Tax Remedies - Mcle Lecture

Taxpayer’s Remedies
By: Atty. Carlos G. Baniqued

I. INVESTIGATION AND
EXAMINATION PROCESS
2 Baniqued & Baniqued

A. Service of Letter of Authority

Service of Letter of Authority
• Do not ignore LA.
• Assessment notice likely to be issued, if ignored.
• Worse, criminal action to be filed for non-submission of books,
etc.
• LA being misplaced - not an excuse.

Amending Tax Return
 Once served an LA, taxpayer (TP) may no longer amend tax
return.
 Amending tax return a matter of right
 If done within 3 years from filing of the return; and
 TP not yet served with LA or notice for investigation or audit (§ 6(A))

Submission of Documents
 Review documents thoroughly before submission
 Evaluate and manage potential risks related to some
documents (e.g., non-compliance with formalities for
invoices, failure to withhold, etc.)
 TP’s receiving copy should be stamped received.

B. Notice of Informal Conference

Notice of Informal Conference
 Does the BIR’s failure to issue a notice of informal
conference invalidate the assessment?
 No. The law only requires the issuance of a PAN prior to the
FAN.
 Notice of informal conference only a directory requirement
under RR 12-99.
 In fact, RR 18-2013 already deleted it, only to be restored by
Rev. Regs. No.

C. Issuance of Preliminary
Assessment Notice (PAN)

PAN
 Must the BIR issue the TP a PAN before a FAN? Yes (§ 228)
 When BIR may dispense with a PAN:
 Mathematical error
 Discrepancy bet. tax withheld and tax actually remitted
 When TP opting for a refund or TCC carried over and
automatically applied excess credits against tax liabilities of the
succeeding taxable quarter/s or year/s
 Non-payment of excise tax
 Transfer by exempt person of tax-free articles to non-exempt
persons (§ 228)

Officers Authorized to Issue Assessment Notice
 The Commissioner or his duly authorized representative may issue the
Preliminary Assessment Notice (PAN), Formal Letter of Demand/Final
Assessment Notice (FLD/FAN), and Final Decision on Disputed
Assessment (FDAA).
 The term “duly authorized representative” refers to each of the Regional
Directors, the Assistant Commissioner for Large Taxpayers Service, and
the Assistant Commissioner for Enforcement and Advocacy Service.
 Thus, a taxpayer filing a protest against the PAN or FLD/FAN must file
the same with the duly authorized representative who signed the PAN or
FLD/FAN, or with the Commissioner himself if he personally signed the
assessment notice. Rev. Regs. No. 12-99, as amended by Rev. Regs. No.
18-2013; Rev. Mem. Cir. No. 11-2014, Feb. 18, 2014

PAN
 If TP fails to present evidence during the PAN stage, is he
precluded from introducing evidence in the FAN stage?
 No. TP still entitled to protest the FAN and submit relevant
supporting docs. Failure to present evidence during PAN stage
(or even failure to respond to the PAN) not an implied
admission of the correctness of the assessment.
 It is only upon TP’s failure to file a protest upon receipt of the
FAN or to appeal the denial of the protest within the prescribed
periods would the FAN become final, unappealable and
executory.

PAN
 What if BIR issues a FAN without first issuing a PAN
(assuming the non-issuance of the PAN does not fall within
the exceptions), will that invalidate the assessment?
 Yes. Denial of due process.
 Must be raised though as an affirmative defense in the protest to
the FAN. Otherwise if not raised, might be considered waived.

PAN
 Pilipinas Shell Petroleum Corp. v. CIR, 541 SCRA 316, 358-
360 (2007)
 The SC said TP was denied due process when the BIR did not
issue a PAN as required by RR 12-99 before cancelling the tax
credit certificates that TP used to pay its excise tax liabilities.

PAN
 CIR v. Metro Star Superama, Inc., 637 SCRA 633, 646-647
(2010)
 Similarly, in the above case where the taxpayer denied having
received a PAN and the BIR was unable to present any registry
receipt or a certification from the post office that it mailed the
PAN, or to explain why it failed to comply with the
requirement of service of the PAN, the SC declared the
assessment null and void.

D. Issuance of Final
Assessment Notice (FAN)

Req’t to Inform Taxpayer of Factual and
Legal Basis of Assessment
 What is the effect if the BIR fails to inform the TP of the
factual and legal basis of the assessment?
 Assessment is null and void because it violates not only the law
but the constitutional requirement of due process.
 Unless basis of deficiency assessment is thoroughly explained,
TP may not be able to fully prepare his defense.

Req’t to Inform Taxpayer of Factual and
Legal Basis of Assessment
 CIR v. Reyes, 480 SCRA 382, 396 (2006), citing Ang Ping v.
CA, 310 SCRA 343 (1999); see also CIR v. Enron Subic
Power Corp., 576 SCRA 212, 218 (2009) and Yao v. CA,
344 SCRA 202 (2000)
 Merely notifying the TP of the BIR’s findings without
informing the TP of factual and legal basis of the assessment is
insufficient.

Service of PAN/FAN
 By personal service on TP at his registered or known address
or wherever he may be found;
 If personal service not practicable, substituted service or by
mail may be resorted to.
 Substituted service done by leaving a copy of the PAN/FAN
with (a) clerk or person having charge of TP’s registered
business address, (b) person of legal age residing in TP’s place
of residence, or (c) barangay official in the presence of 2
disinterested witnesses.
 Service by mail – through registered mail or courier.

Period to Assess
 Gen. rule: 3 years (ordinary prescription) – Sec. 203]
 Note: two periods
 Period to Assess- 3 years
 Period to Collect- 5 years counted from the date of issuance of the FAN
 Exceptions:
 False/fraudulent return or no return – Sec. 222(a);
10 years (extraordinary prescription)
 Waiver of prescriptive period – Sec. 222(b)
 Suspension of prescriptive period – Sec. 223
 CIR prohibited from assessing or collecting + 60 days
 Request for reinvestigation by TP which is granted
 TP cannot be located in address given in return
 No property to satisfy WDL
 TP is out of the Philippines

Period to Assess
 Exception: false/fraudulent return or no return (10 years)
 Question: what are the instances when the 10-year prescriptive
period applies?
 False/fraudulent return with intent to evade payment of taxes
 No return
 Question: when do you start counting the 10-year period?
 Counted from discovery of falsity, fraud or omission

Period to Assess
 Under RR 17-2013, Sept. 27, 2013, the BIR requires taxpayers to
preserve their books of accounts, including subsidiary books and other
accounting records, for a period of 10 years (not 3 years) reckoned from
the day following the deadline in filing a tax return, or if filed after the
deadline, from the date of the filing of the tax return.
 Reasons given include (1) in case of fraud, falsity or omission to file a
return, the government has 10 years to assess, (2) the 3-year
prescriptive period is extended in case of an agreement to do so
between the taxpayer and the BIR, (3) in case there is a pending tax case,
protest or refund/tax credit claim, the books of accounts and other
records material to the case may be needed until the case is finally
resolved, and (4) in the case of tax-exempt entities or those granted tax
incentives, they are subject to periodic examination by the BIR for
purposes of ascertaining their compliance with the conditions for their
exemption or entitlement to incentives.

Period to Assess
 When is an assessment deemed made?
 Basilan Estates, Inc. v. CIR, 21 SCRA 17, 20-21 (1967)
 The assessment is deemed made when notice to this effect is
released, mailed or sent by the Collector to the taxpayer.
 It is not required that the notice be received by the taxpayer
within the five-year (now 3 years) prescriptive period.
 Presumption of regularity in the discharge of official functions.

Period to Assess
 Effect of filing an amended return
 What is the effect of filing an amended return?
 It has the effect of extending the prescriptive period to assess, if the
amendment is substantial.
 So, if prescription is about to set in, think twice before you

amend your tax return.You may be unwittingly extending
the statute of limitations.

Period to Assess
 Effect of filing a wrong return
 What is the effect of filing a wrong return?
 The effect is as if no return was filed (thus the applicable prescriptive
period is 10 yrs. from discovery of the omission to file a return, rather
than the 3-year ordinary prescriptive period). CIR v. Cebu Portland
Cement Co., 156 SCRA 535, 540 (1987), citing Butuan Sawmill, Inc. v.
CTA, 16 SCRA 277 (1966) and Bisaya Land Transportation Co., Inc. v.
Collector of Internal Revenue, G.R. Nos. L-12100 and L-11812, May 29,
1959.
 In Cebu Portland Cement, the TP filed sales tax return instead of ad
valorem.

Period to Assess
 Exception: waiver of prescriptive period
 In Revenue Memorandum Order No. 14-2016, dated April 4, 2016, the
BIR clarified that the waiver may be, but not necessarily, in the
form prescribed by RMO No. 20-90 or RDAO No. 05-01. Thus,
non-compliance of the waiver with the prescribed form shall not
invalidate the executed waiver, provided the waiver complies with
the following: (a) it is executed before the expiration of the period
to assess or to collect and the date of execution thereof is
specifically indicated in the waiver, (b) it is signed by the taxpayer
himself or his duly authorized representative and, in the case of a
corporation, by any of its responsible officials, and (c) the expiry
date of the period agreed upon to assess or collect beyond the 3-
year prescriptive period is indicated in the waiver.

Period to Assess
 Moreover, the waiver need not specify the particular taxes to be
assessed nor the amount thereof, with the exception of waivers for
collection of taxes which shall indicate the particular taxes
assessed. Reference to “all internal revenue taxes” is sufficient. The
waiver need not be notarized, it being sufficient that it is in
writing.
 The RMO further states that “since the taxpayer is the applicant
and the executor of the extension of the period of limitation for its
benefit in order to submit the required documents and accounting
records, the taxpayer is charged with the burden of ensuring that
the waivers of statute of limitation are validly executed by its
authorized representative” and the taxpayer may not contest the
authority of its representative in order to invalidate the waiver.

Period to Assess
 Finally, the RMO declares that “considering that the waiver is
a voluntary act of the taxpayer, the waiver shall take effect
and be binding on the taxpayer [immediately] upon its
execution thereof.”
 BIR’s reaction to the rampant practice of taxpayers of
contesting the validity of their own waivers of the statute of
limitations after having availed of the benefits thereof. BIR
thus shifted the burden of ensuring the validity of such
waivers to taxpayers.

Period to File Protest
 Cases –
 Pantranco v. Blaquera, 107 Phil. 975
 30-day appeal period is jurisdictional and non-extendible

Filing of Protest
 What is the procedure for protesting an assessment?
 Notice of informal conference – TP to respond within 15 days
from receipt of notice. Has since been discontinued.
 PAN – TP to respond within 15 days.
 FAN – TP to file a protest within 30 days.
 Relevant supporting documents – to be submitted by TP within
60 days from the filing of the protest.
 Appeal to CTA – within 30 days from denial of protest or
within 30 days from the lapse of 180 days from submission of
relevant supporting documents.

Filing of Protest
 TP to indicate whether his protest is in the nature of a
request for reconsideration or a request for reinvestigation. If
the latter, TP to specify newly discovered or additional
evidence to be presented;
 Protest to indicate date of assessment notice; and
 Protest to state the applicable law, rules and regulations, or
jurisprudence on which it is based.
 Failure to comply with all of the above shall render the
protest void and without force and effect. RR 18-2013, Nov.
28, 2013

Filing of Protest
 If there are several issues involved in the assessment notice
and the TP only protests or disputes some but not all, the
assessment pertaining to the unprotested issues shall become
final and demandable.
 Similarly, if the TP fails to state in his protest the applicable
law, rules and regulations, or jurisprudence on some of the
issues, the assessment pertaining to such issues shall become
final and demandable.
 [RR 18-2013, Nov. 28, 2013]

Submission of Supporting Documents
 § 228 requires the TP to submit all relevant supporting docs
within 60 days from filing the protest. What is the effect if the TP
fails to comply with this req’t?
 The assessment becomes final, executory and demandable
 Who determines whether the TP has submitted “all relevant
supporting documents?”
 The TP. “Relevant supporting documents” refers to such documents
which the TP feels would be necessary to support his protest and not
what the CIR feels should be submitted; otherwise, TPs would always
be at the mercy of the BIR which may require production of such
documents which TP could not produce. CIR v. First Express
Pawnshop Company, Inc., 589 SCRA 253, 275 (2009)

Effect of Failure to File Protest
 Final Assessment Notice (FAN) becomes final and executory,
and the same may be collected through the summary
remedies of distraint and levy (WDL) or garnishment, or by
judicial action.
 Where the TP moved for a reconsideration of the deficiency
assessment and asked for 30 days within which to submit a
position paper but failed to submit such position paper, the
SC held that the TP’s letter-request for reconsideration was
nothing but a mere scrap of paper. Consequently, the
assessment became final and executory. Dayrit v. Cruz, 165
SCRA 571, 579-580 (1988)

 In general, if the Commissioner or his duly authorized
representative denies the protest, in whole or in part, the taxpayer
may appeal to the CTA within 30 days from receipt of the said
decision, or else the assessment shall become final, executory and
demandable. However, if the Commissioner’s duly authorized
representative is the one that denies the taxpayer’s protest, the
taxpayer may still appeal such decision to the Commissioner of
Internal Revenue within 30 days from receipt of the final decision
of the Commissioner’s duly authorized representative. In such a
case, it is the final decision of the Commissioner that is appealable
to the Court of Tax Appeals within 30 days from receipt thereof.
Sec. 3.1.5, Rev. Regs. No. 12-99; see also Rev. Regs. No. 18-2013,
Nov. 28, 2013, and Belle Corporation v. Commissioner of Internal
Revenue, CTA Case No. 8175, Sept. 18, 2012

E. Final Decision on Disputed
Assessment (FDAA)

What Constitutes Denial of Protest/Decision
on Disputed Assessment
 General rule: Final Decision on Disputed Assessment
(FDDA)
 Denial Stating It Constitutes the CIR’s Final Decision –
 St. Stephen’s Association and St. Stephen’s Chinese Girl’s
School v. CIR, 104 Phil. 314, 317-318 (1958)

 Thus, in CIR v. Union Shipping Corp., 185 SCRA 547, 551-
552 (1990), the SC enjoined the CIR to always indicate to TP
in clear and unequivocal language that his action on a
disputed assessment duly protested by the TP (e.g., denial,
issuance of a WDL, final notice before seizure, or filing of a
collection case in court) constitutes his final decision on the
matter. That way, the TP is clearly guided as to what next
course of action to take. This also deters the CIR from
unfairly making the TP grope in the dark and speculate as to
which action of the CIR constitutes the appealable decision.

 Final Notice Before Seizure
 CIR v. Isabela Cultural Corp., 361 SCRA 71, 76-79 (2001),
citing CIR v. Ayala Securities Corp, 70 SCRA 204, 209
(1976), Surigao Electric Co. v. CTA, 57 SCRA 523, 526
(1974), and CIR v. Union Shipping Corp., 185 SCRA 547
(1990)
 See also CIR v. Isabela Cultural Corporation, 515 SCRA 556,
56(2007)

 Final Demand Letter
 CIR v. Ayala Securities Corp., 70 SCRA 204, 209 (1976)
 Surigao Electric Co. Inc. v. CTA, 57 SCRA 523, 526 (1974)
 Oceanic Wireless Network, Inc. v. CIR, 477 SCRA 205, 211-
213 (2005)

 Filing of collection suit
 CIR v. Union Shipping Corp., 185 SCRA 547, 551-552
(1990)

 Issuance of WDL –
 CIR v. Algue, Inc., 158 SCRA 9, 12-13 (1988)
 Advertising Assoc., Inc. v. CA, 133 SCRA 765, 769-770
(1984)

Slide No. 57
F. In case of denial of protest or
inaction, appeal to CTA

Application of the 180-Day Rule
 Lascona Land Co. v. CIR, 667 SCRA 455 (2012) (CQB not
convinced; but later on the decision was incorporated in
Rules of Procedure)
 CIR has 180 days from TP’s submission of supporting
documents within which to decide the protest.
 In case of inaction, Sec. 228 gives the taxpayer two options:
 He may appeal to the CTA within thirty (30) days from the
lapse of the 180-day period; or
 He may wait until the CIR decides his protest before he elevates
his case to the CTA.

 Before the SC affirmed CTA’s decision in Lascona, the

Revised Rules of Procedure of the CTA approved and issued
by the SC on Nov. 22, 2005 already adopted Lascona (see §
3(a)(2), Rule 4 and § 3(a), Rule 8), even while the Lascona
decision was pending appeal before the SC.

 RCBC v. CIR, 491 SCRA 213, 220-221 (2006), 522 SCRA
144 (2007)
 Where the TP has availed of the first option, i.e., filing with
the CTA a petition for review which was however filed out of
time, he can not successfully resort to the second option,
i.e., awaiting the final decision of the CIR and appealing the
same to the CTA on the pretext that there is yet no final
decision on the disputed assessment because of the CIR’s
inaction.”
 Appeal options are mutually exclusive.

Mode of Appeal and Effect of Appeal
 What is the TP’s remedy in case the BIR denies the protest (i.e.,
issues an adverse decision on the disputed assessment ) or fails to
act on the same within the 180-day period?
 Appeal the denial or the inaction to the CTA within 30 days from the
denial or from the lapse of the 180-day period by filing a petition for
review (RA 1125 § 11)
 A division of the CTA shall hear the appeal.
 What is the effect of the appeal on the disputed assessment?
 Gen. rule: the appeal will not suspend the payment, levy, distraint
and/or sale of any property of the TP for the satisfaction of his tax
liability (RA 1125 § 11, 4th par.)
 Exception: when the collection will jeopardize the interest of the
gov’t or the TP (court will issue an injunction (“Suspension Order”)
provided amount claimed is deposited or surety bond is posted for
not more than 2x the amount claimed).

 What is the TP’s remedy in case the CTA division issues an adverse
decision vs. the TP?
 File an MR or new trial within 15 days from notice of decision (RA
1125 § 11, 3rd par.)
 Upon issuance of resolution denying the MR or new trial, appeal the
same to the CTA En Banc within 15 days from notice of the
resolution (RA 1125 § 18; Revised Rules of the CTA § 3(b), rule 8)
 May the TP appeal the adverse decision directly to the CTA En
Banc without filing an MR?
 No. Appeals to the CTA En Banc must be preceded by the timely
filing of an MR with the CTA division (Revised Rules of the CTA § 1,
rule 8; see also RA 1125 § 18)

 May the TP appeal the adverse decision of the CTA division
directly to the SC under Rule 45 (on a pure question of law)?
 No. Failure to file a motion for reconsideration of an assailed
decision of a CTA division, or at least file a petition for review
with the CTA en banc, before filing a petition for review with
the SC renders the assailed decision final and executory.
Commissioner of Customs v. Gelmart Industries Phil., Inc.,
G.R. No. 169352, February 13, 2009, 579 SCRA 272, 284-285
 It is no excuse that appealing to the CTA en banc (composed of
6 justices then) would have been a futile exercise inasmuch as 3
justices had concurred in the assailed decision. Ibid.

 However, appeal to the CTA En Banc applies only to final
decisions or rulings of the CTA division. Interlocutory orders
of the CTA division are not appealable to the CTA En Banc.
 Thus, in Mendez v. People, G.R. NO. 179962, June 11, 2014,
726 SCRA 203, 214-215, the Supreme Court held that a
certiorari brought to it under Rule 65 was proper because
what petitioner challenged was a resolution of the CTA
division that denied his opposition to the admission of an
amended information that the CTA believed did not
constitute a substantial amendment of the charge against the
petitioner.

 The SC similarly ruled in Commissioner of Internal Revenue v. Court of
Tax Appeals, G.R. Nos. 203054-55, July 29, 2015, 764 SCRA 212,
217-223, where the CTA in Division declared respondent CIR in
default for failure of the BIR lawyer to appear at the pre-trial
conference and thereafter scheduled the reception of petitioner’s
evidence ex parte. After the CTA Division denied the BIR’s Motion
to Lift Order of Default, the CIR filed directly with the Supreme
Court a Petition for Certiorari under Rule 65, instead of
appealing to the Court En Banc. The Supreme Court held that the
CIR was correct in filing the Petition for Certiorari since what the
CIR appealed was not a final judgment or order but rather an
interlocutory order.

 Likewise, a denial by the CTA Division of a motion to quash,

which is also an interlocutory order, is not a proper subject
of an appeal to the CTA En Banc. Santos v. People, et. al., 563
SCRA 341 (2008)

Scope of Jurisdiction of CTA/What is
Appealable to CTA
 Disputed Assessments, Refunds, etc.

 Decisions of the CIR on: (i) disputed assessments; (ii) refunds of
internal revenue taxes, fees, etc.; and (iii) other matters arising
under the NIRC or other tax laws.
 Inaction of the CIR on disputed assessments, refunds, etc.
 Local Tax Cases
 RTC decisions on local tax cases.

Appealable to CTA
 Customs Duties and Taxes

 Decisions of the COC: (i) on cases involving liability for duties
and taxes; (ii) seizure, detention and release of property; and
(iii) other matters arising under the TCCP and other customs
laws.
 Real Property Tax
 Decisions of the CBAA on appeal of real property tax matters
originally decided by the LBAA.

Appealable to CTA
 Decisions of DOF and DTI on certain matters
 Decisions of DOF Sec on customs cases elevated to him on
automatic review of COC decisions adverse to the government
under TCCP § 2315.
 Decisions of the DOF Sec on appeals from adverse rulings of
the BIR Commissioner. Philamlife General Insurance, G.R. No.
210987, Nov. 24, 2014
 Decisions of DTI Sec or DA Sec. involving dumping,
countervailing duties and safeguard measures.

Appealable to CTA
 Tax and Customs Criminal Offenses
 Original jurisdiction over criminal offenses arising from violation of
the NIRC, TCCP and other tax/customs laws where amount involved
is P1 million or more.
 Appellate jurisdiction over RTC decisions on criminal offenses where
amount involved is less than P1 million.
 Tax Collection Cases
 Original jurisdiction over tax collection cases involving final and
executory assessments where amount involved is P1 million or more.
 Appellate jurisdiction over RTC decisions on tax collection cases
where amount involved is less than P1 million.

Appealable to CTA
 Certiorari Power (City of Manila v. Hon. Grecia-Cuerdo, G.R. No. 175723, Feb.
4, 2014)
 The Supreme Court held that while the CTA charter does not expressly grant
certiorari power to the CTA, Section 1, Article VIII of the 1987 Constitution
provides nonetheless that “judicial power shall be vested in one Supreme Court
and in such lower courts as may be established by law and that judicial power
includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.”
The Supreme Court thus declared that the power of the CTA includes that of
determining whether or not the RTC committed grave abuse of discretion
amounting to lack of or in excess of jurisdiction in issuing an interlocutory
order in cases falling within the exclusive appellate jurisdiction of the CTA.

Appealable to CTA
 In City of Manila v. Hon. Grecia-Cuerdo, the city of Manila assessed private respondents
local business taxes that the latter challenged. However, because the city would not issue
their business licenses and permits unless they paid the disputed taxes assessed,
respondents were constrained to pay the assessment under protest. Thereafter,
respondents filed with the RTC a complaint for “Refund or Recovery of Illegally and/or
Erroneously-Collected Local Business Tax, Prohibition with Prayer to Issue TRO and
Writ of Preliminary Injunction”. The RTC granted respondents’ application for a writ of
preliminary injunction. The City of Manila filed a Motion for Reconsideration but the
RTC denied it. The City of Manila then filed a special civil action for certiorari with the
Court of Appeals assailing the RTC Orders granting the preliminary injunction and
denying the city’s Motion for Reconsideration. The CA dismissed the petition for lack of
jurisdiction and ruled that “since appellate jurisdiction over private respondents’
complaint for tax refund, which was filed with the RTC, is vested in the Court of Tax
Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA
9282), it follows that a petition for certiorari seeking nullification of an interlocutory
order issued in the said case should, likewise, be filed with the CTA.”

Appealable to CTA
 Similarly, the Court of Tax Appeals has original jurisdiction
over a petition for certiorari assailing the jurisdiction of the
Secretary of the Department of Justice in a preliminary
investigation involving violations of the Tariff and Customs
Code. See Bureau of Customs v. Devanadera, G.R. No. 193253,
Sept. 8, 2015, 770 SCRA 1, involving the dismissal by the
Secretary of Justice of BOC’s complaint-affidavit against
private respondents for violation of the TCCP on the ground
of lack of probable cause.

Appealable to CTA
The Tax Court held in Petron Corporation v. Commissioner of
Internal Revenue, Commissioner of Customs and Collector of
Customs, CTA Case No. 8544, 2nd Division, July 21, 2016,
that it can rule not only on the propriety of an assessment or
tax treatment of a certain transaction, but also on the validity
of the revenue regulation or revenue memorandum circular
on which the said assessment is based. Hence, absent an
assessment, the Tax Court was of the view that it may not
pass upon the validity of the revenue regulation or revenue
memorandum circular.

Appealable to CTA
The Tax Court’s holding in Petron Corporation v. Commissioner of
Internal Revenue, Commissioner of Customs and Collector of Customs finds
basis in the SC decision in Commissioner of Internal Revenue v. Court of
Tax Appeals, G.R. No. 207843, July 15, 2015, 763 SCRA 123, 134-
135, where the SC declared that “the phrase ‘other matters arising
under this Code”, as stated in the second paragraph of Section 4 of
the NIRC, should be understood as pertaining to those matters
directly related to the preceding phrase ‘disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties
imposed in relation thereto’ and must therefore not be taken in
isolation to invoke the jurisdiction of the CTA” pursuant to the
ejusdem generis principle in statutory construction.

Appealable to CTA
In other words, according to the Petron case, the term “other
matters arising under the NIRC” should be understood in
conjunction with, or in reference to, those matters over which
the CIR exercises quasi-judicial powers, such as disputed
assessments, refund claims, and fees, charges, or penalties
imposed in relation thereto, NOT to those matters falling within
the quasi-legislative power of the CIR. Consequently, since in the
instant case involving Petron, there was as yet no official
assessment issued by the Collector of Customs relating to excise
tax on the importation of alkylate, a blending component used in
the manufacture of ethanol-blended motor gasoline, but only the
CIR’s interpretation of a tax provision imposing excise tax on
alkylate for being allegedly a product of distillation similar to
naphta, Petron prematurely invoked the jurisdiction of the CTA.

Appealable to CTA
The recent Supreme Court decision in Banco de Oro v. CIR, et. al.,
G.R. No. 198756, Jan. 13, 2015, however, resolved the seeming
uncertainty on whether or not the CTA can pass upon the validity
or constitutionality of a revenue regulation, revenue
memorandum circular, or any revenue issuance for that matter
absent an assessment. The Supreme Court, reiterating its holding
in City of Manila v. Grecia-Cuerdo that the Tax Court has certiorari
power and, therefore, the power to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality
of the Government, it may pass upon the validity of any revenue
issuance even without an assessment.

 (BAR) Informer’s Reward. Questions involving the authority of the
Commissioner of Internal Revenue to enter into compromise of delinquent
accounts and entitlement of an informer to the informer’s reward are “matters
arising from the NIRC and other laws being administered by the BIR, thus,
appealable to the Court of Tax Appeals.” Similarly, in Meralco Securities
Corporation v. Savellano, where the Commissioner of Internal Revenue denied the
informant’s claim for informer’s reward on the ground that his tip for tax
evasion (allegedly being committed by Meralco Securities Corporation who
reported for tax purposes only 25% of the dividends received by it from
MERALCO under the law then applicable) had no factual and legal basis, the
Supreme Court held that the informant should have appealed to the CTA within
30 days, instead of filing a mandamus case with the Court of First Instance (now
RTC) to compel the Commissioner to assess Meralco Securities Corporation
and award him the informer’s reward. PNOC v. Court of Appeals, 457 SCRA
32, 76-77 (2005)
 117 SCRA 804 (1982)

Effect of Appeal to CTA
May the BIR review or revise an assessment that the taxpayer
has already appealed to the CTA? In Collector of Internal Revenue
v. Batangas Transportation Company, et. al., the Collector, before
filing an Answer with the CTA, increased the amount of the
assessment upon discovering some error in the crediting of
income taxes previously paid. The Supreme Court, although
not unanimously, permitted such action of the Collector on the
ground that (a) Government is not bound by the mistakes of its
agents and tax collectors, (b) multiplicity of suits will arise, and
(3) trial at the CTA is trial de novo any way. 102 Phil. 822
(1958)

G. Appeal to Supreme Court
• Generally, by way of Petition for Review under Rule 45 of final
decisions or orders of the CTA En Banc.
• By way of Petition for Certiorari under Rule 65 involving interlocutory
orders of the CTA in Division.

II. AVAILING OF COMPROMISE
AND ABATEMENT

Compromise and Abatement
 Grounds for Compromise and Minimum Rates under Section 204 (A):
 Reasonable doubt as to validity of assessment – 40% of basic tax; or
 TP’s financial incapacity – 10% of basic tax
 Where basic tax exceeds P1 Million, or where settlement offered is less
than aforesaid minimum rates, approval by NEB needed. Under Rev.
Regs. No. 9-2013, May 10, 2013, amending Rev. Regs. No. 30-2002, all
decisions of the NEB that are favorable to the taxpayer require the
concurrence of the CIR. By a mere RR, the CIR has vested unto herself
a veto power that Congress had not so provided in the law.
 Pay as you file. If offer rejected, outstanding assessment is reduced by
amount paid.
 All criminal violations may be compromised except (a) those already
filed in court, or (b) those involving fraud.

 Only the CIR has the power and authority to compromise
taxes. Otherwise, compromise is ultra vires and does not bar
the BIR from issuing an assessment on the same matter
covered by the compromise agreement. See Security Bank
Corp. v. CIR, 499 SCRA 453 (2006), which involved a
compromise agreement entered into with the BAP relating
to the DST assessment against member banks on non-
negotiable PNs.
 Non-remittance of withheld taxes non-compromisable, the
same being held in trust for Gov’t. PNOC v. CA, 457 SCRA
32, 100 (2005)

 Grounds for Abatement under Section 204 (B):
 Assessment appears to be unjust or excessive; or
 Administration and collection costs do not justify the
collection of the amount due.

 The CIR had in the past abated or condoned the payment of
interest, surcharge and compromise penalties in cases where
taxpayers relied on previous rulings that the CIR subsequently
revoked, where there was confusion resulting from difficult
questions of law, or where there were conflicting interpretations
or understanding of certain tax provisions.
 The CIR had also waived the imposition of surcharges, interests
and compromise penalties on Filipino and some alien employees of
foreign governments, embassies, diplomatic missions and
international organizations who erroneously believed that they
were exempt from income tax just like their employers.
 [Rev. Regs. No. 7-2013, April 29, 2013, as amended by Rev. Regs.
No. 8-2013, May 9, 2013]

III. COLLECTION AND
ENFORCEMENT PROCESS

A. Civil Action
• Summary remedies of WDL, garnishment, seizure, etc.
• Collection Case
• Anti-injunction rule vs. collection of taxes

Period to Collect
 Taxes assessed within prescriptive period may be collected by
distraint or levy or by a proceeding in court within 5 years
following the assessment of the tax. Sec 223(c)
 5-year period could be extended by agreement of the CIR
and the TP. Sec. 223(d)

Period to Collect
 Cases –
 RP v. Ablaza, 108 Phil. 1105 (1960)
 Rationale for prescriptive period:
To obligate the government to act promptly in the making of
assessment;
To protect TPs from unscrupulous tax agents

Period to Collect
 Cases –
 BPI v. CIR, 548 SCRA 105, 112-116 (2008), 473 SCRA 205
(2005)
 Prescriptive period for collection of taxes can only be suspended by a
request for reinvestigation (which is granted), not a request for
reconsideration.

Period to Collect
 Cases –
 BPI v. CIR, supra
 Request for reconsideration refers to a plea for a re-evaluation
of an assessment on the basis of existing records without need
of additional evidence. It may involve both a question of fact or
of law or both.
 Request for reinvestigation refers to a plea for re-evaluation of
an assessment on the basis of newly-discovered or additional
evidence that a taxpayer intends to present in the
reinvestigation. It may also involve a question of fact or law or
both.

B. Criminal Action
• Filing with DOJ for various offenses
• Run After Tax Evaders (RATE)

 May corporate officers and/or stockholders be held liable for
a corporation’s unpaid tax obligations?
 No. Due to separate personality of corp., its tax obligations
are personal to it and may only be enforced against it. Thus,
BIR may not collect the corp’s unpaid tax obligations from its
corporate officers or stockholders. Proton Pilipinas Corp. v.
Republic, 504 SCRA 528, 546 (2006), which involved
spurious TCCs assigned to Proton by unscrupulous
exporters.
 However, for violations of the penal provisions of the NIRC,
responsible officers of the corp. may be charged and held
criminally liable. See Secs. 253(d) and 256, NIRC.

IV. REFUND AND/OR TAX CREDIT OF
ERRONEOUSLY PAID TAX

Period to File Refund Claim
 ACCRA Investments Corp. v. CA, G.R. No. 96322, Dec. 20,
1991
 April 15, 1982: TP filed annual ITR showing overpaid income tax
arising from excess creditable withholding tax (withholding agents
remitted taxes withheld from income payments to TP from Feb. to
Dec. 1981).
 Dec. 29, 1983: refund claim with BIR (no BIR action).
 April 13, 1984: petition for review (dismissed by CTA; reckoning
point of 2-year prescriptive period is Dec. 31, 1981, when taxes
withheld were paid to BIR, not April 15, 1982, when TP filed annual
ITR).
 Held: 2-year prescriptive period is counted from April 15, 1982.
 See also CIR v. TMX Sales, Inc., G.R. No. 83736, Jan. 15, 1992

 Prescriptive Period for Input VAT on Zero-Rates Sales:
 Administrative claim should be filed with the BIR within 2 years
after the close of the taxable quarter when zero-rated sales were
made.
 CIR has 120 days from submission by TP of supporting documents
within which to decide admin claim.
 If 120 days expire without any decision by the CIR, or the CIR
denies the admin claim in full or in part, TP must appeal to the
CTA within 30 days from expiration of the 120-day period or
from receipt of the denial by the CIR.
 [CIR v. Aichi Forging Company of Asia, Inc., 632 SCRA 422, 442-
444 (2010); see also Mindanao II Geothermal Partnership v. CIR,
G.R. No. 193301, and Mindanao I Geothermal Partnership v.
CIR, G.R. No. 194637, both dated March 11, 2013]

Supervening Event Irrelevant. The Tax Court seems to have
brushed the above rule, however, in Commissioner of Internal Revenue v.
Meralco where the Tax Court held that the 2-year prescriptive period is
suspended by reason of equity and special circumstances. In the said
case, the decision of the Supreme Court ordering Meralco to refund
excess distribution charges to customers became final and executory on
May 5, 2003. On November 27, 2003, Meralco filed a claim for refund
of excess income tax payments for taxable year 1994 onwards on
account of the refund made to its customers. The BIR opposed the
refund claim on the ground of prescription. The Tax Court held in favor
of Meralco, stating that it was only after the decision of the Supreme
Court ordering the refund that the 2-year prescriptive period began to
run. The Court further explained that it was only then that Meralco
could ascertain the amount of the refund claim. CTA EB Case No. 773
(CTA Case No. 7242), Nov. 13, 2012

Leap Year
 In case of a leap year, one year is still deemed to consist of 12

calendar months and the number of days is irrelevant.
 See Commissioner of Internal Revenue v. Primetown Property
Group, 531 SCRA 436 (2007), where the taxpayer who filed its
1997 income tax return on April 14, 1998 filed a Petition for
Review with the Court of Tax Appeals on April 14, 2000 after its
claim for refund of excess or unutilized withholding taxes
remained unacted upon by the Commissioner despite submission
of supporting documents. Alleging that 2000 was a leap year, the
CTA dismissed the petition for being filed out of time. The
Supreme Court reversed.

Requirement to File Administrative
Claim
 The NIRC does not require that payment of the tax sought to
be refunded should have been made under protest. Ramie
Textiles, Inc. v. Mathay, 89 SCRA 586.
 However, filing a written claim for refund or tax credit with

the BIR is jurisdictional such that the non-filing of such
administrative claim would be fatal to the judicial claim
subsequently filed. CIR v. Acosta, 529 SCRA 177 (2007)

Requirement to File Administrative
Claim
 Under Section 229, the CIR may, even without a written
claim, refund or credit a tax if, on the face of the tax return,
such tax payment appears clearly to have been erroneously
paid.
 In fact, the SC in CIR v. PL Management Int’l Phils., Inc.,
647 SCRA 72 (2011), held that the 2-year period is not
jurisdictional and may be suspended for reasons of equity.
[Citing Oral and Dental College v. CTA, 102 Phil. 912
(1958), and CIR v. Philamlife Insurance Co., 244 SCRA
446].

Option to Carry-Over to Next Taxable Period or
Claim a Refund/Tax Credit
 Once the taxpayer has chosen to carry-over to the next taxable year the excess
withholding taxes for a particular taxable period, such election made is irrevocable.
Consequently, the taxpayer may not claim a refund or tax credit of the excess
withholding taxes that it had earlier elected to carry-over or apply to the next taxable
year or years.
 However, Section 76 of the NIRC allows certain exceptions to the irrevocability rule.
The exceptions include business transformation, such as when a corporation liquidates
and dissolves. In such a case, owing to the cessation of business, the corporation has no
more opportunity to utilize the excess credits. Consequently, it is but fair that the
dissolved corporation be allowed to opt for a refund of the unutilized excess credit even
if it previously chose the irrevocable option to carry-over such excess credits.
Commissioner of Internal Revenue v. Mirant (Philippines) Operations, Corporation,
G.R. No. 171742, June 15, 2011, and Mirant (Philippines) Operations, Corporation v.
Commissioner of Internal Revenue, G.R. No. 176165, June 15, 2011, 652 SCRA 80,
Commissioner of Internal Revenue v. PL Management International Phil. Inc., G.R. No.
160949, April 4, 2011; see also Philam Asset Management, Inc. v. Commissioner of
Internal Revenue, 477 SCRA 761; IMPSA Construction Corporation v. Commissioner
of Internal Revenue, CTA EB No. 685, May 24, 2011

Proper Party to File a Refund or Tax
Credit Claim
 For withholding taxes, either the payor/withholding agent
[CIR v. Wander Phils., Inc., 160 SCRA 573 (1988), or the
payee/income recipient [CIR v. Procter & Gamble PMC, 160
SCRA 560 (1988] may file the claim.
 For indirect taxes like VAT or excise tax, the proper party is
the statutory taxpayer, i.e., the person on whom the tax is
imposed by law and who paid the tax. It is irrelevant that he
shifted the burden thereof to another who actually paid it.
PGI v. CIR, 465 SCRA 308, 317-318 (2005), Silkair
(Singapore) Pte. Ltd. v. CIR, 544 SCRA 100 (2008), 571
SCRA 141, 159 (2008)

Slide No. 106
Liability of Government for Interest,
Attorney’s Fees, Etc.
 May the Gov’t be required to pay interest and/or attorney’s fees?
 NO, the CIR cannot be required to pay interest on taxes refunded in
the absence of a statutory provision clearly or expressly directing or
authorizing such payment. Collector v. Sweeney, 106 Phil. 59 (1959)
 Neither may the CIR be required to pay attorney’s fees or costs of
suit. Philippine Veterans Affairs Office v. Añover, 125 SCRA 354
(1983)
 If the CIR, however, acted with arbitrariness in collecting the taxes
sought to be refunded, he may be held liable to pay interest. Victorias
Milling Co. Inc. v. CIR, 19 SCRA 430 (1967); see also Banco de Oro, et.
al. v. Republic, et. al, G.R. No. 198756, Jan. 13, 2015 and August 16,
2016
 Arbitrariness presupposes inexcusable or obstinate disregard of legal
provisions.

Liability of Government for Interest,
Attorney’s Fees, Etc.
 Philex Mining Corp. v. CIR, G.R. No. 120324, April 21, 1999
 No interest on refund of tax can be awarded unless authorized by law
or the collection of the tax was attended by arbitrariness.
 An action is not arbitrary when exercised honestly and upon due
consideration where there is room for two opinions, however much it
may be believed that an erroneous conclusion was reached.
Arbitrariness presupposes inexcusable or obstinate disregard of legal
provisions. None of the exceptions are present in the case at bar.
Respondent’s decision denying petitioner’s claim for refund was based
on an honest interpretation of law. SC, therefore, sees no reason why
petitioner should be entitled to the payment of interest.

Appeal in Case of Denial of Refund or
Tax Credit Claim
 Appeal to CTA/SC; same as appeal of denial of protest.
 Engaging independent CPA

Utilization of Tax Credit Certificate
(TCC)
 Tax Debit Memo
 May be used in payment of internal revenue taxes
 Restrictions on transferability. See Rev. Regs. No. 14-2011,
July 29, 2011

Offsetting Against Deficiency
Assessments
 May the BIR offset a deficiency assessment against an approved
claim for refund or tax credit?
 Yes, said the SC in CIR v. Cebu Portland Cement Company, 156 SCRA
535, 541 (1987), where the CTA ordered the CIR to refund to the TP
overpayment of ad valorem taxes on cement products that it produced
and sold. Instead of refunding, the CIR offset the refund against an
outstanding sales tax deficiency assessment that the TP protested but
which protest was pending resolution by the CIR.

Assessments
 Permitting the offsetting, the SC in CIR v. Cebu Portland Cement
Company held “the argument that the assessment cannot as yet be
enforced because it is still being contested loses sight of the urgency
of the need to collect taxes as “the lifeblood of the government”.
 If the payment of taxes could be postponed by simply questioning
their validity, the machinery of the state would grind to a halt and all
government functions would be paralyzed.
 This is the reason for the existence of the anti-injunction rule.
 To require CIR to actually refund to TP the amount of the judgment
debt, which he will later have the right to distrain for payment of its
sales tax liability is an idle ritual.
 SC held that the CTA erred in ordering such a charade.

Assessments
 CGB: But, doesn’t offsetting deprive the taxpayer of due
process considering that the deficiency assessment will have to
be acted upon independently of the refund claim, and defenses
raised by the taxpayer will have to be addressed? If offsetting
were automatically allowed, the right of the taxpayer to protest
the assessment might be rendered nugatory.
 CGB: Moreover, may the offsetting of the refundable amount
against a protested deficiency assessment be treated as a denial
of the protest, hence, the taxpayer may now appeal to the CTA?

Taxes not Subject to Set-Off
 Francia v. IAC, 162 SCRA 753
 TP owned real property, a portion of which was expropriated by the gov’t
and for which gov’t owed TP P4,116.
 The rest of TP’s property sold at public auction for delinquency RPT of
P2,400.
 TP contends that his tax delinquency of P2,400.00 has been extinguished by
legal compensation. He claims that the government owed him P4,116.00
when a portion of his land was expropriated on October 15, 1977. Hence,
his tax obligation had been offset by operation of law as of October 15,
1977.
 Held: contention of the TP has no merit. SC has consistently ruled that there
can be no off-setting of taxes against the claims that the TP may have against
the government. A person cannot refuse to pay a tax on the ground that the
government owes him an amount equal to or greater than the tax being
collected. The collection of a tax cannot await the results of a lawsuit against
the government.

Slide No. 114
Taxes not Subject to Set-Off
 Francia v. IAC, supra
 This rule was reiterated in the case of Cordero v. Gonda, 18
SCRA 331, where SC stated that: ". . . internal revenue taxes
can not be the subject of compensation: Reason: government
and taxpayer are not mutually creditors and debtors of each
other under Article 1278 of the Civil Code and a “claim for
taxes is not such a debt, demand, contract or judgment as is
allowed to be set-off.”
 Moreover, RPT was due to an LGU while the expropriation
was effected by the national government.

Slide No. 115
V. QUASI-LEGISLATIVE AND QUASI-
JUDICIAL POWERS OF THE CIR

Types of BIR Issuances
 Rulings – refer to rulings, opinions and interpretations of the CIR with respect
to provisions of the Tax Code and other tax laws, which are issued in response
to a specific request for ruling filed by a TP with the BIR.
 Rev. Regs. – contain all needful rules and regulations for the effective
enforcement of the provisions of the NIRC. Promulgated by the Sec. of Finance,
upon recommendation of the Commissioner of Internal Revenue.
 RMO – contains directives or instructions outlining procedures, techniques,
methods, etc. which are necessary to carry out programs or to achieve policy
goals and objectives. Promulgated by Commissioner of Internal Revenue.
 RMC – disseminates and embodies pertinent and applicable portions, as well as
amplifications, of the rules, precedents, laws, regulations, opinions and other
orders and directives issued by the CIR, and by other offices and agencies, for
the information, guidance or compliance of revenue personnel. Promulgated by
CIR.

Slide No. 117
Quasi-legislative and quasi-judicial powers
of the Commissioner
 Quasi-legislative – power to make rules and regulations of
general applicability.
 Quasi-judicial – power to hear and determine questions of
fact to which the legislative policy is to apply and to decide in
accordance with the standards laid down by law; exercise of
power results to a decision or order affecting a named person
or applying to a specific situation and becoming final and
executory after the lapse of a certain period.

Slide No. 118
Review Power of Secretary of Finance
 What is the scope of the DOF’s review power under Sec. 4?
 The Sec. of Finance only has the power of review over
interpretations by the CIR of the provisions of the NIRC or
other tax laws.
 What is covered by the CIR’s power of interpretation?
 The power of administrative agencies, such as the BIR, to
interpret and construe the statutes entrusted to them for
implementation is an exercise of the quasi-legislative power of
administrative agencies as distinguished from their quasi-judicial
power.

 Sec. 4, par. 1:
 CIR’s power to interpret the provisions of the Tax Code and
other tax laws, subject to review by the Sec. of Finance.
Decisions of the latter are appealable to the CTA.
 Sec. 4, par. 2
 CIR’s power to decide disputed assessments, refunds, or other
matters arising under the Tax Code and other tax laws.
 Subject to appellate jurisdiction of the CTA.

 If exercise of power is quasi-legislative in nature – appeal is
to DOF. (Sec. 4, 1st par.) From the DOF, appeal is to the
CTA.
 If exercise of power is quasi-judicial in nature – appeal is to
CTA. (Sec. 4, 2nd par.; Sec. 7, RA 9282)

Slide No. 121
Judicial Review
 CTA has appellate jurisdiction over decisions of the CIR on
“other matters arising under the Tax Code or other laws
administered by the [BIR]”. (Sec. 4, 2nd par.)
 Decision of CIR on “other matters” should be quasi-judicial in
nature for the 2nd par. of Sec. 4 to apply.
 See, however, CIR v. Leal, 392 SCRA 9, 13-18 (2002), where
the SC held that CTA has jurisdiction over RMCs issued by BIR.

Slide No. 122
Judicial Review
 CIR v. Leal, supra
 TP filed with RTC a Petition for Prohibition seeking to prohibit
CIR from enforcing RMO No. 15-91 and RMC No. 453-91
which imposed a 5% lending investor’s tax on pawnshops.
 CIR, contending that the subject issuances were issued pursuant
to his power to render rulings or opinions on provisions of the
NIRC, moved to dismiss on the ground that CTA, not RTC, has
jurisdiction.
 RTC denied motion to dismiss, ruling that the issuances are not
assessments to implement the NIRC but are in effect “new taxes
(against pawnshops) which are not provided for under the
NIRC and which only Congress is empowered to impose.”

Slide No. 123
Judicial Review
 CIR v. Leal, supra
 Held: Challenged RMOs/RMCs are actually rulings or opinions
of the CIR implementing the Tax Code on taxability of pawn
shops.
 Jurisdiction to review rulings of the CIR, such as
RMOs/RMCs, pertains to CTA, not RTC.
 CTA has jurisdiction over decisions of the CIR on “other
matters” arising under the Tax Code.

Slide No. 124
Judicial Review
 Asia Int’l Auctioneers v. Parayno, 540 SCRA 536 (2007)
 TP questioned the authority of the CIR to impose VAT and
excise tax on the auction of imported vehicles in the Subic
Freeport Zone by filing with the RTC a complaint to declare
null and void for being unconstitutional and ultra vires RMC
Nos. 31-2003 and 32-3003 and Rev. Regs. Nos. 1-95, 12-97
and 16-99 relating to tax treatment of sale of motor vehicles in
public auction within SBF and other Freeport Zones.
 CIR questioned RTC’s jurisdiction.

Slide No. 125
Judicial Review
 Asia Int’l Auctioneers v. Parayno, supra
 Citing Leal, Blaquera, SC held that assailed BIR issuances are
administrative rulings or opinions of the CIR on the tax
treatment of sale of motor vehicles in public auction within SBF,
hence, appealable to CTA.
 Also held that failure of TP to ask for reconsideration of the assailed
issuances is another reason for dismissal of the case.

Slide No. 126
Judicial Review
 BAT v. Camacho, 562 SCRA 511, 533-535 (2008)
 TP assailed before the RTC the constitutionality of Sec. 145(C)
of the NIRC and the validity of its implementing regulations.
 Sec. 145(C) embodied the “poison pill” provision in the NIRC,
i.e., the excise tax classification freeze on cigarettes and
tobacco.
 Equal protection, deprivation of property without due process,
monopoly and unfair competition, etc.

Slide No. 127
Judicial Review
 BAT v. Camacho, supra
 Held: While RA 1125, as amended by RA 9282, confers on
CTA jurisdiction to resolve tax disputes in general, this does not
include cases where the constitutionality of a law or rule is
challenged.
 Where what is assailed is the validity or constitutionality of a
law, or a rule or regulation issued by the administrative agency
in the performance of its quasi-legislative function, the regular
courts have jurisdiction to pass upon the same.
 The determination of whether a specific rule or set of rules
issued by an administrative agency contravenes the law or the
constitution is within the jurisdiction of the regular courts.

Slide No. 128
Judicial Review
 Commissioner of Customs v. Hypermix Feeds Corporation, 680
Phil. 681 (2012)
 Case involved Customs Memorandum Order No. 27-2003 issued by
the Commissioner of Customs in regard to the classification of wheat
for tariff purposes.
 In anticipation of the implementation of the said CMO, respondent
filed a declaratory relief with the RTC, alleging that the CMO was
issued without observing the provisions of the Revised Administrative
Code, it was confiscatory, and it violated the equal protection clause
of the Constitution.
 The Commissioner of Customs moved to dismiss on the ground of
lack of jurisdiction.
 The Supreme Court, however, held that the RTC had jurisdiction,
citing the British American Tobacco case, since constitutionality was
raised.

Slide No. 129
Judicial Review
 Sunlife v. Commissioner of Internal Revenue
 Decision of CIR to issue RMC clarifying taxability of insurance
companies for MCIT, business tax and DST purposes not a
“decision” contemplated by Sec. 7 of RA 1125 that is appealable
to the CTA.
 Since principal relief sought is to declare null and void RMC
30-2008, the same is outside jurisdiction of CTA (citing British
American Tobacco).

Slide No. 130
Judicial Review
 Gorospe v. Vinzons-Chato
 Petition before SC assailing validity of RMC dismissed for non-
exhaustion of administrative remedies. SC held, citing Sec. 4:
 Petitioners should have asked CIR for a reconsideration.
 If action on reconsideration is adverse, denial should have been appealed
to DOF Sec.

Slide No. 131
Judicial Review
 Leal, Gorospe, and Asia Int’l Auctioneers seem to suggest
that, at the very least, administrative remedies should first be
exhausted before resorting to judicial action (unless
exceptions apply, e.g., issue/s are purely legal, urgency of
judicial intervention, or futility of appeal to the
CIR/Secretary of Finance).
 Questions on validity of revenue issuances, such as RRs,
RMOs, RMCs, and the like, fall within the jurisdiction of the
CTA (RRs, RMOs, and RMCs being considered as “decisions”
on “other matters” appealable to the CTA), unless ground is
constitutionality pursuant to the British American Tobacco
case.

Slide No. 132
Judicial Review
 However, SC abandoned the British American Tobacco decision
in Banco de Oro, et. al. v. Republic, et. al, G.R. No. 198756,
August 16, 2016, and reverted to its holding in Leal, Gorospe,
and Asia Int’l Auctioneers.
 Thus, questions on validity, including constitutionality, of
revenue issuances, such as RRs, RMOs, RMCs, and the like,
fall within the jurisdiction of the CTA under “other matters”
appealable to the CTA.

Slide No. 133
Request for BIR Ruling
 Sparingly resorted to in the past administration.
 Disclosure of all relevant and material facts
 Procedure

Slide No. 134
Tax Treaty Relief Application
 BIR requires TP to file a tax treaty relief application (“TTRA”)
with the BIR’s International Tax Affairs Division (ITAD) before the
transaction for which a tax treaty exemption or reduced rate is
invoked. [Rev. Mem. Order No. 72-2010]
 In Deutsche Bank AG Manila v. CIR, G.R. No. 188550, August
19, 2013, the SC held that that non-compliance alone with such
requirement of prior application cannot deprive TP of its
entitlement to the treaty benefit in violation of the pacta sunt
servanda rule.
 The affirmation by the SC of the CTA decision in Mirant through a
minute resolution did not constitute a binding precedent.

 RMO No. 8-2017, dated March 28, 2017, and which takes
effect on June 26, 2017, dispenses with the TTRA for
dividend, interest and royalty income.
 In lieu of the TTRA, withholding agents may apply outright
the treaty preferential rates for these types of income
conditioned on the submission of a Certificate of Residence
for Tax Treaty Relief (CORTT) by the resident of a treaty
country claiming the benefits of the treaty.
 The CORTT thus replaces the old TTRA form for dividend,
interest and royalties.

 The CORTT consists of 2 parts:
 First Part:
A. Applicable Treaty
B. Information of Income Recipient/Beneficial Owner
(Individual)
C. Information of Income Recipient/Beneficial Owner
(Non-Individual)
D. Certification of Competent Authority or Authorized Tax
Office of Country of Residence

 The CORTT consists of 2 parts:
 Second Part:
A. Information of Withholding Agent/Income Payor
B. Details of Withholding Tax
C. Type of Income Earned within the Philippines in Respect to
which Relief is claimed
D. Declaration of Income Recipient/Beneficial Owner
E. Declaration of Withholding Agent/Income Payor

Non-Retroactivity of Rulings/Regs.
 Administrative agencies, such as the BIR, are not bound by
precedents and may overrule or abandon their own rulings or
interpretations of the law or those of their predecessors in
favor of new ones which are deemed more consonant with
the letter and spirit of the law.
 The power to abandon rulings, however, is limited by Sec.
246.
 What is the danger if Sec. 246 is not in place?

Slide No. 139
 Section 246 of the NIRC states “any revocation, modification
or reversal of any of the rules and regulations promulgated in
accordance with the preceding Sections or any of the rulings
or circulars promulgated by the Commissioner shall not be
given retroactive application if the revocation, modification
or reversal will be prejudicial to the taxpayers.”
 EXCEPTIONS: Misrepresentation or omission of material
facts in request for ruling; facts subsequently gathered by BIR
are materially different from TP’s representations; or TP
acted in bad faith.

Slide No. 140
 Commissioner of Internal Revenue v. Benguet Corporation, 495 SCRA
59, 65-72 (2006), Commissioner of Internal Revenue v. Benguet
Corporation, 463 SCRA 28 (2005)[involving zero-rating of sale of gold
to the Central Bank], Commissioner of Internal Revenue v. Burmeister
and Wain Scandinavian Contractor Mindanao, Inc., 512 SCRA 124, 141
(2007) [where the Commissioner’s Answer filed with the CTA
effectively served as a revocation of the VAT ruling earlier issued to the
taxpayer-petitioner], ABS-CBN Broadcasting Corporation v. Court of
Tax Appeals and the Commissioner of Internal Revenue, 108 SCRA 142,
148 (1981), Commissioner of Internal Revenue v. Court of Appeals,
Court of Tax Appeals & Alhambra Industries, Inc., 267 SCRA 557, 564
(1997), Commissioner of Internal Revenue v. Telefunken Semiconductor
Phils., Inc. et. al., 249 SCRA 401, 407 (1995), Commissioner of
Internal Revenue v. Burroughs Limited and Court of Tax Appeals, 142
SCRA 324, 328 (1986)

Slide No. 141
 Gen. rule: the government is not bound by the mistakes of its
agents
 Exception: Sec. 246
 Rationale: justice and fair play
 Because the “opinion or ruling of the Commissioner of Internal
Revenue, the agency tasked with the enforcement of tax laws, is
accorded much weight and even finality, when there is no
showing that it is patently wrong,” a taxpayer cannot be
convicted for taking the tax authorities at their word.

Slide No. 142
 CIR v. Burroughs, Ltd., supra
 TP remitted branch profits to parent; paid 15% BPRT based on
total branch profits out of which remittance was made.
 Subsequent BIR ruling that 15% BPRT should be based on
amount actually remitted, not on total branch profits out of
which remittance is to be made.
 Refund claim
 RMC revoking BIR ruling
 TP entitled to refund since revocatory RMC cannot be given
retroactive effect.

Slide No. 143
 BUT BEWARE!!!!
 In a recent issuance, the CIR declared that all rulings issued
prior to 1998 no longer have any binding effect except to the
taxpayer who was issued the ruling and only for the
transactions subject of the issued ruling. This is tantamount
to revoking all pre-1998 rulings previously issued by the BIR,
without distinguishing between rulings that are consistent
with the Tax Reform Act of 1997 and those that are not. [Rev.
Regs. No. 5-2012, April 2, 2012 and Rev. Mem. Cir. No. 22-
2012, May 7, 2012]

VI. ACCREDITATION OF TAX
PRACTITIONERS OR AGENTS

• Section 6(G) of the NIRC grants the CIR the power to
accredit and register tax agents or professionals with respect
to their tax practice and representation of taxpayers before
the BIR.
• Revenue Regional Accreditation Board (RRAB) and
Revenue National Accreditation Board (RNAB) created.
• Cert. of Accreditation valid for 3 years from issue date.
Renewable.

• Thus, as a general rule, only tax
practitioners/agents, partners or officers of GPPs,
or officers or directors of corporate entities engaged
in tax practice who have been issued Certificate of
Accreditation or ID card may represent a taxpayer
before the BIR.
• BIR may refuse to transact official business with tax
practitioners who are not accredited. [Rev. Regs. No.
11-06, June 15, 2006, as amended by Rev. Regs. No.
004-10 and Rev Regs. No. 014-10]

• Lawyers, however, may appear and practice before
the BIR without having to undergo accreditation.
Accreditation is optional for lawyers.
• Filings by lawyers with the BIR on behalf of clients
(e.g., protests, requests for ruling, claims for refund
or tax credit, applications for compromise
settlement or abatement, and other official
correspondence) must bear the lawyer’s TIN,
attorney’s roll no., and MCLE Compliance No.

Other exemptions:
 Taxpayers acting on their own behalf;
 Limited or special appearance by:
- Immediate family member
- Officer or regular full time employee representing
employer
- Trustee, receiver, guardian, administrator executor
- Officer or regular full time employee of gov’t unit,
agency or instrumentality

• What is the effect of a protest or refund or tax credit claim
filed by a non-lawyer who is not accredited by the BIR as a
tax practitioner or agent?

Tax Remedies - Mcle Lecture

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Taxpayer’s Remedies

By: Atty. Carlos G. Baniqued

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 So, if prescription is about to set in, think twice before you

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 Before the SC affirmed CTA’s decision in Lascona, the

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 Likewise, a denial by the CTA Division of a motion to quash,

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 Disputed Assessments, Refunds, etc.

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 Customs Duties and Taxes

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