Beruflich Dokumente
Kultur Dokumente
TAX 2
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May a TP amend his tax return as a matter of Rohm Apollo Semiconductor Phil. v. CIR
right? § Although TP is allowed to amend its returns, the
§ Yes, subject to the following conditions: amendment so allowed does not extend as to give
— The amendment is made within 3 years from the filing of support to TP’s allegations in its pleadings that are
the return; and contradictory to the existing evidence on record
— No notice for investigation or audit of such return,
statement or declaration has, in the meantime, been
actually served upon the TP (§ 6(A))
Atty. Terence Conrad H. Bello Slide No. 3 Atty. Terence Conrad H. Bello Slide No. 4
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A. Procedure
Atty. Terence Conrad H. Bello 5 Atty. Terence Conrad H. Bello Slide No. 6
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C. PAN C. PAN
§ Must the BIR issue the TP a PAN before a FAN? Yes (§ § If TP fails to present evidence during the PAN stage, does
228) this mean that the TP is precluded from introducing
§ When may the BIR dispense with a PAN? Only in the ff. evidence in the FAN stage?
instances: – No. TP still entitled to protest the FAN and submit relevant
a. Mathematical error supporting docs. Failure to present evidence during PAN
b. Discrepancy bet. tax withheld and tax actually remitted stage (or even failure to respond to the PAN) not an implied
c. When TP opting for a refund or TCC carried over and admission of the correctness of the assessment
automatically applied excess credits against tax – It is only upon TP’s failure to file a protest upon receipt of
liabilities of the succeeding taxable quarter/s or year/s the FAN or to appeal the denial of the protest within the
d. Non-payment of excise tax prescribed periods would the FAN become final,
e. Transfer by exempt person of tax-free articles to non- unappealable and executory thereby negating TP’s right to
exempt persons (§ 228) present evidence precisely because the right to dispute the
assessment has prescribed and the court can no longer
acquire jurisdiction over the same
Atty. Terence Conrad H. Bello Slide No. 7 Atty. Terence Conrad H. Bello Slide No. 8
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C. PAN C. PAN
§ What is the BIR’s remedy then if TP fails to Pier 8 Arrastre and Stevedoring Services v. CIR
present evidence during the PAN stage? § Failure of TP to appear and/or to present evidence during
PAN stage, or even during the protest period does not mean
– BIR is entitled to issue a FAN based on its a waiver of the right to present any evidence to dispute the
findings assessment
§ Such failure is not equivalent to an implied admission of the
correctness of the tax assessment
§ It is only when TP fails to file a timely protest on the FAN or
fails to timely appeal the denial of the protest would the
assessment become final, unappealable and executory
thereby negating TP’s right to present evidence precisely
because the right to dispute the assessment has prescribed
and the court can no longer acquire jurisdiction over the
Atty. Terence Conrad H. Bello Slide No. 9
same
Atty. Terence Conrad H. Bello Slide No. 10
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C. PAN C. PAN
§ What if BIR issues a FAN without first issuing a PAN § See, however, the case of CIR v. Menguito which seems to hold that the
lack of a PAN is not fatal to the BIR so long as a FAN is served on the TP
(assuming the non-issuance of the PAN does not fall
– However, while the lack of a post-reporting notice and pre-
within the exceptions), will that invalidate the assessment notice is a deviation from the requirements under RR 12-
assessment? 85, the same cannot detract from the fact that formal assessments
were issued to and actually received by respondents in accordance
– Yes. Denial of due process. Even if TP had all the with Section 228 of the NIRC
opportunity to protest the FAN and submit relevant – Requirement that an assessment be satisfactorily proven to have
supporting documents? Can’t the BIR argue that all been issued and released or, if receipt thereof is denied, that said
that the due process clause requires is the assessment has been served on TP, applies only to a FAN, but not to
post-reporting notices or PAN
opportunity to be heard (which was satisfied when
– A post-reporting notice and PAN do not bear the gravity of a FAN;
TP protested the FAN and submitted relevant they merely hint at the initial findings of the BIR and invite the TP to
supporting documents)? an informal conference. Neither contains a declaration of the tax
– Must be raised though as an affirmative defense in liability of the TP or a demand for payment thereof. Hence, the lack
of such notices inflicts prejudice on the TP for as long as the latter is
the protest to the FAN (otherwise if not raised, might properly served a FAN
be considered waived)
Atty. Terence Conrad H. Bello Slide No. 11 Atty. Terence Conrad H. Bello Slide No. 12
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Atty. Terence Conrad H. Bello Slide No. 13 Atty. Terence Conrad H. Bello Slide No. 14
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D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
Atty. Terence Conrad H. Bello Slide No. 15 Atty. Terence Conrad H. Bello Slide No. 16
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D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
Atty. Terence Conrad H. Bello Slide No. 17 Atty. Terence Conrad H. Bello Slide No. 18
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D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
Atty. Terence Conrad H. Bello Slide No. 19 Atty. Terence Conrad H. Bello Slide No. 20
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D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
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D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment D. Req’t to Inform Taxpayer of Factual and Legal Basis of Assessment
CIR v. Enron Subic Power Corp. See, however, Samar-I Electric Cooperative v. CIR, G.R. No. 193100, Dec. 10, 2014 –
§ The advice of tax deficiency, given by the CIR to an employee of TP, There is substantial compliance when factual and legal basis can be found in a series
as well as the preliminary five-day letter, were not valid substitutes of correspondence between TP and the BIR (and not in the FAN/FLD)
for the mandatory notice in writing of the legal and factual bases of • TP Contention: the assessment is void since the FAN/FLD were silent as to the
the assessment. These steps were mere perfunctory discharges of nature and basis of the assessment
the CIR’s duties in correctly assessing a taxpayer • Held: Assessment upheld
§ The requirement for issuing a preliminary or final notice, as the • Prior to the informal conference, TP was already informed of the BIR findings and
case may be, informing a taxpayer of the existence of a deficiency was furnished a summary of report of investigation
tax assessment is markedly different from the requirement of what • Attached to the PAN was a Details of Discrepancy with an explanation of the BIR’s
such notice must contain. Just because the CIR issued an advice, a factual and legal basis
preliminary letter during the pre-assessment stage and a final • In response to the TP’s reply to the PAN, the BIR addressed the arguments raised
notice, in the order required by law, does not necessarily mean that by TP in its reply
TP was informed of the law and facts on which the deficiency tax • Although the FAN/FLD were not accompanied by a written explanation of the
assessment was made factual and legal basis of the assessment, the BIR’s letter responding to TP’s
§ The law requires that the legal and factual bases of the assessment protest against the FAN/FLD explained the factual and legal basis of the
be stated in the formal letter of demand and assessment notice assessment
pursuant to RR 12-99 • Considering the exchange of correspondence and documents between TP and the
BIR, there was substantial compliance wit Sec. 228 of the 1997 NIRC
Atty. Terence Conrad H. Bello Slide No. 23 Atty. Terence Conrad H. Bello Slide No. 24
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§ § 228 requires the TP to submit all relevant supporting H. Tambunting Pawnshop, Inc. v. CIR
docs within 60 days from filing the protest. What is the
effect if the TP fails to comply with this req’t? § “Relevant supporting documents” refers to such
– The assessment becomes final, executory and documents which the TP feels would be
demandable necessary to support his protest and not what
§ Who determines whether the TP has submitted “all the CIR feels should be submitted, otherwise,
relevant supporting documents?” TPs would always be at the mercy of the BIR
– The TP. “Relevant supporting documents” refers to which may require production of such
such documents which the TP feels would be documents which TP could not produce. In this
necessary to support his protest and not what the manner the assessment could easily become
CIR feels should be submitted, otherwise, TPs would final
always be at the mercy of the BIR which may require
production of such documents which TP could not
produce. In this manner the assessment could easily
become final
Atty. Terence Conrad H. Bello Slide No. 25 Atty. Terence Conrad H. Bello Slide No. 26
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CIR v. First Express Pawnshop § What is the BIR’s remedy then if it feels that
§ It cannot be said that respondent failed to submit relevant supporting the docs submitted by the TP are insufficient?
documents that would render the assessment final because when
respondent submitted its protest, respondent attached the GIS and
– Deny the protest and state that the
Balance Sheet. Further, petitioner cannot insist on the submission of supporting documents submitted by the
proof of DST payment because such document does not exist as TP failed to overturn the presumption of
respondent claims that it is not liable to pay, and has not paid, the DST
on the deposit on subscription
correctness of the assessment
§ The term “relevant supporting documents” should be understood as
those documents necessary to support the legal basis in disputing a tax
assessment as determined by the taxpayer. The BIR can only inform the
taxpayer to submit additional documents. The BIR cannot demand what
type of supporting documents should be submitted. Otherwise, a
taxpayer will be at the mercy of the BIR, which may require the
production of documents that a taxpayer cannot submit
Atty. Terence Conrad H. Bello Slide No. 27 Atty. Terence Conrad H. Bello Slide No. 28
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Dayrit v. Cruz
§ The assessments having become final and executory,
the CFI properly acquired jurisdiction
§ The aforesaid exclusive jurisdiction of the CTA arises
only in cases of disputed tax assessments. As noted
earlier, TPs’ letter dated October 7, 1972 asking for
reconsideration of the questioned assessments cannot
be considered as one disputing the assessments
because petitioners failed to substantiate their claim
that the deficiency assessments are contrary to law.
TPs asked for a period of thirty (30) days within which III. IN CASE OF DENIAL OF PROTEST
to submit their position paper but they failed to
submit the same nonetheless. Hence, TPs’ letter for a OR INACTION, APPEAL TO CTA
reconsideration of the assessments is nothing but a
mere scrap of paper
Atty. Terence Conrad H. Bello Slide No. 29 Atty. Terence Conrad H. Bello 30
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A. Scope of Jurisdiction of CTA/What is Appealable to CTA A. Scope of Jurisdiction of CTA/What is Appealable to CTA
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A. Scope of Jurisdiction of CTA/What is Appealable to CTA A. Scope of Jurisdiction of CTA/What is Appealable to CTA
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C. What Constitutes Denial of Protest/Decision on Disputed Assessment C. What Constitutes Denial of Protest/Decision on Disputed Assessment
Atty. Terence Conrad H. Bello Slide No. 39 Atty. Terence Conrad H. Bello Slide No. 40
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C. What Constitutes Denial of Protest/Decision on Disputed Assessment C. What Constitutes Denial of Protest/Decision on Disputed Assessment
Atty. Terence Conrad H. Bello Slide No. 41 Atty. Terence Conrad H. Bello Slide No. 42
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C. What Constitutes Denial of Protest/Decision on Disputed Assessment C. What Constitutes Denial of Protest/Decision on Disputed Assessment
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C. What Constitutes Denial of Protest/Decision on Disputed Assessment C. What Constitutes Denial of Protest/Decision on Disputed Assessment
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C. What Constitutes Denial of Protest/Decision on Disputed Assessment C. What Constitutes Denial of Protest/Decision on Disputed Assessment
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C. What Constitutes Denial of Protest/Decision on Disputed Assessment C. What Constitutes Denial of Protest/Decision on Disputed Assessment
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51 52
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E. Mode of Appeal and Effect of Appeal E. Mode of Appeal and Effect of Appeal
1. What is the TP’s remedy in case the BIR denies the protest 3. What is the TP’s remedy in case the CTA division issues an
(i.e., issues an adverse decision on the disputed adverse decision vs. the TP?
assessment ) or fails to act on the same within the 180-day § File an MR or new trial within 15 days from notice of
period? decision (RA 1125 § 11, 3rd par.)
§ Appeal the denial or the inaction to the CTA within 30 days § Upon issuance of resolution denying the MR or new
from the denial or from the lapse of the 180-day period by
filing a petition for review (RA 1125 § 11) trial, appeal the same to the CTA En Banc within 15
days from notice of the resolution (RA 1125 § 18;
§ A division of the CTA shall hear the appeal
Revised Rules of the CTA § 3(b), rule 8)
2. What is the effect of the appeal on the disputed 4. May the TP appeal the adverse decision directly to the CTA
assessment?
En Banc without filing an MR?
§ Gen. rule: the appeal will not suspend the payment, levy,
distraint and/or sale of any property of the TP for the § No. Appeals to the CTA En Banc must be preceded by
satisfaction of his tax liability (RA 1125 § 11, 4th par.) the timely filing of an MR new trial with the CTA
§ Exception: when the collection will jeopardize the interest of division (Revised Rules of the CTA § 1, rule 8; see also
the gov’t or the TP (court will issue an injunction provided RA 1125 § 18)
amount claimed is deposited or surety bond is posted for not
more than 2x the amount claimed)
Atty. Terence Conrad H. Bello Slide No. 53 Atty. Terence Conrad H. Bello Slide No. 54
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Atty. Terence Conrad H. Bello Slide No. 55 Atty. Terence Conrad H. Bello 56
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1. Cases –
Chemical Industries of the Phil., Inc. v. CIR
§ Held: the March 31, 1998 ruling request addressed to the
Deputy Commissioner is not a claim for refund but a letter
requesting for a ruling for the refund of the tax allegedly paid
by TP
§ The ruling request is not the written claim for refund required
by law before a judicial refund claim may be filed with the CTA
§ The stock transaction tax was not illegally or erroneously
assessed or collected
§ No allegation that at the time the stock transaction tax was
paid, no such tax was due and payable; in other words, there
V. REFUND AND/OR TAX CREDIT OF was no allegation that the payment therefore was erroneous
ERRONEOUSLY PAID TAX § The share sale was already perfected and remained effective
until one or more of the resolutory conditions occurred; such
being the case, the payment of the tax was proper and legal
Atty. Terence Conrad H. Bello 57 Atty. Terence Conrad H. Bello Slide No. 58
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1. Cases – 1. Cases –
CIR v. Cebu Portland Cement BPI Securities Corp. v. CIR
§ Moreover, it appears that the memorandum-report has not yet
§ Held: The argument that the assessment cannot as yet be ripened into a formal assessment duly approved by the Regional
enforced because it is still being contested loses sight of the Director or by the CIR
urgency of the need to collect taxes as “the lifeblood of the § Thus, the same can proceed independently of the claim for refund
government” and its merits or demerits may be determined in separate
proceedings as provided for in the Tax Code
§ If the payment of taxes could be postponed by simply § The principle that taxes are not subject to set-off or legal
questioning their validity, the machinery of the state would compensation must govern, especially in this case where the taxes
grind to a halt and all government functions would be and the taxpayer's claim are not fully liquidated, due and
paralyzed demandable
§ This is the reason for the existence of the anti-injunction rule § In this case, no assessment, whether tentative or final, has been
issued to petitioner. Consequently, we do not find any reason to
§ To require CIR to actually refund to TP the amount of the deviate from the above rulings. Thus, the argument of the
judgment debt, which he will later have the right to distrain respondent that petitioner's refund claim must be denied on the
for payment of its sales tax liability is in our view an idle ritual basis of the findings and recommendation in the memorandum
issued by the Revenue Officer does not deserve consideration
§ We hold that the CTA erred in ordering such a charade v Question: what if there was already a FAN that the TP protested, would
the result be different?
Atty. Terence Conrad H. Bello Slide No. 63 Atty. Terence Conrad H. Bello Slide No. 64
63 64
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E. Offsetting Against Deficiency Assessments F. Liability of Government for Interest, Attorney’s Fees, Etc.
65 66
Atty. Terence Conrad H. Bello Slide No. 67 Atty. Terence Conrad H. Bello Slide No. 68
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69 70
Atty. Terence Conrad H. Bello 71 Atty. Terence Conrad H. Bello Slide No. 72
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Atty. Terence Conrad H. Bello 73 Atty. Terence Conrad H. Bello Slide No. 74
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Atty. Terence Conrad H. Bello Slide No. 75 Atty. Terence Conrad H. Bello Slide No. 76
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Phil. Journalists, Inc. v. CIR Appeal Remedy vs. Challenged BIR Issuances
§ Decision to issue a warrant of distraint and levy to § If the BIR issues a Rev. Regs., RMO or RMC that is
enforce collection of an assessment that was perceived to be contrary to law, what is the
already barred by prescription taxpayer’s appeal remedy?
§ Conflicting decisions on proper remedy
Atty. Terence Conrad H. Bello Slide No. 77 Atty. Terence Conrad H. Bello Slide No. 78
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§ Quasi-legislative – power to make rules and § What is the scope of the DOF’s review power under
regulations of general applicability Sec. 4?
– The Sec. of Finance only has the power of review
§ Quasi-judicial – power to hear and determine over interpretations of the CIR of the provisions of
questions of fact to which the legislative the NIRC or other tax laws
policy is to apply and to decide in accordance § What is covered by the CIR’s power of interpretation?
with the standards laid down by law; exercise – The power of administrative agencies, such as the
of power results to a decision or order BIR, to interpret and construe the statutes
affecting a named person or applying to a entrusted to them for implementation is an
specific situation and becoming final and exercise of the quasi-legislative power of
administrative agencies as distinguished from their
executory after the lapse of a certain period
quasi-judicial power
Atty. Terence Conrad H. Bello Slide No. 81 Atty. Terence Conrad H. Bello Slide No. 82
81 82
Atty. Terence Conrad H. Bello Slide No. 83 Atty. Terence Conrad H. Bello Slide No. 84
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Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
CIR v. Leal, 392 SCRA 9 (2002) Asia Int’l Auctioneers v. Parayno, G.R. 163445, Dec. 18,
§ Challenged RMOs/RMCs are actually rulings or 2007
opinions of the CIR implementing the Tax Code on § Citing Leal, Blaquera, SC held that assailed RMC is a
taxability of pawn shops ruling or opinion of the CIR on the tax treatment of
§ Jurisdiction to review rulings of the CIR, such as sale of motor vehicles in public auction within SBF
RMOs/RMCs, pertains to CTA, not RTC appealable to CTA
§ CTA has jurisdiction over decisions of the CIR on § Also held that failure of TPs to ask for
“other matters” arising under the Tax Code reconsideration of the assailed issuances is another
reason for dismissal of the case
Atty. Terence Conrad H. Bello Slide No. 85 Atty. Terence Conrad H. Bello Slide No. 86
85 86
Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
British American Tobacco v. Camacho, G.R. 163583, Aug. 20, 2008
Sunlife of Canada v. CIR, CTA Case No. 7833, Jan. 12,
§ While RA 9282 confers on CTA jurisdiction to resolve tax disputes
in general, this does not include case where the constitutionality 2009
of a law or rule is challenged § Decision of CIR to issue RMC clarifying taxability of
§ Where what is assailed is the validity or constitutionality of a law, insurance companies for MCIT, business tax and DST
or a rule or regulation issued by the administrative agency in the
purposes not a “decision” contemplated by Sec. 7 of
performance of its quasi-legislative function, the regular courts
have jurisdiction to pass upon the same RA 1125 that is appealable to the CTA
§ The determination of whether a specific rule or set of rules issued § Since principal relief sought is to declare null and
by an administrative agency contravenes the law or the void RMC 30-2008, the same is outside jurisdiction
constitution is within the jurisdiction of the regular courts
of CTA (citing British American Tobacco)
Atty. Terence Conrad H. Bello Slide No. 87 Atty. Terence Conrad H. Bello Slide No. 88
87 88
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Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
Philamlife v. Sec. of Finance, G.R. 210987, Nov. 24, 2014
Gorospe v. Vinzons-Chato, G.R. 132228, Jan. 21,
§ BIR issued a ruling denying the request of TP that the
2003 sale of shares at a price below FMV is not subject to
§ Petition before SC assailing validity of RMC donor’s tax
dismissed for non-exhaustion of administrative § BIR anchored denial on Rev. Regs 6-2008 which treats
remedies. SC held, citing Sec. 4: sale of shares at below FMV as “deemed donations”
subject to donor’s tax
Ø Petitioners should have asked CIR for a § TP’s Sec. 4 appeal of the adverse ruling to the Sec. of
reconsideration Finance denied
Ø If action on reconsideration is adverse, denial § TP appealed decision of the Sec. of Finance to the CA
(instead of the CTA), where it sought to invalidate
should have been appealed to SecFin
Atty. Terence Conrad H. Bello Slide No. 89 Atty. Terence Conrad H. Bello Slide No. 90
89 90
Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
Philamlife v. Sec. of Finance, G.R. 210987, Nov. 24, 2014 Banco de Oro v. RP, G.R. 198756, Jan. 13, 2015
§ Held: Reviews by the Secretary of Finance pursuant to Sec. 4 § BIR rulings subjecting to withholding tax on maturity of
of the NIRC are appealable to the CTA under “other matters” the so-called PEACe Bonds appealed directly to SC
§ Appellate power of the CTA includes certiorari pursuant to § SC held that non-exhaustion of administrative remedies
City of Manila v. Grecia-Cuerdo, G.R. 175723, Feb. 4, 2014 proper (purely question of law and urgency of judicial
§ City of Manila diametrically opposes British American intervention exceptions)
Tobacco to the effect that it is now within the power of the
CTA, through its power of certiorari, to rule on the validity of § Appeal of the questioned tax rulings to the Secretary of
a particular administrative rule or regulation so long as it is Finance would have been proper remedy (citing 1st par.
within its appellate jurisdiction. Hence, it can now rule not of Sec. 4)
only on the propriety of an assessment or tax treatment of § SC agreed with BIR that jurisdiction to review rulings of
a certain transaction, but also on the validity of the revenue the CIR pertains to the CTA, citing Leal and Blaquera
regulation or RMC on which the assessment is based
Atty. Terence Conrad H. Bello Slide No. 91 Atty. Terence Conrad H. Bello Slide No. 92
91 92
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Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
Banco de Oro v. RP, G.R. 198756, Aug. 16, 2016
Banco de Oro v. RP, G.R. 198756, Aug. 16, 2016 § CTA has undoubted jurisdiction to pass upon the constitutionality or
validity of a tax law or regulation when raised by the taxpayer as a
§ British American Tobacco case no longer controlling;
defense in disputing or contesting an assessment or claining a refund. It
SC reverting to its earlier decisions in Leal and Asia is only in the lawful exercise of its power to pass upon all matters brought
Auctioneers before it, as sanctioned by Section 7 of Republic Act No. 1125, as
amended
§ CTA has jurisdiction not only on indirect/collateral § CTA may likewise take cognizance of cases directly challenging the
attacks on the validity of BIR issuances, but also on constitutionality or validity of a tax law or regulation or adminstrative
issuance (revenue orders, revenue memorandum circulars, rulings)
cases directly challenging the constitutionality or
§ In other words, within the judicial system, the law intends the CTA to
validity of a tax law or regulation or administrative have exclusive jurisdiction to resolve all tax problems. Petitions for writs
issuance of certiorari against the acts or omissions of the said quasi-judicial
agencies [CIR, COC, SecFin, CBAA and Sec. of Trade and Industry] should,
thus, be filed before the Court of Tax Appeals.
Atty. Terence Conrad H. Bello Slide No. 93 Atty. Terence Conrad H. Bello Slide No. 94
93 94
Appeal Remedy vs. Challenged BIR Issuances Appeal Remedy vs. Challenged BIR Issuances
Recap: Recap:
1. Indirect (Collateral) Attack: e.g., denial of protest on 2. Direct Attack:
an assessment for alleged deficiency income tax and § Appeal RMC/RMO/Rev. Regs. to Secretary of
VAT on condominium dues on the basis of RMC 65- Finance pursuant to Sec. 4, 1st par.; then appeal
denial by SecFin to CTA on the basis of “other
2012 – appeal denial to CTA
matters” (Philam Life and BDO/PEACe bonds
case)
§ If exceptions to prior exhaustion of
administrative remedies apply, appeal directly to
CTA … or directly to SC (under the paramount
national transcendental exception)
Atty. Terence Conrad H. Bello Slide No. 95 Atty. Terence Conrad H. Bello Slide No. 96
95 96
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97 98
Atty. Terence Conrad H. Bello Slide No. 99 Atty. Terence Conrad H. Bello Slide No. 100
99 100
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Atty. Terence Conrad H. Bello Slide No. 101 Atty. Terence Conrad H. Bello Slide No. 102
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Atty. Terence Conrad H. Bello Slide No. 103 Atty. Terence Conrad H. Bello Slide No. 104
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4. How prescriptive period counted 5. Gen. rule: 3 years (ordinary prescription) – Sec. 203
CIR v. Primetown Prop. Group, Inc. 6. Exceptions: 10 years (extraordinary prescription)
§ When the law speaks of a “year,” it is understood to be § False/fraudulent return or no return – Sec.
12 calendar months
222(a)
§ A calendar month is “a month designated in the
calendar without regard to the number of days it may § Waiver of prescriptive period – Sec. 222(b)
contain” § Suspension of prescriptive period – Sec. 223
§ It is the “period of time running from the beginning of - CIR prohibited from assessing or collecting + 60 days
a certain numbered day up to, including, the - Request for reinvestigation by TP which is granted
corresponding numbered day of the next month, and if - TP cannot be located in address given in return
there is not a sufficient number of days in the next - No property to satisfy WDL
month, then up to and including the last day of that
month” - TP is out of the Philippines
Atty. Terence Conrad H. Bello Slide No. 105 Atty. Terence Conrad H. Bello Slide No. 106
105 106
6. Exception: false/fraudulent return or no return (10 6. Exception: false/fraudulent return or no return (10
years) years)
§ Question: what are the instances when the 10- Taligaman Lumber Co. v. CIR
year prescriptive period applies? § TP assessed deficiency sales tax
payment of taxes § BIR argued that TP did not file returns, hence, the 10-year
period applies
– No return § Held: no showing that returns were filed, hence, 10-year
§ Question: when do you start counting the 10- period applies
year period? § TP objects to the application of the 10-year prescriptive
period upon the ground that there is no affirmative
– Counted from discovery of falsity, fraud or evidence that it had not filed the corresponding returns for
omission the years 1948-1949
Atty. Terence Conrad H. Bello Slide No. 107 Atty. Terence Conrad H. Bello Slide No. 108
107 108
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6. Exception: false/fraudulent return or no return (10 6. Exception: false/fraudulent return or no return (10 years)
years) Aznar v. CTA
Taligaman Lumber Co. v. CIR § Ruling of CTA: 10-year period applies; substantial under-
declarations of income for 6 consecutive years
§ Thus the issue boils down to which of the two parties had demonstrate the falsity or fraudulence of the ITRs
the burden of proving such failure to file said returns.
§ Held: 10-year period applies; return of TP “false”, not
§ It is, however, clear that since prescription is one of the fraudulent
affirmative defenses set up by TP herein, it was incumbent § 3 instances justifying application of 10-year period: (a)
upon the latter, if it wanted to avail itself of the benefits of false return, (2) fraudulent return with intent to evade
Section 331 (5-year prescriptive period), to prove that it had payment of taxes, and (3) failure to file a return
submitted said returns, and that, having failed to do so, the § There is a difference between “false return” and
conclusion must be that no such returns had been filed and “fraudulent return”
that the Government had 10 years within which to make § “False return” implies deviation from the truth, whether
the corresponding assessments, as it did in this case intentional or not
§ “Fraudulent return” implies intentional or deceitful entry
with intent to evade the taxes due
Atty. Terence Conrad H. Bello Slide No. 109 Atty. Terence Conrad H. Bello Slide No. 110
109 110
6. Exception: false/fraudulent return or no return (10 years) 6. Exception: false/fraudulent return or no return (10 years)
Aznar v. CTA
§ The ordinary period of prescription of 5 years within which to assess tax liabilities CIR v. B.F. Goodrich
under Sec. 331 of the NIRC should be applicable to normal circumstances, but
whenever the government is placed at a disadvantage so as to prevent its lawful § CIR insists that TP committed “falsity” when it
agents from proper assessment of tax liabilities due to false returns, fraudulent
return intended to evade payment of tax or failure to file returns, the period of sold the property for a price lesser than its
ten years provided for in Sec. 332 (a) NIRC, from the time of the discovery of the
falsity, fraud or omission even seems to be inadequate and should be the one declared FMV
enforced
§ Issue: W/N the 50% fraud surcharge should apply (which the CTA imposed) § This fact alone did not constitute a false return
§ Held: No which contains wrong information due to
§ CTA erred in making no distinction between false returns (due to mistake,
carelessness or ignorance) and fraudulent returns (with intent to evade pay’t of mistake, carelessness or ignorance
tax)
§ Fraud cannot be presumed, but must be proven; fraud could not be deduced v This case thus establishes the rule that not all
from mistakes however frequent they may be
§ TP also cooperated with the BIR during the investigation, thus, negating bad faith
erroneous entries in the return will render the
§ Negligence, whether slight or gross, is not equivalent to fraud with intent to same “false” for purposes of applying the 10-yr.
evade tax
prescriptive period
Atty. Terence Conrad H. Bello Slide No. 111 Atty. Terence Conrad H. Bello Slide No. 112
111 112
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6. Exception: false/fraudulent return or no return (10 years) 6. Exception: false/fraudulent return or no return (10
Telesat, Inc. v. CIR years)
§ In order to render a return made by TP a “false return” Estate of Reyes. v. CIR
within the meaning of Sec. 223, there must appear a § TP contention: phrase “with intent to evade tax”
design to mislead or deceive on the part of the TP, or at qualifies both false and fraudulent returns; their
least culpable negligence supposed good faith in committing errors negates
§ A mistake not culpable in respect of its value would not intent to evade
constitute a false return
§ In fact SC has held that mere falsity of a return does not § Held: pursuant to Aznar, false return do not
merit the application of the 10-year prescriptive period necessarily mean with intent to evade taxes,
otherwise, there will be no distinction between false
§ The element of fraud as in the case of TP’s intent to and fraudulent returns
evade payment of the correct amount of tax, must be
clearly established § Returns “false” because there were substantial
§ TP was able to explain discrepancy as merely a timing underdeclarations of properties and substantial
difference due to accounting method overstatement of deductions
Atty. Terence Conrad H. Bello Slide No. 113 Atty. Terence Conrad H. Bello Slide No. 114
113 114
Atty. Terence Conrad H. Bello Slide No. 115 Atty. Terence Conrad H. Bello Slide No. 116
115 116
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Atty. Terence Conrad H. Bello Slide No. 117 Atty. Terence Conrad H. Bello Slide No. 118
117 118
Atty. Terence Conrad H. Bello Slide No. 119 Atty. Terence Conrad H. Bello Slide No. 120
119 120
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121 122
123 124
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Atty. Terence Conrad H. Bello Slide No. 125 Atty. Terence Conrad H. Bello Slide No. 126
125 126
1. Cases – 1. Cases –
Palanca v. CIR Palanca v. CIR
§ Following assessment of deficiency estate tax, WDL served on
TP, which was however not executed due to various requests § Summary remedy of distraint and levy is begun by the
for reinvestigation/re-computation filed by TP issuance of a WDL.
§ After repeated requests were denied and CIR was undertaking § The right of the CIR to collect by summary method has
steps to collect the deficiency (via execution of the WDL), TP the effect of stopping the running of prescription once a
argued that right of BIR to collect prescribed already
WDL is issued
§ Held: right to collect not yet prescribed
§ All that is required to stop the running of the period of § The issuance of the WDL begins the summary remedy of
limitation therein prescribed is to distraint or levy, or institute distraint and levy and that it is not necessary that it be
a proceeding in court, within 5 years after the assessment of actually executed to be made effective; not essential that
the tax. A judicial action for the collection of a tax is begun by the WDL be fully executed in order that it may have the
the filing of a complaint with the proper CFI, or where the effect of suspending the running of the statute of
assessment is appealed to the CTA, by filing an answer to the
TP’s petition for review wherein payment of the tax is prayed limitation upon collection of the tax
for
Atty. Terence Conrad H. Bello Slide No. 127 Atty. Terence Conrad H. Bello Slide No. 128
127 128
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1. Cases – 1. Cases –
129 130
1. Cases – 1. Cases –
RP v. Hizon CIR v. Wyeth Suaco Laboratories
§ July 18, 1986: assessment (became final and executory for § Dec. 19, 1974: TP received 2 assessment notices for deficiency
failure to contest) FWT on royalty payments and deficiency advance sales tax
§ Jan. 12, 1989: WDL issued, but not executed § Jan. 17 and Feb. 8, 1975: protest letters on the 2 assessments
§ Nov. 3, 1992: TP sought recon of assessment (denied by BIR on § Jan. 2, 1980: protest denied in part; revised assessment issued
Aug. 11, 1994) prompting TP to appeal to CTA
§ Jan. 1, 1997: collection case § Feb. 7, 1980: WDL issued (enjoined by CTA)
§ Held: collection enforcement by judicial action prescribed § Held: settled is the rule that the prescriptive period to collect
(out-of-time protest did not suspend period; assessment by distraint or levy or by a proceeding in court is interrupted
already demandable) once a TP requests for reinvestigation or reconsideration of
§ BIR, however, can still execute WDL having been timely issued the assessment
(sufficient that WDL issued before expiration of prescriptive
period; not necessary that WDL be executed)
Atty. Terence Conrad H. Bello Slide No. 131 Atty. Terence Conrad H. Bello Slide No. 132
131 132
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1. Cases – 1. Cases –
CIR v. Wyeth Suaco Laboratories CIR v. Wyeth Suaco Laboratories
§ Although the protest letters prepared by SGV & Co. in § Verily, the original assessments dated December 16
behalf of TP did not categorically state or use the words and 17, 1974 were both received by TP on December
19, 1974. However, when TP protested the
“reinvestigation” and “reconsideration,” the same are to be
assessments and sought its reconsideration in two
treated as letters of reinvestigation and reconsideration. (2) letters received by the BIR on January 20 and
§ By virtue of these letters, the BIR ordered its Manufacturing February 10, 1975, the prescriptive period was
Audit Division to review the assessments made. interrupted.
Furthermore, TP’s claim that it did not seek reinvestigation § This period started to run again when the BIR served
or reconsideration of the assessments is belied by the the final assessment to TP on January 2, 1980. Since
subsequent correspondence or letters written by its the WDL were served on TP on March 12, 1980,
officers, as shown above. then, only about four (4) months of the five-year
§ These letters of TP interrupted the running of the 5-year prescriptive period was used.
prescriptive period to collect the deficiency taxes.
Atty. Terence Conrad H. Bello Slide No. 133 Atty. Terence Conrad H. Bello Slide No. 134
133 134
1. Cases – 1. Cases –
BPI v. CIR BPI v. CIR
§ Service of WDL on TP on Oct. 23, 1992 was time-barred (BIR only
§ Oct. 20, 1989: TP received FAN dated Oct. 10, 1989 for had until Oct. 19, 1992 to enforce collection)
tax year 1985
§ Prescriptive period for collection of taxes can only be suspended
§ Nov. 17, 1989: TP filed protest requesting that by a request for reinvestigation (which is granted), not a request
assessment be “revoked and cancelled” for reconsideration
§ Oct. 23, 1992: TP received WDL dated Oct. 15, 1992 (not § Protest filed by TP did not constitute a request for reinvestigation
executed however) § Request for reconsideration refers to a plea for a re-evaluation of
§ Sept. 11, 1997: BIR denied protest (prompting TP to an assessment on the basis of existing records without need of
appeal to CTA) additional evidence. It may involve both a question of fact or of
law or both.
§ CTA ruled that right to collect not yet prescribed; request § Request for reinvestigation refers to a plea for re-evaluation of an
for reinvestigation is granted when the BIR entertains the assessment on the basis of newly-discovered or additional
request by not issuing a WDL evidence that a taxpayer intends to present in the reinvestigation.
§ Issue: W/N right of government to collect has prescribed It may also involve a question of fact or law or both
§ Wyeth Suaco clarified
§ Held: Yes
Atty. Terence Conrad H. Bello Slide No. 135 Atty. Terence Conrad H. Bello Slide No. 136
135 136
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1. Cases – 1. Cases –
Hambrecht & Quist v. CIR Hambrecht & Quist v. CIR
§ Feb. 15, 1993: TP informed BIR of change of business address § Issue: W/N CTA has jurisdiction to rule that right to collect has
prescribed
§ Nov. 4, 1993: TP received “tracer-letter” from A/R & Billing
Division of BIR demanding payment of deficiency taxes for 1989 § BIR Contention: when the law says that CTA has jurisdiction over
§ Dec. 3, 1993: TP protested deficiency assessment as set forth in “other matters,” it presupposes that the assessment has not become
tracer-letter final and unappealable. Thus, if the assessment has become final
§ Nov. 7, 2001: nearly 8 years later, TP received decision from BIR and unappealable, CTA has no jurisdiction to decide “other matters”
denying the protest on the ground that the protest was time- related to the assessment, such as, the issue on the right to collect
barred the same
§ Dec. 6, 2001: appeal to CTA (in a decision dated Sept. 24, 2004, § Held: CTA has jurisdiction
CTA held that that although the subject assessment notice sent by § We do not agree. Nowhere in the law does any limitation appear as
registered mail to TP’s former place of business has become final to the extent of the jurisdiction of the Court over “other matters”
and unappealable for failure to protest the same within the § The appellate jurisdiction of the CTA is not limited to cases which
period provided by law, nevertheless, the right of CIR in said case involve disputed assessments. The second part also covers other
to collect the assessed taxes has already prescribed) cases that arise out of the NIRC or other related laws administered
by the BIR
Atty. Terence Conrad H. Bello Slide No. 137 Atty. Terence Conrad H. Bello Slide No. 138
137 138
1. Cases – 1. Cases –
Hambrecht & Quist v. CIR Hambrecht & Quist v. CIR
§ As correctly pointed out by TP, a tax assessment deals with § A request for reconsideration or reinvestigation filed by a taxpayer,
how much taxes are due from a TP, while tax collection deals which has not been seasonably filed, does not interrupt the
prescriptive period to collect taxes appropriately assessed
with the whole process of collecting the same from the TPs.
Therefore, it can really happen, as in this case, that while there § In the instant case, the Original Division of this Court found the
assessment issued against herein respondent, HQPI to be final and
may no longer be any dispute on the assessment as it has unappealable because its motion for reconsideration/reinvestigation
become final, there is still an existing controversy pertaining to was filed out of time. This being so, CIR should have instituted
the right of the BIR to legally collect the assessed taxes collection proceedings within the 3-year period from assessment,
§ CIR must make a tax assessment within 3 years after the either by distraint or levy, or by judicial action. Apparently, the BIR
correspondent return is filed. However, no action can be did not initiate collection proceedings within the period provided by
brought by it for the recovery of the tax after the lapse of that law to enforce the assessment, and the TP had the legal right to
period in case no assessment has been made. Any tax assessed assail the same when it filed the petition
must in turn be collected by the remedies provided by law, i.e. § Correspondingly, the Original Division of this Court appropriately
distraint or levy, within 3 years following the assessment save possessed the jurisdiction to act on said case because the officers of
the BIR should not be allowed to benefit from their neglect in
in cases specified by law collecting taxes from the TP within the reglementary period
Atty. Terence Conrad H. Bello Slide No. 139 Atty. Terence Conrad H. Bello Slide No. 140
139 140
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Atty. Terence Conrad H. Bello Slide No. 141 Atty. Terence Conrad H. Bello Slide No. 142
141 142
1. Cases – 1. Cases –
Collector v. Sweeney
Collector v. Sweeney
§ TP, a non-stock, non-profit corporation, was assessed
deficiency fixed and percentage taxes for operating a bar § Held: as to the propriety of taking the case to the CTA
exclusively for its members before TPs received any advice as to the action taken, if any,
§ TP protested assessment (while protest pending, Club was on their petition for refund, this question has already been
dissolved) ruled upon by Us to the effect that TPs need not wait for
§ CIR denied protest; sought to collect deficiency taxes from the action of the CIR on the request for refund before
past presidents of Club taking the matter to court
§ Under threat of criminal prosecution for tax evasion, past
presidents paid the taxes under protest; on the same day, § Nowhere does the law imply that the CIR must act upon
past presidents filed refund claim the claim or that the TP shall not go to court before he is
§ Due to inaction of CIR on refund claim, past presidents notified of the CIR's action. Having filed his claim and the
appealed claim to CTA CIR having had ample time to study it, the claimant may,
§ CIR Contention: CTA has no jurisdiction over the case indeed should, within the statutory period of 2 years
because the CIR has yet to rule on the refund claim proceed with his suit without waiting for the CIR's decision
Atty. Terence Conrad H. Bello Slide No. 143 Atty. Terence Conrad H. Bello Slide No. 144
143 144
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1. Cases – 1. Cases –
Gibbs v. CIR
Collector v. Sweeney § TP assessed (protested; denied)
§ Oct. 3, 1956: TP paid tax under protest; at the same time,
§ Indeed, it must be observed that under said sought immediate refund
provisions, the TP’s failure to comply with the § Oct. 26, 1956: CIR denied refund claim (denial received
requirement regarding the institution of the by TP on Nov. 14, 1956)
action or proceeding in court within 2 years after § Sept. 26, 1957: 10 mos. after receiving the denial, TP
filed petition for review with CTA (dismissed by CTA;
the payment of the taxes bars him from the appeal filed more than 30 days from receipt of denial)
recovery of the same, irrespective of whether a § Issue: W/N judicial refund claim filed on time
claim for the refund of such taxes filed with the § Held: No, time-barred
§ TP Contention: although appeal was filed beyond 30-day
CIR is still pending action of the latter period, CTA still had jurisdiction over the same, by virtue
of NIRC § 306 (now § 229)
Atty. Terence Conrad H. Bello Slide No. 145 Atty. Terence Conrad H. Bello Slide No. 146
145 146
1. Cases – 1. Cases –
Gibbs v. CIR CIR v. CA
§ NIRC § 306 should be construed together with § 11 of RA
1125. In fine, a TP who has paid the tax, whether under § April 2, 1986: TP filed annual ITR for tax year 1985
protest or not, and who is claiming a refund of the same, must § ITR showed over-payment of quarterly income tax by P65k
comply with the requirements of both sections, that is, he § April 14, 1988: administrative refund claim
must file a claim for refund with the CIR within 2 years from
the date of his payment of the tax, as required by said NIRC § § April 15, 1988: judicial refund claim
306, and appeal to the CTA within 30 days from receipt of the § Issue: whether the 2-year period of prescription for filing a
CIR's decision or ruling denying his claim for refund, as claim for refund, as provided in § 230, is to be counted
required by said § 11 of RA 1125. If however, the CIR takes
time in deciding the claim, and the period of 2 years is about from April 2, 1986 when the corporate income tax return
to end, the suit or proceeding must be started in the CTA was actually filed or from April 15, 1986 when, according to
before the end of the two-year period without awaiting the § 70(b), the final adjustment return could still be filed
decision of the CIR. This is so because of the positive without incurring any penalty
requirement of § 306 and the doctrine that delay of the CIR in
rendering decision does not extend the peremptory period § Held: from April 2, 1986; hence, admin claim and judicial
fixed by the statute claim barred by prescription
Atty. Terence Conrad H. Bello Slide No. 147 Atty. Terence Conrad H. Bello Slide No. 148
147 148
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1. Cases – 1. Cases –
ACCRA Investments Corp. v. CA
CIR v. CA
§ April 15, 1982: TP filed annual ITR showing overpaid income
§ In the context of § 230, which provides for a 2-year tax arising from excess creditable withholding tax (withholding
period of prescription counted “from the date of agents remitted taxes withheld from income payments to TP
payment of the tax” for actions for refund of corporate from Feb. to Dec. 1981)
income tax, the 2-year period should be computed § Dec. 29, 1983: refund claim with BIR (no BIR action)
from the time of actual filing of the Adjustment Return § April 13, 1984: petition for review (dismissed by CTA;
reckoning point of 2-year prescriptive period is Dec. 31, 1981,
or Annual Income Tax Return. This is so because at that when taxes withheld were paid to BIR, not April 15, 1982,
point, it can already be determined whether there has when TP filed annual ITR)
been an overpayment by the TP. Moreover, under § § Held: 2-year prescriptive period is counted from April 15, 1982
49(a) of the NIRC, payment is made at the time the § As regards excess CWT, the 2-year period from the “date of
return is filed payment of the tax” is reckoned “when the tax liability falls
due”
Atty. Terence Conrad H. Bello Slide No. 149 Atty. Terence Conrad H. Bello Slide No. 150
149 150
1. Cases – 1. Cases –
ACCRA Investments Corp. v. CA
§ A TP whose income is withheld at source will be deemed to ACCRA Investments Corp. v. CA
have paid his tax liability when the same falls due at the
end of the tax year. It is from this latter date then, or when § It bears emphasis at this point that the rationale in
the tax liability falls due, that the 2-year prescriptive period computing the 2-year prescriptive period with
under § 306 (now part of § 230) starts to run with respect respect to the TP’s claim for refund from the time
to payments effected through the withholding tax system
(Gibbs v. CIR) it filed its FAR is the fact that it was only then that
§ W/N the TP is entitled to a refund is determined when the the TP could ascertain whether it made profits or
TP files its annual ITR on or before April 15, 1982 when its
tax liability for 1981 fell due incurred losses in its business operations. The
§ If we were to uphold the respondent appellate court in “date of payment,” therefore, in the herein TP’s
making the “date of payment” coincide with the “end of case was when its tax liability, if any, fell due upon
the taxable year,” the TP at the end of the 1981 taxable
year was in no position then to determine whether it was its filing of its final adjustment return on April 15,
liable or not for the payment of its 1981 income tax 1982
Atty. Terence Conrad H. Bello Slide No. 151 Atty. Terence Conrad H. Bello Slide No. 152
151 152
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1. Cases – 1. Cases –
CIR v. TMX Sales, Inc. CIR v. TMX Sales, Inc.
§ Issue: In a case involving overpaid corporate quarterly § Held: the most reasonable and logical application of the law
income tax, does the 2-year prescriptive period to claim a would be to compute the 2-year prescriptive period at the
refund of erroneously collected tax provided for in § 292 time of filing the FAR or the Annual Income Tax Return,
(now § 229) commence to run from the date the when it can be finally ascertained if the TP has still to pay
quarterly income tax was paid, or from the date of filing
additional income tax or if he is entitled to a refund of
of the Final Adjustment Return (final payment)?
overpaid income tax
§ Facts: May 15, 1981: TP filed quarterly income tax return
reporting income of P571k and paying income tax of § The filing of a quarterly ITRs and payment of quarterly
P247k income tax should only be considered mere installments of
the annual tax due. These quarterly tax payments which are
§ During subsequent quarters TP suffered net losses such
that when it filed its annual ITR on April 15, 1982, it computed based on the cumulative figures of gross receipts
reported a negative tax position and deductions in order to arrive at a net taxable income,
§ July 9, 1982: refund claim (not acted upon) should be treated as advances or portions of the annual
income tax due, to be adjusted at the end of the calendar
§ March 14, 1984: petition for review or fiscal year
Atty. Terence Conrad H. Bello Slide No. 153 Atty. Terence Conrad H. Bello Slide No. 154
153 154
1. Cases –
CIR v. TMX Sales, Inc.
§ In the case of Collector v. Prieto (2 SCRA 1007
[1961]), this Court held that when a tax is paid in
installments, the 2-year prescriptive period should
be counted from the date of the final payment. This
ruling is reiterated in CIR v. Palanca (18 SCRA 496
[1966]), wherein this Court stated that where the tax
account was paid on installment, the computation of IX. NON-RETROACTIVITY OF
the 2-year prescriptive period should be from the
date of the last installment RULINGS OR REGULATIONS
Atty. Terence Conrad H. Bello Slide No. 155 Atty. Terence Conrad H. Bello 156
155 156
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§ Sec. 246: Any revocation, modification or reversal of any of § Gen. rule: the government is not bound by
the rules and regulations shall not be given retroactive the mistakes of its agents
application if the revocation, modification or reversal will
be prejudicial to the taxpayers, except in the following § Exception: Sec. 246
cases: § Rationale: justice and fair play
• Where the taxpayer deliberately misstates or omits
– Because the “opinion or ruling of the
material facts;
Commissioner of Internal Revenue, the agency
• Where the facts subsequently gathered by BIR are tasked with the enforcement of tax laws, is
materially different from the facts on which the ruling accorded much weight and even finality, when
is based; or there is no showing that it is patently wrong,” “a
• Where the taxpayer acted in bad faith taxpayer cannot be convicted for taking the tax
authorities at their word
Atty. Terence Conrad H. Bello Slide No. 157 Atty. Terence Conrad H. Bello Slide No. 158
157 158
159 160
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161 162
41