments about undisclosed wealth, rather
than specific tax offenses, and who fails to show that the
information which he or she supplied was the CIR vs. BPI
undiscovered pivotal cause for the revelation of a tax G.R. No. 224327 | 11 JUNE 2018
offense, the conviction and/or punishment of the [SERVICE OF ASSESSMENT IS A SUBSTANTIVE REQUIREMENT]
persons liable, and an actual recovery made by the State.
Indiscriminate, expendable information negates a clear The law imposes a substantive, not merely a formal,
legal right and further impugns the propriety of issuing a requirement. To proceed heedlessly with tax collection
writ of mandamus. The grant of an informer's reward is without first establishing a valid assessment is evidently
not a readily demandable entitlement. violative of the cardinal principle in administrative
investigations: that taxpayers should be able to present
their case and adduce supporting evidence. Although
taxes are the lifeblood of the government, their In this case, no pre-assessment notice is required since
assessment and collection "should be made in respondent taxpayer carried over to taxable year 2003
accordance with law as any arbitrariness will negate the the prior year's excess credits which have already been
very reason for government itself. fully applied against its income tax liability for taxable
year 2002.
Petitioner insists that respondent failed to elevate the
tax assessment against it to the CTA within the required We cannot subscribe to respondent's reasoning. The
period. Respondent, on the other hand, claims that it ruling of the CTA First Division and the CTA En Banc
never received any final decision on the disputed clearly affects respondent's income tax liability for
assessment from petitioner granting or denying the taxable year 2003 precisely because respondent carried
same, whether in whole or in part. over the amount of P16,194,108.00 as prior year's excess
credits, to which it is not entitled. Respondent is once
Petitioner failed to prove that it sent a notice of again trying to evade the adverse effect of the ruling of
assessment and that it was received by respondent. The the CT A First Division that respondent (petitioner
failure of petitioner to prove the receipt of the therein) failed to substantiate almost all of its claimed
assessment by respondent would necessarily lead to the prior year's excess credits, especially since respondent
conclusion that no assessment was issued. already carried over and applied the amount of
P16,194,108.00 as prior year's excess creditable tax
It is clear that the right of petitioner to assess respondent against the income tax due for the succeeding taxable
has already prescribed and respondent is not liable to year 2003. To reiterate, the CTA First Division already
pay the deficiency tax assessment. The period of ruled that respondent (petitioner therein) failed to
collection has also prescribed. substantiate its prior year's excess credits of
P30,150,767.00 except for the amount of P288,076.04,
which can be applied against respondent's income tax
DEAN: So the law imposes a substantive requirement not merely a liability for taxable year 2002. Thus, since respondent's
formal requirement so before you collect there must be a valid prior year's excess credits have already been fully
assessment otherwise it will be a violation of due process. applied against its 2002 income tax liability, the
P16,194,108.00 unsubstantiated tax credits in taxable
year 2002 could no longer be carried over and applied
CIR vs. CEBU HOLDINGS against its income tax liability for taxable year 2003.
G.R. No. 189792 | 20 JUNE 2018
[REFUND CLAIM UNSUBSTANTIATED THEN OPT TO CARRY-OVER,
WHEN PRE-ASSESSMENT NOT REQUIRED] DEAN: Instances where pre-assessment is not required.
(a) When the finding for any deficiency tax is the result of
It is incumbent upon the CIR to issue a final assessment mathematical error in the computation of the tax as
notice and demand letter for the payment of taxpayer's appearing on the face of the return; or
deficiency tax liability for taxable year 2003 without (b) When a discrepancy has been determined between the tax
need of pre-assessment notice under Sec. 228. withheld and the amount actually remitted by the
withholding agent; or
In Section 228 (c), NIRC 1997 provides that PAN shall not (c) When a taxpayer who opted to claim a refund or tax credit
be issued but a FAN: “(c) When a taxpayer who opted to of excess creditable withholding tax for a taxable period
claim a refund or tax credit of excess creditable was determined to have carried over and automatically
withholding tax for a taxable period was determined to applied the same amount claimed against the estimated tax
have carried over and automatically applied the same liabilities for the taxable quarter or quarters of the
amount claimed against the estimated tax liabilities for succeeding taxable year; or
the taxable quarter or quarters of the succeeding taxable (d) When the excise tax due on excisable articles has not been
year.” paid; or
(e) When an article locally purchased or imported by an
Considering that respondent's prior year's excess credits exempt person, such as, but not limited to, vehicles, capital
have already been fully applied against its 2002 income equipment, machineries and spare parts, has been sold,
tax liability, the Pl6,194,108.00 unsubstantiated tax traded or transferred to non exempt persons.
credits in taxable year 2002 could no longer be carried
over and applied against its income tax liability for
taxable year 2003. Thus, the amount of Pl6,194,108.00 CITY OF MANILA vs. COSMOS BOTTLING
as prior year's excess credits should be deleted, making G.R. No. 196681 | 27 JUNE 2018
respondent liable for income tax in the amount of [MR IN CTA MANDATORY]
P8,540, 182.00 for taxable year 2003.
The filing of a motion for reconsideration or new trial to
question the decision of a division of the Court of Tax

Appeals (CTA) is mandatory and indispensable provisions of Republic Act No. 9282, considering its
requirement for filing an appeal before the CTA en banc. urgent need for injunctive relief.
An appeal brought directly to the CTA En Banc is
dismissible for lack of jurisdiction. The rule against forum shopping is violated when a party
institutes more than one action based on the same cause
The CTA En Banc was correct in interpreting Section 18 to increase its chances of obtaining a favorable outcome.
of R.A. No. 1125, as amended by R.A. 9282 and R.A. No. Thus, when a party institutes a case while another case
9503, as requiring a prior motion for reconsideration or is pending, where there is an identity of parties and an
new trial before the same division of the CTA that identity of rights asserted and relief prayed for such that
rendered the assailed decision before filing a petition for judgment in one case amounts to res judicata in the
review with the CTA En Banc. Failure to file such motion other, it is guilty of forum shopping.
for reconsideration or new trial is cause for dismissal of
the appeal before the CTA En Banc. To reverse a court determination that a party has
violated the rule against forum shopping, this party must
A timely motion for reconsideration or new trial must show that one or more of the requirements for forum
first be filed with the CTA Division that issued the shopping does not exist. To this end, petitioner attempts
assailed decision or resolution in order for the CTA En to differentiate the petition filed with the Court of
Banc to take cognizance of an appeal via a petition for Appeals from the appeal filed with the Court of Tax
review. Failure to do so is a ground for the dismissal of Appeals. It argues that the right asserted before the
the appeal as the word "must" indicates that the filing of Court of Appeals is its right to peacefully possess its
a prior motion is mandatory, and not merely directory. ports, free from the threat of losing the properties due
to tax liabilities, whereas the right asserted before the
Court of Tax Appeals is its right to be exempt from real
PPA vs. DAVAO CITY property tax, as a government instrumentality.
G.R. No.190324 | 06 JUNE 2018 Petitioner further argues that the reliefs sought from the
[CTA JURISDICTION INCLUDES ALL OTHER RELIEF RELATED TO THE two (2) tribunals were not the same-it sought a final
TAX CASE; CBAA] relief from payment of real property taxes on its ports
from the Court of Tax Appeals; on the other hand, it
When a tax case is pending on appeal with the Court of sought a temporary and immediate relief from
Tax Appeals, the Court of Tax Appeals has the exclusive respondents' acts from the Court of Appeals, while the
jurisdiction to enjoin the levy of taxes and the auction of issue of taxability was still pending with the Court of Tax
a taxpayer's properties in relation to that case. It is Appeals.
improper to bring an injunction relief before the Court of
Appeals to restrain the auction proceedings. Bringing
another relief to another court is forum shopping. STEEL CORP. vs. BOC & BIR
GR. No. 220502 | 12 FEBRUARY 2018
The Court of Tax Appeals had jurisdiction over [CTA JURISDICTION ON ALL TAX CASES AND MATTERS RELATED
petitioner's appeal to resolve the question of whether or THERETO EVEN IF TAXPAYER IS UNDER CORPORATE REHAB]
not it was liable for real property tax. The real property
tax liability was the very reason for the acts which The issue is whether a corporation placed under
petitioner wanted to have enjoined. It was, thus, the corporate rehabilitation can avail the benefits of Section
Court of Tax Appeals, and not the Court of Appeals, that 19 of R.A. No. 10142, which issue is cognizable by the RTC
had the power to preserve the subject of the appeal, to and whose decision may be appealed to the CA or the
give effect to its final determination, and, when Supreme Court and not to any other court like the CTA.
necessary, to control auxiliary and incidental matters CTA has exclusive appellate jurisdiction on the issue on
and to prohibit or restrain acts which might interfere the waiver of taxes under Sec. 19 of FRIA including
with its exercise of jurisdiction over petitioner's appeal. injunctive relief.
Thus, respondents' acts carried out pursuant to the
imposition of the real property tax were also within the SEC. 19. Waiver of Taxes and Fees Due to the National
jurisdiction of the Court of Tax Appeals. Government and to Local Government Units (LGUs). -
Upon issuance of the Commencement Order by the
There is no dispute that the Central Board of Assessment court, and until the approval of the Rehabilitation Plan
Appeals decision constitutes one of the cases covered by or dismissal of the petition, whichever is earlier, the
the Court of Tax Appeals' exclusive jurisdiction. imposition of all taxes and fees, including penalties,
interests and charges thereof, due to the national
Despite the clear wording of the law placing this case government or to LGUs shall be considered waived, in
within the exclusive appellate jurisdiction of the Court of furtherance of the objectives of rehabilitation.
Tax Appeals, petitioner insists that the Court of Appeals
could have issued the relief prayed for despite the

The Court of Tax Appeals has undoubted jurisdiction to or dismissal of the petition, whichever is earlier, the
pass upon the constitutionality or validity of a tax law or imposition of all taxes and fees, including penalties,
regulation when raised by the taxpayer as a defense in interests and charges thereof, due to the national
disputing or contesting an assessment or claiming a government or to LGUs shall be considered waived, in
refund. It is only in the lawful exercise of its power to furtherance of the objectives of rehabilitation.
pass upon all matters brought before it, as sanctioned by
Section 7 of Republic Act No. 1125, as amended. What happens if di ka binigyan ng waiver ng rehab courts? You go to
the CTA. The issue is whether a corporation placed under corporate
R.A. No. 1125 and its amendatory laws, the CTA, rehab can avail of the benefits of Sec. 19. The Court of Tax Appeals
therefore, is the proper forum to file the appeal. Matters has undoubted jurisdiction to pass upon the constitutionality or
calling for technical knowledge should be handled by validity of a tax law or regulation when raised by the taxpayer as a
such court as it has the specialty to adjudicate tax, defense in disputing or contesting an assessment or claiming a refund.
customs, and assessment cases. It is only in the lawful exercise of its power to pass upon all matters
brought before it, as sanctioned by Section 7 of Republic Act No. 1125,
With the enactment of R.A. No. 1125, the CTA was as amended.
granted the exclusive appellate jurisdiction to review by
appeal all cases involving disputed assessments of For as long as they are tax cases.you can bring them up to the CTA,
internal revenue taxes, customs duties, and real not to the regular courts anymore. Like in this case, hindi sya gibigyan
property taxes. In general, it has jurisdiction over cases ng waiver ng rehab court, your action now is to proceed to the CTA,
involving liability for payment of money to the because this talks about taxes. So hindi na sa regular courts, even
Government or the administration of the laws on though it involves corporate rehab.
national internal revenue, customs, and real property.
This Court, however, declares that the Court of Tax BIR vs. CTA & CHEVRON
Appeals may likewise take cognizance of cases directly GR 195320 | 23 APRIL 2018
challenging the constitutionality or validity of a tax law [CERTIORARI NOT AVAILABLE IF APPEAL IS PROPER]
or regulation or administrative issuances (revenue
orders, revenue memorandum circulars, rulings). Time and again, this Court emphasized that the special
civil action for certiorari is a limited form of review and a
From the clear purpose of R.A. No. 1125 and its remedy of last recourse. Section 1, Rule 65 of the Rules
amendatory laws, the CTA, therefore, is the proper of Court provides that the special civil action of certiorari
forum to file the appeal. Matters calling for technical may only be invoked when there is no appeal, nor any
knowledge should be handled by such court as it has the plain, speedy and adequate remedy in the course of law.
specialty to adjudicate tax, customs, and assessment
cases. A writ of certiorari is not a substitute for a lost appeal.
When an appeal is available, certiorari will not prosper
Section 11, Paragraph 4 of R.A. No. 1125, as amended by especially if the appeal was lost because of one's own
R.A. No. 9282, embodies the rule that an appeal to the negligence or error in the choice of remedy, even if the
CTA will not suspend the payment, levy, distraint, and/or ground is grave abuse of discretion.
sale of any property of the taxpayer for the satisfaction
of his tax liability as provided by existing law. For cases before the CTA, a decision rendered by a
Nonetheless, when, in the opinion of the CTA, the division of the CT A is appealable to the CTA En Banc as
collection may jeopardize the interest of the provided by Section 18 of R.A. No. 1125, as amended by
Government and/or the taxpayer, it may suspend the R.A. No. 9282.
said collection and require the taxpayer either to deposit
the amount claimed or to file a surety bond for not more Section 2 of Rule 4 of the Revised Rules of the CT A also
than double the amount. Yet the requirement of deposit states that the CTA En Banc has exclusive appellate
or surety bond may be dispensed with. jurisdiction relative to the review of the court divisions'
decisions or resolutions on motion for reconsideration or
new trial, in cases arising from administrative agencies
DEAN: This is a good case. We were waiting na lumabas ito sa last such as the BIR.
year’s Bar, pero wala man. This case involves corporate rehab. Under
section 19 of the FRIA, waiver of taxes and fees due to national Clearly, the CT A-Special First Division disposed of the
government if you pursue a case for insolvency. case in its entirety and no other issues were left to
further rule upon. Therefore, the appropriate remedy to
SEC. 19. Waiver of Taxes and Fees Due to the National challenge the Resolution dated December 3, 2010 is an
Government and to Local Government Units (LGUs). - ordinary appeal, not a petition for certiorari.
Upon issuance of the Commencement Order by the
court, and until the approval of the Rehabilitation Plan

BIR had every opportunity to elevate the matter to the

CTA En Banc but chose not to avail itself of this remedy.
Even on this ground alone, the Court may already dismiss
the present petition.
The Court finds no grave abuse of discretion on the part

of the CT A-Special First Division in issuing the assailed
resolutions. Neither can the BIR, having chosen not to
avail itself of the remedy of appeal, now substitute
certiorari for an appeal· as both remedies are mutually
exclusive, and not alternative or successive.
DEAN:
GR: Appeal will not suspend the collection of tax.
EXCEPTION:
Section 11 of R.A. No. 1125, as amended by R.A. No. 9282,53 which

embodies the rule that an appeal to the CTA from the decision of the
CIR will not suspend the payment, levy, distraint, and/or sale of any
property of the taxpayer for the satisfaction of his tax liability as
provided by existing law. When, in the view of the CTA, the collection
may jeopardize the interest of the Government and/or the taxpayer,
it may suspend the said collection and require the taxpayer either
to deposit the amount claimed or to file a surety bond.
So you can go now to the CTA to pursue the relief you seek.
Additional note:
So this is common procedure ha, even if it’s a tax case, if appeal is

available, you cannot go on certiorari. So when the BIR will deny your
protest, your remedy is not certiorari because of grave abuse of
discretion, your remedy is appeal to CA. That is basic, whether tax
case or not. That’s it. See you on deliberations. 🙏🙏🙏
END
(MKGumboc)

Taxation Law Ii Review: Transfer Taxes

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Taxation Law Ii Review: Transfer Taxes

Încărcat de

Drepturi de autor:

Formate disponibile

TAXATION LAW II REVIEW

Dean Manuel P. Quibod || 4 Manresa 2018-2019

29 JANUARY 2019 GROSS ESTATE OF THE DECEDENT

(D) Property Passing Under General Power of Appointment. – To

SECTION 104. PROPERTIES SITUATED IN THE PHILIPPINES AND IS

2. Claims against the estate 5. Deduction of property previously taxed (Vanishing

(a) One hundred percent (100%) of the value, if the prior

(1) Standard Deduction. — An amount equivalent to Five hundred

So, in proportion ng claims against the estate of insolvent

 This is part of the gross but claimed as deduction

 Here, there is actually no transfer.

PAYMENT BY INSTALLMENT ADMINISTRATIVE RESTRICTIONS

CITIZEN AND RESIDENT ALIEN DONORS

OTHER RULES DONOR’S TAX RATES

EXCEPTION: Zero-Rated Transaction (a) Shareholders or investors as share in the

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |14

(1) Successful establishment and implementation of an

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |15

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |16

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |18

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |19

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |20

(a) In the case of a VAT-registered Person. – IN CASE OF REAL PROPERTY TAX

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |22

The taxpayers shall be informed in writing of the law and the

(b) If before the expiration of the time prescribed in CONDITIONS

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |25

Hindi pwede yung kapag pumirma ka ng waiver of the period of

When the commissioner or his duly authorized representative

DEAN: That is the notice of informal conference.

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |26

Q: What happens if there is inaction?

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |27

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |28

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |29

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |30

ABATEMENT OR CANCELLATION OF TAX LIABILITY NOTICE OF INFORMAL CONFERENCE

 GR: All criminal violations, may be compromised maski FAN

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |31

In the event that there is finding of deficiency or deficiency tax, there

The taxpayers shall be informed in writing of the law and the

Within a period to be prescribed by implementing rules and

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |33

REMEDIES FROM THE CIR DIAGRAM

The Bureau of Internal Revenue shall advance the amounts

SEC. 281. Prescription for Violations of any Provision of this Code.

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |34

 CTA - when the amount of taxes to be collected in a criminal

There is now a statutory provision that states that the inaction is

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |37

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |38

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |43

Philippines a Franchise to Construct, Install, Operate

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |45

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |46

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |47

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |48

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |49

CIR vs. ASALUS CORP.

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |50

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |51

ABAD.AMPARO.CANDOLITA.CEBALLOS.CONFESOR.GERALDE.IBAY.JARDINEL.NARCA.VEGA Page |52