TAX LAW 1

Discussion Guide 2, September 2022

TAX ADMINISTRATION AND REMEDIES

A. Tax Administration

1. The Bureau of Internal Revenue; Organization; Jurisdiction, Power, and

Functions of the Commissioner of Internal Revenue
➢ It is the administrative agency of the government charged with the
primary function of administration of the national internal
revenue laws and regulations. For administrative purposes, the
Bureau is under the executive supervision and control of the
Department of Finance which oversees the administration of
national taxes in the Philippines.

➢ SEC. 2. POWERS AND DUTIES OF THE BUREAU OF INTERNAL

REVENUE. - The Bureau of Internal Revenue shall be under the
supervision and control of the Department of Finance and its
powers and duties shall comprehend:
1. assessment and collection of all national internal
revenue taxes, fees, and charges, and

2. enforcement of all forfeitures, penalties, and fines

connected therewith, including the execution of
judgments in all cases decided in its favor by the Court
of Tax Appeals and the ordinary courts.

The Bureau shall give effect to and administer the supervisory

and police powers conferred to it by this Code or other laws.

2. SEC. 3. CHIEF OFFICIALS OF THE BUREAU OF INTERNAL

REVENUE. - The Bureau of Internal Revenue shall have a chief to be
known as Commissioner of Internal Revenue, hereinafter referred to as
the Commissioner, and four (4) assistant chiefs to be known as Deputy
Commissioners.

a) Interpreting Tax Laws and Deciding Tax Cases

SEC. 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 Commissioner is vested with the following, subject to the

exclusive appellate jurisdiction of the Court of Tax Appeals:
1. power to decide disputed assessments,
2. refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or
3. other matters arising under this Code or other laws or
portions thereof administered by the Bureau of Internal
Revenue

b) Non-Retroactivity of Rulings

3. Rule-Making Authority of the Secretary of Finance

4. Doctrine of Exhaustion of Administrative Remedies
5. Court of Tax Appeals (CTA)
1. Exclusive Original and Appellate Jurisdiction Over Civil
Cases
2. Exclusive Original and Appellate Jurisdiction Over Criminal
Cases
3. Procedures
 1. Filing of an Action for Collection of Taxes
a) Internal Revenue Taxes
b) Local Taxes
4. Civil Cases
1) Who May Appeal, Mode of Appeal, and
Effect of Appeal
2) Suspension of Collection of Taxes
3) Injunction Not Available to Restrain
Collection
5. Criminal Cases
1) Institution and Prosecution of Criminal
Action
2) Institution of Civil Action in Criminal
Action
3) Period to Appeal
6. Appeal to the CTA En Banc
7. Petition for Review on Certiorari to the SC

6. Statute of Limitations

1. Assessment of Internal Revenue Taxes

a) Procedural Due Process in Tax Assessments
b) Requisites of a Valid Assessment
c) Tax Delinquency vs. Tax Deficiency
d) Prescriptive Period for Assessment
(1) False Returns vs. Fraudulent
Returns vs. Non-Filing of Returns
(2) Suspension of the Running of
Statute of Limitations
2. Period within which the government could collect (Sections 203,
222, NIRC)
1. Republic v. Hizon, GR No. 130430, 13 December 1999
2. CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA
825
3. PNOC v. CA, GR No. 109976, 26 April 2005
4. BPI v. CIR, GR No. 174942, 7 March 2008
3. Period within which the action may be filed
7. Civil Cases (Sections 203, 222, NIRC)
1. ii. Criminal Cases (Title X, Sec 281, NIRC)
2. Cases:
1. Republic v. Hizon, GR No. 130430, 13 December
a) 1999 (re approval of filing of civil and criminal
action)
2. CIR v. La Suerte Cigar, G.R. No. 144942, 4 July 2002
a) (Re participation of the Office of the Solicitor
General)
3. PNOC v. Court of Appeals, G.R. No. 109976, Apr 26, 2005
4. Lim v. CA, GR Nos. 48134-37, 18 October 1990, 190
a) SCRA 616 (re prescription of criminal actions,
Section 281,
b) NIRC)
5. Marcos II v. CA, GR No. 120880, 5 June 1997 (re
enforcement of tax liability during pendency of probate
proceedings)
8. Remedies of the Taxpayer

I. Before Payment
2. Protest (Section 228, NIRC)
9. Requirements of a valid protest—Rev. Regs. 12-85
10. Cases
 1. CIR v. Wyeth Suaco Laboratories, GR No. 76281, 30
Sept 1991 CIR v. Atlas Consolidated Mining, GR Nos.
31230-32, 14 Feb 2000
2. Lascona v. CIR, CTA Case 5777, 4 January 2000 vis-
à-vis Section 7 (2), RA 9282 and the Revised Rules of
Procedure of the CTA, AM No. 05-11-07-CTA
3. CIR v. Union Shipping, GR No. 66160, 21 May 1990,
185 SCRA 548 and CIR v. IsabelaCultural
Corporation, GR No. 135210, 11 July 2001
4. Protector’s Servicesv. CA, GR No. 118176, 12 April
2000

2. Compromise

3. II. After Payment

1. Refund (Section 229, NIRC)
11. Must be strictly construed against the taxpayer—
1. Citibank, NA v. Court of Appeals, GR No. 107434, 10
October 1997, 280 SCRA 459;
2. FEBTC v. CIR, GR No. 138919, 02 May 2006
2. Grounds for filing a claim for refund (See Section 229,
1. Engtek Phils v. CIR, CTA Case No. 6644, 26 January
2005)
3. Period within which to file a claim for refund
2. General rule is two years from the date of payment
a) ACCRA Investments Corporation v. Court of
Appeals, GR No. 96322, 20 December 199
b) CIR v. TMX Sales, 15 January 1992
c) CIR v. PhilAm Life, 29 May 1995
d) CIR v. CA and BPI, GR No. 117254, 21
January 1999
3. exception to the 2-year period:
a) CIR v. PNB, GR No. 161997, 25 October 2005
b) CIR v. Primetown Property, GR No. 162155,
28 Aug 2007.
4. In case of amended returns
5. In case of taxpayers contemplating dissolution
a) BPI v. CIR, 28 August 2001; See also:
Sections 52(c) and 56(a)
2. Who has the personality to file a claim for refund?
a) CIR v. Procter and Gamble, GR No. 66838, 16
Dec 1991; CIR v. CA, 20 January 1999
b) Silkair v. CIR, GR Nos. 171383 & 172379, 14
Nov 2008
3. Is setting-off of taxes against a pending claim for refund
allowed?
a) —The doctrine of equitable recoupment—
b) Philex Mining Corp. v. CIR, GR No. 125704, 28
Aug 1998
4. Is automatic application of excess tax credits allowed?
(Sec. 76)
a) Calamba Steel v. CIR, GR No. 151857, 28
April 2005
b) Systra Philippines v. CIR, GR No. 176290, 21
September 2007 CIR v. BPI, GR No. 178490,
07 July 2009 (Irrevocability Rule)
5. Effect of existing tax liability on a pending claim for refund
a) CIR v. CA and Citytrust, GR No. 106611, 21
July 1994
6. Period of validity of a tax refund/credit (Sec. 230, NIRC)
7. Returns are not actionable documents for purposes of the
rules on civil procedure and evidence
 1) Aguilar v. CIR, CA Case dated 30
March 1990)
8. Refund and Protest are mutually exclusive remedies—
a) Case: Vda. De San Agustin v. CIR, 10
September 2001
2. k. Is the taxpayer entitled to claim interest on the
refunded tax? (Sec. 79 (c) 2, NIRC)

3. Other Remedies
12. Action to Contest Forfeiture of Chattel (Sec. 231)
13. Redemption of Property Sold (Sec. 214)

14. C. Remedies available to the government

1. No injunction to restrain collection of taxes (Sec. 218,
NIRC)
2. Period within which the government could collect (Sections
203, 222, NIRC)
3. Republic v. Hizon, GR No. 130430, 13 December 1999
4. CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA
825
5. PNOC v. CA, GR No. 109976, 26 April 2005
6. BPI v. CIR, GR No. 174942, 7 March 2008
15. Overview of Remedies (Section 205)
1. Tax Lien (Section 219, NIRC)
16. CIR v. NLRC, GR No. 74965, 9 November 1994
1. Compromise
2. Distraint and/or Levy
3. Civil Action
4. Criminal Action
5. Forfeiture
17. Suspension of business operations
18. Enforcement of administrative fines
19. Administrative Remedies in Detail (Sections 206-217, NIRC)
1. Distraint
1. Actual
2. Constructive
2. Levy
3. Garnishment
20. Judicial Remedies in Detail (Section 220, NIRC)
1. Period within which the action may be filed
21. Civil Cases (Sections 203, 222, NIRC)
1. ii. Criminal Cases (Title X, Sec 281, NIRC)
22. Where should these cases be filed?
23. Criminal Cases (See the imposable penalty vis-à-vis the jurisdiction of
courts)
24. Civil Cases (Consider the amount of tax sought to be collected vis-à-vis
the jurisdiction of courts, together with the provisions of RA9282)
25. Cases:
1. Republic v. Hizon, GR No. 130430, 13 December
1. 1999 (re approval of filing of civil and criminal action)
26. CIR v. La Suerte Cigar, G.R. No. 144942, 4 July 2002
1. (Re participation of the Office of the Solicitor General)
27. PNOC v. Court of Appeals, G.R. No. 109976, Apr 26, 2005
28. Lim v. CA, GR Nos. 48134-37, 18 October 1990,
1. (re prescription of criminal actions, Section 281,NIRC)
2. Marcos II v. CA, GR No. 120880, 5 June 1997 (re
enforcement of tax liability during pendency of probate
proceedings)
3. Judy Anne Santos v. People, GR No. 173176, 26 August
2008

29. Effects of failure to pay the tax on time:

 1. Additions to the tax (Chapter I, Title X, NIRC)
1. Surcharges
2. Ordinary (Section 248A, NIRC)
30. Failure to pay tax on time as required by the tax code or the regulations
1. ii. Failure to pay the deficiency tax within the time fixed in
the notice
2. iii. Filing of the return with the wrong office
2. Fraud Penalty (Section 248B, NIRC)
31. CIR v. Javier Jr., GR No. 78953, 31 July 1991.199 SCRA 825
1. Interest (Section 249, NIRC)
1. In General
2. Deficiency Interest
3. Delinquency Interest
4. On Extended Payments
2. Compromise Penalties
3. Effect of failure to file information returns (Section 250, NIRC)