59.

CONTINENTAL MICRONESIA, INC.- PHIL. BRANCH vs. CIR

C.T.A. CASE NO. 6191
March 22, 2006

FACTS
Petitioner is a Philippine branch of a non-resident foreign corporation
incorporated in USA, engaged in air transportation.
In 1996, the BIR examined the books of accounts and records of all
the internal revenue taxes of the petitioner and found deficiency taxes.
Consequently, petitioner paid for the deficiency in Philippine billings and
common carriers tax but not for the remaining deficiency taxes.
In 1998, an assessment on the deficiency withholding tax was issued
to the petitioner which it objected that resulted to reinvestigation.
In 2000, the result of the reinvestigation was received by the
petitioner and was protested due to prescription on the assessments.
ISSUE
W/N the period for assessment has prescribed.
RULING
No. The counting of the prescriptive period is reckoned from the last
day required by law for the filing of the monthly remittance return, which is
10 days after December and 25 days after the end of December of taxes
withheld. In this case, the deficiency notice was given beyond the period.
However, the request for reinvestigation which was granted by respondent
suspended the running of the 3-year period to assess pursuant to Sec. 223
of the NIRC which provides:
SEC. 223. Suspension of Running of Statute of
Limitations. - The running of the Statute of Limitations provided in
Sections 203 and 222 on the making of assessment and the beginning
of distraint or levy a proceeding in court for collection, in respect of
any deficiency, shall be suspended for the period during which the
Commissioner is prohibited from making the assessment or beginning
distraint or levy or a proceeding in court and for sixty (60) days
thereafter; when the taxpayer requests for a reinvestigation which is
granted by the Commissioner; when the taxpayer cannot be located in
the address given by him in the return filed upon which a tax is being
assessed or collected: Provided, that, if the taxpayer informs the
Commissioner of any change in address, the running of the Statute of
Limitations will not be suspended; when the warrant of distraint or
levy is duly served upon the taxpayer, his authorized representative,
or a member of his household with sufficient discretion, and no
property could be located; and when the taxpayer is out of the
Philippines.

60.

REPUBLIC OF THE PHILIPPINES vs. LUIS G. ABLAZA

G.R. No. L-14519
July 26, 1960

FACTS
In 1951, the Collector of Internal Revenue assessed respondent
Ablazas income tax returns for the years 1945-1948 which totalled to
P5,254.70. Thereafter, Ablazas accountants requested a reinvestigation of
his tax liability, on the grounds that (1) the assessment is based on thirdparty information and (2) neither the taxpayer nor his accountants were
permitted to appear in person. The petition for reinvestigation was granted.
Ablazas accountants then submitted a copy of their own computation and
supplemental memorandum.
In 1954, Ablazas accountants requested the examiner of accounts and
collections of the Bureau of Internal Revenue a copy of their computation on
the alleged tax liability.
In 1957, after the reinvestigation, the Collector of Internal Revenue
made a final assessment of the Ablazas income taxes amounting to
P2,066.56 which was protested by the accountants on the ground that the
income taxes are no longer collectible due to prescription.
The Collector then filed a complaint in the Court of First Instance to recover
the amount assessed. CFI dismissed the complaint. Thus, this appeal.
ISSUE
W/N the period for collection of taxes has prescribed.
RULING
Yes. Generally, a request for reinvestigation of the assessment of the
income taxes suspends the period of prescription of action to collect the
taxes. In this case, however, the question is in the interpretation of the
letter of request to re-examine the assessment sent to the BIR in 1954. If
said letter be interpreted as a request for a new investigation which is
different from the investigation demanded upon Ablaza's submission of their
copy of the computation, then the period of prescription would be
suspended; but if the letter asks only for further investigation then the
period of prescription continues.
It can be concluded that the request for re-examination does not ask
for another investigation. All that the letter asks is that the taxpayer be
furnished a copy of the computation. The request is to be interpreted that
the taxpayer assumed that in 1954, the reinvestigation was about to be
finished and he wanted a copy of the re-assessment in order to be prepared
to admit or contest it. The letter does not imply a demand or request for a
ready assessment, therefore, the said letter may not be interpreted to
authorize or justify the continuance of the suspension of the period of
limitations.

61.

CLARA DILUANGCO PALANCA, ET AL. vs. CIR, ET AL.

G.R. No. L-16661
January 31, 1962

FACTS
Gliceria Diluangco died on April 18, 1947 and testate proceedings were
filed with the CFI. Upon discovering that the executor failed to file the
return, the CIR required him to do so and in 1951 he filed the requested
estate and inheritance tax return. The estate was assessed and the taxes
due which includes 25% surcharge for failure to file the return on time. Atty.
Manuel San Jose, executor of the estate and counsel for the heirs, requested
reconsideration on the imposition of the surcharge, which was denied.
However, an internal revenue examiner assessed P22,533.46 as deficiency
taxes from the incorrect return filed.
In 1952, the CIR issued a warrant of distraint and levy for the
deficiency which Atty. San Jose refused to receive and instead requested the
suspension of the execution of said warrant in view due to alleged
discrepancies. They then requested two re-evaluations, the last one alleging
the defense of prescription on the right of the Government to collect through
a summary method.
ISSUE
W/N the period for collection of taxes has prescribed.
RULING
No. Section 332 (c) of the NIRC provides that the collection of an
internal revenue tax may be made by distraint and levy if the proceeding is
begun within five years after assessment.
In this case, the warrant has not been fully executed with the seizure
and sale of any property subject to the lien, due to the request of Atty. San
Jose for a statement of the amount due from each heir and for an
opportunity to make arrangement for the settlement of the obligation. Under
the law, it is not essential that the warrant of distraint and levy be fully
executed in order that it may have the effect of suspending the running of
the statute of limitation upon collection of the tax. It is enough that the
proceeding be validly begun or commenced and that its execution has not
been suspended by reason of the voluntary desistance of the respondent.
The Court ruled that the warrant of distraint and levy in 1955 was
validly issued and was duly served upon counsel for petitioners, therefore,
the 5-year period for collection of the estate and inheritance taxes in
question was suspended. And it continued to be suspended up to the date
when the present appeal was filed by petitioners. Accordingly, the right to
collect said taxes has not prescribed.

62.

FINLEY J. GIBBS and DIANE P. GIBBS vs. CIR

G.R. No. L-17406
November 29, 1965

FACTS
In 1965, respondent CIR issued against the petitioners Finley and
Diane Gibbs a Deficiency Income Tax Assessment for tax year 1950 with the
demand that the said amount should be paid on or before March 15, 1956.
On March 14, 1956, Allison J. Gibbs, attorney-in-fact of Finley J. Gibbs,
his brother, acknowledged receipt of the assessment notice and notified the
respondent that Finley J. Gibbs was then living in California. Allison also
questioned the disallowance of the items which gave rise to the deficiency
assessment and requested for a correction of it, which was denied.
Having deemed the denial to be a final decision, Allison paid the
deficiency taxes under protest which later demanded refund.
The first demand for refund having denied, Allison filed another
demand with claims for tax credits from previous overpayment by the
petitioner. However, respondent never replied to this letter.
In 1958, the petitioners filed with the respondent court a petition for
review alleging its claims for refund and tax credit which it ruled that the
collection of the taxes were barred by prescription.
ISSUE
W/N the statute of limitation of two years under Sec. 306 of the NIRC
has prescribed.
RULING
No. Sec. 306 of the NIRC should be construed together with Sec. 11 of
RA 1125. A taxpayer who has paid the tax, whether under protest or not,
and who is claiming a refund of the same, must comply with the requirement
of both sections, that is, he must file a claim for refund with the Collector of
Internal Revenue within 2 years from the date of his payment of the tax, as
required by Sec. 306 of the NIRC, and appeal to the CTA within 30 days
from receipt of the Collector's decision or ruling denying his claim for refund,
as required by Sec. 11 of RA 1125. If, however, the Collector takes time in
deciding the claim, and the period of two years is about to end, the suit or
proceeding must be started in the CTA before the end of the two-year period
without awaiting the decision of the Collector. This is so because of the
positive requirement of Sec. 306 and the doctrine that delay of the Collector
in rendering decision does not extend the peremptory period fixed by the
statute.

63.

FAR EAST BANK AND TRUST COMPANY vs. CIR

G.R. No. 138919
May 2, 2006

FACTS
Petitioner is the trustee of various retirement plans established by
several companies for its employees. It reinvested these retirement funds in
various money market placements, bank deposits, etc. which earned interest
income. Petitioner then claimed for refund on the tax withheld and paid to
the CIR for the four (4) quarters of 1993 on the interest income on the
ground that employees trusts are exempted by specific mandate of law from
income taxation. However, these claims for refund were denied.
By this time, petitioner already had a pending petition before the CTA
involving the same legal issue but a previous taxable period. Petitioner then
filed a Motion to Admit Supplemental Petition seeking to include in that case
the tax refund claimed for 1993. However, the CTA denied such petition and
advised petitioner to file a separate petition for review for the refund of the
withholding taxes paid in 1993. Petitioner then filed another petition for
review on its claim for refund for 1993 which was denied due to prescription.
ISSUE
W/N the period for filing an action for tax refund has prescribed.
RULING
Yes. The Court ruled that the income from employees trusts is
exempted from income tax. However, period for filing an action for tax
refund had prescribed.
Since the petition for review was only filed on 9 October 1995,
petitioner could no longer claim the refund of tax withheld for the period of
January to 8 October 1995, the 2-year prescriptive period having elapsed.
The two-year prescriptive period for the refund of erroneously paid
taxes cannot be suspended by filing of the Supplemental Petition because it
did not give CTA jurisdiction over the new claim.
The admission of supplemental pleadings does not arise as a matter of
right on the petitioner, but remains in the sound discretion of the court. It is
only upon the admission by the court of the supplemental complaint that it
may be deem to augment the original complaint. Until such time, the court
acquires no jurisdiction over such new claims as may be raised in the
supplemental complaint.
In this case, the Court did not treat the Supplemental Petition as
having any judicial effect. The CTA acquired jurisdiction over the claim for
refund for taxes paid by petitioner in 1993 only upon the filing of the new
Petition for Review on 9 October 1995. Thus, the two-year period for filing
an action for tax refund had already prescribed.

64.

CIR vs. WYETH SUACO LABORATORIES, INC.

G.R. No. 76281
September 30, 1991

FACTS
In 1974, the CIR conducted an investigation and examination of the
books of accounts of Wyeth Suaco and found that it failed to remit
withholding tax at source for the fourth quarter of 1973 on accrued royalties,
remuneration for technical services and cash dividends.
Consequently, the BIR assessed Wyeth Suaco on the said tax liabilities
in two notices of assessments which were protested. Wyeth Suaco then
requested for the cancellation or withdrawal on the ground that said
assessments lacked factual or legal basis which was denied.
Thereafter, Wyeth Suaco filed a petition for review in CTA in 1980,
alleging prescription on the assessments. Petitioner then issued a warrant of
distraint of personal property and warrant of levy of real property to enforce
collection of the deficiency taxes. The warrants were suspended due to the
granting of a motion enjoining the CIR from collecting the deficiency taxes.
ISSUE
W/N petitioner's right to collect deficiency withholding tax at source
and sales tax liabilities from private respondent is barred by prescription
RULING
No. Section 319 (c) of the NIRC provides that where the assessment of
any internal revenue tax has been made within the 5-year period after the
filing of return (Sec. 318, NIRC), such tax may be collected by distraint or
levy by a proceeding in court, but only if begun (1) within five years after
the assessment of the tax, or (2) prior the expiration of any period for
collection agreed upon in writing by the Commissioner and the taxpayer
before the expiration of such five-year period. The period so agreed upon
may be extended by subsequent agreements in writing made before the
expiration of the period previously agreed upon.
In this case, the 5-year prescriptive period provided by law to make a
collection by distraint or levy or by a proceeding in court has not yet
prescribed. When Wyeth Suaco protested the assessments, it was regarded
as a request for a reinvestigation or reconsideration, which could interrupt
the running of the five-year prescriptive period.

65.

LASCONA LAND CO., INC. vs. CIR

G.R. No. 171251
March 5, 2012

FACTS
The CIR assessed petitioner Lascona Land Co., Inc. to have a
deficiency income tax for the year 1993. Consequently, Lascona filed a letter
protest, but was denied by the Regional Director of the BIR and alleged that
the failure to appeal to the CTA within 30 days from the lapse of the 180-day
period rendered the assessment final and executory.
Upon appeal to the CTA, it nullified the subject assessment stating that
in cases of inaction by the CIR on the protested assessment, Section 228 of
the NIRC should be applied.
CIR moved for reconsideration. It argued that in declaring the subject
assessment as final, executory and demandable, it did so pursuant to Sec. 3
(3.1.5) of Revenue Regulations No. 12-99.
ISSUE
W/N the subject assessment has become final, executory and
demandable.
RULING
No. Section 228 of the NIRC is instructional as to the remedies of a
taxpayer in case of the inaction of the Commissioner on the protested
assessment. It further provides that, if the protest is denied in whole or in
part, or is not acted upon within one hundred eighty 180 days from
submission of documents, the taxpayer by the decision or inaction may
appeal to the CTA within 30 days from receipt of the said decision, or from
the lapse of the 180-day period; otherwise the decision shall become final,
executory and demandable. When the Commissioner failed to act on the
disputed assessment within the 180-day period from date of submission of
documents, a taxpayer can either: (1) file a petition for review with the
Court of Tax Appeals within 30 days after the expiration of the 180-day
period; or (2) await the final decision of the Commissioner on the disputed
assessments and appeal such final decision to the CTA within 30 days after
receipt of a copy of such decision. These options are mutually exclusive and
resort to one bars the application of the other.
In this case, Lascona opted to await the final decision of the
Commissioner on the protested assessment, it then has the right to appeal
such final decision to the Court by filing a petition for review within 30 days
after receipt of a copy of such decision, even after the expiration of the 180day period fixed by law for the CIR to act on the disputed assessments.
Thus, Lascona, when it filed an appeal on April 12, 1999 before the CTA,
after its receipt of the Letter, the appeal was timely made as it was filed
within 30 days after receipt of the copy of the decision.

66.

ANDREA R. VDA. DE AGUINALDO vs. CIR

G.R. No. L-19927
February 26, 1965

FACTS
In 1952, Leopoldo R. Aguinaldo and his wife received cash dividends in
the sum of P10,000.00. The spouses did not declare said dividends in their
joint income tax return for 1952, but declared P5,000.00 thereof in their
income tax return for 1953.
One year after, the BIR re-examined the 1952 and 1953 their joint
income tax returns and readjusted the returns, increasing the declared
income for 1952 by P10,000.00 and eliminating from the 1953 income tax
return P5,000.00. The result was a deficiency income tax of P3,840.00 for
1952 and an overpayment of tax in the amount of P1,600.00 for 1953. The
BIR then recommended that the overpayment for 1953 in the amount of
P1,600.00 be credited against the deficiency tax for 1952. The Collector of
Internal Revenue, however assessed against Leopoldo the amount of
P3,840.00 as deficiency income tax for 1952, without crediting the
overpayment in 1953.
Aguinaldo's counsel protested against the assessment and requested
that the overpayment for 1953 be credited. However, it was denied stating
that the amount of P1,600.00 cannot be credited against the tax for 1952
since the claim for tax credit was filed beyond the two-year period provided
for in Section 309 of the NIRC.
Subsequently, Leopoldo R. Aguinaldo died, but petitioner Andrea Vda.
de Aguinaldo, his surviving spouse and administratrix appealed to the CTA
which was denied for lack of cause of action. Thus, the appeal to the SC.
ISSUE
W/N the period for filing the petition for tax credit has prescribed.
RULING
Yes. The authority of the Commissioner of Internal Revenue under
Section 309 can only be exercised if a claim for credit is made in writing and
filed with him within two years from the payment of the tax.
The third paragraph of Section 309, clearly requires the filing by the
taxpayer of a written claim for credit or refund within two years after
payment of the tax, before the Commissioner of Internal Revenue can
exercise his authority to grant the credit or refund. Such requirement is
therefore a condition precedent and non-compliance precludes the
Commissioner of Internal Revenue from exercising the authority given.
As noted, the Aguinaldos paid the income tax for 1953 on 1952. From
both dates to January 13, 1958, the claim for tax credit was filed beyond the
two years required period. Evidently, petitioner's claim for tax credit has
prescribed.

67.

COLLECTOR OF INTERNAL REVENUE vs. J. N. SWEENEY, ET AL

G.R. No. L-12178
August 21, 1959

FACTS
The International Club of Iloilo, Inc. from 1949 to its dissolution in
August 1951, maintained and operated a clubhouse with a bar to cover
operational expenses. It is admitted that the Club never paid fixed or
percentage taxes as operator of a bar during its brief lifespan.
In 1950, petitioner Collector of Internal Revenue demanded from the
Club payment of tax due as operator of a bar but the respondents protested
and argued that the Club was a private one, not organized for profit, thus,
should not be held liable for the taxes sought to be collected. However, the
protest remained unanswered for about 10 months.
In 1953, petitioner urged the City Fiscal of Iloilo to prosecute
criminally the past presidents of the Club for violation of the Tax Code which
was later withdrawn as they paid under protests to the City Treasurer of
Iloilo their alleged tax liabilities. On the same date, the respondents sent
ther claim for refund of the amounts paid by them under protests. Not
having received any reply from respondent regarding said claim for refund,
petitioners for review which was received by the Court on August 27, 1955.
ISSUE
W/N the respondents are correct in taking the case to the CTA before
received any advice to the petition to refund.
RULING
No. The taxpayers need not wait for the action of the Collector of
Internal Revenue on the request for refund before taking the matter to
court.
According to jurisprudence, the law does not imply that the Collector
of Internal Revenue must act upon claim or that in the Taxpayer shall not go
to court before he is notified of the Collectors' action. Having filed his claim
and the Collector of Internal Revenue having had ample time to study it, the
claimant may, indeed should, within the statutory period of the two years
proceed with his suit without waiting for the Collector's decision.
Under said provisions, the taxpayer's failure to comply with the
requirement regarding the institution of the action or proceeding in court
within 2 years after the payment of the taxes bars him from the recovery of
the same, irrespective of whether a claim for the refund of such taxes filed
with the Collector or Internal Revenue is still pending action of the latter.

68.

FINLEY J. GIBBS and DIANE P. GIBBS vs. CIR

CTA Case No. 584
November 29, 1965

FACTS
In 1965, respondent CIR issued against the petitioners Finley and
Diane Gibbs a Deficiency Income Tax Assessment for tax year 1950 with the
demand that the said amount should be paid on or before March 15, 1956.
On March 14, 1956, Allison J. Gibbs, attorney-in-fact of Finley J. Gibbs,
his brother, acknowledged receipt of the assessment notice and notified the
respondent that Finley J. Gibbs was then living in California. Allison also
questioned the disallowance of the items which gave rise to the deficiency
assessment and requested for a correction of it, which was denied.
Having deemed the denial to be a final decision, Allison paid the
deficiency taxes under protest which later demanded refund.
The first demand for refund having denied, Allison filed another
demand with claims for tax credits from previous overpayment by the
petitioner. However, respondent never replied to this letter.
ISSUE
W/N the action for refund has prescribed.
RULING
Yes. The evidence does not show that the claim for refund and credit
as alleged overpayment of income tax withheld at source in the year 1951
was filed with respondent within the 2 years from the date of payment.
Furthermore, the present petition for refund was filed only on October
1, 1958; the judicial suit was thus, instituted beyond the prescriptive period.

69.

CIR vs. CA
G.R. No. 124043

October 14, 1998

FACTS
Private Respondent YMCA is a non-stock, non-profit institution, which
conducts various programs and activities that are beneficial to the public,
especially the young people, pursuant to its religious, educational and
charitable objectives.
In 1980, YMCA earned an income of P676,829.80 from leasing out a
portion of its premises to small shop owners, like restaurants and canteen
operators, and P44,259.00 from parking fees collected from nonmembers. In 1984, the CIR issued an assessment a deficiency income tax
amounting to P415,615.01 including surcharge and interest. YMCA protested
but was denied by the CIR.
ISSUE
W/N the income derived from rentals of real property owned by the
YMCA are subject to income tax.
RULING
No. Sec. 27 NIRC provides:
SEC. 27. Exemptions from tax on corporations. -- The following
organizations shall not be taxed under this Title in respect to income
received by them as such -(g) Civic league or organization not organized for profit but
operated exclusively for the promotion of social welfare;
(h) Club organized and operated exclusively for pleasure,
recreation, and other non-profitable purposes, no part of the net
income of which inures to the benefit of any private stockholder
or member;
Notwithstanding the provision in the preceding paragraphs, the income
of whatever kind and character of the foregoing organization from any
of their properties, real or personal, or from any of their activities
conducted for profit, regardless of the disposition made of such
income, shall be subject to the tax imposed under this Code. (as
amended by Pres. Decree No. 1457)
In this case, the exemption claimed by the YMCA is expressly
disallowed by the last paragraph of then Section 27 of the NIRC which
mandates that the income of exempt organizations (such as the YMCA) from
any of their properties, real or personal, be subject to tax.

70.

ACCRA INVESTMENTS CORPORATION vs. CA

G.R. No. 96322 December 20, 1991

FACTS
In 1982, the petitioner filed with BIR its annual corporate income tax
return for the year 1981 reporting a net loss. In the said return, the
petitioner declared as creditable, all taxes withheld at source by various
withholding agents. Consequently, such agents remitted to the BIR the
withholding taxes from the petitioner.
In 1983, petitioner filed a claim for refund as it had no tax liability
against which to credit the amounts withheld as overpaid taxes.
Pending claim, petitioner filed a petition for review with CTA which was
dismissed after a finding that petitioner's claim for refund had already
prescribed.
ISSUE
W/N the period for the claim for refund has already prescribed.
RULING
No. Sec. 230 of the NIRC provides that in recovery of tax erroneously
or illegally collected, no suit or proceeding shall begin after the expiration of
two years from the date of payment of the tax or penalty.
The issue in this case lies in the interpretation of the phraseology
"from the date of payment of the tax" which according to the ruling in the
case of Gibbs vs. CIR, there are two alternative reckoning dates: (1) the end
of the tax year; and (2) when the tax liability falls due.
In this case, petitioner is not claiming a refund of overpaid withholding
taxes, but for the recovery of the sum of the refundable or creditable
amount determined upon the filing of the its final adjustment tax return on
or before 15 April 1982 when its tax liability for the year 1981 fell due.
Respondent, by his own rules and regulations mandates that the
corporate taxpayer opting to ask for a refund must show in its final
adjustment return the income it received from all sources and the amount of
withholding taxes remitted by its withholding agents to the BIR. The
petitioner corporation filed its final adjustment return for its 1981 taxable
year on April 15, 1982. Hence, the two-year prescriptive period within which
to claim a refund commences to run is on the date of the filing of the
adjusted final tax return. Thus, the petitioner had until April 15, 1984 within
which to file its claim for refund

71.

CIR vs. TMX SALES, INC.

G.R. No. 83736 January 15, 1992

FACTS
In May 1981, respondent TMX Sales Inc. filed a quarterly income tax
return for the first quarter of 1981 and paid the corresponding income tax
thereon.
During the subsequent quarters, it suffered losses so that when it filed
its Annual Income Tax Return for the year 1981, it declared a net loss. It
thereafter filed a claim for refund, which was not acted upon by the
Commissioner of Internal Revenue.
In 1984, respondent filed a petition for review with the CTA to order
the CIR to refund the amount overpaid as income tax. The CIR raised the
defense of prescription against respondent stating that more than two years
had already elapsed since respondent paid the contended income tax and
the filing of the claim in court.
ISSUE
W/N the period to claim for refund has prescribed.
RULING
No. Section 230 of the NIRC provides that there are two reckoning points
to which a claim for refund of erroneously collected tax commence to run: (1) the
date the quarterly income tax was paid, or (2) from the date of filing of the Final
Adjustment Return (final payment).
In this case, the computation of the two-year prescriptive period is at
the time of filing the Final Adjustment Return or the Annual Income Tax
Return, 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 filing of quarterly income tax returns required in Section 85 (now
Section 68) and implemented per BIR Form 1702-Q and payment of
quarterly income tax should only be considered mere instalments of the
annual tax due. These quarterly tax payments which are computed based on
the cumulative figures of gross receipts and deductions in order to arrive at
a net taxable income, should be treated as advances or portions of the
annual income tax due, to be adjusted at the end of the calendar or fiscal
year.

72.

RIZAL COMMERCIAL BANKING CORPORATION vs. CIR

G.R. No. 168498
June 16, 2006

FACTS
In 2001, petitioner RCBC received a Formal Letter of Demand the
respondent CIR for its deficiency taxes for the year 1997.
Petitioner filed a protest and requested for reinvestigation which was
not acted upon by the respondent. Petitioner then filed in 2002 a petition for
review with the CTA for the cancellation of the assessments which was
dismissed because it was filed beyond the 30-day period following the lapse
of 180 days from petitioners submission of documents in support of its
protest. Petitioner did not file a motion for reconsideration or an appeal to
the CTA from the dismissal of its petition for review. Consequently, the
September 10, 2003 Resolution became final and executory.
ISSUE
W/N the period for protesting of assessment has prescribed.
RULING
Yes. Sec. 228 of the NIRC provides that an assessment may be
protested administratively by filing a request for reconsideration or
reinvestigation within 30 days from receipt of the assessment. Within 60
days from filing of the protest, all relevant supporting documents shall have
been submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon within
one hundred eighty (180) days from submission of documents, the taxpayer
adversely affected by the decision or inaction may appeal to the Court of Tax
Appeals within 30 days from receipt of the said decision, or from the lapse of
the 180-day period; otherwise the decision shall become final, executory and
demandable.
In this case, from July 20, 2001, that is, the date of petitioners filing
of protest, it had until September 18, 2001 to submit relevant documents
and from September 18, 2001, the Commissioner had until March 17, 2002
to issue his decision. As admitted by petitioner, the protest remained
unacted by the CIR. Therefore, it had until April 16, 2002 within which to
elevate the case to this court. Thus, when petitioner filed its Petition for
Review on April 30, 2002, the same is outside the 30-day period.
As provided in Sec. 228, the failure of a taxpayer to appeal from an
assessment on time rendered the assessment final, executory and
demandable. Consequently, petitioner is precluded from disputing the
correctness of the assessment.

73.

CIR vs. FIRST EXPRESS PAWNSHOP COMPANY, INC.

G.R. Nos. 172045-46
June 16, 2009

FACTS
Petitioner CIR issued assessment notices against respondent First
Express Pawnshop Company, Inc. which respondent filed its written protest.
When CIR did not act on the protest during the 180-day period, respondent
filed a petition before the CTA.
Petitioner maintained that respondent is subject to 10% VAT based on
its gross receipts pursuant to RA 7716, or the EVAT Law and also cited BIR
Ruling No. 221-91 which provides that pawnshop tickets are subject to DST.
In 2003, respondent paid P27,744.88 as deficiency income tax
inclusive of interest.
ISSUE
W/N the assessment by petitioner has become final, executory and
demandable, hence, unappealable.
RULING
No. Section 228 of the Tax Code provides the remedy to dispute a tax
assessment within a certain period of time. It states that an assessment
may be protested by filing a request for reconsideration or reinvestigation
within 30 days from receipt of the assessment by the taxpayer. Within 60
days from filing of the protest, all relevant supporting documents shall have
been submitted; otherwise, the assessment shall become final.
In this case, respondent received the tax assessment on 3 January 2002 and
it had until 2 February 2002 to submit its protest. On 1 February 2002,
respondent submitted its protest and attached the GIS and Balance Sheet as
of 31 December 1998.
Within 60 days from the filing of protest or until 2 April 2002,
respondent should submit relevant supporting documents.
Respondent, having submitted the supporting documents together with its
protest, did not present additional documents anymore.
It cannot be said that respondent failed to submit relevant supporting
documents that would render the assessment final because when respondent
submitted its protest, respondent attached the GIS and Balance Sheet. The
BIR cannot demand what type of supporting documents should be
submitted.
Respondent has complied with the requisites in disputing an
assessment pursuant to Section 228 of the Tax Code. Hence, the tax
assessment cannot be considered as final, executory and demandable.

74.

RIZAL COMMERCIAL BANKING CORPORATION vs. CIR

G.R. No. 168498
April 24, 2007

FACTS
In 2001, petitioner RCBC received a Formal Letter of Demand the
respondent Commissioner of Internal Revenue for its deficiency taxes for the
year 1997.
Petitioner filed a protest and requested for reinvestigation which was
not acted upon by the respondent. Petitioner then filed in 2002 a petition for
review with the CTA for the cancellation of the assessments which was
dismissed because it was filed beyond the 30-day period following the lapse
of 180 days from petitioners submission of documents in support of its
protest. Petitioner did not file a motion for reconsideration or an appeal to
the CTA from the dismissal of its petition for review. Consequently, the
September 10, 2003 Resolution became final and executory.
Petitioner then filed a Petition for Relief from the judgement alleging
that counsels failure to file petition for review with the CTA within the period
was due to its counsels negligence, which was denied.
For resolution is petitioners Motion for Reconsideration of the Decision
affirming the Decision of the CTA En Banc, which affirmed the Resolutions of
the CTA Second Division, denying petitioners Petition for Relief from
Judgment and Motion for Reconsideration, respectively.
ISSUE
W/N petitioner timely filed its petition for review.
RULING
No. If the protest is denied in whole or in part, or is not acted upon
within one hundred eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may appeal to the
Court of Tax Appeals within 30 days from receipt of the said decision, or
from the lapse of the 180-day period; otherwise the decision shall become
final, executory and demandable.
In the case at bar, the protest was filed on July 20, 2001. From that
date, RCBC had until September 18, 2001 (60 days) to submit supporting
documents. There was no showing that RCBC submitted any such
documents. But assuming it submitted said documents on September 18,
2001, the 180 day period for the CIR to decide shall commence on that date
hence the 180 day period has lapsed on March 17, 2002. Thereafter, RCBC
has 30 days to appeal the inaction of the CIR (30 days from the lapse of the
180 day period) or until April 16, 2002. RCBC filed its appeal on April 30,
2002 which was already beyond the 30 day period. In such case, the
decision of the CIR indirectly denying the protest by reason of inaction is
already final and executory and is no longer appealable.

75.

CIR vs. CARLOS PALANCA, JR.,

G.R. No. L-16626
October 29, 1966

FACTS
In July, 1950, Don Carlos Palanca, Sr. donated in favor of his son, the
respondent, shares of stock in La Tondea, Inc. amounting to 12,500. For
failure to file a return on the donation within the statutory period, the
petitioner was assessed the gift tax, 25% surcharge and interest, which he
paid on June 22, 1955.
The respondent filed with the BIR his income tax return for 1955,
which was subsequently amended claiming an additional deduction
representing interest paid on the donee's gift tax. The claim for deduction
was denied. Meanwhile, the BIR considered the transfer of 12,500 shares of
stock to be a transfer in contemplation of death, the gift tax was applied to
his estate and inheritance tax liability.
The petitioner contends that the claim for refund has prescribed since
the same was filed outside the 30-day period. The prescriptive period
commenced to run on October 14, 1947 when the denial by the BIR of the
respondent Palanca's claim for refund in 1956. The case was filed with the
CTA only on August 13, 1958, then it had prescribed.
ISSUE
W/N the respondents claim for tax refund has prescribed.
RULING
No. The 30-day period under Sec. 11 of RA 1125 did not commence to
run in this incident. The original assessment for alleged gift tax liabilities was
subsequently abandoned and a new one was prepared and served on the
respondent. Considering that it is the interest paid on the estate and
inheritance tax that Palanca is claiming refund for, then the 30-day period
should be computed from the receipt of the final denial by the BIR of the
said claim. Palanca's claim was filed with the CTA even before it had been
denied by the petitioner or the BIR. The case was filed with the said court on
August 13, 1958 while the petitioner denied the claim subject of the said
case only on July 24, 1959.

76.

CIR vs. BURROUGHS LIMITED AND THE CTA

G.R. No. L-66653 June 19, 1986

FACTS
Sometime in March 1979, respondent Burroughs Limited branch office
applied with the Central Bank for authority to remit to its parent company
abroad, branch profit. Thus, in 1979, it paid the 15% branch profit
remittance tax.
Respondent filed a claim for refund, alleging that the 15% profit
remittance tax should have been computed on the basis of the amount
actually remitted (P6,499,999.30) and not on the amount before profit
remittance tax (P7,647,058.00).
Respondent then filed with petitioner, a petition for review for the
recovery of the above-mentioned amount.
ISSUE
W/N respondent is entitled to the claim for refund.
RULING
Yes. Sec. 24 (b) (2) (ii) of the NIRC states:
Sec. 24. Rates of tax on corporations....
(b) Tax on foreign corporations.
(2) (ii) Tax on branch profits remittances. Any profit remitted
abroad by a branch to its head office shall be subject to a tax of
fifteen per cent (15 %)
In a BIR ruling, the tax base upon which the 15% branch profits
remittance tax provided for under Section 24 (b) (2) of the 1977 Tax Code
shall be imposed on the branch profits actually remitted abroad and not on
the total branch profits out of which the remittance is to be made.

77.

PHILIPPINE BANK OF COMMUNICATIONS vs. CIR

G.R. No. 112024. January 28, 1999

FACTS
Petitioner PBCom filed its quarterly income tax returns for the first and
second quarters of 1985, reported profits, and paid its income tax.
Subsequently, however, PBCom suffered losses so that when it filed its
Annual Income Tax Returns for the years 1985 and 1986, it declared a net
loss, thereby showing no income tax liability.
But during these two years, PBCom earned rental income from leased
properties. The lessees withheld and remitted to the BIR withholding
creditable taxes.
In 1987, petitioner requested the CIR for a tax credit representing the
overpayment of taxes in the first and second quarters of 1985. Thereafter,
petitioner filed a claim for refund of creditable taxes withheld by their
lessees from property rentals.
Pending the investigation of the respondent CIR, petitioner instituted a
Petition for Review before the CTA, which was denied on the ground that it
was filed beyond the two-year reglementary period provided for by law.
ISSUE
W/N the period for filing a petition for review has prescribed.
RULING
Yes. Section 230 of the NIRC provides for the 2-year prescriptive
period for filing a court proceeding for the recovery of tax erroneously or
illegally collected and should be computed from the time of filing the
Adjustment Return and final payment of the tax for the year.
However, the CTA after examining the adjusted final corporate annual
income tax return for taxable year 1986, found out that petitioner opted to
apply for automatic tax credit. This was the basis used (vis-avis the fact that
the 1987 annual corporate tax return was not offered by the petitioner as
evidence) by the CTA in concluding that petitioner had indeed availed of and
applied the automatic tax credit to the succeeding year, hence it can no
longer ask for refund, as to the two remedies of refund and tax credit are
alternative.

78.

FLUOR DANIEL PHILIPPINES INC. vs. CIR

CTA Case No. 7793
April 17, 2012

FACTS
A Formal Letter of Demand was sent by respondent assessing
petitioner deficiency taxes for 2004 comprising Income Tax, VAT and
Expanded Withholding Tax. Included in the EWT assessment was the alleged
deficient on petitioners payments of maintenance service fees for software
maintenance to Fluor International, Inc. (FII). Respondent stating that since
there was no documentary evidence to show the true nature of the contract,
the fees should be treated as income from services and thus, subject to EWT
at 32%.
Petitioner then filed a protest requesting reinvestigation or
reconsideration and applied for abatement of penalties, surcharges and
interest. In response to petitioner's protest, respondent issued a Final
Decision on Disputed Assessment (FDDA) cancelling the deficiency EWT but
issuing an assessment for Final Withholding Tax (FWT) on the same software
fees albeit using a lower 15% rate under the RP-US Tax Treaty.
ISSUE
W/N petitioner was deprived of due process when the FDDA changed
the assessment from deficiency EWT to deficiency FWT
RULING
Yes. The change of the assessment in the FDDA itself constituted a
new assessment. As such, the taxpayer should have given the chance to
dispute the same via the process laid down in the Tax Code which is by way
of filing a protest. Given that this is was not complied with and what was
issued was already an FDDA, the circumstances certainly deprived the
petitioner of a reasonable opportunity to be heard and submit evidence in
support of its defense which is a clear violation of due process requirements.

79.

CIR vs. ABUNDANCE PROVIDERS AND ENTREPRENEURS

CORPORATION (APEC)
CTA EB No. 999
August 18, 2014

FACTS
In 2004, respondent APEC received a Final Assessment Notice (FAN)
from the BIR assessing APEC for deficiency VAT for the year 2001.
Subsequently, respondent executed a waiver of the defense of prescription.
However, the examiners of the BIR subsequently served upon respondent a
formal letter of demand and assessment notice.
APEC filed its protest which was denied by the BIR and further stated
that the case shall be forwarded to the Legal Service of the BR since it
involves an industry issue.
In 2010, a representative of the petitioner CIR served upon APEC a
warrant of distraint and/or levy enforcing the collection of the deficiency tax.
APEC thereafter filed a Petition for Review to annul the warrant, which was
granted.
ISSUE
W/N the period to collect the deficiency tax by distraint and/or levy
has prescribed.
RULING
Yes. Sec. 222(c) of the NIRC provides:
SEC. 222. Exceptions as to Period of Limitation of Assessment and
Collection of Taxes. xxx
(c) Any internal revenue tax which has been assessed within the
period of limitation as prescribed in paragraph (a) hereof may be
collected by distraint or levy or by a proceeding in court within five (5)
years following the assessment of the tax.
xxx
In this case, when the formal letter of demand and assessment notice
were issued and received by respondent in 2004, the CIR had a period of
5years to enforce collection of the deficiency tax. The warrant of distraint
and/or levy was only served after the lapse of 5years.