1.

X, a domestic corporation, received an income tax deficiency assessment from the BIR on May
17, 2010. On June 15, 2010, “X” filed its protest with the BIR. On August 13, 2010, it submitted
to the BIR all his documentary evidences in support of its protest. The CIR did not formally rule
on the protest but on February 10, 2012 the Bureau filed a collection case against X. On March
5, 2012 X was served a summons and a copy of the complaint for collection of tax deficiency tax
filed by the BIR with the RTC. On the following day, X brought a petition for review before the
CTA. The BIR argued and contended that the petition for review before theCTA is premature since
there was no formal denial of the protest of X and should therefore be dismissed. Has the CTA
acquired jurisdiction over the case? Does the RTC have jurisdiction over the collection case filed by
the BIR? Explain.

Answer. Yes, the CTA has acquired jurisdiction over the case because this qualifies as an appeal
from the CIR’s decision on the disputed assessment. When the CIR decided to collect the tax
assessed against X without first deciding on the taxpayer’s protest, that is an implied denial of X’s
protest, in which event the taxpayer may file an appeal with the CTA within 30 days from receipt
of the summons from the RTC. (Republic vs. Lim Tian Teng & Sons, Inc., Dayrit vs. Cruz) The filing of
an appeal with the CTA has the effect of divesting the RTC of jurisdiction over the CIR’s filing of
the collection case with the RTC which was considered as an implied decision of denial, it gives a
justifiable basis for the taxpayer to move for dismissal in the RTC of the Government’s action to
collect the tax liability under dispute. (Yabes vs. Flojo, San Juan vs. Vasquez). There is no final,
executory and demandable assessment that can be enforced by the BIR, once a timely appeal is
filed before the CTA. Hence, the RTC has no more jurisdiction over the collection case filed by
the BIR.

2.What is the period of limitation upon collection of internal revenue taxes under the NIRC?

Answer. (a) Collection of internal revenue taxes shall be made within five (5) years from the
finality of an assessment. (b) If there is no assessment made, the CIR may enforce collection within
three (3) years from the time the tax is due or when the return is actually filed, whichever is
later. Collection without an assessment is valid because IR taxes are self-assessing, thus, assessment
is not necessary to establish the tax liability of the taxpayer. (c) In the case of a false or fraudulent
return with intent to evade tax or for failure to file a return, the tax may be assessed or a
proceeding may be filed in court for collection without assessment, within 10 years after the
discovery of the falsity, fraud or omission. An internal revenue tax that has been assessed within
this period may be collected by distraint or levy or by a proceeding in court within 5 years following
the assessment of the tax. (d) If before the expiration of the time prescribed in Sec. 203, the CIR
and the taxpayer agree in writing to assessment after such time, the tax may be assessed during
the period agreed upon. This period may be extended by subsequent written agreements made
before the expiration of the extended period. Any tax so assessed may be collected within the
period agreed upon in writing before the expiration of the 5-year period following the assessment.

3. The two-year prescriptive period for filing a claim for tax refund/credit is mandatory. However,
it may be suspended under special circumstances. State these exceptional cases.

Answer. The two-year prescriptive period may be suspended under the following exceptional cases:
a. If the BIR made the taxpayer asking for refund believed that he would be credited for the
overpayment. (Panay Doctrine) b. If there is an agreement between the taxpayer and the agent of
the CIR that they would wait for a decision of the Supreme Court to guide them in the settlement
on the issue/question involved in the refund. (Promissory Estoppel)

What is the prescriptive period for tax assessment under the Tax Code (RA 8424) and provide the
exceptions thereto? (2005 case)

Answer. The right of the government to assess is three (3) years after the last day prescribed by
law for the filing of the return or from actual payment of the tax whichever is later. A tax return
filed before the last day prescribed by law for the filing thereof shall be considered as filed on
the last day. (Sec. 203, NIRC) Exceptions: a) If during the 3-year period to assess, there is a valid
written agreement entered into between the taxpayer and the government to suspend the period
of assessment. (Sec. 222) b) Where there is a discovery that the taxpayer failed a fraudulent return
or failed to file a tax return when one is required, the period to assess is 10 years from discovery
of the fraud or the omission to file a return; (sec. 222) c) In case the taxpayer waives the period
of limitation. d) When there is injunction duly issued by the CTA; (Sec. 223) e) When the taxpayer
requests for a reinvestigation which is granted by the CIR; (Sec. 223) f) When the taxpayer cannot be
located in the address given by him in the tax return upon which a tax is being assessed or
collected; (Sec. 223) g) When the taxpayer is out of the country. (Sec. 223) h) When a warrant of
distraint or levy is duly served upon the taxpayer, his authorized representative or a member of
his household with sufficient discretion, and NO property could be located. (Sec. 223) i) j) When
there is a pending appeal; and When there is a second request for reconsideration or reinvestigation
which is granted.

When does an assessment become final and executory that warrants subsequent collection

thereof?

Answer.

a) Failure to dispute a valid assessment within 30 days from receipt thereof.

b) Having disputed the same, but taxpayer failed to submit relevant documentary evidences in

support of his dispute within 60 days thereof.

b) c) Upon receipt of a denial of his request for reconsideration, taxpayer failed to seasonably appeal
c) before the tax court within 30 days from receipt thereof..
d) d) Upon receipt of a writ or warrant of distraint and levy (in lieu of an answer to his request for
e) reinvestigation or reinvestigation), taxpayer failed to seasonably appeal before the tax court
f) within 30 days thereof..
g) e) Upon receipt of summons before the regular court relative to a collection case filed by the CIR
h) (in lien of an answer to his request for reconsideration or reinvestigation), taxpayer failed to
i) seasonably appeal before the tax court within 30 days thereof.
j) f) Failure to appeal to the CTA within 30 days from receipt of a final demand letter from the CIR
k) reiterating payment of taxpayer’s unpaid taxes in lieu of an answer to the taxpayer’s dispute.
l) g) Failure to appeal within 30 days after the lapsed of the 180-day period where BIR is supposed
to
m) act on taxpayer’s administrative protest.
 n) h) Failure to dispute the second assessment within 30 days from receipt thereof.

5. The Tax Code provides that assessment issued by the CIR is presumed to be correct and valid.
Would this not be a denial of due process?

Answer. No. The presumption is not final or conclusive but merely prima facie correct and valid.
An opportunity is open to the taxpayer to rebut or overcome that presumption. After all, being
the party who is expected to have personal and better knowledge (than that of the CIR) of the
circumstances of his tax liability, the presumption of the law is not at all unreasonable or unjustified.

The law requires that the appeal to the CTA should be made within 30 days from receipt

of denial by the CIR AND within two (2) years after the payment of the tax or penalty. In the given

facts, while the appeal to the CTA was made within 30 days from receipt of the notice of denial by the

CIR, it was filed beyond the two-year period from date of payment. The law uses the conjunctive

“AND”, thus, both requisites must concur. X should not have waited for the decision of the CIR;

instead, he should have treated the inaction of the CIR equivalent to an implied denial of his claim. He

could immediately file an appeal to the CTA even without the denial so as not to defeat his claim by

the lapse of the two-year prescriptive period. (This is referred to as the DOCTRINE OF THE TWIN

PRESCRIPTIVE PERIOD ON REFUNDS)

What is the Doctrine of Operative Fact?

Answer. This principle has been incorporated in Sec. 226 of the NIRC (The non-retroactivity of

rulings). This rule provides that taxpayers may rely upon a rule or ruling issued by the CIR from the

time the rule or ruling is issued up to its reversal by the CIR or by the Court. Any reversal is not given

retroactive effect.

Application:

X applied for tax credit of its unutilized input taxes in April 28, 2005. The claim was well within the

2-year period. At the time of X’s application it relied upon BIR Ruling DA 489-03 which maintains that

the taxpayer claiming need not wait for the lapse of the 120-day period before it could seek judicial

relief with the CTA by way of petition for review. Many taxpayers relied on this BIR issuance and it

was allowed because of the Doctrine of Equitable Estoppel. In the case of CIR vs. Aichi Forging

Company of Asia, Inc., G.R. No. 184823, October 10, 2010, 632 SCRA 422, the Supreme Court ruled
that BIR Ruling DA 489-03 is erroneous and rectified the same reiterating the jurisdictional and

mandatory requirement of the “120 + 30” day period should be complied with in a claim for unutilized

input taxes under the Tax Code.

In view of this development, the SC maintained that the only exception to the 120 + 30 period are

those claims validly filed between December 10, 2003 to October 6, 2010 when the ruling was issued

until its overturned in the Aichi case.

The “120 + 30-day” period is used to determine when to appeal to the CTA.

NOTE: Administrative practices, not formalized into a rule or ruling are not covered by the Doctrine of

Operative Facts because a mere administrative practice may not be uniformly and consistently

applied. They are usually not known to the general public and can be availed of only by those with

informal contacts with the government agency.

7. On April 20, 2009, X filed his income tax return plus the corresponding penalty. A year after,

he discovered that the penalty he paid was excessive. On February 9, 2011, he filed a claim for

refund with the BIR; On May 2, 2012 the BIR denied his claim. X received the notice of denial

only on June 6, 2012. On June 27, 2012, still well within 30-day period from receipt of the

denial, he appealed the case to the CTA, Will his appeal prosper? Why?

Answer. No. The law requires that the appeal to the CTA should be made within 30 days from receipt

of denial by the CIR AND within two (2) years after the payment of the tax or penalty. In the given

facts, while the appeal to the CTA was made within 30 days from receipt of the notice of denial by the

CIR, it was filed beyond the two-year period from date of payment. The law uses the conjunctive

“AND”, thus, both requisites must concur. X should not have waited for the decision of the CIR;

instead, he should have treated the inaction of the CIR equivalent to an implied denial of his claim. He

could immediately file an appeal to the CTA even without the denial so as not to defeat his claim by

the lapse of the two-year prescriptive period. (This is referred to as the DOCTRINE OF THE TWIN

8. . X paid his income tax on April 15, 2012 for his 2011 income. In March 1, 2013, X hired a new

accountant to prepare his income tax return for the current year. He was informed that he

made an overpayment in his income tax return filed in 2012. Convinced that he erroneously

computed his tax, he filed a written claim for refund of tax erroneously collected on December
15, 2013. On April 5, 2014 without receiving any reply or decision on his claim for refund, X

filed with the CTA a petition for review on his claim for refund of tax erroneously paid. Did the

tax court acquire jurisdiction over the petition for review of X? Explain.

Answer. Yes, because while the BIR has not yet rendered a decision on the said claim for refund, the

preemptory period of two years within which a claim for refund of taxes erroneously collected is about

to expire on April 5, 2014 and the failure of the CIR to act on the claim for refund is tantamount to an

implied denial of the taxpayer’s claim, hence, the tax court has acquired jurisdiction of the petition for

review filed by X. An appeal to the Court of Tax Appeals on matters relative to tax refund of internal

revenue taxes must be made within 30 days from receipt of denial of the request for refund, however,

this 30 day period must be within the two-year period for filing the written claim for tax refund or

credit.

9. What the requisites for a valid claim of unutilized input tax credit?

Answer.

a) The taxpayer-claimant must be a VAT-registered taxpayer

b) He is engaged in sales which are zero-rated or effectively zero-rated;

c) The claim is filed within 2 years after the close of the taxable quarter when such sales were

made, and

d) The creditable input VAT due or paid must be attributable to such sales, except the transitional

input VAT, to the extent that such input tax has not been applied against the output VAT.

An application for tax refund or credit must be accompanied by copies of the taxpayer’s VAT

return(s) for taxable quarter(s) concerned showing that the claimant is entitled to the refund or

credit of input VAT and the same has not been applied against its output VAT-liabilities. (Atlas

Consolidated Mining and Development Corp., vs. CIR, January 26, 2011)

X received an assessment from RD- tax protest to RD and it was denied- MR to CIR within 30

days from receipt of adverse decision of RD- CIR did not act w/in 180 days- X filed a petition for

review with CTA within 30 days from the lapse of 180 period- is X petition for review filed on

time?
Yes, the petition for review was filed on time. As held in the case of PAGCOR vs CIR, the Supreme

Court held that

1. If the protest is wholly or partially denied by the CIR or his authorized representative, then the

taxpayer may appeal to the CTA within 30 days from receipt of the whole or partial denial of the

protest.

2. If the protest is wholly or partially denied by the CIR's authorized representative, then the

taxpayer may appeal to the CIR within 30 days from receipt of the whole or partial denial of

the protest.

3. If the CIR or his authorized representative failed to act upon the protest within 180 days from

submission of the required supporting documents, then the taxpayer may appeal to the CTA within 30

days from the lapse of the 180-day period.

To further clarify the three options: A whole or partial denial by the CIR's

authorized representative may be appealed to the CIR or the CTA. A whole or partial denial by the

CIR may be appealed to the CTA. The CIR or the CIR's authorized representative's failure to act may

be appealed to the CTA. There is no mention of an appeal to the CIR from the failure to act by the

CIR's authorized representative. (konopy paste ko talaga yan galing sa case. Kayo na bahala kung

paano niyo gagamitin hahaha)

In this case, the petition for review was timely filed because when the RD denied the claim of X, such

denial was timely elevated to CIR (see second option) and when the 180 day period for the CIR to

resolve has elapsed, X filed a petition for review to the CTA within 30 days from the lapse of 180 day

period. A taxpayer has administrative remedies and judicial remedies. Since X has exhausted all his

administrative remedies, he can avail of his judicial remedy of filing a PFR to the CTA

When may the CIR compromise any internal revenue tax?

Answer. The CIR may compromise when: (a) a reasonable doubt as to the validity of the claim

against the taxpayer exists; or (b) the financial position of the taxpayer demonstrates a clear inability

to pay the assessed tax.

703. When is compromise agreement no longer feasible?

Answer.
a) When there is already a final decision of the court; or

b) When it involves fraud; and

c) Those involving criminal violation – when information has already been filed in court.

Requirements for validity of taxpayer’s protest: (Sec. 3.1.5, Rev. Reg. 12-99)

Answer. The taxpayer shall state the facts, the applicable law, rules and regulations, or jurisprudence

on which the protest is based, otherwise, his protest shall be considered void and without force and

effect. If there are several issues involved in the disputed assessment and the taxpayer fails to state

the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest against

some of the several issues on which the assessment is based, the same shall be considered

undisputed issue(s), in which case the taxpayer shall be required to pay the corresponding deficiency

tax(es) attributable thereto.

771. Briefly outline the steps involved in disputing (protesting) an assessment under the NIRC:

Answer.

a) The BIR conducts a tax audit and a pre-assessment notice is sent to the taxpayer;

b) The taxpayer is given an opportunity to explain;

c) The BIR issues a final assessment notice to the taxpayer;

d) The taxpayer files a written request for reconsideration or reinvestigation within thirty (30) days

from the receipt of the assessment notice;

e) The taxpayer submits all supporting documents within sixty (60) days from the filing of the

protest;

f) The CIR shall resolve or decide the dispute (protest) within 180 days from the submission of the

supporting documents;

g) If the CIR’s decision is adversely affecting the interest of the taxpayer, he may appeal to the

CTA within 30 days from receipt of such decision or from the lapse of the 180-day of the

inaction of the CIR which is counted from submission of the reportorial requirements;

h) The taxpayer may continue appealing from the CTA to the SC.

Jurisdiction of CTA En Banc:

iii. Exclusive original - promulgate rules and regulations

iv. Exclusive appellate:

1. Decisions on Motion for Reconsideration/New Trial of CTA in Division in the exercise of

the exclusive original or appellate jurisdiction;

2. Local tax cases decided by the RTC in the exercise of appellate jurisdiction

3. Tax collection cases decided by the RTYC in the exercise of its appellate jurisdiction

4. Criminal offenses decided by the RTC in the exercise of its appellate jurisdiction

5. Decisions of the CBASA involving assessment and collection of real property taxes, and

6. Other matter arising from the provisions of the Tax Code.

i. Revenue Memorandum Orders, Revenue Memorandum Circulars, BIR Rulings

ii. Tax dispute between BIR and Government agencies, and

iii. Rulings of the Sec. of Finance.