63 Bar Ops Pilipinas 2015 Philippine Association of Law Schools Failure to print the word zero-rated on the invoices or receipts is fatal to a claim for credit of refundofinputVATonzero-ratedsales(J.R.A.Philippines,Inc.v.CIR,G.R.No.177127, October 11, 2010) If the claim for refund/ tax credit certificate is based on the existence of zero-rated sales by the taxpayer but it fails to comply with the invoicing requirements in the issuance of sales invoices (e.g. failure to indicate the TIN), its claim for tax credit/refund of VAT on its purchases shall be denied considering that the invoice it is issuing to its customers does not depict its being a VAT-registered taxpayer whose sales are classified as zero-rated sales. Nonetheless, this treatment iswithoutprejudicetotherightofthetaxpayertochargetheinputtaxestotheappropriate expenseaccountorassetaccountsubjecttodepreciation,whicheverisapplicable(Panasonic Comm. Imaging Corp. of the Phil. v. CIR, G.R. No. 178090, February 8, 2010) b) Invoicing and recording deemed sale transactionsc) Consequences of issuing erroneous VAT invoice or VAT official receipt23. Filing of return and payment24. Withholding of final VAT on sales to government TAX REMEDIES UNDER THE NIRC a)AssessmentAn assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and protests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer. Accordingly,anaffidavit,whichwasexecutedbyrevenueofficersstatingthetax liabilities of a taxpayer and attached to a criminal complaint for tax evasion, cannot be deemed an assessment that can be questioned before the Court of Tax Appeals. (CIR vs Pascor Realty and Development Corp., GR no. 128315, June 29, 1999) (i) Concept of assessment(a) Requisites for valid assessment(b) Constructive methods of income determinationTheruleisthatintheabsenceoftheaccountingrecordsofataxpayer, histaxliabilitymaybedeterminedbyestimation.Thepetitionerisnot requiredtocomputesuchtaxliabilitieswithmathematicalexactness. Approximationinthecalculationofthetaxesdueisjustified.Tohold otherwise would be tantamount to holding that skillful concealment is an invinciblebarriertoproof. However,theruledoesnotapplywherethe estimationisarrivedatarbitrarilyandcapriciously.Infine,then,the petitioner acted arbitrarily and capriciously in relying on and giving weight tothemachinecopiesoftheConsumptionEntriesinfixingthetax deficiencyassessmentsagainsttherespondent.(CIRvsHantexTrading Co., GR no. 136975, March 31, 2005) The "best evidence" envisaged in Section 16 of the 1977 NIRC [now Sec. 6,1997NIRC],asamended,includesthecorporateandaccounting 64 Bar Ops Pilipinas 2015 Philippine Association of Law Schools records of the taxpayer who is the subject of the assessment process, the accountingrecordsofothertaxpayersengagedinthesamelineof business, including their gross profit and net profit sales. The law allows the BIR access to all relevant or material records and data in the person of the taxpayer. It places no limit or condition on the type or form of the medium by which the record subject to the order of the BIR is kept. The purpose of the law is to enable the BIR to get at the taxpayers records in whatever form they may be kept. Such records include computer tapes of the said records prepared by the taxpayer in the course of business.68 In thiseraofdevelopinginformation-storagetechnology,thereisnovalid reasontoimmunizecompanieswithcomputer-based,record-keeping capabilities from BIR scrutiny. The standard is not the form of the record butwhereitmightshedlightontheaccuracyofthetaxpayersreturn. However,thebestevidenceobtainableunderSection16ofthe1977 NIRC[nowSec.6,1997NIRC],asamended,doesnotincludemere photocopiesofrecords/documents.Thepetitioner,inmakinga preliminaryandfinaltaxdeficiencyassessmentagainstataxpayer, cannotanchorthesaidassessmentonmeremachinecopiesof records/documents.MerephotocopiesoftheConsumptionEntrieshave noprobativeweightifofferedasproofofthecontentsthereof. (CIRvs Hantex Trading Co., GR no. 136975, March 31, 2005) (c) Inventory method for income determination(d) Jeopardy assessment(e) Tax delinquency and tax deficiency (ii) Power of the Commissioner to make assessments and prescribe additional requirements for tax administration and enforcement(a) PoweroftheCommissionertoobtaininformation,andto summon/examine, and take testimony of persons Forthepurposeofsafeguardingtaxpayersfromanyunreasonable examination,investigationorassessment,ourtaxlawprovidesastatuteof limitationsinthecollectionoftaxes.Thus,thelawonprescription,beinga remedialmeasure,shouldbeliberallyconstruedinordertoaffordsuch protection. Asacorollary,theexceptionstothelawonprescriptionshould perforcebestrictlyconstrued.Sec.15oftheNIRC,ontheotherhand, provides that "[w]hen a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by law or regulation, or when there is reason to believe that any such reportisfalse,incomplete,orerroneous,theCommissionerofInternal Revenueshallassessthepropertaxonthebestevidenceobtainable." Clearly, Section 15 does not provide an exception to the statute of limitations ontheissuanceofanassessment,byallowingtheinitialassessmenttobe madeonthebasisofthebestevidenceavailable.Havingmadeitsinitial assessment in the manner prescribed, the commissioner could not have been authorized to issue, beyond the five-year prescriptive period, the second and thethirdassessmentsunderconsiderationbeforeus.(CIRvsBFGoodrich Phils., Inc., GR no. 104171, February 24, 1999) (iii) When assessment is made65 Bar Ops Pilipinas 2015 Philippine Association of Law Schools Anassessmentisdeemedmadeonlywhenthecollectorofinternalrevenue releases, mails or sends such notice to the taxpayer. (CIR vs Pascor Realty and Development Corp., GR no. 128315, June 29, 1999) (a) Prescriptive period for assessmentThestatuteoflimitationsonassessmentandcollectionoftaxesisforthe protection of the taxpayer and, thus, shall be construed liberally in his favor. Thoughthestatuteoflimitationsonassessmentandcollectionofnational internalrevenuetaxesbenefitsboththeGovernmentandthetaxpayer,it principally intends to afford protection to the taxpayer against unreasonable investigation. Theindefiniteextensionoftheperiodforassessmentis unreasonable because it deprives the said taxpayer of the assurance that he willnolongerbesubjectedtofurtherinvestigationfortaxesafterthe expiration of a reasonable period of time. (BPI vs CIR, GR 139736, October 17, 2005) Both Article 13 of the Civil Code andSection 31, Chapter VIII, Book I of the AdministrativeCodeof1987dealwiththesamesubjectmatterthe computationoflegalperiods.UndertheCivilCode,ayearisequivalent to 365dayswhetheritbearegularyearoraleapyear.Underthe AdministrativeCodeof1987,however,ayeariscomposedof12calendar months.Needlesstostate,undertheAdministrativeCodeof1987,the number of days is irrelevant. There obviously exists a manifest incompatibility inthemannerofcomputinglegalperiodsundertheCivilCodeandthe AdministrativeCodeof1987.Forthisreason,weholdthatSection31, ChapterVIII,BookIoftheAdministrativeCodeof1987,beingthemore recentlaw,governsthecomputationoflegalperiods.(CIRvsPrimetown Property Group Inc., GR 162155, August 28, 2007) Consideringthatthedeficiencyassessmentwasbasedontheamended returnwhich,asaforestated,issubstantiallydifferentfromtheoriginal return,theperiodoflimitationoftherighttoissuethesameshouldbe counted from the filing of the amended income tax return. We believe that to holdotherwise,wewouldbepavingthewayfortaxpayerstoevadethe payment of taxes by simply reporting in their original return heavy losses and amendingthesamemorethanfiveyearslaterwhentheCommissionerof Internal Revenue has lost his authority to assess the proper tax thereunder. TheobjectoftheTaxCodeistoimposetaxesfortheneedsofthe Government, not to enhance tax avoidance to its prejudice. (CIR vs Phoenix Assurance Co., L-19127, May 20, 1965) A waiver of the statute of limitations under the NIRC, to a certain extent, is a derogationofthetaxpayersrighttosecurityagainstprolongedand unscrupulousinvestigationsandmustthereforebecarefullyandstrictly construed. The waiver of the statute of limitations is not a waiver of the right toinvokethedefenseofprescriptionaserroneouslyheldbytheCourtof Appeals.ItisanagreementbetweenthetaxpayerandtheBIRthatthe period to issue an assessment and collect the taxes due is extended to a date certain. The waiver does not mean that the taxpayer relinquishes the right to 66 Bar Ops Pilipinas 2015 Philippine Association of Law Schools invokeprescriptionunequivocallyparticularlywherethelanguageofthe documentisequivocal.TheWaiverofStatuteofLimitations,signedby petitionerscomptrolleronSeptember22,1997isnotvalidandbinding because it does not conform with the provisions of RMO No. 20-90. It did not specify a definite agreed date between the BIRand petitioner, within which theformermayassessandcollectrevenuetaxes.Thus,petitionerswaiver becameunlimitedintime,violatingSection222(b)oftheNIRC.(Philippine Journalists, Inc vs CIR, GR 162852, December 16, 2004) ThewaiverrequiredundertheTaxCodeisonewhichisnotunilateralnor canitbesaidthatconcurrencetosuchagreementisamereformality because it is the very signatures of both the Commissioner and the taxpayer which give birth to such valid agreement. (CIR v. CA, G.R. 115712, Feb. 25, 1999) Awaiverofthestatuteoflimitationsbeingaderogationofthetaxpayers righttosecurityagainst prolongedandunscrupulousinvestigationsmust be carefully and strictly construed. (CIR v. FMF Devt Corp., 556 SCRA 698) The requirement to furnish the taxpayer a copy of the waiver of the Statute of Limitations is not only to give notice of the existence of the document but oftheacceptancebytheBIRandtheperfectionoftheagreement.(Phil. Journalists, Inc. v. CIR, GR 162852, Dec. 16, 2004) (1) False, fraudulent, and non-filing of returnsPetitioner insists that private respondent committed "falsity" when it sold thepropertyforapricelesserthanitsdeclaredfairmarketvalue.This factalonedidnotconstituteafalsereturnwhichcontainswrong informationduetomistake,carelessnessorignorance. 13 Itispossible thatrealpropertymaybesoldforlessthanadequateconsiderationfor a bona fide business purpose; in such event, the sale remains an "arm's length"transaction.Inthepresentcase,theprivaterespondentwas compelled to sell the property even at a price less than its market value, because it would have lost all ownership rights over it upon the expiration oftheparityamendment.(CIRvsBFGoodrichPhils.,Inc.,GRno. 104171, February 24, 1999) Fraudcannotbepresumedbutmustbeproven.Asacorollarythereto, wecanalsostatethatfraudulentintentcouldnotbededucedfrom mistakeshoweverfrequenttheymaybe,especiallyifsuchmistakes emanatefromerroneousentriesorerroneousclassificationofitemsin accounting methods utilized for determination of tax liabilities. The lower court'sconclusionregardingtheexistenceoffraudulentintenttoevade paymentoftaxeswasbasedmerelyonapresumptionandnoton evidence establishing a willful filing of false and fraudulent returns so as to warrant the imposition of the fraud penalty. The fraud contemplated by law is actual and not constructive. It must be intentional fraud, consisting ofdeceptionwillfullyanddeliberatelydoneorresortedtoinorderto 67 Bar Ops Pilipinas 2015 Philippine Association of Law Schools induce another to give up some legal right. Negligence, whether slight or gross,isnotequivalenttothefraudwithintenttoevadethetax contemplated by the law. (Aznar vs CTA, GR L-20569, August 23, 1974) (b) Suspension of running of statute of limitations Petitionersalsoarguethatthegovernmentsrighttoassessandcollectthe subjecttaxhadprescribed.PetitionersadmittedintheirMotionfor ReconsiderationbeforetheCourtofAppealsthatthepoolchangedits address, fortheystatedthatthepoolsinformationreturnfiledin1980 indicated therein its present address. The Court finds that this falls short of therequirementofSection333[nowsection223]oftheNIRCforthe suspensionoftheprescriptiveperiod.Thelawclearlystatesthatthesaid periodwillbesuspendedonlyifthetaxpayerinformstheCommissionerof Internal Revenue of any change in the address. (Afisco Insurance vs CA, GR 112675, January 25, 1999) Sec. 271 [1977 NIRC] (now Sec. 223 of 1997 NIRC) limits the suspension of the running of prescription to instances when reinvestigation is requested by a taxpayer and is granted by the CIR. Only a request for reinvestigation can tolltherunningoftheperiodofthestatuteoflimitationsbecauseitwould entail reception and evaluation of additional evidence and will take more time thanarequestforreconsiderationwheretheevaluationoftheevidenceis limitedonlytotheevidencealreadyathand.(CIRv.Phil.Global Communications, 506 SCRA 427) (iv) General provisions on additions to the tax(a) Civil penalties(b) Interest(c) Compromise penaltiesItdoesnotappearthatpetitioneracceptedtheimpositionofthecompromise amounts.Itisnowa wellsettleddoctrinethatcompromisepenaltycannotbe imposedorcollectedwithouttheagreementorconformityofthetaxpayer. (WonderMechanicalEngineeringvsCTA,GRL-22805&L-27858,June30, 1975) (v) Assessment process(a) Tax audit(b) Notice of informal conferenceUnderRev.Reg.12-99, anoticeof informalconferenceissenttothetaxpayer informinghimof thefindingsof theauditconductedonhis booksand records indicating that there is a discrepancy in his tax payments which has to be paid. However under Rev. Reg. 18-2013 dated Nov. 28, 2013 the requirement for the issuance of a letter of informal conference has been removed.(c) Issuance of preliminary assessment noticeSec.228oftheTaxCodeclearlyrequiresthatthetaxpayermustbeinformed thatheisliablefordeficiencytaxesthroughthesendingofaPreliminary 68 Bar Ops Pilipinas 2015 Philippine Association of Law Schools Assessment Notice. The sending of a PAN to the taxpayer is to inform him of the assessmentmadeisbutpartofdueprocessrequirementintheissuanceofa deficiencytaxassessment,theabsenceofwhichrendersnugatoryany assessment made by the tax authorities. (CIR v. Metro Star Superama, Inc. 637 SCRA 633) (d) Notice of informal conference[ is this same as (b) above?] (e) Issuance of preliminary assessment notice [ is this same as (c)?] (f) Exceptions to issuance of preliminary assessment notice(g) Reply to preliminary assessment notice (h)Issuanceofformalletterofdemandandassessmentnotice/final assessment noticeTax assessments by tax examiners are presumed correct and made in good faith. Thetaxpayerhasthedutytoproveotherwise. Intheabsenceofproofofany irregularities in the performance of duties, an assessment duly made by a Bureau ofInternalRevenueexaminerandapprovedbyhissuperiorofficerswillnotbe disturbed. Allpresumptionsareinfavorofthecorrectnessoftaxassessments. (Sy Po vs CTA, GR 81446, August 18, 1988) An assessment fixes and determines the tax liability of a taxpayer. As soon as it is served, an obligation arises on the part of the taxpayer concerned to pay the amountassessedanddemanded.Hence,assessmentsshouldnotbebasedon mere presumptions no matter how reasonable or logical said presumptions may be. In order to stand the test of judicial scrutiny, the assessment must be based onactualfacts.(CIRvsIslandGarmentManufacturingCo.,GRL-46644, September 11, 1987) Taxpayersshallbeinformedinwritingofthelawandthefactsonwhichthe assessmentismade,otherwise,theassessmentshallbevoid.Theold requirement of merely notifying the taxpayer of the CIRs findings was changed in 1998 to inform the taxpayer of not only the law but also the facts on which an assessmentwouldbemade.FailuretocomplywithSec.228oftheTaxCode doesnotonlyrendertheassessmentvoid,butalsofindsnovalidationinany provision in the Tax Code.(CIR vs. Reyes, 480 SCRA 382) A taxpayer must be informed in writing of the legal and factual bases of the tax assessment made against him. This is a mandatory requirement. The advice of a taxdeficiencygivenbytheCIRtoanemployeeofEnronaswellasthe preliminary5-dayletternotice,werenotvalidsubstitutesforthemandatory notice in writing of the legal and factual bases of the assessment. Sec. 228 of the NIRCrequiresthatthelegalandfactualbasesbestatedintheformalletterof demandandassessmentnotice.OtherwisethelawandRR12-99wouldbe rendered nugatory. In view of the absence of a fair opportunity for Enron to be informedofthebasesoftheassessment,theassessmentwasvoid.Thisisa requirement of due process. (CIR v. Enron Subic Power Corp. 575 SCRA 212) (i) Disputed assessment(j) Administrative decision on a disputed assessment 69 Bar Ops Pilipinas 2015 Philippine Association of Law Schools Theauthoritytomaketaxassessmentsmaybedelegatedtosubordinate officers.Saidassessmenthasthesameforceandeffectasthatissuedbythe Commissioner himself, if not reviewed or revised by the latter. (Oceanic Network Wireless Inc., GR 148380, December 9, 2005)(vi) Protesting assessment (a) Protest of assessment by taxpayer (1) Protested assessment (2) When to file a protest (3) Forms of protest This Court had consistently ruled in a number of cases that a request for reconsideration or reinvestigation by the taxpayer, without a valid waiver oftheprescriptiveperiodsfortheassessmentandcollectionoftax,as requiredbytheTaxCodeandimplementingrules,willnotsuspendthe running thereof. (BPI vs CIR, GR 139736, October 17, 2005) It bears to emphasize that under Section 224 of the Tax Code of 1977, as amended,therunningoftheprescriptiveperiodforcollectionoftaxes can only be suspended by a request for reinvestigation, not a request for reconsideration. Undoubtedly,areinvestigation,whichentailsthe reception and evaluation of additional evidence, will take more time than areconsiderationofataxassessment,whichwillbelimitedtothe evidencealreadyathand; thisjustifieswhythe formercansuspendthe runningofthestatuteoflimitationsoncollectionoftheassessedtax, while the latter can not. (BPI vs CIR, GR 139736, October 17, 2005) (4) Content and validity of protest (b) Submission of documents within 60 days from filing of protest Petitioner cannot insist on the submission of proof of DST payment because such document does not exist as respondent claims that it is not liable to pay, and has not paid, the DST on the deposit on subscription. The term relevant supporting documents should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR canonlyinformthetaxpayertosubmitadditionaldocuments.TheBIRcannot demand what type of supporting documents should be submitted.Otherwise, a taxpayerwillbeatthemercyoftheBIR,whichmayrequiretheproductionof documentsthatataxpayercannotsubmit.(CIRvsFirstExpressPawnshop Company, GR 172045-46, June 16, 2009) (c) Effect of failure to protest TheruleisthatfortheCourtofTaxAppealstoacquirejurisdiction,an assessmentmustfirstbedisputedbythetaxpayerandruleduponbythe CommissionerofInternalRevenuetowarrantadecisionfromwhichapetition forreviewmaybetakento theCourt ofTaxAppeals.Whereanadverseruling has been rendered by the Commissioner of Internal Revenue with reference to a disputed assessment or a claim for refund or credit, the taxpayer may appeal the same within thirty (30) days after receipt thereof. A request for reconsideration 70 Bar Ops Pilipinas 2015 Philippine Association of Law Schools mustbemadewithinthirty(30)daysfromthetaxpayersreceiptofthetax deficiency assessment, otherwise, the decision becomes final, unappealable and therefore, demandable.A tax assessment that has become final,executory and enforceable for failure of the taxpayer to assail the same as provided in Section 228cannolongerbecontested.(OceanicNetworkWirelessInc.,GR 148380, December 9, 2005) (d) Period provided for the protest to be acted upon (vii) Rendition of decision by Commissioner(a)Denial of protest Records show that petitioner disputed the PAN but not the Formal Letter of Demand withAssessmentNotices.Nevertheless,wecannotblamepetitionerfornotfilinga protestagainsttheFormalLetterofDemandwithAssessmentNoticessincethe language used and the tenor of the demand letter indicate that it is the final decision of the respondent on the matter.We have time and again reminded the CIR to indicate, inaclearandunequivocallanguage,whetherhisactiononadisputedassessment constituteshisfinaldeterminationthereoninorderforthetaxpayerconcernedto determine when his or her right to appeal to the tax court accrues. Viewed in the light of theforegoing,respondentisnowestoppedfromclaimingthathedidnotintendthe Formal Letter of Demand with Assessment Notices to be a final decision. (Allied Banking Corporation vs CIR, G.R. No. 175097, February 5, 2010)(1)Commissioners actions equivalent to denial of protest Therequestforreinvestigationandreconsiderationwasineffect considered denied by petitioner when the latter filed a civil suit for collectionofdeficiencyincome. Underthecircumstances,the Commissioner of Internal Revenue, not having clearly signified his finalactiononthedisputedassessment,legallytheperiodto appeal has not commenced to run. Thus, it was only when private respondent received the summons on the civil suit for collection of deficiencyincomeonDecember28,1978thattheperiodto appealcommencedtorun.(CIRvsUnionShippingCorporation, GR L-66160, May 21, 1990) TheletterofFebruary18,1963,intheviewoftheCourt,is tantamounttoadenialofthereconsiderationorprotestofthe respondentcorporationontheassessmentmadebythe petitioner,consideringthatthesaidletterisinitselfareiteration ofthedemandbytheBureauofInternalRevenueforthe settlementoftheassessmentalreadymade,andforthe immediatepaymentofthesumofP758,687.04inspiteofthe vehementprotestoftherespondentcorporationonApril21, 1961.Thiscertainlyisaclearindicationofthefirmstandof petitioneragainstthereconsiderationofthe disputed assessment inviewofthecontinuedrefusaloftherespondent corporation to execute the waiver of the period of limitation upon the assessment in question. (CIR vs Ayala Securities Corp., GR L-29485, March 31, 1976) 71 Bar Ops Pilipinas 2015 Philippine Association of Law Schools (a) Filing of criminal action against taxpayer(b) Issuing a warrant of distraint and levy(2) Inaction by Commissioner(viii) Remedies of taxpayer to action by Commissioner(a)In case of denial of protest (b)IncaseofinactionbyCommissionerwithin180daysfrom submission of documents In case the Commissioner failed to act on the disputed assessment within the180-dayperiodfromdateofsubmissionofdocuments,ataxpayer caneither:(1)fileapetitionforreviewwiththeCourtofTaxAppeals within 30 days after the expiration of the 180-day period; or (2) await the finaldecisionoftheCommissioneronthedisputedassessmentsand appealsuchfinaldecisiontotheCourtofTaxAppealswithin30days afterreceiptofacopyofsuchdecision.(RCBCvsCIR,G.R.No. 168498, April 24, 2007)(c) Effect of failure to appeal b) Collection(i) Requisites(ii) Prescriptive periods The BIR has three years, counted from the date of actual filing of the return or fromthelastdateprescribedbylawforthefilingofsuchreturn,whichever comeslater,toassessanationalinternalrevenuetaxortobeginacourt proceeding for the collection thereof without an assessment.In case of a false orfraudulentreturnwithintenttoevadetaxorthefailuretofileanyreturnat all, the prescriptive period for assessment of the tax due shall be 10 years from discoverybytheBIRofthefalsity,fraud,oromission. WhentheBIRvalidly issues an assessment, within either the three-year or ten-year period, whichever isappropriate,thentheBIRhasanotherthreeyears[now5yearsunderSec. 222,1997NIRC] aftertheassessmentwithinwhichtocollectthenational internal revenue tax due thereon by distraint, levy, and/or court proceeding. (BPI vs CIR, GR 139736, October 17, 2005) UnderSection223(c)oftheTaxCodeof1977,asamended,itisnotessential that the Warrant of Distraint and/or Levy be fully executed so that it can suspend the running of the statute of limitations on the collection of the tax.It is enough that the proceedings have validly began or commenced and that their execution has not been suspended by reason of the voluntary desistance of the respondent BIRCommissioner. Existingjurisprudenceestablishesthatdistraintandlevy proceedingsarevalidlybegunorcommencedbytheissuanceofthe Warrant and service thereof on the taxpayer.It is only logical to require that the Warrant of Distraint and/or Levy be, at the very least, served upon the taxpayer inordertosuspendtherunningoftheprescriptiveperiodforcollectionofan assessedtax,becauseitmayonlybeuponthe serviceoftheWarrantthatthe taxpayer is informed of the denial by the BIR of any pending protest of the said taxpayer, and the resolute intention of the BIR to collect the tax assessed. (BPI vs CIR, GR 139736, October 17, 2005) 72 Bar Ops Pilipinas 2015 Philippine Association of Law Schools WhilewemayagreewiththeCourtofTaxAppealsthatamererequestfor reexamination or reinvestigation may not have the effect of suspending the running of the period of limitation for in such case there is need of a written agreement to extend the period between the Collector and the taxpayer, there are cases however where a taxpayer may be prevented from setting up the defense of prescription even if he has not previously waived it in writing as when by his repeated requests or positive acts the Government has been, for good reasons, persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the Government. (CIR vs Kudos Metal Corp., GR 178087, May 5, 2010) Therunningoftheprescriptionperiodwheretheactsofthetaxpayerdidnot preventthegovernmentfromcollectingthetax. Partialpaymentwouldnot preventthegovernmentfromsuingthetaxpayer.Because,bysuchactof payment,thegovernmentisnottherebypersuadedtopostponecollectionto make him feel that the demand was not unreasonable or that no harassment or injusticeismeant.(CIRvsPhilippineGlobalCommunication,GR167146, October 31, 2006) The act of requesting a reinvestigation alone does not suspend the period.The requestshouldfirstbegranted,inordertoeffectsuspension.Theburdenof proofthatthetaxpayersrequestforreinvestigationhadbeenactuallygranted shallbeonrespondentBIRCommissioner. Thegrantmaybeexpressedin communications with the taxpayer or implied from the actions of the respondent BIRCommissionerorhisauthorizedBIRrepresentativesinresponsetothe request for reinvestigation. (BPI vs CIR, GR 139736, October 17, 2005)

(iii) Distraint of personal property including garnishment Theprohibitionagainstexaminationoforinquiryintoabankdepositunder Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in such a case, and if existence of the deposit is disclosed the disclosure is purely incidental to the execution process. It ishardtoconceivethatitwaseverwithintheintentionofCongresstoenable debtorstoevadepaymentoftheirjustdebts,eveniforderedbytheCourt, throughtheexpedientofconvertingtheirassetsintocashanddepositingthe same in a bank. (PCIB vs CA, GR 84526, January 28, 1991)(a) Summary remedy of distraint of personal property(1) Purchase by the government at sale upon distraint(2) Report of sale to the Bureau of Internal Revenue (BIR)(3)Constructivedistrainttoprotecttheinterestofthe government(iv) Summary remedy of levy on real property(a) Advertisement and sale(b) Redemption of property sold(c) Final deed of purchaser (v) Forfeiture to government for want of bidder(a) Remedy of enforcement of forfeitures(1) Action to contest forfeiture of chattel(b) Resale of real estate taken for taxes 73 Bar Ops Pilipinas 2015 Philippine Association of Law Schools (c) When property to be sold or destroyed(d)Dispositionoffundsrecoveredinlegalproceedingsor obtained from forfeiture(vi) Further distraint or levy(vii) Tax lien It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. The tax lien attaches notonlyfromtheserviceofthewarrantofdistraintofpersonalpropertybut fromthetimethetaxbecamedueandpayable. Besides,thedistraintonthe subject properties of Maritime Company of the Philippines as well as the notice of theirseizureweremadebypetitioner,throughtheCommissionerofInternal Revenue,longbeforethewritofexecutionwasissuedbytheRegionalTrial Court. (Republic vs Enriquez, GR 78391, October 21, 1988) (viii) Compromise(a)AuthorityoftheCommissionertocompromiseandabate taxes(ix) Civil and criminal actions(a) Suit to recover tax based on false or fraudulent returns The contention is made, and is here rejected, that an assessment of the deficiencytaxdueisnecessarybeforethetaxpayercanbeprosecuted criminallyforthechargespreferred.Thecrimeiscompletewhenthe violatorhas,asinthiscase,knowinglyandwillfullyfiledfraudulent returnswithintenttoevadeanddefeatapartorallofthetax.While therecanbenocivilactiontoenforcecollectionbeforetheassessment proceduresprovidedintheCodehavebeenfollowed,thereisno requirementfortheprecisecomputationandassessmentofthetax beforetherecanbeacriminalprosecutionundertheCode.(Ungabvs Cusi Jr., GR L-41919-24, May 30, 1980) Sec. 269 [now Sec. 222 of the 1997 NIRC] provides that when fraudulent tax returns are involved, a proceeding in court after the collection of such taxmaybebegunwithoutassessment.Thegrossdisparityinthetaxes dueandtheamountsactuallydeclaredconstitutesbadgesoffraud. ApplyingUngabv.Cusi,97SCRA877[1980],assessmentisnot necessary in filing criminal complaints for tax violations. Assessment of a deficiency is not necessary to a criminal prosecution for tax evasion. The crimeiscompletewhentheviolatorknowinglyandwillfullyfiled fraudulentreturnwithintentiontoevadethetax.(Adamsonv.Courtof Appeals, 588 SCRA 27) c) Refund A corporation entitled to a tax credit or refund of the excess estimated quarterly income taxespaidhastwooptions:(1)tocarryovertheexcesscreditor(2)toapplyforthe issuance of a tax credit certificate or to claim a cash refund. If the option to carry over the excess credit is exercised, the same shall be irrevocable for that taxable period. This is known as the irrevocability rule and is embodied in the last sentence of Section 76 of the Tax Code. (Systra Philippines vs CIR, GR 176290, September 21, 2007) 74 Bar Ops Pilipinas 2015 Philippine Association of Law Schools Norefundfordocumentarystamptaxes:documentarystamptaxesareleviedonthe exercisebypersonsofcertainprivilegesconferredbylawforthecreation,revision,or termination of specific legal relationships through the execution of specific instruments. Documentary stamp taxes are thus levied on the exercise of these privileges through the executionofspecificinstruments,independentlyofthelegalstatusofthetransactions giving rise thereto. The documentary stamp taxes must be paid upon the issuance of the said instruments, without regard to whether the contracts which gave rise to them are rescissible,void,voidable,orunenforceable.(PhilippineHomeAssuranceCorp.vsCA, GR 119446, January 21, 1999) Sec.79ofthe1997NIRClaiddowntheirrevocabilityrule.Thetaxpayerwithexcess income tax credits is given the option to either (1) to credit the same to its tax liability forthesucceedingtaxableperiods;or(2)refundtheamountorissuetaxcredit certificate.Oncethecarry-overoptionistaken,actuallyorconstructively,itbecomes irrevocable.Itcanneverberefunded.Thecontrollingfactorfortheoperationofthe irrevocability rule is that the taxpayer chose an option; and once it had already done so, it could no longer make another one. No application for refund or tax credit certificate shallbeallowed.TheoptionoftheBPItocarry-overthe1998excesscreditsis irrevocable. BPI cannot anymore apply for the refund in the event it is unable to credit thesaidexcess.Thecreditingoftheexcesscreditsinthesucceedingtaxableperiods has no prescription unlike the claim for refund which prescribes after two years from the filing of the ITR. In the event the taxpayer fails to make an appropriate marking of its option in the ITR, does not mean that the taxpayer is barred from choosing his option later on. The reason for requiring that a choice be made upon the filing of the ITR is to easetaxadministration.Failuretomakeachoicemeansthatthetaxpayerisstill uncertainandwouldshowsimplenegligenceor plainoversight. Thetaxpayermaystill make his choice later but once the choice is made, irrevocability of the said choice sets in. (CIR vs. BPI, 592 SCRA 219) (i) Grounds and requisites for refund (ii) Requirements for refund as laid down by cases Incasesbeforetaxcourts,RulesofCourtappliesonlybyanalogyorina suppletorycharacterandwheneverpracticableandconvenientshallbeliberally construedinordertopromoteitsobjectiveofsecuringajust,speedyand inexpensivedispositionofeveryactionandproceeding.Sinceitisnotdisputed thatpetitionerisentitledtotaxexemption,itshouldnotbeprecludedfrom presenting evidence to substantiate the amount of refund it is claiming on mere technicalityespeciallyinthiscase,wherethefailuretopresentinvoicesatthe firstinstancewasadequatelyexplainedbypetitioner.(PhilippinePhosphate Fertilizer Corp. vs CIR, GR 141973, June 28, 2005)(a) Necessity of written claim for refundAclaimantmustfirstfileawrittenclaimforrefund,categorically demandingrecoveryofoverpaidtaxeswiththeCIR,beforeresortingto anactionincourt. This obviouslyisintended,first,toafford theCIRan opportunitytocorrecttheactionofsubordinateofficers;andsecond,to notifythegovernmentthatsuchtaxeshavebeenquestioned,andthe 75 Bar Ops Pilipinas 2015 Philippine Association of Law Schools notice should then be borne in mind in estimating the revenue available for expenditure. (CIR vs Acosta, GR 154068, August 3, 2007)(b) Claim containing a categorical demand for reimbursement (c)Filingofadministrativeclaimforrefundandthe suit/proceedingbeforetheCTAwithin2yearsfromdateof payment regardless of any supervening cause Thistwo-yearprescriptiveperiodisintendedtoapplytosuitsor proceedingsfortherecoveryoftaxes,penaltiesorsumserroneously, excessively, illegally or wrongfully collected. Accordingly, an availment of ataxcreditgrantedbylawmayhaveadifferentprescriptiveperiod. Absent any specific provision in the Tax Code or special laws, that period wouldbetenyearsunderArticle1144oftheCivilCode.(Concurring opinion of Justice Vitug in CIR vs The Philippine American Life Insurance Co., G.R. No. 105208, May 29, 1995) Section230[nowSec.229,1997NIRC]oftheTaxCode,ascouched, particularly its statute of limitations component, is, in context, intended to applytosuitsfortherecoveryofinternalrevenuetaxesorsums erroneously,excessively,illegallyorwrongfullycollected.Blackdefines theterm erroneousorillegaltax asoneleviedwithoutstatutory authority.Inthestrictlegalviewpoint,therefore,PNBsclaimfortax creditdidnotproceedfrom,orisaconsequenceofoverpayment oftax erroneouslyorillegallycollected.ItisbeyondcavilthatrespondentPNB issuedtotheBIRthecheckforP180Millionintheconceptoftax paymentinadvance,thuseschewingthenotionthattherewaserroror illegality in the payment. (CIR vs PNB, GR 161997, October 25, 2005) Wheneverapplicable,thetwo-yearprescriptiveperiodstartsfrom the full and final payment of the tax sought to be recovered. (Concurring opinion of Justice Vitug in CIR vs The Philippine American Life Insurance Co., G.R. No. 105208, May 29, 1995) For corporations, the two-year prescriptive period within which to claim a refund commences to run, at the earliest, on the date of the filing of the adjustedfinaltaxreturn.Therationaleincomputingthetwo-year prescriptiveperiodwithrespecttothepetitionercorporation'sclaimfor refund from the time it filed its final adjustment return is the fact that it wasonlythenthatACCRAINcouldascertainwhetheritmadeprofitsor incurredlossesinitsbusinessoperations.(ACCRAInvestmentsvsCA, G.R. No. 96322, December 20, 1991) Evenifthetwo(2)-yearprescriptiveperiod,ifapplicable,hadalready lapsed, the same is not jurisdictional and may be suspended for reasons ofequityandotherspecialcircumstances.RecordsshowthattheBIRs very own conduct led PNB to believe all along that its original intention to applytheadvancepaymenttoits futureincometaxobligationswillbe respected by the BIR. (CIR vs PNB, GR 161997, October 25, 2005) 76 Bar Ops Pilipinas 2015 Philippine Association of Law Schools

The claim for refund with the Commissioner of Internal Revenue and the subsequent action before the Court of Tax Appeals regarding the refund should all be done within the said period of two years. (CIR vs NPC, G.R. No. L-18874 January 30, 1970)(iii) Legal basis of tax refunds(iv) Statutory basis for tax refund under the tax code(a) Scope of claims for refund(b) Necessity of proof for claim or refund(c) Burden of proof for claim of refund Taxrefunds,liketaxexemptions,areconstruedstrictlyagainstthe taxpayer. The claimants have the burden of proof to establish the factual basisoftheirclaimforrefundortaxcredit.(HitachiGlobalvsCIR,G.R. No. 174212, October 20, 2010) The Commissioners contention that a tax refund partakes the nature of a tax exemption does not apply to the tax refund to which Fortune Tobacco isentitled.Thereisparitybetweentaxrefundandtaxexemptiononly whentheformerisbasedeitheronataxexemptionstatuteoratax refundstatute.Obviously,thatisnotthesituationhere. Quitethe contrary, Fortune Tobaccos claim for refund is premised on its erroneous paymentofthetax,orbetterstillthegovernmentsexactioninthe absenceofalaw.(CIRvsFortuneTobaccoCorp., GR167274-75,July 21, 2008) (d) Nature of erroneously-paid tax/illegally assessed collected(e) Tax refund vis--vis tax credit Formally, a tax refund requires a physical return of the sum erroneously paidbythetaxpayer,whileataxcreditinvolvestheapplicationofthe reimbursableamountagainstanysumthatmaybedueandcollectible from the taxpayer. On the practical side, the taxpayer to whom the tax is refundedwouldhavetheoption,amongothers,toinvestforprofitthe returned sum, an option not proximately available if the taxpayer chooses insteadtoreceiveataxcredit.(CIRvsPhilippinePhosphateFertilizer Corporation, G.R. No. 144440, September 1, 2004)(f) Essential requisites for claim of refund(v) Who may claim/apply for tax refund/tax credit(a)Taxpayer/withholdingagentsofnon-residentforeign corporation Theproperpartytoquestion,orseekarefundofanindirecttaxisthe statutorytaxpayer,thepersononwhomthetaxisimposedbylawand who paid the same even if he shifts the burden thereof to another. Even ifPetronCorporationpassedontoSilkairtheburdenofthetax,the additional amount billed to Silkair for jet fuel is not a tax butpart of the pricewhichSilkairhadtopayasapurchaser.(SilkairvsCIR,G.R.Nos. 171383 & 172379, November 14, 2008) A withholding agent is a proper party to claim tax refund. He is liable to paythetaxandsubjecttotax.Thewithholdingagentisconstituted 77 Bar Ops Pilipinas 2015 Philippine Association of Law Schools the agent of both the Government and the taxpayer. With respect to the collection and/or withholding of the tax, he is the Government's agent. In regard to the filing of the necessary income tax return and the payment ofthetaxtotheGovernment,heistheagentofthetaxpayer.(CIRvs Procter & Gamble, GR L-66838, December 2, 1991) (vi)Prescriptiveperiodforrecoveryoftaxerroneouslyorillegally collected(vii) Other consideration affecting tax refunds 2. Government remediesa) Administrative remedies(i) Tax lien(ii) Levy and sale of real property(iii) Forfeiture of real property to the government for want of bidder(iv) Further distraint and levy(v) Suspension of business operation(vi) Non-availability of injunction to restrain collection of tax TheNationalInternalRevenueCodeof1997(NIRC)expresslyprovides thatno court shall have the authority to grant an injunction to restrain the collection of anynationalinternalrevenuetax,feeorchargeimposedbythecode.The situation, however, is different in the case of the collection of local taxes as there is no express provision in the LGC prohibiting courts from issuing an injunction to restrainlocalgovernmentsfromcollectingtaxes. Suchstatutorylapse orintent, however it may be viewed, may have allowed preliminary injunction where local taxesareinvolvedbutcannotnegatetheproceduralrulesandrequirements under Rule 58. (Angeles City vs. Angeles City Electric Corp., GR 166134, June 29, 2010) b) Judicial remedies 3. Statutory offenses and penaltiesa) Civil penalties It is mandatory to collect penalty and interest at the stated rate in case of delinquency. Theintentionofthelawistodiscouragedelayinthepaymentoftaxesduethe Government and, in this sense, the penalty and interest are not penal but compensatory fortheconcomitantuseofthefundsbythetaxpayerbeyondthedatewhenheis supposedtohavepaidthemtotheGovernment. Ifpenaltiescouldbecondonedfor flimsyreasons,thelawimposingpenaltiesfordelinquencieswouldberendered nugatory, and the maintenance of the Government and its multifarious activities will be adversely affected. (Philippine Refining Company vs. CA, GR 118794, May 8, 1996) Thetaxpayershouldbe liableonlyfor tax proper andshouldnotbeheldliableforthe surcharge and interest when it appears that the assessment is highly controversial. The Commissionerattheoutsetwasnotcertainastopetitioner'sincometaxliability. (Cagayan Electric Power Light vs CIR, G.R. No. L-60126, September 25, 1985)

(i) Surcharge(ii) Interest78 Bar Ops Pilipinas 2015 Philippine Association of Law Schools (a) In general(b) Deficiency interest(c) Delinquency interest(d) Interest on extended payment 4. Compromise and abatement of taxesa) CompromiseCompromise may be the favored method to settle disputes, but when it involves taxes, it maybesubjecttocloserscrutinybythecourts. Acompromiseagreementinvolving taxeswouldaffectnotjustthetaxpayerandtheBIR,butalsothewholenation,the ultimate beneficiary of the tax revenues collected. (PNOC vs CA, G.R. No. 109976, April 26, 2005) ThediscretionaryauthoritytocompromisegrantedtotheBIRCommissionerisnever meant to be absolute, uncontrolled and unrestrained.No such unlimited power may be validlygrantedtoanyofficerofthegovernment,exceptperhapsincasesofnational emergency.TheBIRCommissionerwouldhavetoexercisehisdiscretionwithinthe parameterssetbythelaw,andincaseheabuseshisdiscretion,theCTAmaycorrect such abuse if the matter is appealed to them. (PNOC vs CA, G.R. No. 109976, April 26, 2005) RMONo.39-86expresslyallowsawithholdingagent,whofailedtowithholdthe requiredtaxbecauseofneglect,ignoranceofthelaw,orhisbeliefthathewasnot required by law to withhold tax, to apply for a compromise settlement of his withholding taxliabilityunderE.O.No.44. Awithholdingagent,insuchasituation,may compromisethewithholdingtaxassessmentagainsthimpreciselybecauseheisbeing helddirectlyaccountableforthetax.RMONo.39-86distinguishesbetweenthe withholdingagentintheforegoingsituationfromthewithholdingagentwhowithheld the tax but failed to remit the amount to the Government.A withholding agent in the lattersituationistheonedisqualifiedfromapplyingforacompromisesettlement becauseheisbeingmadeaccountableasanagent,whoheldfundsintrustforthe Government. (PNOC vs CA, G.R. No. 109976, April 26, 2005) b) Abatement The BIR may therefore abate or cancel the whole or any unpaid portion of a tax liability, inclusiveofincrements,ifitsassessmentisexcessiveorerroneous; orifthe administration costs involved do not justify the collection of the amount due. No mutual concessions need be made, because an excessive or erroneous tax is not compromised; it is abated or canceled.Only correct taxes should be paid. (People vs Sandiganbayan, GR 152532, August 16, 2005) F. Organization and Function of the Bureau of Internal Revenue1. Rule-making authority of the Secretary of FinanceThe authority of the Minister of Finance (now the Secretary of Finance), in conjunction withtheCommissionerofInternalRevenue,topromulgateallneedfulrulesand regulationsfortheeffectiveenforcementofinternalrevenuelawscannotbe controverted.Neithercanitbedisputedthatsuchrulesandregulations,aswellas administrative opinions and rulings, ordinarily should deserve weight and respect by the courts.Muchmorefundamentalthaneitheroftheabove,however,isthatallsuch issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to 79 Bar Ops Pilipinas 2015 Philippine Association of Law Schools carryout,neithertosupplantnortomodify,thelaw.(CIRvsCA,G.R.No.108358, January 20, 1995) a)AuthorityofSecretaryofFinancetopromulgaterulesand regulationsb) Specific provisions to be contained in rules and regulationsc) Non-retroactivity of rulings2.PoweroftheCommissionertosuspendthebusinessoperationofa taxpayer III. Local Government Code of 1991, as amendedA.Local government taxation 1.Fundamental principles The fundamental law did not intend the delegation to be absolute and unconditional; the constitutional objective obviously is to ensure that, while the local government units are being strengthenedandmademoreautonomous,thelegislaturemuststillseetoitthat(a)the taxpayer will not be over-burdened or saddled with multiple and unreasonable impositions; (b) eachlocalgovernmentunitwillhaveitsfairshareofavailableresources,(c)theresourcesof thenationalgovernmentwillnotbeundulydisturbed;and(d)localtaxationwillbefair, uniform, and just.(Manila Electric Co. v. Province of Laguna, G.R. No. 131359, May 05, 1999) 2.Nature and source of taxing power UnderthenowprevailingConstitution,wherethereisneitheragrantnorprohibitionby statute, the taxing power of local governments must be deemed to exist although Congress may provide statutory limitations and guidelines in order to safeguard the viability and self-sufficiency oflocalgovernment unitsbydirectlygrantingthemgeneralandbroadtaxpowers.(City Government of San Pablo, Laguna, et al., v. Reyes, et al., G.R. No. 127708, March 25, 1999) a)Grant of local taxing power under the local government code Local governments do not have the inherent power to tax except to the extent that such powermightbe delegated tothemeitherbythebasiclaworbystatute.Presently,under Article X of the 1987 Constitution, a general delegation of that power has been given in favor of local government units. (Manila Electric Company vs Province of Laguna, G.R. No. 131359, May 5, 1999) b)Authority to prescribe penalties for tax violationsc)Authority to grant local tax exemptionsd)Withdrawal of exemptionse)Authority to adjust local tax ratesf)Residual taxing power of local governmentsg)Authority to issue local tax ordinances An ordinance carries with it the presumption of validity. The question of reasonableness though is open to judicial inquiry.(Victorias Milling Co., Inc. v. Municipality of Victorias, G.R. No. L-21183, September 27, 1968) 92 Bar Ops Pilipinas 2015 Philippine Association of Law Schools underSection3601oftheTariffandCustomsCode.(Peoplev.Desiderio,G.R.No.L-20805, November 29, 1965) The requisites for the forfeiture of goods under Section 2530(f), in relation to (1) (3-5), of the Tariff and Customs Code are: (a) the wrongful making by the owner, importer, exporter orconsigneeofanydeclarationoraffidavit,orthewrongfulmakingordeliverybythesame personofanyinvoice,letterorpaperalltouchingontheimportationorexportationof merchandise;(b)thefalsityofsuchdeclaration,affidavit,invoice,letterorpaper;and(c)an intentiononthepartoftheimporter/consigneetoevadethepaymentoftheduties due. (Republic v. CTA, G.R. No. 139050, October 02, 2001) Onceprobablecausehasbeenshownfortheinstitutionofforfeitureproceedings,the burden of proof is upon claimant to establish that he fell within the purview of the exception. The legal presumption in Section 5(j), Rule 131 of the Rules of Court and Article 541 of the Civil Code are of a general character and cannot prevail over the specific provisions of the Tariff and Customs Code. (Acting Commr. of Customs v. CTA, G.R. No. 62636, April 27, 1984) b)Judicial(i)Rules on appeal including jurisdiction 2.Taxpayera)Protestb)Abandonment BoththeImportEntryDeclaration(IED)andImportEntryandInternalRevenue Declaration(IEIRD)shouldbefiledwithin30daysfromthedateofdischargeofthelast packagefromthevesseloraircraft. (ChevronPhilippines,Inc.v.Commr.,G.R.No.178759, August 11, 2008) c)Abatement and refund V.JudicialRemedies(R.A.No.1125,asamended,andtheRevisedRulesofthe Court of Tax Appeals) A.Jurisdiction of the Court of Tax Appeals 1.Exclusive appellate jurisdiction over civil tax casesa)Cases within the jurisdiction of the court en banc TheappellatejurisdictionoftheCTAisnotlimitedtocaseswhichinvolvedecisionsof theCIRonmattersrelatingtoassessmentsorrefunds.Section7of RepublicActNo. 1125||| coversothercasesthatariseoutoftheNationalInternalRevenueCode(NIRC)or relatedlawsadministeredbytheBureauofInternalRevenue(BIR).(Commr.v.Hambretch & Quist Philippines, Inc., G.R. No. 169225, November 17, 2010) 93 Bar Ops Pilipinas 2015 Philippine Association of Law Schools Inlinewiththelifeblooddoctrine, theNationalInternalRevenueCodeof1997(NIRC) expressly provides that no court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the code. An exception tothisruleobtainsonlywhenintheopinion of theCourtofTaxAppeals(CTA) thecollection thereofmayjeopardizetheinterestofthegovernmentand/orthetaxpayer. (AngelesCityv. Angeles Electric Corporation, G.R. No. 166134, June 29, 2010) b)Cases within the jurisdiction of the court in divisions WithouttheautomaticreviewbytheCommissionerofCustomsandtheSecretaryof Finance, a collector in any of our country's far-flung ports, would have absolute and unbridled discretion to determine whether goods seized by him are locally produced, hence, not dutiable, or of foreign origin, and therefore subject to payment of customs duties and taxes. His decision, unless appealed by the aggrieved party (the owner of the goods), would become final with no onethewiserexcepthimselfandtheownerofthegoods. (Yaokasinv.Commissionerof Customs, G.R. No. 84111, December 22, 1989) Section 7 of Republic Act No. 1125, creating the Court of Tax Appeals, in providing for appeals from '(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments,refundsofinternalrevenuetaxes,feesorothercharges,penaltiesimposedin relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of the law administered by the Bureau of Internal Revenue allows an appeal from a decision of the Collector in cases involving 'disputed assessments' as distinguished from cases involving'refundsofinternalrevenuetaxes,feesorothercharges,...'; Toholdthatthe taxpayer has now lost the right to appeal from the ruling on the disputed assessment but must prosecutehisappealunderSection306oftheTaxCode,whichrequiresataxpayertofilea claim for refund of the taxes paid as a condition precedent to his right to appeal, would in effect requireofhimtogothroughauselessandneedlessceremonythatwouldonlydelaythe disposition of the case, for the Collector (now Commissioner) would certainly disallow the claim for refund in the same way as he disallowed the protest against the assessment. (Vda. de San Agustin v. Commr., G.R. No. 138485, September 10, 2001) WhilethelawconfersontheCTAjurisdictiontoresolvetaxdisputesingeneral,this does not include cases where the constitutionality of a law or rule is challenged. Where what is assailedisthevalidityorconstitutionalityofalaw,oraruleorregulationissuedbythe administrativeagencyintheperformanceofitsquasi-legislativefunction,theregularcourts havejurisdictiontopassuponthesame. (BritishAmericanTobaccov.Camacho,G.R.No. 163583, August 20, 2008) The reviewable decision of the Bureau of Internal Revenue is that contained in the letter ofitsCommissioner,thatsuchconstitutesthefinaldecisiononthematterwhichmaybe appealed to the Court of Tax Appeals and not the warrants of distraint. It was likewise stressed thattheprocedureenunciatedisdemandedbythepressingneedforfairplay,regularityand orderliness in administrative action. (Commr. v. Union Shipping Corp., G.R. No. 66160, May 21, 1990) A final demand letter from the Bureau of Internal Revenue, reiterating to the taxpayer theimmediatepaymentofataxdeficiencyassessmentpreviouslymade,istantamounttoa 94 Bar Ops Pilipinas 2015 Philippine Association of Law Schools denial of the taxpayer's request for reconsideration. Such letter amounts to a final decision on a disputedassessmentandisthusappealabletotheCourtofTaxAppeals(CTA). (Commr.v. Isabela Cultural Corp., G.R. No. 135210, July 11, 2001) Iftheprotestisdeniedinwholeorinpart,orisnotacteduponwithinonehundred eighty(180)daysfromsubmissionofdocuments,thetaxpayeradverselyaffectedbythe decision or inaction may appeal to the Court of Tax Appeals within (30) days from receipt of the saiddecision,orfromthelapseoftheonehundredeighty(180)-dayperiod;otherwisethe decision shall become final, executory and demandable.||| (Rizal Commercial Banking Corp. v. Commr., G.R. No. 168498, June 16, 2006) TheperiodtoappealfromadecisionoftheCommissionerofInternalRevenuetothe CourtofTaxAppealsunder RepublicActNo.1125 isjurisdictionalandnon-extendibleanda taxpayermaynotdelayindefinitelyataxassessmentbyreiteratinghisoriginaldefensesover and over again, without substantial variation. (Filipinas Investment & Finance Corp. v. Commr., G.R. No. L-23501, May 16, 1967) Toallowalitigant toassumeadifferentposturewhenhecomesbeforethecourtand challengethepositionhehadacceptedattheadministrativelevel,wouldbetosanctiona procedure whereby the Court which is supposed to review administrative determinations wouldnotreview,butdetermineanddecideforthefirsttime,aquestionnotraisedatthe administrativeforum. Thus,itiswellsettledthatunderthesameunderlyingprincipleofprior exhaustion of administrative remedies, on the judicial level, issues not raised in the lower court cannot be raised for the first time on appeal. (Commr. v. Wander Phils., Inc., G.R. No. 68375, April 15, 1988) Bywithdrawingtheappeal,petitionerisdeemedtohaveacceptedthedecisionofthe CTA. Petitionercannotbeallowedtocircumventthedenialofitsrequestforataxcreditby abandoningitsappealandfilinganewclaim. (CentralLuzonDrugCorp.v.Commr.,G.R.No. 181371, March 02, 2011) Sec. 7 of RA 1125 provides that the CTA has exclusive appellate jurisdiction to review by appealdecisionsoftheCIRincasesinvolvingdisputedassessments.LikewiseSec.4ofthe 1997NIRC[RA8424]providesthattheCIRhasthepowertodecidedisputedassessments subjecttotheexclusiveappellatejurisdictionoftheCTA.Thelatestlawonthejurisdictionof the CTA under Sec. 7 of RA 9282 provides that the CTA exercises exclusive appellate jurisdiction toreviewbyappealdecisionsoftheCIRincasesinvolvingdisputedassessments.Thusthe CTAs jurisdiction is to entertain an appeal only from a final decision or assessment of the CIR or in cases where the CIR has not acted within the period prescribed by the NIRC. So when the CIRhasnotissuedanassessment,thenthereisnothingtoprotestordispute.(Adamsonvs. Court of Appeals, 588 SCRA 27) TheperiodtoappealthedecisionorrulingoftheRTCinlocaltaxcasestoCTAvia petitionforreviewisgovernedbySec.11ofRA9282andSec.3(a),Rule8oftheRevised Rules of CTA, which is 30 days from receipt of decision or ruling. To appeal an adverse ruling of theRTCtotheCTAthetaxpayermustfileapetitionforreviewwiththeCTAwithin30days from receipt of the adverse decision or ruling. An extension may be granted for 15 days. With theseveralextensionsaskedtheCTAcandismissthepetition.Failuretocomplywith 95 Bar Ops Pilipinas 2015 Philippine Association of Law Schools requirementswouldalsobeagroundtodismissthepetition.(CityofManilavs.CocaCola Bottlers Phils., 595 SCRA 299) 2.Criminal casesa)Exclusive original jurisdictionb)Exclusive appellate jurisdiction in criminal cases B.Judicial procedures1.Judicial action for collection of taxesa)Internal revenue taxes Nowhere in the Tax Code is the Collector of Internal Revenue required to rule first on a taxpayer's request for reinvestigation before he can go to court for the purpose of collecting the tax assessed. On the contrary, Section 305 of the same Code withholds from all courts, except theCourtofTaxAppealsunderSection11of Republic Act1125,theauthoritytorestrainthe collection of any national internal-revenue tax, fee or charge, thereby indicating the legislative policytoallowtheCollectorofInternalRevenuemuchlatitudeinthespeedyandprompt collectionoftaxes. (Republicv.Lim Tian TengSons&Co.,Inc.,G.R.No.L-21731, March31, 1966) Forthepurposeofsafeguardingtaxpayersfromanyunreasonableexamination, investigation or assessment, our tax law provides a statute of limitations in the collection of taxes. (CommissionerofInternalRevenuev.B.F.GoodrichPhils,Inc., (nowSimeDarbyInternational Tire Co., Inc.), et al., G.R. No. 104171, February 24, 1999, 303 SCRA 546; Philippine Journalists, Inc.v.CommissionerofInternalRevenue, G.R.No.162852,December16,2004), aswellas their assessments. Thelawprescribingalimitationofactionsforthecollectionoftheincometaxis beneficialbothtotheGovernmentandtoitscitizens;totheGovernmentbecausetaxofficers would be obliged to act promptly in the making of assessment, and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers, not to determine thelattersrealliability,buttotakeadvantageofeveryopportunitytomolestpeaceful,law-abiding citizens. Without such a legal defense taxpayers would furthermore be under obligation toalwayskeeptheirbooksandkeepthemopenforinspectionsubjecttoharassmentby unscrupuloustaxagents.(BankofPhilippineIslands(FormerlyFarEastBankandTrust Company) v. Commissioner of Internal Revenue, G. R. No. 174942, March 7, 2008) Unreasonable investigation contemplates cases where the period for assessment extends indefinitely because this deprives the taxpayer of the assurance that it will no longer be subjected to further investigationfor taxes after the expiration of a reasonable period of time.(Philippine Journalists, Inc. v. Commissioner of Internal Revenue, G. R. No. 162852, December 16, 2004) Forthepurposeofsafeguardingtaxpayersfromanyunreasonableexamination, investigationorassessment,ourtaxlawprovidesastatuteoflimitationsinthecollectionof taxes. Thus, the law on prescription, being a remedial measure, should be liberally construed in order to afford such protection and the exceptions to the law on prescription should perforce be strictly construed. (Philippine Journalists Inc. v. Commr., G.R. No. 162852, December 16, 2004) 96 Bar Ops Pilipinas 2015 Philippine Association of Law Schools The signatures of both the Commissioner and the taxpayer, are required for a waiver of the prescriptive period, thus a unilateral waiver on the part of the taxpayer does not suspend the prescriptiveperiod.(CommissionerofInternalRevenuev.CourtofAppeals,etal.,G.R.No. 115712, February 25, 1999) Theactofrequestingareinvestigationalonedoesnotsuspendtherunningofthe prescriptiveperiod.TherequestforreinvestigationmustbegrantedbytheCIR.(Bankof PhilippineIslands(FormerlyFarEastBankandTrustCompany)v.CommissionerofInternal Revenue, G. R. No. 174942, March 7, 2008) b)Local taxes(i)Prescriptive period 2.Civil casesa)Who may appeal, mode of appeal, effect of appeal(i)Suspension of collection of taxa)Injunction not available to restrain collection(ii)Taking of evidence(iii)Motion for reconsideration or new trial It is true that petitioner could not move for new trial on the basis of newly discovered evidencebecauseinordertohaveanewtrialonthebasisofnewlydiscoveredevidence,it must be proved that: (a) the evidence was discovered after the trial; (b) such evidencecould not have been discovered and produced at the trial with reasonable diligence; (c) it is material, notmerelycumulative,corroborativeorimpeaching;and(d)itisofsuchweightthat,if admitted,willprobablychangethejudgment. Thisdoesnotmeanhowever,thatpetitioneris altogether barred from having a new trial if the reasons put forth by petitioner could fall under mistakeorexcusablenegligence. (PhilippinePhosphateFertilizerCorp.v.Commr.,G.R.No. 141973, June 28, 2005) BeforetheCTAEnBanccouldtakecognizanceofthepetitionforreviewconcerninga casefallingunderitsexclusiveappellatejurisdiction,thelitigantmustsufficientlyshowthatit soughtpriorreconsiderationormovedforanewtrialwiththeconcernedCTAdivision. Procedural rules are not to be trifled with or be excused simply because their non-compliance mayhaveresultedinprejudicingaparty'ssubstantiverights. (CommisionerofCustomsv. Marina Sales, Inc., G.R. No. 183868, November 22, 2010) TheCommissionerofInternalRevenue,nothavingclearlysignifiedhisfinalactionon the disputed assessment, legally the period to appeal has not commenced to run. The request for reinvestigation and reconsideration was in effect considered denied by CIR when the latter filed a civil suit for collection of deficiency income. (Commissioner of Internal Revenue vs Union Shipping Corporation and the Court of Tax Appeals, G.R. No. L-66160, May 21, 1990) A letter of the BIR Commissioner reiterating to a taxpayer his previous demand to pay an assessment is considered a denial of the request for reconsideration or protest and is appealable totheCourtofTaxAppeals.(Commr.v.AyalaSecuritiesCorp.,G.R.No.L-29485,March31, 1976) 97 Bar Ops Pilipinas 2015 Philippine Association of Law Schools b)Appeal to the CTA, en banc ThepetitionforreviewtobefiledwiththeCTA enbancasthemodeforappealinga decision, resolution, or order of the CTA Division, under Section 18 of Republic Act No. 1125, as amended,isnotatotallynewremedy,uniquetotheCTA,withaspecialapplicationoruse therein.Accordingly, doctrines, principles, rules, and precedents laid down in jurisprudence by thisCourtasregardspetitionsforreviewandappealsincourtsofgeneraljurisdictionshould likewisebindtheCTA,anditcannotdeparttherefrom.(Santosv.People,etal, G.R.No. 173176, August 26, 2008) c)Petition for review on certiorari to the Supreme Court BOCcommittedproceduralmisstepsandthedecisionoftheCTAdivisionhasbecome final. The Supreme Court is without jurisdiction to review decisions rendered by a division of the CTAbutthedecisionoftheCTAenbanc.UnderSec.9ofRA9282,apartyaffectedbythe ruling or decision of a division of the CTA may file an MR within 15 days. Sec. 11 of RA 9282 provides that if the MR is denied, a petition for review is filed with the CTA en banc. From an adverse ruling or decision from the CTA en banc, the appeal by way of petition for review on certiorariunderRule45isfiledwiththeSupremeCourt.ThustheSupremeCourthasno jurisdictiontoreviewthedecisionofadivisionoftheCTA.(Com.ofCustomsv.Gelmart Industries, 579 SCRA 272) 3.Criminal casesa)Institution and prosecution of criminal actions Anysubsequentsatisfactionofthetaxliability,bypaymentorprescription, willnot operatetoextinguishcriminalliability, sincethedutytopaythetaxisimposedbystatute independent of any attempt on the part of the taxpayer to evade payment. The failure of the government, therefore, to enforce by appropriate civil remedies the collection of the taxes, does not detract from its right criminally to prosecute violations of the Code. (People v. Tierra, G.R. Nos. L-17177-80, December 28, 1964) (i)Institution of civil action in criminal action Section222oftheNIRCspecificallystatesthatincaseswhereafalseorfraudulent return is submitted or in cases of failure to file a return such as this case, proceedings in court may be commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandatesthatthecivilandcriminalaspectsofthecasemaybepursued simultaneously. (Commr.v.PascorRealty&DevelopmentCorp.,G.R.No.128315,June29, 1999) Sincethecivilliabilityisnotdeemedincludedinthecriminalaction,acquittalofthe taxpayer in the criminal proceeding does not necessarily entail exoneration from his liability to pay the taxes. The acquittal in a criminal case cannot operate to discharge defendant from the dutyofpayingthetaxeswhichthelawrequirestobepaid,sincethatdutyisimposedby 98 Bar Ops Pilipinas 2015 Philippine Association of Law Schools statutepriortoandindependentlyofanyattemptsbythetaxpayertoevade payment. (Republic v. Patanao, G.R. No. L-22356, July 21, 1967) With regard to the tax proper, the state correctly points out in its brief that the acquittal in the criminal case could not operate to discharge petitioner from the duty to pay the tax, since thatdutyisimposed bystatuepriortoandindependentlyofanyattemptsonthepart ofthe taxpayertoevadepayment.Theobligationtopaythetaxisnotamereconsequenceofthe felonious acts charged in the information, nor is it a mere civil liability derived from crime that wouldbewipedoutbythejudicialdeclarationthatthecriminalactschargeddidnot exist. (Castro v. Collector of Internal Revenue, G.R. No. L-12174, April 26, 1962) b)Appeal and period to appeal(i)Solicitor General as counsel for the people and government officials sued in their official capacityc)Petition for review on certiorari to the Supreme Court C.Taxpayers suit impugning the validity of tax measures or acts of taxing authorities1.Taxpayers suit, defined Itishornbookprinciplethata taxpayer isallowedtosuewherethereisaclaimthat publicfundsareillegallydisbursed,orthatpublicmoneyisbeingdeflectedtoanyimproper purpose,orthatthereiswastageofpublicfundsthroughtheenforcementofaninvalidor unconstitutionallaw. Fora taxpayer's suit toprosper,tworequisitesmustbemetnamely,(1) public funds derived from taxation are disbursed by a political subdivision or instrumentality and in doing so, a law is violated or some irregularity is committed; and (2) the petitioner is directly affected by the alleged act. (LBP v. Cacayuran, G.R. No. 191667, April 17, 2013) What is a taxpayers suit? In the case of a taxpayer, he is allowed to sue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improperpurpose,orthatthereisawastageofpublicfundsthroughtheenforcementofan invalid or unconstitutional law. Before he can invoke the power of judicial review, however, he mustspecificallyprovethathehassufficientinterestinpreventingtheillegalexpenditureof moneyraisedbytaxationandthathewouldsustainadirectinjuryasaresultofthe enforcementofthequestionedstatuteorcontract.Itisnotsufficientthathehasmerelya generalinterestcommontoallmembersofthepublic.Atallevents,courtsarevestedwith discretion as to whether or not a taxpayer's suit should be entertained. This Court opts to grant standing to most of the petitioners, given their allegation that any impending transmittal to the Senate of the Articles of Impeachment and the ensuing trial of the Chief Justice will necessarily involvetheexpenditureofpublicfunds.(Francisco,Jr.vs.Nagmamalasakitnamga Manananggol ng mga Manggagawang Pilipino, 415 SCRA 44) 2.Distinguished from citizens suit Taxpayers have been allowed to sue where there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law. On the other hand, as citizens,petitionershavemustfulfillthestandingrequirementgiventhattheissuesthey 99 Bar Ops Pilipinas 2015 Philippine Association of Law Schools haveraisedmaybeclassifiedasmatters"oftranscendentalimportance,ofoverreaching significancetosociety,orofparamountpublicinterest."(Belgicav.Ochoa,G.R.No.208566, 208493, 209251, L-20768, November 19, 2013) What is a citizens suit? When suing as a citizen, the interest of the petitioner assailing the constitutionality of a statute must be direct and personal. He must be able to show, not only thatthelaworanygovernmentactisinvalid,butalsothathesustainedorisinimminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute or act complained of. In fine,whentheproceedinginvolvestheassertionofapublicright,themerefactthatheisa citizen satisfies the requirement of personal interest. (Francisco, Jr. vs. Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, 415 SCRA 44) 3.Requisitesforchallengingtheconstitutionalityofataxmeasureoractoftaxing authoritya)Concept of locus standi as applied in taxationLegal standing or locus standi has been defined as a personal and substantial interest in the case such that the party has sustained or will sustain direct injury asaresultofthegovernmentalasthatisbeingchallenged.Thegistofthe questionofstandingiswhetherapartyallegessuchpersonalstakeinthe outcomeofthecontroversyastoassuretheconcreteadversenesswhich sharpensthepresentationofissuesuponwhichthecourtdependsfor illumination of difficult constitutional questions. To invest him with locus standi, the plaintiff has to adequately show that he is entitled to judicial protection and has a sufficient interest in the vindication of the assertedpublicright.Incaseoftaxpayerssuits,thepartysuingasataxpayer must prove that he has sufficient interest in preventing the illegal expenditure of money raised by taxation. (Public Interest Center vs. Roxas, 513 SCRA 457) Locusstandi,however,ismerelyamatterofprocedureandithasbeen recognized that in some cases, suits are not brought by parties who have been personally injured by the operation of a law or any other government act but by concernedcitizens,taxpayersorvoterswhoactuallysueinthepublicinterest. Consequently,theCourt,inacatenaofcases,hasinvariablyadoptedaliberal stance on locus standi, including those cases involving taxpayers. The prevailing doctrineintaxpayerssuitsistoallowtaxpayerstoquestioncontractsentered into by the national government or government-owned or controlled corporations allegedly in contravention of law. A taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed, or that money is being deflected to anyimproperpurpose,orthatthereiswastageofpublicfundsthroughthe enforcement of an invalid or unconstitutional law. Significantly, a taxpayer need not be a party to the contract to challenge its validity. (Abaya vs. Ebdane, Jr. 515 SCRA 720) 100 Bar Ops Pilipinas 2015 Philippine Association of Law Schools b)Doctrine of transcendental importanceWhatistranscendentalimportance?Therebeingnodoctrinaldefinitionof transcendental importance, the following instructive determinants are instructive: (1)thecharacterofthefundsorotherassetsinvolvedinthecase,(2)the presence of a clearcase of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government, and the (3) the lack of any other party with a more direct and specific interest in raising thequestionsbeingraised.TheCourthasadoptedaliberalattitudeonlocus standi where the petitioner is able to craft an issue of transcendental significance tothepeople,aswhentheissuesraisedareofparamountimportancetothe public.(Francisco,Jr.vs.NagmamalasakitnamgaManananggolngmga Manggagawang Pilipino, 415 SCRA 44) Only a person who stands to be benefited or injured by the judgment in the suit or entitled to the avails of the suit can file a complaint or petition. Respondents claim that petitioner is not a proper party-in-interest as he was unable to show that he has sustained or is in immediate or imminent danger of sustaining some directandpersonalinjuryasaresultoftheexecutionandenforcementofthe assailed contracts or agreements. Moreover, they assert that not all government contractscanjustifyataxpayerssuitespeciallywhennopublicfundswere utilized in contravention of the Constitution or a law. We explicated in Chavez v. PCGG, 299 SCRA 744 (1998), that in cases where issues of transcendental public importancearepresented,thereisnonecessitytoshowthatpetitionerhas experienced or is in actual danger of suffering direct and personal injury as the requisite injury is assumed. We find our ruling in Chavez v. PEA, 384 SCRA 152 (2002), as conclusive authority on locus standi in the case at bar since the issues raisedinthispetitionareaverredtobeinbreachofthefairdiffusionofthe countrys natural resources and the constitutional right of a citizen to information whichhavebeendeclaredtobemattersoftranscendentalpublicimportance. Moreover, the pleadings especially those of respondents readily reveal that public funds have been indirectly utilized in the Project by means of Smokey Mountain ProjectParticipationCertificates(SMPPCs)boughtbysomegovernment agencies.Hence,petitioner,asataxpayer,isaproperpartytotheinstant petition before the court. (Chavez vs. NHA, 530 SCRA 235) c)Ripeness for judicial determination PREPARED BY: UNIVERSITY OF SAN CARLOS PLAZA, ATHENA PLAZA, LADY LOVE JACILDO, JECCA