taxation - 8 tax remedies under nirc

8/3/2019 Taxation - 8 Tax Remedies Under NIRC

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Part EIGHT

TAX REMEDIES

REMEDIES UNDER THE NATIONAL

INTERNAL REVENUE CODE

Assessment of Internal Revenue Taxes

a. Definition / Nature / Effect / Basis

Sec 4, NIRCPower of the Commissioner to Interpret Tax Laws and to DecideTax Cases.- Power to interpret this Code & other tax laws is under exclusive& orig jurisdiction of Commissioner, subject to rvw by Sec ofFinance.- Power to decide disputed assessments, refunds of internalrevenue taxes, fees, other charges, penalties, other mattersunder this Code or laws or portions administered by BIR isvested in Commissioner, subject to exclusive appellate

jurisdiction of CTA.

Sec 5, NIRCPower of the Commissioner to Obtain Information, and to

Summon, Examine, and Take Testimony of Persons.- In ascertaining correctness of return OR in making return whennone was made OR determining liability of person for internalrevenue tax OR collecting such liability OR evaluating taxcompliance, Commissioner is authorized to

A. examine book, paper, record, data w/c may be relevant /materialB. obtain on regular basis fr (1) person other than theperson whose tax liability is subject to audit / investigationor (2) office / officer of natl & local govt, govt agencies &instrumentalities, incl BSP & GOCCs, any info such as, butnot ltd to

- costs & volume of production- receipts or sales & gross incomes- names, addresses, financial statements of corp,mutual fund co, insurance co, regional operating HQ ofmultinatl companies, joint accts, assns, joint venturesof consortia & registered partnerships AND their

membersC. summon

- person liable for tax or required to file return- officer / employee of such person- person having possession, custody, care of books ofaccts & acctg records of person liable for tax- any other person

to appear before Commissioner or his rep at time & placespecified in summons AND produce books, papers, records,data AND give testimonyD. take testimony under oathE. cause revenue officers & employees to

- make canvass of revenue district / region AND- inquire after & concerning all persons who may beliable to pay internal revenue tax & all persons owningor having the care, mgmt or possession of object w/respect to w/c tax is imposed

- Nothing in this Sec is construed as granting Commissioner theauthority to inquire into bank deposits other than in Sec 6(F).

Sec 6, NIRCPower of the Commissioner to Make assessments and Prescribeadditional Requirements for Tax Administration andEnforcement.A. Examination of Returns & Determination of Tax Due.

- After return was filed, Commissioner or rep may authorizeexam of taxpayer AND assessment of correct amt of tax.- Failure to file return shall not prevent Commissioner frauthorizing exam of taxpayer.- Return, statement of declaration filed in ofc authorized torcv shall not be w/drawn.- W/in 3y fr filing, the same may be modified, changed,amended, provided no notice for audit / investigation of

return, statement or declaration has been actually servedupon taxpayer.

B. Failure to Submit Required Returns, Statements, Reports &Documents.

- When report required shall not be forthcoming w/in timefixed OR when theres reason to believe that report is false,incomplete or erroneous, Commissioner shall assessproper tax on best evidence obtainable.- In case person fails to file return or other doc at timeprescribed OR willfully or otherwise files false / fraudulent

return or doc, Commissioner shall make / amend return frhis own knowledge and fr info as he can obtain, w/c is primafacie correct & sufficient.

C. Authority to Conduct Inventory-taking, surveillance and toPrescribe Presumptive Gross Sales and Receipts.

- Commissioner may, anytime during taxable yr, orderinventory-taking of taxpayer for determining internalrevenue tax liabilities OR place operations of person,natural / juridical, under observation / surveillance if theresreason to believe that person isnt declaring correct income,sales, receipts.- Findings may be used as basis for assessing taxes forother months / qtrs of same or diff taxable yrs. Suchassessment is deemed prima facie correct.- When its found that person failed to issue receipts &invoices OR when theres reason to believe that books ofaccts or records dont correctly reflect declarations made orto be made in return, Commissioner, after taking into acct

the sales, receipts, income, other taxable base of otherpersons engaged in similar businesses under similarsituations OR after considering other relevant info, mayprescribe min amt of gross receipts, sales, taxable base.Such amt prescribed is prima facie correct for determininginternal revenue tax liabilities.

D. Authority to Terminate Taxable Period.- When it comes to knowledge of Commissioner thattaxpayer is (1) retiring fr biz subject to tax OR (2) intendingto leave Phils OR remove prop therefrom OR hide prop OR(3) performing act tending to obstruct collection of tax forpast or current qtr / yr OR render the same totally / partlyineffective unless proceedings are begun immediately,Commissioner shall

- declare tax period terminated anytime AND- send notice of decision w/ request for payment of tax

- said taxes are due & payable immediately ANDsubject to penalties unless pd w/in time fixed indemand by Commissioner

E. Authority of the Commissioner to Prescribe Real PropertyValues.

- Commissioner is authorized to divide Phils into diff zones /areas AND upon consultation w/ appraisers fr pvt & publicsectors, determine FMV of real props in ea zone / area.- For computing internal revenue tax, value of prop iswhichever is higher of:

1. FMV as determined by Commissioner OR2. FMV as shown in schedule of values of Provincial &City Assessors

F. Authority of Commissioner to inquire into Bank DepositAccounts.

- Notwithstanding contrary provision of RA No 1405 & otherlaws, Commissioner is authorized to inquire into bankdeposits of:

1. decedent to determine gross estate

2. taxpayer who filed application for compromise of taxliability under Sec 204(A2) by reason of financialincapacity to pay tax liability

- In case taxpayer files application to compromisepayment of tax liabilities on claim that financialposition demonstrates clear inability to pay, hisapplication isnt considered unless & until hewaives in writing his privilege under RA No 1405or under other laws. Such waiver constitutesauthority of Commissioner to inquire into bankdeposits of taxpayer.

G. Authority to Accredit and Register Tax Agents.- Commissioner shall accredit & register, based onprofessional competence, integrity & moral fitness,individuals & gen professional partnerships and their reps

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who prepare & file tax returns, statements, reports, protests,papers w/ or who appear before, Bureau for taxpayers.- Commissioner shall

- create natl & regional accreditation boards, membersof w/c serve for 3y- designate fr among senior officials of Bureau, 1chairman & 2 members for ea board, subject to rulesas Sec of Finance promulgates upon recommendationof Commissioner.

- Individuals & gen professional partnerships and their reps

who are denied accreditation by Commissioner and / oraccreditation boards may appeal to Sec of Finance, whoshall rule on appeal w/in 60d fr receipt of appeal. Failure ofSec of Finance to rule is deemed as approval of applicationfor accreditation.

H. Authority of the Commissioner to Prescribe AdditionalProcedural or Documentary Requirements.- Commissioner may prescribe manner of compliance w/documentary / procedural requirement in connection w/submission / preparation of FS accompanying tax returns.

Sec 203, NIRCPeriod of Limitation Upon Assessment and Collection.- Except as provided in Sec 222, internal revenue taxes areassessed w/in 3y after last day prescribed for filing of return. Noproceeding in court w/o assessment for collection shall be begunafter expiration of period- Where return is filed beyond period prescribed, the 3y period is

counted fr day the return was filed.- A return filed before last day prescribed for filing is consideredas filed on last day.

Sec 222, NIRCExceptions as to Period of Limitation of Assessment andCollection of Taxes. -a.- In case of false / fraudulent return w/ intent to evade tax ORfailure to file return

- tax may be assessed OR proceeding in court for collectionmay be filed w/o assessment w/in 10y after discovery offalsity, fraud or omission

- In a fraud assessment w/c became final & executory, the fact offraud is judicially taken cognizance of in civil / crim action forcollection.b.- If before expiration of time prescribed in Sec 203 forassessment, both Commissioner & taxpayer agreed in writing toassessment after such time, tax may be assessed w/in periodagreed upon.- Period agreed upon may be extended by subsequent writtenagreement made before expiration of period previously agreedupon.c.- Internal revenue tax w/c was assessed w/in period of limitationprescribed in (a) may be collected by

- distraint OR- levy OR- proceeding in court

w/in 5y ff assessmentd.- Internal revenue tax w/c was assessed w/in period agreed uponin (b) may be collected by

- distraint OR

- levy OR- proceeding in court w/in period agreed upon in writing before expiration of 5yperiod.- Period agreed upon may be extended by subsequent writtenagreements made before expiration of period previously agreedupon.e.- Nothing in (d) & (a) is construed to authorize exam &investigation / inquiry into tax return filed in accordance w/ taxamnesty law or decree.

Sec 223, NIRCSuspension of Running of Statute of Limitations.

- Running of Statute of Limitations in Sec 203 & 222 on making ofassessment AND beginning of distraint / levy / proceeding incourt, is suspended for period during w/c Commissioner isprohibited fr making assessment or beginning distraint / levy /proceeding in court AND for 60d thereafter

- when taxpayer requests for reinvestigation w/c is grantedby Commissioner- when taxpayer cant be located in address in return filedupon w/c tax is being assessed / collected

- if taxpayer informs Commissioner of change in

address, running of Statute of Limitations isntsuspended- when warrant of distraint / levy is served upon taxpayer,his rep, or member of household w/ sufficient discretionAND no prop could be located- when taxpayer is out of Phils

Sec 228, NIRCProtesting of Assessment.- When Commissioner or rep finds that proper taxes shld beassessed, he shall first notify taxpayer.- Preassessment notice isnt required when

a. finding for deficiency tax is result of mathematical errorin computation of tax as appearing on face of returnb. discrepancy was determined between tax w/held and amtactually remitted by w/holding agentc. taxpayer who opted to claim refund / tax credit of excesscreditable w/holding tax for taxable period was determined

to have carried over & automatically applied the same amtclaimed against estimated tax liabilities for taxable qtr orqtrs of succeeding taxable yrd. excise tax due on exciseable articles hasnt been pde. article locally purchased / imptd by exempt person hasbeen sold, traded, transferred to non-exempt persons

- Taxpayer are informed in writing of law AND facts on w/cassessment is made. Otherwise, assessment is void.- W/in period prescribed by IRR, taxpayer is required to respondto notice.- If taxpayer fails to respond, Commissioner or rep issuesassessment based on findings.- Such assessment may be protested administratively by filingrequest for reconsideration OR reinvestigation w/in 30d fr receiptof assessment.- W/in 60d fr filing of protest, supporting docs shall have beensubmitted. Otherwise, assessment becomes final.- If protest is denied in whole or in part, or isnt acted upon w/in180d fr submission of docs, taxpayer may appeal to CTA w/in 30dfr receipt of decision or fr lapse of 180d period. Otherwise,decision becomes final, executory, demandable.

Sec 3, Revenue Regulation 12-99Due Process Requirement in Issuance of Deficiency TaxAssessment.3.1 Mode of procedures in issuance of deficiency taxassessment3.1.1 Notice for informal conference.

- Revenue Officer who audited taxpayer's records shall statein report WON taxpayer agrees w/ his findings that taxpayeris liable for deficiency tax.- If taxpayer isnt amenable, based on Officer's report,taxpayer is informed in writing by Revenue District OfficeOR Special Investigation Division, as case may be (in caseof Revenue Regional Offices) OR by Chief of Division

concerned (in case of BIR Natl Ofc) of discrepancy intaxpayer's payment of internal revenue taxes, for purpose of"Informal Conference" to afford taxpayer opportunity topresent his side.- If taxpayer fails to respond w/in 15d fr receipt of notice forinformal conference, he is considered in default. RevenueDistrict Officer OR Chief of Special Investigation Division ofRevenue Regional Office OR Chief of Division in Natl Ofcshall endorse case to Assessment Division of RevenueRegional Office OR to Commissioner or his rep for rvw &issuance of deficiency tax assessment, if warranted.

3.1.2 Preliminary Assessment Notice (PAN).- If after rvw & evaluation by Assessment Division ORCommissioner / rep, its determined that theres basis toassess taxpayer for deficiency tax, said Ofc shall issue to

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taxpayer, at least by registered mail, a PreliminaryAssessment Notice (PAN) for proposed assessment,showing in detail, facts & law, rules, regulations,

jurisprudence on w/c proposed assessment is based.- If taxpayer fails to respond w/in 15d fr receipt of PAN, hesconsidered in default. Formal letter of demand &assessment notice is caused to be issued by Office, callingfor payment of deficiency tax liability, inclusive of penalties.

3.1.3 Exceptions to Prior Notice of the Assessment.- Notice for informal conference AND PAN arent required in ff

cases. Issuance of formal assessment notice for payment ofdeficiency tax liability is sufficient wheni. finding for deficiency tax is result of mathematical error incomputation of tax appearing on face of tax returnii. discrepancy was determined between tax w/held and amtactually remitted by w/holding agentiii. taxpayer who opted to claim refund / tax credit of excesscreditable w/holding tax for taxable period was determinedto have carried over & automatically applied the same amtclaimed against estimated tax liabilities for taxable qtr orqtrs of succeeding taxable yriv. excise tax due on excisable articles hasnt been pdv. article locally purchased / imptd by exempt person wassold, traded, transferred to non-exempt persons

3.1.4 Formal Letter of Demand and Assessment Notice.- Formal letter of demand & assessment notice is issued byCommissioner or rep.- Letter of demand shall state facts, law, rules, regulations,

jurisprudence on w/c assessment is based. Otherwise,formal letter of demand & assessment notice is void.The same shall be sent to the taxpayer only by registeredmail or by personal delivery. If sent by personal delivery, thetaxpayer or his duly authorized representative shallacknowledge receipt thereof in the duplicate copy of theletter of demand, showing the following: (a) His name; (b)signature; (c) designation and authority to act for and inbehalf of the taxpayer, if acknowledged received by aperson other than the taxpayer himself; and (d) date ofreceipt thereof.

3.1.5 Disputed Assessment.- Taxpayer or rep may protest administratively againstformal letter of demand & assessment notice w/in 30d frdate of receipt.- If there are several issues involved but taxpayer onlydisputes / protests against validity of some of issues,taxpayer is required to pay deficiency tax attributable toundisputed issues. Collection letter is issued to taxpayercalling for payment of said deficiency tax, incl surchargeand / or interest.- No action is taken on disputed issues until taxpayer pddeficiency tax attributable to undisputed issues.- Prescriptive period for assessment / collection of taxattributable to disputed issues is suspended.- Taxpayer shall state facts, law, rules, regulations,

jurisprudence on w/c protest is based. Otherwise, protest isvoid & w/o force & effect.- If there are several issues in disputed assessment andtaxpayer fails to state facts, law, rules, regulations,

jurisprudence on some of issues, the same are consideredundisputed. Taxpayer is required to pay deficiency taxattributable thereto.- Taxpayer shall submit required docs in support of protestw/in 60d fr filing of letter of protest. Otherwise, assessment

becomes final, executory, demandable.- The phrase "submit required docs" includes submission /presentation of docs for scrutiny & evaluation by RevenueOfficer. Revenue Officer shall state this fact in his report.- If taxpayer fails to file protest w/in 30d fr receipt of letter /notice, assessment becomes final, executory, demandable.- If protest is denied, in whole or in part by Commissioner,taxpayer may appeal to CTA w/in 30d fr receipt of decision.Otherwise, assessment becomes final, executory,demandable.- In general, if protest is denied, in whole or in part, byCommissioner or rep, taxpayer may appeal to CTA w/in 30dfr receipt of decision. Otherwise, assessment becomesfinal, executory, demandable.

- If taxpayer elevates protest to Commissioner w/in 30d frdate of receipt of final decision of Commissioner's rep,latter's decision isnt considered final, executory,demandable. Protest is decided by Commissioner.- If Commissioner or rep fails to act on protest w/in 180d frdate of submission of required docs, taxpayer may appealto CTA w/in 30d fr lapse of 180d period. Otherwise,assessment becomes final, executory, demandable.

3.1.6 Administrative Decision on a Disputed Assessment.- Decision of Commissioner or rep shall state

a. facts, law, rules, regulations, jurisprudence on w/cdecision is based (otherwise, decision is void; sameisnt considered a decision on disputed assessment)ANDb. that the same is his final decision

3.1.7 Constructive Service.- If notice to taxpayer is served by registered mail, and noresponse is rcvd fr taxpayer w/in prescribed period fr dateof posting in the mail, the same is considered actually /constructively rcvd by taxpayer.- If personally served on taxpayer or his rep who, however,refused to acknowledge receipt, the same is constructivelyserved on taxpayer.- Constructive svc is considered effected by leaving thesame in premises of taxpayer AND this fact is attested to,witnessed & signed by at least 2 revenue officers other thanrevenue officer who constructively served.- Revenue officer who constructively served makes written

report w/c forms part of docket of this case.

TAX ASSESSMENT

TAX AUDIT

LETTER OF AUTHORITY / AUDIT NOTICE

PRE-ASSESSMENT NOTICE (PAN) / WHEN NOT REQUIRED

NOTICE OF ASSESSMENT OR FORMAL ASSESSMENT NOTICE(FAN)

DEFICIENCY / DELINQUENCY

JEOPARDY ASSESSMENT

POWER OF THE COMMISSIONER TO ASSESS DEFICIENCY TAX /BEST EVIDENCE OBTAINABLE

CIR v. Hantex Trading Co. Inc.- The best evidence envisaged in NIRC includes

1. corporate & acctg records of taxpayer2. acctg records of other taxpayers engaged in same line of biz3. evidence fr other taxpayers who had personal transactions orfr whom subject taxpayer rcvd any income4. info secured fr govt ofcs / agencies

- Law allows BIR access to all relevant or material records & data inthe person of taxpayer. It places no limit / condition on type / form ofmedium by w/c record subject to order of BIR is kept. The standardisnt the form of record but where it might shed light on accuracy oftaxpayers return.- Where the records of taxpayer are manifestly inaccurate &incomplete, Commissioner may look to other sources of info toestablish income made by taxpayer.

- Best evidence obtainable may consist of hearsay evidence, such astesti of 3rd parties or accts or other records of other taxpayerssimilarly circumstanced as subject taxpayer, hence, inadmissible inregular proceeding in regular courts. Gen rule is that administrativeagencies such as BIR arent bound by technical rules of evidence.- However, best evidence obtainable under NIRC doesnt includemere photocopies of records / docs. Such are mere scraps of paperand have no probative value. Where accuracy of return is beingchecked, govt is entitled to use orig records rather than acceptpurported copies w/c present the risk of error / tampering.- In the absence of acctg records of taxpayer, his tax liability may bedetermined by estimation. Petitioner isnt required to compute taxliabilities w/ mathematical exactness. Approximation in calculation isjustified. However, the rule doesnt apply where estimation is arrivedat arbitrarily or capriciously.

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- Gen rule: tax assessments by tax examiners are presumed correct& made in good faith. It is presumed, however, that such assessmentwas based on sufficient evidence. Prima facie correctness ofassessment doesnt apply upon proof that assessment is w/o

foundation, arbitrary, capricious. Where BIR came out w/ nakedassessment, determination of tax due is w/o rational basis.

Wintelecom v. CIR- BIRs failure to return docs to taxpayer wouldnt make assessmentby BIR null & void. Presumption of regularity in official fcn of govt

officials isnt defeated by mere allegation that petitioner was deprivedof opportunity to fully contest subject assessments. Petitioner wasgiven chance to present position before Court w/ option to requirerespondent to bring alleged documentary evidence. Respondentcouldnt be considered at fault for petitioner's negligence in failing toretain copies of subject documentary evidence.- While Commissioner has power to make assessments based onbest evidence obtainable, he must also be able to present suchevidence before Court in the event that litigation ensues. Bestevidence obtainable includes those w/c cant be admitted in judicialproceeding where rules on evidence are strictly observed.- Cited Commissioner of Internal Revenue vs. Hantex

b. Period to Assess Deficiency Tax

PRESCRIPTION

ORDINARY 3 yrs fr date of filing return (Sec 203)

EXTRAORDINARY 10 yrs fr discovery of fraud, falsity oromission (Sec 222)

Estate of Fidel Reyes v. CIR- Cited Aznar v. CTA- False returns dont necessarily mean w/ intent to evade taxes.- Whenever intent to evade taxes exists, fraud already exists.

SUSPENSION OF PRESCRIPTIVE PERIOD / EXCEPTIONS

Revenue Memorandum Order No. 20-90 as amended by RevenueDelegation Authority Order No. 05-01- Internal revenue taxes may be assessed / collected afterordinary prescriptive period, if before its expiration, bothCommissioner & taxpayer agreed in writing to assessment and /or collection after said period.

- Period agreed upon may be extended by subsequent writtenagreement made before expiration of period previously agreedupon.- This written agreement between Commissioner & taxpayer isthe Waiver of the Statute of Limitations.- Ff procedures shld be followed:

1.- Waiver must be in form identified hereof.- Form may be reproduced by Ofc concerned but there shldbe no deviation fr such form.- The phrase "but not after ______ 19 ___" shld be filled up.This indicates expiry date of period agreed upon to assess /collect tax after regular 3y period of prescription.- Period agreed upon constitutes time w/in w/c to effectassessment / collection of tax in addition to ordinaryprescriptive period.2.- Waiver is signed by taxpayer himself OR his rep.

- In case of corp, waiver must be signed by any of itsresponsible officials.- Soon after waiver is signed by taxpayer, Commissioner ofInternal Revenue or revenue official authorized by him, asprovided, shall sign waiver indicating that Bureau hasaccepted & agreed to waiver.- Date of acceptance by Bureau shld be indicated.- Both date of execution by taxpayer & date of acceptanceby Bureau shld be before expiration of period ofprescription or before lapse of period agreed upon in casesubsequent agreement is executed.3.Revenue officials authorized to sign waiver: See RDAO 05-01.4.

- Waiver is executed in 3 copies- orig copy to be attached to docket of case- 2nd copy for taxpayer- 3rd copy for Ofc accepting the waiver

- Fact of receipt by taxpayer of his / her file copy is indicatedin orig copy.5.- Procedures shall be strictly followed.- Revenue official found not to have complied, resulting inprescription of right to assess / collect is administratively

dealt with.

Revenue Delegation Authority Order No. 05-01Revenue Officials Authorized to Sign the Waiver- Ff are authorized to sign & accept Waiver of the Defense ofPrescription Under the Statute of LimitationsA. For National Office cases

1. Assistant Commissioner (ACIR): for tax fraud & policyEnforcement Service cases2. ACIR, Large Taxpayers Service: for large taxpayerscases other than those under Subsec B3. ACIR, Legal Service: for cases pending verification &awaiting resolution of certain legal issues prior toprescription and for issuance / compliance of SubpoenaDuces Tecum4. ACIR, Assessment Service (AS): for cases w/c arepending in or subject to rvw / approval by ACIR, AS5. ACIR, Collection Service: for cases pending action in

Collection SvcB. For cases in Large Taxpayers District Office (LTDO)- Chief of LTDO shall sign & accept waiver for cases pendinginvestigation / action in his possession.C. For Regional cases

1. Revenue District Officer: cases pending investigation /verification / reinvestigation in RDOs2. Regional Director: cases pending in Divisions inRegional Ofc, incl cases pending approval by RegionalDirector

- To prevent undue delay in execution & acceptance of waiver,asst heads of offices are likewise authorized to sign undermeritorious circumstances in absence of abovementionedofficials.- Authorized revenue official ensures that waiver is dulyaccomplished & signed by taxpayer or rep before affixing hissignature.- In case authority is delegated by taxpayer to rep, revenueofficial sees to it that delegation is in writing & duly notarized.Waiver isnt accepted by BIR unless duly notarized.

Revenue Memorandum Circular 6-2005 (Execution of Waiver ofthe Statute of Limitations)Cited Philippine Journalists Inc v. CIR:

1. Waiver of statute of limitations must conform strictly w/RMO 20-90 to be valid & binding.

1.1. Waiver must specify definite agreed date betweenBIR & taxpayer w/in w/c former may assess & collectrevenue taxes.1.2. Waiver must be accepted by Commissioner or hisrep. Date of acceptance must be indicated.1.3. Taxpayer must be furnished copy of waiveraccepted by BIR.

2. Waiver is derogation of taxpayer's right to securityagainst prolonged & unscrupulous investigations and must

be carefully & strictly construed.3. Waiver isnt a waiver of right to invoke defense ofprescription. Its an agreement between taxpayer & BIR thatperiod to issue assessment & collect taxes is extended todate certain.4. Waiver isnt a unilateral act by taxpayer or BIR, but abilateral agreement.

Revenue Memorandum Circular 48-90 (Counting of 3yrprescriptive period in the issuance of the notice of assessment,or warrants of distraint, levy & garnishment)- Except in case of false or fraudulent return or failure to filereturn, period w/ w/c to make assessment is 3y after return isfiled. Tax may be collected by distraint OR levy OR garnishmentOR by proceeding in court w/in 3y after assessment of tax.

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- When period covers leap yr, question is raised as to when lastday of prescriptive period expires.- Years are of 365 days ea as provided in A 13, NCC.- A 3-yr prescriptive period has aggregate no. of 1,095 days (365dx 3y = 1,095d), reckoned fr date of filing of return, or fr issuanceof assessment, as case may be.- The 3-yr prescriptive period expires on 1,095th day,notwithstanding the fact that w/in the period, theres leap yr w/cis of 366d.- NAMARCO v. Tecson explained procedure in computation of

prescriptive period.- In computation of period of time w/in w/c act is to be done, 1stday shld be excluded AND last day included.- To prevent future assessments fr being time-barred,assessment notice / warrants shld be issued on or before 1,095thday.- However, to make sure that prescription will not set in, allconcerned are instructed to issue assessment notices &warrants not later than 90d before expiration of 3y prescriptiveperiod.

CIR v. CTA- In cases of omission, CIR has 10y w/in w/c to assess.- But even if assessment is w/in prescribed period, it doesnt followthat its a valid assessment in its entirety.

CIR v. Gonzales- Fraud is a question of fact. Circumstances must be alleged &

proved as to its existence and non-existence is final unless clearlyshown to be erroneous.- A return need not be complete in all particulars. Its sufficient if itcomplies substantially w/ the law:

1. return is made in good faith and isnt false or fraudulent2. it covers entire period3. it contains info as to various items of such definiteness as topermit computation & assessment of tax

- Law imposes upon taxpayer the burden of supplying by return theinfo upon w/c assessment is based. His duty complied w/, taxpayerisnt bound to do anything more than wait for Commissioner toassess. Code gives Commissioner 5y to assess. If taxpayer failed toobserve the law, Commissioner has longer period. Non-observanceconsists in

1. filing false return2. filing fraudulent return w/ intent to evade tax3. filing no return at all

Republic v. Ker & Company- Fraud is a question of fact w/c must be alleged & proved.- Prescriptive period to collect deficiency taxes shall be suspended forperiod during w/c Commissioner is prohibited fr beginning a distraintand levy or instituting a proceeding in court, and for 60d thereafter.Pendency of taxpayers appeal in CTA and in SC had effect oftemporarily staying the hands of the Commissioner.

Aznar v. CTA- The proper interpretation is that in the 3 diff cases of (1) false return,(2) fraudulent return w/ intent to evade tax, (3) failure to file a return,tax may be assessed or proceeding in court for collection of tax maybe begun w/o assessment, any time w/in 10y after discover of (1)falsity, (2) fraud or (3) omission.- There is a difference between false return and fraudulent return.While the first merely implies deviation fr truth, intentional or not, thesecond implies intentional or deceitful entry w/ intent to evade tax.

- Fraud cant be presumed but must be proven. Fraudulent intentcouldnt be deduced fr mistakes however frequent they may be, esp ifsuch mistakes emanate fr erroneous entries or erroneousclassification of items in acctg methods utilized for determination oftax liabilities.- Fraud contemplated by law is actual & not constructive. It must beintentional fraud, consisting of deception willfully and deliberatelydone or resorted to in order to induce another to give up some legalright. Negligence, slight or gross, isnt equivalent to fraud w/ intent toevade tax.

Phil Journalists Inc. v. Commissioner- NIRC provides for statute of limitations on assessment & collectionof internal revenue taxes to safeguard interest of taxpayer againstunreasonable investigation. Unreasonable investigation contemplates

cases where period for assessment extends indefinitely bec thisdeprives taxpayer of the assurance that itll no longer be subjected tofurther investigation for taxes after expiration of reasonable period oftime.

- Waiver of statute of limitations is a derogation of taxpayers right tosecurity against prolonged & unscrupulous investigations and must becarefully & strictly construed.- Waiver of statute of limitations isnt a waiver of right to invoke the

defense of prescription. Its an agreement between taxpayer & BIRthat period to issue assessment and collect taxes is extended to date

certain. It doesnt mean that taxpayer relinquishes the right to invokeprescription unequivocally particularly where language of doc isequivocal. Exceptions to law on prescription shld be strictlyconstrued.- In this case, waiver is invalid bec it

1. didnt comply w/ RMO 20-90; no specified date between BIRand taxpayer2. signed only by revenue district officer, not the Commissioner3. has defect in date of acceptance4. was not given copy furnished the taxpayer

c. Requisites of a Valid Assessment

Rep v. IAC- Even assuming that deficiency tax assessment were correct, sincetaxpayer has already pd to govt by way of amnesty taxes and weregranted not merely an exemption but an amnesty, govt is estopped frcollecting the difference between deficiency tax assessment and amt

already pd by them as amnesty tax.- An amnesty partakes of an absolute forgiveness or waiver by govtof its right to collect what otherwise would be due it.

Bonifacia Sy Po v. CTA- The rule on best evidence obtainable applies when tax reportrequired by law for purpose of assessment isnt available or when taxreport is incomplete or fraudulent.- Tax assessments by tax examiners are presumed correct & made ingood faith. Taxpayer has duty to prove otherwise. In the absence ofproof of irregularities in performance of duties, assessment duly madeby BIR examiner and approved by superior officers will not bedisturbed. All presumptions are in favor of correctness of taxassessments.

Meralco v. SavellanoMandamus doesnt lie to compel Commissioner of Internal Revenue

to impose a tax assessment not found by him to be proper.

Elegado v. CTAIt is illogical to suggest that a provisional assessment can supersedean earlier assessment w/c had become final & executory.

CIR v. Island GarmentCited Collector v. Benipayo

Collector v. Benipayo- An assessment fixes & determines tax liability of taxpayer. As soonas it is served, an obligation arises on the part of the taxpayerconcerned to pay amt assessed & demanded. Hence, assessmentsshldnt be based on mere presumptions no matter how reasonable orlogical said presumptions may be.- To stand the test of judicial scrutiny, the assessment must be basedon actual facts. The presumption of correctness of assessment beinga mere presumption cannot be made to rest on another presumption.

CIR v. Construction Resources of Asia Inc.Cited CIR v. Bohol Land Trans Co: All presumptions are in favor ofcorrectness of tax assessments. The burden of proof is on thetaxpayer to show the contrary. Good faith of tax assessors and thevalidity of their actions are presumed.

Marcos v. CA- If theres issue as to validity of BIRs decision to assess estate taxes,this shldve been pursued thru proper administrative & judicialavenues.- In case of failure to file return, the tax may be assessed any timew/in 10y after omission, and any tax assessed may be collected bylevy upon real prop w/in 3y ff assessment of tax.

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- The mere fact that decedent has pending cases involving ill-gottenwealth doesnt affect enforcement of tax assessments over propsindubitably included in his estate.

CIR v. Hantex Trading Co Inc, supra

Menguito v. CIR- If taxpayer denies ever having rcvd an assessment fr BIR, its

incumbent upon the latter to prove by competent evidence that noticewas rcvd by addressee.

- Since respondent hasnt adduced sufficient evidence that petitionerhad in fact rcvd pre-assessment notice & post-reporting noticerequired by law, it cant be assumed that petitioner had been servedsaid notices.

ATR Kim Eng Financial Corp v. CIR- A taxpayers claim for tax refund can proceed independently, despiteexistence of deficiency income tax assessment bec the remedy forassessment appeals vary fr claims for refund.- Court cant assume jurisdiction over assessments w/c havent beenduly protested by taxpayer. Court cant be compelled by respondentto take cognizance of assessments w/c appear to be undisputed &worse, not yet served.- When taxpayer rcvs assessment, hes accorded due process ofprotesting assessment & eventually appealing the same to SC.- Assessment must be sent to & rcvd by taxpayer AND must demandpayment of taxes w/in specified period. Failure of respondent toestablish receipt by petitioner of assessment notice to petitioner's new

address renders assessment notice invalid.

Azucena Reyes v. CIR- Sec 228 is clear and mandatory re protesting of assessment.- The old requirement of merely notifying the taxpayer of CIRsfindings was changed in 1998 to informing the taxpayer of not only thelaw, but also of the facts on w/c assessment would be made;otherwise the assessment itself would be invalid.- Sec 228 on protesting assessment, being procedural, can be appliedretroactively.- A void assessment bears no valid fruit. The law imposes asubstantive, not merely formal requirement. To proceed w/ taxcollection w/o first establishing valid assessment is violative ofprinciple in administrative investigation: taxpayers shld be able topresent their case and adduce supporting evidence.

Barcelon Roxas Securities Inc. v. CIR- CIR has 3y fr last day for filing of return to send an assessmentnotice.- Assessment is made w/in prescriptive period if notice to this effect isreleased, mailed or sent by CIR to taxpayer w/in said period. Receiptby taxpayer w/in prescriptive period isnt necessary. The rule doesntdispense w/ requirement that taxpayer shld actually rcv, even beyondprescriptive period, the assessment notice w/c was timely released,mailed and sent.- When mail matter is sent by registered mail, there exists apresumption in R131, that it was rcvd in regular course of mail. Thefacts to be proved to raise this presumption are (a) that the letter wasproperly addressed w/ postage prepaid, (b) that it was mailed. This isa disputable presumption subject to controversion. Direct denial ofreceipt shifts burden upon party favored by presumption to prove thatthe mailed letter was rcvd by addressee.

CIR v. Dominador Menguito- The stringent requirement that assessment notice be satisfactorily

proven to have been issued & released or, if receipt is denied, thatassessment notice was served on taxpayer, applies only to formalassessments under Sec 228 of NIRC, but not to post-reporting notices/ pre-assessment notices.- The issuance of valid formal assessment is substantive prerequisiteto tax collection. It contains not only computation of tax liabilities butalso demand for payment w/in prescribed period, signaling the timewhen penalties & interests begin to accrue against taxpayer &enabling the latter to determine his remedies. Due process requiresthat it must be served on & rcvd by taxpayer.- Post-reporting notice & pre-assessment notice dont bear gravity offormal assessment notice. They merely hint at the initial findings ofBIR against taxpayer & invites latter to "informal" conference /clarificatory mtg. Neither notice contains declaration of tax liability oftaxpayer or demand for payment thereof. Hence, lack of such inflicts

no prejudice on taxpayer for as long as latter is properly served formalassessment notice.

Protesting an assessment / Remedy before payment

a. How to Protest or Dispute an Assessment

Administratively

WHEN TO FILE PROTEST WITHIN 30 DAYS FROM RECEIPT OFFAN

Professional Services Inc. v. CIR- Petitioner had 30d to file protest fr receipt of Formal Letter ofDemand and the Assessment Notice.- When mail matter was rcvd by registered mail, there existspresumption that it was rcvd in regular course of mail. To raise this

presumption, it must be proven that1. the letter was properly addressed w/ postage prepaid AND2. it was mailed

- As RoC applies by analogy or in suppletory character, the date of

mailing of pleadings, motions, papers, as shown by post office stampon envelope or registry receipt, is considered as date of filing;envelope is attached to record of case.- Respondent has burden of proving that petitioner's protest to FAN

was actually mailed after prescriptive period by presenting mailenvelope used by petitioner duly stamped by Phil Postal Corpshowing date when protest was sent by registered mail.

WHERE TO FILE

OTHER REQUIREMENTS- Submission of relevant documents- Payment under protest not required under NIRC

EFFECT OF PROTEST ASSESSMENT DEEMED DISPUTED;SUSPENSION OF THE PRESCRIPTIVE PERIOD TO COLLECT

BPI v. CIR- RR 12-85: Protest to assessment

a. Request for reconsideration: plea for re-evaluation ofassessment on the basis of existing records w/o need of addlevidence; may involve both question of fact or law or bothb. Request for reinvestigation: plea for re-evaluation ofassessment on basis of newly-discovered or addl evidence;may also involve question of fact or law or both

- Under Sec 224, running of prescriptive period for collection of taxescan only be suspended by a request for reinvestigation, notreconsideration.- Tax Code also requires that the request for reinvestigation had beengranted by BIR Commissioner to suspend the running of prescriptiveperiods for assessment & collection.- The burden of proof that taxpayers request for reinvestigation hadactually been granted is on BIR Commissioner. Grant may beexpressed in communications w/ taxpayer or implied fr actions ofCommissioner or his rep.- Statute of limitations on assessment & collection of natl internalrevenue taxes may be suspended if taxpayer executes valid waiverand in instances in Sec 224 w/c include a request for reinvestigationgranted by BIR Commissioner. Outside of these statutory provisions,SC also recognized one other exception to the statute of limitations oncollection of taxes in Collector v. Suyoc:

There are cases where taxpayer may be prevented fr setting updefense of prescription even if he hasnt previously waived it inwriting as when by his repeated requests or positive acts thegovt has been, for good reason, persuaded to postponecollection to make him feel that the demand wasntunreasonable or that no harassment / injustice is meant bygovt.

EFFECT OF FAILURE TO PROTEST / FAILURE TO SUBMITRELEVANT DOCUMENTS

Standard Chartered Bank v. CIR- The "relevant supporting docs" mentioned in the law refers to docsw/c taxpayer feels would be necessary to support his protest AND notwhat Respondent Commissioner feels shld be submitted, otherwise,Petitioner taxpayer would always be at mercy of BIR w/c may requireproduction of docs w/c taxpayer couldnt produce.

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- Where BIR finds that addl docs must be submitted, it shld haveinformed taxpayer-protester to submit docs in order that completedetermination of propriety of assessment may be had.

Unique Dyeworks v. CIR- Petitioner isnt required to submit other evidence w/c he feels will beunnecessary to his protest. Where BIR finds that addl docs must besubmitted, it shld inform taxpayer to submit the docs or else it is

remiss in informing the latter.

Oceanic Wireless Network Inc. v. CIR- Request for reconsideration must be made w/in 30d fr taxpayersreceipt of tax deficiency assessment, otherwise, decision becomesfinal, unappealable and demandable.- A tax assessment that has become final, executory, enforceable forfailure of taxpayer to assail the same as provided in Sec 228 can nolonger be contested.- For CTA to acquire jurisdiction, assessment must first be disputed bytaxpayer & ruled upon by Commissioner to warrant decision fr w/cpetition for rvw may be taken to CTA.- Where adverse ruling was rendered by Commissioner re disputedassessment or claim for refund / credit, taxpayer may appeal thesame w/in 30d after receipt thereof.

CIR v. Solidbank Corp- Cited Standard Chartered Bank Phil Branches v. CIR

- The determination of 'relevant supporting docs' initially restsupon one who filed protest. However, where BIR finds that addl

docs must be submitted, it shldve informed taxpayer-protester tosubmit docs in order that complete determination of propriety ofassessment may be had.- Finality of assessment simply means that where taxpayerdecides to forego w/ opportunity to present docs in support ofclaim w/in 60d fr filing of protest, it merely lost its chance tofurther contest assessment.

- Non-compliance w/ submission of necessary docs would eithermean that

- petitioner no longer wishes to further submit any doc for reasonthat its protest letter filed was more than enough to support itsclaim OR- petitioner failed to comply thus it can no longer give justificationw/ regard to its objections as to correctness of assessmentnotices

- Nonetheless, the necessity of submission of supporting docs lies onpetitioner. It cant be left to the discretion of respondent for in doingso would leave petitioner's case at the mercy of respondent. Its forpetitioner to decide WON supporting docs are necessary to supportprotest, for its in the best position, being the affected party, todetermine w/c docs are necessary & essential to garner favorabledecision fr respondent.

DIFFERENCES AND SIMILARITIES OF PROTEST CASES

Marcos v. CA, supra

Mambulao Lumber Company v. Republic- In a suit for collection of internal revenue taxes, where assessmenthas already become final & executory, action to collect is akin to anaction to enforce a judgment. No inquiry can be made as to themerits of orig case or justness of judgment. Petitioner is alreadyprecluded fr raising defense of prescription.- Where taxpayer didnt contest assessment, such became final &properly collectible by means of ordinary court action. Taxpayer cant

dispute assessment w/c is being enforced by judicial action. Heshldve disputed it before it was brought to court.

Dayrit v. Cruz- Payment of taxes being admittedly a burden, taxpayers shld not beleft w/o any recourse when they feel aggrieved due to erroneous &burdensome assessments made by BIR agent or by Commissioner.- However, remedy of aggrieved taxpayer isnt w/o any limitation. Ataxpayers right to contest assessments, particularly the right toappeal to CTA, may be waived or lost.- A suit for collection of internal revenue taxes where assessment hasalready become final and executory, the action to collect is akin to anaction to enforce judgment. No inquiry can be made as to the meritsof the orig case or the justness of the judgment.

CIR v. Wyett Suaco- Settled is the rule that the prescriptive period provided by law tomake a collection by distraint or levy or by proceeding in court isinterrupted once a taxpayer requests for reinvestigation or

reconsideration of assessment.- The statutory period of limitation for collection may be interrupted ifby taxpayers repeated requests or positive acts the govt has been forgood reasons persuaded to postpone collection to make him feel that

the demand was not unreasonable or that no harassment or injusticeis meant by the govt.

b. CIR Renders Decision on the Disputed Assessment

PERIOD TO DECIDE: WITHIN 180 DAYS FROM SUBMISSION OFRELEVANT DOCUMENT

CIRS ACTIONS EQUIVALENT TO DENIAL OF PROTEST- filing of civil / crim case against taxpayer- issuing a warrant of distraint & levy

Antam Consolidated Inc. v. CTA and CIR- Cited Surigao Electric v CA

- CIR shld always indicate to taxpayer in clear & unequivocallanguage whenever his action on assessment questioned bytaxpayer constitutes his final determination, as contemplated bysec 7 & 11 of RA 1125.- On the basis of this indicium indubitably showing that CIRsaction is final, aggrieved taxpayer would then be able to take

recourse to tax court at opportune time. Taxpayer would be ableto determine when his right to appeal to tax court accrues. Thiswould also obviate all desire & opportunity on part of taxpayer tocontinually delay finality of assessment by repeated requests forrecomputation & reconsideration.- On the part of CIR, this would encourage his ofc to conductcareful study of every questioned assessment & render correct &definite decision in the first instance. This would also deter CIRfr unfairly making taxpayer grope in the dark as to w/c actionsconstitutes decision appealable to tax court. This rule of conductwould meet pressing need for fair play, regularity, orderliness inadministrative action.

- Appealable decision of CIR may be embodied in letter to taxpayer,signifying denial of protest.- While decision of CIR is usually expressed in form of letter totaxpayer, a civil suit for collection can also be considered as denial ofprotest of assessment.

- The decision may yet come in another form, that is, issuance by CIRof warrant of distraint & levy. In CIR v. Algue, SC held that as a rule,warrant of distraint & levy is "proof of finality of assessment.- The issuance of warrant of distraint & levy by CIR is considered as"disputed assessment" for purposes of filing appeal to CTA. Theresnothing more compelling than issuance by CIR of warrant of distraint& levy w/c is preparatory to actual auction sale of taxpayer's prop tosatisfy tax liability.

c. Remedy of the Taxpayer

CIR v. Union Shipping- Issuance of warrant of distraint & levy is proof of finality ofassessment. Its the most drastic action of all media of enforcing thecollection of tax, and is tantamount to an outright denial of MFR ofassessment.- CIR shld always indicate to taxpayer in clear & unequivocallanguage what constitutes his final determination of the disputed

assessment.- CIR, not having clearly signified his final action, legally the period toappeal has not commenced to run. It was only when the summons oncivil suit for collection were rcvd that the period to appeal commencedto run.

CIR v. Algue- Accdg to RA 1125, appeal may be made w/in 30d after receipt ofdecision or ruling challenged. As a rule, warrant of distraint & levy ifproof of the finality of the assessment and renders hopeless a requestfor reconsideration. But there is a special circumstance in this casethat prevents application of this doctrine. In this case, the letter ofprotest was not taken into account before warrant of distraint & levywas issued bec it couldnt be located in ofc of CIR. During the

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intervening period, the warrant was premature and could not beserved.

Advertising Asso v. CACommissioner shld always indicate to taxpayer in clear & unequivocallanguage what constitutes his final determination of the disputedassessment.

IF PROTEST DENIED- In case final decision is rendered by Commissioners duly authorized

rep, taxpayer may appeal to Commissioner w/in 30d fr receipt ofdecision. In this case, the reps decision shall not be considered final,executory and demandable, and Commissioner shall decide case.(RR 12-99)- Appeal to CTA the final decision of CIR on disputed assessment w/in30d fr receipt of decision.

CIR FAILS TO ACT ON THE PROTEST WITHIN 180 DAYS FROMSUBMISSION OF RELEVANT DOCUMENTSFile appeal w/in 30d fr lapse of 180d or wait for CIRs decision

Lascona Land Co Inc. v. CIRIn cases of inaction, Sec 228 of Tax Code merely gave taxpayer anoption:

1. he may appeal to CTA w/in 30d fr lapse of 180d periodprovided for OR2. he may wait until Commissioner decides on his protest beforehe elevates his case

- The taxpayer was given this option so that in case his protest isntacted upon w/in 180d period, he may be able to seek immediate relief& need not wait for indefinite period of time for Commissioner todecide.- But if he chooses to wait for positive action on part of Commissioner,then the same couldnt result in assessment becoming final, executory& demandable.

Moog Controls Corp Phil Branch v. CIR- RR 12-99 isnt inconsistent w/ Sec 228. It merely implements Sec228 by establishing guideline on nature of decision rendered byauthorized rep of CIR on disputed assessment. Taxpayer is givenchoice whether to appeal decision to CIR or to CTA. Decision ofauthorized rep will not attain finality if taxpayer appeals the same toCIR who shall then be required to decide protest himself.- Sec 228 requires that taxpayer shall comply w/ periods indicateddefining the stages of protest. One of those is the 180d time framegiven to CIR to decide protest. Thereafter, taxpayer has 30d toappeal to this Court which is jurisdictional. Petitioner's right to seekjudicial relief accrues only upon lapse of 180d period in cases ofinaction by CIR. If petitioner doesnt comply w/ 180d period, right tofile action hasnt yet accrued and the lapse of 180d after filing ofpetition hadnt cured such defect.

RCBC v. CIR- Jurisdiction of CTA has been expanded to incl not only decisions /rulings, but also inaction of CIR. Decisions, rulings, inaction of CIRare necessary to vest CTA w/ jurisdiction to entertain appeal, providedits filed w/in 30d after receipt of decision / ruling OR w/in 30d afterexpiration of 180d fixed by law for CIR to act on disputed assessment.The 30d period is jurisdictional and failure to comply bars appeal anddeprives CTA of jurisdiction.- In case CIR failed to act on disputed assessment w/in 180d period,taxpayer can either

1. file petition for rvw w/ CTA w/in 30d

2. await final decision of CIR on disputed assessments andappeal such final decision to CTA w/in 30d after receipt of copyof decision

these options are mutually exclusive.

EFFECT OF FAILURE TO APPEAL

MATTER APPEALABLE TO THE CTA; WHAT CONSTITUTESFINAL DECISION OF THE CIR ON THE DISPUTED ASSESSMENT

CIR v. Isabela Cultural Corp.- In the normal course, revenue district officer sends taxpayer a noticeof delinquent taxes, indicating period covered, amt due incl interest,and reason for delinquency. If taxpayer disagrees, it sends letter toBIR indicating protest, stating the reasons and submitting necessary

proof. That letter is considered as taxpayers request forreconsideration. Assessment becomes disputed assessment on w/c itmust render decision. That decision is appealable to the CTA.- CIRs position regarding disputed assessment must be indicated in

final decision. Its this decision that is properly appealable to the CTA.- Sec 228 states that delinquent taxpayer may nevertheless directlyappeal a disputed assessment, if its request for reconsiderationremains unacted upon 180d after submission.

- Final demand letter for payment of delinquent taxes may beconsidered a decision on disputed assessment.

- BIR shld always indicate to taxpayer in clear & unequivocallanguage what constitutes final action on disputed assessment. Theobject of this policy is to avoid repeated requests for reconsiderationby taxpayer, thereby delaying finality of assessment andconsequently, collection of taxes. Furthermore, the taxpayer wouldntbe groping in the dark.

Oceanic Wireless Network Inc. v. CIR- A demand letter for payment of delinquent taxes may be considereda decision on disputed assessment. The determination on WONdemand letter is final is conditioned upon language used or tenor ofletter being sent to taxpayer.- CIR shld always indicate to taxpayer in clear & unequivocallanguage what constitutes his final determination of disputedassessment.- Authority to make tax assessments may be delegated to subordinateofficers. Said assessment has the same force & effect as that issuedby Commissioner himself, if not rvwd or revised by latter.

- A request for reconsideration must be made w/in 30d fr taxpayersreceipt of tax deficiency assessment, otherwise, the decisionbecomes final, unappealable and demandable. A tax assessmentthat has become final, executory, and enforceable for failure oftaxpayer to assail as provided in Sec 228 can no longer be contested.- For the CTA to acquire jurisdiction, assessment must first bedisputed by taxpayer and ruled upon by CIR to warrant a decision frw/c petition for review may be taken to CTA. Where an adverse rulinghas been rendered by CIR w/ reference to disputed assessment orclaim for refund / credit, taxpayer may appeal the same w/in 30d afterreceipt thereof.

Allied Banking Corp. v. CIR- The protest referred to in disputed assessment thats properlyappealable to CTA is a protest on FAN & Formal Letter of Demand asopposed to protest on PAN.- Court in Division can only take cognizance of appeal fr decision /inaction of CIR on disputed assessment but not fr final decision ofCommissioner's duly authorized rep i.e. Deputy Commissioner, whereno protest on FAN is filed by taxpayer either w/ Commissioner'sauthorized rep or w/ Commissioner.- This is in consonance w/ principle of exhaustion of administrativeremedies w/c requires that resort be first made to administrativeauthorities in cases falling under their jurisdiction to allow them tocarry out their fcns & discharge responsibilities w/in specialized areasof competence. The administrative agency is in the best position tocorrect any previous error committed in its forum.- Its duty / legal obligation of aggrieved party to determine if appeal isallowed to superior admin officer w/in agency concerned prior to filingaction in court.

Claims for refund and credit of taxes / Remedy after

payment

a. Who may file claim for refund / tax credit

DEFINE TAXPAYER / WITHHOLDING AGENT

Cebu Portland v. Collector- It is the petitioner (taxpayer) and not its customers that may ask forrefund of whatever amts its entitled for percentage or sales tax it pd.

CIR v. Procter & Gamble Phil Mfg Corp- The term taxpayer is defined in NIRC as referring to any personsubject to tax imposed by the title on Tax on Income.- The w/holding agent who is required to deduct & w/hold any tax ismade personally liable for such tax. The w/holding agent is directly &independently liable for correct amt of tax that shld be w/held frdividend remittances. W/holding agent is subject to deficiencyassessments, surcharges, penalties.

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- A person liable for tax is a person subject to tax and properlyconsidered a taxpayer. The terms liable for tax and subject to taxboth connote legal obligation to pay a tax.

Silkair (Singapore) Pte Ltd v. CIRThe proper party to question, or seek refund of, an indirect tax is thestatutory taxpayer, the person on whom the tax is imposed by law andwho pd the same even if he shifts the burden therof to another.

Diageo Phils Inc. v. CIR

- In taxation, a "person liable for tax" is a "person subject to tax" &properly considered a "taxpayer". Such a person shld be regarded asa party in interest, or as person w/ sufficient legal interest, to bring suitfor refund of taxes he believes were illegally collected fr him.- Right to refund / tax credit of excise taxes is available to thosepersons in NIRC, for theyre the ones primarily & legally liable to payexcise taxes. Sec 130(D) is a tax incentive available to manufacturer-exporter who has pd excise taxes. However, to avail of this privilege,manufacturer-exporter has to prove the fact that it has actually pdexcise taxes.- Excise tax is considered as indirect tax. Unlike direct tax, wheretaxpayer is directly liable on transaction it engaged in, an indirect taxis primarily pd by persons who can shift burden upon someone else.Its one where incidence of or liability for payment of tax falls on oneperson, but the burden can be shifted to another.- In indirect taxation, distinguish between liability for tax & burden ofthe tax. The amt of tax pd may be shifted by seller to the buyer.Whats transferred isnt the liability for tax, but the tax burden.

- In indirect taxes, the proper party who can question / seek refund isthe person on whom tax is imposed by law & who pd tax even whenhe shifts burden to another. The reason is obvious: where burden oftax is shifted to buyer, the amt passed on to it is no longer tax butbecomes added cost on goods purchased w/c constitutes part ofpurchase price, and w/c purchaser has to pay to seller to obtaingoods.

b. Administrative Claim for Refund

CASES WHERE REFUND NOT ALLOWED

Sec 204, NIRCAuthority of the Commissioner to Compromise, Abate andRefund or Credit Taxes.- Commissioner may

A. compromise payment of internal revenue tax when:

1. reasonable doubt as to validity of claim againsttaxpayer exists OR2. financial position of taxpayer demonstrates clearinability to pay assessed tax.- Compromise settlement of tax liability is subject tomin amts:

- For financial incapacity, min compromise rateequivalent to 10% of basic assessed tax- For other cases, min compromise rate equivalentto 40% of basic assessed tax

- Where basic tax involved exceeds P1M or wheresettlement offered is < prescribed min rates,compromise is subject to approval of Evaluation Boardw/c is composed of Commissioner & 4 DeputyCommissioners.

B. abate or cancel tax liability when1. tax or portion thereof appears to be unjustly /excessively assessed OR

2. administration & collection costs involved dontjustify collection of amt due.- Crim violations may be compromised except those:

a. already filed in court ORb. involving fraud

C.- credit / refund taxes erroneously / illegally rcvd ORpenalties imposed w/o authority- refund value of internal revenue stamps when theyrereturned in good condition by purchaser- redeem / change unused stamps that have been renderedunfit for use AND refund their value upon proof ofdestruction

- No credit / refund is allowed unless taxpayer files in writing w/Commissioner a claim for credit / refund w/in 2y after payment oftax / penalty.- A return filed showing overpayment is considered as writtenclaim for credit / refund.- A Tax Credit Certificate validly issued may be applied againstinternal revenue tax, excluding w/holding taxes, for w/c taxpayeris directly liable.- Any request for conversion into refund of unutilized tax creditsmay be allowed, subject to Sec 230 provided, the orig copy of

Tax Credit Certificate showing creditable balance is surrenderedto revenue officer for verification & cancellation.- In no case shall tax refund be given resulting fr availment ofincentives granted pursuant to special laws for w/c no actualpayment was made.- Commissioner shall submit to Chairmen of Committee on Ways& Means of both Senate & House of Reps every 6 mos, a reporton exercise of his powers under this Sec. Said report ispresented to Oversight Committee in Congress that determinesthat said powers are reasonably exercised & that the govt isntunduly deprived of revenues.

REFUND WITHOUT CLAIM (PAYMENT UNDER PROTEST NOT AREQUIREMENT)

Sec 229, NIRCRecovery of Tax Erroneously or Illegally Collected.- No suit / proceeding is maintained in any court for recovery of

any natl internal revenue tax alleged to have been erroneously /illegally assessed / collected OR of penalty claimed to have beencollected w/o authority, OR of any sum alleged to have beenexcessively or wrongfully collected, until claim for refund / creditis filed w/ Commissioner; but suit / proceeding may bemaintained WON such tax, penalty, sum was pd under protest /duress.- No such suit / proceeding shall be filed after 2y fr date ofpayment of tax / penalty regardless of any supervening causethat may arise after payment.- Commissioner may, even w/o written claim, refund / credit anytax, where on the face of the return upon w/c payment was made,payment appears clearly to have been erroneously pd.

CIR v. Philamlife- The prescriptive period of 2y shld commence to run only fr the timethat the refund is ascertained, w/c can only be determined after finaladjustment return is accomplished.- Even if the 2y period had already lapsed, the same isntjurisdictional and may be suspended for reasons of equity and otherspecial circumstances.- Vitug, concur:

- Corporate income tax payments for 1st 3 quarters of taxable yrshld, for purposes of 2y prescriptive period, be deemed to havebeen pd on 15th of April or of 4th month ff close of fiscal yrcovering the entire taxable income of preceding calendar / fiscalyr.

CIR v. Tokyo Shipping- A claim for refund is in the nature of a claim for exemption and shldbe construed in strictissimi juris against taxpayer.- Taxpayer has burden of proof to establish factual basis of its claimfor tax refund.

San Carlos v. CIR

- Once a taxpayer opts for either a refund or the automatic tax creditscheme, and signified his option in accordance w/ regulation, thisdoesnt ipso facto confer on him the right to avail of the sameimmediately. An investigation is necessary to enable Commissionerto determine correctness of returns and the tax amt to be credited.- An opportunity must be given the internal revenue branch of the govtto investigate & confirm the veracity of claims of taxpayer.

CIR v. CA and Citytrust- The grant of refund is founded on assumption that the tax return isvalid, that is, the facts stated are true & correct. The deficiencyassessment, though not yet final, created a doubt as to andconstitutes challenge against truth & accuracy of facts stated in returnw/c, by itself, cant be basis for grant of refund.

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- To grant refund w/o determination of proper assessment of tax duewill result in multiplicity of proceedings / suits. If the deficiencyassessment shld subsequently be upheld, the govt will be forced toinstitute anew a proceeding for recovery of erroneously refunded

taxes w/c must be filed w/in 10y after discovery of falsity, fraud oromission in false / fraudulent return.- In determining WON petitioner is entitled to refund of amt pd, itsnecessary to determine how much the govt is entitled to collect as

taxes.

CIR v. CA and Atlas Consolidated- Claims for refund shld be made w/in 2y fr date of payment of the taxsought to be refunded.

c. Remedy of the Taxpayer

CIR v. Acesite Phil Hotel Corp- Cited UST Cooperative Store v. City of Manila

- Theres erroneous payment of taxes when a taxpayer paysunder mistake of fact, as for instance in a case where he isntaware of an existing exemption in his favor at the time paymentwas made. Such payment is not voluntary and can berecovered / refunded.

- Tax refunds are based on the principle of quasi-contract or solutioindebiti and pertinent laws are found in Civil Code.- When money is pd to another under the influence of a mistake offact, on the mistaken supposition of the existence of a specific fact,where it wouldnt have been known that the fact was otherwise, it may

be recovered. The ground is that money pd thru misapprehension offacts belongs in equity and in good conscience to the person who pdit.- The govt is w/in the scope of solutio indebiti.- Cited CIR v. Firemans Fund Insurance Co

- No person shall unjustly enrich himself at the expense ofanother. The govt isnt exempted fr application of this doctrine.

CIR NO DECISIONPetition for refund must be filed w/ CTA w/in 2y fr date of payment oftax.

CIR RENDERS A DECISION

Maceda v. MacaraigTheres no legal obstacle to the BIR granting, even w/o suit bytaxpayer, tax credit / refund claimed, assuming that

- claim was made seasonably AND- amts covered were actually pd previously to BIR

APPEAL TO CTA BY FILING A PETITION FOR REVIEW

WITHIN 2 YRS FROM DATE OF PAYMENT TO INITIATE JUDICIALREMEDY

CIR v. Concepcion- Cited Republic v. Lim

- Taxpayers failure to appeal to CTA in due time madeassessment in question final, executory and demandable.

- The expedient of an appeal fr denial of tax request for cancellation ofwarrant of distraint & levy cant be utilized for purpose of testing thelegality of an assessment w/c had become conclusive & binding ontaxpayer. There being no appeal, the procedure in NIRC isntavailable to revive the right to contest validity of assessment once thesame was irretrievably lost not only by failure to appeal but likewise by

lapse of reglementary period w/in w/c to appeal.

CIR v. TMX Sales- Sec 232 NIRC requires that books of accts of companies / personsw/ gross quarterly sales / earnings exceeding P25000 be audited andexamined yearly by an independent CPA and their ITRs beaccompanied by balance sheets, profit & loss statements, scheduleslisting income producing properties and incomes therefrom, and otherrelated statements.- Before accountant can make certification on FS or render auditorsopinion, an audit of the books of accts has to be conducted.- Since the audit is to be conducted yearly, it is the Final AdjustmentReturn where figures of gross receipts & deductions have beenaudited & adjusted, that is truly reflective of the results of theoperations. It is only when the Adjustment Return covering the whole

yr is filed that the taxpayer would know whether tax is still due orrefund can be claimed based on the adjusted & audited figures.- Cited Collector v. Prieto

- When a tax is pd in installments, the prescriptive period of 2y in

NIRC shld be counted fr date of final payment.- Cited CIR v. Palanca

- Where tax acct was pd on installment, the computation of 2yprescriptive period shld be fr date of last installment.

CIR v. PNB

- Limiting the right to carry-over the balance of advance payment oftax only to immediately succeeding taxable yr is unfair & improper ifthere is intent to apply the entire amt to future tax obligations.- Cited Commissioner v. Philamlife

- Availment of tax credit due for reasons other than erroneouscollection of taxes may have diff prescriptive period. Absent anyprovision in Tax Code or special laws, that period is 10y underA1144, CC.

CIR v. Primetown Property Group Inc- The 2y prescriptive period is reckoned fr filing of the final adjustmentreturn.- CC A13 says that a yr is equivalent to 365 days.- Cited National Marketing Corp v. Tecson

- A yr is equivalent to 365 days regardless of whether its aregular yr or leap yr.

- However, the Administrative Code of 1987 says that a year isunderstood to be 12 calendar months.

- The Administrative Code, being the more recent law, governscomputation of legal periods. Lex posteriori derogat priori.

30 DAY PERIOD TO APPEAL IS JURISDICTIONAL

Gibbs v. CIRCourt had no jurisdiction over petition in this case bec it was filedbeyond the 30d period.

THE 2 YR PERIOD TO INITIATE JUDICIAL PROCEEDINGS NOTJURISDICTIONAL, BUT A POSITIVE REQUIREMENT

CIR v. Philamlife, supra

THE TWO PERIODS (30 DAYS AND 2 YRS) MUST CONCUR

d. Requirements for Refund Cases

Collector v. Prieto- As the taxpayers were only asking for refund of inheritance taxes, itwas unnecessary for them to implead, or for the court to order theimpleading of the executrix and the other heirs. They arentindispensable parties bec, w/o them, court was in a position to renderfinal determination of inheritance tax liability.

ACCRA Investments Corp v. CA- There is a need to file a return first before claim for refund canprosper. Commissioner mandates that corporate taxpayer opting toask for refund must show in its final adjustment return the income itrcvd fr all sources and the amt of w/holding taxes remitted by itsw/holding agents to BIR.- The 2yr prescriptive period w/in w/c to claim a refund commences tofun, at the earliest, on the date of the filing of the adjusted final taxreturn.

CIR v. Alltel Intl Resource Management- Cited CIR v. CA and Citytrust

Sithe Phils Holdings v. CIR- Sec 76 of 1997 Tax Code: Every taxpayer-corp is required to filefinal adjustment return reflecting all items of gross income &deductions as well as total taxable income for the taxable yr. By filingthereof, it enables taxpayer to ascertain whether it has tax still due orexcess income tax based on adjusted & audited figures. If its shownthat taxpayer has tax still due, then he must pay balance; if he hasoverpd income tax, he could carry it over to succeeding taxable yr orhe may credit / refund excess amt pd.- Orig option to refund excess tax is actually negated by act ofcarrying over excess amt to succeeding taxable yr. The option tocarry-over excess tax credit is irrevocable.

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- To be entitled to refund of excess creditable w/holding tax at source,3 requirements:

1. claim for refund was filed w/in 2y prescriptive period2. the fact of w/holding is established by copy of statement

issued by payor (w/holding agent) to payee3. the income upon w/c taxes were w/held were incl in return ofrecipient

Calamba Steel Center Inc v. CIR- A tax refund may be claimed even beyond the taxable yr ff that in

w/c tax credit arises, provided that the claim for such refund is filed w/internal revenue commissioner w/in 2y after payment of said taxes.- Recognition of the entitlement to a tax refund doesnt necessarilymean the automatic payment of sum claimed in final adjustmentreturn. The amt of claim must still be proven in normal course.- A taxable corp is entitled to a tax refund when the sum of quarterlyincome taxes it pd during taxable yr exceeds its total income tax duealso for that yr. The refundable amt thats shown on its finaladjustment return may be credited, at its option, against its quarterlyincome tax liabilities for the next taxable yr.- If the excess income taxes pd in a given taxable yr havent beenentirely used by taxable corp against its quarterly income tax liabilitiesfor the next taxable yr, the unused amt of excess may still berefunded, provided that the claim for such refund is made w/in 2y afterpayment of the tax.- The phrase succeeding taxable yr in par 2 of Sec 69 is a limitationthat applies only to a tax credit, not a tax refund.- To be able to claim a tax refund, a taxpayer only needs to

- declare the income payments it rcvd as part of gross incomeAND- establish the fact of w/holding

- The proper interpretation of the provisions in tax refund is a questionof law that doesnt call for an examination of probative value of theevidence.

Philam Asset Management Inc. v. CIR- Sec 76 offers 2 options to a taxable corp whose total quarterlyincome tax payments in a given taxable yr exceeds its total incometax due:

1. filing for tax refund- tax on income thats pd in excess of amt due may berefunded provided that taxpayer properly applies for refund

2. availing of a tax credit- applying the refundable amt, as shown on FAR of a giventaxable yr, against estimated quarterly income tax liabilitiesof the succeeding taxable yr

- These options are alternative in nature. The choice of one precludesthe other.- A corp must signify its intent by marking the corresponding optionbox in the FAR. This requirement is only for facilitating tax collection.Failure to signify intent in FAR doesnt mean outright barring of validrequest for refund, shld one still choose this option later on. Taxcredit shld be construed merely as alternative remedy to tax refundsubject to prior verification.- Requiring that the ITR or FAR of succeeding yr be presented to BIRin requesting tax refund has no basis in law & jurisprudence.

- Sec 76 requires FAR for the preceding, not succeeding taxableyr.- RR 12-94 merely provides that claims for refund of incometaxes deducted & w/held fr income tax payments shall be givendue course only when

1. its shown in ITR that income payments rcvd is beingdeclared part of the taxpayers gross income AND

2. fact of w/holding is established by copy of w/holding taxstatement, issued by payor to payee- Theres no automatic grant of tax refund. BIR shld be given theopportunity to investigate & confirm the veracity of taxpayersclaim.- BIR ought to have on file its own copies of petitioners FAR forsucceeding yr, on basis of w/c it could rebut assertion that therewas subsequent credit of excess income tax payments forprevious yr.- Despite failure of petitioner to make appropriate marking in BIRform, filing of its written claim effectively serves as expression ofits choice to request tax refund, instead of tax credit. To assertthat future claim for tax refund will be instantly hindered byfailure to signify intent in FAR is to render nugatory the 2yprescriptive period.

- The carry-over option in Sec 76 is permissive. A corp thats entitledto a tax refund / credit for excess payment of quarterly income taxesmay carry over & credit excess income taxes pd in given taxable yragainst estimated income tax liabilities of succeeding quarters. Once

chosen, the carry-over is irrevocable for the taxable period and noapplication for refund or issuance of tax credit certificate shall beallowed.- Tax refunds are construed strictly against taxpayer.

Atlas Consolidated v. CIR

- Those seeking tax refunds / credits bear the burden of provingfactual bases of their claims and of showing that legislature intendedto entitle them to such claims.- A judicial claim for refund / tax credit in CTA is by no means anoriginal action but an appeal by way of petition for rvw of previousunsuccessful administrative claim. Petitioner has to convinceappellate court that the quasi-judicial agency didnt have reason todeny its claims.

Systra Phils, Inc. v. CIR- A corp entitled to a tax credit / refund of excess estimated quarterlyincome taxes pd has 2 options

1. to carry over excess credit2. to apply for issuance of tax credit certificate or claim cashrefund

- If option to carry over is exercised, this is irrevocable for that taxableperiod.- The corp must signify in the adjustment return its intent to carry over

or claim refund. These remedies are in the alternative and choice ofone precludes the other.- This is the IRREVOCABILITY RULE and is in the last sentence ofSec 76. The rule prevents taxpayer fr claiming twice the excessquarterly taxes pd.

Jurisdiction of the Court of Tax Appeals

Rule 1, Revised Rules of the CTATITLE AND CONSTRUCTION

Sec 1. Title of the Rules.- Revised Rules of the Court of Tax Appeals

Sec 2. Liberal construction.- The Rules are liberally construed to promote objective ofsecuring just, speedy, inexpensive determination of every action

& proceeding.

Sec 3. Applicability of the Rules of Court.- RoC in the Phils apply suppletorily to these Rules.

Rule 2, Revised Rules of the CTATHE COURT, ITS ORGANIZATION AND FUNCTIONS

Sec 1. Composition of the Court.- Court is composed of presiding justice AND 5 assoc justicesappointed by Pres of Phils.- Court shall sit

- en banc OR- in 2 Divisions of 3 justices ea, incl presiding justice, who isChair of 1st Division

Sec 2. Exercise of powers and functions.- Court exercises adjudicative powers, fcns & duties en banc or

in Divisions.- Court sits en banc in exercise of administrative, ceremonial,non-adjudicative fcns.

Sec 3. Court en banc, quorum and voting.- Presiding justice or, in his absence, the most senior justice inattendance presides over sessions of Court en banc.- Attendance of 4 justices constitutes quorum for sessions enbanc.- Presence at deliberation AND affirmative vote of 4 justices ofCourt en banc are necessary for rendition of decision ORresolution on any case / matter submitted for consideration.- Where necessary majority vote cant be had

- petition is dismissed

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- in appealed cases, judgment / order appealed fr standsaffirmed- on all incidental matters, petition / motion is denied

- No decision of Division of Court may be reversed / modifiedexcept by affirmative vote of 4 justices of Court en banc actingon the case.- Interlocutory orders / resolutions are acted upon by majorityvote of justices present constituting quorum.

Sec 4. The Court in Divisions; quorum and voting.

- Chairman of Division or, in his absence, its senior memberpresides over sessions of Court in Divisions.- Attendance of at least 2 justices of Court is necessary toconstitute quorum for sessions in Divisions.- Presence at deliberation AND affirmative vote of at least 2

justices are required for pronouncement of judgment / finalresolution of Court in Divisions.

Sec 5. Hearings.- Court en banc or in Divisions conducts hearings on days &times & places it may fix, w/ notice to parties.- Fri of ea wk is devoted to hearing motions, unless for specialreasons, Court en banc or in Divisions shall, motu proprio orupon motion, fix another day for hearing of any motion.

Sec 6. Disqualification of justices.a. Mandatory.

- No justice / officer / employee of Court shall intervene,

directly / indirectly, in mgmt / control of any pvt enterprisew/c may be affected by fcns of Court.- Justices are disqualified fr sitting in any case on samegrounds under Sec 1, R137, RoC.- No person who has once served in Court as presiding

justice or associate justice is qualified to practice ascounsel before Court for 1y fr retirement / resignation assuch.

b. Disclosure & consent of parties & lawyers.- A justice disqualified under Sec 1(1), R 137 may, instead ofw/drawing fr case / proceeding, disclose on records thebasis of disqualification.- If, based on disclosure, the parties & lawyers,independently of justices participation, all agree in writingthat reason for inhibition is immaterial / unsubstantial,

justice may participate.- The agreement, signed by all parties & lawyers, isincorporated in record of action / proceeding.

c. Voluntary.- A justice may, in his sound discretion, disqualify himself frsitting in case / proceeding, for just / valid reasons otherthan those mentioned.

- A justice who inhibits shall immediately notify in writing thepresiding justice AND members of his Division.

Sec 7. Motion to inhibit a justice.- When motion for inhibition of justice is filed, the Court, en bancor in Division, acts upon motion.- If motion for inhibition is based on discretionary ground, Courtrefers motion to justice involved for his appropriate action.

Rule 3, Revised Rules of the CTAPLACE OF OFFICE, SEAL AND OFFICE HOURS

Sec 1. Place of office.

- Court has principal ofc in Metro Manila.

Sec 2. Court seal.- Seal of Court is circular in form AND of the usual size.- It bears, in center, a design of coat of arms of Republic of Philsw/ the words BATAS AT BAYAN immediately underneath.- On the upper margin running fr left to right are the wordsCOURT OF TAX APPEALS and on lower margin the wordsREPUBLIKA NG PILIPINAS.

Sec 3. Seal, where affixed.- Seal of Court is affixed to all

- summons- subpoena- notices

- decisions- orders- resolutions- certified copies of official records- other papers that Court may require to be sealed

Sec 4. Office hours.- Ofc of Clerk of Court is open for transaction of biz & rcvingpetitions, complaints, pleadings, motions, other papers, during8am to 430pm, Mon to Fri, except on such days designated by

law / executive proclamation as non-working official holidays.

Sec 218, NIRCInjunction not Available to Restrain Collection of Tax.- No court has authority to grant injunction to restrain collectionof natl internal revenue tax, fee, charge imposed by Code.

RA 1125, as amended by RA 9282AN ACT CREATING THE COURT OF TAX APPEALS

Sec 1. Court; Justices; Qualifications; Salary; Tenure.- There is hereby created a Court of Tax Appeals (CTA)

- of same level as CA- possessing all inherent powers of Court of Justice- consists of

a. Presiding Justice ANDb. 5 Associate Justices

- Incumbent Presiding Judge & Assoc Judges continue in ofc &

bear new titles.- Presiding Justice & most Senior Assoc Justice serve aschairmen of the 2 Divisions.- The addl 3 Justices & succeeding members of Court areappointed by Pres upon nomination by Judicial & Bar Council.- Presiding Justice is so designated in his appointment; theAssoc Justices have precedence accdg to date of appointments,or when appointments of 2 or more of them bear same date,accdg to order in w/c appointments were issued by Pres.- They have same qualifications, rank, category, salary,emoluments, privileges, be subject to same inhibitions &disqualifications, enjoy the same retirements & other benefits asthose provided for Presiding Justice & Assoc Justices of CA.- Whenever salaries of Presiding Justice & Assoc Justices of CAare increased, such increases are deemed correspondinglyextended to Presiding Justice & Assoc Justices of CTA.- Presiding Justice & Assoc Justices hold office during goodbehavior

- until they reach age of 70 or become incapacitated todischarge duties of ofc- unless sooner removed for same causes & in samemanner for members of judiciary of equivalent rank

Sec 2. Sitting En Banc or Division; Quorum; Proceedings.- CTA may sit

- en banc OR- in 2 Divisions, ea consisting of 3 Justices

- 4 Justices constitute quorum for sessions en banc; 2 Justicesfor sessions of Division.- When required quorum cant be constituted due to vacancy,disqualification, inhibition, disability, other lawful cause,Presiding Justice designates any Justice of other Divisions to sittemporarily therein.- Affirmative votes of 4 members of Court en banc or 2 membersof Division is necessary for rendition of decision / resolution.

Sec 3. Clerk of Court; Division Clerks of Court; Appointment;Qualification; Compensation.- CTA has a Clerk of Court AND 3 Division Clerks of Courtappointed by SC.- No person is appointed Clerk of Court or Division Clerk of Courtunless duly authorized to practice law in Phils.- Clerk of Court & Division Clerks of Court exercise same powers& duties re matters w/in Court's jurisdiction, as exercised byClerk of Court & Division Clerks of Court of CA, in so far as thesame may be applicable or analogous. They are under directionof the Court.- Clerk of Court & Division Clerks of Court have same rank,privileges, salary, emoluments, retirement, benefits as thoseprovided for Clerk of Court & Division Clerks of Court of CA.

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Sec 4. Other Subordinate Employees.- SC appoints all officials & employees of CTA, in accordance w/Civil Svc Law.- SC fixes their salaries & prescribes their duties.

Sec 5. Disqualifications.- No Justice / officer / employee of CTA shall intervene, directly /indirectly, in mgmt / control of any pvt enterprise w/c may beaffected by fcns of Court.

- Justices are disqualified fr sitting in any case on same groundsunder R 137, RoC for disqualification of judicial officers.- No person who has once served in Court in permanent capacity,either as Presiding Justice or Assoc Justice thereof, is qualifiedto practice as counsel before the Court for 1y fr retirement /resignation.

Sec 6. Place of Office.- CTA has principal ofc in Metro Manila and shall hold hearings attime & place as it may, by order in writing, designate.

Sec 7. Jurisdiction.- CTA shall exercise

a. exclusive appellate jurisdiction to rvw by appeal1. decisions of CIR re

- disputed assessments- refunds of internal revenue taxes, fees, charges- penalties

- other matters under NIRC or other lawsadministered by BIR

2. inaction by CIR re- disputed assessments- refunds of internal revenue taxes, fees, charges- penalties- other matters under NIRC or other lawsadministered by BIR

where NIRC provides specific period of action, inw/c case inaction is deemed a denial3. decisions, orders, resolutions of RTC

- in local tax cases originally decided / resolvedby them in exercise of orig or appellate

jurisdiction4. decisions of Commissioner of Customs re

- liabilit