PART I REMEDIES UNDER THE NIRC I.

Assessment of Internal Revenue Taxes

A. Definition/Nature/effect/Basis Sections 4-7, 203, 222, 223, 228, 232, 235, 266 of the NIRC Revenue Regulations (RR) No. 12-99 dated September 6, 1999 http://www.bir.gov.ph/taxpayerrights/taxpayerrights.htm 1. Tax Audit Process 2. Letter of Authority/Audit Notice/Tax Verification Notice Revenue Audit Memorandum Order No. 1-00 Revenue Memorandum Order No. 44-2010 dated May 12, 2010 Revenue Memorandum Order No. 69-2010 dated August 11, 2010 CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010 3. Tax Assessment CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999) 4. 5. 6. 7. Pre-assessment Notice (PAN)/when not required Notice of Assessment or Formal Assessment Notice (FAN) Deficiency vs. Delinquency Jeopardy Assessment Sec. 3 (1)(a) of RR No. 30-02 dated December 16, 2002

8. Power of the Commissioner to assess deficiency tax / best evidence obtainable Revenue Memorandum Circular No. 23-00 dated November 27, 2000 Bonifacio SyPo vs. CTA (164 SCRA 524) Fitness By Design, Inc. vs. CIR (GR No. 177982 dated October 17, 2008) 9. Rule on Amendment of Returns 10. Power to issue Subpoena Duces Tecum Revenue Memorandum Order No. 002-08 dated January 8, 2008 Revenue Memorandum Order No. 045-10 dated May 12, 2010 Revenue Memorandum Order No. 088-10 dated December 22, 2010 B. Period to assess deficiency tax 1. Prescription a. Rationale/Construction/Interpretation Republic vs. Ablaza (108 Phil 1105) b. Ordinary 3 years from date of filing (Sec. 203, NIRC) c. Extraordinary 10 years from discovery of fraud, falsity, or omission (see also Sec. 248(B) d. Counting of periods (Art. 13 of NCC vs. Sec. 31 of Revised Admin Code)

CIR vs. Primetown Property Group (GR No. 162155, August 28, 2007) e. Rule if wrong returns/amended return CIR vs. Ayala Securities (GR No. L-29485, dated November 21, 1980) Butuan Sawmill, Inc. vs. CTA (GR No. L-20601, February 28, 1966) CIR vs. Phoenix (GR No. L-19727, May 20, 1965) CIR vs. Gonzales (18 SCRA 757) 2. Suspension of prescriptive periods/ exceptions Secs. 203, 222 and 223 NIRC Revenue Memorandum Order No. 20-90, as amended by Revenue Delegation Authority Order No. 05-01 dated August 2, 2001 (Execution of waiver of statute of limitations) Cases on Sec. 222 and 223: Republic vs. Ret (GR No. L-13754 dated March 31, 1962) BPI vs. CIR (GR No. 139736, October 17, 2005) Continental Micronesia, Inc. Phil. Branch vs. CIR (CTA Case No. 6191, March 22, 2006) Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004) CIR vs. Kudos Metal (GR No. 178087, May 5, 2010) Aznar vs. CTA (58 SCRA 519) Republic vs. Ker (18 SCRA 208) CIR vs. Suyoc (104 Phil. 819) CIR vs. Phil Global Communication (GR No. 167146, October 31, 2006) C. Requisites of a valid assessment Sec. 3 of RR No. 12-99 1. Due Process Collector vs. Benipayo (4 SCRA 182) CIR vs. Enron Subic (GR No. 166387 dated January 19, 2009) CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006) A Brown Co., Inc. vs. CIR (CTA Case No. 6357, June 7, 2004) CIR vs. Menguito (GR No. 167550, September 17, 2008) CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010 2. Power of CIR to issue assessments Meralco vs. Savellano (117 SCRA 804) Maceda vs. Macaraig (197 SCRA 771) 3. Modes of Service of Assessments 4. When Assessment made Nava vs. CIR (GR No. L-19470, January 30, 1965) Barcelon, Roxas Securities vs. CIR, (GR No. 157064, dated August 7, 2006)

II. Protesting an assessment/ Remedy BEFORE payment A. How to protest or dispute an assessment administratively Sec. 228, NIRC Sec. 3.1.5, RR No. 12-99 1. When to file protest within 30 days from receipt of the FAN 2. Where to file 3. Reinvestigation vs. Reconsideration BPI vs. CIR (GR No. 139736, October 17, 2005) 4. Other requirements a. Submission of relevant documents b. Payment of protest not required under the NIRC 5. Effects of filing of the protest 6. Effects of failure to file protest / failure to submit relevant documents Marcos II vs. CA (GR No. 120880 dated June 5, 1997) Republic vs. Ker (18 SCRA 208) Prulife of UK Insurance Corp vs. CIR (CTA Case No. 6774 dated September 11, 2007) ABN-AMRO Savings Bank Corp vs. CIR (CTA Case No. 7089 dated September 10, 2008) CIR vs. First Express Pawnshop (GR Nos. 172045-06 dated June 16, 2009) B. Commissioner of Internal Revenue renders a decision on the disputed assessment Oceanic Wireless Network, Inc. vs. CIR (GR No. 14380, dated December 9, 2005) C. Remedy of the taxpayer Sec. 3.5.1, RR No. 12-99 Sec. 228 of the NIRC RA No. 9282, as amended by RA No. 9503 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on September 16, 2008 1. If protest is expressly denied 2. CIRs actions equivalent to denial of protest 3. CIR fails to act on the protest within 180 days from submission of relevant documents Lascona Land Co. Inc. vs. CIR (CTA Case No. 5557, January 4, 2000) RCBC vs. CIR (GR No. 168498, April 24, 2007) 4. Remedy in case CIR files a case or issues a warrant of distraint or levy 5. Effect of failure to appeal on time CIR vs. Concepcion (22 SCRA 1058) Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004) 6. Matter appealable to the CTA 7. Appeal to the CTA En Banc / Supreme Court Fishwealth Canning Corp. vs. CIR (GR No. 179343 dated January 21, 2010) Allied Banking Corporation vs. CIR (GR No. 175097 dated February 5, 2010)

Republic vs. Lim Tian Teng Sons (GR No. L-21731 dated March 31, 1966) Advertising Associates vs. CA (133 SCRA 765) CIR vs. Algue (158 SCRA 9) Yabes vs. Flojo (GR No. L-46954, July 20, 1982) CIR vs. Union Shipping (185 SCRA 547) CIR vs. Isabela Cultural Corp. (GR No. 135210, July 11, 2001) D. Non-retroactivity of rulings (Sec. 246, NIRC) 1. BIR Rulings 2. Rulings of first impression (Sec. 7(B) NIRC) 3. Review/Appeal to Sec. Of Finance (Sec. 4, NIRC) CIR vs. Phil. Healthcare Providers (GR No. 168129, April 24, 2007) Phil. Bank of Communications vs. CIR (GR No. 112024, January 28, 1999) CIR vs. CA (GR No. 117982, February 6, 1997) [read also concurring opinion of Justice Vitug] CIR vs. Burmeister and Wain GR No. 153205 dated Jaunary22, 2007

III. Remedies Available to the Government A. Prescriptive period to collect Sec. 222, NIRC Republic vs. Hizon (GR No. 130430. December 13, 1997) CIR vs. Hambrecht & Quist Philippines, Inc. (GR No. 169225 November 17, 2010) B. Administrative remedies / Summary Remedies Secs. 205-217 1. Distraint of personal property Secs. 205-207, 217, 208-209, 210, 212, NIRC Revenue Memorandum Circular No. 5-01 dated February 19, 2001 2. Levy of Real Property Secs. 205-207, 217, 208-209, 213-214, NIRC 3. Forfeiture Sec. 215, NIRC Castro vs. CIR (GR No. L-12174, April 26, 1962) 4. Tax lien Sec. 219, NIRC Republic vs. Enriquez (166 SCRA 608) CIR vs. NLRC (238 SCRA 42) Hong Kong Shanghai Bank vs. Rafferty (39 SCRA 145) 5. No injunction to restrain collection of taxes Sec. 218, NIRC

Rule 10, Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on September 16, 2008 Revenue Memorandum Order No. 42-10 dated May 4, 2010. C. Judicial Remedies Sec. 205 Secs. 220-221, NIRC Republic vs. Hizon (GR No. 130430 December 13, 1997) Mambulao Lumber vs. Republic (132 SCRA 1) Fernandez Hermanos vs. CIR (GR No. L-21551, September 30, 1969) PNOC vs. CIR (GR No. 109976, April 26, 2005)

IV. Statutory Offenses and Penalties A. Civil Penalties / Surcharge / Interest Secs. 247-251, NIRC RR No. 12-99 1. Applicable Interest Rate 2. How to compute interest 3. Rules on interest BPI vs. CIR (GR No. 137002, July 27, 2006) 4. Deficiency vs. Delinquency Tax 5. Surcharge: 25% or 50% Sec. 248, NIRC Castro vs. CIR (GR No. L-12174, April 26, 1962) a. False vs. Fraudulent return b. Fraud Assessment c. Mandatory imposition of penalties Phil. Refining Co. vs. CA (GR No. 118794 dated May 8, 1996) d. When penalties may be waived Lhuillier Pawnshop vs. CIR (GR No. 166786 dated September 11, 2006) e. Rule on prima facie fraud Sec. 248 (B), NIRC Aznar vs.CIR (58 SCRA 519) Javier vs. CIR (199 SCRA 824) B. Crimes / Offenses / Penalties / Forfeitures Secs. 220-221, 224-226, NIRC Secs. 253-281, NIRC Revenue Memorandum Circular No. 101-90 dated November 26, 1990 1. Precondition before a criminal case may be filed

Ungab vs. Cusi (97 SCRA 877) CIR vs. CA (257 SCRA 200) CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999) Adamson vs. CA (GR No. 120935, May 21, 2009) 2. Compromise Penalty a. Nature and enforcement Revenue Memorandum Order No. 19-07 dated August 8, 2007 CIR vs. Liangga Bay Logging (GR No. L-35266, January 21, 1991) 3. Elements of tax evasion CIR vs. The Estate of Benigno Toda, Jr. (GR No. 147188, September 14, 2004) 4. Persons liable in case taxpayer is a juridical entity 5. Payment of tax in criminal cases Sec. 253 (a), NIRC Sec. 205 (b) last paragraph Republic vs. Patanao (GR No. L-22356, July 21, 1967) Castro vs. CIR (GR No. L-12174, April 26, 1962) 6. Crimes under Secs. 254 and 255 7. Civil liability in criminal cases People vs. Galero (CTA Criminal Case No. O-055. September 30, 2009) People vs. Mendez (CTA Criminal Case Nos. O-013 &O-015, January 5, 2011) People vs. Kintanar (CTA Criminal Case Nos. O-031-& O-032 dated September 27, 2010) 8. Prescription of violations of the NIRC Lim vs. CA (190 SCRA 616)

V. Claims for refund and credit of taxes/Remedy AFTER payment A. Who may file claim for refund/tax credit 1. Basis of Tax Refunds CIR vs. Acesite Phils. (GR No. 147295, February 16, 2007) 2. Taxpayer/withholding agent CIR vs. Procter & Gamble (204 SCRA 377) 3. Requisites for a valid claim for refund Koppel (Phils) vs. CIR (GR No. L-10550, September 19, 1961) CIR vs. Far East Bank GR No. 173854 March 15, 2010 CIR vs. Concepcion (22 SCRA 1058) CIR vs. CA (234 SCRA 348) 4. Refunds where written claim is not needed

Sec. 204 (3), NIRC Sec. 229, NIRC Vda de San Agustin vs. CIR, GR No. 138485, September 10, 2001 5. Refunds of Corporate taxpayers/Irrevocability Rule Sec. 76, NIRC ACCRA Investments vs. CA (204 SCRA 957) CIR vs. TMX Sales (205 SCRA 184) Systra Phils. Inc. vs. CIR (GR No. 176290, September 21, 2007) Sithe Phils. Holdings vs. CIR (CTA Case No. 6274, April 4, 2003) BPI-Family Savings Bank, Inc. vs. CA, CTA and CIR (GR No. 122480, April 12, 2000) Philam Asset Management, Inc. vs. CIR (GR Nos. 156637/162004, December 14, 2005) CIR vs. BPI (GR No. 178490, July 7, 2009) Asia World Properties vs. CIR (GR No. 171766, July 29, 2010) 6. Rule in case of Merger/Corporate taxpayers contemplating dissolution Sec. 52 (C), NIRC BPI vs. CIR (GR No. 144653, August 28, 2001) 7. When 2 year period does not apply CIR vs. PNB (GR No. 161997, October 25, 2005) 8. Remedy of the taxpayer Sec. 229, NIRC RA No. 9282, as amended by RA No. 9503 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on September 16, 2008 a. CIR renders a decision b. CIR does not render a decision c. Appeal to the CTA 9. Issuance of Tax Credit Certificate Secs.203 (C), 230, NIRC RR No. 05-00 dated July 19, 2000 a. b. c. d. e. f. Tax Credit, Tax Credit Certificate, Tax Debit Memo Sources of Tax Credit Uses of Tax Credit Sale / Assignment of Tax Credit Validity, Conversion and Validation Forfeiture of Cash Refunds / Tax Credit

10. Erroneously Refunded Tax Guagua Electric Light vs. CIR (GR No. L-23611, April 24, 1967)

VI. Jurisdiction of the Court of Tax Appeals RA No. 9282, as amended by RA No. 9503 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on September 16, 2008 1. Why was the CTA created? Philippine Refining Co. vs. CA (256 SCRA 661 2. 3. 4. 5. Weight given to CTA decisions Composition of the Court (No. of Divisions and Justices, the CTA En Banc) Reversal of Decisions of CTA Division Jurisdiction of CTA Division a. Constitutionality of Regulations/Tax Laws Asia International Auctioneers vs. Parayno GR No. 163445, December 18, 2007 British American Tobbaco vs. Camacho, GR No. 163583, August 20, 2008 b. Civil/Criminal Cases Adamson vs. CA (GR No. 120935, May 21, 2009) CIR vs. Hambrecht & Quist Philippines, Inc., G.R. No. 169225, November 17, 2010

6. Jurisdiction of CTA EB 7. Suspension of Collection of Tax 8. Appeal to the SC

VII. Abatement of Tax / Tax Compromise Secs. 7 and 204, NIRC RR No. 13-01 RR No. 30-02 RR No. 8-04 A. Authority of CIR to abate taxes 1. Grounds for abating taxes and penalties 2. Conditions B. Power to compromise 1. Cases that can be compromised 2. Cases that cannot be compromised 3. Basis for acceptance of compromise settlement and rates CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)