TAXATION LAW 2

GROUP III
GAPUZAN, ANGELI B.
RAFAEL, KIMBERLY P.
SEBASTIAN, JERZON S.
QUESTION:
Daenerys filed and paid taxes on April 15, 2007 worth P 5 million. On
May 15, 2007, the BIR issued an assessment and required Daenerys to
pay an additional P 1 million on or before June 15, 2007. If she pays
before June 15, 2007, is she subject to the 25% surcharge? Explain.
ANSWER:
No, Daenerys is not liable for the payment of 25% surcharge. Under Section 248 of the
NIRC, a penalty equivalent to twenty-five percent (25%) of the amount due is imposed in
the following cases:
(1) Failure to file any return and pay the tax due thereon as required under the provisions
of this Code or rules and regulations on the date prescribed; or
(2) Unless otherwise authorized by the Commissioner, filing a return with an internal
revenue officer other than those with whom the return is required to be filed; or
(3) Failure to pay the deficiency tax within the time prescribed for its payment in the
notice of assessment; or
(4) Failure to pay the full or part of the amount of tax shown on any return required to be
filed under the provisions of this Code or rules and regulations, or the full amount of
tax due for which no return is required to be filed, on or before the date prescribed
for its payment.
None of the above violations mentioned was committed by the taxpayer; hence, she is not
liable for the 25 % surcharge.
QUESTION:
Panda Inc is a domestic corporation registered with SBMA as Freeport
enterprise. It filed its ITR for 1996 showing net loss of P7,684,948. BIR,
thru preliminary 5-day letter, informed Panda Inc. of deficiency income
tax assessment of P2,880,817. On May 26, 1999, Panda Inc. received
FAN from CIR and it protested the same on June 14, 1999. Due to nonresolution of protest within 180-day period, Panda Inc. filed a petition
for review in CTA. It argued that the deficiency assessment
disregarded Sec. 228 of Tax Code and Sec. 3.1.4 of RR 12-99, by not

providing the legal and factual bases of assessment. Is the claim of

Panda Inc. valid? Explain.
ANSWER:
Yes. The claim of Panda Inc. is valid. Sec. 228 of the Tax Code provides
that taxpayers shall be informed in writing of the law and the facts on
which the assessment is made; otherwise, the assessment is void. RR
12-99 provides that the letter of demand shall state the facts, the law,
and the regulations, or jurisprudence on which the assessment is
based, otherwise, the formal letter of demand and assessment notice
shall be void. (CIR vs. Enron Subic Power Corp.)
QUESTION:
Are all taxes considered to be self-assessing taxes, which in turn do
not require issuance of assessment? If not, state the reason/s and
enumerate the exceptions and discuss them briefly if any.
ANSWER:
No, not all are self-assessing taxes as there exceptions. Basically, taxes
are self-assessing; hence, do not require the issuance of an
assessment notice in order to establish tax liability of a taxpayer. The
exceptions are as follows:
Tax period of a taxpayer is terminated.
When it shall come to the knowledge of the Commissioner that a
taxpayer is retiring from business subject to tax, or is intending to
leave the Philippines or to remove his property therefrom or to hide or
conceal his property, or is performing any act tending to obstruct the
proceedings for the collection fo the tax for the past or current quarter
or year, or to render the same totally or partly ineffective unless such
proceedings are begun immediately, the Commissioner shall declare
the tax period of such taxpayer terminated at any time and shall send
the taxpayer a notice of the decision together with a request for the
immediate payment of the tax.
Deficiency tax liability arising from a tax audit conducted by
the BIR.
To determine the correctness of the computation of the tax liability
made by the taxpayer, the BIR is granted the right to conduct a tax
audit within the prescriptive period.

Tax Lien
If any person liable to pay an internal revenue tax, neglects or refuses
to pay the same after demand, the amount shall be a lien in favor of
the government from the time when the assessment was made by the
commissioner until paid, with interests, penalties, and costs that may
accrue in addition thereto upon all property and rights to property
belonging to the taxpayer.
Dissolving corporation
The dissolving or reorganizing corporation shall, prior to the issuance
by the Securities and Exchange Commission (SEC) of the Certificate of
Dissolution or Reorganization, as may be defined by rules and
regulations prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, secure a certificate of tax
clearance from the BIR which certificate shall be submitted to the SEC