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TAXATION REMEDIES CASES

CIR v. Julieta Ariete


By: Roman Almalbis
FACTS:
May 21, 1997: Informer filed affidavit with
SID, Davao, declaring that no ITRs were
filed by taxpayer for 1994-1996.
May 23, 1997: SID Chief issued Mission
Order.
Oct 15, 1997: RO reported no ITRs were
filed.
Dec 2, 1997: Respondent filed ITRs for
1993-1996 when BIR offered VAP under
RMO 59-97, as amended by RMO 60-97 and
63-97.
July 28, 1998: RD issued LA for 1993-1996.
After investigation, 4 assessment notices
were issued in total amount of
P191,463.04.
Feb 22, 1999: Protest was filed.
Mar 30, 1999: Protest was denied. Taxpayer
is not entitled to benefits under VAP.
Apr 16, 1999: Respondent offered
compromise, but it was denied by BIR.
Respondent filed petition for review with
CTA.
Jan 15, 2002: CTA rendered decision
cancelling deficiency assessments. MR filed
by CIR but denied by CTA.
Petitioner appealed to CA.
June 14, 2004: CA affirmed CTAs decision.
Petitioner filed appeal to SC.

by an informer under Sec 281 of the NIRC,


and duly recorded in the Official Registry
Book of the Bureau before the date of
availment under VAP are excluded from
the coverage of the VAP.
This denotes that in addition to the filing of
verified information, the same should also
be duly recorded in the ORB of BIR. The
conjunctive word and is not without legal
significance. It means in addition to. The
word and, whether it is used to connect
words, phrases or full sentences, must be
accepted as binding together and as
relating to one another. It implies
conjunction or union.
This interpretation is bolstered by the fact
that BIR issued RR 18-2005 and reiterated
the same provision in the implementation
of the Enhanced VAP.
When a tax provision speaks
unequivocably, it is not the province of a
Court to scan its wisdom or its policy. The
more correct course of dealing with a
question of construction is to take the
words exactly what they say. Findings of
facts of the CTA are final and binding upon
the SC, specially if these are similar
findings of the CA, which is the final arbiter
of questions of fact.
CIR vs Metro Star Superama
GR No. 185371
By: Jon Cerlan Bangoy

ISSUE: Is the recording in the Official


Registry Book of the BIR of the information
filed by informer a mandatory requirement
before taxpayer may be excluded from
coverage of Voluntary Assessment Program
(VAP)?
SC DECISION: Yes. Where the language
of the law is clear and unequivocal, it must
be given its literal application and applied
without interpretation.
RMO 59-97, 60-97, and 63-97 consistently
provided that persons under investigation
as a result of verified information filed

FACTS:
Respondent is a duly organized domestic
corporation. On January 26, 2001, the
regional director Legazpi City issued a
letter of authority for the revenue officer to
examine respondents books of accounts
and other accounting records for taxable
year 1999. Respondent failed to comply for
requests for presentation of records and a
subpoena duce tecum, thus the
investigation proceeded based on the best
evidence obtainable for the issuance of
assessment notice.
1

On November 8, 2001, RDO issued a


Preliminary 15-day Letter, received on
November 9, 2001 stating a deficiency of
VAT and withholding taxes in the amount of
PhP292,874. On April 11, 2002, a Final
Assessment Notice was received by the
respondent for the deficient amount.
Subsequently the RDO sent a Final Notice
of Seizure on May 12, 2003 received on
May 15. On February 6, 2004 a Warrant of
Distraint and/or Levy demanding payment.
Respondent filed a Motion for
Reconsideration on July 30, 2003. On
February 8, 2005 the CIR denied the MR.
Respondent corporation as a defense
raised the defense that it never received a
Preliminary Assessment Notice and was not
afforded due process when it filed a
petition for review with the CTA.
CTA SECOND DIVISION:
Found in favor in Metro Star Superama and
granted an order to desist the collecting of
taxes.
The CTA-SecondDivision opined that [w]hile
there [is] a disputable presumption that a
mailed
letter [is] deemed received by the
addressee in the ordinary course of mail, a
direct denial of the
receipt of mail shifts the burden upon the
party favored by the presumption to prove
that the mailedletter was indeed received
by the addressee.It also found that there
was no clear showing thatMetro Star
actually received the alleged PAN, dated
January 16, 2002. It, accordingly, ruled that
theFormal Letter of Demand dated April 3,
2002, as well as the Warrant of Distraint
and/or Levy datedMay 12, 2003 were void,
as Metro Star was denied due process.
CIR moved for a motion for reconsideration.
CTA En Banc denied and dismissed for
lack of merit.

WON a Preliminary Assessment Notice


(PAN) is necessary since the
respondent corporation received the
Final Assessment Notice.
HELD:
YES. The PAN is necessary to accord due
process to tax payers, even if a FAN was
ultimately issued.
The SC cited the case of Barcelon, Roxas
Securties vs CIR:
Jurisprudence is replete with cases holding
that if the taxpayer denies ever having
received an assessment from the BIR, it is
incumbent upon the latter to prove by
competent evidence that such notice was
indeed received by the addressee. The
onus probandi was shifted to the
respondent to prove by contrary evidence
that the Petitioner received the assessment
in the due course of mail.
Section 228 of the Tax Code also states
that:
Protesting of Assessment. - When the
Commissioner or his duly authorized
representative finds that proper tax should
be assessed, her shall first notify the
taxpayer of his findings, provided, however,
that a preassessment notice shall not be
required in the following
cases:
(a) When the finding for any deficiency tax
is the result of mathematical error in the
computation of the tax as appearing on the
face of the return; or
(b) When a discrepancy has been
determined between the tax withheld and
the amount
actually remitted by the withholding agent;
or
(c) When a taxpayer who opted to claim a
refund or tax credit of excess creditable
withholding tax for a taxable period was
determined to have carried over and
automatically

ISSUE:
2

applied the same amount claimed against


the estimated tax liabilities for the taxable
quarter or
quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable
articles has not been paid; or
(e) When the article locally purchased or
imported by an exempt person, such as,
but
not limited to, vehicles, capital equipment,
machineries and spare parts, has been
sold, traded
or transferred to non-exempt persons.
The taxpayers shall be informed in writing
of the law and the facts on which the
assessment is made; otherwise the
assessment shall be void.
The SC also used the Revenue Regulation
No. 12-99 of the BIR for strict compliance of
the issuance of the PAN. (See below)
SC also cited CIR vs Algue stating the life
blood doctrine but emphasized that:
But even as we concede the
inevitability and indispensability of
taxations, it is a requirement in all
democratic regimes that it be
exercised reasonably and in
accordance with the prescribed
procedure.
R.R. No 12-99:
SECTION 3. Due Process Requirement in the
Issuance of a Deficiency Tax Assessment.
3.1 Mode of procedures in the
issuance of a deficiency tax
assessment:
3.1.1 Notice for informal
conference. The Revenue Officer who
audited the taxpayersrecords shall, among
others, state in his report whether or not
the taxpayer agrees with hisfindings that
the taxpayer is liable for deficiency tax or
taxes. If the taxpayer is not
amenable,based on the said Officer's
submitted report of investigation, the
taxpayer shall be informed, inwriting, by

the Revenue District Office or by the


Special Investigation Division, as the case
maybe (in the case Revenue Regional
Offices) or by the Chief of Division
concerned (in the case ofthe BIR National
Office) of the discrepancy or discrepancies
in the taxpayer's payment of hisinternal
revenue taxes, for the purpose of "Informal
Conference," in order to afford thetaxpayer
with an opportunity to present his side of
the case. If the taxpayer fails to
respondwithin fifteen (15) days from date
of receipt of the notice for informal
conference, he shall beconsidered in
default, in which case, the Revenue District
Officer or the Chief of the
SpecialInvestigation Division of the
Revenue Regional Office, or the Chief of
Division in the NationalOffice, as the case
may be, shall endorse the case with the
least possible delay to theAssessment
Division of the Revenue Regional Office or
to the Commissioner or his duly
authorized representative, as the case may
be, for appropriate review and issuance of
a
deficiency tax assessment, if warranted.
3.1.2 Preliminary Assessment
Notice (PAN). If after review and
evaluation by the
Assessment Division or by the
Commissioner or his duly authorized
representative, as the casemay be, it is
determined that there exists sufficient
basis to assess the taxpayer for
anydeficiency tax or taxes, the said Office
shall issue to the taxpayer, at least by
registered mail, aPreliminary Assessment
Notice (PAN) for the proposed assessment,
showing in detail, the factsand the law,
rules and regulations, or jurisprudence on
which the proposed assessment isbased
(see illustration in ANNEX A hereof). If the
taxpayer fails to respond within fifteen
(15)days from date of receipt of the PAN,
he shall be considered in default, in which
case, a formalletter of demand and
assessment notice shall be caused to be
issued by the said Office, callingfor
payment of the taxpayer's deficiency tax
3

liability, inclusive of the applicable


penalties.
3.1.3 Exceptions to Prior Notice
of the Assessment. The notice for
informal conferenceand the preliminary
assessment notice shall not be required in
any of the following cases, inwhich case,
issuance of the formal assessment notice
for the payment of the taxpayersdeficiency
tax liability shall be sufficient:
(i) When the finding for any
deficiency tax is the result of mathematical
error in
the computation of the tax appearing on
the face of the tax return filed by the
taxpayer; or
(ii) When a discrepancy has been
determined between the tax withheld and
the
amount actually remitted by the
withholding agent; or
(iii) When a taxpayer who opted to
claim a refund or tax credit of excess
creditable withholding tax for a taxable
period was determined to have carried
over and automatically applied the same
amount claimed against the
estimated tax liabilities for the taxable
quarter or quarters of the succeeding
taxable year; or
(iv) When the excise tax due on
excisable articles has not been paid; or
(v) When an article locally purchased
or imported by an exempt person, such as,
but not limited to, vehicles, capital
equipment, machineries and spare parts,
has been sold, traded or transferred to nonexempt persons.
3.1.4 Formal Letter of Demand
and Assessment Notice. The formal
letter of demand andassessment notice
shall be issued by the Commissioner or his
duly authorized representative.
989, respondent issued to the petitioner,
assessment/demand notices for deficiency
withholding tax at source (Swap
Transactions) and DST involving the
amounts of P190,752,860.82 and

The letter of demand calling for payment of


the taxpayer's deficiency tax or taxes shall
state thefacts, the law, rules and
regulations, or jurisprudence on which the
assessment is based,
otherwise, the formal letter of demand and
assessment notice shall be void (see
illustration inANNEX B hereof).
The same shall be sent to the taxpayer only
by registered mail or by personal delivery.
If sent by personal delivery, the taxpayer or
his duly authorized representative shall
acknowledge receipt thereof in the
duplicate copy of the letter of demand,
showing the
following: (a) His name; (b) signature; (c)
designation and authority to act for and in
behalf ofthe taxpayer, if acknowledged
received by a person other than the
taxpayer himself; and (d)date of receipt
thereof.
x x x.
BPI vs CIR
By: Red Gabriel Convocar
G.R. No. 174942

March 7, 2008

Facts:
Respondent, through its Revenue Service
Chief, issued to the petitioner a preassessment notice (PAN) dated November
26, 1986.
Petitioner, in a letter dated November 29,
1986, requested for the details of the
amounts alleged as 1982-1986 deficiency
taxes mentioned in the November 26, 1986
PAN.
On April 7, 1
P24,587,174.63, respectively, for the years
1982 to 1986.
On April 20, 1989, petitioner filed a protest
on the demand/assessment notices.
4

The tax court ordered Petitioner to pay the


respondent the amount of P24,587,174.63
representing deficiency documentary
stamp tax for the period 1982-1986, plus
20% interest starting February 14, 2003
until the amount is fully paid pursuant to
Section 249 of the Tax Code.
The tax court, applying the case of
Commissioner of Internal Revenue v. Wyeth
Suaco Laboratories, Inc., (Wyeth Suaco
case), ruled that BPIs protest and
supplemental protest should be considered
requests for reinvestigation which tolled
the prescriptive period provided by law to
collect a tax deficiency by distraint, levy, or
court proceeding.
BPI argues that the governments right to
collect the DST had already prescribed
because the Commissioner of Internal
Revenue (CIR) failed to issue any reply
granting BPIs request for reinvestigation
manifested in the protest letters dated 20
April and 8 May 1989. It was only through
the 9 August 2002 Decision ordering BPI to
pay deficiency DST, or after the lapse of
more than thirteen (13) years, that the CIR
acted on the request for reinvestigation,
warranting the conclusion that prescription
had already set in.
Issue:
Whether or not the collection of the
deficiency DST is barred by prescription
Held:
Yes.
The CIR has three (3) years from the date
of actual filing of the tax return to assess a
national internal revenue tax or to
commence court proceedings for the
collection thereof without an assessment.

When it validly issues an assessment within


the three (3)-year period, it has another
three (3) years within which to collect the
tax due by distraint, levy, or court

proceeding. The assessment of the tax is


deemed made and the three (3)-year
period for collection of the assessed tax
begins to run on the date the assessment
notice had been released, mailed or sent to
the taxpayer.
As applied to the present case, the CIR had
three (3) years from the time he issued
assessment notices to BPI on 7 April 1989
or until 6 April 1992 within which to collect
the deficiency DST. However, it was only on
9 August 2002 that the CIR ordered BPI to
pay the deficiency
The Tax Code states that in order to
suspend the running of the prescriptive
periods for assessment and collection, the
request for reinvestigation must be granted
by the CIR.
There is nothing in the records of this case
which indicates, expressly or impliedly, that
the CIR had granted the request for
reinvestigation filed by BPI. What is
reflected in the records is the piercing
silence and inaction of the CIR on the
request for reinvestigation, as he
considered BPIs letters of protest to be.
Neither did the waiver of the statute of
limitations signed by BPI supposedly
effective until 31 December 1994 suspend
the prescriptive period. The CIR himself
contends that the waiver is void as it shows
no date of acceptance.
BPIs letters of protest and submission of
additional documents pertaining to its
SWAP transactions, which were never even
acted upon, much less granted, cannot be
said to have persuaded the CIR to postpone
the collection of the deficiency DST.
The inordinate delay of the CIR in acting
upon and resolving the request for
reinvestigation filed by BPI and in collecting
the DST allegedly due from the latter had
resulted in the prescription of the
governments right to collect the deficiency.
PJ
5

Ace
Moog Controls Corporation vs. CIR
By: Gwapo
FACTS:
As culled from the records of the case, it is
not disputed that on January 8, 2003,
petitioner received the Formal Letter of
Demand with the Assessment Notices,
assessing it for deficiency income and final
withholding taxes for the period covering
October 1998 to September 1999 in the
total amount of P 38,604,536.94, inclusive
of surcharges and interest. On February 7,
2003, a Letter of Protest addressed to the
Revenue Regional Director, Jaime Q.
Concepcion, of BIR Revenue Region No. 2 of
the Cordillera Administrative Region was
subsequently filed by herein petitioner. On
April 4, 2003, petitioner submitted its
supporting documents, as evidenced by a
copy of the transmittal letter addressed to
herein respondent. On May 9, 2003, a letter
from Regional Director Jaime Q.
Concepcion, denying with finality
petitioner's protest letter dated February 7,
2003, was received by petitioner.
ISSUE:
Whether or not the Court has jurisdiction
over the case?
HELD:
No. A decision on the protest has to be
rendered by the Commissioner of Internal
Revenue before this Court may acquire
jurisdiction to act on the case. Also, as
specifically mentioned under Section 228 of
the Tax Code, when the Commissioner of
Internal Revenue fails to act on the protest
of the taxpayer after the lapse of one
hundred eighty (180) days from the
submission of its supporting documents,
the taxpayer may elevate the appeal to
this Court.
It is a fundamental and mandatory rule in
law that an aggrieved taxpayer must first

exhaust all available administrative


remedies before he can be able to avail of
the benefits of a judicial remedy. The
purpose of this is to enable the
administrative tribunals, especially where
their sound discretion and competence are
demanded, to extend the necessary
knowledge and expertise to determine the
matters of the case. This rule finds
application in the case at bar. The decision
received on May 9, 2003, by herein
petitioner was rendered by the BIR
Regional Director of Revenue Region No. 2.
Subsequently, petitioner seasonably filed
an administrative protest with the
Commissioner of Internal Revenue on June
9, 2003. However, on the very same date,
and obviously without waiting for any
response from the Commissioner, this
instant petition for review was likewise filed
by petitioner with this court. Apparently, a
decision has yet to be rendered by
Commissioner of Internal Revenue which is
to be the subject of review by this court. In
other words, there is no decision yet to
speak of, which would confer jurisdiction on
this Court. It is also argued by herein
petitioner that the subsequent inaction by
the respondent on its protest for more than
one hundred eighty (180) days already
rendered the issue of prematurity moot and
academic.
We cannot agree. It seems like herein
petitioner failed to cautiously appreciate
the facts of the case. It is very clear from
the records that petitioner filed this instant
petition for review on the very same date it
filed its appeal with the Commissioner of
Internal Revenue. Petitioner did not wait for
any response from the Commissioner; in
fact, it did not give the Commissioner the
opportunity to decide on its case. As such,
while obviously there is no decision; there
is no "inaction" on the part of the
Commissioner to speak of either. The
period provided for under Section 228 of
the Tax Code refers to the period of inaction
by the Commissioner of Internal Revenue
on the protest of a taxpayer, which period
should be counted from the time the
6

required documents supporting the


taxpayer's protest are submitted to the
Commissioner. In other words, the
Commissioner has a period of one hundred
eighty (180) days, from the date the
aggrieved taxpayer submits his supporting
documents, to act on the protest filed, and
consequently, his failure to seasonably act
on the protest will entitle the taxpayer to
elevate the appeal to this Court within
thirty (30) days from the lapse of the 180
day period. "In the case at bar, petitioner
opted to seek immediate relief to the Court
of Tax Appeals instead of waiting for the
decision of the respondent. Hence, we
opine that petitioner is bound to follow the
periods provided for in Section 228 of the
Tax Code, in relation to Section 11 of RA No.
1125" (Rizal Commercial Banking
Corporation vs. Commissioner of Internal
Revenue/ CTA case No. 647~ September
10/ 2003). Petitioner should have waited for
the lapse of the 180-day period of inaction
by the Commissioner of Internal Revenue
before filing its Petition for Review with this
court within the 30-day period provided by
law, instead of filing it on the same day
that petitioner filed its administrative
appeal with the Commissioner of Internal
Revenue. In Commissioner of Internal
Revenue vs. Villa/ 22 SCRA 3/ the Supreme
Court said that "[T]he Tax Court is a court
of special jurisdiction. As such, it can take
cognizance only of such matters as are
clearly within its jurisdiction." The other
issue raised pertaining to want of preassessment conference may be raised by
the petitioner as matter of defense if this
court acquired jurisdiction."
LA FLOR DELA ISABELA v. CIR
By: Edgar Praile II
Facts:
Mar 21, 2005 -- Petitioner received Formal
Letter of Demand with attached deficiency
tax assessments. Mar 30 and Apr 12,
2005 Petitioner filed its protest and
supplemental protest. July 9, 2007
Petitioner received Final Decision on

Disputed Assessments. Oct 8, 2007


Petitioner filed application for tax amnesty
pursuant to RA 9480. Oct 18, 2007
Petitioner filed application for compromise
under Sec 204, NIRC. Nov 29, 2007 -Petitioner filed petition for review with CTA.
Issue:
WON the petition was filed In time with the
court.
Held:
While the right to appeal a decision of the
Commissioner to the CTA is merely a
statutory remedy, nevertheless the
requirement that it must be brought within
thirty (30) days is jurisdictional. Instead of
appealing the Final Decision on Disputed
Assessment dated June 1, 2007 to the CTA,
or instead of elevating its protest to the
Commissioner, petitioner availed of the tax
amnesty pursuant to RA 9480, for the
assessed income and VAT deficiencies, and
likewise filed an application for
compromise, for the assessed withholding
tax deficiencies, on October 8, 2007 and
October 18, 2007, respectively. Pursuant to
Section 228 of the NIRC of 1997, as
amended, petitioner's failure to appeal the
Final Decision on Disputed Assessment
dated June 1, 2007 to the Court, within the
statutory period, rendered the disputed
assessment final, executory and
demandable, thereby precluding it from
interposing the defense of legality or
validity of the assessment. Petitioners
failure to appeal within the 30-day period
rendered the disputed assessment final,
executory and demandable, thereby
precluding it from interposing the defense
of legality or validity of assessment. The
assessment ceases to be a disputed
assessment, and the same can no longer
be contested by means of a disguised
protest (La Flor dela Isabela, Inc v. CIR, CTA
Case 7709, Jun 9, 2010). "

RIZAL COMMERCIAL
BANKING CORPORATION
v.
COMMISSIONER OF
INTERNAL REVENUE
G.R. No. 168498, 24 April 2007, J.
Ynares-Santiago (Third Division)
By: Enna Fleur Trivilegio
The Court of Tax Appeals (CTA) is a
court of special jurisdiction and can only
take cognizance of such matters as are clearly
within its jurisdiction. The jurisdiction of the
CTA has been expanded to include not only
decisions or rulings but inaction as well of the
Commissioner of Internal Revenue. The
decisions, rulings or inaction of the
Commissioner are necessary in order to vest
the CTA with jurisdiction to entertain the
appeal, provided it is filed within the period
provided for by Section 3(a) (2), Rule 4 of the
Revised Rules of the Court of Tax Appeals. In
case the Commissioner failed to act on the
disputed assessment within the 180-day period
from the date of submission of documents, a
taxpayer can either: (1) file a petition for
review with the CTA within 30 days after the
expiration of the 180-day period fixed by law
for the Commissioner to act on the disputed
assessments; or (2) await the final decision of
the Commissioner on the disputed
assessments and appeal such final decision to
the CTA within 30 days after the receipt of a
copy of such decision. The 30-day period within
which to file an appeal is jurisdictional and
failure to comply therewith would bar the
appeal and deprive the CTA of its jurisdiction to
entertain and determine the correctness of the
assessments. Such period is not merely directory
but mandatory and it is beyond the power of
the courts to extend the same. Moreover, these
options are mutually exclusive and resort to one
bars the application of the other.

Rizal Commercial Banking


Corporation (RCBC) sought to file a
petition for review with the Court of Tax
Appeals (CTA) for failure of the
Commissioner of Internal Revenue
(Commissioner) to act on its disputed
tax assessment. However, The CTA
Second Division denied the petition
because it was not file within the
reglementary period required by law. The
CTA En Banc affirmed the ruling of its
second division. RCBC filed this Motion for
Reconsideration of the decision of the
Court, affirming the decision of the CTA En
Banc. RCBC maintained that its former
counsels failure to file petition for review
with the CTA within the reglementary
period was excusable.

ISSUE:

Whether or not RCBC had timely filed its


petition for review before the Court of Tax
Appeals in order to give the latter
jurisdiction over the case

HELD:

Petitioners motion for


reconsideration is DENIED.

The Court of Tax Appeals (CTA) is a


court of special jurisdiction and can only
take cognizance of such matters as are
clearly within its jurisdiction. Section 7 of
Republic Act 9282, amending R.A. 1125,
the Law Creating the Court of Tax
Appeals, and Section 3, Rule 4 of the
Revised Rules of the Court of Tax Appeals
provide that the CTA shall have exclusive
appellate jurisdiction to review by appeal
the: (1) decisions of the Commissioner
of Internal Revenue (Commissioner) in
8

cases involving disputed assessments,


refunds of internal revenue taxes, fees or
other charges, penalties in relation
thereto, or other matters arising under
the National Internal Revenue Code or
other laws administered the Bureau of
Internal Revenue (BIR); (2) inaction by
the Commissioner in cases involving
disputed assessments, refunds of internal
revenue taxes, fees or other charges,
penalties in relation thereto, or other
matters arising under the National
Internal Revenue Code or other laws
administered by the BIR, where the
National Internal Revenue Code provides
a specific period of action, in which case
the inaction shall be deemed a denial.
The jurisdiction of the CTA has been
expanded to include not only decisions or
rulings but inaction as well of the
Commissioner. The decisions, rulings or
inaction of the Commissioner are
necessary in order to vest the CTA with
jurisdiction to entertain the appeal,
provided it is filed within the period
provided for by Section 3(a) (2), Rule 4 of
the Revised Rules of the Court of Tax
Appeals. In case the Commissioner failed
to act on the disputed assessment within
the 180-day period from the date of
submission of documents, a taxpayer can
either: (1) file a petition for review with
the CTA within 30 days after the expiration
of the 180-day period fixed by law for the
Commissioner to act on the disputed
assessments; or (2) await the final
decision of the Commissioner on the
disputed assessments and appeal such
final decision to the CTA within 30 days
after the receipt of a copy of such
decision. The 30-day period within which
to file an appeal is jurisdictional and
failure to comply therewith would bar
the appeal and deprive the CTA of its
jurisdiction to entertain and determine
the correctness of the assessments. Such
period is not merely directory but
mandatory and it is beyond the power of
the courts to extend the same. Moreover,
these options are mutually exclusive and

resort to one bars the application of the


other.

In the instant case, the


Commissioner failed to act on the
disputed assessment within 180 days
from the date of submission of
documents. Thus, RCBC opted to file for
review before the CTA. Unfortunately, the
petition for review was filed out of time,
i.e. it was filed more than 30 days after
the lapse of the 180-day period.
Consequently, it was dismissed by the
CTA for late filing. RCBC did not file a
motion for reconsideration or make an
appeal; hence, the disputed assessment
became final, demandable and executory.

RCBC cannot now claim that the


disputed assessment is not yet final as it
remained unacted upon by the
Commissioner and thereafter appeal the
same to the CTA. This legal maneuver
cannot be countenanced. After availing
the first option, i.e., filing a petition for
review which was however filed out of
time, RCBC cannot successfully resort to
the second option, i.e. awaiting the final
decision of the Commissioner and
appealing the same to the CTA, on the
pretext that there is yet no final decision
on the disputed assessment because of
the Commissioners inaction.
Royal Bank vs. CIR
By: Vanity Gail Trivilegio
Facts:
-Petitioner Royal bank of Scotland Phil., inc.
is a domestic corporation duly registered w/
SEC and authorized by BSP to engage in
commercial banking.
-Petitioner received a formal assessment
notice or FAN for alleged deficiency
documentary stamp tax (DST).
-In the said FAN, CIR claimed that the
reverse repurchase agreements with the
9

BSP are considered as "deposit substitutes"


under the NIRC.
-Petioner filed its protest letter on January
28, 2004.
-As the protest was not acted upon by the
respondent, on October 25, 2004,
petitioner filed a Petition for Review with
this Court.
-On September 10, 2008, the First Division
rendered the assailed Decision dismissing
the petition for lack of jurisdiction.
-On September 30, 2008, petitioner filed a
motion for reconsideration which was
denied for lack of merit by the First Division
in a Resolution dated November 27, 2008.
-Hence, the instant Petition for Review.
Issue: WON CTA has jurisdiction.
Held: No. The 180-day period, as prescribed
in the said provision, should be reckoned
from the filing of petitioner's protest on
January 28, 2004, which .lapsed on July 26,
2004. From July 26, 2004, petitioner had
thirty (30) days or until August 25, 2004 to
appeal the decision or inaction of the CIR to
this Court. However, record shows that
petitioner filed its Petition for Review with
this Court on October 25, 2004 only, sixty
(60) days way beyond the thirty (30) day
reglementary period prescribed under
Section 228 of the NIRC of 1997, as
amended.
Thus, for petitioner's failure to
appeal the CIR's inaction within the
reglementary period, the assessment had
become final, executory and demandable.
Consequently, petitioner is precluded from
disputing the correctness of the
assessment.
Petition for review for the
cancellation of the deficiency documentary
stamp tax assessment for taxable year
1999 is hereby dismissed for lack of
jurisdiction.
HPCO AGRIDEV CORPORATION
vs.
COMMISSIONER OF INTERNAL
REVENUE
C.T.A. CASE NO. 6355, JULY 1 8, 2002

By: Kristiane Osorio

FACTS:
This case stemmed from an
assessment issued against petitioner for
deficiency value-added tax and expanded
withholding tax for the taxable year 1997
in the aggregate amount of P2,165,373.93,
inclusive of surcharge, interests and
compromise penalties. Petitioner is a
corporation organized and existing under
the laws of the Philippines with office
address at corner Washington and Figueroa
Streets, Silay City, Negros Occidental. It is
engaged, among others, in the business of
developing and leasing private agricultural
lands and planting, cultivating and selling
products of such lands. On January 24,
2001, petitioner received Notice of
Assessment Nos. 00007-2001 and 000082001 from the Bureau of Internal Revenue
(BIR), together with the corresponding
demand letter, all dated January 10, 2001.
As of October 17, 2001, however,
respondent had not yet resolved/decided
petitioner's protest. Consequently, to
prevent the assessment notices from
becoming "final, executory and
demandable" pursuant to Section 228 of
the 1997 NIRC, petitioner filed the instant
petition on November 16, 2001.

ISSUES:
The petitioner and the respondent
stipulated the issues to be resolved by this
court, to wit:
(1) Whether or not the right of the
government to assess deficiency VAT and
EWT for taxable year 1997 has already
prescribed;

10

(2) Whether or not the Assessment Notices


are void for failure of the respondent to
inform petitioner of the facts and the law
upon which the assessment is based; and
(3) Whether or not the imposition of
surcharge and compromise penalties is
proper.

RULING:
As to the first issue:
Only the assessment for deficiency VAT for
the last quarterof 1997 and the assessment
for deficiency expanded withholding tax for
December of 1997 were issued within the
period allowed by law.
The assessments made on January 16,
2001 for deficiency VAT covering the
taxable year 1997 had already prescribed
with respect to the first, second and third
quarters thereof.
The assessment was issued on January 10,
2001, said issuance was within the threeyear prescriptive period. As regards the
EWT assessment, the same was issued
within the period allowed by law for
respondent had until March 1, 2001 within
which to assess pursuant to Section 5l (c)
of the 1993 Tax Code.
Pursuant to Section 203 in relation to
Section 110 of the Tax Code and Section 2
of Revenue Regulations No. 5-93, the
period to assess commences after the last
day prescribed by law for the filing of the
return. In the case of VAT, it is twenty (20)
days following the close of each taxable
quarter. Hence, if the return was filed
earlier than the last day allowed by law, the
period to assess shall still be counted from
the last day prescribed for filing of the
return. However, if the return was filed
beyond the period prescribed by law, the
three-year period shall be counted from the
day the return wasfiled. Under then Section
110 of the Tax Code, as implemented by

Section 2 ofRevenue Regulations No. 5-93,


the taxpayer is required to file a quarterly
VAT return not later than twenty days
following the close of each quarter. For
each quarter, the taxpayer is mandated to
file an adjusted and complete return. A final
or adjustment return is not required in the
case of value-added tax, unlike in the case
of an annual Income TaxReturn filed for
income tax purposes.
The Supreme Court on several occasions
ruled that it is the date when the demand
letter or notice of assessment is released,
mailed or sent to the taxpayer that
constitutes an actual assessment. The law
does not require that the demand or notice
be received within the prescriptive period.
As long as the release thereof iseffected
before prescription sets in, the assessment
is deemed made on time even if the same
is actually received by the taxpayer after
the expiration of the prescriptive period.
As disclosed by the records in this case,
both the assessment notices and
demandletter were mailed only on January
16, 2001 (BIR Records, pages 234 to 236).
Apparently, the three (3)-year period within
which respondent has to assesspetitioner
of expanded withholding tax shall be
counted from the last day required by law
for filing a monthly remittance return,
which is ten (10) days after the end of each
calendar month (save December) and
twenty-five (25) days after the end of
December fortaxes withheld from the last
compensation/income payment for the said
month.Consequently, the assessment
notice received by the petitioner on January
24, 2001 for deficiency expanded
withholding tax, had already prescribed for
the months of January to November of
1997.

As to the second issue:


In the case at bar, the pre-assessment
notice merely stated that "please
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beinformed that as a result of the review of


the report of investigation, x xx, on
yourcompany's internal revenue tax liability
for the year 1997, there has been found
due and collectible from your company the
amount of P2,088,353.78 as deficiency
value-added and withholding taxes,
inclusive of penalties, as per attached
computation sheet." (BIR. records, page
216). While there was an attached audit
sheet to the pre-assessment notice, the
same, however, merely stated the sections
of the NIRC or the revenue
regulationswhere the stated computations
were based. There was no explanation
whatsoever on how the assessment was
arrived at. Neither did the demand letter
dated January 10, 2001 contain information
on the law and facts on which the
assessment was made (BIR records, page
234). Ditto with the assessment notices
both dated January 10, 2001 (BIR. records,
pages 235 and 236). It must be stressed
that Section 228 of the Tax Code is quite
precise in providing that "the taxpayers
shall be informed in writing of the law and
the facts on which the assessment is made;
otherwise, the assessment shall be void".

COMMISSIONER
OF
INTERNAL
REVENUE
vs.
KUDOS
METAL
CORPORATION- Waiver of the Statute
of Limitations

FACTS:
CIR assessed Kudos Metal Corporation for
taxable year 1998. A Waiver of the Statute
of Limitations was executed on December
2001. The CTA issued a Resolution
canceling the assessment notices issued
against Petitioner for having been issued
beyond the prescriptive period as the
waiver purportedly failed to (a) have the
valid officer execute the same (i.e., only
the Assistant Commissioner signed it and
not the CIR); (b) the date of acceptance
was not indicated; (c) the fact of receipt by
the taxpayer was not indicated in the
original copy.

ISSUE:
As to the third and last issue:
The question of propriety of the imposition
of compromise penalty,the same becomes
moot and academic in view of the findings
that the assessments were issued out of
time and were void for failure to inform
petitioner of the law and facts on which
they were made.
WHEREFORE, in view of all the foregoing,
the assessments issued against petitioner
for deficiency VAT and EWT in the total
amount of P2, 165,373.93 covering the
year 1997 are hereby CANCELLED and SET
ASIDE.

Has the CIRs right to assess prescribed?

HELD:
YES. The requirements for a valid waiver as
laid down in RMO 20-90 and RDAO No. 5-01
are mandatory to give effect to Section 222
of the Tax Code. Specifically, the flaws in
the waiver executed by Kudos Metal were
as follows: (a) there was no notarized
written authority in favor of the signatory
for the company; (b) there is no stated date
of acceptance by the Commissioner or his
representative; and (c) the fact of the
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receipt of the copy was not indicated in the


original waivers.

Neither can it be said that by merely


executing the waiver the taxpayer is
already estopped from disputing an action
by the CIR beyond the statutory 3-year
period since the exception under the Suyoc
case (i.e., when the delays were due to
taxpayers acts) does not apply.
Note: Requisites of a valid waiver: (i)
acceptance date; (ii) expiry date; (iii)
signed by authorized officer of taxpayer
and BIR; (iv) notarized; (v) fact of receipt
must be indicated in the copies

CIR v. AICHI FORGING COMPANY OF


ASIA, INC.
G.R. No. 184823 October 6, 2010
Del Castillo, J.
By: Irish Mombay
Doctrine:
The CIR has 120 days, from the date of
the submission of the complete documents
within which to grant or deny the claim for
refund/credit of input vat. In case of full or
partial denial by the CIR, the taxpayers
recourse is to file an appeal before the CTA
within 30 days from receipt of the decision
of the CIR. However, if after the 120-day
period the CIR fails to act on the application
for tax refund/credit, the remedy of the
taxpayer is to appeal the inaction of the
CIR to CTA within 30 days.
A taxpayer is entitled to a refund either
by authority of a statute expressly granting
such right, privilege, or incentive in his

favor, or under the principle of solutio


indebiti requiring the return of taxes
erroneously or illegally collected. In both
cases, a taxpayer must prove not only his
entitlement to a refund but also his
compliance with the procedural due
process.
As between the Civil Code and the
Administrative Code of 1987, it is the latter
that must prevail being the more recent
law, following the legal maxim, Lex
posteriori derogat priori.
The phrase within two (2) years x x x
apply for the issuance of a tax credit
certificate or refund under Subsection (A)
of Section 112 of the NIRC refers to
applications for refund/credit filed with the
CIR and not to appeals made to the CTA.
Facts:
Petitioner filed a claim of refund/credit of
input vat in relation to its zero-rated sales
from July 1, 2002 to September 30, 2002.
The CTA 2nd Division partially granted
respondents claim for refund/credit.
Petitioner filed a Motion for Partial
Reconsideration, insisting that the
administrative and the judicial claims were
filed beyond the two-year period to claim a
tax refund/credit provided for under
Sections 112(A) and 229 of the NIRC. He
reasoned that since the year 2004 was a
leap year, the filing of the claim for tax
refund/credit on September 30, 2004 was
beyond the two-year period, which expired
on September 29, 2004. He cited as basis
Article 13 of the Civil Code, which provides
that when the law speaks of a year, it is
equivalent to 365 days. In addition,
petitioner argued that the simultaneous
filing of the administrative and the judicial
claims contravenes Sections 112 and 229
13

of the NIRC. According to the petitioner, a


prior filing of an administrative claim is a
condition precedent before a judicial
claim can be filed.
The CTA denied the MPR thus the case was
elevated to the CTA En Banc for review. The
decision was affirmed. Thus the case was
elevated to the Supreme Court.
Respondent contends that the nonobservance of the 120-day period given to
the CIR to act on the claim for tax
refund/credit in Section 112(D) is not fatal
because what is important is that both
claims are filed within the two-year
prescriptive period. In support thereof,
respondent cited Commissioner of Internal
Revenue v. Victorias Milling Co., Inc. [130
Phil 12 (1968)] where it was ruled that if
the CIR takes time in deciding the claim,
and the period of two years is about to end,
the suit or proceeding must be started in
the CTA before the end of the two-year
period without awaiting the decision of the
CIR.
Issues:
1. Whether or not the claim for refund was
filed within the prescribed period
2. Whether or not the simultaneous filing of
the administrative and the judicial claims
contravenes Section 229 of the NIRC, which
requires the prior filing of an administrative
claim, and violates the doctrine of
exhaustion of administrative remedies
Held:
1. Yes. As ruled in the case of
Commissioner of Internal Revenue v. Mirant
Pagbilao Corporation (G.R. No. 172129,
September 12, 2008), the two-year period
should be reckoned from the close of the
taxable quarter when the sales were made.

In Commissioner of Internal Revenue v.


Primetown Property Group, Inc (G.R. No.
162155, August 28, 2007, 531 SCRA 436),
we said that as between the Civil Code,
which provides that a year is equivalent to
365 days, and the Administrative Code of
1987, which states that a year is composed
of 12 calendar months, it is the latter that
must prevail being the more recent law,
following the legal maxim, Lex posteriori
derogat priori.
Thus, applying this to the present case, the
two-year period to file a claim for tax
refund/credit for the period July 1, 2002 to
September 30, 2002 expired on September
30, 2004. Hence, respondents
administrative claim was timely filed.
2. Yes. We find the filing of the judicial
claim with the CTA premature.
Section 112(D) of the NIRC clearly provides
that the CIR has 120 days, from the date
of the submission of the complete
documents in support of the application
[for tax refund/credit], within which to
grant or deny the claim. In case of full or
partial denial by the CIR, the taxpayers
recourse is to file an appeal before the CTA
within 30 days from receipt of the decision
of the CIR. However, if after the 120-day
period the CIR fails to act on the application
for tax refund/credit, the remedy of the
taxpayer is to appeal the inaction of the
CIR to CTA within 30 days.
Subsection (A) of Section 112 of the NIRC
states that any VAT-registered person,
whose sales are zero-rated or effectively
zero-rated may, within two years after the
close of the taxable quarter when the sales
were made, apply for the issuance of a tax
credit certificate or refund of creditable
input tax due or paid attributable to such
14

sales. The phrase within two (2) years x x


x apply for the issuance of a tax credit
certificate or refund refers to applications
for refund/credit filed with the CIR and not
to appeals made to the CTA.
The case of Commissioner of Internal
Revenue v. Victorias Milling, Co., Inc. is
inapplicable as the tax provision involved in
that case is Section 306, now Section 229

of the NIRC. Section 229 does not apply to


refunds/credits of input VAT.
The premature filing of respondents claim
for refund/credit of input VAT before the
CTA warrants a dismissal inasmuch as no
jurisdiction was acquired by the CTA.

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