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Held: NO.
Neither the NIRC nor the RRs define the word assessment.
However, the specific functions and effects of an assessment
are defined in the NIRC. To consider the affidavit attached to
the complaint as a proper assessment is to subvert the nature
of an assessment and set a bad precedent that will prejudice
innocent taxpayers. An assessment informs the taxpayer that
he has a tax liability. It must be sent to and received by a
taxpayer and must demand payment of the taxes within a
specific period. It is made only when the Collector of internal
revenue releases, mails, or sends such notice to the taxpayer.
In this case, the affidavit merely contained the computation of
PRDCs tax liability. It did not state a demand or a period for
payment. Also, it was addressed to the justice secretary and
not to the taxpayer.
II. MARCOS II v. Court of Appeals GR No. 120880, June 5, 1997
293 SCRA 77
IV. SY PO vs. Court of Tax Appeals G.R. No. 81446; August 18,
1988
Facts: Po Bien Sing, the sole proprietor of Silver Cup Wine
Factory (SCWF), engaged in the business of manufacture and
sale of compounded liquors. On the basis of a denunciation
against SCWF allegedly for tax evasion amounting to millions of
pesos, Secretary of Finance directed the Finance-BIR--NBI team
to investigate.
Held: The law is specific and clear. The rule on The Best
Evidence Obtainable applies when a tax report required by law
for the purpose of assessment is not available or when tax
report is incomplete or fraudulent.
Fortune Tobacco filed a petition for review with the CTA. 8 CTA
upheld the position of Fortune. CA affirmed.
However, such request was not granted due to BIR VAT Ruling
No. 008-92 dated 23 January 1992 that was issued subsequent
to the consummation of the subject sales of gold to the Central
Bank which provides that sales of gold to the Central Bank shall
not be considered as export sales and thus, shall be subject to
10% VAT. BIR VAT Ruling No. 008-92 withdrew, modified, and
superseded all inconsistent BIR issuances.
Held: (1) NO. At the time when the subject transactions were
consummated, the prevailing BIR regulations relied upon by
Benguet ordained that gold sales to the Central Bank were
zero-rated. Benguet should not be faulted for relying on the
BIRs interpretation of the said laws and regulations.
(2) YES. The adverse effect is that Benguet Corp became the
unexpected and unwilling debtor to the BIR of the amount
equivalent to the total VAT cost of its product, a liability it
previously could have recovered from the BIR in a zero-rated
scenario or at least passed on to the Central Bank had it known
it would have been taxed at a 10% rate. Thus, it is clear that
Benguet suffered economic prejudice when it consummated
sales of gold to the Central Bank were taken out of the zero-
rated category. The change in the VAT rating of Benguets
transactions with the Central Bank resulted in the twin loss of
its exemption from payment of output VAT and its opportunity
to recover input VAT, and at the same time subjected it to the
10% VAT sans the option to pass on this cost to the Central
Bank, with the total prejudice in money terms being equivalent
to the 10% VAT levied on its sales of gold to the Central Bank.
The claim has no merit since the consortium, which was the
recipient of services rendered by Burmeister, was deemed
doing business within the Philippines since its 15-year O&M
with NPC can not be interpreted as an isolated transaction.
Held: Yes, the Court ruled that the period to collect has already
prescribed. The BIR has three years, counted from the date of
actual filing of the return or from the last date prescribed by
law for the filing of such return, whichever comes later, to
assess a national internal revenue tax or to begin a court
proceeding or the collection thereof without an assessment. In
case of a false or fraudulent return with intent to evade tax or
the failure to file any return at all, the prescriptive period for
assessment of the tax due shall be 10 years from discovery by
the BIR of the falsity, fraud, or omission. When the BIR validly
issues an assessment, within either the three-year or ten-year
period, whichever is appropriate, then the BIR has another
three years after the assessment within which to collect the
national internal revenue tax due thereon by distraint, levy,
and/or court proceeding. The assessment of the tax is deemed
made and the three-year period for collection of the assessed
tax begins to run on the date the assessment notice had been
released, mailed or sent by the BIR to the taxpayer.
In their Decisions, both the CTA and the Court of Appeals found
that the filing by petitioner BPI of a protest letter suspended the
running of the prescriptive period for collecting the assessed
DST. This Court, however, takes the opposing view, and, based
on the succeeding discussion, concludes that there is no valid
ground for suspending the running of the prescriptive period for
collection of the deficiency DST assessed against petitioner BPI.
Here, respondent failed to file his tax returns for 1986 and
1987. On September 14, 1989, petitioner found respondents
omission. Hence, the running of the ten-year prescriptive period
within which to assess and collect the taxes due from
respondent commenced on that date until September 14, 1999.
The two final assessment notices were issued on February 28,
1991, well within the prescriptive period of three (3) years.
When respondent failed to question or protest the deficiency
assessments thirty (30) days therefrom, or until March 30,
1991, the same became final and executory.
XII. Oceanic Wireless v. Commissioner of Internal Revenue GR
NO. 148380, December 9, 2005
Issue: Whether the demand letter for tax deficiency issued and
signed by a subordinate officer who was acting in behalf of the
CIR is deemed final and executor and subject to an appeal to
the CTA.
Held: Any tax income that is paid in excess of its amount due to
the government may be refunded, provided that a taxpayer
properly applies for the refund. One can not get a tax refund
and a tax credit at the same time for the same excess to
income taxes paid. Failure to signify ones intention in Final
Assessment Return (FAR) does not mean outright barring of a
valid request for a refund
Issues: (1) whether or not CTA has jurisdiction over the issues in
this case. (2) Whether or not the Waiver of the Statute of
Limitations is valid and binding on the petitioner
Held: (1) No. The appellate jurisdiction of the CTA is not limited
to cases which involve decisions of the Commissioner of
Internal Revenue on matters relating to assessments or
refunds. The second part of the provision covers other cases
that arise out of the NIRC or related laws administered by the
Bureau of Internal Revenue. The wording of the provision is
clear and simple. It gives the CTA the jurisdiction to determine
if the warrant of distraint and levy issued by the BIR is valid and
to rule if the Waiver of Statute of Limitations was validly
effected.
In 1999, the CTA ruled that the use by PSPC of the TCCs was
legal and valid, and that respondents attempt to collect
alleged delinquent taxes and penalties from PSPC without an
assessment constitutes denial of due process. Respondent
elevated CTA Decision to the Court of Appeals (CA) through a
petition for review. Despite the pendency of this case, PSPC
received assessment letter from respondent for excise tax
deficiencies, surcharges, and interest based on the first batch
of cancelled TCCs and TDM covering PSPCs use of the TCCs.
All these cancelled TDM and TCCs were also part of the subject
matter of the now pending before the CA.
PSPC protested the assessment letter, but the protest was
denied by the BIR, constraining it to file another case before the
CTA. Subsequently, CTA ruled in favor of PSPC and accordingly
cancelled and set aside the assessment issued by the
respondent. Respondent motion for reconsideration of the
above decision which was rejected thus respondent appealed
the above decision before the CTA En Banc. The CTA En Banc
ruled in favor of respondent and ordered PSPC to pay the
amount of P570,577,401.61 as deficiency excise tax for the
taxable years 1992 and 1994 to 1997, inclusive of 25%
surcharge and 20% interest.
Thus, with the due issuance of TDM by the Center and TDM by
the BIR, the payments made by PSPC with the use of the
subject TCCs have been effected and consummated as the
TDMs serve as the official receipts evidencing PSPCs payment
or satisfaction of its tax obligation. Moreover, the BIR not only
issued the corresponding TDM, but it also issued ATAPETs which
doubly show the payment of the subject excise taxes of PSPC.
The CTA found that respondent filed its final adjusted return on
April 14, 1998. Thus, its right to claim a refund or credit
commenced on that date. According to the CTA, the two-year
prescriptive period under Section 229 of the NIRC for the filing
of judicial claims was equivalent to 730 days. Because the year
2000 was a leap year, respondent's petition, which was filed
731 days after respondent filed its final adjusted return, was
filed beyond the reglementary period.
Held: NO. The 2nd paragraph of Sec. 228 of NIRC is clear and
mandatory insofar as taxpayers shall be informed in writing of
the law and the facts on which the assessment is made,
otherwise the assessment shall be void. RA 8424 has already
amended the provisions of Sec. 229 of NIRC on protesting an
assessment. The old requirement of merely notifying the
taxpayer of the CIRs findings was changed in 1998 of informing
the taxpayer of not only the law, but also of the facts on which
an assessment would be made, otherwise, the assessment
itself would be invalid. Being invalid, the assessment canot be
in turn be used as a basis for the perfection of a tax
compromise.
Realizing its error, petitioner filed a Petition for Review with the
CTA En Banc. The petition, however, was dismissed for having
been filed out of time. Petitioner filed a Motion for
Reconsideration but it was denied.
(2) Petitioner disputes the assessment made by the BIR for VAT
deficiency in the amount of P11,905,696.32 for taxable year
1998 on the ground that pawnshops are not included in the
coverage of VAT.
Guided by the foregoing, petitioner is not liable for VAT for the
year 1998. Consequently, the VAT deficiency assessment issued
by the BIR against petitioner has no legal basis and must
therefore be cancelled. In the same vein, the imposition of
surcharge and interest must be deleted.
XXIII. Commissioner of Internal Revenue v United International
Pictures
Held: No
Under our tax system, the CTA is a highly specialized body that
reviews tax cases. For this reason, its findings of fact are
binding on the Court unless such findings are not supported by
substantial evidence. In this case, the CTA concluded that
respondent was entitled to refund but only to the extent of
P6,285,892.05. As pointed out by the CA, the CTA exhaustively
explained why it granted the refund albeit less than what
respondent claimed. We find no reason to disturb the CTA's
findings of fact.
Central Luzon Drug filed a Petition for Review with the Court of
Appeals. The appellate court held that the 20% discount given
to senior citizens which is treated as a tax credit is considered
just compensation and, as such, may be carried over to the
next taxable period if there is no current tax liability.
Finally, for purposes of clarity, Sec. 229 of the Tax Code does
not apply to cases that fall under Sec. 4 of the Senior Citizens
Act because the former provision governs exclusively all kinds
of refund or credit of internal revenue taxes that were
erroneously or illegally imposed and collected pursuant to the
Tax Code while the latter extends the tax credit benefit to the
private establishments concerned even before tax
payments have been made. The tax credit that is contemplated
under the Senior Citizens Act is a form of just compensation,
not a remedy for taxes that were erroneously or
illegally assessed and collected. In the same vein, prior
payment of any tax liability is not a precondition before a
taxable entity can benefit from the tax credit. The credit may
be availed of upon payment of the tax due, if any. Where there
is no tax liability or where a private establishment reports a net
loss for the period, the tax credit can be availed of and carried
over to the next taxable year.
XXVI. Visayas Geothermal vs Commissioner of Internal Revenue
NIRC TCC
A) Administrative Remedies A) Administrative Remedies
1. Before payment of tax: 1. Protest
a. Protest Disputing a. Any importer or
the assessment by interested party
filing a motion for adversely affected
reconsideration or with the published
reinvestigation value of duties may
within 30 days from within 15 days from
receipt of the formal date of publication
assessment (Sec. file a written protest
220) b. If the legality of
b. B. Entering into a assessment or
compromise with the appraisal is
BIR (Sec. 204) questioned, taxpayer
2. After payment of the may protest within
tax: 15 days from
a. Filing claim for assessment.
refund or tax credit *Payment under
within 2 years protest is necessary
regardless of any 2. Refund Abatement or
supervening event. drawback (if
(Sec. 229) importation missing or
Note: Payment under deficient or if re-
protest is not exported). (Sections
necessary. 1701-1708 of TCC)
*Taxpayer is given the *Settlement of any seizure by
right of redemption payment of fine or redemption
within 1 year from date of foreclosed goods shall not
of sale or forfeiture of be allowed in any case where
the property sold. (Sec.
215) importation is absolutely
prohibited or if released
thereof is prohibited by law.
(Sec. 2307 of TCC)
B) Judicial Remedies B) Judicial Remedies
1. Civil Action: 1. Civil Action
a. Appeal to the CTA a. Appeal to the CTA
within 30 days from within 30 days from
receipt of the receipt of the
adverse decision of adverse decision of
the CIR of from lapse the Commissioner of
of 180 days inaction Secretary of Finance
of the CIR on the *Adverse decision of
dispute (Sec. 228) the Collector is
b. Action to contest appealable to the
forfeiture of chattel. Commissioner not to
(Sec. 231) the CTA within 15
c. Action for damages days from receipt
(Sec. 227) thereof (notice to the
d. Injustion when the collector of appeal to
collection of the tax the Commissioner is
may jeopardize required) (Sec. 2313
interest of taxpayer TCC)
or the government, b. Action to question
CTA may enjoin the the legality of the
collection and may seizure.
require the taxpayer c. Abandonment of the
to put in a bond. goods (Sec. 1802,
(Sec. 1, RA 1125) TCC)
2. Criminal Action:
Acting erring and
abusive tax officials
and/or employees of
the BIR
Note: The taxpayers judicial relief both under the NIRC and the
TCC may lie either with the CTA (exclusive in all cases
cognizable by it) or the ordinary courts (in all other cases).
Assessment Defined:
Assessment is a formal written notice/communication with the
computation of the tax liability sent to the taxpayer and
demanding for the settlement of a due tax liability within the
indicated period thereof.
An assessment is not an action or proceeding for the collection
of taxes but a step preliminary to warrant of distraint and levy if
that is still feasible.
It is also used to establish a sufficient cause for judicial action
under the pertinent provision of the
Tax Code.
Kinds of Assessment:
A. Self-Assessment one in which the tax is assessment by
the taxpayer himself. The amount of the tax assessed is
reflected in his tax return that he has to pay at the time of
filing of the tax return.
B. Deficiency Assessment This is an assessment made by
the tax assessor himself whereby the correct amount of
the tax is determined after the examination or
investigation is conducted.
C. Prospective Assessment informs the taxpayer of the
findings of the tax examiner who recommends a
deficiency assessment. The taxpayer is usually given
fifteen (15) days from notice within which to explain his
side.
D. Official Assessment An assessment that is made by the
CIR within the reglamentary period sent to the taxpayer
informing him of his tax liability and demanding that he
settles the same within the given period.
E. Disputed Assessment is one where the taxpayer contests
the legality or validity of the assessment and asks that the
same be cancelled or withdrawn.
F. Final Assessment An official assessment what was not
disputed within the prescribed time or that which was not
contested on appeal by the taxpayer.
G. Illegal or Void Assessment An assessment that is made
by a person who has no power to act at all.
H. Erroneous Assessment An assessment that is made by a
person who has the authority to act but the same is
erroneous or he errs in the exercise of that power.
I. Jeopardy Assessment In one that is made by an
authorized person without the benefit of complete or
partial audit, in light of the said officials belief that the
assessment and collection of a deficiency tax will be
jeopardized by delay caused by the taxpayers failure to
(a) comply with audit and investigation requirements to
present his books of accounts and/or pertinent records, or
(b) substantiate all or any of the deductions, exemptions
or credits claimed in his return. To prevent the issuance of
a jeopardy assessment, the taxpayer may be required to
execute a waiver of the statute of limitations.