DLSU College of Law Atty. Martin Ignacio D.

Mijares
Taxation Law II Second Semester, AY 2017-2018

LAST MEETING

Rights and Remedies under the Tax Code

Rights and Remedies of the Taxpayer

Amend tax returns

Administrative protest of an assessment

TAXATION LAW II
Judicial protest of an assessment

Martin Ignacio D. Mijares 1

Week Seven – 03/06/2018

TODAY

Rights and Remedies under the Tax Code

Rights and Remedies of the Taxpayer

Judicial appeal of collection proceedings

Refund and/or tax credit of erroneously paid tax RIGHTS AND

Request for ruling
REMEDIES OF
TAXPAYERS

Judicial Protest of an Assessment

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DLSU College of Law
Taxation Law II
ALLIED BANK V. CIR

Issue: WON the FLD can be construed as a final
decision of the CIR appealable to the CTA

Held:

Section 7, RA 9282 expressly provides that the CTA
exercises exclusive appellate jurisdiction to review by
appeal decisions of the CIR in cases involving disputed
assessments

In this case, Petitioner did not protest the final assessment
notices

Instead, it filed a Petition for Review with the CTA

Thus, if we strictly apply the rules, the dismissal of the Petition
for Review by the CTA was proper.
5
PAGCOR V. BIR

Issue: WON PAGCOR timely filed its appeal to the
CTA

Held:

The appeal to the CTA was premature

A protesting taxpayer like PAGCOR had only three
options:

If the protest is wholly or partially denied by the CIR or his
AR, then the taxpayer may appeal to the CTA within 30 days
from receipt of the whole or partial denial of the protest

If the protest is wholly or partially denied by the CIR's AR,
then the taxpayer may appeal to the CIR within 30 days from
receipt of the whole or partial denial of the protest

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
7 8
CTA within 30 days from the lapse of the 180-day period
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
ALLIED BANK V. CIR

The case is an exception to the rule on exhaustion of
administrative remedies

A careful reading of the FLD-AN shows that the instant
case is an exception to the rule on exhaustion of
administrative remedies, i.e., estoppel on the part of the
administrative agency concerned

The language used and the tenor of the demand letter
indicate that it is the final decision of the respondent on the
matter.

The FLD-AN which was not administratively protested by the
petitioner can be considered a final decision of the CIR
appealable to the CTA because the words used, specifically
the words "final decision" and "appeal", taken together led
petitioner to believe that the FLD-AN was in fact the final
decision of the CIR on the letter-protest it filed and that the
available remedy was to appeal the same to the CTA. 6
PAGCOR V. BIR

PAGCOR did not wait for the RD or the CIR's decision on
its protest

PAGCOR made separate and successive filings before the
RD and the CIR before it filed its petition with the CTA.

A petition before the CTA may only be made after a
whole or partial denial of the protest by the CIR or the
CIR's AR

When PAGCOR filed its petition before the CTA on 11 March
2009, there was still no denial of PAGCOR's protest by either
the RD or the CIR

Therefore, under the first option, PAGCOR's petition before the
CTA had no cause of action because it was prematurely filed

The CIR made an unequivocal denial of PAGCOR's protest only
on 18 July 2011, when the CIR sought to collect from PAGCOR
the amount of P46,589,507.65
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DLSU College of Law
Taxation Law II
RIGHTS AND
REMEDIES OF
TAXPAYERS
Judicial Appeal of Collection
Proceedings
JUDICIAL APPEAL OF COLLECTION
PROCEEDINGS

CTA’s Jurisdiction on “Other Matters”

The law dictates that the appellate jurisdiction of the CTA
is not limited to cases which involve disputed
assessments

The second part also covers other cases that arise out of the
NIRC or other related laws administered by the BIR

A tax assessment deals with how much taxes are due from a
taxpayer, while tax collection deals with the whole process of
collecting the same from the taxpayers

Therefore, it can really happen that while there may no longer be
any dispute on the assessment as it has become final, there is
still an existing controversy pertaining to the right of the BIR to
legally collect the assessed taxes

An appeal filed with the CTA challenging the collection
proceedings gives it an opportunity to revisit the and
examine the validity of the tax assessment
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
JUDICIAL APPEAL OF COLLECTION
PROCEEDINGS

CTA’s Jurisdiction on “Other Matters”

The jurisdiction of the CTA is not limited to cases
involving the assessment of deficiency taxes

The CTA also has the jurisdiction over other matters arising
from the Tax Code. Section 7, RA No. 1125, as amended by
RA No. 9282 (the “CTA Law”) provides that:
SECTION 7. Jurisdiction - The Court of Tax Appeals shall
exercise exclusive appellate jurisdiction to review by appeal, as
herein provided —
(1) Decisions of the Commissioner of Internal Revenue in cases
involving disputed assessment, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto, or
other matters arising under the National Internal Revenue or
other law or part of law administered by the Bureau of Internal
Revenue. 10
JUDICIAL APPEAL OF COLLECTION
PROCEEDINGS

In Philippine Journalists, the Supreme Court confirmed
that the CTA has jurisdiction to determine the validity of
the collection proceedings initiated by the BIR

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
11 12
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DLSU College of Law
Taxation Law II
JUDICIAL APPEAL OF COLLECTION
PROCEEDINGS

An appeal filed with the CTA challenging the collection
proceedings gives it an opportunity to revisit the and
examine the validity of the tax assessment

A void assessment bears no fruit and a warrant of distraint
and/or levy issued pursuant a void assessment is likewise
null and void

The CTA has jurisdiction to determine if the warrant of distraint
and levy issued by the BIR is valid and to rule whether the
assessment has prescribed or if the notice requirement in the
issuance of a deficiency tax assessment pursuant to Section
228, Tax Code was complied with

The CTA is not precluded from determining compliance with the
requirements of due process laid down by the law and by the
BIR itself in the issuance of deficiency tax assessment to
determine the validity of the warrant of distraint and levy
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CIR V. HAMBRECHT & QUIST

The fact that an assessment has become final for failure
of the taxpayer to file a protest within the time allowed
only means that the validity or correctness of the
assessment may no longer be questioned on appeal

However, the validity of the assessment itself is a separate
and distinct issue from the issue of whether the right of the
CIR to collect the validly assessed tax has prescribed

This issue of prescription, being a matter provided for by the
NIRC, is well within the jurisdiction of the CTA to decide
15
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
CIR V. HAMBRECHT & QUIST

Issue: WON the CTA had jurisdiction to rule on the
issue of prescription of the BIR’s right to collect

Held:

The appellate jurisdiction of the CTA is not limited to
cases which involve decisions of the CIR 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
BIR

In the case at bar, the issue at hand is whether or not the
BIR's right to collect taxes had already prescribed and that is
a subject matter falling under Section 223(c), 1986 NIRC

Thus, the issue of prescription of the BIR's right to collect taxes
may be considered as covered by the term "other matters" over
which the CTA has appellate jurisdiction
14
CIR V. HAMBRECHT & QUIST

Issue: WON the BIR’s right to collect has prescribed

Held:

Two requisites must concur before the period to enforce
collection may be suspended:

That the taxpayer requests for reinvestigation, and

That petitioner grants such request

The mere filing of a protest letter which is not granted
does not operate to suspend the running of the period to
collect taxes
16
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DLSU College of Law
Taxation Law II
CIR V. ALPHA RIGGING & MOVING
SYSTEMS

Issue: WON the CTA correctly assumed jurisdiction
and nullified the WDL issued against Alpha Rigging

Held:

There is no issue on jurisdiction

The jurisdiction of the CTA over "other matters arising under
the National Internal Revenue Code (NIRC) or other laws or
part of law administered by the Bureau of Internal Revenue”
is not limited to the timeliness and validity of the collection
procedure itself

The second part of the provision covers other cases that arise
out of the NIRC or related laws administered by the BIR

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
17
CIR V. ALPHA RIGGING & MOVING
SYSTEMS

Here, petitioner failed to prove that the 2000 FLD and
FAN No. 59/2000 were indeed served and received by
respondent

As such, there is no assessment to begin with, and petitioner
cannot be considered a delinquent taxpayer

Consequently, there is no basis for the issuance of WDL No.
059-10-018

Thus, WDL No. 059-10-018 issued by respondent to petitioner, in
so far as it seeks to collect from petitioner deficiency taxes for
year 2000, is void

Petitioner also failed to prove that the 2001 NIC and PAN
were served and received by respondent

Such failure on the part of petitioner makes the 2001 FLD
and FAN No. 59/2001 as well as the WDL No. 059-10-018
invalid
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Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
CIR V. ALPHA RIGGING & MOVING
SYSTEMS

A void assessment bears no fruit and a warrant of
distraint and/or levy issued pursuant a void assessment
is likewise null and void

The Court is not precluded from determining compliance with
the requirements of due process laid down by the law and by
the BIR itself in the issuance of deficiency tax assessment to
determine the validity of the warrant of distraint and levy

In the case at bar, the petitioner's witness testified that FLD and
FAN 59/2000 and 2001 PAN were mailed and received by
respondent, however, CIR failed to mark, offer, identify and admit
as evidence any registry receipt and return card to prove the fact
of mailing and receipt

Likewise we note in CIR's Answer to the petition before this
Court in Division on alleged registry receipt and return card to
prove the fact of mailing and receipt by the taxpayer, however,
no evidence was marked, offered, identified and admitted during
trial
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RIGHTS AND
REMEDIES OF
TAXPAYERS
Refund of Erroneously Paid Tax
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DLSU College of Law Atty. Martin Ignacio D. Mijares
Taxation Law II Second Semester, AY 2017-2018

REFUND OF ERRONEOUSLY PAID TAX REFUND OF ERRONEOUSLY PAID TAX

Section 204(C), Tax Code

The CIR may credit or refund taxes erroneously or
illegally received or penalties imposed without authority

No credit or refund of taxes or penalties shall be allowed
unless the taxpayer files in writing with the CIR a claim for
credit or refund within two (2) years after the payment of the
tax or penalty
21

Section 229, Tax Code

No suit or proceeding shall be maintained in any court for
the recovery of:

Any national internal revenue tax hereafter alleged to have
been erroneously or illegally assessed or collected, or

Any penalty claimed to have been collected without authority,

Any sum alleged to have been excessively or in any manner
wrongfully collected without authority

Any sum alleged to have been excessively or in any manner
wrongfully collected
until a claim for refund or credit has been duly filed
with the CIR

But such suit or proceeding may be maintained, whether or
not such tax, penalty, or sum has been paid under protest or
duress 22

WHAT CONSTITUTES ERRONEOUS

PAYMENT

Erroneous Payment

What can be refunded or credited is a tax that is
“erroneously, x x x illegally, x x x excessively or in any
manner wrongfully collected

There must be a wrongful payment because what is paid, or
part of it, is not legally due

Section 229 apply only to instances of erroneous payment of
illegal collection of internal revenue taxes

Erroneous or wrongful payment includes excessive
payment because they all refer to payment of taxes not
legally due
23
CIR V. PNB

Issue: WON the two-year prescriptive period for the
refund of erroneously or illegally collected tax applies

Held:

The term erroneous or illegal tax as one levied without
statutory authority

Therefore, PNB's claim for tax credit did not proceed from, or
is a consequence of overpayment of tax erroneously or
illegally collected

PNB issued to the BIR the check for P180 Million in the concept
of tax payment in advance, thus there was no error or illegality in
the payment.

PNB merely sought the application of amounts advanced to the BIR to
future annual income tax liabilities, in view of its inability to carry-over
the remaining amount of such advance payment to the four (4)
succeeding taxable years, not having incurred income tax liability
during that period
24

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DLSU College of Law
Taxation Law II
CIR V. PNB

It would be improper to treat PNB’s advance payment as
erroneous, wrongful or illegal payment of tax within the
meaning of Section 230 (now 229), Tax Code

So that even if the respondent's inability to carry-over the
remaining amount of its advance payment to taxable years
1992 to 1996 resulted in excess credit, it would be
inequitable to impose the two-year prescriptive period in
Section 230 as to bar PNB's claim for tax credit to utilize the
same for future tax liabilities

When the P180 million advance income tax payment was
tendered by PNB, no tax had been assessed or due, or
actually imposed and collected by the BIR

Neither can such payment be considered as illegal having been
made in response to a call of patriotic duty to help the national
government
25
CIR V. CENTRAL AZUCARERA

Issue: WON the claim for refund filed within two years
from the grant of tax exemption was time barred

Held:

The 2-year prescriptive period refers to taxes erroneously
or illegally or in any manner wrongfully collected, or
penalties collected without authority

The basis of the claim for refund is the tax exemption
granted by the Board of Industries under Rep. Act No. 3127

Before the application for such exemption was approved there
was absolutely no basis for the Central to file a claim with the
CIR or to commence a suit in court
27
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
CIR V. PNB

An availment of a tax credit due for reasons other than
the erroneous or wrongful collection of taxes may have a
different prescriptive period

Absent any specific provision in the Tax Code or special
laws, that period would be ten (10) years under Article 1144,
Civil Code

Even if the two-year prescriptive period, if applicable, had
already lapsed, the same is not jurisdictional and may be
suspended for reasons of equity and other special
circumstances
26
CIR V. CENTRAL AZUCARERA

When the tax sought to be refunded is illegally
or erroneously collected, the period of
prescription starts from the date the tax was
paid; but when the tax is legally collected, the
prescriptive period commences to run from the
date of occurrence of the supervening cause
which gave rise to the right of refund

In this case, the supervening cause from which the right to
the tax credit applied for arose was the issuance of the
certificate of tax exemption by the Board of Industries on
October 5, 1965 and the Central filed its claim for tax credit
with the CIR on the following November 3, or well within the
two-year period, it is clear that the said claim had not yet
prescribed
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DLSU College of Law Atty. Martin Ignacio D. Mijares
Taxation Law II Second Semester, AY 2017-2018

REQUIREMENT FOR FILING REQUIREMENT FOR FILING

ADMINISTRATIVE CLAIM ADMINISTRATIVE CLAIM

General Rule
Exception:

Section 229, Tax Code
Section 204(C), Tax Code proviso

No suit or proceeding shall be maintained in any court for the
A return showing an overpayment shall be considered a
recovery of: written claim for credit or refund

Any national internal revenue tax hereafter alleged to have been
Section 229, Tax Code proviso
erroneously or illegally assessed or collected, or

The CIR may, even without a written claim therefor, refund or

Any penalty claimed to have been collected without authority,
credit any tax, where on the face of the return upon which

Any sum alleged to have been excessively or in any manner payment was made, such payment appears clearly to have
wrongfully collected without authority been erroneously paid

Any sum alleged to have been excessively or in any manner
wrongfully collected
until a claim for refund or credit has been duly filed with the
CIR

29 30

CIR V. PRIMETOWN PROPERTY GROUP CIR V. TMX SALES, INC.

Issue: How should the two-year prescriptive period be
computed?

Held:

Since there is incompatibility in the manner of computing
legal periods under the Civil Code and the Administrative
Code, the SC held that Section 31, Chapter VIII, Book I
of the Administrative Code, being the more recent law,
governs the computation of legal periods

Thus, two years means 24 calendar months from the date of
payment

The two-year prescriptive period consisted of 24 calendar
months

Respondent's petition (filed on April 14, 2000) was filed on the
last day of the 24th calendar month from the day respondent
filed its final adjusted return well within the reglementary period
31

Issue: WON the 2-year period to filed a claim for
refund of erroneously paid income tax be reckoned
from the quarterly income tax was paid or the date of
filing of the Final Adjustment Return (FAR)

Held:

The most reasonable and logical application of the law
would be to compute the two-year prescriptive period at
the time of filing the FAR or the Annual ITR, when it can
be finally ascertained if the taxpayer has still to pay
additional income tax or if he is entitled to a refund of
overpaid income tax

The payment of quarterly income tax should only be
considered mere installments of the annual tax due
32

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DLSU College of Law Atty. Martin Ignacio D. Mijares
Taxation Law II Second Semester, AY 2017-2018

PERIOD TO FILE CLAIM FOR REFUND SET OFF OF TAXES

Payment under Protest not Required

Such suit or proceeding may be maintained, whether or
not such tax, penalty, or sum has been paid under protest
or duress

Time to File

In any case, no such suit or proceeding shall be filed
after the expiration of 2 years from the date of payment of
the tax or penalty regardless of any supervening cause
that may arise after payment

General Rule:

Taxes cannot be subject to compensation because the
government and the taxpayer are not creditors and
debtors of each other to trigger legal compensation under
Article 1278, Civil Code

Exception:

Offsetting of taxes allowed where the determination of
the taxpayer’s liability is intertwined with the resolution of
the claim for refund or erroneously or illegally collected
taxes under Section 229, Tax Code

33 34

FRANCIA V. IAC CIR V. TOLEDO POWER COMPANY

Issue: WON there can be legal compensation between
Issue: WON TPC may be assessed deficiency VAT in
the amount due from the government and taxes due connection with its claim for refund of unutilized VAT
thereto

Held:

Held:

As a rule, taxes cannot be subject to compensation

By legal compensation, obligations of persons, who in
because the government and the taxpayer are not
their own right are reciprocally debtors and creditors of
each other, are extinguished (Article 1278, Civil Code) creditors and debtors of each other

However, in several cases, the Court has allowed the

Internal revenue taxes can not be the subject of set-off or
compensation determination of a taxpayer's liability in a refund case,
thereby allowing the offsetting of taxes

A claim for taxes is not such a debt, demand, contract or
judgment as is allowed to be set-off under the statutes of set-
off

Taxes are not in the nature of contracts between parties but
grow out of duty to the government

35 36

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DLSU College of Law
Taxation Law II
CIR V. TOLEDO POWER COMPANY

CIR v. CTA: offsetting of taxes was allowed in a tax refund case
because there was an existing deficiency income and business
tax assessment against the taxpayer

To award the refund despite the existence of that deficiency
assessment is an absurdity and a polarity in conceptual effects and
that to grant the refund without determination of the proper
assessment and the tax due would inevitably result in multiplicity of
proceedings or suits

South African Airways v. CIR: offsetting of taxes was permitted
because the correctness of the return filed by the taxpayer was
put in issue

SMI-ED Philippines Technology, Inc. v. CIR: offsetting was
allowed because there was a need for the court to determine if a
taxpayer claiming refund of erroneously paid taxes is more
properly liable for taxes other than that paid.

The determination of the proper category of tax that should have been
paid is not an assessment but is an incidental issue that must be
resolved in order to determine whether there should be a refund
37
PRINCIPLE OF SOLUTIO INDEBITI APPLIES

A taxpayer is entitled to a refund or tax credit either by
authority of a statute expressly granting such right,
privilege, or incentive in his favor, or under the
principle of solutio indebiti, requiring the return of taxes
erroneously or illegally collected

The government should not be unjustly enriched at the
expense of the taxpayer
39
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
CIR V. TOLEDO POWER COMPANY

But in all these cases, offsetting of taxes was allowed only
because the determination of the taxpayer's liability is
intertwined with the resolution of the claim for tax refund of
erroneously or illegally collected taxes under Section 229 of
the NIRC

A situation that is not present in the instant case

In this case, TPC filed a claim for tax refund or credit under Section
112, NIRC, where the issue to be resolved is whether TPC is entitled
to a refund or credit of its unutilized input VAT for the taxable year
2002

And since it is not a claim for refund under Section 229,NIRC, the
correctness of TPC's VAT returns is not an issue

Thus, there is no need for the court to determine whether TPC is
liable for deficiency VAT
38
CIR V. ACESITE (PHILIPPINES) HOTEL

Issue: WON Acesite was entitled to the refund of VAT
it paid by mistake

Held:

Tax refunds are based on the principle of quasi-contract
or solutio indebiti

When money is paid to another under the influence of a
mistake of fact, that is to say, on the mistaken supposition of
the existence of a specific fact, where it would not have been
known that the fact was otherwise, it may be recovered

The ground upon which the right of recovery rests is that
money paid through misapprehension of facts belongs in
equity and in good conscience to the person who paid it

The Government comes within the scope of solutio
indebiti principle
40
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DLSU College of Law
Taxation Law II
CIR V. ACESITE (PHILIPPINES) HOTEL

Since an action for a tax refund partakes of the
nature of an exemption, which cannot be
allowed unless granted in the most explicit and
categorical language, it is strictly construed
against the claimant who must discharge such
burden convincingly
41
UTILIZATION OF TAX CREDIT

A Tax Credit Certificate validly issued may be applied
against any internal revenue tax, excluding withholding
taxes, for which the taxpayer is directly liable

Any request for conversion into refund of unutilized tax
credits may be allowed

In no case shall a tax refund be given resulting from
availment of incentives granted pursuant to special
laws for which no actual payment was made
43
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
BURDEN OF PROOF

In an action for refund or tax credit, the burden of proof
is on the taxpayer to establish its right to the refund or
tax credit

Failure to sustain the burden is fatal to the claim

Exemptions from taxation are highly disfavored in law
and he who claims exemption must be able to justify by
the clearest grant of organic or statutory law
42
FORFEITURE OF CASH REFUND AND OF
TAX CREDIT

Forfeiture of Refund

A refund check or warrant issued, which shall remain
unclaimed or uncashed within 5 years from the date the
said warrant or check was mailed or delivered, shall be
forfeited in favor of the Government and the amount
thereof shall revert to the general fund

Forfeiture of Tax Credit

A tax credit certificate issued, which shall remain
unutilized after 5 years from the date of issue, shall,
unless revalidated, be considered invalid, and shall not
be allowed as payment for internal revenue tax liabilities
of the taxpayer, and the amount covered by the certificate
shall revert to the general fund
44
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DLSU College of Law Atty. Martin Ignacio D. Mijares
Taxation Law II Second Semester, AY 2017-2018

APPEAL OF DENIAL OF REFUND CLAIM

Denial of Refund

CTA has exclusive appellate jurisdiction to review by appeal

Decisions of the CIR in cases involving refunds of internal
revenue taxes, fees or other charges, penalties in relation
thereto
RIGHTS AND

Inaction by the CIR in cases involving refunds of internal
revenue taxes, fees or other charges, penalties in relation
REMEDIES OF
thereto where the NIRC provides a specific period of action, in
which case the inaction shall be deemed a denial
TAXPAYERS

Both the administrative and judicial claims for refund have to be filed
within the two-year period

Hence, if the BIR does not act on the administrative claim for refund
and the two-year period is about to end, a judicial claim for refund
will have to be filed without waiting for the CIR’s decision Request for Ruling

Appeal to the CTA Division  CTA En Banc  SC

45

REQUEST FOR RULING REQUEST FOR RULING

RMO No. 9-2014 (February 16, 2014)

What are Tax Rulings?

These are official positions of the BIR on inquiries of
taxpayers, who request clarification on certain provisions of
the NIRC, other tax laws, or their implementing regulations

Rulings are based on particular facts and circumstances
presented and are interpretations of the law at a specific
point in time

The ruling function is limited to the determination of purely
legal issues, as opposed to questions of fact

The ruling function need not be exercised where the law, rule or
regulation is clear, thereby dispensing with the need for the
interpretation thereof

Revenue Bulletin No. 1-2003, as amended

No-Ruling Areas

Certain issues or subject matter as “No-Ruling Areas”, on
which the appropriate office of the BIR is hereby instructed
not to accept any request for rulings, such as:

Tax treatment of the sale or disposition of Principal Residence
under Section 24(D)(2), Tax Code

Request for confirmation of tax privileges of Senior Citizens
under RA No. 7432

Tax treatment of the monetized leave credits of government
officials and employees under EO No. 291

Tax treatment of the monetized value of unutilized vacation leave
credits not in excess of 10 days

Tax treatment of separation benefits under Section 32(B)(6)(b),
Tax Code

47 48

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DLSU College of Law Atty. Martin Ignacio D. Mijares
Taxation Law II Second Semester, AY 2017-2018

REQUEST FOR RULING REQUEST FOR RULING

Revenue Bulletin No. 1-2003, as amended

No-Ruling Areas

Determination of whether an expense is ordinary or necessary

Industry issues

These are issues as may be determined by the Management
Committee from time to time as such, which may not or may be
subject of a protest raised by a related or unrelated taxpayer

Request for rulings on issue/s or transactions based on
hypothetical situations

“What if?” questions, or queries involving theoretical, speculative,
conjectured, conjectural, notional, suppositional, supposed, or
assumed entities or transactions

A ruling will not be issued on alternative plans of proposed
transactions or on supposed situations
49

Revenue Bulletin No. 1-2003, as amended

No-Ruling Areas

The BIR does not give tax planning advice and does not
approve tax planning arrangements

The BIR will not resolve an issue through a ruling if the
matter can be determined through another process

The BIR will not issue a ruling in response to a request
where:

The taxpayer has directed a similar inquiry to another office of
the BIR

The same issue involving the same taxpayer or a related
taxpayer is pending in a case in litigation

The same issue involving the same taxpayer is subject of a
pending investigation, on-going audit, administrative protest,
claim for refund or issuance of tax credit certificate or collection
proceeding
50

REQUEST FOR RULING REQUEST FOR RULING

Letter Requests for Ruling
Letter Requests for Ruling

A letter request is a sworn statement executed under
A letter request is a sworn statement executed under
oath by the individual taxpayer or by the authorized oath by the individual taxpayer or by the authorized
official/representative of the corporation, partnership, or official/representative of the corporation, partnership, or
entity containing the following: entity containing the following:

Factual background
Affirmation stating that –

issues/questions raised or conclusions sought to be
A similar inquiry has not been filed and it not pending in another
confirmed office of the BIR

The legal grounds and relevant authority supporting the
There is no pending case in litigation involving the same issue/s
and the same taxpayer or related taxpayer
position of the taxpayer

The issue/s subject of the request is not pending investigation,

List of documents submitted
on-going audit, administrative protest, claim for refund, or
issuance of TCC, collection proceeding or judicial appeal

The documents submitted are complete and that no other
documents will be submitted in connection with the request

51 52

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DLSU College of Law
Taxation Law II
RULE-MAKING AUTHORITY

Non- Retroactivity of Rulings

Section 246, Tax Code

Any revocation, modification or reversal of any of the rules
and regulations promulgated by the CIR shall not be given
retroactive application if the revocation, modification or
reversal will be prejudicial to the taxpayers, except in the
following cases:

Where the taxpayer deliberately misstates or omits material facts
from his return or any document required of him by the BIR

Where the facts subsequently gathered by the BIR are materially
different from the facts on which the ruling is based

Where the taxpayer acted in bad faith
53
REQUEST FOR RULING

Effect and Validity of Issued Rulings

A taxpayer ordinarily may rely on a valid ruling received
from the BIR pertaining to the transaction it was applied
for

For the ruling to be valid, the taxpayer must fully and
accurately describe the transaction in the request

Tax rulings cannot be cited as precedent by other
taxpayers but they can provide useful information on how
the BIR may treat a similar transaction

The BIR ruling can only be used for purposes of internal
revenue taxes
55
Atty. Martin Ignacio D. Mijares
Second Semester, AY 2017-2018
ABS-CBN BROADCASTING V. CTA AND CIR

Issue: WON Revised Memo-Circular 4-71 should be
given retroactive effect

Held:

Rulings or circulars promulgated by the CIR have no
retroactive application where to so apply them would be
prejudicial to taxpayers

The prejudice to petitioner of the retroactive application of
Memorandum Circular No. 4-71 is beyond question

It was issued only in 1971, or three years after 1968, the last
year that petitioner had withheld taxes under General Circular
No. V-334

Petitioner was no longer in a position to withhold taxes due from
foreign corporations because it had already remitted all film
rentals and no longer had any control over them when the new
Circular was issued
54
REQUEST FOR RULING

Revocation and Modification

A ruling may be revoked or modified for any number of
reasons such as when the facts as represented are
discovered to be different from what was represented or
not in accord with the current views of the CIR
56
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DLSU College of Law Atty. Martin Ignacio D. Mijares
Taxation Law II Second Semester, AY 2017-2018

57 THANK YOU.

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