REMEDIES

1. What is an assessment?
2.

ANS:
An assessment is a formal notice to the
taxpayer stating that the amount thereon is due
as a tax & containing a demand for the
payment thereof. An assessment contains not
only a computation of tax liabilities but also a
demand for payment within a prescriptive
period. (Alhambra Cigar vs. Collector of Internal
3.

Revenue, G.R. Nos. L-12026 & L-12131, May 29,1959)

4.

5. When
can
the
compromise taxes?

Commissioner

6.
ANS:
a. If there is reasonable doubt as to the
validity of the claim against the taxpayer
exists;
b. If the financial position of the taxpayer
demonstrates a clear inability to pay the
assessed tax.
7.

8. Does a withholding agent have the

right to file an application for tax
refund?
9.
ANS:
10.
YES. A withholding agent should be
allowed to claim for a tax refund because
under the law the said agent is the one liable
for any violation of the withholding tax law
should such violation occur. Furthermore, since
the withholding agent is made personally liable
to deduct & withhold any tax under Sec. 53 (C)
of the Tax Code, it is imperative that he be
considered the taxpayer for all legal intents &
purposes. Thus, by any reasonable standard,
such person should be regarded as a party in
interest to bring suit for refund of taxes.
11.

12.
What remedies are available to
a taxpayer who considers himself
aggrieved in connection with the
assessment & collection of internal
revenue taxes?

13.

ANS:
When a taxpayer receives a letter of
demand & an assessment notice of deficiency
taxes, he must protest the same within a period
of 30 days from the receipt of such notice. As a
general rule, payment in protest is not required.
However, if the taxpayer only disputes or
protest against the validity of some of the
issues raised, the taxpayer shall be required to
pay the deficiency tax or taxes attributable to
the undisputed issues. No action shall be taken
on the taxpayers disputed issues until the
taxpayer has paid the deficiency tax or taxes
attributable to the undisputed issues. (R.R. 12-99)
16.
He must then, within a period of 60 days
from filing of such protest, submit complete
supporting documents. If he does not comply
with this requirement, the taxpayer would be
considered as not having filed the protest &
then the BIR could collect the tax.
18.
If the BIR denies the taxpayers protest,
or if the BIR does not resolve the protest within
a period of 180 days from the submission of
the complete supporting documents, then the
taxpayer has a period of 30 days from receipt
of the denial or expiration of the 180 days
period, within which to appeal to the CTA by
filing a petition for review with an application for
the issuance of a writ of preliminary injunction
to enjoin the BIR from collecting the tax. The
appeal is to be heard by a Division.
20.
If the Divisions decision is unfavorable
to the taxpayer, he could then file a motion for
reconsideration or new trial with the Division
within 15 days from notice. If the Division
unfavorably acts on the action for motion for
new trial or reconsideration, the taxpayer may
file a petition for review with the CTA en banc.
The adverse decision of the CTA en banc is
appealable to the Supreme Court through a
verified petition for review on certiorari within a
period of 15 days from the receipt of the CTAs
14.

15.

17.

19.

adverse decision, which period is extendible for

30 days.
22.
If the assessment notice has become
final, executor, & collectible & the BIR files a
collection suit in court, the taxpayer may use
affirmative defenses such as prescription, res
judicata, or payment but not negative defenses
which are deemed waived for failure to raise
the same in the administrative proceedings.
Estoppel could not be used as a defense
because the government is not stopped by the
acts of its agents.
24.
Whether the BIR intends to collect the
taxes judicially or administratively, the taxpayer
must try to enter into a compromise in order to
obtain a reduction of the taxes being
demanded.
25.
21.

23.

26.
PSP used tax credit certificates
that was transferred to it for value by
several BOI-registered companies to
pay its tax liabilities. However, these
TCCs were cancelled by the BIR
because it discovered that the TCCs
were fraudulently secured by the
original grantees. The BIR sent
letters to PSP requiring it to replace
the amount equivalent to the amount
of the cancelled TCCs. Thereafter
collection cases were filed by the BIR
with the RTC of Manila. PSP
thereafter filed a Petition for Review
with the CTA. Does the CTA have
jurisdiction over the case?
27.

ANS:
28.
NO. The present case does not involve
a tax protest case within the jurisdiction of the
CTA to resolve. The letter of the BIR cannot be
considered as an assessment of PSPs tax
liabilities that can be subject to an
administrative tax protest. PSPs tax liabilities
had long been computed & ascertained in the
original assessments of its tax liabilities & in

fact settled them using the TCCs. These

original assessments, therefore have become
final, incontestable, & beyond any subsequent
protest proceeding, administrative or judicial to
rule upon. (Pilipinas Shell Petroleum Corporation vs.
Commissioner of Customs, G.R. 176380, June 18, 2009)
29.

30.
State the conditions required by
the
Tax
Code
before
the
Commissioner of Internal Revenue
could authorize the refund or credit
of taxes erroneously or illegally
received.
31.
ANS:
32.
The conditions are:
a. A written claim for refund is filed by the
taxpayer with the Commissioner of Internal
Revenue. (Sec. 204, NIRC)
b. The claim for refund must be a categorical
demand for reimbursement. (Bermejo vs.
Collector of Internal Revenue, 87 Phil. 96 [1950])

c. The claim for refund or tax credit must be

filed with the Commissioner, or the suit or
proceeding therefore must be commenced
in court within 2 years from the date of
payment of the tax or penalty regardless of
any supervening cause. (Sec. 229, NIRC)
33.
34.
What is the SUPERVENING EVENT
CLAUSE in refund cases?
35.
ANS:
36.
The Supervening Event Clause provides
that the case for refund must be elevated to the
Court of Tax Appeals before the expiration of
the 2-year period because the prescriptive
period will not be suspended regardless of any
supervening event.
37.
38.
39.

40.
Can the Commissioner grant a
refund or tax credit even without a
written claim for it?
41.

ANS:
YES. When the taxpayer files a return
which on its face shows an overpayment of the
42.

tax & the option to refund claim tax credit was

chosen by the taxpayer, the Commissioner
shall grant the refund or tax credit without the
need for a written claim. This is so because a
return filed showing an overpayment shall be
considered as a written claim for credit or
refund. (Secs. 76 & 204, NIRC). Moreover, the law
provides that the Commissioner may, even
without a written claim therefor, refund or credit
any tax where on the face of the return upon
which payment was made, such payment
appears clearly to have been erroneously paid.
(Sec. 229, NIRC)
43.

44.
What is the prescriptive period
for assessment & collection of taxes?
45.
ANS:
46.
Generally, internal revenue taxes shall
be assessed within 3 years after the last day
prescribed by law for filing of return.
47.

48. What are the exceptions to the threeyear prescriptive period to assess &
collect taxes?
49.
ANS:
a. In case of false or fraudulent return with
intent to evade or failure to file a return, the
tax may be assessed or a proceeding in
court for the collection of tax may be filed
without assessment at any time within 10
years after the discovery of the falsity, fraud
or omission.
b. If before the expiration of the 3-year period,
the Commissioner & the taxpayer have
agreed in writing to its assessment after such
time, the tax shall be assessed within the
period agreed upon.
50.
51.
What are the BADGES OF FRAUD

in income tax returns?

52.
ANS:
a. Deliberate over-claim of deductions
b. Deliberate under-declaration of income
c. Recurrence of both.
53.

54.
B Company opted to carry over
its overpaid income taxes in taxable
year 1998 to the succeeding taxable
year. In 1999, it declared a net loss.
Considering that it still had the prior
years overpaid income taxes &
excess tax credits, B Company once
again opted to carry over the excess
income taxes & tax credits to the
following year. For taxable year 2000,
B Company continued to have nil
income tax liability. In its return, it did
not indicate its choice to carry over
the overpaid income tax or to claim
for refund/tax credit certificate. When
it filed a claim for refund of the
excess
income
&
creditable
withholding taxes for taxable year
1998, both the BIR & the CTA denied
the claim citing the irrevocability
rule under Sec. 76 of the 1997 Tax
Code. Is the irrevocability rule
applicable only for a certain taxable
period?
55.
ANS:
56.
NO. Sec. 76 remains clear &
unequivocal. Once the carry-over options is
taken, actually or constructively, it becomes
irrevocable. It mentioned no exception or
qualification to the irrevocability rule. Hence,
the controlling factor for the operation of the
irrevocability rule is that the taxpayer chose an
option; and once it had already done so, it
could no longer make another one.
Consequently, after the taxpayer opts to carryover its excess tax credit to the following
taxable period, the question of whether or not it
actually gets to apply said tax credit is
irrelevant, Sec. 76 of the NIRC of 1997 is
explicit in stating that once the option to carryover has been made, no application for tax

refund or issuance of a tax credit certificate

shall be allowed therefor. The last sentence of
Sec. 76 of the NIRC of 1997 reads: Once the
option to carry-over & apply the excess
quarterly income tax against the income tax
due for the taxable quarters of the succeeding
taxable years has been made, such option
shall be considered irrevocable for that taxable
period & no application for tax refund or
issuance of a tax credit certificate shall be
allowed therefor. The phrase for that taxable
period merely identifies the excess income
tax, subject of the option, by credit, which B
Company opted to carry over, was acquired by
the said bank during the taxable year 1998.
The option of BPI to carry over its 1998 excess
income tax credit is irrevocable; it cannot later
on opt to apply for a refund of the very same
1998 excess income tax credit. (Comm. of Internal
Revenue vs. BPI, G.R. No. 178490, July 7, 2009).
57.

58. Sec. 218 of the NIRC provides that:

No court shall have authority to grant
an injunction to restrain the collection
of any national internal revenue tax,
fee, or charge. However, the no
injunction rule does not apply to the
Court of Tax Appeals (CTA). What are
the conditions for the issuance of an
injunction by the CTA?
59.
ANS:
60.
The CTA may enjoin the collection of
taxes if in its opinion the same may jeopardize
the interest of the government and/or taxpayer.
In this instance, the court may require to either
deposit the amount claimed or file a surety bond
for not more than double the amount with the
court.
61.

62.
The Comm. of Internal Revenue
(CIR) filed with the DOJ an affidavit of
complaint against ABC Corporation.
Its President, Juan dela Cruz & its
treasurer, Pedro delos Reyes for tax

evasion in the total amount of

P10,000,000. The DOJ thereafter filed
with
the
CIR
a
Motion
for
Reconsideration / Reinvestigation
disputing the tax assessment & tax
liability. The CIR denied the request
on the ground that he had not yet
issued a formal assessment.
a. Can the Commissioners affidavit
of complaint be considered as a
formal assessment?
b. If NO, is the filing of the criminal
complaints against Dela Cruz
premature for lack of formal
assessment?
c. Does the CTA have jurisdiction
over the case?
63.
ANS:
a. NO. An assessment contains not only a
computation of tax liabilities, but also a
demand for payment within a prescribed
period. The affidavit of complaint cannot be
considered an assessment because:
it was not addressed to the taxpayer;
there was no demand made on the
taxpayers to pay the tax liability, nor a
period therein;
the letter was never mailed or sent to
the taxpayer by the Commissioner.
(Adamson et. al. vs. CA & Liwayway Vinzons
Chato, G.R. No. 120935, May 21, 2009)
64.

b. NO. An assessment of a deficiency is not

necessary to a criminal prosecution for
willful attempt to defeat & evade the
income tax. A crime is complete when the
violator has knowingly & willfully filed a
fraudulent return, with intent to evade &
defeat the tax. The perpetration of the
crime is grounded upon knowledge on the
part of the taxpayer that he has made an
inaccurate return, & the governments
failure to discover the error & promptly to
assess has no connections of the crime.
65.

c. NO. The CTA has jurisdiction to entertain

an appeal only from a final decision or
assessment of the Commissioner, or in
cases where the Commissioner has not
acted within the period prescribed by the
NIRC. In the cases at bar, the
Commissioner has not issued an
assessment of the tax liability of private
respondents.
66.

2. Appeal
80.

a. Court of Tax Appeals

Within 30 days from receipt of the
decision, judgment or order denying the
protest [Sec. 9, RA 9282]
b. Supreme Court
Within 15 days from receipt of the
decision, judgment or final order of the
CTA
If a motion for reconsideration is filed,
the 15-day period is reckoned from
denial of said motion [Rule 45, Revised
Rules of Court].

67.
68.

81.

69.

B. IF TAX IS ERRONEOUSLY/ILLEGALLY PAID

82.

1. Claim for refund [Sec. 229, RA 8424]

70.

83.

2. Claim for tax credit [Sec. 229, RA 8424]

PERIOD TO CLAIM : Generally, within 2
years after payment.
If paid on installments, the 2-year
period is counted from the payment of
the last installment or, if paid late,
from the date the last return should
have been filed.
In case of corporate quarterly returns,
the 2-year period is counted from the
date of payment of the last quarter tax,
or if paid late, from the date the final
return should have been filed.
84.

71.
72.

SUMMARY

OF

THE

REMEDIES OF THE TAXPAYER

A. IF TAX IS NOT YET PAID
73.

1. Protest the assessment

74.

a. By filing a formal protest within 30 days

from receipt of the ASSESSMENT
b. By submitting evidence in support of
the protest within 60 days from filing of
the PROTEST [Sec. 228, RA 8424]
Inaction of the Commissioner is not
deemed a denial of the protest. [Lacona

85.

86.

[Commissioner of Internal Revenue vs.

Philam Life Insurance Company, Inc., G.R.
No. 105208, 29 May 1995]
87.
88.
89.
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.

Land Company, Inc. v. Commissioner, CTA

Case No. 5777, 4 January 2000]

The filing of a civil case for collection

is deemed a denial of the protest.
[Republic vs. Lim Tian Teng & Sons, Inc.
16 SCRA 584; Dayrit vs. Cruz, L-39910, 26
September]
75.

c. Other defenses in civil and/or criminal

action
Compromise [Sec. 204, RA 8424; Rev.
76.

Regs. 7-2001 & 13-2001];

77.

Abatement

[Sec. 204, RA 8424; Rev.

Regs. 7-2001 & 13-2001]
78.

Tax amnesty [RA 9480]

79.

WHEN TO FILE CLAIM:

100.

With the Commissioner of Internal

Revenue to afford him an
opportunity to correct the mistake if
any, committed by him or his
subordinate. [P.J. Kiener Co., Ltd. vs.
David, 92 Phil. 945]

With the CTA within 30 days from

receipt of an adverse decision of

the Commissioner or prior to the

lapse of the 2-year prescriptive

period if no action is taken by the

commissioner [Secs. 204 & 229, RA

8424]