Primus 2008 Vol II

8/9/2019 Primus 2008 Vol II

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PRIMUS 2008 ONE-LINERS: TAXATION PART 2

“PRIMUS 2008 ONE-LINERS”

AXA ION

VER. 2008.09.10copyrighted 2008Prepared by the PRIMUS Board of Cons ultants

Prof. belardo !. "o#ondonPrincipal Consultant

!hese $otes in the for# of one or t%o sentences and &uestions and ans%ers %ere speciallyprepared by a Board of Consultants specially co##issioned by PRIMUS 'nfor#ation Center('nc.( for the use of candidates %ho are going to ta)e the 2008 Bar E*a#ination. !hey are not asco#prehensi+e as the other PRIMUS publications such as the PRIMUS Bar ,tar $otes( or the PRIMUS Cut and Paste. !hey are intended to be read during the Pre- ee) or before thestart of the regular Bar re+ie% for any gi+en Bar E*a#ination year.

!hese $otes atte#pt to second guess the areas %here &uestions #ay probably be sourced for the 2008 Bar E*a#ination in !a*ation. !hey include enu#erations and distinctions( as %elldigests of so#e land#ar) cases( although they go beyond t%o sentences. !hey #ay also ser+eas /#e#ory oggers to help the candidate recall concepts. !he reader is ad+ised to concentrateon the / ne-liners that are in bold letters. !hose that are not in bold are #ere elucidations of concepts.!he / PRIMUS 2008 ONE-LINERS shall be re+ised regularly to consider latest la% and

urisprudence to #eet the re&uire#ents of future Bar Re+ie%s such that the title shall changefro# year to year. 3or the 2009 Bar e*a#ination the title shall be / PRIMUS 2009 ONE-LINERS” %hich shall be released so#eti#e in ,epte#ber( 2009. !he reader is ho%e+er ad+ised to ac&uire and read the latest +ersions of the other PRIMUS publications such as

the PRIMUS Bar ,tar $otes( or the PRIMUS Cut and Paste %hich contain #ore detailedinfor#ation leading to a #ore co#prehensi+e Bar re+ie%. f course those %ho intend to ta)ethe 2009 Bar e*a#ination are encouraged to attend the PRIMUS 2009 rap-up Re+ie%s

lthough pri#arily for the use of Bar candidates %ho ha+e attended the PRIMUS 2008 rap-upRe+ie%s( the / n-4iners #ay be a+ailed of by other students %ho are interested in thesub ect. hile a+ailable for the free use of all the contents of the / PRIMUS 2008 ONE-LINERS are co+ered by copyright protection and should ne+er be published 5%hether throughprinted #edia or through the internet6 %ithout %ritten per#ission in %ritingfro# PRIMUS 'nfor#ation Center( 'nc. "o%nloading and printing into hard copies is allo%ed onlyfor pri+ate use and should not be distributed on a co##ercial basis.

TARIFF AND CUSTOMS CODE1. Customs duties defined. Custo#s duties is the na#e gi+en to ta*es on the i#portation ande*portation of co##odities( the tariff or ta* assessed upon #erchandise i#ported fro#( or e*ported to(a foreign country. 5 Nestle Phils. v. Court of Appeals, et al., 7.R. $o. 1 11 (:uly ;( 20016. S!fe"u!#d me!su#es are e#ergency #easures( including tariffs( to protect do#estic industries andproducers fro# increased i#ports %hich inflict or could inflict serious in ury on the#.!he C! is +ested %ith urisdiction to re+ie% decisions of the ,ecretary of !rade and 'ndustry i#posingsafeguard #easures as pro+ided under Rep. ct $o. 8800 the ,afeguard


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5,< 6. 5 Southern Cross Cement Corporation v. The Philippine Cement Manufacturers Corp., et al., 7.R. $o. 1=8= 0( :uly 8( 200 6!he "!' ,ecretary cannot i#pose the safeguard #easures if the !ariff Co##ission does not fa+orablyreco##end its i#position.$. %&!t is me!n '( t&e te#m “ent#(” in Customs L!) *

,>77E,!E" $, ER? 't has a triple #eaning.a. the docu#ents filed at the Custo#s house@b. the sub#ission and acceptance of the docu#ents@ andc. Custo#s declaration for#s or custo#s entry for#s re&uired to be acco#plished by passengers of inco#ing +essels or passenger planes as en+isaged under ,ec. 2=0= of the !CCP 53ailure todeclare baggage6. 5 Jardeleza v. People, 7.R. $o. 1;=2;=( 3ebruary ;( 200;6+. A f,i"&t ste)!#dess !##i ed f#om Sin"! o#e. U on &e# !##i !, s&e )!s !s/ed )&et&e# s&e &!s!n(t&in" to de0,!#e. S&e !ns)e#ed none !nd s&e su'mitted &e# “Customs 2!""!"eDe0,!#!tion Fo#m” )&i0& s&e !00om ,is&ed !nd si"ned )it& not&in" o# )#itten on t&e s !0e fo# items to 'e de0,!#ed. %&en &e# &!n"e# '!" )!s e3!mined some ie0es of 4e)e,#( )e#e found0on0e!,ed )it&in t&e ,inin" of s!id '!".S&e )!s t&en 0on i0ted of io,!tin" of Se0. $561 of t&e T!#iff !nd Customs Code fo# un,!)fu,im o#t!tion )&i0& en!,i7es !n( e#son )&o s&!,, f#!udu,ent,( im o#t o# '#in" intot&e P&i,i ines !n( !#ti0,e 0ont#!#( to ,!).S&e no) ! e!,s 0,!imin" t&!t ,o)e# 0ou#t e##ed n 0on i0tin" &e# unde# Se0. $561 )&en t&ef!0ts !,,e"ed 'ot& in t&e info#m!tion !nd t&ose s&o)n '( t&e #ose0ution 0onstitute t&eoffense unde# Se0. 868 “F!i,u#e to De0,!#e 2!""!"e ” of )&i0& s&e )!s !09uitted. Is s&e0o##e0t * ,>77E,!E" $, ER? $o. ,ec. ;01 does not define a cri#e. 't #erely pro+ides( inter alia, thead#inistrati+e re#edies %hich can be resorted to by the Bureau of Custo#s %hen seiAingdutiablearticles found the baggage of any person arri+ing in the Philippines %hich is not included in theacco#plished baggage declaration sub#itted to the custo#s authorities( and the ad#inistrati+epenalties that such person #ust pay for the release of such goods if not i#ported contrary to la%.,uch ad#inistrati+e penalties are independent of the cri#inal liability for s#uggling that #ay bei#posed under ,ec. ;01( and other pro+isions of the !CC %hich can only be deter#ined after theappropriate cri#inal proceedings( prescinding fro# the outco#e in any ad#inistrati+e case that #ayha+e been filed and disposed of by the custo#s authorities.'ndeed the second paragraph of ,ec. 2=0= pro+ides that nothing shall pre+ent the bringing of acri#inal action against the offender for s#uggling under ,ection ;01. 5 Jardeleza v. People, 7. R. $o.1;=2;=( 3ebruary ;( 200;68. :o) is smu"",in" 0ommitted *,>77E,!E" $, ER? ,#uggling is co##itted by any person %ho?a. fraudulently i#ports or brings into the country any article contrary to la%@b. assists in so doing any article contrary to la%@ or

c. recei+es( conceals( buys( sells or in any #anner facilitates the transportation( conceal#ent or saleof such goods after i#portation( )no%ing the sa#e to ha+e been i#ported contrary tola%. 5Jardeleza v. People, 7.R. $o. 1;=2;=( 3ebruary ;( 200; citing Rodriguez v. Court of

Appeals, 7. R. $o. 11=218( ,epte#ber 18( 199=( 2 8 ,CR 288( 29;65. T&e Co,,e0to# of Customs sittin" in sei7u#e !nd fo#feitu#e #o0eedin"s &!s e30,usi e

4u#isdi0tion to &e!# !nd dete#mine !,, 9uestions tou0&in" on t&e sei7u#e !nd fo#feitu#e of duti!',e "oods. RTCs !#e #e0,uded f#om !ssumin" 0o"ni7!n0e o e# su0& m!tte#s e en


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tou"& etitions of 0e#tio#!#i #o&i'ition o# m!nd!mus . The !ureau of Customs, et al., v."gario, et al., 7.R. $o. 1 8081( 77E,!E" $, ER?a. Regional !rial Courts ha+e no urisdiction to reple+in a property %hich is sub ect to seiAure and

forfeiture proceedings for +iolation of the !ariff and Custo#s Code other%ise( actions for forfeiture of property for +iolation of the Custo#s la%s could easily be under#ined by the si#ple de+ice of reple+in. 5 #e la $uente v. #e %e&ra, et al., 120 ,CR ==6b. !he doctrine of e*clusi+e custo#s urisdiction o+er custo#s cases to the e*clusion of the R!Cs isanchored upon the policy of placing no unnecessary hindrance on the go+ern#ent s dri+e( not only topre+ent s#uggling and other frauds upon Custo#s(c. but #ore i#portantly( to render effecti+e and efficient the collection of i#port and e*port duties duethe ,tate( %hich enables the go+ern#ent to carry out the functions it has been instituted toperfor#. Jao, et al., v. Court of Appeals, et al., and companion case, 2 9 ,CR =( 6d. !he issuance by regular courts of %rits of preli#inary in unction in seiAure and forfeiture proceedingsbefore the Bureau of Custo#s #ay arouse suspicion that the issuance or grant %as for considerationother than the strict #erits of the case. 5 'uno v. Ca(redo, 02 ,CR = D200 6e. >nder the doctrine of pri#ary urisdiction( the Bureau of Custo#s has e*clusi+e ad#inistrati+e

urisdiction to conduct searches( seiAures and forfeitures of contraband %ithout interference fro# thecourts. 't could conduct searches and seiAures %ithout need of a udicial %arrant e*cept if the search isto be conducted in a d%elling place.here an ad#inistrati+e office has obtained a technical e*pertise in a specific sub ect( e+en the courts#ust defer to this e*pertise.;. “A” 0,!imin" to 'e t&e o)ne# of ! esse, )&i0& is t&e su'4e0t of 0ustoms )!##!nt of sei7u#e!nd detention sou"&t t&e inte#0ession of t&e RTC to #est#!in t&e 2u#e!u of Customs f#ominte#fe#in" )it& &is #o e#t( #i"&ts o e# t&e esse,. %ou,d t&e suit #os e#*,>77E,!E" $, ER? $o. Fis re#edy %as not %ith the R!C but %ith the C! ( as issues of o%nership of goods in the custody of custo#s officials are %ithin the po%er of the C! to deter#ine.!he Collector of Custo#s has e*clusi+e urisdiction o+er seiAure and forfeiture proceedings and trialcourts are precluded fro# assu#ing cogniAance o+er such #atters e+en through petitions for certiorari( prohibition or #anda#us. 5 Commissioner of Customs v. Court of Appeals, et al., 7. R.$os. 111202-0=( :anuary 1( 200;6


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a. rongful #a)ing by the o%ner( i#porter( e*porter or consignee of any declaration or affida+it( or the%rongful #a)ing or deli+ery by the sa#e person of any in+oice( letter or paper G all touching on thei#portation or e*portation of #erchandise.b. the falsity of such declaration( affida+it( in+oice( letter or paper@ andc. an intention on the part of the i#porterHconsignee to e+ade the pay#ent of the duties due. Repu(lic,

etc., v. The Court of Appeals, et al .( 7.R. $o. 1 90=0( ctober 2( 200161 . On ?!nu!#( ; 1=77E,!E" $, ER? 4i&uidation is the final co#putation and ascertain#ent by the Collector of Custo#s of the duties due on i#ported #erchandise based on official reports as to the &uantity(character and +alue thereof( and the Collector of Custo#sI o%n finding as to the applicable rate of duty.

li&uidation is considered to ha+e been #ade %hen the entry is officially sta#ped/li&uidated. 5 Pilipinas Shell Petroleum Corporation v. Repu(lic of the Philippines, etc., 7. R. $o.1;19= (


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!he i#porter s liability therefore constitutes a lien on the article %hich the go+ern#ent #ay choose toenforce %hile the i#ported articles are either in its custody or under its control.hen Bureau of Custo#s has released the i#ported goods( its lien o+er the i#ported goods %ase*tinguished. Conse&uently( Bureau of Custo#s could only enforce the pay#ent ofi#port duties infull by filing a case for collection against i#porter. 5 Pilipinas Shell Petroleum Corporation v. Repu(lic

of the Philippines, etc., 7. R. $o. 1;19= (

urisdiction prior to the a#end#ent of Rep. ct $o. 112=.1


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$$. T&e im osin" !ut&o#it( fo# t&e 0ounte# !i,in" duties is t&e Se0#et!#( of T#!de !ndIndust#( in t&e 0!se of non-!"#i0u,tu#!, #odu0t 0ommodit( o# !#ti0,e o# t&e Se0#et!#( of A"#i0u,tu#e in t&e 0!se of !"#i0u,tu#!, #odu0t 0ommodit( o# !#ti0,e after for#al in+estigationand affir#ati+e finding of the !ariff Co##ission.E+en %hen all the re&uire#ents for the i#position ha+e been fulfilled( the decision on %hether or not

to i#pose a definiti+e anti-du#ping duty re#ains the prerogati+e of the !ariff Co##ission. 5,ec. 015a6( !CC( as a#ended by Rep. ct $o. 8 =2( / nti-"u#ping ct of 1999 6$+. T&e 0ounte# !i,in" dut( is e9ui !,ent to t&e !,ue of t&e s e0ifi0 su'sid(.$8. M!#/in" duties are the additional custo#s duties i#posed on foreign articles 5or its containers if the article itself cannot be #ar)ed6( not #ar)ed in any official language in the Philippines( in aconspicuous place as legibly( indelibly and per#anently in such #anner as to indicate to an ulti#atepurchaser in the Philippines the na#e of the country of origin.$5. T&e Commissione# of Customs im oses t&e m!#/in" dut(.$;. T&e m!#/in" dut( is e9ui !,ent to fi e e#0ent 8 !d !,o#em.$


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b. a %ritten protest setting forth his ob ection to the ruling or decision in &uestion( together %ith hisreasons therefor. $o protest shall be considered unless pay#ent of the a#ount due after finalli&uidation has first been #ade and the corresponding doc)et fee. 5,ec. 2 08( !CC nu#bering andarrange#ent supplied6

++. P#otest E30,usi e Remed( in P#otest!',e C!ses. 'n all cases sub ect to protest( the

interested party %ho desires to ha+e the action of the collector re+ie%ed( shall #a)e a protest(other%ise the action of the collector shall be final and conclusi+e against hi#. 5,ec. 2 09( !CC6+8. T&e '!sis of duti!',e !,ue of me#0&!ndise t&!t is su'4e0t to !d !,o#em 0ustomsduties t&e t#!ns!0tion !,ue %hich shall be the price actually paid or payable for the goods %hensold for e*port to the Philippines( ad usted by adding certain cost ele#ents to the e*tent that they areincurred by the buyer but are not included in the price actually paid or payable for the i#portedgoods( and #ay include the follo%ing?a. Cost of containers and pac)ing(b. 'nsurance( andc. 3reight. 5,ec. 201( !CC as a#ended by ,ec. 1( Rep. ct $o. 91 =6+5. T&e !'o e t#!ns!0tion !,ue is t&e #im!#( met&od of dete#minin" duti!',e !,ue.If t&et#!ns!0tion !,ue of t&e im o#ted !#ti0,e 0ou,d not 'e dete#mined usin" t&e !'o e t&efo,,o)in" !,te#n!ti e met&ods s&ou,d 'e used one !fte# t&e ot&e#>a. !ransaction +alue of identical goodsb. !ransaction +alue of si#ilar goodsc. "educti+e #ethodd. Co#puted #ethode. 3allbac) #ethod+;. T&e#e is ! mist!/en 'e,ief t&!t 0,!ims fo# #efund !#e "o e#ned '( t&e #u,e on 9u!si-0ont#!0t of solutio indebeti )&i0& #es0#i'es in si3 5 (e!#s unde# A#ti0,e 11+8 of t&e Ci i,Code.'n order for the rule on solutio inde(eti to apply it is an essential condition that the petitioner #ustfirst sho% that its pay#ent of the custo#s duties %as in e*cess of %hat %as re&uired by the la% atthe ti#e the sub ect 1; i#portations of #il) and #il) products %ere #ade. >nless sho%n other%ise(the disputable presu#ption of regularity of perfor#ance of duty lies in fa+or of the Collector of Custo#s. Nestle Phil. v. Court of Appeals, et al., /.R. No. -01--1, Jul& 2, 344-5+pon receipt by the Co##issioner of such certified clai# he shall cause the sa#e to bepaid if found correct.5,ec. 1 08( !CC6


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86. Unde# t&e do0t#ine of #im!#( 4u#isdi0tion t&e 2u#e!u of Customs &!s e30,usi e!dminist#!ti e 4u#isdi0tion to 0ondu0t se!#0&es sei7u#es !nd fo#feitu#es of 0ont#!'!nd)it&out inte#fe#en0e f#om t&e 0ou#ts. It 0ou,d 0ondu0t se!#0&es !nd sei7u#es )it&out need of ! 4udi0i!, )!##!nt e30e t if t&e se!#0& is to 'e 0ondu0ted in ! d)e,,in" ,!0e.81. T&e do0t#ine of e30,usi e 0ustoms 4u#isdi0tion o e# 0ustoms 0!ses to t&e e30,usion of t&e

RTCs is !n0&o#ed u on t&e o,i0( of ,!0in" no unne0ess!#( &ind#!n0e on t&e "o e#nmentBsd#i e not on,( to #e ent smu"",in" !nd ot&e# f#!uds u on Customs 'ut mo#e im o#t!nt,(to #ende# effe0ti e !nd effi0ient t&e 0o,,e0tion of im o#t !nd e3 o#t duties due t&e St!te)&i0& en!',es t&e "o e#nment to 0!##( out t&e fun0tions it &!s 'een instituted toe#fo#m. Jao, et al., v. Court of Appeals, et al., and companion case, 2 9 ,CR =( 68 . T&e Co,,e0to# of Customs sittin" in sei7u#e !nd fo#feitu#e #o0eedin"s &!s e30,usi e

4u#isdi0tion to &e!# !nd dete#mine !,, 9uestions tou0&in" on t&e sei7u#e !nd fo#feitu#e of duti!',e "oods. RTCs !#e #e0,uded f#om !ssumin" 0o"ni7!n0e o e# su0& m!tte#s e entou"& etitions of 0e#tio#!#i #o&i'ition o# m!nd!mus . The !ureau of Customs, et al., v."gario, et al., 7.R. $o. 1 8081(


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b. the falsity of such declaration( affida+it( in+oice( letter or paper@ andc. an intention on the part of the i#porterHconsignee to e+ade the pay#ent of the duties due.Repu(lic, etc., v. The Court of Appeals, et al .( 7.R. $o. 1 90=0( ctober 2( 2001651. Fo#feitu#e of sei7ed "oods in t&e 2u#e!u of Customs is in t&e n!tu#e of ! #o0eedin" inrem i.e. directed against the res or i#ported goods and entails a deter#ination of the legality of their

i#portation. 'n this proceeding( it is in legal conte#plation the property itself %hich co##its the+iolation and is treated as the offender( %ithout reference %hatsoe+er to the character or conduct of the o%ner.!he issue is li#ited to %hether the i#ported goods should be forfeited and disposed of inaccordance %ith la% for +iolation of the !ariff and Custo#s Code. . Transglo(e )nternational, )nc. v.Court of Appeals, et al .( 7.R. $o. 12;; ( :anuary 2=( 199965 . T&e one-(e!# #es0#i ti e e#iod fo# fo#feitu#e #o0eedin"s ! ,ies on,( in t&e !'sen0e of f#!ud. Commissioner of Customs v. Court of Ta* Appeals, et al., 7.R. $o. 1 2929(


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Association of the Philippines, et al., 7. R. $o. 1=8= 0( ugust ( 200=( citing +arious cases in hisseparate opinion to the decision on the #otion for reconsideration6$. Cou#t of T!3 A e!,sB findin" of f!0t 'inds t&e Su #eme Cou#t. 't is doctrinal that the factualfindings of the Court of !a* ppeals( %hen supported by substantial e+idence( %ill not be disturbedon appeal( unless it is sho%n that it co##itted gross error in the appreciation of

facts. 5 Commissioner of )nternal Revenue v. Manila ;lectric Compan&, 7. R. $o. 121;;;( ctober 10( 200 citing Commissioner of )nternal Revenue v. Court of Appeals ( 7.R. $o. 12 0 ( ctober 1 ( 1998( 298 ,CR 8 ( 91 citing Commissioner of )nternal Revenue v. Mitsu(ishi Metal Corp., 7.R.$os. = 909 and 800 1( :anuary 22( 1990( 181 ,CR 21 ( 220@ Philippine Refining Compan& v.Court Commissioner of )nternal Revenue v. Court of Appeals ( 7.R. $o. 12 0 ( ctober 1 ( 1998(298 ,CR 8 ( 91 citing Commissioner of )nternal Revenue v. Mitsu(ishi Metal Corp., 7.R. $os.= 909 and 800 1( :anuary 22( 1990( 181 ,CR 21 ( 220@ Philippine Refining Compan& v. Court of

Appeals, 7.R. $o. 118 9 (


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a. >pon receipt of a pre-assess#ent notice( the ta*payer shall respond to the sa#e %ithin fifteen51=6 days fro# receipt %hich is the period pro+ided for by i#ple#enting rules andregulations. D rd par.( ,ec. 228 5e6( $'RC of 199b. >pon the issuance of an assess#ent notice( the ta*payer shall protest ad#inistrati+ely by filing are&uest for reconsideration or rein+estigation %ithin thirty 5 06 days fro# receipt of the assess#ent in

such for# and #anner as #ay be prescribed by i#ple#enting rules and regulations.c. ithin si*ty 5;06 days fro# the filing of the protest( all rele+ant supporting docu#ents shall besub#itted@ other%ise the assess#ent shall beco#e final. 5 th par.( )(id. 6;. T&e ,e"!, #emedies unde# t&e NIRC of 1==; ! !i,!',e to !n !""#ie ed t!3 !(e# !tt&e 4udi0i!, ,e e, %ith respect to assess#ent of internal re+enue ta*es?

a. 'f the protest is denied in %hole or in part( or b. is not acted upon %ithin one hundred eighty 51806 days fro# sub#ission of docu#ents(c. the ta*payer ad+ersely affected by the decision or inaction #ay appeal to the Court of !a*

ppeals %ithin thirty 5 06 days fro# receipt of the said decision( or fro# the lapse of the one hundredeighty 51806 G day period@ other%ise( the decision shall beco#e final( e*ecutory andde#andable. Dlast par.( ,ec. 228 5e6( $'RC of 199

d. n appeal( the ta*payer should apply for the issuance of a %rit of preli#inary in unction toen oin the B'R fro# collecting the ta* sub ect of the appeal.

e. decision of a di+ision of the Court of !a* ppeals ad+erse to the ta*payer or thego+ern#ent #ay be the sub ect of a #otion for reconsideration or ne% trial( a denial of %hichis appealable to the Court of !a* ppeals en (anc by #eans of a petition for re+ie%. .

f. decision of the Court of !a* ppeals en (anc ad+erse to the ta*payer or the go+ern#ent#ay be appealed to the ,upre#e Court through a petition for re+ie% on certiorari filed %ith fifteen51=6 days fro# notice( and e*tendible for ustifiable reasons for thirty 5 06 days only.


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the ta*payer %ill be able to ascertain %hether a ta* is still due or refund can be clai#ed based on thead usted and audited figures. !an8 of the Philippine)slands v. Commissioner of )nternal Revenue,/.R. No. -112+0, August 3 , 344- 61$. utline of ta* re#edies of a ta*payer and the go+ern#ent relati+e to ,,E,,


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nce an assess#ent has beco#e final and collectible( not e+en the B'R Co##issioner could change the sa#e. !hus( the ta*payer could not pay the ta*( then apply for a refund( and if denied appeal the sa#e to the Court of !a* ppeals.

h. 'f the protest is denied in %hole or in part( or is not acted upon %ithin one hundred eighty51806 days fro# the sub#ission of docu#ents( the ta*payer ad+ersely affected by the decision or

inaction #ay appeal to the Court of !a* ppeals %ithin thirty 5 06 days fro# receipt of the ad+ersedecision( or fro# the lapse of the one hundred eighty 5180-6 day period( %ith an application for theissuance of a %rit of preli#inary in unction to en oin the B'R fro# collecting the ta* sub ect of theappeal.

'f the ta*payer fails to so appeal( the denial of the Co##issioner or the inaction of theCo##issioner %ould result to the notice of assess#ent beco#ing final and collectible and the B'Rcould then utiliAe its ad#inistrati+e and udicial re#edies to collect the ta*.

i. decision of a di+ision of the Court of !a* ppeals ad+erse to the ta*payer or thego+ern#ent #ay be the sub ect of a #otion for reconsideration or ne% trial( a denial of %hichis appealable to the Court of !a* ppeals en (anc by #eans of a petition for re+ie%. .

!he Court of !a* ppeals( has a period of t%el+e 5126 #onths fro# sub#ission of the casefor decision %ithin %hich to decide.

. 'f the decision of the Court of !a* ppeals en (anc affir#s the denial of the protest by theCo##issioner or the assess#ent in case of failure by the Co##issioner to decide the ta*payer #ust file a petition for re+ie% on certiorari %ith the ,upre#e Court %ithin fifteen 51=6 days fro# noticeof the udg#ent on &uestions of la%. n e*tension of thirty 5 06 days #ay for ustifiable reasons begranted. 'f the ta*payer does not so appeal( the decision of the Court of !a* ppeals %ould beco#efinal and this has the effect of #a)ing the assess#ent also final and collectible. !he B'R could thenuse its ad#inistrati+e and udicial re#edies to collect the ta*.1+. T&e 4u#isdi0tion of t&e Cou#t of T!3 A e!,s>/a. E30,usi e ! e,,!te 4u#isdi0tion to #e ie) '( ! e!, !s &e#ein #o ided>1. "ecisions of the Co##issioner of 'nternal Re+enue in cases in+ol+ing disputed assess#ents(

refunds of internal re+enue ta*es( fees or other charges( penalties( in relation thereto( or other #atters arising under the $ational 'nternal Re+enue Code or other la%s ad#inistered by theBureau of 'nternal Re+enue @ 5"'V',' $6

2. 'naction by the Co##issioner of 'nternal Re+enue in cases in+ol+ing disputedassess#ents( refunds or internal re+enue ta*es( fees or other charges( penalties in relationthereto( or other #atter arising under the $ational 'nternal Re+enue Code or other la%sad#inistered by the Bureau of 'nternal Re+enue( %here the $ational 'nternal Re+enue Codepro+ides a specific period of action( in %hich case the inaction shall be dee#ed a denial@ 5!heinaction on refunds in t%o years fro# the ti#e ta* %as paid.!hus( if the prescripti+e period of t%o years is about to e*pire( the ta*payer should interpose a petition for re+ie% %ith the C! G"'V',' $6

. "ecisions( orders or resolutions of the Regional !rial Courts in local ta* cases originally decided

or resol+ed by the# in the e*ercise of their original or appellate urisdiction@ 5'f original"'V',' $@ if appellate ;N !ANC 6

. "ecisions of the Co##issioner of Custo#s in cases in+ol+ing liability for custo#s duties(fees or other #oney charges( seiAure( detention or release of property affected( fines( forfeituresor other penalties in relation thereto( or other #atters arising under the Custo#s 4a% or other la%s ad#inistered by the Bureau of Custo#s@ 5"'V',' $6


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=. "ecisions of the Central Board of ssess#ent ppeals in the e*ercise of its appellate urisdiction o+er cases in+ol+ing the assess#ent and ta*ation of real property originally decidedby the pro+incial or city board of assess#ent appeals@ 5 ;N !ANC 6

;. "ecisions of the ,ecretary of 3inance on custo#s cases ele+ated to hi# auto#aticallyfor re+ie% fro# decisions of the Co##issioner of Custo#s %hich are ad+erse to the

7o+ern#ent under ,ection 2 1= of the !ariff and Custo#s Code@ 5!his has reference toforfeiture cases %here the decision is to release the seiAed articles G "'V',' $6. "ecisions of the ,ecretary of !rade and 'ndustry( in case of nonagricultural product(

co##odity or article( and the ,ecretary of griculture in the case of agricultural product(co##odity or article( in+ol+ing du#ping and counter+ailing duties under ,ection 01 and 02(respecti+ely( of the !ariff and Custo#s Code( and safeguard #easures under Republic ct $o.8800( %here either party #ay appeal the decision to i#pose or not to i#pose saidduties. 5"'V',' $6

b. ?u#isdi0tion o e# 0!ses in o, in" 0#imin!, offenses !s &e#ein #o ided>1. E30,usi e o#i"in!, 4u#isdi0tion o e# !,, 0#imin!, 0!ses arising fro# +iolations of the$ational 'nternal Re+enue Code or !ariff and Custo#s Code and other la%s ad#inistered by theBureau of 'nternal Re+enue or the Bureau of Custo#s? Provided, ho7ever, !hat offenses or felonies #entioned in this paragraph %here the principal a#ount of ta*es and fees( e*clusi+e of charges and penalties clai#ed( is less than ne #illion pesos 5P1(000(000.006 or %here there isno specified a#ount clai#ed shall be tried by the regular Courts and the urisdiction of the C!shall be appellate. ny pro+ision of la% or the Rules of Court to the contrary not%ithstanding(the cri#inal action and the corresponding ci+il action for the reco+ery of ci+il liability for ta*esand penalties shall at all ti#es be si#ultaneously instituted %ith( and ointly deter#ined in thesa#e proceeding by the C! ( the filing of the cri#inal action being dee#ed to necessarily carry%ith it the filing of the ci+il action( and no right to reser+e the filing of such ci+il action separatelyfro# the ci+il action %ill be recogniAed.

2. E30,usi e ! e,,!te 4u#isdi0tion in 0#imin!, offenses>a6 +er appeals fro# the udg#ents( resolutions or orders of the Regional !rial Courts inta* cases originally decided by the#( in their respecti+e territorial urisdiction.

b6 +er petitions for re+ie% of the udg#ents( resolutions or orders of the Regional!rial Courts in the e*ercise of their appellate urisdiction o+er ta* cases originallydecided by the


16/53

18. T&e fo,,o)in" !#e t&e !0ts of 2IR Commissione# 0onside#ed !s deni!, of ! #otest )&i0&se# e !s '!sis fo# ! e!, to t&e Cou#t of T!3 A e!,s>a. 3iling by the B'R of a ci+il suit for collection of the deficiency ta* is considered a denial of there&uest for reconsideration. 5 Commissioner of )nternal Revenue v. 9nion Shipping Corporation, 18=,CR = 6

b. n indication to the ta*payer by the Co##issioner /in clear and une&ui+ocal language of his finaldenial not the issuance of the %arrant of distraint and le+y. hat is the sub ect of the appeal is thefinal decision not the %arrant of distraint. Commissioner of )nternal Revenue v. 9nion Shipping Corporation, 18= ,CR = 5c. B'R de#and letter sent to the ta*payer after his protest of the assess#ent notice is consideredas the final decision of the Co##issioner on the protest. Surigao ;lectric Co., )nc. v. Court of Ta*

Appeals, et al., = ,CR =2 6d. letter of the B'R Co##issioner reiterating to a ta*payer his pre+ious de#and to pay anassess#ent is considered a denial of the re&uest for reconsideration or protest and is appealable tothe Court of !a* ppeals. Commissioner v. A&ala Securities Corporation, 0 ,CR 20 6e. 3inal notice before seiAure considered as co##issioner s decision of ta*payer s re&uest for reconsideration %ho recei+ed no other response. Commissioner of )nternal Revenue v. )sa(elaCultural Corporation ( 7.R. $o. 1 =210( :uly 11( 2001 held that not only is the $otice the onlyresponse recei+ed? its content and tenor supports the theory that it %as the C'R s final act regardingthe re&uest for reconsideration. !he +ery title e*pressly indicated that it %as a final notice prior toseiAure of property. !he letter itself clearly stated that the ta*payer %as being gi+en /this 4 ,!PP R!>$'!K to pay@ other%ise( its properties %ould be sub ected to distraint and le+y.15. The taxpayer seasonably protested the assessment issued by the Commissioner of Internal Revenue. During the pendency of the protest the CIR issued a arrant of distraint and levy to collect the taxes sub!ect of the protest.

"s counsel hat advice shall you give the taxpayer. #xplain briefly your ans er. $, ER? !he ta*payer should appeal( by %ay of a petition for re+ie%( to the Court of !a* ppealsnot on the ground of the denial of the protest but on other #atter arising under the pro+isions of the$ational 'nternal Re+enue Code. !he actual issuance of a %arrant of distraint and le+y in certaincases cannot be considered a final decision on a disputed assess#ent.

!o be a +alid decision on a disputed assess#ent( the decision of the Co##issioner or hisduly authoriAed representati+e shall 5a6 state the facts( the applicable la%( rules and regulations( or

urisprudence on %hich such decision is based( other%ise( the decision shall be +oid( in %hich casethe sa#e shall not be considered a decision on the disputed assess#ent@ and 5b6 that the sa#e ishis final decision. 5,ec. .1.;( Re+. Regs. 12-996!hese conditions are not co#plied %ith by the #ereissuance of a %arrant of distraint and le+y. Commissioner of )nternal Revenue v. 9nion Shipping Corp., 18= ,CR = 53urther#ore( a #otion for the suspension of the collection of the ta* #ay be filed together %ith thepetition for re+ie% 5,ec. ( Rule 10( RRC! effecti+e "ece#ber 1=( 200=6 because the collection of

the ta* #ay eopardiAe the interest of the ta*payer.1;. As ! "ene#!, #u,e t&e#e must !,)!(s 'e ! de0ision of t&e Commissione# of Inte#n!,Re enue o# Commissione# of Customs 'efo#e t&e Cou#t of T!3 A e!,s )ou,d &! e

4u#isdi0tion. 'f there is no such decision( the %ould be dis#issed for lac) of urisdiction unless thecase falls under any of the follo%ing e*ceptions.1


17/53

a. here the Co##issioner has not acted on the disputed assess#ent after a period of 180days fro# sub#ission of co#plete supporting docu#ents( the ta*payer has a period of 0 days fro#the e*piration of the 180 day period %ithin %hich to appeal to the Court of !a* ppeals. 5last par.(,ec. 228 5e6( $'RC of 199 < Commissioner of )nternal Revenue v. )sa(ela Cultural Corporation, /.R.No. -0+3-4, Jul& --, 344-5

b. here the Co##issioner has not acted on an application for refund or credit and the t%oyear period fro# the ti#e of pay#ent is about to e*pire( the ta*payer has to file his appeal %ith theCourt of !a* ppeals before the e*piration of t%o years fro# the ti#e the ta* %as paid.

't is disheartening enough to a ta*payer to be )ept %aiting for an indefinite period for theruling(. 't %ould #a)e #atters #ore e*asperating for the ta*payer if the doors of ustice %ould beclosed for such a relief until after the Co##issioner( %ould ha+e( at his personal con+enience( gi+enhis go signal. Commissioner of Customs, et al, v. Court of Ta* Appeals, et al., /.R. No. 32- ,March -2, - , unrep.51=. %&!t is t&e ,e"!, #emed( unde# t&e NIRC of 1==; !t t&e 4udi0i!, ,e e, )it& #es e0t to#efundo# #e0o e#( of t!3 e##oneous,( o# i,,e"!,,( 0o,,e0ted * ,>77E,!E" $, ER. !he legal re#edy under the $'RC of 199 at the udicial le+el %ith respectto refund or reco+ery of ta* erroneously or illegally collected( is the filing of a suit or proceeding %iththe Court of !a* ppeals

a. before the e*piration of t%o 526 years fro# the date of pay#ent of the ta* regardless of anysuper+ening cause that #ay arise after pay#ent 52 nd par.( ,ec. 229( $'RC of 199 6( or

b. %ithin thirty 5 06 days fro# receipt of the denial by the Co##issioner of the application for refund or credit. 5,ec. 11( R. . $o. 112=6

6. !he t%o 526 year period and the thirty 5 06 day period should be applied on a %hiche+er co#es first basis. !hus( if the 0 days is %ithin the 2 years( the 0 days applies( if the 2 year period isabout to lapse but there is no decision yet by the Co##issioner %hich %ould trigger the 0-day period(the ta*payer should file an appeal( despite the absence of a decision. Commissioners, etc. v. Court of Ta* Appeals, et al., /. R. No. 32- , March -2, - , unrep.5

1. here the ta*payer is a corporation the t%o year prescripti+e period fro# /date of pay#ent for refund of inco#e ta*es should be the date %hen the corporation filed its final ad ust#entreturn not on the date %hen the ta*es %ere paid on a &uarterly basis. Philippine !an8 of Communications v. Commissioner of )nternal Revenue, et al., /.R. No. --3431, Januar& 3 , - 5

7enerally spea)ing it is the 3inal d ust#ent Return( in %hich a#ounts of the gross receiptsand deductions ha+e been audited and ad usted( %hich is reflecti+e of the results of the operations of abusiness enterprise. 't is only %hen the return( co+ering the %hole year( is filed that the ta*payer %ill beable to ascertain %hether a ta* is still due or refund can be clai#ed based on the ad usted and auditedfigures. !an8 of the Philippine )slands v. Commissioner of )nternal Revenue, /.R. No. -112+0, August 3 , 344- 6. %&!t is t&e 'u#den of t!3 !(e#s see/in" t!3 #efunds o# 0#edits *

,>77E,!E" $, ER? 't has al%ays been the rule that those see)ing ta* refunds or credits bear

the burden of pro+ing the factual basis of their clai#s and of sho%ing( by %ords too plain to be#ista)en( that the legislature intended to entitle the# to such clai#s. 5 Atlas Consolidated Mining and #evelopment Corporation v. Commissioner of )nternal Revenue, 7. R. $o. 1 ==2;(


18/53

3irst( a udicial clai# for refund or ta* credit in the C! is by no #eans an original action( but rather anappeal by %ay of petition for re+ie% of a pre+ious( unsuccessful ad#inistrati+e clai#.!herefore( as in e+ery appeal or petition for re+ie%( a petitioner has to con+ince the appellate court thatthe &uasi- udicial agency a =uo did not ha+e any reason to deny its clai#s.,econd( cases filed in the C! are litigated de novo . !hus( a petitioner should pro+e e+ery #inute

aspect of its case by presenting( for#ally offering and sub#itting its e+idence to the C! .,ince it is crucial for a petitioner in a udicial clai# for refund or ta* credit to sho% that its ad#inistrati+eclai# should ha+e been granted in the first place( part of the e+idence to be sub#itted to the C! #ustnecessarily include %hate+er is re&uired for the successful prosecution of an ad#inistrati+eclai#. 5 Atlas Consolidated Mining and #evelopment Corporation v. Commissioner of )nternal Revenue, 7. R. $o. 1 ==2;(


19/53

Asi! Inte#n!tion!, Au0tionee#s !nd ot&e#s fi,ed ! 0om ,!int 'efo#e t&e RTC of O,on"! o Cit( to de0,!#e oid U,t#! i#es !nd Un0onstitution!, HRMC No. $1- 66$ d!ted?une $ 66$ !nd HRMC No. $ - 66$ d!ted ?une 8 66$ ( Re . Re". Nos. 1-=8 1 -=; !nd 15-==d!ted ?!nu!#( + 1==8 Au"ust ; 1==; !nd Se tem'e# ; 1=== #es e0ti e,( (

T&e( 0ontended t&!t 4u#isdi0tion o e# t&e 0!se !t '!# #o e#,( e#t!ins to t&e #e"u,!#

0ou#ts !s t&is is “!n !0tion to de0,!#e !s un0onstitution!, oid !nd !"!inst t&e #o isions of HR.A. No. ; ;” t&e RMCs issued '( t&e CIR. T&e( do “do not 0&!,,en"e t&e #!te st#u0tu#e o# fi"u#es of t&e im osed t!3es #!t&e# t&e( 0&!,,en"e t&e !ut&o#it( of t&e #es ondentCommissione# to im ose !nd 0o,,e0t t&e s!id t!3es.” T&e( !,so 0,!im t&!t t&e 0&!,,en"e ont&e !ut&o#it( of t&e CIR to issue t&e RMCs does not f!,, )it&in t&e 4u#isdi0tion of t&e Cou#t of T!3 A e!,s CTA .

Does t&e RTC &! e 4u#isdi0tion *,>77E,!E" $, ER? $o. 't is the Court of !a* ppeals that has e*clusi+e urisdiction.'n the case at bar( the assailed re+enue regulations and re+enue #e#orandu# circulars are

actually rulings or opinions of the C'R on the ta* treat#ent of #otor +ehicles sold at public auction%ithin the ,,EL to i#ple#ent ,ection 12 of R. . $o. 22 %hich pro+ides that /e*portation or re#o+al of goods fro# the territory of the D,,EL to the other parts of the Philippine territory shall besub ect to custo#s duties and ta*es under the Custo#s and !ariff Code and other rele+ant ta* la%sof the Philippines. !hey %ere issued pursuant to the po%er of the C'R under ,ection of the$ational 'nternal Re+enue Code( viz ?

,ection . Po%er of the Co##issioner to 'nterpret !a* 4a%s and to "ecide !a* Cases.-- !hepo%er to interpret the pro+isions of this Code and other ta* la%s shall be under the e*clusi+e andoriginal urisdiction of the Co##issioner( sub ect to re+ie% by the ,ecretary of 3inance.!he po%er to decide disputed assess#ents( refunds of internal re+enue ta*es( fees or other charges( penalties i#posed in relation thereto( or other #atters arising under this Code or other la%sor portions thereof ad#inistered by the Bureau of 'nternal Re+enue is +ested in the Co##issioner(sub ect to the e*clusi+e appellate urisdiction of the Court of !a* ppeals. 5as a#ended by the $'RCof 199 ( emphases supplied, Asia )nternational Auctioneers, )nc., etc et al., .v. Para&no, Jr., etc.,, et al., 7. R. $o. 10 =( "ece#ber 18( 200 65. %&!t is t&e 0&!#!0te#isti0 of ! 2IR deni!, of ! #otest su0& !s )ou,d en!',e t&e t!3 !(e# to! e!, t&e s!me to t&e Cou#t of T!3 A e!,s * ,>77E,!E" $, ER? !he Co##issioner of 'nternal Re+enue should al%ays indicate to theta*payer in clear and une&ui+ocal language %hene+er his action on an assess#ent &uestioned by ata*payer constitutes his final deter#ination on the disputed assess#ent.n the basis of his state#ent indubitably sho%ing that the Co##issioner s co##unicated action is hisfinal decision on the contested assess#ent( the aggrie+ed ta*payer %ould then be able to ta)erecourse to the ta* court at the opportune ti#e. ithout needless difficulty( the ta*payer %ould be ableto deter#ine %hen his right to appeal to the ta* court accrues.5 Commissioner of )nternal Revenue v.!an8 of the Philippines )slands, 7. R. $o. 1 0;2( pril 1 ( 200 citing "ceanic >ireless Net7or8, )nc.

v. Commissioner of )nternal Revenue, 7. R. $o. 1 8 80( 9 "ece#ber 200=( ,CR 20=( 211-212(citing Surigao ;lectric Co., )nc. v. Court of Ta* Appeals, 7. R. $o. 4-2= 289( 28 :une 19 ( = ,CR=2 6;. Re!sons fo# t&e #u,e #e9ui#in" CIRBs une9ui o0!, ,!n"u!"e on &is !0tion on t&e #otest.a. 't %ould ob+iate all desire and opportunity on the part of the ta*payer to continually delay the finalityof the assess#ent G and( conse&uently( the collection of the a#ount de#anded as ta*es G by repeatedre&uests for reco#putation and reconsideration.


20/53

b. n the part of the Co##issioner of 'nternal Re+enue( this %ould encourage his office to conduct acareful and thorough study of e+ery &uestioned assess#ent and render a correct and define decisionthereon in the first instance. c. !his %ould also deter the Co##issioner of 'nternal Re+enue fro# unfairly #a)ing the ta*payer grope in the dar) and speculate as to %hich action constitutes the decision appealable to the ta* court.

d. f greater i#port( this rule of conduct %ould #eet a pressing need for fair play( regularity( andorderliness in ad#inistrati+e action. 5 Commissioner of )nternal Revenue v. !an8 of the Philippines)slands, 7. R. $o. 1 0;2( pril 1 ( 200 citing "ceanic >ireless Net7or8, )nc. v. Commissioner of )nternal Revenue, 7. R. $o. 1 8 80( 9 "ece#ber 200=( ,CR 20=( 211-212( citing Surigao;lectric Co., )nc. v. Court of Ta* Appeals, 7. R. $o. 4-2= 289( 28 :une 19 ( = ,CR =2 677E,!E" $, ER?a. 3iling by the B'R of a ci+il suit for collection of the deficiency ta* is considered a denial of the re&uestfor reconsideration. 5 Commissioner of )nternal Revenue v. 9nion Shipping Corporation, 18= ,CR= 6b. n indication to the ta*payer by the Co##issioner /in clear and une&ui+ocal language of his finaldenial not the issuance of the %arrant of distraint and le+y. hat is the sub ect of the appeal is the finaldecision not the %arrant of distraint. Commissioner of )nternal Revenue v. 9nion Shipping Corporation, 18= ,CR = 5c. B'R de#and letter sent to the ta*payer after his protest of the assess#ent notice is considered asthe final decision of the Co##issioner on the protest. Surigao ;lectric Co., )nc. v. Court of Ta*

Appeals, et al., = ,CR =2 6d. letter of the B'R Co##issioner reiterating to a ta*payer his pre+ious de#and to pay anassess#ent is considered a denial of the re&uest for reconsideration or protest and is appealable tothe Court of !a* ppeals. Commissioner v. A&ala Securities Corporation, 0 ,CR 20 6e. 3inal notice before seiAure considered as co##issioner s decision of ta*payer s re&uest for reconsideration %ho recei+ed no other response. Commissioner of )nternal Revenue v. )sa(elaCultural Corporation ( 7.R. $o. 1 =210( :uly 11( 2001 held that not only is the $otice the only responserecei+ed? its content and tenor supports the theory that it %as the C'R s final act regarding the re&uestfor reconsideration. !he +ery title e*pressly indicated that it %as a final notice prior to seiAure of property. !he letter itself clearly stated that the ta*payer %as being gi+en /this 4 ,! PP R!>$'!Kto pay@ other%ise( its properties %ould be sub ected to distraint and le+y.=. T&e t!3 !(e# se!son!',( #otested t&e !ssessment issued '( t&e Commissione# of Inte#n!,Re enue. Du#in" t&e enden0( of t&e #otest t&e CIR issued ! )!##!nt of dist#!int !nd ,e ( to0o,,e0t t&e t!3es su'4e0t of t&e #otest.As 0ounse, )&!t !d i0e s&!,, (ou "i e t&e t!3 !(e#. E3 ,!in '#ief,( (ou# !ns)e#.,>77E,!E" $, ER? !he ta*payer should appeal( by %ay of a petition for re+ie%( to the Court of !a* ppeals not on the ground of the denial of the protest but on other #atter arising under the

pro+isions of the $ational 'nternal Re+enue Code. !he actual issuance of a %arrant of distraint andle+y in certain cases cannot be considered a final decision on a disputed assess#ent.

!o be a +alid decision on a disputed assess#ent( the decision of the Co##issioner or his dulyauthoriAed representati+e shall 5a6 state the facts( the applicable la%( rules and regulations( or

urisprudence on %hich such decision is based( other%ise( the decision shall be +oid( in %hich case thesa#e shall not be considered a decision on the disputed assess#ent@ and 5b6 that the sa#e is his finaldecision. 5,ec. .1.;( Re+. Regs. 12-996 !hese conditions are not co#plied %ith by the #ere issuance


21/53

of a %arrant of distraint and le+y. Commissioner of )nternal Revenue v. 9nion Shipping Corp., 18=,CR = 53urther#ore( a #otion for the suspension of the collection of the ta* #ay be filed together %ith thepetition for re+ie% 5,ec. ( Rule 10( RRC! effecti+e "ece#ber 1=( 200=6 because the collection of theta* #ay eopardiAe the interest of the ta*payer.

$6. Inst!n0es )&e#e t&e Cou#t of T!3 A e!,s )ou,d &! e 4u#isdi0tion e en if t&e#e is node0ision (et '( t&e Commissione# of Inte#n!, Re enue>a. here the Co##issioner has not acted on the disputed assess#ent after a period of 180

days fro# sub#ission of co#plete supporting docu#ents( the ta*payer has a period of 0 days fro#the e*piration of the 180 day period %ithin %hich to appeal to the Court of !a* ppeals. 5last par.( ,ec.228 5e6( $'RC of 199 < Commissioner of )nternal Revenue v. )sa(ela Cultural Corporation, /.R. No.-0+3-4, Jul& --, 344-5

b. here the Co##issioner has not acted on an application for refund or credit and the t%oyear period fro# the ti#e of pay#ent is about to e*pire( the ta*payer has to file his appeal %ith theCourt of !a* ppeals before the e*piration of t%o years fro# the ti#e the ta* %as paid.

't is disheartening enough to a ta*payer to be )ept %aiting for an indefinite period for theruling(. 't %ould #a)e #atters #ore e*asperating for the ta*payer if the doors of ustice %ould beclosed for such a relief until after the Co##issioner( %ould ha+e( at his personal con+enience( gi+enhis go signal. Commissioner of Customs, et al, v. Court of Ta* Appeals, et al., /.R. No. 32- , March-2, - , unrep.5$1. As ! "ene#!, #u,e “No 0ou#t s&!,, &! e t&e !ut&o#it( to "#!nt !n in4un0tion to #est#!in t&e0o,,e0tion of !n( n!tion!, inte#n!, #e enue t!3 fee o# 0&!#"e . 5,ec. 218($'RC6/$o appeal ta)en to the C! fro# the decision of the Co##issioner of 'nternal Re+enue or theCo##issioner of Custo#s or the Regional !rial Court( pro+incial( city or #unicipal treasurer or the,ecretary of 3inance( the ,ecretary of !rade and 'ndustry and ,ecretary of griculture( as the case#ay be shall suspend the pay#ent( le+y( distraint( andHor sale of any property of the ta*payer for thesatisfaction of his ta* liability as pro+ided by e*isting la%? Pro+ided( ho%e+er( !hat %hen in the opinionof the Court the collection by the afore#entioned go+ern#ent agencies #ay eopardiAe the interest of the 7o+ern#ent andHor the ta*payer the Court at any stage of the proceeding #ay suspend thesaid collection and re&uire the ta*payer either to deposit the a#ount clai#ed or to file a surety bond for not #ore than double the a#ount %ith the Court. 5,ec. 11( Rep. ct $o. 112=( as a#ended by ,ec.9(Rep. ct $o. 9282 6!he ,upre#e Court #ay en oin the collection of ta*es under its general udicial po%er but it should beapparent that the source of the po%er is not statutory but constitutional.!he ,upre#e Court did not grant the pro+isional re#edy prayed for in Southern Cross Cement Corporation v. The Philippine Cement Manufacturers Corp., et al., 7. R. $o. 1=8= 0( :uly 8( 200 for it%ould be tanta#ount to en oining the collection of ta*es( a pere#ptory udicial act %hich is traditionallyfro%ned upon unless there is a clear statutory basis for it.E+ident is the clear legislati+e intent that thei#position of safeguard #easures( despite the a+ailability of udicial re+ie%( should not be en oined

not%ithstanding any ti#ely appeal of the i#position. !his so because the ,afeguard /!he rule is that in the absence of accounting records of a ta*payer( his ta*liability #ay be deter#ined by esti#ation. !he petitioner 5Co##issioner of 'nternal Re+enue6 is notre&uired to co#pute such ta* liabilities %ith #athe#atical e*actness. ppro*i#ation in the calculation of ta*es due is ustified. !o hold other%ise %ould be tanta#ount to holding that s)illful conceal#ent is an


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in+incible barrier to proof. D Commissioner of )nternal Revenue v. ?ante* Trading Co., )nc. 7. R. $o.1 ;9 =( .,. 12 519 6 /Fo%e+er( the ruledoes not apply %here the esti#ation is arri+ed at arbitrarily and capriciously. D Commissioner of )nternal Revenue v. ?ante* Trading Co., )nc., citing 9nited States v. Rinds8opf, 10= >.,. 18 518816

$$. Me!nin" of 'est e iden0e o't!in!',e M under ,ec. ; 5B6( $'RC of

199 . !his#eans that the original docu#ents #ust be produced. 'f it could not be produced(secondary e+idence #ust be adduced. 5 ?ante* Trading Co., )nc. v. Commissioner of )nternal Revenue (C - 7.R. ,P $o. 1 2( ,epte#ber 0( 19986$+. Se0. 5 2 of t&e NIRC of 1==; !,,o)s t&e 2IR to m!/e o# !mend ! t!3 #etu#n f#om &is o)n/no),ed"e o# o't!ined tou"& testimon( o# ot&e#)ise . !hus( the Co##issioner of 'nternalRe+enue in+estigates any circu#stance %hich led hi# to belie+e that the ta*payer had ta*ableinco#e larger than that reported. $ecessarily( this in&uiry %ould ha+e to be outside of the boo)sbecause they supported the return as filed. Fe #ay ta)e the s%orn testi#ony of the ta*payer( he #ayta)e the testi#ony of third parties@ he #ay e*a#ine and subpoena( if necessary( traders and bro)ersaccounts and boo)s and the ta*payer s boo)s of accounts. !he Co##issioner is not bound to follo%any set of patterns. !he e*istence of unreported inco#e #ay be sho%n by any particular proof that isa+ailable in the circu#stances of the particular situation. D Commissioner of )nternal Revenue v. ?ante* Trading Co., )nc. citing Camp(ell, Jr., v. /uetersloh, 28 3.2d 8 8 519;16

Citing its ruling in a pre+ious case( a />.,. appellate court declared that %here the records of theta*payer are #anifestly inaccurate and inco#plete( the Co##issioner #ay loo) to other sources of infor#ation to establish inco#e #ade by the ta*payer during the years in &uestion. 5 )(id., in turnciting @enne& v. Commissioner, 111 3.2d 6

$8. !he follo%ing are the "ene#!, met&ods de e,o ed '( t&e 2u#e!u of Inte#n!, Re enuefo# #e0onst#u0tin" ! t!3 !(e#Bs in0ome %here the records do not sho% the true inco#e or %hereno return %as filed or %hat %as filed %as a false and fraudulent return

5a6 Percentage #ethod@5b6 $et %orth #ethod.@

5c6 Ban) deposit #ethod@5d6 Cash e*penditure #ethod@5e6 >nit and +alue #ethod@5f6 !hird party infor#ation or access to records #ethod@5g6 ,ur+eillance and assess#ent #ethod. 5Chapter N'''. 'ndirect pproach to 'n+estigation(

Fandboo) on udit Procedures and !echni&ues G Volu#e '( pp. ;8- 6$5. >nder the percentage #ethod( the co#puted a#ount of re+enues based on the percentageco#putation is co#pared to the a#ount of re+enues reflected on the return. !he percentages used#ay be obtained fro# the ta*payer( industry publication( prior year s audit results( or thirdparties. !he co#parison %ill pro+ide an indication on the possibility of re+enue being understated.

#ong the significant ratios and trends to be analyAed are the percentage #ar)-up( grossprofits ratio or gross #argin percentage( profit #argin( total assets turno+er( and in+entory turno+er.5Chapter N'''. 'ndirect pproach to 'n+estigation( Fandboo) on udit Procedures and !echni&ues GVolu#e '( pp. ;8- 6$;. !he net %orth #ethod is a #ethod of reconstructing inco#e %hich is based on the theory that if the ta*payer s net %orth has increased in a gi+en year in an a#ount larger than his reported inco#e(he has understated his inco#e for that year. !he net %orth on a fi*ed starting date is co#pared %iththe net %orth on a fi*ed ending date. ny increase in net %orth is presu#ed to be inco#e notdeclared for ta* purposes. 5Chapter N'''. 'ndirect pproach to 'n+estigation( Fandboo) on uditProcedures and !echni&ues G Volu#e '( pp. ;8- 6


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$nder the ban) deposit #ethod( the ban) records of the ta*payer are analyAed and the B'R

esti#ates inco#e on the basis of the total ban) deposits after eli#inating non-inco#e ite#s. !his#ethod stands on the pre#ise that deposits represent ta*able inco#e unless other%ise e*plained asbeing non-ta*able ite#s. !his #ethod #ay be used only %here the B'R has been legally allo%edaccess to the ta*payer s ban) records. 5Chapter N'''. 'ndirect pproach to 'n+estigation( Fandboo)on udit Procedures and !echni&ues G Volu#e '( pp. ;8- 6+6. !he cash e*penditure #ethod assu#es that the e*cess of a ta*payer s e*penditures during theta* period o+er his reported inco#e for that period is ta*able to the e*tent not dispro+ed other%ise.5Chapter N'''. 'ndirect pproach to 'n+estigation( Fandboo) on udit Procedures and !echni&ues GVolu#e '( pp. ;8- 6+1. >nder the unit and +alue #ethod( the deter#ination or +erification of gross receipts #ay beco#puted by applying price and profit figures to the )no%n ascertainable &uality of business of theta*payer. 5Chapter N'''. 'ndirect pproach to 'n+estigation( Fandboo) on udit Procedures and!echni&ues G Volu#e '( pp. ;8- 63or e*a#ple( in order to deter#ine the gross receipts of a piAAa parlor( #ultiply the pounds of flour used by the nu#ber of piAAas per pound %hich in turn %ould then be #ultiplied by the a+erage priceper piAAa.+ . !hird party infor#ation or access to records #ethod. !he B'R #ay re&uire third parties( public or pri+ate to supply infor#ation to the B'R( and thus( /obtain on a regular basis fro# any person other than the person %hose internal re+enue ta* liability is sub ect to audit or in+estigation( or fro# anyoffice or officer of the national and local go+ern#ents( go+ern#ent agencies and instru#entalitiesincluding the Bang)o ,entral ng Pilipinas and go+ern#ent-o%ned or Gcontrolled corporations( anyinfor#ation such as( but not li#ited to( costs and +olu#e of production( receipts or sales and grossinco#es of ta*payers( and the na#es ( addresses( and financial state#ents of corporations( #utualfund co#panies( insurance co#panies( regional operating head&uarters or #ultinational co#panies(

oint accounts( associations( oint +entures or consortia and registered partnerships( and their #e#bers@ *** D,ec. = 5B6( $'RC of 199 6+$. pre-assess#ent notice is a letter sent by the Bureau of 'nternal Re+enue to a ta*payer as)inghi# to e*plain %ithin a period of fifteen 51=6 days fro# receipt %hy he should not be the sub ect of anassess#ent notice. 't is part of the due process rights of a ta*payer.

s a general rule( the B'R could not issue an assess#ent notice %ithout first issuing a pre-assess#ent notice because it is part of the due process rights of a ta*payer to be gi+en notice in thefor# of a pre-assess#ent notice( and for hi# to e*plain %hy he should not be the sub ect of anassess#ent notice.++. 'nstances %here a pre-assess#ent notice is not re&uired before a notice of assess#ent is sent

to the ta*payer.a. hen the finding for any deficiency ta* is the result of #athe#atical error in the co#putation of the ta* as appearing on the face of the return@ or b. hen a discrepancy has been deter#ined bet%een the ta* %ithheld and the a#ount actuallyre#itted by the %ithholding agent@ or c. hen a ta*payer opted to clai# a refund or ta* credit of e*cess creditable %ithholding ta* for ata*able period %as deter#ined to ha+e carried o+er and auto#atically applied the sa#e a#ount


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clai#ed against the esti#ated ta* liabilities for the ta*able &uarter or &uarters of the succeedingtable year@ or d. hen the e*cess ta* due on e*cisable articles has not been paid@ or e. hen an article locally purchased or i#ported by an e*e#pt person( such as( but not li#ited to+ehicles( capital e&uip#ent( #achineries and spare parts( has been sold( trade or transferred to non-

e*e#pt persons. 5,ec. 228( $'RC of 199 6+8. !he %ord assess#ent %hen used in connection %ith ta*ation( #ay ha+e #ore than one#eaning . Mo#e 0ommon,( t&e )o#d “!ssessment” me!ns t&e offi0i!, !,u!tion of ! t!3 !(e#Bs#o e#t( fo# u# ose of t!3!tion. T&e !'o e definition of !ssessment finds ! ,i0!tion

unde# t!#iff !nd 0ustoms t!3!tion !s )e,, !s ,o0!, "o e#nment t!3!tion .3or #e!, #o e#t( t!3!tion t&e#e m!( 'e ! s e0i!, me!nin" to t&e 'u#dens t&!t !#e im osedu on #e!, #o e#ties t&!t &! e 'een 'enefited '( ! u',i0 )o#/s e3 enditu#e of ! ,o0!,"o e#nment. 't is so#eti#es called a special assess#ent or a special le+y. Commissioner of )nternal Revenue v. Pascor Realt& and #evelopment Corporation, et al., 7.R. $o. 128 1=( :une 29( 19996Fo# inte#n!, #e enue t!3!tion !ssessment !s ,!(in" ! t!3. !he ulti#ate purpose of an assess#entto such a connection is to ascertain the a#ount that each ta*payer is to pay. Commissioner of )nternal Revenue v. Pascor Realt& and #evelopment Corporation, et al., 7.R. $o. 128 1=( :une 29( 19996+5. An !ssessment is ! noti0e du,( sent to t&e t!3 !(e# )&i0& is deemed m!de on,( )&en t&e2IR #e,e!ses m!i,s o# sends su0& noti0e to t&e t!3 !(e#. Commissioner of )nternal Revenue v.Pascor Realt& and #evelopment Corporation, et al., 7.R. $o. 128 1=( :une 29( 19996+;. %&!t is ! se,f-!ssessed t!3 * ,>77E,!E" $, ER? ta* that the ta*payer hi#self assesses or co#putes and pays to the ta*ingauthority. 't is a ta* that self-assessed by the ta*payer %ithout the inter+ention of an assess#ent by theta* authority to create the ta* liability.!he !a* Code follo%s the pay-as-you-file syste# of ta*ation under %hich the ta*payer co#putes hiso%n ta* liability( prepares the return( and pays the ta* as he files the return. !he pay-as-you-file syste#is a self-assessing ta* return.'nternal re+enue ta*es are self-assessing. D"issent of :. Carpio in Philippine National "il Compan& v.Court of Appeals, et al., 7. R. $o. 1099 ;( pril 2;( 200= and co#panion case citing Tupaz v.9lep, 1; ,CR 118 519996 in turn citing Vitug and costa( Ta* :a7 and Jurisprudence, 1 st edition(199 ( p. 2;

clear e*a#ple of a self-assessed ta* is the annual inco#e ta*( %hich the ta*payer hi#self co#putesand pays %ithout the inter+ention of any assess#ent by the B'R. !he annual inco#e ta* beco#es dueand payable %ithout need of any prior assess#ent by the B'R. !he B'R #ay or #ay not in+estigate or audit the annual inco#e ta* return filed by the ta*payer. !he ta*payer s liability for the inco#e ta* doesnot depend on %hether or not the B'R conducts such subse&uent in+estigation or audit.Fo%e+er( if the ta*ing authority is first re&uired to in+estigate( and after such in+estigation to issue theta* assess#ent that creates the ta* liability( then the ta* is no longer self-assessed.5"issent of :.Carpio in Philippine National "il Compan& v. Court of Appeals, et al., 7. R. $o. 1099 ;( pril 2;( 200=

and co#panion case6+


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0ontendin" fu#t&e# t&!t t&e#e )!s no se!son!',e #otest &en0e t&e t!3 is sue!nd 0o,,e0ti',e. %&o is 0o##e0t *,>77E,!E" $, ER? !he B'R is correct. >nder the old la% ,ec. 2 0( it is enough #erely that theB'R Co##issioner shall /notify the ta*payer of his findings!he ta*payer ban) counsel s "ece#ber 10( 1988 letter is not a seasonable protest because it %as filed

thirty 5 06 days after receipt of the assess#ent on ctober 28( 1988. 5 Commissioner of )nternal Revenue v. !an8 of Philippine )slands, 7. R. $o. 1 0;2( pril 1 ( 200 6+=. %&!t !#e t&e #es0#i ti e e#iods fo# m!/in" !ssessments of inte#n!, #e enue t!3es * ,>77E,!E" $, ER?

a. !hree 5 6 years fro# the last day %ithin %hich to file a return or %hen the return %as actuallyfiled( %hiche+er is later 5,ec. 20 ( $'RC of 199 6. !he C'R has three 5 6 years fro# the date of actualfiling of the ta* return to assess a national internal re+enue ta* or to co##ence court proceedingsfor the collection thereof %ithout an assess#ent. D !an8 of Philippine )slands $ormerl& $ar ;ast !an8 and Trust Compan&5 v. Commissioner of )nternal Revenue, 7. R. $o. 1 9 2(


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Commissioner of )nternal Revenue, 7. R. $o. 1;28=2( "ece#ber 1;( 200 citing Commissioner of )nternal Revenue v. !.$. /oodrich Phils, )nc no7 Sime #ar(& )nternational Tire Co., )nc.5,., et al., 7.R.$o. 10 1 1( 3ebruary 2 ( 1999( 0 ,CR = ;

!he prescripti+e period %as precisely intended to gi+e the ta*payers peace of #ind.Commissioner of )nternal Revenue v. !.$. /oodrich Phils., )nc., et al .( 7.R. $o. 10 1 1( 3ebruary 2 (

199968 . Du#in" ?u,i!n!Bs ,ifetime &e# 'usiness !ff!i#s )e#e m!n!"ed '( t&e P&i,i ine T#ustCom !n( P&i,t#ust . S&e died on A #i, $ 661.T)o d!(s !fte# &e# de!t& P&i,t#ust tou"& itsT#ust Offi0e# fi,ed &e# In0ome T!3 Retu#n fo# 666 )it&out indi0!tin" t&!t ?u,i!n! died.On M!( 661 P&i,t#ust fi,ed ! e#ified etition )it& t&e RTC fo# ! ointment !s S e0i!,Administ#!to#. T&is )!s denied '( t&e 0ou#t )&o ! ointed one of t&e &ei#s !s S e0i!,Administ#!to#. P&i,t#ustBs motion fo# #e0onside#!tion )!s denied.Afte# !n in esti"!tion '( t&e 2IR of t&e de0edentBs in0ome t!3 ,i!'i,it( it sent on No em'e# 1<66$ ! dem!nd ,ette# !nd ! Noti0e of Assessment to ?u,i!n! 0@o P&i,t#ust !t t&e ,!tte#Bs !dd#ess)&i0& )!s st!ted in t&e 1==< In0ome T!3 Retu#n. No #es onse )!s m!de neit&e# )!s t&e 2IR!d ised t&!t ?u,i!n! !,#e!d( died.On ?une 1< 668 t&e 2IR Commissione# issued )!##!nts of dist#!int !nd ,e ( to enfo#0e0o,,e0tion of t&e defi0ien0( in0ome t!3 ,i!'i,it( )&i0& )!s se# ed on ?u,i!n!Bs &ei#. OnNo em'e# 668 t&e 2IR fi,ed )it& t&e est!te 0ou#t ! motion fo# !,,o)!n0e of 0,!im. T&e &ei# 0,!imed t&!t t&e#e )!s no #o e# se# i0e of t&e noti0e of !ssessment !nd t&!t t&e fi,in" of t&emotion )!s time-'!##ed. On t&e ot&e# &!nd t&e 2IR m!de t&e su'mission t&!t 'ot& t&eissu!n0e of t&e !ssessment noti0e !nd t&e motion )e#e !,, #o e#,( m!de onP&i,t#ust. Fu#t&e#mo#e t&e ,! se of t&e $6-d!( e#iod )it&in )&i0& to #otest m!de t&e!ssessment fin!, e3e0uto#( !nd un0ontest!',e !nd not time '!##ed.Ru,e on t&e 0onf,i0tin" 0,!ims of t&e !#ties.,>77E,!E" $, ER? ' %ould rule in fa+or of the heir.!here %as no proper ser+ice of the notice of assess#ent because the death of :uliana auto#aticallyse+ered the legal relationship of principal and agent bet%een her and Philtrust.!he se+eredrelationship could not be re+i+ed on the #ere fact that Philtrust filed her !a* Return t%o days after her death.Philtrust s failure to file a notice of death sub ects it to penal sanctions %hich do not include theindefinite tolling of the prescripti+e period for #a)ing deficiency ta* assess#ents( or the %ai+er of thenotice re&uire#ent for such assess#ents. 5 ;state of the late Juliana #iez %da. de /a(riel v.Commissioner of )nternal Revenue, 7.R. $o. 1=== 1( :anuary 2 ( 200 68$. %&!t is t&e #esum tion t&!t f,o)s f#om ! t!3 !(e#Bs f!i,u#e to #otest !n !ssessment *

,>77E,!E" $, ER? /!a* assess#ents by ta* e*a#iners are presu#ed correct and #ade ingood faith. !he ta*payer has the duty to pro+e other%ise. 'n the absence of proof of any irregularitiesin the perfor#ance of duties( an assess#ent duly #ade by a Bureau of 'nternal Re+enue e*a#iner and appro+ed by his superior officers %ill not be disturbed. ll presu#ptions are in fa+or of the

correctness of ta* assess#ents. 5 Commissioner of )nternal Revenue v. !an8 of Philippine )slands., 7(R. $o. 1 0;2( pril 1 ( 200 citing S& Po v. Court of Appeals, 7. R. $o. 4-81 ;( 18 ugust 1988(1; ,CR =2 ( = 0( citations o#itted68+. %&!t !#e t&e #e!sons fo# #esum tion of 0o##e0tness of !ssessments *,>77E,!E" $, ER?a. 4ifeblood theory


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b. Presu#ption of regularity 5 Commissioner of )nternal Revenue v. ?ante* Trading Co., )nc., 7( R. $o.1 ;9 =( nited ,tates ,upre#e Court on $o+e#ber 19( 19 6d. !he desirability of bolstering the record-)eeping re&uire#ents of the $'RC. 5 )(id. 688. i e inst!n0es )&e#e #im! f!0ie 0o##e0tness of ! t!3 !ssessment does not ! ,(.,>77E,!E" $, ER? !he / prima facie correctness of a ta* assess#ent does not apply upon proof that an assess#ent is utterly %ithout foundation( #eaning it is arbitrary and capricious. here the B'Rhas co#e out %ith a /na)ed assess#ent i.e.( %ithout any foundation character( the deter#ination of the ta* due is %ithout rational basis. D Commissioner of )nternal Revenue v. ?ante* Trading Co.,)nc., 7( R. $o. 1 ;9 =( ,

519 ;6 'n such a situation( /the deter#ination of the Co##issioner contained in a deficiencynotice disappears. D Commissioner of )nternal Revenue, supra citing a >.,. Court of ppeals ruling(in Clar8 and Clar8 v. Commissioner of )nternal Revenue, 2;; 3. 2d ;98 519=96 /Fence( thedeter#ination by the C! #ust rest on all the e+idence introduced and its ulti#ate deter#ination #ustfind support in credible e+idence. D Commissioner of )nternal Revenue, supra85. %&!t !#e t&e inst!n0es t&!t sus ends t&e #unnin" of t&e #es0#i ti e e#iods St!tute of Limit!tions )it&in )&i0& to m!/e !n !ssessment !nd t&e 'e"innin" of dist#!int o# ,e ( o# of !#o0eedin" in 0ou#t fo# t&e 0o,,e0tion in #es e0t of !n( t!3 defi0ien0ies*,>77E,!E" $, ER?a. hen the Co##issioner is prohibited fro# #a)ing the assess#ent( or beginning distraint( or le+y or proceeding in court and for si*ty 5;06 days thereafter@b. hen the ta*payer re&uests for and is granted a rein+estigation by the co##issioner@c. hen the ta*payer could not be located in the address gi+en by hi# in the return filed upon %hichthe ta* is being assessed or collected@d. hen the %arrant of distraint and le+y is duly ser+ed upon the ta*payer( his authoriAedrepresentati+e( or a #e#ber of his household %ith sufficient discretion( and no property could belocated@ ande. hen the ta*payer is out of the Philippines.?8;. T&e si"n!tu#es of 'ot& t&e Commissione# !nd t&e t!3 !(e# !#e #e9ui#ed fo# ! )!i e# of t&e#es0#i ti e e#iod ( thus a unilateral %ai+er on the part of the ta*payer does not suspend theprescripti+e period. D Commissioner of )nternal Revenue v. Court of Appeals, et al., 7.R. $o. 11= 12(3ebruary 2=( 1999 5Carnation case68


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?!nu!#( 1 1==+ to De0em'e# $1 1==+ s&o)ed defi0ien0( AT In0ome T!3 !nd %it&&o,din" T!3in t&e tot!, !mount of P1 ; mi,,ion. Du#in" t&e Se tem'e# 1==; info#m!, 0onfe#en0e )it&t&e Re enue Dist#i0t Offi0e# P?IBs Com t#o,,e# e3e0uted ! )!i e# of st!tute of ,imit!tions#o ided fo# unde# se0tions $ !nd + of t&e NIRC. On O0to'e# 8 1==< t&e 2IR issued ! P#e-Assessment Noti0e )&i0& )!s fo,,o)ed '( Assessment@Dem!nd No.$$-1-666;8;-=+ st!tin" !

tot!, defi0ien0( t!3es in t&e !mount of P111 mi,,ion fo# in0ome t!3 AT !nd e3 !nded)it&&o,din" t!3es in0,usi e of inte#est !nd 0om #omise en!,t(.On M!#0& 15 1=== t&e 2IR sent to P?I ! P#e,imin!#( Co,,e0tion Lette# to !( t&e !ssessment)it&in 16 d!(s f#om #e0ei t. On No em'e# 16 1=== ! Fin!, Noti0e 2efo#e Sei7u#e )!s issued"i in" P?I 16 d!(s f#om #e0ei t )it&in )&i0& to !(. P?I #e0ei ed t&e fin!, noti0e on No em'e# + 1=== !nd on No em'e# 5 1=== P?I !s/ed t&!t it 'e 0,!#ified on &o) t&e t!3 ,i!'i,it( of P111mi,,ion )!s !##i ed !t !nd #e9uested fo# !n e3tension of $6 d!(s f#om #e0ei t of t&e 0,!#ifi0!tion)it&in )&i0& to #e ,(. P?I tou"& ! fo,,o)-u ,ette# !sse#ted it ne e# #e0ei edAssessment@Dem!nd No. $$-1-666;8;-=+. On M!#0& < 666 P?I #e0ei ed ! %!##!nt of Dist#!int!nd@o# Le (. P?I t&en ! e!,ed to t&e CTA.T&e fo,,o)in" issues !#e fo# #eso,ution in t&e ! e!,>!. Does t&e CTA &! e 4u#isdi0tion o e# t&e ! e!, *'. %!s t&e %!i e# of t&e St!tute of Limit!tions !,id *0. %e#e t&e Assessment@Dem!nd !nd t&e %!##!nt of Dist#!int !nd@o# Le ( !,id *%i,, t&e ! e!, #os e#* E3 ,!in '#ief,( (ou# !ns)e#.

,>77E,!E" $, ER? Kes( it %ill prosper.a. !he C! has urisdiction to deter#ine if the %arrant of distraint and le+y issued by the B'R is +alidand to rule if the ai+er of the ,tatute of 4i#itations %as +alidly effected. !his is so because the C!has e*clusi+e appellate urisdiction to re+ie% by appeal decisions of the Co##issioner of 'nternalRe+enue in cases in+ol+ing /other #atters arising under the $ational 'nternal Re+enue Code or other la%s ad#inistered by the Bureau of 'nternal Re+enue. D,ec. 5a6 516. R. . $o. 112=( as a#ended byR. . $o. 92826 !hus it %as pre+iously ruled that the C! had urisdiction to act on a petition toin+alidate and annul the distraint orders of the Co##issioner. DKnares-,antiago( :. PhilippineJournalists, )nc. v. Commissioner of )nternal Revenue, 7. R. $o. 1;28=2( "ece#ber 1;( 200citing Panrto a v. #avid, 111 Phil. 19 @ 1 ,CR ;08 519;16 4i)e%ise upheld by the ,upre#e Court %asthe decision of the C! declaring se+eral %ai+ers e*ecuted by the ta*payer as null and +oid( thusin+alidating the assess#ents issued by the B'R. 5 )(id., citing Commissioner of )nternal Revenue v.Court of Appeals, 7. R. $o. 11= 12( 2= 3ebruary 1999( 0 ,CR ;1 6b. !he ai+er of the ,tatute of 4i#itations is not +alid because it did not specify a definite agreed datebet%een the B'R and P:'( %ithin %hich the for#er #ay assess and collect re+enue ta*es. 3urther#ore(the %ai+er is also defecti+e fro# the go+ern#ent side because it %as signed only by a re+enue districtofficer( and not the Co##issioner( as so re&uired.3inally( P:' %as not furnished a copy of the %ai+er.c. !he %ai+er docu#ent is inco#plete and defecti+e and thus the three-year prescripti+e period %ithin%hich to assess %as not tolled or e*tended and continued to run until pril 1 ( 1998. Conse&uently(

ssess#entH"e#and $o. -1-000 = -9 issued on "ece#ber 9( 1998 %as in+alid because it %asissued beyond the three 5 6 year period. 'n the sa#e #anner( the arrant of "istraint andHor 4e+y%hich P:' recei+ed on


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a. Re&uest for reconsideration %hich refers to a plea for re-e+aluation of an assess#ent on the basisof e*isting records %ithout need of additional e+idence. 't #ay in+ol+e both a &uestion of fact or of la%or both.b. Re&uest for rein+estigation %hich refers to a plea for re-e+aluation of an assess#ent on the basis of ne%ly-disco+ered e+idence or additional e+idence that a ta*payer intends to present in the

in+estigation. 't #ay also in+ol+e a &uestion of fact or la% or both. 5 Commissioner of )nternal Revenuev. Philippine /lo(al Communication, )nc., 7. R. $o. 1; 1 ;( ctober 1( 200; citing Re+. Regs. $o.12-8=651. %&!t is t&!t t( e of #otest t&!t sus ends t&e #unnin" of t&e st!tute of ,imit!tions fo# t&e'e"innin" of dist#!int o# ,e ( o# ! #o0eedin" in 0ou#t fo# 0o,,e0tion * %&( * ,>77E,!E" $, ER? 't is that type of protest /%hen the ta*payer re&uests for a rein+estigation%hich is granted by the Co##issioner 5,ec. 22 ( $'RC of 199 6( that suspends the running of thestatute of li#itations for collection of the ta*. 5 Commissioner of )nternal Revenue v. Philippine /lo(al Communication, )nc., 7. R. $o. 1; 1 ;( ctober 1( 200; citing ,ec. 2 1( no% ,ec. 22 ( $'RC of 199 6 hen a ta*payer de#ands a rein+estigation( the ti#e e#ployed in rein+estigation should bededucted fro# the total period of li#itation. D Commissioner of )nternal Revenue, supra citing Repu(lic v. :opez, 11 Phil. = =( = 8@ ,CR =;;( =;8-=;9 519; 6>ndoubtedly( a rein+estigation( %hich entails the reception and e+aluation of additional e+idence( %illta)e #ore ti#e than a reconsideration of a ta* assess#ent %hich %ill be li#ited to the e+idencealready at hand@ this ustifies %hy the for#er can suspend the running of the statute of li#itations oncollection of the assessed ta*( %hile the latter cannot. 5 Commissioner of )nternal Revenue v. Philippine/lo(al Communication, )nc., 7. R. $o. 1; 1 ;( ctober 1( 200; citing !an8 of Philippine )slands v.Commissioner of )nternal Revenue, 7. R. $o. 1 9 ;( 1 ctober 200=( ,CR 20=( 2 0-2 165 . A 0om #omise is ! 0ont#!0t %hereby the parties( by #a)ing reciprocal concessions( a+oid alitigation or put an end to one already co##enced. 5 rt. 2028( Ci+il Code6

co#pro#ise penalty could not be i#posed by the B'R( if the ta*payer did not agree. co#pro#isebeing( by its nature( #utual in essence re&uires agree#ent. !he pay#ent #ade under protest couldonly signify that there %as no agree#ent that had effecti+ely been reached bet%een the parties. 5 %da.de San Agustin, et al., v. Commissioner of )nternal Revenue ( 7. R. $o. 1 8 8=( ,epte#ber 10( 20016

5$. co#pro#ise is a contract %hereby the parties( by #a)ing reciprocal concessions( a+oida litigation or put an end to one already co##enced. 5 rt. 2028( Ci+il Code6

5+. co#pro#ise penalty could not be i#posed by the B'R( if the ta*payer did not agree. co#pro#ise being( by its nature( #utual in essence re&uires agree#ent. !he pay#ent #ade under protest could only signify that there %as no agree#ent that had effecti+ely been reached bet%eenthe parties. 5 %da. de San Agustin, et al., v. Commissioner of )nternal Revenue, /. R. No. -0 1 +,Septem(er -4, 344-5

58. !he follo%ing cases #ay( upon ta*payer s co#pliance %ith the basis for co#pro#ise( bethe sub ect #atter of co#pro#ise settle#ent?

a. "elin&uent accounts@

b. Cases under ad#inistrati+e protest after issuance of the 3inal ssess#ent $otice to the ta*payer %hich are still pending in the Regional ffices( Re+enue "istrict ffices( 4egal ,er+ice( 4arge!a*payer ,er+ice 54!,6( Collection ,er+ice( Enforce#ent ,er+ice and other offices in the $ationalffice@c. Ci+il ta* cases being disputed before the courts@d. Collection cases filed in courts@e. Cri#inal +iolations( other than those already filed in court( or those in+ol+ing cri#inal ta*fraud. 5,ec. 2( Re+. Regs. $o. 0-20026


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55. !a* cases %hich could not be the sub ect of co#pro#ise?a. ithholding ta* cases unless the applicant-ta*payer in+o)es pro+isions of la% that cast

doubt on the ta*payer s obligation to %ithhold.@b. Cri#inal ta* fraud cases( confir#ed as such by the Co##issioner of 'nternal Re+enue or

his duly authoriAed representati+e@

c. Cri#inal +iolations already filed in court@d. "elin&uent accounts %ith duly appro+ed schedule of install#ent pay#ents@e. Cases %here final reports of rein+estigation or reconsideration ha+e been issued resulting

to reduction in the original assess#ent and the ta*payer is agreeable to such decision by signing there&uired agree#ent for# for the purpose. n the other hand( other protested cases shall be handledby the Regional E+aluation Board 5REB6 or the $ational E+aluation Board 5$EB6 on a case to casebasis@

f. Cases %hich beco#e final and e*ecutory after final udg#ent of a court %here co#pro#iseis re&uested on the ground of doubtful +alidity of the assess#ent@ and

g. Estate ta* cases %here co#pro#ise is re&uested on the ground of financial incapacity of the ta*payer. 5,ec. 2( Re+. Regs. $o. 0-20026

5;. !he Co##issioner #ay co#pro#ise the pay#ent of any internal re+enue ta* %hen?a. reasonable doubt as to the +alidity of the clai# against the ta*payer e*ists pro+ided that

the #ini#u# co#pro#ise entered into is e&ui+alent to forty percent 5 0J6 of the basic ta*@ or b. !he financial position of the ta*payer de#onstrates a clear inability to pay the assessed

ta* pro+ided that the #ini#u# co#pro#ise entered into is e&ui+alent to ten percent 510J6 of thebasic assessed ta*'n the abo+e instances the Co##issioner is allo%ed to enter into a co#pro#ise only if the basic ta*in+ol+ed does not e*ceed ne #illion pesos 5P1(000(000.006( and the settle#ent offered is not lessthan the prescribed percentages. D,ec. 20 5 6( $'RC of 199'n instances %here the Co##issioner is not authoriAed( the co#pro#ise shall be sub ect to theappro+al of the E+aluation Board co#posed of the Co##issioner and the four 5 6 "eputyCo##issioners.

5


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f. !he assess#ents %ere issued on or after :anuary 1( 1998( %here the de#and notice allegedlyfailed to co#ply %ith the for#alities under ,ec. 228 of the $ational 'nternal Re+enue Code of 199 @or g. ssess#ents #ade based on the /Best E+idence btainable Rule and there is reason to belie+ethat the sa#e can be disputed by sufficient and co#petent e+idence@ or

h. !he assess#ent %as issued %ithin the prescripti+e period for assess#ent as e*tended by theta*payer s e*ecution of ai+er of the ,tatute of 4i#itations the +alidity or authenticity of %hich isbeing &uestioned or at issue and there is strong reason to belie+e and e+idence to pro+e that it is notauthentic. 5,ec. ( 1( Re+. Regs. $o. 0- 0026;6. !he offer to co#pro#ise based on financial incapacity #ay be accepted upon sho%ing that?

a. !he corporation ceased operation or is already dissol+ed Pro+ided( that ta* liabilitiescorresponding to the ,ubscription Recei+able or ssets distributedHdistributable to the stoc)holdersrepresenting return of capital at the ti#e of cessation of operation or dissolution of business shall notbe considered for co#pro#ise@ or b. !he ta*payer( as reflected in its latest Balance ,heet supposed to be filed %ith the Bureau of 'nternal Re+enue( is suffering fro# surplus or earnings deficit resulting to i#pair#ent in the originalcapital by at least =0J( pro+ided that a#ounts payable to due to stoc)holders other than business-related transactions %hich are properly ineludible in the regular /accounts payable are by fiction of la% considered as part of capital and not liability( and pro+ided further that the ta*payer has nosufficient li&uid asset to satisfy the ta* liability@ or c. !he ta*payer is suffering fro# a net%orth deficit 5total liabilities e*ceed total assets6 co#puted bydeducting total liabilities 5net of deferred credits and a#ounts payable to stoc)holdersHo%nersreflected as liabilities( e*cept business-related transactions6 fro# total assets 5net of prepaide*penses( deferred charges( pre-operating e*penses( as %ell as appraisal increases in fi*ed assets6ta)en fro# the latest audited financial state#ents( pro+ided that in the case of an indi+idual ta*payer(he has no other le+iable properties under the la% other than his fa#ily ho#e@ or d. !he ta*payer is a co#pensation inco#e earner %ith no other source of inco#e and the fa#ily sgross #onthly co#pensation inco#e does not e*ceed( if single( P10(=00 or less( or if #arried(%hose salary together %ith his spouse is P21(000 per #onth( or less( and it appears that theta*payer possesses no other le+iableHdistrainable assets other than his fa#ily ho#e@ or e. !he ta*payer has been declared by any co#petent tribunalH authorityHbodyHgo+ern#ent agency asban)rupt or insol+ent. 5,ec. . 2( Re+. in relation to ,ec. .1.1 both of Regs. $o. 0- 0026;1. %&!t is t&e #es0#i ti e e#iod fo# 0o,,e0tin" inte#n!, #e enue t!3es * ,>77E,!E" $, ER? !here are four 5 6 prescripti+e periods for the collection of an internalre+enue ta*?a. Collection upon a false or fraudulent return or no return %ithout assess#ent. 'n case of a false or fraudulent return %ith the intent to e+ade ta* or of failure to file a return( /a proceeding in court for thecollection of such ta* #ay be filed %ithout assess#ent( at any ti#e %ithin ten 5106 years after thedisco+ery of the falsity( fraud or o#ission. D,ec. 222 5a6( $'RC of 199 6

b. Collection upon a false or fraudulent return or no return %ith assess#ent. ny internal re+enue ta*%hich has been assessed 5because the return is false or fraudulent %ith intent to e+ade ta* or of failureto fail a return6( %ithin a period of ten 5106 years fro# disco+ery of the falsity( fraud or o#ission / m!('e 0o,,e0ted '( dist#!int o# ,e ( o# '( ! #o0eedin" in 0ou#t )it&in fi e 8 (e!#s fo,,o)in" t&e!ssessment of t&e t!3 . D,ec. 222 5c6( in relation to ,ec. 222 5a6 $'RC of 199 ( e#phasis supplied6c. Collection upon an e*tended assess#ent. here a ta* has been assessed %ith the period agreedupon bet%een the Co##issioner and the ta*payer in %riting 5%hich should initially be %ithin three 5 6years fro# the ti#e the return %as filed or should ha+e been filed6( or any e*tensions before the


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e*piration of the period agreed upon( the t!3 “m!( 'e 0o,,e0ted '( dist#!int o# ,e ( o# '( !#o0eedin" in 0ou#t )it&in t&e e#iod !"#eed u on in )#itin" 'efo#e t&e e3 i#!tion of t&e fi e 8(e!# e#iod . !he period so agreed upon #ay be e*tended by subse&uent %ritten agree#ents #adebefore the e*piration of the period pre+iously agreed upon. D,ec. 222 5d6( in relation to ,ecs. 222 5b6and 20 ( $'RC of 199 ( e#phasis supplied6

d. Collection upon a return that is not false or fraudulent( or %here the assess#ent is not an e*tendedassess#ent. /E*cept as pro+ided in ,ection 222( internal re+enue ta*es shall be assessed %ithin three5 6 years after the last day prescribed by la% for the filing of the return( and no #o0eedin" in 0ou#t)it&out !ssessment fo# t&e 0o,,e0tion of su0& t!3es s&!,, 'e 'e"un !fte# t&e e3 i#!tion of su0&e#iod @ Pro+ided( !hat in case %here a return is filed beyond the period prescribed by la%( the three5 6 year period shall be co#puted fro# the day the return %as filed. 3or purposes of this ,ection( areturn filed before the last day prescribed by la% for the filing thereof shall be considered filed on suchlast day. 5,ec. 20 ( $'RC of 199 ( e#phasis supplied6 hen the B'R +alidly issues an assess#ent %ithin the three 5 6-year period( it has another three 5 6years %ithin %hich to collect the ta* due by distraint( le+y( or court proceeding. !he assess#ent of the ta* is dee#ed #ade and the three 5 6-year period for collection of the assessed ta* begins to runon the date the assess#ent notice had been released( #ailed or sent to the ta*payer. D !an8 of Philippine )slands $ormerl& $ar ;ast !an8 and Trust Compan&5 v. Commissioner of )nternal Revenue, 7. R. $o. 1 9 2( 77E,!E" $, ER? Kes. !he failure to first file a %ritten clai# for refund or credit is not fatal to apetition for re+ie% in+ol+ing a disputed assess#ent %here an assess#ent %as disputed but the protest%as denied by the Bureau of 'nternal Re+enue.

!o hold that the ta*payer has no% lost the right to appeal fro# the ruling on the disputedassess#ent and re&uire hi# to file a clai# for a refund of the ta*es paid as a condition precedent to hisright to appeal( %ould in effect re&uire of hi# to go through a useless and needless cere#ony that%ould only delay the disposition of the case( for the Co##issioner %ould certainly disallo% the clai#for refund in the sa#e %ay as he disallo%ed the protest against the assess#ent. !he la%( should not


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be interpreted as to result in absurdities . vda. de San Agustin., etc., v. Commissioner of )nternal Revenue, 7.R. $o. 1 8 8=( ,epte#ber 10( 2001 citing Roman Catholic Arch(ishop of Ce(u v.Collector of )nternal Revenue, ,CR 2 96

;8. %&!t is t&e n!tu#e of t&e t!3 !(e#Bs #emed( of eit&e# to !s/ fo# ! #efund of e30esst!3 !(ments o# to ! ,( t&e s!me in !(ment of su00eedin" t!3!',e e#iodsB t!3es *

$, ER? ,ec. ;9 of the 19 $'RC 5no% ,ec. ; of the $'RC of 199 6 pro+ides that anye*cess of the total &uarterly pay#ents o+er the actual inco#e ta* co#puted in the ad ust#ent or finalcorporate inco#e ta* return( shall either 5a6 be refunded to the corporation( or 5b6 #ay be creditedagainst the esti#ated &uarterly inco#e ta* liabilities for the &uarters of the succeeding ta*able year. !oease the ad#inistration of ta* collection( these re#edies are in the alternati+e and the choice of oneprecludes the other. ,ince the Ban) has chosen the ta* credit approach it cannot any#ore a+ail of theta* refund. Philippine !an8 of Communications v. Commissioner of )nternal Revenue, et al., 7.R. $o.11202 ( :anuary 28( 19996;5. %&!t is t&e “i##e o0!'i,it( #u,e” in 0,!ims fo# #efund !nd )&!t is t&e #!tion!,e 'e&indt&is * ,>77E,!E" $, ER? corporation entitled to a ta* credit or refund of the e*cessesti#ated &uarterly inco#e ta*es paid has t%o options? 516 to carry o+er the e*cess credit or 526 toapply for the issuance of a ta* credit certificate or to clai# a cash refund. 'f the option to carry o+er the e*cess credit is e*ercised( the sa#e shall be irre+ocable for that ta*able period.'n e*ercising its option( the corporation #ust signify in its annual corporate ad ust#ent return 5by#ar)ing the option bo* pro+ided in the B'R for#6 its intention either to carry o+er the e*cess credit or to clai# a refund. !o facilitate ta* collection( these re#edies are in the alternati+e and the choice of one precludes the other. D S&stra Philippines, )nc., v. Commissioner of )nternal Revenue, 7. R. $o.1 ;290( ,epte#ber 21( 200 citing Philippine !an8 of Communications v. Commissioner of )nternal Revenue ( ;1 Phil. 91; 519996

!his is )no%n as the irre+ocability rule and is e#bodied in the last sentence of ,ection ; of the !a* Code. !he phrase /such option shall be considered irre+ocable for that ta*able period#eans that the option to carry o+er the e*cess ta* credits of a particular ta*able year can no longer be re+o)ed.!he rule pre+ents a ta*payer fro# clai#ing t%ice the e*cess &uarterly ta*es paid? 516 as auto#aticcredit against ta*es for the ta*able &uarters of the succeeding years for %hich no ta* creditcertificate has been issued and 526 as a ta* credit either for %hich a ta* credit certificate %ill beissued or %hich %ill be clai#ed for cash refund. 5 S&stra Philippines, )nc., supra citing "e 4eon(Fector( !FE $ !' $ 4 '$!ER$ 4 REVE$>E C "E( ,e+enth Edition( 2000( p. 06

;;. In t&e (e!# 666 S(st#! de#i ed e30ess t!3 0#edits !nd e3e#0ised t&e o tion to0!##( t&em o e# !s t!3 0#edits fo# t&e ne3t t!3!',e (e!#. :o)e e# t&e t!3 due fo# t&e ne3tt!3!',e (e!# is ,o)e# t&!n e30ess t!3 0#edits. It no) ! ,ies fo# ! #efund of t&e un! ,ied t!30#edits. M!( its #efund 'e "#!nted * If t&e #efund is denied does S(st#! ,ose t&e un! ,ied t!30#edits * E3 ,!in '#ief,( (ou# !ns)e#.

,>77E,!E" $, ER? ,ystra s clai# for refund should be denied. nce the carry o+er

option %as #ade( actually or constructi+ely( it beca#e fore+er irre+ocable regardless of %hether thee*cess ta* credits %ere actually or fully utiliAed >nder ,ection ; of the !a* Code( a clai# for refundof such e*cess credits can no longer be #ade. !he e*cess credits %ill only be applied /againstinco#e ta* due for the ta*able &uarters of the succeeding ta*able years."espite the denial of its clai# for refund( ,ystra does not lose the unapplied ta* credits. !he a#ount%ill not be forfeited in fa+or of the go+ern#ent but %ill re#ain in the ta*payer s account. Petitioner #ay clai# and carry it o+er in the succeeding ta*able years( creditable against future inco#e ta*liabilities until fully utiliAed. 5 S&stra Philippines, )nc., v. Commissioner of )nternal Revenue, 7. R. $o.


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!a* credit generally refers to an a#ount that is subtracted directly fro# one s total ta* liability( anallo%ance against the ta* itself( or a deduction fro# %hat is o%ned.

ta* credit reduces the ta* due( including G%hene+er applicable G the inco#e ta* that is deter#inedafter applying the corresponding ta* rates to ta*able inco#e. 5 Commissioner of )nternal Revenue v.Central :uzon #rug Corporation, 7. R. $o. 1=9; ( pril 1=( 200=6

se( Re+alidation and !ransfer(issued by then ,ecretary of 3inance :ose !. Pardo on :uly 19( 2000( ,ec. '( B6

't is clear that a !CC is an underta)ing by the go+ern#ent through the B'R or " 3(ac)no%ledging that a ta*payer is entitled to a certain a#ount of ta* credit fro# either ano+erpay#ent of inco#e ta*es( a direct benefit granted by la% or other sources and instancesgranted by la% such as on specific unused input ta*es and e*cise

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