TAXATION LAW II 3B

CASE DIGEST
GENOVIS, Joatham | FERRER, Vana Samantha | ORBITA, Avytte Gail | SULTAN, John Henrich

CASE:
Light Rail Transit Authority Vs. Bureau of Internal Revenue, represented by the
Commissioner of Internal Revenue; G.R. No. 231238. June 20, 2022

FACTS
1. The Regional Director of Revenue (Region VIII) issued a preliminary assessment
notice to herein petitioner, Light Rail Transit Authority (“Light Rail”) dated
December 8, 2008 for deficiency in income tax, value added tax, withholding tax
on compensation, expanded withholding tax, and withholding of value added
tax. Deficiencies amounted to Php 3,521,915.61.
2. The RDR then issued a final assessment notice amounting to Php 3,555,982.19,
inclusive of interests.
3. Light Rail in response protested the formal assessment notice, which was later
denied by the RDR in a Final Decision on Disputed Assessment.
4. Light Rail thereafter filed an appeal to the CIR.
5. Pending the appeal, the OIC of the Revenue District Office of Region 8 issued a
preliminary collection notice for the amount of Php 9,279,619.86, payable within
10 days of the receipt of the collection letter.
6. Although Light Rail informed the Regional Director that it filed an appeal with
the CIR, the Revenue District Officer issued a “Final Notice Before Siezure,”
giving Light Rail 10 more days upon receipt of the Final Notice to settle its tax
liabilities.
7. Light Rail continues to contend that its appeal is still pending and it shall act on
the matter as soon as it receives the Commissioner’s decision.
8. The RDR then issues a warrant of distraint and/or levy against Light Rail, which
the latter sought reconsideration for.
9. The Revenue District Officer then forwarded the matter to a Revenue Officer for
reinvestigation, this was however later dropped for the reason of Light Rail’s
failure to submit the required documents. The Revenue District Officer then
declared the findings in the Final Decision on Disputed Assessment as final and
appealable.
10. Shortly after, the Regional Director, acting on appeal of Light Rail to the CIR
declared the case as final, executory, and demandable, for Light Rail’s failure to
submit the required documents.
11. Light Rail then filed a petition for review with the Court of Tax appeals.
However, the BIR filed a motion to dismiss for lack of jurisdiction. The BIR
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GENOVIS, Joatham | FERRER, Vana Samantha | ORBITA, Avytte Gail | SULTAN, John Henrich

contended that the reckoning point for filing a petition for review was on March
17, 2012 which was the day Light Rail received a copy of the Warrant for
Distraint and/or Levy. Light Rail subsequently argued that the reckoning point
for filing the petition for review was on August 12, 2014 which was the day it
received the letter dated June 13, 2014.

CTA RULINGS
1. Light Rail’s Petition for Review before the CTA Third Division
The Court agreed with the Bureau of Internal Revenue (BIR) and granted its
Motion to Dismiss for lack of jurisdiction, thereby dismissing the Light Rail’s
Petition for Review. Light Rail did not protest the Formal Assessment Notice,
rendering the assessment final and unappealable. Consequently, the CTA had no
jurisdiction over the cognizance of the Petition for Review.
2. Light Rail’s Motion for Reconsideration and Motion to Quash Warrant of
Distraint and/or Levy before the CTA Third Division
Denied. The CTA Division held that despite the filing of the protest to the Formal
Assessment Notice, the assessment against Light Rail had become final.
The Third Division held that the Final Notice Before Seizure is the decision
properly appealable to the Court of Tax Appeals
3. Petition for Review before the CTA En Banc
Denied for lack of merit. CTA En Banc emphasized that it may only take
cognizance of matters clearly within its jurisdiction, being a court of special
jurisdiction. Specifically, before it can take cognizance of an appeal, there must
first be a disputed assessment, followed by a ruling on the protest, either by the
Commissioner of Internal Revenue or one of their duly authorized
representatives. Petition for Review was deemed belatedly filed, and the
assessment final, demandable, and executory. Consequently, the Court of Tax
Appeals may no longer take cognizance of the Petition for Review

MAIN ISSUE/S:
1. Whether or not the Court of Tax Appeals had jurisdiction over petitioner Light
Rail Transit Authority's Petition for Review. Subsumed in this issue is whether or
not the Final Decision on the Disputed Assessment is the final decision of the
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CASE DIGEST
GENOVIS, Joatham | FERRER, Vana Samantha | ORBITA, Avytte Gail | SULTAN, John Henrich

respondent Commissioner of Internal Revenue appealable to the Court of Tax

Appeals.
2. Whether or not the right of respondent Bureau of Internal Revenue to assess the
petitioner Light Rail Transit Authority of deficiency taxes for the year 2003 had
already been prescribed.

RULING:
1. Yes. The final decision on the protest that can be appealed to the Court of Tax
Appeals was the June 30, 2014 letter rejecting the petitioner's appeal. The Court
of Tax Appeals had jurisdiction over the petitioner's Petition for Review
provided that it was filed within thirty days of receiving the June 30, 2014 Letter.
The term "Decisions of the Commissioner in cases involving disputed
assessments" refers to the Commissioner's decisions regarding the protest to the
assessment, not the assessment itself. The protest may be a request for
reconsideration or reinvestigation, and the decision on the protest—which may
also be made by a duly authorized Commissioner representative—must be final
and not merely tentative. The petitioner's appeal of the Final Decision on a
Disputed Assessment was ignored by the respondent in this instance. In
addition, this Court concludes that the petitioner made an honest decision to
wait for the Commissioner's final decision on its appeal in light of the
circumstances. We believe that the choice was made in good faith and not as a
legal maneuver to claim that the assessment had not yet been made final. The
petitioner's responses to the Revenue District Officer's Preliminary Collection
Letter and Final Notice Before Seizure demonstrate this. It will act on the matter
as soon as we receive the Commissioner's decision on our appeal, the petitioner
stated in both of its reply letters. In point of fact, the petitioner did not submit the
Petition for Review to the Court of Tax Appeals until after the June 30, 2014
Letter decided its May 6, 2011 appeal to the Commissioner's Office.

2. Yes. The question of whether the assessment had prescribed is premised on a

question of fact, i.e., the existence of the Waiver of Defense of Prescription signed
by petitioner on September 13, 2006. Since you/your authorized representative
had executed a waiver of the defense of prescription under the statute of
limitations prescribed in Sections 203 and 222, and other related provisions of the
National Internal Revenue Code, on September 13, 2006 and have consented to
 TAXATION LAW II 3B
CASE DIGEST
GENOVIS, Joatham | FERRER, Vana Samantha | ORBITA, Avytte Gail | SULTAN, John Henrich

the assessment and/or collection of tax or taxes of said year which may be found
due after investigation/reinvestigation/re-evaluation at any time before or after
the lapse of the period of limitations fixed by said sections of the National
Internal Revenue Code but not later than December 31, 2008, the period of
prescription, therefore, is suspended from the date of execution up to December
31, 2008. Petitioner did not controvert this in its protest to the Preliminary
Assessment Notice. Hence, this statement is deemed admitted by the petitioner.
The petitioner, having allowed the extension of the prescriptive period under
Sections 203 and 222 of the Tax Code up to December 31, 2008, the assessment
made on December 8, 2008, was valid.

QUESTION:
May a taxpayer file a Petition for Review before CTA even after the lapse of the
180-day period to resolve protests of assessment?

Answer: Yes. Taxpayers in the Philippines have 180 days from the date they filed a
protest with the Bureau of Internal Revenue (BIR) to give the BIR a chance to look over
the assessment and make a decision. The taxpayer can appeal the denial to the Court of
Tax Appeals (CTA) in the event that the BIR does not respond to the protest within the
allotted 180 days.

However, the taxpayer may still choose to file a Petition for Review before the CTA even
after the 180-day period has expired if the BIR does not act within that time. The
taxpayer may proceed with the appeal in this instance by arguing that the BIR's inaction
amounted to a rejection of the protest.

It is essential to keep in mind that submitting a Petition for Review to the CTA even
after the 180-day period has expired is not automatic, and the taxpayer must still adhere
to the appropriate procedures for appealing to the CTA. To support their claim that the
BIR's inaction amounted to a denial of the protest, the taxpayer may also need to
provide evidence.