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III.
Section 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to interpret the
provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner,
subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties
imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by
the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the
Court of Tax Appeals.
CHAPTER III - PROTESTING AN ASSESSMENT, REFUND, ETC.
Section 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that
proper taxes should be assessed, he shall first notify the taxpayer of his findings: provided, however, That a
preassessment notice shall not be required in the following cases:
(a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as
appearing on the face of the return; or
(b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the
withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period
was determined to have carried over and automatically applied the same amount claimed against the estimated tax
liabilities for the taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not been paid; or
(e) When the article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital
equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the
assessment shall be void.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to
said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an
assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within
thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules
and regulations.
Within sixty (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 thirty (30) days from receipt of the said decision, or from the lapse of one hundred eighty (180)-day period;
otherwise, the decision shall become final, executory and demandable.
Sec. 7, Rep. Act No. 1125, as amended by Rep. Act No. 9282
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by
appeal, as herein provided.
(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the
National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;
(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money
charges; seizure, detention or release of property affected fines, forfeitures or other penalties imposed in relation
thereto; or other matters arising under the Customs Law or other law or part of law administered by the Bureau of
Customs; and
(3) Decisions of provincial or city Boards of Assessment Appeals in cases involving the assessment and taxation of
real property or other matters arising under the Assessment Law, including rules and regulations relative thereto.
Lascona Land Co., Inc. v. CIR, CTA Case No. 5777, Jan. 4, 2000
FACTS The Commissioner of Internal Revenue (CIR) issued an assessment against Lascona Land Co., Inc.
(Lascona) informing the latter of its alleged deficiency income tax for the year 1993 in the amount of P753,266.56.
Consequently, on April 20, 1998, Lascona filed a letter protest, but was denied by Norberto R. Odulio, Officer-inCharge (OIC), Regional Director, Bureau of Internal Revenue, Revenue Region No. 8, Makati City. On April 12, 1999,
Lascona appealed the decision before the CTA. Lascona alleged that the Regional Director erred in ruling that the
failure to appeal to the CTA within thirty (30) days from the lapse of the 180-day period rendered the assessment final
and executory. The CIR, however, maintained that Lasconas failure to timely file an appeal with the CTA after the
lapse of the 180-day reglementary period provided under Section 228 of the National Internal Revenue Code (NIRC)
resulted to the finality of the assessment.
ISSUE Whether the subject assessment has become final, executory and demandable due to the failure of petitioner
to file an appeal before the CTA within thirty (30) days from the lapse of the One Hundred Eighty (180)-day period
pursuant to Section 228 of the NIRC.
HELD NO.
[T]he Court has held that in case 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 Court of Tax Appeals 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.
Therefore, as in Section 228, when the law provided for the remedy to appeal the inaction of the CIR, it did not intend
to limit it to a single remedy of filing of an appeal after the lapse of the 180-day prescribed period. Precisely, when a
taxpayer protested an assessment, he naturally expects the CIR to decide either positively or negatively. A taxpayer
cannot be prejudiced if he chooses to wait for the final decision of the CIR on the protested assessment. More so,
because the law and jurisprudence have always contemplated a scenario where the CIR will decide on the protested
assessment.
Rizal Commercial Banking Corp. v. CIR, G.R. No. 168498, April 24, 2007
Facts: RCBC received a Formal Letter of Demand dated May 25, 2001 from the respondent CIR for its tax liabilities
particularly for Gross Onshore Tax in the amount of P53,998,428.29 and Documentary Stamp Tax for its Special
Savings Placements in the amount of P46,717,952.76, for the taxable year 1997.Petitioner filed a protest
letter/request for reconsideration/reinvestigation pursuant to Section 228 of the NIRC. As the protest was not acted
upon by the respondent, petitioner filed a petition for review with the CTA for the cancellation of the assessments.
Respondent filed a motion to resolve first the issue of CTAs jurisdiction, which was granted by the CTA in a
Resolution dated September 10, 2003.8 The petition for review was dismissed because it was filed beyond the 30day period following the lapse of 180 days from petitioners submission of documents in support of its protest, as
provided under Section 228 of the NIRC and Section 11 of R.A. No. 1125, otherwise known as the Law Creating the
Court of Tax Appeals. Petitioner did not file a motion for reconsideration or an appeal to the CTA En Banc from the
dismissal of its petition for review. Consequently, the September 10, 2003 Resolution became final and executory on
October 1, 2003 and Entry of Judgment was made on December 1, 2003.9
Thereafter, respondent sent a Demand Letter to petitioner for the payment of the deficiency tax assessments. On
February 20, 2004, petitioner filed a Petition for Relief from Judgment on the ground of excusable negligence of its
counsels secretary who allegedly misfiled and lost the September 10, 2003 Resolution. The CTA Second Division set
the case for hearing on April 2, 2004 during which petitioners counsel was present. Respondent filed an Opposition
while petitioner submitted its Manifestation and Counter-Motion. On May 3, 2004, the CTA Second Division rendered
a Resolution denying petitioners Petition for Relief from Judgment. Petitioners motion for reconsideration was
denied in a Resolution dated November 5, 2004,16 hence it filed a petition for review with the CTA En Banc, docketed
as C.T.A. EB No. 50, which affirmed the assailed Resolutions of the CTA Second Division in a Decision dated June 7,
2005.
Ruling: As provided in Sec. 228, the failure of the taxpayer to appeal from an assessment on time rendered the
assessment final, executory and demandable. RCBC is precluded from disputing the correctness of the assessment.
While the right to appeal a decision of the Commissioner of CTA is merely a statutory remedy, nevertheless the
requirement that it must be brought within 30 days is jurisdictional. If a statutory remedy provides as a condition
precedent that the action to enforce it must be commenced within a prescribed time, such requirement is jurisdictional
and failure to comply therewith may be raised in a MTD.
Shorter digest:
On July 5, 2001, the Commissioner of Internal Revenue (CIR) issued a final assessment notice (FAN) to the Rizal
Commercial Banking Corporation (RCBC) demanding a total tax liability of about P100 million. On July 20, 2001
(within the 30 day period from issuance of FAN to file a protest), RCBC filed a protest. The CIR never acted on the
protest. On April 30, 2002, RCBC filed an appeal with the Court of Tax Appeals (CTA).
ISSUE: Whether or not RCBC filed a timely appeal.
HELD : No. Under the law, after the lapse of 180 days within which the CIR is supposed to rule on the protest yet
the CIR did not, the taxpayer has 30 days from said lapse to file an appeal with the CTA. 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.
BRIEF 2: The CIRs failure to appreciate the supporting documents presented by the taxpayer is not tantamount to
denial of due process.
The Commissioner of Internal Revenues non-appreciation of taxpayers arguments and supporting documents
submitted before the Court of Tax Appeals which led to the subsequent issuance of identical Preliminary Assessment
Notice (PAN), Final Assessment Notice (FAN) and Collection Letter cannot in any way be construed as deprivation of
the taxpayers right to due process absent any proof of any irregularity in the performance of CIRs official duties.
Thus, the presumption of regularity in the performance of the CIRs official duties shall therefore stand.
In Bank of the Philippine Islands vs. CIR, the Supreme Court held that a Revenue Memorandum Circular is merely an
administrative interpretation of the law which cannot be given effect if it is contrary to the Revenue Regulations.
Ayala Securities Corp filed its ITR w/ the CIR for the fiscal year w/c ended on Sept 30, 1955.
Attached to its ITR was the audited financial statements showing a surplus of P2M+.
Income tax due on the return was duly paid w/in the period prescribed by law.
CIR then advised Ayala for the assessment of P758k unpaid tax on its accumulated surplus.
Ayala protested ate assessment and sought reconsideration given that the accumulation was 1) for a bona
fide business purpose and not to avoid imposition of tax, and 2) assessment was issued beyond 5 yrs.
CTA and SC both held that the assessment was made beyond the 5-year period and thus had no binding
force and effect.
I: W/n the assessment was done beyond the prescriptive period
R: YES.
In this case, the applicable provision is NOT Sec 332a but Sec 331.
Sec 332 should apply when there is fraud / falsity on the return with intent to evade payment of tax.
There is no evidence presented by the CIR in this case as to any fraud/falsity on the return w/ intent to avoid
payment.
Fraud is a question of fact, circumstances must be proven and alleged.
In this case, the assessment issued on Feb 21, 1961, received by Ayala on March 22, 1961, was made
BEYOND the 5 year period prescribed under Sec331 (Ayala could file its income tax on or before Jan 1956
thus, assessment must be made NOT later than Jan 1961). Thus, it was no longer binding on Ayala Securities.
of the revised assessment in a letter to the Commissioner dated June 6, 1963. The Commissioner, however, in a
letter dated June 28, 1963 denied the request for recomputation.
Petitioner appealed to the CTA which was subsequently dismised on the ground that the appeal was filed beyond the
thirty-day period of appeal provided by Sec. 11 of Republic Act 1125.
Issue:
WON the petitioner's appeal to the CTA was time-barred.
Ruling:
YES. To sustain the petitioner's contention that the Commissioner's letter of June 28, 1963 denying its request for
further amendment of the revised assessment constitutes the ruling appealable to the tax court and that the thirty-day
period should, therefore, be counted from July 16, 1963, the day it received the June 28, 1963 letter, would, in effect,
leave solely to the petitioner's will the determination of the commencement of the statutory thirty-day period, and
place the petitioner and for that matter, any taxpayer in a position, to delay at will and on convenience the
finality of a tax assessment. This absurd interpretation espoused by the petitioner would result in grave detriment to
the interests of the Government, considering that taxes constitute its life-blood and their prompt and certain
availability is an imperative need.