CLASS NOTES IN TAX REMEDIES REMEDIES

SCHOOL YEAR 2016-2017

Submitted by: April Boy Regina
Under Class of MTA

1. Sec. 4, NIRC, Power of Secretary of Finance to review rulings of CIR as implemented

by RMC 44-2001, October 11, 2001 and DOF Order 7-02, May 7, 2002

DESCRIPTION. All rulings and issuances of the Commissioner of Internal Revenue that
pertain to the implementation and interpretation of the Tax Code of 1997 and other tax laws
are valid. However, the Secretary of Finance has the power to affirm, revise, modify or
set aside rulings and issuances BIR concerning such implementation and application of the
provisions of the Tax Code of 1997 and other tax laws.

The exercise of such power under Section 4 of the Tax Code of 1997, however, does not
cover disputed assessments, refunds of internal revenue taxes, fees or other charges,
and penalties imposed in relation thereto, or other matters arising under the Tax Code or
other laws or portions thereof administered by the BIR. In these instances, the Court of
Tax Appeals has the exclusive appellate jurisdiction pursuant to the second paragraph of
the same Section 4.

Neither shall the power be exercised to apply to rulings that are deemed void ab initio
because they contradict duly issued Revenue Regulations, Revenue Memorandum Orders,
Revenue Memorandum Rulings, and Revenue Memorandum Circulars.

It is important to note that only the final “adverse” decision of the Commissioner may be
brought to the Department of Finance (DOF) for review.

Notwithstanding, the Secretary of Finance may review motu proprio the rulings and
issuances of the Bureau of Internal Revenue concerning such implementation and application
of the provisions of the Tax Code of 1997 and other tax laws.

PERIOD TO FILE APPEAL. Within thirty (30) days from the date of receipt of the
adverse ruling of the Commissioner.

TAX FORMS. No specific BIR numbered form shall be used. The duplicate copy of the
records on file with the BIR pertaining to the taxpayer's request will need to be authenticated
and certified by the BIR.

2. Sec. 6 – 17, NIRC (Sec. 6-7 in next section.

Section 8. Duty of the Commissioner to Ensure the Provision and Distribution of Forms,
Receipts, Certificates, and Appliances, and the Acknowledgment of Payment of Taxes. -

(A) Provision and Distribution to Proper-Officials. - Any law to the contrary notwithstanding,
it shall be the duty of the Commissioner, among other things, to prescribe, provide, and

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 distribute to the proper officials the requisite licenses; internal revenue stamps; unique,
secure and non-removable identification markings (hereafter called unique identification
markings), such as codes or stamps, be affixed to or form part of all unit packets and
packages and any outside packaging of cigarettes and bottles of distilled spirits; labels
and other forms; certificates; bonds; records; invoices; books; receipts; instruments;
appliances and apparatus used in administering the laws falling within the jurisdiction of
the Bureau. For this purpose, internal revenue stamps, or other markings and labels shall
be caused by the Commissioner to be printed with adequate security features.

Internal revenue stamps, whether of a bar code or fuson design, or other markings shall be
firmly and conspicuously affixed or printed on each pack of cigars and cigarettes and bottles
of distilled spirits subject to excise tax in the manner and form as prescribed by the
Commissioner, upon approval of the Secretary of Finance.

To further improve tax administration, cigarette and alcohol manufacturers shall be required
to install automated volume-counters of packs and bottles to deter over-removals and
misdeclaration of removals.

(B) (B) Receipts for Payment Mode. - It shall be the duty of the Commissioner or his duly
authorized representative or an authorized agent bank to whom any payment of any tax is
made under the provisions of this Code to acknowledge the payment of such tax,
expressing the amount paid and the particular account for which such payment was made
in a form and manner prescribed therefor by the Commissioner.

SEC. 9. Internal Revenue Districts. - With the approval of the Secretary of Finance, the
Commissioner shall divide the Philippines into such number of revenue districts as may from
time to time be required for administrative purposes. Each of these districts shall be under the
supervision of a Revenue District Officer.

SEC. 10. Revenue Regional Director. - Under rules and regulations, policies and standards
formulated by the Commissioner, with the approval of the Secretary of Finance, the Revenue
Regional director shall, within the region and district offices under his jurisdiction, among
others:

(a) Implement laws, policies, plans, programs, rules and regulations of the department or
agencies in the regional area;
(b) Administer and enforce internal revenue laws, and rules and regulations, including the
assessment and collection of all internal revenue taxes, charges and fees;
(c) Issue Letters of authority for the examination of taxpayers within the region;
(d) Provide economical, efficient and effective service to the people in the area;
(e) Coordinate with regional offices or other departments, bureaus and agencies in the area;
(f) Coordinate with local government units in the area;
(g) Exercise control and supervision over the officers and employees within the region; and
(h) Perform such other functions as may be provided by law and as may be delegated by the
Commissioner.

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SEC. 11. Duties of Revenue District Officers and Other Internal Revenue Officers. - It shall
be the duty of every Revenue District Officer or other internal revenue officers and
employees to ensure that all laws, and rules and regulations affecting national internal
revenue are faithfully executed and complied with, and to aid in the prevention, detection and
punishment of frauds of delinquencies in connection therewith.

It shall be the duty of every Revenue District Officer to examine the efficiency of all officers
and employees of the Bureau of Internal Revenue under his supervision, and to report in
writing to the Commissioner, through the Regional Director, any neglect of duty,
incompetency, delinquency, or malfeasance in office of any internal revenue officer of which
he may obtain knowledge, with a statement of all the facts and any evidence sustaining each
case.

SEC. 12. Agents and Deputies for Collection of National Internal Revenue Taxes. - The
following are hereby constituted agents of the Commissioner:

a) The Commissioner of Customs and his subordinates with respect to the collection of
national internal revenue taxes on imported goods;

b) The head of the appropriate government office and his subordinates with respect to the
collection of energy tax; and

c) Banks duly accredited by the Commissioner with respect to receipt of payments internal
revenue taxes authorized to be made thru banks.

Any officer or employee of an authorized agent bank assigned to receive internal revenue tax
payments and transmit tax returns or documents to the Bureau of Internal Revenue shall be
subject to the same sanctions and penalties prescribed in Sections 269 and 270 of this Code.

SEC. 13. Authority of a Revenue Officer. - Subject to the rules and regulations to be
prescribed by the Secretary of Finance, upon recommendation of the Commissioner, a
Revenue Officer assigned to perform assessment functions in any district may, pursuant to a
Letter of Authority issued by the Revenue Regional Director, examine taxpayers within the
jurisdiction of the district in order to collect the correct amount of tax, or to recommend the
assessment of any deficiency tax due in the same manner that the said acts could have been
performed by the Revenue Regional Director himself.

SEC. 14. Authority of Officers to Administer Oaths and Take Testimony. - The
Commissioner, Deputy Commissioners, Service Chiefs, Assistant Service Chiefs, Revenue
Regional Directors, Assistant Revenue Regional Directors, Chiefs and Assistant Chiefs of
Divisions, Revenue District Officers, special deputies of the Commissioner, internal revenue
officers and any other employee of the Bureau thereunto especially deputized by the
Commissioner shall have the power to administer oaths and to take testimony in any official
matter or investigation conducted by them regarding matters within the jurisdiction of the
Bureau.

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 SEC. 15. Authority of Internal Revenue Officers to Make Arrests and Seizures. - The
Commissioner, the Deputy Commissioners, the Revenue Regional Directors, the Revenue
District Officers and other internal revenue officers shall have authority to make arrests and
seizures for the violation of any penal law, rule or regulation administered by the Bureau of
Internal Revenue. Any person so arrested shall be forthwith brought before a court, there to
be dealt with according to law.

SEC. 16. Assignment of Internal Revenue Officers Involved in Excise Tax Functions to
Establishments Where Articles subject to Excise Tax are Produced or Kept. - The
Commissioner shall employ, assign, or reassign internal revenue officers involved in excise
tax functions, as often as the exigencies of the revenue service may require, to establishments
or places where articles subject to excise tax are produced or kept: Provided, That an internal
revenue officer assigned to any such establishment shall in no case stay in his assignment for
more than two (2) years, subject to rules and regulations to be prescribed by the Secretary of
Finance, upon recommendation of the Commissioner.

SEC. 17. Assignment of Internal Revenue Officers and Other Employees to Other Duties. -
The Commissioner may, subject to the provisions of Section 16 and the laws on civil service,
as well as the rules and regulations to be prescribed by the Secretary of Finance upon the
recommendation of the Commissioner, assign or reassign internal revenue officers and
employees of the Bureau of Internal Revenue, without change in their official rank and
salary, to other or special duties connected with the enforcement or administration of the
revenue laws as the exigencies of the service may require: Provided, That internal revenue
officers assigned to perform assessment or collection function shall not remain in the same
assignment for more than three (3) years; Provided, further, That assignment of internal
revenue officers and employees of the Bureau to special duties shall not exceed one (1) year.

3. Sec. 202 – 282, NIRC (to be discussed below).

Read:
a. RR 12-99 implementing the provisions of the NIRC on the rules of assessment, civil
penalties and interest and extra judicial settlement of taxpayer’s criminal violation under
RMO 1-90 (to be discussed below)

b. RR 18-2013 dated November 28, 2013, Amending Certain Sections of RR 12-99 Relative
to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment (to be
discussed below).

c. RR 11-2006, June 15, 2006 (Accreditation of Tax Practitioners to practice before BIR).

REVENUE REGULATIONS NO. 11-2006 ISSUED ON JULY 21, 2006.

Promulgates the consolidated regulations on the accreditation of tax practitioners/agents
as a prerequisite to their practice or representation before the Bureau of Internal Revenue
(BIR) and further simplifies and supersedes Revenue Regulations (RR) No. 15-99.

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The duties of the Revenue National Accreditation Board (RNAB) in the National Office
and the Revenue Regional Accreditation Board (RRAB) in each Revenue Region are the
following:
a. To act upon all applications to practice before the BIR;
b. To institute and provide for the conduct of accreditation, suspension or
disaccreditation proceedings; and
c. To perform such other duties as are necessary or appropriate to carry out their
functions as prescribed by the Secretary of Finance. Provided, however, that any
action or decision of the RRAB shall only become final upon affirmation by the
RNAB and/or by the Commissioner.

The RRAB and RNAB shall have jurisdiction over the following persons and shall
require their accreditation with the BIR:
a. Individual tax practitioners engaged in private practice who are Certified Public
Accountants (CPAs), CPA-Lawyers who issue/sign auditor's certificates or otherwise
perform functions exclusively pertaining to a CPA and individuals other than CPAs
who meet the qualifications prescribed in these Regulations;
b. Partners of a General Professional Partnership (GPP) engaged in the practice of
taxation, accountancy, and/or auditing; their duly authorized officers or
representatives who regularly appear or otherwise engage in tax practice before the
BIR;
c. GPP engaged in the practice of taxation, accountancy and auditing who regularly
appears or otherwise engaged in tax practice before the BIR; and
d. Officers or duly authorized representatives of incorporated business entities engaged
in accounting, auditing or tax consultancy services.

Individual applicants, GPPs and partners of GPPs who were already accredited with the
Bureau of Accountancy (BOA) and Securities and Exchange Commission (SEC) shall no
longer be required to undergo the various processes for accreditation under these
Regulations. But they shall automatically be accredited and issued a BIR Certificate of
Accreditation upon payment of the processing fee.

The following individuals are allowed to appear and practice before the BIR without
undergoing accreditation proceedings:
a. Individual taxpayers acting on their own behalf, provided they present satisfactory
identification;
b. Members of the Philippine Bar not suffering from suspension/disbarment. However,
they may at their option, apply for accreditation; and
c. Other individuals presenting satisfactory proof of identification or authority in any
one of the following circumstances of limited practice or special appearances:
i. An individual representing a member of his or her immediate family;
ii. ii. A regular full-time employee representing an individual employer;
iii. A bona fide officer or a regular full-time employee in representation of his
employer-corporation, association or organized group;
iv. A trustee, receiver, guardian, administrator, executor or regular full-time
employee in representation of a trust, receivership, guardianship or estate; and

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 v. An officer or a regular employee of a government unit, agency, or instrumentality
representing said unit, agency or instrumentality in the course of his or her official
duties.

The accreditation certificate may be suspended, cancelled or revoked, as the case may be,
upon petition by a taxpayer or by the PICPA or by the Tax Management Association of
the
Philippines (TMAP) and other similar professional organizations, or upon petition by any
internal revenue officer, or upon motu propio action by the RRAB or RNAB, after due
notice and hearing set for the purpose, based on any of the following grounds:
a. Conviction of any criminal offense under the Tax Code, or of any offense involving
dishonesty, or breach of trust;
b. Giving false or misleading information, or participating in any way in the giving of
false or misleading information to the BIR or to any officer or employee in
connection with any matter pending before them, knowing such information to be
false or misleading;
c. The use of false or misleading representations with intent to deceive a client or
prospective client in order to procure employment, or representing that he can ably
obtain special consideration or action from the BIR or officer or employee by
improper or unlawful means;
d. Willfully failing to make a tax return in violation of the NIRC, or evading, attempting
to evade, or participating in any way in evading or attempting to evade any national
internal revenue tax or payment thereof;
e. Knowingly counseling or suggesting to a client or prospective client of an illegal plan
to evade taxes or payment thereof or concealing assets to evade taxes or payment
thereof;
f. Misappropriating or failing to remit funds received from a client for the purpose of
payment of taxes;
g. Directly or indirectly attempting to influence, or offering or agreeing to attempt to
influence the official action of any officer or employee of the BIR by the use of
threats, false accusations, duress or coercion, or by offering any special inducement
or promise of advantage or by bestowing any gift, favor or thing of substantial value;
h. Disbarment or suspension from the practice as an attorney or as a CPA;
i. Contemptuous conduct in connection with practice before the BIR, including use of
abusive language, making false accusations and statements, knowing them to be false,
or circulating or publishing malicious or libelous matter;
j. Giving a false opinion, knowingly, recklessly or through gross incompetence,
including an opinion that is intentionally or recklessly misleading, or a pattern of
providing incompetent opinions on questions arising under the Tax Code. False
opinion includes those which reflect or result from a known misstatement of fact or
law from an assertion of a position known to be unwarranted under existing laws or
regulations; from advising or assisting in conduct known to be illegal or fraudulent;
from concealment of matters required by law or regulations to be revealed. A pattern
of conduct is a factor that will be taken into account in determining whether a
practitioner acted knowingly, recklessly or through gross incompetence; and

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 k. Upon administrative findings by the concerned Board that the holder of an
accreditation certificate has committed any of the offenses penalized under the Tax
Code

4. RA 9282 March 30, 2004, expanding the jurisdiction of CTA, elevating it to collegiate court,
amending RA 1125 (Effective April 23, 2004)
5. RA 9503, further expanding the composition of CTA.

On June 12, 2008, Republic Act Number 9503 (R.A. 9503) was enacted and took effect on July
5, 2008. This enlarged the organizational structure of the CTA by creating a Third Division and
providing for three (3) additional Justices. Hence, the CTA is now composed of one (1)
Presiding Justice and eight (8) Associate Justices. The CTA may sit en banc or in three (3)
divisions with each division consisting of three (3) Justices. The CTA, as one of the Courts
comprising the Philippine Judiciary, and it is under the supervision of the Supreme Court of the
Philippines.

Previously, only decision, judgment, ruling or inaction of the Commissioner of Internal Revenue,
the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry, or
the Secretary of Agriculture, involving the National Internal Revenue Code and the Tariff and
Customs Code on civil matters are appeallable to the Court of Tax Appeals. The EXPANDED
JURISDICTION transferred to the CTA the jurisdiction of the Regional Trial Courts and
the Court of Appeals over matters involving criminal violation and collection of revenues
under the National Internal Revenue Code and Tariff and Customs Code. In addition, it also
acquired jurisdiction over cases involving local and real property taxes which used to be with the
Regional Trial Court and the Court of Appeals.

JURISDICTION OF THE COURT OF TAX APPEALS

Civil Tax Cases

Exclusive Original Jurisdiction

Tax collection cases involving final and executory assessments for taxes, fees, charges and
penalties, where the principal amount of taxes and fees, exclusive of charges and penalties,
claimed is one million pesos or more. (P1,000,000 or more)

Exclusive Appellate Jurisdiction

CTA Division
(1) Decisions and Inaction of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue or other laws
administered by the Bureau of Internal Revenue;
(a) Inaction of the Commissioner shall be deemed a denial in which the taxpayer may appeal.
(b) Inaction does not necessarily constitute a formal decision and the taxpayer may opt to
await the final decision of the Commissioner by constitute a formal decision and the

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 taxpayer may opt to await the final decision of the Commissioner beyond the 180 days
and may appeal such final decision.
(c) For claim for refund, the taxpayer must file a petition for review with the CTA prior to
the expiration of the two year prescriptive period.
(2) Decisions, orders or resolutions of the RTC in local tax cases and in tax collection cases
originally decided or resolved by them in their ORIGINAL jurisdiction.
(3) Decisions of the Commissioner of Customs in cases involving liability for customs duties,
fees or other money charges, seizure, detention or release of property affected, fines,
forfeitures or other penalties in relation thereto, or other matters arising under the Customs
Law or other laws administered by the Bureau of Customs;
(4) Decisions of the Secretary of Finance on customs cases elevated to him automatically for
review from decisions of the Commissioner of Customs which are adverse to the
Government under Section 2315 of the Tariff and Customs Code;
(5) Decisions of the Secretary of Trade and Industry, in the case of non-agricultural product,
commodity or article, and the Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing duties under Section 301 and
302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic
Act No. 8800, where either party may appeal the decision to impose or not to impose said
duties. (Sec. 7, RA No. 1125 as amended)

CTA en Banc
(1) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions
in the exercise of its exclusive appellate jurisdiction over:
(a) Cases arising from administrative agencies – Bureau of Internal Revenue, Bureau of
Customs, Department of Finance, Department of Trade and Industry, Department of
Agriculture;
(b) Local tax cases decided by the Regional Trial Courts in the exercise of their original
jurisdiction; and
(c) Tax collection cases decided by the Regional Trial Courts in the exercise of their original
jurisdiction involving final and executory assessments for taxes, fees, charges and
penalties, where the principal amount of taxes and penalties claimed is less than one
million pesos;
(2) Decisions, resolutions or orders of the Regional Trial Courts in local tax cases and in tax
collection cases decided or resolved by them in the exercise of their APPELLATE
jurisdiction;
(3) Decisions, resolutions or orders on motions for reconsideration or new trial of the Court in
Division in the exercise of its exclusive original jurisdiction over tax collection cases;
(4) Decisions of the Central Board of Assessment Appeals (CBAA) in the exercise of its
appellate jurisdiction over cases involving the assessment and taxation of real property
originally decided by the provincial or city board of assessment appeals;

Criminal cases [Sec. 7, RA 1125 as amended]

Exclusive Original Jurisdiction

All criminal offenses arising from violations of the National Internal Revenue Code or Tariff and
Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of

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Customs. Principal amount of taxes and fees, exclusive of charges and penalties, claimed is more
than or equal to One million pesos (P1,000,000.00).

The filing of the criminal action being deemed to necessarily carry 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 be recognized.

Exclusive appellate jurisdiction in criminal cases

CTA Division
(1) Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax
cases originally decided by them, in their respected territorial jurisdiction.
(2) Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts
in the exercise of their appellate jurisdiction over tax cases originally decided by the
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their
respective jurisdiction.

CTA En Banc
(1) Decisions, resolutions or orders on motions for reconsideration or new trial of the Court in
Division in the exercise of its exclusive original jurisdiction over cases involving criminal
offenses arising from violations of the National Internal Revenue Code or the Tariff and
Customs Code and other laws administered by the Bureau of Internal Revenue or Bureau of
Customs;
(2) Decisions, resolutions or orders on motions for reconsideration or new trial of the Court in
Division in the exercise of its exclusive appellate jurisdiction over criminal offenses
mentioned in the preceding subparagraph; and
(3) Decisions, resolutions or orders of the Regional trial Courts in the exercise of their appellate
jurisdiction over criminal offenses mentioned in subparagraph (f).

Section 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases.

(1) POWER TO INTERPRET

 The Commissioner has the exclusive and original jurisdiction to interpret the
provisions of NIRC.
 subject to review by the Secretary of Finance

(2) POWER TO DECIDE TAX CASES

 The power to decide the following disputes are vested in the Commissioner:
i. assessments,
ii. refunds of internal revenue taxes,
iii. fees or other charges,
iv. penalties imposed in relation thereto, or
v. other matters arising under this Code or other laws or portions thereof
administered by the BIR

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  subject to exclusive appellate jurisdiction of the Court of Tax Appeals

Section 5. Power of the Commissioner to Obtain Information, and to Summon,

Examine, and Take Testimony of Persons.

(A) To examine any book, paper, record, or other data which may be relevant or material to
such inquiry;
(B) To obtain information from any person other than the person whose internal revenue tax
liability is subject to audit or investigation [Third-Party Information Rule]
(C) To summon the following to appear before the Commissioner or his duly authorized
representative at a time and place specified in the summons and to produce such books,
papers, records, or other data, and to give testimony;
1. person liable for tax or required to file a return, or
2. any officer or employee of such person, or
3. any person having possession, custody, or care of the books of accounts and other
accounting records containing entries relating to the business of the person liable for
tax, or
4. any other person
(D) To take such testimony of the person concerned, under oath, as may be relevant or
material to such inquiry; and
(E) To make a canvass and inquire who may be liable to pay any internal revenue tax, and
all persons owning or having the care, management or possession of any object with
respect to which a tax is imposed.

Section 6. Power of the Commissioner to Make Assessments and Prescribe Additional

Requirements for Tax Administration and Enforcement.

(A) Examination of Return and Determination of Tax Due.

Q: Will the failure to file return prevent the CIR from authorizing the examination of a
taxpayer?
A: NO. Failure to file a return shall not prevent the Commissioner from authorizing the
examination of any taxpayer. [Par. 1, Section 6(A)]

Q: When shall deficiency tax so assessed shall be paid?

A: The tax or any deficiency tax so assessed shall be paid upon (1) notice and (2)
demand from the Commissioner or from his duly authorized representative. [Par. 2,
Section 6(A)]

Q: May the return, statement or declaration filed in any office authorized to receive the
same be withdrawn?
A: NO. The Return, Statement or declaration filed in any office authorized to receive the
same shall not be withdrawn, HOWEVER, the same may be modified, changed, or
amended within three (3) years from the date of filing, provided that no notice for
audit or investigation of such return, statement or declaration has in the meantime
been actually served upon the taxpayer. [Par. 3, Section 6(A)]

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 Q: May the statement or declaration filed in any office authorized to receive the same be
modified, changed, or amended?
A: YES. The Statement or declaration filed in any office authorized to receive the same
may be modified, changed, or amended provided that (1) it is made within three (3)
years from the date of filing, and (2) no notice for audit or investigation of such
return, statement or declaration has been actually served upon the taxpayer. [Par. 3,
Section 6(A)]

(B) Assess the proper tax on the best evidence obtainable in case a person (i) fails to file
a required return or other document at the time prescribed by law, or (ii) willfully
or otherwise files a false or fraudulent return or other document

“BEST EVIDENCE OBTAINABLE” RULE - In case a person fails to file a required

return or other document at the time prescribed by law, or willfully or otherwise files a
false or fraudulent return or other document, the Commissioner shall make or amend the
return from (1) his own knowledge, and (2) such information as he can obtain through
testimony or otherwise, which shall be prima facie correct and sufficient for all legal
purposes.

(C) Conduct (i) Inventory-taking, (ii) Surveillance and to (iii) Prescribe Presumptive
Gross Sales and Receipts.

The Commissioner may, at any time during the taxable year, order:
i. Order Inventory-taking of goods of any taxpayer as a basis for determining his
internal revenue tax liabilities, or
ii. Order Surveillance of a place the business operations of any person, natural or
juridical, under observation if there is reason to believe that such person is not
declaring his correct income, sales or receipts for internal revenue tax purposes.
iii. Prescribe Presumptive Gross Sales and Receipts if:
(1) a person has failed to issue receipts and invoices or
(2) when there is reason to believe that the books of accounts or other records do not
correctly reflect the declarations made

 “Presumptive Gross Sales and Receipts” – for the for purposes of determining
the internal revenue tax liabilities of a person, the Commissioner shall prescribe a
minimum amount of such gross receipts, sales and taxable base after taking into
account the sales, receipts, income or other taxable base of other persons engaged
in similar businesses under similar situations or circumstances or after considering
other relevant information, in which such amount so prescribed shall be prima
facie correct.

(D) Terminate Taxable Period.

Q: When may the Commissioner declare the tax period of such taxpayer terminated?

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 A: The Commissioner may the Commissioner declare the tax period of such taxpayer
terminated When it shall come to the knowledge of the Commissioner that a taxpayer
is:
(1) Retiring from business
(2) Intending to
i. leave the Philippines or
ii. remove his property therefrom or
iii.hide or conceal his property, or is
(3) Performing any act tending to obstruct the proceedings for the collection of the
tax for the past or current quarter or year or to render the same totally or partly
ineffective unless such proceedings are begun immediately.

Q: What shall the commissioner do upon declaration that the tax period of such taxpayer
terminated?
A: The Commissioner shall send the taxpayer (1) a notice of decision to terminate the
tax period; (2) request for the immediate payment of the tax for the period so
declared terminated and the tax for the preceding year or quarter, or such portion
thereof as may be unpaid.

Q: What is the effect of the declaration that the tax period is terminated?
A: Said taxes shall be due and payable immediately and shall be subject to all the
penalties hereafter prescribed, unless paid within the time fixed in the demand made
by the Commissioner.

(E) Prescribe Real Property Values.

The Commissioner is authorized to:

(1) divide the Philippines into different zones or areas, and
(2) determine the fair market value of real properties located in each zone or area.

The value of the property shall be, whichever is the higher:

i. The fair market value as determined by the Commissioner; or
ii. The fair market value as shown in the schedule of values of the Provincial and City
Assessors.

(F) Inquire into Bank Deposit Accounts.

Q: Is the Commissioner authorized to inquire into bank deposits?

A: YES. Under Section 6(F), the Commissioner is authorized to inquire into the bank
deposits and other related information held by financial institutions of:
1. A decedent to determine his gross estate; and
2. Any taxpayer who has filed an application for compromise of his tax liability
by reason of financial incapacity to pay his tax liability.

[In this case, his application shall not be considered unless and until he waives in
writing his privilege (confidentiality of bank accounts), and such waiver shall

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 constitute the authority of the Commissioner to inquire into the bank deposits of
the taxpayer.]

3. Upon the request from a foreign tax authority pursuant to an international

convention or agreement on tax matters to which the Philippines is a signatory or
a party of.

[The information obtained from the banks and other financial institutions may be
used by the Bureau of Internal Revenue for tax assessment, verification, audit and
enforcement purposes.]

[In case of a request from a foreign tax authority for tax information held by
banks and financial institutions, the exchange of information shall be done in a
secure manner to ensure confidentiality thereof.]

"foreign tax authority," shall refer to the tax authority or tax administration of
the requesting State under the tax treaty or convention to which the Philippines is
a signatory or a party of.

(G) Accredit and Register Tax Agents.

Individuals and general professional partnerships and their representatives who prepare
and file tax returns, statements, reports, protests, and other papers with or who appear
before the Bureau in behalf of the taxpayers shall be accredited and registered by the
Commissioner based on their
i. professional competence,
ii. integrity and
iii. moral fitness.

[In case of denial of accreditation and registration, the Individuals and general
professional partnerships and their representatives may appeal to the Secretary of
Finance, who shall rule on the appeal within sixty (60) days from receipt of such appeal.
Failure of the Secretary of Finance to rule on the Appeal within the prescribed period
shall be deemed as approval of the application for accreditation of the appellant.]

(H) Prescribe Additional Procedural or Documentary Requirements.

Section 7. Authority of the Commissioner to Delegate Power.

GR: The Commissioner may delegate the powers vested in him to subordinate officials with
the rank equivalent to a division chief or higher.

EX: That the following powers of the Commissioner shall not be delegated:

(a) Power to recommend the promulgation of rules and regulations by the Secretary of
Finance;

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 (b) Power to issue rulings of first impression or to reverse, revoke or modify any existing
ruling of the Bureau;

(c) Power to compromise or abate any tax liability:

Upon recommendation of the Commissioner, the Secretary of finance may

promulgate rules and regulations on the compromise by regional evaluation board
(which shall be composed of the Regional Director as Chairman, the Assistant
Regional Director, the heads of the Legal, Assessment and Collection Divisions and
the Revenue District Officer having jurisdiction over the taxpayer, as members) of the
following:

1. assessments issued by the regional offices involving basic deficiency taxes of

Five hundred thousand pesos (P500,000) or less, and
2. minor criminal violations discovered by regional and district officials,

(d) Power to assign or reassign internal revenue officers to establishments where articles
subject to excise tax are produced or kept.

Section 203. Period of Limitation Upon Assessment and Collection.

STATUTE OF LIMITATION

 GENERAL RULE: Assessment shall be made within three (3) years after the last day
prescribed by law for the filing of the return;

 in case the return is filed beyond the period prescribed by law, the three (3)-year period
shall be counted from the day the return was filed;

 a return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.

 EFFECT: no proceeding in court without assessment for the collection of such taxes
shall be begun after the expiration of such period.

PERIOD OF ASSESSMENT
ORDINARY  3 years after the last day
(Sec. 203) prescribed by law for the
filing of the return;
 In the case of a false or
EXTRAORDINARY fraudulent return with
(Sec. 222) intent to evade tax or of
failure to file a return,
within ten (10) years after
the discovery of the falsity,

14
 fraud or omission.
 Upon agreement in writing
of both the Commissioner
and the taxpayer, within the
period agreed upon
 The Commissioner is (i)
prohibited from making the
assessment or (ii) beginning
SUSPENSION OF distraint or levy or a
STATUTE OF proceeding in court and (iii)
LIMITATION for sixty (60) days
(Sec. 223) thereafter;
 Taxpayer requests for a
reinvestigation which is
granted by the
Commissioner;
 Taxpayer cannot be located
in the address given by him
in the return filed upon
which a tax is being
assessed or collected. If the
taxpayer informs the
Commissioner of any
change in address, the
running of the Statute of
Limitations will not be
suspended;
 The warrant of distraint or
levy is duly served upon the
taxpayer, his authorized
representative, or a member
of his household with
sufficient discretion, and no
property could be located;
and when the taxpayer is out
of the Philippines.

Section 222. Exceptions as to Period of Limitation of Assessment and Collection of

Taxes.

EXCEPTIONS AS TO PERIOD OF LIMITATION OF ASSESSMENT AND

COLLECTION OF TAXES.

1. In the case of a false or fraudulent return with intent to evade tax or of failure to file a
return.

15
 EFFECT: At any time within ten (10) years after the discovery of the falsity, fraud or
omission:

(1) the tax may be assessed, or

(2) a proceeding in court for the collection of such tax may be filed without assessment

That the fact of fraud shall be judicially taken cognizance of in the civil or criminal action
for the collection thereof, in case a fraud assessment has become final and executory.

Any internal revenue tax which has been assessed within the period of limitation as
prescribed in the case of a false or fraudulent return with intent to evade tax or of
failure to file a return may be collected by distraint or levy or by a proceeding in court
within five (5) years following the assessment of the tax.

2. If before the expiration of the time prescribed for the assessment of the tax, both the
Commissioner and the taxpayer have agreed in writing to its assessment after such time,
the tax may be assessed within the period agreed upon.

Requisites under no. 2:

(1) both the Commissioner and the taxpayer have agreed in writing on assessment of tax
beyond the prescribed period for the assessment
(2) the agreement is made before the expiration of the time prescribed for the assessment
of the tax (before expiration of 3 years)

The period so agreed upon may be extended by subsequent written agreement made
before the expiration of the period previously agreed upon.

Any internal revenue tax, which has been assessed within the period agreed upon
hereinabove, may be collected by distraint or levy or by a proceeding in court before the
expiration of the five (5)-year period.

NOTE: nothing in the provisions above shall be construed to authorize the examination
and investigation or inquiry into any tax return filed in accordance with any tax amnesty
law or decree.

Section 223. Suspension of Running of Statute of Limitations.

1. The Commissioner is (i) prohibited from making the assessment or (ii) beginning
distraint or levy or a proceeding in court and (iii) for sixty (60) days thereafter;
2. Taxpayer requests for a reinvestigation which is granted by the Commissioner;
3. Taxpayer cannot be located in the address given by him in the return filed upon which a
tax is being assessed or collected. If the taxpayer informs the Commissioner of any
change in address, the running of the Statute of Limitations will not be suspended;
4. The warrant of distraint or levy is duly served upon the taxpayer, his authorized
representative, or a member of his household with sufficient discretion, and no property
could be located; and when the taxpayer is out of the Philippines.

16
Section 228. Protesting of Assessment.

REQUISITES OF A VALID ASSESSMENT

1. The taxpayers shall be informed/notified in writing of the law and the facts on which the
assessment is made
2. An assessment contains not only a computation of tax liabilities, but also a demand for
payment within a prescribed period
3. An assessment must be served on and received by the taxpayer

NOTES:
 Service of preliminary assessment notice by the Commissioner or his duly authorized
representative to the taxpayer in case he finds that proper taxes should be assessed.

EXCEPTION TO PRELIMINARY ASSESSMENT NOTICE:

(a) When the finding for any deficiency tax is the result of mathematical error in the
computation of the tax as appearing on the face of the return; or
(b) When a discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have carried over and
automatically applied the same amount claimed against the estimated tax liabilities
for the taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable articles has not been paid; or
(e) When the article locally purchased or imported by an exempt person, such as, but not
limited to, vehicles, capital equipment, machineries and spare parts, has been sold,
traded or transferred to non-exempt persons.

 Service of the Assessment Notice where the taxpayer shall be informed in writing of the
law and the facts on which the assessment is made

 Within a period to be prescribed by implementing rules and regulations, the taxpayer

shall be required to respond to said notice.

 If the taxpayer fails to respond, the Commissioner or his duly authorized representative
shall issue an assessment based on his findings.

 Such assessment may be protested administratively by filing a request for

reconsideration or reinvestigation within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules and
regulations.

 Within sixty (60) days from filing of the protest, all relevant supporting documents shall
have been submitted; otherwise, the assessment shall become final.

17
 If the protest is denied in whole or in part, or is not acted upon within one hundred
eighty (180) days from submission of documents, the taxpayer adversely affected by the
decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days
from receipt of the said decision, or from the lapse of one hundred eighty (180)-day
period; otherwise, the decision shall become final, executory and demandable.

Section 232. Keeping of Books of Accounts.

Corporations, Companies, Partnerships or

Persons Required to Keep Books of
Accounts.
Journal and a All corporations, companies,
ledger or their partnerships or persons
equivalents required by law to pay
internal revenue taxes
Simplified set That those whose quarterly
of sales, earnings, receipts, or
bookkeeping output do not exceed P50,000
records (must be duly authorized by
the Secretary of Finance)
Books of gross quarterly sales,
accounts earnings, receipts or output
audited and exceed P150,000.
examined
yearly by
independent
CPA

'Independent Certified Public Accountant' - an accountant who possesses the

independence as defined in the rules and regulations of the Board of Accountancy.

Section 266. Failure to Obey Summons

Any person duly summoned to FINE: not less than

appear to testify, or to appear 5,000; not more than
and produce books of accounts, 10,000
records, memoranda or other
papers, or to furnish
information as required under IMPRISONMENT:
the pertinent provisions of this not less than 1 year;
Code, neglects to appear or to not more than 2
produce such books of years.
accounts, records, memoranda
or other papers, or to furnish
such information, shall, upon
conviction, be punished by:

18
REVENUE REGULATIONS NO. 12-99 issued September 14, 1999

This RR Implements the provisions of the Tax Code of 1997 relative to the rules on
assessment of national internal revenue taxes, fees and charges, as well as provides the rules
for the extra-judicial settlement of a taxpayer's criminal violation of the said Code or any of
its implementing Regulations through payment of a suggested compromise penalty. As a
general principle, in case the tax due from the taxpayer is paid on a partial or installment
basis, the interest on the deficiency tax or on the delinquency tax liability of the taxpayer will
be imposed from due date of the tax until full payment thereof. The interest will be computed
based on the diminishing balance of the tax, inclusive of interests.

NB: RR 12-99 is amended by RR 18-2013. Under RR No. 18-2013, the following are the
New Tax Assessment Rules:

1. PAN instead of Informal Conference

In RR 12-99, the findings and alleged deficiency taxes from the tax examination or
tax assessment in the Philippines shall be contained in a Notice for Informal Conference
or Notice of Preliminary findings informing the taxpayer of the findings and giving a
period ranging from five (5) to fifteen (15) days to respond either through an informal
discussion with the handling officer or a position paper to the Notice for Informal
Conference.

Under the new rules, the issuance of Notice for Informal Conference has been deleted
and a Preliminary Assessment Notice (PAN) shall be issued instead of the Notice for
Informal Conference. The tax payer may pay the deficiency taxes in the PAN or file a
protest within fifteen (15) days stating its disagreement to the findings with the basis of
such protest, facts and the law.

2. Issuance of FAN/FLD within 15 days from PAN

Upon issuance of the Preliminary Assessment Notice (PAN) in the Philippines, the
BIR will issue a Final Assessment Notice – Formal Letter of Demand (FAN-FLD) within
fifteen (15) days thereof. The wording of RR No. 18-2013 is quite silent as to the impact
of the protest to the PAN timely filed within fifteen (15) days from receipt thereof.

The taxpayer may pay the deficiency taxes in the Final Assessment Notice – Formal
Letter of Demand (FAN-FLD) in Philippines issued within the prescriptive period of the
BIR to issue (either under the three-year period, or ten-year period), or file the protest to
the FAN-FLD with factual and legal basis within thirty (30) days from receipt thereof,
then, submit complete supporting documents within sixty (60) days from filing the
protest.

3. Final and executor of undisputed findings

19
 In filing the protest, the taxpayer should dispute all the alleged findings on deficiency
internal revenue taxes and any item stated in the assessment that has not been disputed
will become final and executory where the taxpayer will be required to pay upon filing
the protest. Protests filed without such payment on undisputed findings will not be
accepted by the BIR.

4. Administrative appeal

Tax assessment process would be undertaken by the commissioner or by the

authorized representative such as Regional Directors. In the event of the following
circumstance, the taxpayer has the option to elevate the tax assessment case in the
Philippines with the Court of Tax Appeals (CTA) via Petition For Review within thirty
(30) days:

 Denial of the that the protest to the formal assessment notice – formal letter of
demand; or
 Inaction on the protest within one hundred eighty (180) days

Under the new rules on tax assessment in the Philippines under RR No. 18-2013, if
such denial or inaction has been made by the Commissioner’s authorized representative,
then, the taxpayer has the option to elevate the same with the Commissioner of Internal
Revenue (CIR) instead of having the same with the CTA which would require a legal
counsel to file, payment of filing fees, and other technical requirements.

5. Service of Tax Assessment Notices to taxpayers

Under RR No. 12-99, service of notices such as PAN and FAN-FLD shall be made
either by personal delivery or by registered mail only. In the new rules of tax assessment
in the Philippines under RR No. 18-2013, the following new modes of serving notices has
been introduced that is more aligned with the Rules of Court of the Supreme Court of the
Philippines in legal proceedings in the Philippines:

1. Service to taxpayer in its business address, residence, or wherever it may be found

under personal delivery
2. Service to professional courier under service by mail
3. Service to the office in charge of the office, or to a legal resident at residence, or with
the barangay officials under substituted service
4. Service to tax agent

6. Imposition of Delinquency interest

Delinquency interest is the interest being imposed upon a taxpayer as an addition to

the tax from the time required to be paid as stated in the FAN-FLD up to such time of full
payment. RR No. 18-2013 has expressly provided that the delinquency interest should be
imposed. The base for the computation of such delinquency interest includes the
deficiency interest covering the interest from the time required by law to be filed or from

20
 late filing until the date required to be paid stated in the FAN-FLD. In short, the
deficiency interest will generate delinquency interest or interest will earn another interest
similar in concept to a compounded interest computation in finance practice.

Clarifying Certain Issues Relative to Due Process Requirement in the Issuance of a

Deficiency Tax Assessment Pursuant to Revenue Regulations (RR) No. 12-99, as
amended by RR 18-2013

Tax Alert No. 9 [Revenue Memorandum Circular No. 11-2014 dated 18 February 2014]

The Commissioner of Internal Revenue has issued Revenue Memorandum Circular No. 11-
2014 (“RMC”) clarifying certain issues relative to the amendments introduced by RR 18-
2013 on the issuance of a deficiency tax assessment.

1. The term “duly authorized representative” of the Commissioner of Internal Revenue

(CIR) who may issue the Preliminary Assessment Notice (PAN), Formal Letter of
Demand/Final Assessment Notice (FLD/FAN) and Final Decision on Disputed
Assessment (FDDA) refers to Revenue Regional Directors, Assistant Commissioner-
Large Taxpayers Service, and Assistant Commissioner-Enforcement and Advocacy
Service.
2. Taxpayers shall submit their responses to the PAN and protests (requests for
reconsideration / reinvestigation) to the FLD/FAN with the duly authorized representative
of the CIR who signed the PAN and FLD/FAN in accordance with RMC No. 39-2013.
3. Protests in the nature of requests for reconsideration of taxpayers elevated to the CIR
arising from inactions or adverse decisions of the “duly authorized representatives” shall
be filed with the Office of the CIR.
4. Prior to the issuance of the PAN, the taxpayer may be allowed to make voluntary
payments of probable deficiency taxes and penalties.
5. An FLD/FAN issued reiterating the immediate payment of deficiency taxes and penalties
previously made in the PAN is a denial of the response to the PAN. A final demand letter
for payment of delinquent taxes may be considered a decision on a disputed assessment.
6. An FLD/FAN issued beyond 15 days from filing/submission of the taxpayer’s response
to the PAN shall be valid, provided the same is issued within the period of limitation to
assess taxes. However, non-observance of the 15-day period shall constitute an
administrative infraction and revenue officers who caused the delay shall be subject to
administrative sanctions.
7. The failure of the taxpayer who requested for a reinvestigation to submit all relevant
supporting documents within the 60- day period shall render the FLD/FAN “final” by
operation of law.
8. The notice (PAN/FLD/FAN/FDDA) shall first be served to the taxpayer’s registered
address before the same may be served to the taxpayer’s known address, or in the
alternative, to the taxpayer’s registered address and known address simultaneously.

PART I
REMEDIES UNDER THE NIRC

21
I. Assessment of Internal Revenue Taxes

A. Definition/Nature/effect/Basis

1. Tax Audit Process

2. Letter of Authority/Audit Notice/Tax Verification Notice

 Revenue Audit Memorandum Order No. 1-00
 Revenue Memorandum Order No. 44-2010 dated May 12, 2010
 Revenue Memorandum Order No. 69-2010 dated August 11, 2010
1. CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010

3. Tax Assessment

4. Pre-assessment Notice (PAN)/when not required

5. Notice of Assessment or Formal Assessment Notice (FAN)

6. Deficiency vs. Delinquency

7. Jeopardy Assessment
 Sec. 3 (1)(a) of RR No. 30-02 dated December 16, 2002

8. Power of the Commissioner to assess deficiency tax / best evidence obtainable

 Revenue Memorandum Circular No. 23-00 dated November 27, 2000
2. Bonifacio SyPo vs. CTA (164 SCRA 524)
3. Fitness By Design, Inc. vs. CIR (GR No. 177982 dated October 17, 2008)

9. Rule on Amendment of Returns

10. Power to issue Subpoena Duces Tecum

 Revenue Memorandum Order No. 002-08 dated January 8, 2008
 Revenue Memorandum Order No. 045-10 dated May 12, 2010
 Revenue Memorandum Order No. 088-10 dated December 22, 2010

B. Period to assess deficiency tax

1. Prescription

a. Rationale/Construction/Interpretation
4. Republic vs. Ablaza (108 Phil 1105)

b. Ordinary – 3 years from date of filing (Sec. 203, NIRC)

22
 c. Extraordinary – 10 years from discovery of fraud, falsity, or omission (see also Sec.
248(B)

d. Counting of periods (Art. 13 of NCC vs. Sec. 31 of Revised Admin Code)

5. CIR vs. Primetown Property Group (GR No. 162155, August 28, 2007)

TAXABLE YEAR
• Normal year (365 days)
• Leap year (366 days)

If there is a leap year within the prescriptive period (3 years from filing of return)
to assess, a year shall be deemed to have 365 days only (NAMARCO v. Tecson, 29
SCRA 70). Thus, assessment issued on April 15 of the third year from filing of
return (which is the 1,096th day) shall be treated as invalid due to prescription.

EO 292 (Administrative Code of 1987), being the more recent law than Civil
Code, governs the computation of legal period. Accor-dingly, a year shall be
understood to be 12 calendar months; a month of 30 days, unless it refers to a
specific calendar month

e. Rule if wrong returns/amended return

6. CIR vs. Ayala Securities (GR No. L-29485, dated November 21, 1980)
7. Butuan Sawmill, Inc. vs. CTA (GR No. L-20601, February 28, 1966)
8. CIR vs. Phoenix (GR No. L-19727, May 20, 1965)
9. CIR vs. Gonzales (18 SCRA 757)

2. Suspension of prescriptive periods/ exceptions

 Secs. 203, 222 and 223 NIRC
 Revenue Memorandum Order No. 20-90, as amended by Revenue Delegation
Authority Order No. 05-01 dated August 2, 2001 (Execution of waiver of statute of
limitations)

Cases on Sec. 222 and 223:

10. Republic vs. Ret (GR No. L-13754 dated March 31, 1962)
11. BPI vs. CIR (GR No. 139736, October 17, 2005)
12. Continental Micronesia, Inc. – Phil. Branch vs. CIR (CTA Case No. 6191, March

22, 2006)
13. CIR vs. Kudos Metal (GR No. 178087, May 5, 2010)
 Waiver must be in the form identified in RMO 20-90.
 Expiry date of period agreed upon is indicated in the waiver.
 Waiver form requires statement of the kind of tax and amount of tax due; if
not indicated in the waiver, there is no agreement.
 Waiver is signed by taxpayer or his authorized representative. In case of
corporation, waiver is signed by any responsible official.

23
  CIR or his authorized representative shall sign waiver indicating that BIR has
accepted and agreed to the waiver.
 Date of acceptance by BIR is indicated.
 Date of execution and acceptance by BIR should be before expiration of
prescriptive period.
 Waiver is executed in 3 copies; second copy is for taxpayer. Fact of receipt
by the taxpayer should be indicated in the original copy
14. Aznar vs. CTA (58 SCRA 519)
15. Republic vs. Ker (18 SCRA 208)
16. CIR vs. Suyoc (104 Phil. 819)
17. CIR vs. Phil Global Communication (GR No. 167146, October 31, 2006)

C. Requisites of a valid assessment

 Sec. 3 of RR No. 12-99

1. Due Process
18. Collector vs. Benipayo (4 SCRA 182)
19. CIR vs. Enron Subic (GR No. 166387 dated January 19, 2009)
20. A Brown Co., Inc. vs. CIR (CTA Case No. 6357, June 7, 2004)
21. CIR vs. Menguito (GR No. 167550, September 17, 2008)
22. CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010

2. Power of CIR to issue assessments

23. Meralco vs. Savellano (117 SCRA 804)
24. Maceda vs. Macaraig (197 SCRA 771)

3. Modes of Service of Assessments

4. When Assessment made

25. Nava vs. CIR (GR No. L-19470, January 30, 1965)
26. Barcelon, Roxas Securities vs. CIR, (GR No. 157064, dated August 7, 2006)

II. Protesting an assessment/ Remedy BEFORE payment

A. How to protest or dispute an assessment administratively

 Sec. 228, NIRC
 Sec. 3.1.5, RR No. 12-99

1. When to file protest – within 30 days from receipt of the FAN

2. Where to file

3. Reinvestigation vs. Reconsideration

27. BPI vs. CIR (GR No. 139736, October 17, 2005)

24
4. Other requirements

a. Submission of relevant documents

b. Payment of protest not required under the NIRC

5. Effects of filing of the protest

6. Effects of failure to file protest / failure to submit relevant documents

28. Marcos II vs. CA (GR No. 120880 dated June 5, 1997)
29. Republic vs. Ker (18 SCRA 208)
30. Prulife of UK Insurance Corp vs. CIR (CTA Case No. 6774 dated September 11,

2007)
31. ABN-AMRO Savings Bank Corp vs. CIR (CTA Case No. 7089 dated September

10, 2008)
32. CIR vs. First Express Pawnshop (GR Nos. 172045-06 dated June 16, 2009)

B. Commissioner of Internal Revenue renders a decision on the disputed assessment

C. Remedy of the taxpayer

 Sec. 3.5.1, RR No. 12-99
 Sec. 228 of the NIRC
 RA No. 9282, as amended by RA No. 9503
 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008

1. If protest is expressly denied

2. CIR’s actions equivalent to denial of protest

3. CIR fails to act on the protest within 180 days from submission of relevant documents
33. Lascona Land Co. Inc. vs. CIR (CTA Case No. 5557, January 4, 2000)
34. RCBC vs. CIR (GR No. 168498, April 24, 2007)

4. Remedy in case CIR files a case or issues a warrant of distraint or levy

5. Effect of failure to appeal on time

35. CIR vs. Concepcion (22 SCRA 1058)

6. Matter appealable to the CTA

7. Appeal to the CTA En Banc / Supreme Court

36. Fishwealth Canning Corp. vs. CIR (GR No. 179343 dated January 21, 2010)

Petitioner’s administrative protest was denied by Final Decision on Disputed

Assessment dated Aug 2, 2005, which was received by petitioner on Aug 4, 2005.

25
 Aug 31, 2005 -- Letter of Reconsideration of the denial of administrative protest
was filed by petitioner with CIR.

Sept 6, 2005 -- BIR issued Preliminary Collection Letter.

Oct 20, 2005 – Petitioner appealed to CTA, but it dismissed petitioner for being
filed out of time.
Petitioner filed Motion for Reconsideration which was denied by CTA.
Resolution was received on Oct 31, 2006.

Nov 21, 2006, petitioner appealed to CTA en banc, which denied it.

SC ruled that since the petition for review was filed before the CTA only on Oct
20, 2005, it was filed out of time. An MR at the BIR level does not toll the 30-
day period to appeal to CTA.
37. Allied Banking Corporation vs. CIR (GR No. 175097 dated February 5, 2010)

Apr 30, 2004 -- BIR issued PAN.

July 16, 2004 – BIR wrote Formal Letter of Demand with Assessment Notices to
ABC, which reads: “It is requested that the above deficiency tax be paid
immediately upon receipt hereof, inclusive of penalties incident to delinquency.
This is our final decision based on investigation. If you disagree, you may appeal
the final decision within thirty days from receipt hereof, otherwise said
assessment shall become final, executory and demandable.”
CTA has exclusive appellate jurisdiction to review by appeal “decisions of CIR in
cases involving disputed assessments.” (RA 9282)

The word “decisions” means decisions of the CIR on the protest of taxpayer
against the assessment.
Strictly speaking, the dismissal of the petition for review by CTA was proper.
However, a careful reading of the demand letter and assessment notices leads us
to agree with petitioner. The statement of the CIR led the petitioner to conclude
that only a final judicial ruling in her favor would be accepted by the BIR.

Although there was no direct reference to petitioner to bring the matter directly to
the CTA, it cannot be denied that the word “appeal” refers to filing of petition for
review with CTA. As aptly pointed out by petitioner, the terms “protest,”
reinvestigation” and “reconsideration” refer to administrative remedies before the
CIR.
38. Republic vs. Lim Tian Teng Sons (GR No. L-21731 dated March 31, 1966)

26
 BIR is not required to rule first on taxpayer’s request for reinvestigation before
initiation of judicial action to collect; decision of CIR may be inferred from his
referral of case to the Solicitor General
39. Advertising Associates vs. CA (133 SCRA 765)
40. CIR vs. Algue (158 SCRA 9)
41. Yabes vs. Flojo (GR No. L-46954, July 20, 1982)
42. CIR vs. Union Shipping (185 SCRA 547)
43. CIR vs. Isabela Cultural Corp. (GR No. 135210, July 11, 2001)

D. Non-retroactivity of rulings (Sec. 246, NIRC)

1. BIR Rulings

2. Rulings of first impression (Sec. 7(B) NIRC)

3. Review/Appeal to Sec. Of Finance (Sec. 4, NIRC)

44. CIR vs. Phil. Healthcare Providers (GR No. 168129, April 24, 2007)
45. Phil. Bank of Communications vs. CIR (GR No. 112024, January 28, 1999)
46. CIR vs. CA (GR No. 117982, February 6, 1997) [read also concurring opinion of

Justice Vitug]
47. CIR vs. Burmeister and Wain GR No. 153205 dated Jaunary22, 2007

III. Remedies Available to the Government

A. Prescriptive period to collect

 Sec. 222, NIRC
48. Republic vs. Hizon (GR No. 130430. December 13, 1997)
49. CIR vs. Hambrecht & Quist Philippines, Inc. (GR No. 169225 November 17,

2010)

B. Administrative remedies / Summary Remedies

 Secs. 205-217

1. Distraint of personal property

 Secs. 205-207, 217, 208-209, 210, 212, NIRC
 Revenue Memorandum Circular No. 5-01 dated February 19, 2001

2. Levy of Real Property

 Secs. 205-207, 217, 208-209, 213-214, NIRC

3. Forfeiture
 Sec. 215, NIRC
50. Castro vs. CIR (GR No. L-12174, April 26, 1962)

4. Tax lien

27
  Sec. 219, NIRC
51. Republic vs. Enriquez (166 SCRA 608)
52. CIR vs. NLRC (238 SCRA 42)
53. Hong Kong Shanghai Bank vs. Rafferty (39 SCRA 145)

5. No injunction to restrain collection of taxes

 Sec. 218, NIRC
 Rule 10, Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005,
as amended on September 16, 2008
 Revenue Memorandum Order No. 42-10 dated May 4, 2010.

C. Judicial Remedies
 Sec. 205
 Secs. 220-221, NIRC
54. Republic vs. Hizon (GR No. 130430 December 13, 1997)
55. Mambulao Lumber vs. Republic (132 SCRA 1)
56. Fernandez Hermanos vs. CIR (GR No. L-21551, September 30, 1969)
57. PNOC vs. CIR (GR No. 109976, April 26, 2005)

IV. Statutory Offenses and Penalties

A. Civil Penalties / Surcharge / Interest

 Secs. 247-251, NIRC
 RR No. 12-99

1. Applicable Interest Rate

2. How to compute interest

3. Rules on interest
58. BPI vs. CIR (GR No. 137002, July 27, 2006)

4. Deficiency vs. Delinquency Tax

5. Surcharge: 25% or 50%

 Sec. 248, NIRC
59. Castro vs. CIR (GR No. L-12174, April 26, 1962)

a. False vs. Fraudulent return

b. Fraud Assessment

c. Mandatory imposition of penalties

60. Phil. Refining Co. vs. CA (GR No. 118794 dated May 8, 1996)

d. When penalties may be waived

28
 61. Lhuillier Pawnshop vs. CIR (GR No. 166786 dated September 11, 2006)

e. Rule on prima facie fraud

 Sec. 248 (B), NIRC
62. Aznar vs.CIR (58 SCRA 519)
63. Javier vs. CIR (199 SCRA 824)

B. Crimes / Offenses / Penalties / Forfeitures

 Secs. 220-221, 224-226, NIRC
 Secs. 253-281, NIRC
 Revenue Memorandum Circular No. 101-90 dated November 26, 1990

1. Precondition before a criminal case may be filed

64. Ungab vs. Cusi (97 SCRA 877)

FILING OF CRIMINAL ACTION DURING PENDENCY OF PROTEST

 During the investigation, the BIR discovered the non-declaration of income from
sales of banana saplings, which fact was known to the taxpayer. Without issuing
an assessment and during the pendency of the examination of the tax liability,
CIR filed a criminal action with the DOJ.
 Assessment is not necessary to criminal prosecution for willful attempt to evade
tax.
 There is no precise computation and assessment of tax before there can be
criminal prosecution
 Crime is complete when violator has knowingly and willfully filed fraudulent
return with intent to evade tax
 What is involved here is not collection of taxes where assessment may be
reviewed by RTC, but criminal prosecution for violation of Tax Code (based on
the 1977 Tax Code)
There can be no civil action to enforce collection before assessment procedures
have been followed
65. CIR vs. CA (257 SCRA 200)
66. Adamson vs. CA (GR No. 120935, May 21, 2009)

2. Compromise Penalty

a. Nature and enforcement

67. Revenue Memorandum Order No. 19-07 dated August 8, 2007
68. CIR vs. Liangga Bay Logging (GR No. L-35266, January 21, 1991)

3. Elements of tax evasion

69. CIR vs. The Estate of Benigno Toda, Jr. (GR No. 147188, September 14, 2004)

4. Persons liable in case taxpayer is a juridical entity

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5. Payment of tax in criminal cases
 Sec. 253 (a), NIRC
 Sec. 205 (b) last paragraph
70. Republic vs. Patanao (GR No. L-22356, July 21, 1967)
71. Castro vs. CIR (GR No. L-12174, April 26, 1962)

6. Crimes under Secs. 254 and 255

7. Civil liability in criminal cases

72. People vs. Galero (CTA Criminal Case No. O-055. September 30, 2009)
73. People vs. Mendez (CTA Criminal Case Nos. O-013 &O-015, January 5, 2011)
74. People vs. Kintanar (CTA Criminal Case Nos. O-031-& O-032 dated September

27, 2010)

8. Prescription of violations of the NIRC

75. Lim vs. CA (190 SCRA 616)

V. Claims for refund and credit of taxes/Remedy AFTER payment

A. Who may file claim for refund/tax credit

1. Basis of Tax Refunds

76. CIR vs. Acesite Phils. (GR No. 147295, February 16, 2007)

2. Taxpayer/withholding agent
77. CIR vs. Procter & Gamble (204 SCRA 377)

3. Requisites for a valid claim for refund

78. Koppel (Phils) vs. CIR (GR No. L-10550, September 19, 1961)
79. CIR vs. Far East Bank GR No. 173854 March 15, 2010
80. CIR vs. Concepcion (22 SCRA 1058)
81. CIR vs. CA (234 SCRA 348)

4. Refunds where written claim is not needed

 Sec. 204 (3), NIRC
 Sec. 229, NIRC
82. Vda de San Agustin vs. CIR, GR No. 138485, September 10, 2001

5. Refunds of Corporate taxpayers/Irrevocability Rule

 Sec. 76, NIRC
83. ACCRA Investments vs. CA (204 SCRA 957)
84. CIR vs. TMX Sales (205 SCRA 184)
85. Systra Phils. Inc. vs. CIR (GR No. 176290, September 21, 2007)
86. Sithe Phils. Holdings vs. CIR (CTA Case No. 6274, April 4, 2003)

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 87. BPI-Family Savings Bank, Inc. vs. CA, CTA and CIR (GR No. 122480, April 12,
2000)
88. Philam Asset Management, Inc. vs. CIR (GR Nos. 156637/162004, December 14,
2005)
89. CIR vs. BPI (GR No. 178490, July 7, 2009)
90. Asia World Properties vs. CIR (GR No. 171766, July 29, 2010)

6. Rule in case of Merger/Corporate taxpayers contemplating dissolution

 Sec. 52 (C), NIRC
91. BPI vs. CIR (GR No. 144653, August 28, 2001)

7. When 2 year period does not apply

92. CIR vs. PNB (GR No. 161997, October 25, 2005)

8. Remedy of the taxpayer

 Sec. 229, NIRC
 RA No. 9282, as amended by RA No. 9503
 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008
a. CIR renders a decision
b. CIR does not render a decision
c. Appeal to the CTA

9. Issuance of Tax Credit Certificate

 Secs.203 (C), 230, NIRC
 RR No. 05-00 dated July 19, 2000
a. Tax Credit, Tax Credit Certificate, Tax Debit Memo
b. Sources of Tax Credit
c. Uses of Tax Credit
d. Sale / Assignment of Tax Credit
e. Validity, Conversion and Validation
f. Forfeiture of Cash Refunds / Tax Credit

10. Erroneously Refunded Tax

93. Guagua Electric Light vs. CIR (GR No. L-23611, April 24, 1967)

VI. Jurisdiction of the Court of Tax Appeals

 RA No. 9282, as amended by RA No. 9503
 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008

1. Why was the CTA created?

94. Philippine Refining Co. vs. CA (256 SCRA 661

2. Weight given to CTA decisions

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3. Composition of the Court (No. of Divisions and Justices, the CTA En Banc)

4. Reversal of Decisions of CTA Division

5. Jurisdiction of CTA Division

a. Constitutionality of Regulations/Tax Laws
95. Asia International Auctioneers vs. Parayno GR No. 163445, December 18, 2007
96. British American Tobbaco vs. Camacho, GR No. 163583, August 20, 2008

b. Civil/Criminal Cases
97. Adamson vs. CA (GR No. 120935, May 21, 2009)
98. CIR vs. Hambrecht & Quist Philippines, Inc., G.R. No. 169225, November 17,

2010

6. Jurisdiction of CTA EB

7. Suspension of Collection of Tax

8. Appeal to the SC

VII. Abatement of Tax / Tax Compromise

 Secs`. 8-04

A. Authority of CIR to abate taxes

1. Grounds for abating taxes and penalties

2. Conditions

B. Power to compromise

1. Cases that can be compromised

2. Cases that cannot be compromised

3. Basis for acceptance of compromise settlement and rates

1. CIR VS. BASF COATING + INKS PHILS, INC., GR # 198677, NOVEMBER 26, 2014
• The running of the period to assess and collect shall be suspended, if taxpayer’s
whereabouts is not known, in order not to prejudice the government.
• However, SC notes that respondent was aware where petitioner may be located.
1. Petitioner caused publication of Notice of Dissolution in Aug 22, 29 and Sept 5, 2001
issues of Malaya, which included address in Laguna of petitioner.
2. Respondent conducted tax audit for 1999 at its Canlubang, Laguna address.

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 • The failure of BIR to note where to send PAN and FAN should not be taken against
BASF. When the deficiency assessments were sent to old address despite proper
notification of new address, the running of 3-year period to assess was not suspended.
• The law on prescription being a remedial measure should be interpreted in a way
conducive to bringing about the beneficent purpose of affording protection to the
taxpayer
• As there are no notices sent to petitioner, assessments are void. In CIR v. Reyes, the SC
ruled that if there is no valid notice sent, the assessment is void. The reason is that “the
law imposes a substantive, not merely a formal requirement. To proceed heedlessly with
tax collection without first establishing a valid assessment is evidently violative of the
cardinal principle in administrative investigations: that taxpayers should be able to
present their case and adduce supporting evidence. xxx.”
• A void assessment cannot give rise to an obligation to pay deficiency taxes, and it divests
the taxing authority of the right to collect them.
2. MANNASOFT TECHNOLOGY CORPORATION VS. CIR, CTA 8745, JANUARY 13,
2017
3. OAKWOOD MANAGEMENT SERVICES (PHILIPPINES) VS. CIR, CTA CASE NO.
7989, AUGUST 8, 2013
4. CIR VS. SMC STOCK TRANSFER SERVICE CORP, CTA CASE NO. 889, JUNE 26,
2013
5. CIR VS. NEXT MOBILE INC., GR # 212825, DECEMBER 7, 2015
6. ASALUS CORPORATION VS. CIR, CTA CASE 8573, APRIL 2, 2014
7. LIQUIGAZ PHILIPPINES CORPORATION VS. CIR, CTA 1117 Sept 21, 2015
8. CIR v. PHILIPPINE TOBACCO FLUE-CURING AND REDRYING CORPORATION
CTA1218 AND 1220 APRIL 11, 2016
9. LIQUIGAZ PHILIPPINES CORPORATION VS. CIR, CTA EN BANK 117 June 3, 2016
10. RP v. CTA & NIELSON & CO., GR NO. L-38540, 149 SCRA 351 DEMAND
LETTER/FOLLOW-UP LETTER FOR FOR PAYMENT OF TAXES CONSIDERED
NOTICE OF ASSESSMENT
11. COLLECTOR VS. BAUTISTA. L-12250, L-12259, MAY 27, 1959, NOTICE OF
ASSESSMENT DEEMED MADE WHEN NOTICE IS RELEASED, MAILED AND
DOES NOT REQUIRE THAT NOTICE BE RECEIVED WITHIN 3 YEARS PERIOD
12. CIR VS. METRO STAR SUPERAMA, INC., GR # 185371, DECEMBER 8, 2010

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13. REPUBLIC VS. RICARTE, GR # L-46893, NOVEMBER 12, 1985 (ACTION TO ASSESS
PRESCRIBED SINCE THERE WAS NOT PROOF THAT NOTICE WAS SENT)
14. ADVERTISING ASSOCIATES VS. CTA, 133 SCRA 765, P. 939, NOLLEDO.
REVIEWABLE DECISION OF CIR IS WHERE HE DIRECTS TAXPAYERS TO
APPEAL TO CTA NOT MERE ISSUANCES OF WARRANTS OF DISTRAINT AND
LEVY
15. CIR VS. UNION SHIPPING, GR # 66160, MAY 21, 1990. DEMAND TO PAY
DEFICIENCY TAX CONSIDERED FINAL DECISION OF CIR
16. SURIGAO ELECTRIC VS. CTA, 57 SCRA 523. CIR SHOULD CATEGORICALLY
STATE WHETHER ORDER IS FINAL DETERMINATION SO THAT IT CAN BE
APPEALED TO CTA
17. CIR VS. ISABELA CULTURAL CORPORATION, GR # 135210, JULY 11, 2001. FINAL
DEMAND LETTER FROM BIR IS TANTAMOUNT TO DENIAL OF REQUEST
FOR RECONSIDERATION WHICH IS THEREFORE APPEALABLE TO CTA
18. OCEANIC WIRELESS NETWORK VS. CIR, GR # 148380, DECEMBER 9, 2005. FINAL
DEMAND LETTER FROM ACCOUNTS RECEIVABLE DIVISION HEAD WAS
FINAL DECISION OF THE CIR AND CONSTITUTED APPEALABLE DECISION
TO CTA.

Since the petitioner did not submit any document in support of his protest within sixty days
from the filing of its protest, the counting of the 180-day period was from the filing of the
protest.

Accordingly, when respondent (CIR) failed to render his decision within 180 days from the
filing of the taxpayer’s protest, petitioner has 30 days after the lapse of the 180-day period to
file an appeal to CTA
19. GIBBS VS. COMMISIONER, L-17406, NOVEMBER 29, 1965 (PERIOD TO FILE
REFUND CLAIM) AND GIBBS V. COLLECTOR, GR # L-13453, FEBRUARY 29, 1960
(2-YEAR PERIOD IS ABSOLUTE) (IF INCOME OF TAXPAYER IS WITHHELD
AT SOURCE HE IS DEEMED TO HAVE PAID HIS TAX LIABILITY AT THE END
OF THE TAX YEAR. IT IS FROM THIS DATE THAT THE 2-YEAR PERIOD WILL
RUN.)
20. CIR VS. TMX SALES & CTA, GR # 83736, JANUARY 16, 1992 (WHEN TO COUNT 2-
YEAR PERIOD IF ON INSTALLMENT BASIS) IF TP PAYS INCOME TAX ON
QUARTERLY BASIS, THE 2 YEAR PERIOD IS COUNTED FROM THE TIME OF
FILING FINAL ADJUSTMENT RETURN.
21. COMMISSIONER VS. PHILAMLIFE INSURANCE CO., GR #105208, MAY 29, 1995.
OBITER BY JUSTICE VITUG REFERRING THE 10-YEAR PERIOD ON TAXES

34
 NOT ERRONEOUSLY / ILLEGALLY PAID. LIKEWISE, THE CLAIM MUST BE
FILED WITHIN 2 YEARS REGARDLESS OF SUPERVENING CAUSE.
22. ALSO, THIS CASE, PACIFIC PRO., LTD. CASE GR # 68013, NOVEMBER 12, 1984,
COUNTING OF TWO-YEAR PRESCRIPTIVE PERIOD FOR FILING CLAIM FOR
REFUND OF OVERPAID CORPORATE INCOME TAX STARTS FROM TIME
FINAL ADJUSTMENT RETURN IS FILED.

If assessment falls on Saturday, Government has next business day which to assess.
23. UNITED AIRLINES VS. CIR, GR # 178788, SEPTEMBER 29, 2010
24. ABS-CBN BROADCASTING CORP., VS. CTA, 108 SCRA 143 (NON-
RETROACTIVITY OF RULINGS) REQUIRING 3 YEARS BACK TAXES AFTER
PREVIOUS CIRCULAR VIOLATED SEC. 246
25. EMILIO S. LIM VS. COURT OF APPEALS, GR # L-48134-37, OCTOBER 18, 1990.
PRESCRIPTIVE PERIOD TO FILE CRIMINAL CASE UNDER SEC. 281, NIRC, 5
YEARS FROM FAILURE TO PAY TAX AFTER NOTICE AND DEMAND
26. COMMISSIONER VS. COURT OF APPEALS, LUCIO TAN, ET. AL., GR # 119322,
JUNE 4, 1996
27. COMMISSIONER V. CTA AND FORTUNE TOBACCO, GR NO. 119322, JUNE 4, 1996
28. CIR V. PASCOR REALTY AND DEVELOPMENT CORP., GR NO. 128315, JUNE
29, 1999 – ASSESSMENT NOT NECESSARY BEFORE FILING CRIMINAL
COMPLAINT OF TAX EVASION BASED ON SECTION 222 ITSELF.

CRIMINAL CHARGE WITHOUT ASSESSMENT

 BIR conducted a tax audit, and it was discovered that taxpayer sold property but no return
was filed nor payment of tax made. Revenue officers executed an Affidavit containing
their findings. CIR filed a criminal complaint with DOJ. When DOJ issued a summons
to taxpayer (for it to file a counter-affidavit with the DOJ on the complaint filed by CIR),
the taxpayer instead considered the affidavit as an assessment and thereafter filed a
protest before the BIR.
 Assessment by the BIR is not necessary before a criminal charge (for non-filing of
return) may be filed by BIR with the DOJ
 Criminal charge need only be proved by prima facie showing of failure to file required
return and such fact need not be proved by an assessment
 Issuance of assessment is different from filing of complaint for criminal prosecution.
Issuance of an assessment involves a civil (tax) liability, while the filing of a criminal
complaint involves a criminal action

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29. CIR V. LASCONA LAND CO., INC.-CA-GR SP NO. 58061. OCTOBER 25, 2005.
WHENTO ELEVATE ASSESSMENT TO CTA
30. SAN AGUSTIN V. CIR, GR 138485, SEPTEMBER 10, 2001. TAXPAYER CAN
APPEAL A DISPUTED ASSESSMENT DESPITE PAYMENT OF DEFICIENCY
TAX. FILING OF REFUND NOT NECESSARY FOR THIS PURPOSE
31. PHILIPPINE JOURNALISTS, INC. V. CIR, GR 16285, DECEMBER 16, 2004. WAIVER
OF PRESCRIPTION MUST BE EXERCISED PROPERLY PER RMO 20-90
OTHERWISE, INVALID.

 Waiver must indicate definite expiration date agreed upon by CIR and taxpayer
 Waiver should state date of acceptance by BIR. Without the date, it cannot be determined
whether waiver was accepted before expiration of 3-year period.
 Taxpayer must be furnished copy of accepted waiver. Under RMO 20-90, second copy
of waiver is for taxpayer. Fact of receipt by taxpayer of his copy should be indicated in
the original copy
32. CIR V. PHIL. GLOBAL COMMUNICATIONS, GR NO. 167146, OCTOBER 31, 2006.
PRESCRIPTIVE PERIOD TO COLLECT TAXES ASSESSED BY CIR.
33. RCBC V. CIR, GR NO. 174942. OPTIONS FOR DISPUTING TAX ASSESSMENT
MUTUALLY EXCLUSIVE.
34. BPI V. CIR, GR NO. 174942, SUSPENSION OF COLLECTION REQUIRES
REQUEST FOR REINVESTIGATION TO BE GRANTED
35. PETRON CORPORATION V. CIR, GR NO. 180385, JULY 28, 2010.
36. CIR V. GONZALES, GR NO. 180385, JULY 28, 2010
37. CIR V. ELRIC AUXILLARY SERIVES CORP. CTA, 1174 MARCH 3, 2016
38. CIR V. ENRON SUBIC POWER CORP, GR NO. 166387, JANUARY 19, 2009

FACTS:
• Enron is a domestic corporation registered with SBMA as freeport enterprise. It filed
ITR for 1996 showing net loss of P7,684,948.
• BIR, thru preliminary 5-day letter, informed Enron of deficiency income tax assessment
of P2,880,817.
• Enron disputed the proposed assessment in first protest letter.
• May 26, 1999, Enron received FAN from CIR and it protested the same on June 14,
1999.
• Due to non-resolution of protest within 180-day period, Enron filed petition for review in
CTA. It argued the deficiency assessment disregarded Sec. 228 of Tax Code and Sec.
3.1.4 of RR 12-99, by not providing the legal and factual bases of assessment. It also
questioned the substantive validity of the assessment.

36
• Sept 12, 2001 - CTA granted Enron’s petition and ordered cancellation of assessment
which is void.
• Nov. 12, 2001 – MR of CIR was denied.
• CIR appealed to CA.
• CA affirmed decision of CTA. It held audit working did not substantially comply with
Sec. 228 and RR 12-99 because they failed to show applicability of cited law to the facts
of the assessment.
• MR filed by CIR was deemed abandoned when he filed motion for extension to file a
petition for review with SC.

ISSUE
• Whether or not Enron was informed of legal and factual bases of the deficiency tax
assessment.

SC RULING
• Sec. 228 of Tax Code provides that taxpayer shall be informed in writing of the law and
the facts on which the assessment is made; otherwise, the assessment is void.
• To implement such provisions, RR 12-99 provides that the letter of demand shall state the
facts, the law, rules and regulations, or jurisprudence on which the assessment is based;
otherwise, the formal letter of demand and assessment notice shall be void.
• The use of the word “shall” in the above legal provisions indicates the mandatory nature
of the requirements laid down therein.
• In the issuance of FAN, the revenue officers did not provide Enron with written bases of
the law and facts on which assessment is based. CIR did not bother to explain how it
arrived at such assessment. He failed to mention the specific provision of the Tax Code
or rules and regulations not complied with by Enron.
• In this case, BIR disallowed certain itemized deductions and considered some cost items
as subject to 5% final tax on gross income earned, without indicating factual and legal
bases. During the preliminary stage, BIR informed taxpayer thru preliminary 5-day letter
and furnished copy of audit working paper.
• SC ruled above documents were not valid substitutes for mandatory notice in writing of
legal and factual bases of assessment. These steps were mere perfunctory discharge of
CIR’s duties in correctly assessing a taxpayer. The requirement for issuing a preliminary
or final assessment, informing a taxpayer of the existence of deficiency tax assessment is
markedly different from the requirement of what such notice must contain. Just
because CIR issued an advice, preliminary letter and final notice does not necessarily
mean that taxpayer was informed of the law and facts on which the assessment was made.
• Law requires that they be stated in the Demand Letter and FAN. Otherwise, the express
provisions of Art. 228 of NIRC and RR 12-99 would be rendered nugatory. The alleged
“factual bases” in the advice, preliminary letter and audit working papers did not suffice.
Moreover, due to the absence of a fair opportunity to be informed of legal and factual
bases of assessment, the assessment is void. Old law merely required taxpayer to be
notified of assessment. This was changed in 1998 and the taxpayer must now be
informed not only of the law but also of the facts on which the assessment is made. Such
amendment is in keeping with the constitutional principle that no person shall be
deprived of property without due process

37
39. CIR V. FMF DEVELOPMENT CORP. GR NO. 167765, JUNE 30, 2008

• Waiver must be in the form identified in RMO 20-90.

• Expiry date of period agreed upon is indicated in the waiver.
• Waiver form requires statement of the kind of tax and amount of tax due; if not indicated
in the waiver, there is no agreement.
• Waiver is signed by taxpayer or his authorized representative. In case of corporation,
waiver is signed by any responsible official.
• CIR or his authorized representative shall sign waiver indicating that BIR has accepted
and agreed to the waiver.
• Date of acceptance by BIR is indicated.
• Date of execution and acceptance by BIR should be before expiration of prescriptive
period.
• Waiver is executed in 3 copies; second copy is for taxpayer. Fact of receipt by the
taxpayer should be indicated in the original copy
40. FEBTC V. CIR, GR NO. 138919, MAY 2, 2006
41. CIR V. AZUCENA REYES, GR NO. 159694, JANUARY 27, 2006

• May 19, 1998 - the heirs of Tancinco received FAN and DL for deficiency estate tax of
P14.91 M, inclusive of penalties.
• June 1, 1998 - protest was filed on ground that decedent had sold property in 1990.
• CIR issued collection letter, followed by Final Notice Before Seizure dated Dec 4, 1998.
WDL was served upon estate.
• Heirs protested WDL and offered compromise by paying 50% of basic estate tax. CIR
denied offer and demanded P18.03 M; otherwise, property would be sold.
• April 11, 2000 - Reyes proposed to pay 100% of basic tax. As tax was not paid on April
15, 2000, BIR notified Reyes on June 6, 2000 that property would be sold at public
auction in August, 2000.
• June 13, 2000 - Reyes filed protest with BIR Appellate Div and offered to pay estate tax
without penalties. Without acting on protest and offer, CIR instructed CED to proceed
with auction sale.
• Reyes filed petition for review with CTA and BIR filed Motion to Dismiss on ground that
CTA has no jurisdiction; assessment was already final and petition was filed out of time.
• CTA denied motion.
• In meantime, BIR issued RR 6-2000 and RMO 42-2000, offering taxpayers with disputed
assessments to compromise cases.
• Nov 25, 2000 - Reyes filed application for compromise and paid P1.06 M. While waiting
for approval by BIR NEB, Reyes filed with CTA a motion to declare application as
perfected compromise, which CTA denied since NEB approval is needed.
• Reyes filed for judgment on the pleadings, which was granted. CTA denied the petition.
• Reyes filed appeal to CA, which granted petition, saying FAN and DL should have stated
the facts and law on which assessment was based.

38
 • Since FAN and DL did not state facts and law, assessment was void and proceedings
emanating from them were also void, and any order emanating from them could never
attain finality.
• BIR appealed to SC, which ruled that Sec. 228 of Tax Code is clear and mandatory –
taxpayer shall be informed in writing of the law and facts on which assessment is based;
otherwise, it is void. Reyes was only notified of the findings by the CIR, who merely
relied on provisions of former Sec. 229 prior to its amendment by RA 8424.
• General rule is that laws apply prospectively. However, statutes that are remedial, or that
do not create new or take away vested rights, do not fall under the general rule. Since
Sec. 228 of Tax Code, as amended by RA 8424, does not state that pending actions are
excepted from the operation of Sec. 228, or that applying it to pending proceedings would
impair vested rights, said law may be applied retroactively
42. JUDY ANNE SANTOS V. PEOPLE, GR NO. 173176, AUGUST 26, 2008
43. ASIA INTERNATIONAL V. PARAYNO, 540 SCRA 536 (2007)
44. BRITISH AMERICAN TOBACCO V. CAMACHO., GR NO. 163583, AUGUST 20, 2008;
45. CIR V. ELRIC AUXILLARY SERVICES CORP. CTA 1174, MARCH 3, 2026

39