REMEDIES UNDER THE NIRC

A. Assessment and Collection of Internal Revenue Taxes

1. Tax Audit Process / Assessment Process

a. Overview
CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016
An assessment -refers to the determination of amounts due from a person obligated to make payments.
-it refers to the determination of the taxes due from a taxpayer under the NIRC of 1997.
Assessment Process:
1. The assessment process starts with the filing of tax return and payment of tax by the taxpayer. The initial assessment
evidenced by the tax return is a self-assessment of the taxpayer. The tax is primarily computed and voluntarily paid by the
taxpayer without need of any demand from government. If tax obligations are properly paid, the Bureau of Internal Revenue
may dispense with its own assessment.
2. After filing a return, the Commissioner or his or her representative may allow the examination of any taxpayer for assessment
of proper tax liability. The failure of a taxpayer to file his or her return will not hinder the Commissioner from permitting the
taxpayer's examination. The Commissioner can examine records or other data relevant to his or her inquiry in order to verify
the correctness of any return, or to make a return in case of noncompliance, as well as to determine and collect tax
liability.
3. Section 3 of Revenue Regulations No. 12-99 - requires a notice for informal conference. The revenue officer who audited
the taxpayer's records shall state in his or her report whether the taxpayer concurs with his or her findings of liability for
deficiency taxes. If the taxpayer does not agree, based on the revenue officer's report, the taxpayer shall be informed in
writing of the discrepancies in his or her payment of internal revenue taxes for "Informal Conference." The informal conference
gives the taxpayer an opportunity to present his or her side of the case.
4. The taxpayer is given 15 days from receipt of the notice of informal conference to respond. If the taxpayer fails to
respond, he or she will be considered in default. The revenue officer endorses the case with the least possible delay to the
Assessment Division of the Revenue Regional Office or the Commissioner or his or her authorized representative. The
Assessment Division of the Revenue Regional Office or the Commissioner or his or her authorized representative is
responsible for the "appropriate review and issuance of a deficiency tax assessment, if warranted."
5. If, after the review conducted, there exists sufficient basis to assess the taxpayer with deficiency taxes, the officer shall issue a
preliminary assessment notice showing in detail the facts, jurisprudence, and law on which the assessment is based.
The taxpayer is given 15 days from receipt of the pre-assessment notice to respond. If the taxpayer fails to respond, he or
she will be considered in default, and a formal letter of demand and assessment notice will be issued.
6. The formal letter of demand and assessment notice shall state the facts, jurisprudence, and law on which the
assessment was based; otherwise, these shall be void. The taxpayer or the authorized representative may administratively
protest the formal letter of demand and assessment notice within 30 days from receipt of the notice. A final assessment
notice provides for the amount of tax due with a demand for payment. This is to determine the amount of tax due to a
taxpayer. However, due process requires that taxpayers be informed in writing of the facts and law on which the assessment is
based in order to aid the taxpayer in making a reasonable protest. To immediately ensue with tax collection without initially
substantiating a valid assessment contravenes the principle in administrative investigations "that taxpayers should be able to
present their case and adduce supporting evidence."

b. Letter of Authority / Audit Notice

Letter of Authority or LOA - is the authority given to the appropriate revenue officer assigned to perform assessment functions. It
empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the
purpose of collecting the correct amount of tax.

Sec. 6(A) (as amended by RA 10963) and Sec. 13 of the NIRC

SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and
Enforcement.— “(A) Examination of Returns and Determination of Tax Due.— After a return has been filed as required under the
provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and
the assessment of the correct amount of tax, notwithstanding any law requiring the prior authorization of any government agency or
instrumentality: Provided, however, That failure to file a return shall not prevent the Commissioner from authorizing the examination of
any taxpayer.
SEC. 13. Authority of a Revenue Officer. - Subject to the rules and regulations to be prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, a Revenue Officer assigned to perform assessment functions in any district may, pursuant to a
Letter of Authority issued by the Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect
the correct amount of tax, or to recommend the assessment of any deficiency tax due in the same manner that the said acts could
have been performed by the Revenue Regional Director himself.

Revenue Audit Memorandum Order No. 1-00 (Service of Letter of Authority only)
Revenue Audit Memorandum Order (RAMO) 1-00 provides as follows:
2.3 A Letter of Authority must be served or presented to the taxpayer within 30 days from its date of issue; otherwise it becomes
null and void, unless revalidated. The taxpayer has the right to refuse its service if presented beyond the 30-day period depending
on the policy set up by management. Revalidation is done by issuing a new Letter of Authority or by just simply stamping the words
"Revalidated on " on the face of the copy of the Letter of Authority issued.

"This Letter of Authority becomes void if it contains erasures, or if not served to the taxpayer within 30 days from date hereof, or if dry
 seal of BIR office is not present".

The LOA should be properly served on the subject taxpayer. The RMOs clearly mandate that the LOA must be served on the subject
taxpayer within thirty (30) days from date of issue lest the authority becomes null and void. The RMOs even state that a simple
erasure on an LOA already renders it null and void 15, more so if it is improperly or belatedly served.

Revenue Memorandum Order No. 43-90 dated September 20, 1990 (as cited in the SC Cases)
Revenue Memorandum Order (RMO) No. 43-90 mandates as follows:
C. Other policies for issuance of L/As.
1. All audits/ investigations, whether field audit or office audit, should be conducted under a Letter of Authority.

Revenue Memorandum Order No. 44-2010 dated May 12, 2010

Features of eLOA: Na-Se-RO-Ta-Ba-Ma-N
1. Shall bear the name, designation, and electronic signature of the approving BIR official;
2. The serial number shall be system-generated, while the date shall reflect when it was printed;
3. The names of ROs assigned to a particular case shall be printed;
4. The tax types and taxable period to be covered by audit;
5. The basis for audit (i.e. regular audit program, special audit, etc.);
6. Any manually-written character, notation or erasure shall render it invalid;
7. Shall contain a notation stating that the taxpayer is requested to verify the validity of the LA.

Revenue Memorandum Order No. 69-2010 dated August 11, 2010 – see issuance

CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010
Sony Philippines contested such finding as it argued that the basis used by the CIR to assess said deficiency were the records
covering the period of January 1998 through March 1998 which was a period not covered by the letter of authority so issued. The CIR
countered that the LOA phrase “the period 1997 and unverified prior years” should be understood to mean the fiscal year ending on
March 31, 1998.

Upon review, the CTA-EB even added that the coverage of LOA 19734, particularly the phrase and unverified prior years, violated
Section C of Revenue Memorandum Order No. 43-90 dated September 20, 1990, the pertinent portion of which reads:

3. A Letter of Authority should cover a taxable period not exceeding one taxable year. The practice of issuing L/As covering audit of
unverified prior years is hereby prohibited. If the audit of a taxpayer shall include more than one taxable period, the other periods
or years shall be specifically indicated in the L/A.

CIR vs. De La Salle, GR No. 198841 dated November 9, 2016

The LOA issued to DLSU is not entirely void. The assessment for taxable year 2003 is valid. RMO 43-90 does not say that a LOA
which contains unverified years is void. It merely prescribes that if the audit includes more than one taxable period, the other periods
or years must be specified.

Medicard Philippines, Inc. vs. CIR, GR No. 222743 dated April 5, 2017
The absence of LOA violated Medicard’s right to due process. In the absence of such an authority, the assessment or examination is
a nullity.
Difference between a LOA and LN:
1. LOA is addressed to a revenue officer is specifically required under the NIRC before an examination of a taxpayer may be had
while an LN is not found in the NIRC and is only for the purpose of notifying the taxpayer that a discrepancy is found based on
the BIR's RELIEF System.
2. LOA is valid only for 30 days from date of issue while an LN has no such limitation.
3. LOA gives the revenue officer only a period of 10days from receipt of LOA to conduct his examination of the taxpayer whereas an
LN does not contain such a limitation.
LN is entirely different and serves a different purpose than an LOA. Due process demands, as recognized under RMO No. 32-2005,
that after an LN has serve its purpose, the revenue officer should have properly secured an LOA before proceeding with the further
examination and assessment of the petitioner.

c. Number of times a taxpayer may be audited

Sec. 235 of the NIRC -
xxx Provided, That for income tax purposes, such examination and inspection shall be made only once in a taxable year, except in
the following cases: Fim-Re-Wi-Ca-Co
(a) Fraud, irregularity or mistakes, as determined by the Commissioner;
(b) The taxpayer requests reinvestigation;
(c) Verification of compliance with withholding tax laws and regulations;
(d) Verification of capital gains tax liabilities; and
 (e) In the exercise of the Commissioner's power under Section 5(B) to obtain information from other persons in which case,
another or separate examination and inspection may be made. Examination and inspection of books of accounts and other
accounting records shall be done in the taxpayer's office or place of business or in the office of the Bureau of Internal
Revenue. All corporations, partnerships or persons that retire from business shall, within ten (10) days from the date of
retirement or within such period of time as may be allowed by the Commissioner in special cases, submit their books of
accounts, including the subsidiary books and other accounting records to the Commissioner or any of his deputies for
examination, after which they shall be returned.
Corporations and partnerships contemplating dissolution must notify the Commissioner and shall not be dissolved until cleared of any
tax liability. Any provision of existing general or special law to the contrary notwithstanding, the books of accounts and other pertinent
records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the Bureau of Internal Revenue
for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives,
and their tax liability, if any.

2. Preservation of Books of Accounts and tax records

Sec. 235 of the NIRC
Preservation of Books and Accounts and Other Accounting Records. - All the books of accounts, including the subsidiary books
and other accounting records of corporations, partnerships, or persons, shall be preserved by them for a period beginning from the
last entry in each book until the last day prescribed by Section 203 within which the Commissioner is authorized to make an
assessment. The said books and records shall be subject to examination and inspection by internal revenue officers.
3years – ordinary assessment
10years after discovery– extraordinary assessment (in case of falsity, fraud or omission)
RR No. 17-2013 dated September 27, 2013
All taxpayers are required to preserve their books of accounts, including subsidiary books and other accounting records, for a period
of ten (10) years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of filing of
the return, for the taxable year when the last entry was made in the books of accounts.
RR No. 5-2014 dated July 30, 2014
Provided that, within the first five (5) years reckoned from the day following the deadline in filing a return, or if filed after the deadline,
from the date of the filing of the return, for the taxable year when the last entry was made in the books of accounts, the taxpayer shall
retain hardcopies of the books of accounts, including subsidiary books and other accounting records. Thereafter, the taxpayer may
retain only an electronic copy of the hardcopy (paper) of the books of accounts, subsidiary books and other accounting records in
an electronic storage system which complies with the requirements set forth under Section 2-A hereof.

3. Tax Assessment in General

CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)
An affidavit, which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a criminal complaint for tax
evasion, cannot be deemed an assessment that can be questioned before the CTA. Further, such affidavit was not issued to the
taxpayer, it was submitted as an attachment to the DOJ. It must also be noted that not every document coming from the Bureau of
Internal Revenue which provides a computation of the tax liability of a taxpayer can be considered as an assessment. An assessment
is deemed made only when the CIR releases, mails or sends such notice to the taxpayer.

An assessment is deemed made only when the collector of internal revenue releases, mails or sends such notice to the taxpayer.
In the present case, the revenue officers’ Affidavit merely contained a computation of respondents’ tax liability. It did not state a
demand or a period for payment.

Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment. This is incorrect, because
Section 222 of the NIRC specifically states that in cases where a false or fraudulent 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 mandates that the civil and criminal aspects of the case may be pursued simultaneously.

It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax
Code.

SMI-ED Technology Corporation, Inc. vs. CIR, GR No. 175410 dated November 12, 2014
In an action for the refund of taxes allegedly erroneously paid, the Court of Tax Appeals may determine whether there are taxes that
should have been paid in lieu of the taxes paid. Determining the proper category of tax that should have been paid is not an
assessment. It is incidental to determining whether there should be a refund. The power and duty to assess national internal revenue
taxes are lodged with the BIR. The Court of Tax Appeals’ jurisdiction is appellate in nature. In this case, the Court of Tax Appeals’
jurisdiction was acquired because petitioner brought the case on appeal before the Court of Tax Appeals after the BIR had failed to
act on petitioner’s claim for refund of erroneously paid taxes. The Court of Tax Appeals did not acquire jurisdiction as a result of a
disputed assessment of a BIR decision.

For the purpose of safeguarding taxpayers from any unreasonable examination, investigation or assessment, our tax law
provides a statute of limitations in the collection of taxes. Thus, the law on prescription, being a remedial measure, should be liberally
construed in order to afford such protection. As a corollary, the exceptions to the law on prescription should perforce be strictly
construed.
 The BIR had three years from the filing of petitioner’s final tax return in 2000 to assess petitioner’s taxes. Nothing stopped the BIR
from making the correct assessment. The elevation of the refund claim with the Court of Tax Appeals was not a bar against the BIR’s
exercise of its assessment powers. The BIR, however, did not initiate any assessment for deficiency capital gains tax. Since
more than a decade have lapsed from the filing of petitioner's return, the BIR can no longer assess petitioner for deficiency capital
gains taxes, if petitioner is later found to have capital gains tax liabilities in excess of the amount claimed for refund.

CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016
The act of informing the taxpayer of both the legal and factual bases of the assessment is mandatory. The law requires that the
bases be reflected in the formal letter of demand and assessment notice. The requirement enables the taxpayer to make an effective
protest or appeal of the assessment or decision.

A final assessment notice provides for the amount of tax due with a demand for payment. This is to determine the amount of tax
due to a taxpayer. However, due process requires that taxpayers be informed in writing of the facts and law on which the assessment
is based in order to aid the taxpayer in making a reasonable protest. To immediately ensue with tax collection without initially
substantiating a valid assessment contravenes the principle in administrative investigations "that taxpayers should be able to present
their case and adduce supporting evidence.” A final assessment is a notice to the effect that the amount therein stated is due as tax
and a demand for payment thereof. This demand for payment signals the time "when penalties and interests begin to accrue against
the taxpayer and enabling the latter to determine his remedies. Thus, it must be "sent to and received by the taxpayer, and must
demand payment of the taxes described therein within a specific period.

The issuance of a valid formal assessment is a substantive prerequisite for collection of taxes. The disputed Final Assessment
Notice is not a valid assessment. First, it lacks the definite amount of tax liability for which respondent is accountable. Second, there
are no due dates in the Final Assessment Notice.

Taxes are the lifeblood of government and should be collected without hindrance. However, the collection of taxes should be
exercised "reasonably and in accordance with the prescribed procedure." The essential nature of taxes for the existence of the State
grants government with vast remedies to ensure its collection. However, taxpayers are guaranteed their fundamental right to due
process of law, as articulated in various ways in the process of tax assessment. After all, the State's purpose is to ensure the well-
being of its citizens, not simply to deprive them of their fundamental rights.

4. Certain Powers of the Commissioner/BIR in relation to a tax audit/tax assessment:

a. Power to Obtain Information

Sec. 5(B)
(B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or
investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including
the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations, any information such as, but not limited to, costs
and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of
corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint
accounts, associations, joint ventures of consortia and registered partnerships, and their members;

Revenue Memorandum Circular No. 12-2018 dated February 22, 2018

The power to obtain information under Sec 5 of NIRC serves as an exception to both atty-client and accountant-clien privilege
because: RCSLL
1. Rule 20.01 of Lawyer’s Code of Professional Responsibility provides that a lawyer shall not reveal the confidence or secrets
of his client except, among others, when required by law;
2. In Genato v. Silapan, the SC stressed that the privilege does not extend to those made in contemplation of a crime or
perpetration of fraud;
3. Sec. 29 of RA 9298 states that accountant-client privilege does not apply if the production of documents is through
subpoena;
4. Sec. 140.1 of Code of Ethics of Professional Accountants shall refrain from disclosing unless there is legal right or duty to
disclose;
5. Taxes are lifeblood of our nation so its collection should be actively pursued without unnecessary impediment.

b. Power of the Commissioner to assess deficiency tax / best evidence obtainable

Sec. 6(B) of the NIRC
(B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When 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 laws or rules and regulations
or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper
tax on the best evidence obtainable.
Revenue Memorandum Circular No. 23-00 dated November 27, 2000
Under Section 2.4(c) of Revenue Memorandum Circular (RMC) 23-2000, which prescribes the procedures on the assessment of
deficiency internal revenue taxes based on the "Best Evidence Obtainable” under Section 6(B) of the Tax
Code, in case there is showing that the expenses have been incurred by the taxpayer but the exact amount of such expenses cannot
be ascertained due to absence of documentary evidence, the BIR can make an estimate of the deduction that may be allowable in
computing the taxpayer’s taxable income, and the disallowance of 50% of the taxpayer's claimed deduction is valid.

Bonifacia Sy Po vs. CTA (164 SCRA 524)

Fitness By Design, Inc. vs. CIR (GR No. 177982 dated October 17, 2008)

c. Power to issue Subpoena Duces Tecum

Secs. 5(C) and 266 of the NIRC
Sec.5 (C) Authority to Conduct Inventory-taking, Surveillance and to Prescribe Presumptive Gross Sales and Receipts. - The
Commissioner may, at any time during the taxable year, order inventory-taking of goods of any taxpayer as a basis for determining his
internal revenue tax liabilities, or may place the business operations of any person, natural or juridical, under observation or
surveillance if there is reason to believe that such person is not declaring his correct income, sales or receipts for internal revenue tax
purposes. The findings may be used as the basis for assessing the taxes for the other months or quarters of the same or different
taxable years and such assessment shall be deemed prima facie correct.

When it is found that a person has failed to issue receipts and invoices in violation of the requirements of Sections 113 and 237 of this
Code, or when there is reason to believe that the books of accounts or other records do not correctly reflect the declarations made or
to be made in a return required to be filed under the provisions of this Code, the Commissioner, after taking into account the sales,
receipts, income or other taxable base of other persons engaged in similar businesses under similar situations or circumstances or
after considering other relevant information may prescribe a minimum amount of such gross receipts, sales and taxable base, and
such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person.

Sec. 266. Failure to Obey Summons. - Any person who, being duly summoned to appear to testify, or to appear and produce books
of accounts, records, memoranda or other papers, or to furnish information as required under the pertinent provisions of this Code,
neglects to appear or to produce such books of accounts, records, memoranda or other papers, or to furnish such information, shall,
upon conviction, be punished by a fine of not less than Five thousand pesos (P5,000) but not more than ten thousand pesos
(P10,000) and suffer imprisonment of not less than one (1) year but not more than two (2) years.
Revenue Memorandum Order No. 045-10 dated May 12, 2010
Revenue Memorandum Order No. 10-13 dated April 17, 2013
Revenue Memorandum Order No. 08-14 dated January 29, 2014
d. Power to Inquire into Bank Deposit Accounts
Sec. 6(F) of the NIRC, as amended by RA No. 10021
(F) Authority of the Commissioner to Inquire into Bank Deposit Accounts and Other Related information held by Financial
Institutions. - Notwithstanding any contrary provision of Republic Act No. 1405, Republic Act No. 6426, otherwise known as the
Foreign Currency Deposit Act of the Philippines, and other general or special laws, the Commissioner is hereby authorized to inquire
into the bank deposits and other related information held by financial institutions of:
(1) A decedent to determine his gross estate; and
(2) Any taxpayer who has filed an application for compromise of his tax liability under Section 204(A)(2) of this Code by reason of
financial incapacity to pay his tax liability. In case a taxpayer files an application to compromise the payment of his tax liabilities on his
claim that his financial position demonstrates a clear inability to pay the tax assessed, his application shall not be considered unless
and until he waives in writing his privilege under Republic Act No. 1405, Republic Act No. 6426, otherwise known as the Foreign
Currency Deposit Act of the Philippines, or under other general or special laws, and such waiver shall constitute the authority of the
Commissioner to inquire into the bank deposits of the taxpayer.
(3) A specific taxpayer or taxpayers subject of a request for the supply of tax information from a foreign tax authority pursuant to
an international convention or agreement on tax matters to which the Philippines is a signatory or a party of: Provided, That the
information obtained from the banks and other financial institutions may be used by the Bureau of Internal Revenue for tax
assessment, verification, audit and enforcement purposes. In case of a request from a foreign tax authority for tax information held by
banks and financial institutions, the exchange of information shall be done in a secure manner to ensure confidentiality thereof under
such rules and regulations as may be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.

B. Prescriptive period to assess and collect

1. Prescription in General
a. Rationale/Construction/Interpretation
Republic vs. Ablaza (108 Phil 1105)
b. Counting of periods (Art. 13 of NCC vs. Sec. 31 of Revised Admin Code)
CIR vs. Primetown Property Group (GR No. 162155, August 28, 2007)
2. Prescriptive period to Assess and Collect
a. Period for Assessment – General Rule/Ordinary Prescription
Sec. 203 of the NIRC
b. Period for Collection – General Rule
Sec. 222(c) of the NIRC
c. Matters that may affect the prescriptive period
1. Wrong Form/Return
Butuan Sawmill, Inc. vs. CTA (GR No. L-20601, February 28, 1966)
2. Amended Return
CIR vs. Phoenix (GR No. L-19727, May 20, 1965)
3. Defective Return
CIR vs. Gonzales (18 SCRA 757)
4. False Return, Fraudulent Return, Omission to File a Return/Extraordinary Prescription
Sec. 222(a) of the NIRC Sec. 248(B) of the NIRC
Aznar vs. CTA (58 SCRA 519)
CIR vs. Asalus Corporation (GR No. 22150 dated February 22, 2017)
CIR vs. Philippine Daily Inquirer, Inc., (GR No. March 22, 2017)
CIR vs. Fitness By Design, Inc., (GR No. 215957 dated November 9, 2016)
5. Suspension of the prescriptive period
Secs. 223 and 91(B) of the NIRC
SEC. 223. Suspension of Running of Statute of Limitations. - The running of the Statute of Limitations provided in Sections 203
and 222 on the making of assessment and the beginning of distraint or levy a proceeding in court for collection, in respect of any
deficiency, shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning
distraint or levy or a proceeding in court and for sixty (60) days thereafter; when the taxpayer requests for a reinvestigation which is
granted by the Commissioner; when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is
being assessed or collected: Provided, that, if the taxpayer informs the Commissioner of any change in address, the running of the
Statute of Limitations will not be suspended; when the 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; and when the taxpayer is
out of the Philippines.
Republic vs. Ker (18 SCRA 208)
CIR vs. United Salvage and Towage (Phils.), Inc. (GR No. 197515 dated July 2, 2014) - compare with Republic vs. Ker
Continental Micronesia, Inc. – Phil. Branch vs. CIR (CTA Case No. 6191, March 22, 2006) BPI vs. CIR (GR No. 139736, October 17,
2005)
CIR vs. BASF Coating + Inks Phils., Inc. (GR No. 198677 dated November 26, 2014)
6. Waiver of the Statute of Limitations
New Requirements under RMO 14-2016 dated April 4, 2016 (FPBWLSDE)
1. The waiver may be, but not necessarily, in the form prescribed;
2. The waiver need not specify the particular taxes to be assessed nor the amount thereof, and it may simply state "all internal
revenue taxes;
3. The taxpayer is charged with the burden of ensuring that the waivers of statute of limitation are validly executed by its
authorized representative;
4. It is sufficient that the waiver is in writing;
5. The waiver shall take legal effect and be binding on the taxpayer upon its execution thereof;
6. It shall be the duty of the taxpayer to submit its duly executed waiver to the CIR and be accepted by concerned officer;
7. There shall only be two (2) material dates that need to be present on the waiver:

a) The date of execution of the waiver by the taxpayer or its authorized representative; and
b) The expiry date of the period the taxpayer waives the statute of limitations.
8. Before the expiration of the period set on the previously executed waiver, the period earlier set may be extended by subsequent
written waiver.
Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004) CIR vs. Kudos Metal (GR No. 178087,
May 5, 2010)
RCBC vs. CIR (GR No. 170257, September 7, 2011)
CIR vs. Next Mobile, Inc. (GR No. 212825 dated December 29, 2015)
Asian Transmission Corporation vs. CIR, GR No. 230861 dated September 19, 2018
7. Estoppel
CIR vs. Suyoc (104 Phil. 819)

C. Requisites of a valid assessment

Sec. 228 of the NIRC
RR No. 12-99, as amended by RR No. 18-2013, further amended by RR No. 7-2018
(FLRRJ)
Taxpayer shall be informed of the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is
based; otherwise the assessment is void.

1. Due Process and Pre-assessment Notice

Pre-assessment notice shall not be required in the following cases: (MaWiREA)
(a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face
of the return; or
(b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent;
or
 (c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable articles has not been paid; or
(e) When the article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold, traded or transferred to non-exempt persons.

Collector vs. Benipayo (4 SCRA 182)

CIR vs. Enron Subic (GR No. 166387 dated January 19, 2009) CIR vs. Azucena T. Reyes
(GR No. 159694, January 27, 2006) A Brown Co., Inc. vs. CIR (CTA Case No. 6357, June
7, 2004) CIR vs. Menguito (GR No. 167550, September 17, 2008)
CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010
CIR vs. Asalus Corporation (GR No. 22150 dated February 22, 2017)
CIR vs. Fitness By Design, Inc., (GR No. 215957 dated November 9, 2016) Samar-I Electric Cooperative vs.
CIR, GR No. 193100 dated December 10, 2014

2. Modes of Service of Assessments

a. Personal Service
b. Substituted Service
c. Service by mail

3. When Assessment Deemed made / Assessments sent by registered mail

Nava vs. CIR (GR No. L-19470, January 30, 1965)
Barcelon, Roxas Securities vs. CIR, (GR No. 157064, dated August 7, 2006)

D. Protesting an assessment

1. Reinvestigation vs. Reconsideration

RR No. 18-2013
Request for reconsideration — refers to a plea of re-evaluation of an assessment on the basis of existing records without need of
additional evidence. It may involve both a question of fact or of law or both.

Request for reinvestigation — refers to a plea of re-evaluation of an assessment on the basis of newly discovered or additional
evidence that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or of law or both.
BPI vs. CIR (GR No. 139736, October 17, 2005)

2. Contents of a valid protest

RR No. 18-2013
The taxpayer shall state in his protest: (NDA)
(i) the nature of protest whether reconsideration or reinvestigation, specifying newly discovered or additional evidence he intends to
present if it is a request for reinvestigation;
(ii) date of the assessment notice; and
(iii) the applicable law, rules and regulations, or jurisprudence on which his protest is base.

3. Protest against a PAN / FAN

Sec. 228 and RR No. 18-2013
4. Submission of relevant documents / 60-day period
RR No. 18-2013
Prulife of UK Insurance Corp vs. CIR (CTA Case No. 6774 dated September 11, 2007) CIR vs. First Express
Pawnshop (GR Nos. 172045-06 dated June 16, 2009)

E. Decision / Inaction on the Pending Protest

1. The 180-day period to Decide
Sec. 228
RR No. 18-2013

2. Final Decision on a Disputed Assessment (“FDDA”)

a. Contents of a Valid FDDA
RR No. 18-2013
The Formal Letter of Demand and Final Assessment Notice (FLD/FAN) shall be issued by the Commissioner or his duly authorized
representative. The FLD/FAN calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and
regulations, or jurisprudence on which the assessment is based; otherwise, the assessment shall be void

CIR vs. Liquigaz Philippines Corporation, GR No. 215534 dated April 18, 2016

3. Actions tantamount to a Denial of the Pending Protest

Oceanic Wireless Network, Inc. vs. CIR (GR No. 14380, dated December 9, 2005)
 Advertising Associates vs. CA (133 SCRA 765)
CIR vs. Algue (158 SCRA 9)
Yabes vs. Flojo (GR No. L-46954, July 20, 1982) CIR vs. Union Shipping
(185 SCRA 547)
CIR vs. Isabela Cultural Corp. (GR No. 135210, July 11, 2001)

4. Inaction during the 180-day period / Appeal to the Court of Tax Appeals
Sec. 228
RR No. 18-2013
Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on
September 16, 2008
Lascona Land vs. CIR (GR No. 171251, March 5, 2012)
RCBC vs. CIR (GR No. 168498, April 24, 2007)
PAGCOR vs. BIR, GR No. 208731 dated January 27, 2016
Fishwealth Canning Corp. vs. CIR (GR No. 179343 dated January 21, 2010) Allied Banking Corporation
vs. CIR (GR No. 175097 dated February 5, 2010)

5. Administrative Appeal with the CIR

RR No. 18-2013

6. Assessment Becomes Final and Executory for Failure to Protest /Appeal

RCBC vs. CIR (GR No. 168498, April 24, 2007)
Marcos II vs. CA (GR No. 120880 dated June 5, 1997) Republic vs. Ker (18
SCRA 208)
Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004)
CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010
CIR vs. Concepcion (22 SCRA 1058)

F. Collection / Remedies of the Government

1. Prescriptive period to collect

Secs. 222(c) and 222(a)

2. Administrative remedies / Summary Remedies

Secs. 205-217
Republic vs. Hizon (GR No. 130430. December 13, 1997)
CIR vs. Hambrecht & Quist Philippines, Inc. (GR No. 169225 November 17, 2010)

a. Distraint of personal property

Secs. 205-207, 217, 208-209, 210, 212, NIRC
Revenue Memorandum Circular No. 5-01 dated February 19, 2001

b. Levy of Real Property

Secs. 205-207, 217, 208-209, 213-214, NIRC

c. Forfeiture
Sec. 215, NIRC
Castro vs. CIR (GR No. L-12174, April 26, 1962)

d. Tax lien
Sec. 219, NIRC

Republic vs. Enriquez (166 SCRA 608) CIR vs. NLRC (238 SCRA
42)
Hong Kong Shanghai Bank vs. Rafferty (39 SCRA 145)

e. No injunction to restrain collection of taxes

Sec. 218, NIRC
Rule 10, Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on September 16,
2008
Revenue Memorandum Order No. 42-10 dated May 4, 2010. Spouses Pacquiao vs. the CTA, GR
No. 213394 dated April 6, 2016.
Tridharma Marketing Corporation vs. CTA, GR No. 215950 dated June 20, 2016
 3. Judicial Remedies
Sec. 205
Secs. 220-221, NIRC
Republic vs. Hizon (GR No. 130430 December 13, 1997)
Fernandez Hermanos vs. CIR (GR No. L-21551, September 30, 1969) PNOC vs. CIR (GR No.
109976, April 26, 2005)

G. Statutory Offenses and Penalties

1. Civil Penalties / Surcharge / Interest

Secs. 247-251, NIRC
RR No. 12-99, as amended by RR No. 18-2013

a. Mandatory Imposition of Penalties

Phil. Refining Co. vs. CA (GR No. 118794 dated May 8, 1996) BPI vs. CIR (GR No. 137002,
July 27, 2006)

b. 25% and 50% Surcharge

Sec. 248 and RR No. 12-99 as amended by 18-2013
Castro vs. CIR (GR No. L-12174, April 26, 1962)

c. Applicable Interest Rate

Sec. 249 as amended by RA 10963
RR No. 21-2018 dated September 14, 2018

d. When penalties may be waived

Lhuillier Pawnshop vs. CIR (GR No. 166786 dated September 11, 2006)

2. Crimes / Offenses / Penalties / Forfeitures

Secs. 220-221, 224-226, NIRC Secs. 253-281, NIRC

Revenue Memorandum Circular No. 101-90 dated November 26, 1990

a. Precondition before a criminal case may be filed

Ungab vs. Cusi (97 SCRA 877) CIR vs. CA (257 SCRA
200)
CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)

b. Compromise Penalty
a. Nature and enforcement
Revenue Memorandum Order No. 7-15 dated January22, 2015
CIR vs. Liangga Bay Logging (GR No. L-35266, January 21, 1991)

c. Elements of tax evasion

CIR vs. The Estate of Benigno Toda, Jr. (GR No. 147188, September 14, 2004)\
Tax evasion connotes the integration of three factors: EAC
(1) the end to be achieved, i.e., the payment of less than that known by the taxpayer to be legally due, or the non-payment of
tax when it is shown that a tax is due;
(2) an accompanying state of mind which is described as being "evil," in "bad faith," "willfull," or "deliberate and not
accidental"; and
(3) a course of action or failure of action which is unlawful.

d. Persons liable in case taxpayer is a juridical entity e. Payment of tax in criminal

cases
Sec. 253 (a), NIRC
Sec. 205 (b) last paragraph

Republic vs. Patanao (GR No. L-22356, July 21, 1967) Castro vs. CIR (GR No. L-
12174, April 26, 1962)

f. Probable Cause
BIR vs CA, GR No. 197590 dated November 25, 2015
g. Crimes under Secs. 254 and 255 h. Civil liability in criminal
 cases
People vs. Mendez (CTA Criminal Case Nos. O-013 &O-015, January 5, 2011) People vs. Kintanar (CTA
Criminal Case No. O-030 dated August11, 2010) People vs. Santos (CTA Criminal Case No. O-012dated
January16, 2013)
People vs. Spouses Castillo (CTA CTA Criminal Case No. O-219 dated October 7, 2013)

i. Prescription of violations of the NIRC

Lim vs. CA (190 SCRA 616)

H. Claims for refund and credit of taxes/Remedy AFTER payment

1. Basis of Tax Refunds

CIR vs. Acesite Phils. (GR No. 147295, February 16, 2007)

2. Taxpayer/withholding agent
CIR vs. Procter & Gamble (204 SCRA 377)
CIR vs. Smart Communications, Inc. (GR Nos. 179045-46, August 25, 2010)
Honda Cars Philippines, Inc. vs. Honda Cars Technical Specialist and Supervisors Union
(GR No. 204142 dated November 19, 2014)
CIR vs. Philippine Associated Smelting and Refining Corporation, GR No. 186223 dated
October 1, 2014

3. Requisites for a valid claim for refund / Creditable Withholding Tax Cases
Koppel (Phils) vs. CIR (GR No. L-10550, September 19, 1961)
CIR vs. Meralco, GR No. 181459 dated June 9, 2014
CIR vs. Far East Bank GR No. 173854 March 15, 2010
CIR vs. Concepcion (22 SCRA 1058) CIR vs. CA (234 SCRA
348)
PNB vs. CIR (GR No. 206019 dated March 18, 2015
CIR vs. PNB, GR No. 180290 dated September 29, 2014
CIR vs. Cebu Holdings, Inc., GR No. 189792 dated June 20, 2018

4. Refunds where written claim is not needed

Sec. 204 (3), NIRC
Sec. 229, NIRC
Vda de San Agustin vs. CIR, GR No. 138485, September 10, 2001

5. Refunds of Corporate taxpayers/Irrevocability Rule

Sec. 76, NIRC
ACCRA Investments vs. CA (204 SCRA 957) CIR vs. TMX Sales (205
SCRA 184)
Systra Phils. Inc. vs. CIR (GR No. 176290, September 21, 2007) Sithe Phils. Holdings vs.
CIR (CTA Case No. 6274, April 4, 2003)
BPI-Family Savings Bank, Inc. vs. CA, CTA and CIR (GR No. 122480, April 12, 2000)
Philam Asset Management, Inc. vs. CIR (GR Nos. 156637/162004, December 14, 2005) CIR vs. BPI (GR No. 178490,
July 7, 2009)
Asia World Properties vs. CIR (GR No. 171766, July 29, 2010)
IMPSA Construction Corporation vs. CIR (CTA EB Case No. 685, May 24, 2011) CIR vs. Rhombus Energy Incorporated
(CTA EB Case No. 803, October 11, 2012) Winbrenner & Inigo Insurance Brokers, Inc. (GR No. 206526 dated January 28,
2015) Republic vs. Team (Phils.) Energy Corporation, (GR No. 188016 dated January 14, 2015) – read also concurring
opinion of CJ Sereno
University Physicians Services, Inc. – Management vs. CIR, GR No. 205955 dated March 7,
2018
Rhombus Energy, Inc. CIR, GR No. 206362 dated August 1, 2018

6. Rule in case of Merger/Corporate taxpayers contemplating dissolution

Sec. 52 (C), NIRC
BPI vs. CIR (GR No. 144653, August 28, 2001)

7. When 2 year period does not apply

CIR vs. PNB (GR No. 161997, October 25, 2005)

8. Remedy of the taxpayer

Sec. 229, NIRC
RA No. 9282, as amended by RA No. 9503
 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on
September 16, 2008

a. CIR renders a decision

b. CIR does not render a decision
c. Appeal to the CTA

9. Interest on Tax Refunds

BDO vs. Republic, GR No. 198756 dated August 16, 2016
Sec. 79(C)(2)

10. Issuance of Tax Credit Certificate

Secs.203 (C), 230, NIRC
RR No. 05-00 dated July 19, 2000
RR No. 14-11 dated July 29, 2011

a. Tax Credit, Tax Credit Certificate, Tax Debit Memo b. Sources of Tax Credit
c. Uses of Tax Credit
d. Sale / Assignment of Tax Credit
e. Validity, Conversion and Validation
f. Forfeiture of Cash Refunds / Tax Credit

11. Erroneously Refunded Tax

Guagua Electric Light vs. CIR (GR No. L-23611, April 24, 1967)

I. The Court of Tax Appeals

RA No. 9282, as amended by RA No. 9503
Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on
September 16, 2008

1. Why was the CTA created?

Philippine Refining Co. vs. CA (256 SCRA 661

2. Weight given to CTA decisions

3. Composition of the Court (No. of Divisions and Justices, the CTA En Banc)
4. Reversal of Decisions of CTA Division
5. Jurisdiction of CTA Division
a. Constitutionality/Validity of Regulations/Tax Laws
Philamlife vs. Secretary of Finance (GR No. 210987 dated November 24, 2014) CIR vs. CTA and Petron
Corporation, GR No. 207843 dated July 15, 2015
Banco De Oro vs. Republic (GR No. 198756, January 13, 2015) and resolution on the
Motion for reconsideration (GR No. 198756 dated August 16, 2016)

b. Civil/Criminal Cases
Adamson vs. CA (GR No. 120935, May 21, 2009)
CIR vs. Hambrecht & Quist Philippines, Inc., G.R. No. 169225, November 17, 2010
City of Manila vs. Grecia-Cuerdo, GR No. 175723 dated February 4, 2014. CIR vs. BPI, GR No.
224327 dated June 11, 2018
Gaw, Jr. vs. CIR, GR No. 222837 dated July 23, 2018

c. BIR vs. Government Agency

Power Sector Assets and Liabilities Management Corporation vs. CIR, GR No. 198146 dated August 8, 2017
CIR vs. Secretary of Justice, GR No. 209289 dated July 9, 2018

6. Jurisdiction of CTA EB
Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017

7. Suspension of Collection of Tax

8. Appeal to the SC

J. Abatement of Tax / Tax Compromise

Secs. 7 and 204, NIRC RR No. 13-01
 RR No. 30-02
RR No. 8-04
RR No. 4-12
RR No. 9-13

A. Authority of CIR to abate taxes

1. Grounds for abating taxes and penalties
2. Conditions
Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017

B. Power to compromise
1. Cases that can be compromised
2. Cases that cannot be compromised
3. Timing of payment of amount offered as compromise
4. Basis for acceptance of compromise settlement and rates
CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)