PAN-FAN 30-60-180 days (30 days lapsed of the 180 days elevate to CTA)

In Commissioner of Internal Revenue v Ruben U Yu,(1) the Court of Tax Appeals (CTA) en banc
clarified that the 180-day period referred to in section 228 of the Tax Code, as amended, applies
only to the period within which the Commissioner of Internal Revenue (CIR), or their duly
authorized representative, may act on a protest against a tax assessment. Thus, if a taxpayer files
an administrative appeal to request the reconsideration of the decision of the CIR's duly
authorized representative on a protest, the CIR is not given a fresh or separate 180-day period to
decide the administrative appeal.
2. Real property tax before pag-file ng protest -payment of tax under protest

In the Philippines, the process of handling real property tax disputes involves several steps and is
governed by specific rules and regulations. Here's an overview of the process, particularly
focusing on the payment of tax under protest:

1. Assessment and Payment of Real Property Tax

 Assessment: The local government unit (LGU), through its Assessor’s Office, assesses
the value of real properties within its jurisdiction. Based on this assessment, real property
tax (RPT) is computed.
 Payment: Property owners are required to pay the assessed RPT to the LGU, typically
the City or Municipal Treasurer's Office.

2. Filing a Protest

 Grounds for Protest: A property owner may file a protest if they believe that the
assessment is incorrect or unjust.
 Deadline: The protest must be filed within sixty (60) days from the date of receipt of the
tax assessment notice.
 Form of Protest: The protest should be in writing and filed with the local Treasurer.

3. Payment Under Protest

 Requirement: Despite the filing of a protest, the taxpayer is required to pay the tax due
before the protest is entertained. This means the tax must be paid under protest.
 Annotation: The payment should be annotated as being made under protest. This can be
done by indicating on the payment form or receipt that the payment is under protest.

4. Treasurer’s Action

 Decision Period: Upon receipt of the protest, the Treasurer has sixty (60) days to decide
on the protest.
 Notification: The taxpayer will be notified in writing of the Treasurer’s decision.

5. Appeal Process
  Local Board of Assessment Appeals (LBAA): If the taxpayer is not satisfied with the
decision of the Treasurer, they may appeal to the LBAA within sixty (60) days from
receipt of the decision.
 Central Board of Assessment Appeals (CBAA): Further appeal from the LBAA’s
decision can be made to the CBAA.

6. Refund or Credit

 Refund: If the protest is decided in favor of the taxpayer, the taxpayer may be entitled to
a refund of the excess tax paid.
 Credit: Alternatively, the excess tax paid can be credited to future real property tax
liabilities.

Summary (A,P3,TAR)

1. Assessment: Property is assessed by the LGU’s Assessor’s Office.

2. Payment: Pay the real property tax to the LGU, even if you intend to file a protest.
3. Protest Filing: File a written protest within 60 days of the assessment notice.
4. Payment Under Protest: Ensure the payment is marked as "under protest".
5. Treasurer’s Decision: Wait for the decision within 60 days.
6. Appeal: If necessary, appeal to the LBAA and subsequently to the CBAA.
7. Refund/Credit: If successful, receive a refund or credit for future taxes.

This process ensures that while disputes are being resolved, the LGU continues to receive
necessary funds without undue delay, while also providing a legal avenue for taxpayers to
contest assessments they believe are unfair.

3. VAT refund ( sec 112, 229, 223, 228) assessment process The 120 days & 30 days to process
(after the lapsed of 120 days may 30 days to file)

SEC. 112. Refunds of Input Tax.[115] -

(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are
zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales, except transitional input tax, to the
extent that such input tax has not been applied against output tax: Provided, however, That in the
case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1) and
(2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided,
further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also
in taxable or exempt sale of goods of properties or services, and the amount of creditable input
tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be
allocated proportionately on the basis of the volume of sales. Provided, finally, that for a person
making sales that are zero-rated under Section 108(B) (6), the input taxes shall be allocated
ratably between his zero-rated and non-zero-rated sales.

(B) Cancellation of VAT Registration. - A person whose registration has been cancelled due to
retirement from or cessation of business, or due to changes in or cessation of status under Section
106(C) of this Code may, within two (2) years from the date of cancellation, apply for the
issuance of a tax credit certificate or cash refund for any unused input tax which may be used in
payment of his other internal revenue taxes or apply for refund for any unused input tax.

(C) Period within which Refund of Input Taxes shall be Made. - In proper cases, the
Commissioner shall grant a refund for creditable input taxes within ninety (90) days [109] from the
date of submission of invoices and other documents [110] in support of the application filed in
accordance with Subsections (A) and (B) [111] hereof: Provided, That for this purpose, the VAT
refund claims shall be classified into low-, medium-, and high-risk claims, with the risk
classification based on amount of VAT refund claim, tax compliance history, frequency of
filing VAT refund claims, among others: Provided, further, that medium- and high-risk claims
shall be subject to audit or other verification processes in accordance with the Bureau of Internal
Revenue's national audit program for the relevant year: Provided, finally, That should the
Commissioner find that the grant of refund is not proper, the Commissioner must state in writing
the legal and factual basis for the denial within the ninety (90)-day period.

In case of full or partial denial of the claim for tax refund, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim, or after the
expiration of the ninety (90)-day period, appeal the decision with the Court of Tax Appeals:
Provided, however, That failure on the part of any official, agent, or employee of the Bureau of
Internal Revenue to act on the application within ninety (90) days period shall be punishable
under Section 269 of this Code. [111]

(D) Manner of Giving Refund. - Refunds shall be made upon warrants drawn by the
Commissioner or by his duly authorized representative without the necessity of being
countersigned by the Chairman, Commission on Audit, the provisions of the Administrative
Code of 1987 to the contrary notwithstanding: Provided, That refunds under this paragraph shall
be subject to post audit by the Commission on Audit following the risk-based classification
above-described: Provided, further, That in case of disallowance by the commission on audit,
only the taxpayer shall be liable for the disallowed amount without prejudice to any
administrative liability on the part of any employee of the Bureau of Internal Revenue who may
be found to be grossly negligent in the grant of refund.”.

SEC. 229. Recovery of Tax Erroneously or Illegally Collected.[115] - No suit or proceeding shall
be maintained in any court for the recovery of any national internal revenue tax hereafter alleged
to have been erroneously or illegally assessed or collected, or of any penalty claimed to have
been collected without authority, of any sum alleged to have been excessively or in any manner
wrongfully collected without authority, or of any sum alleged to have been excessively or in any
manner wrongfully collected, until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty,
or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed unless there is a full or partial denial of the
claim for refund or credit by the Commissioner or there is a failure on the part of the
Commissioner to act on the claim within the one hundred eighty (180)-day period under Section
204 of this Code; Provided, however, That the Commissioner may, even without a written claim
therefor, refund or credit any tax, where on the face of the return upon which payment was made,
such payment appears clearly to have been erroneously paid.

In case of full or partial denial of the claim for tax refund, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim or after the
expiration of the one hundred eighty (180)-day period, appeal the decision with the Court of Tax
Appeals.”

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.

SEC. 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 pre-assessment 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 excisable 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.

4. Transaction deemed sale

Transactions Deemed Sale under the NIRC

According to the NIRC, the following are considered transactions deemed sale:

1. Transfer, Use, or Consumption Not in the Course of Business

o Goods or properties originally intended for sale or for use in the course of
business are transferred, used, or consumed for personal purposes or for purposes
other than the conduct of business.
2. Distribution or Transfer to Shareholders or Investors
o The distribution or transfer of goods or properties to shareholders or investors as
share in the profits of the company.
3. Distribution or Transfer to Creditors
o The distribution or transfer of goods or properties to creditors in payment of debt.
4. Consignment
o Consignment of goods if actual sale is not made within sixty (60) days from the
date such goods were consigned.
5. Retirement from or Cessation of Business
 o Retirement from or cessation of business, with respect to all goods on hand as of
the date of such retirement or cessation, whether capital goods, stock-in-trade,
supplies, or materials.

VAT Implications

For VAT purposes, these transactions are treated as if a sale has been made, and thus, they are
subject to VAT. The seller (or the one making the transfer) is required to issue a VAT invoice
and remit the corresponding VAT to the Bureau of Internal Revenue (BIR).

Examples

1. Personal Use of Business Goods: If a business owner takes inventory items from their
business for personal use, this is deemed a sale, and VAT must be paid on the value of
the goods taken.
2. Distribution to Shareholders: When a corporation distributes assets to its shareholders
as dividends, it is considered a sale, and VAT is due on the value of the distributed assets.
3. Payment to Creditors: Settling a debt by transferring business assets to a creditor is
deemed a sale, and VAT must be applied to the value of the assets transferred.
4. Unsold Consigned Goods: Goods consigned to an agent for sale, if unsold within 60
days, are considered sold, and VAT must be paid.
5. Business Closure: Upon closing a business, all remaining goods are treated as sold, and
VAT is due on these goods as if they were sold in the normal course of business.

Compliance

Businesses must ensure they properly account for these deemed sales in their VAT returns. This
includes:

 Issuing VAT invoices for the deemed sales.

 Including the value of deemed sales in the computation of VAT payable.
 Remitting the correct amount of VAT to the BIR.

Understanding and complying with the rules on transactions deemed sale is crucial for
businesses to avoid penalties and ensure proper tax compliance in the Philippines.

6. Input & Output tax EOPT

The terms "input tax" and "output tax" are fundamental concepts in the Value-Added Tax (VAT)
system in the Philippines. The VAT system operates on the principle that businesses collect VAT
on their sales (output tax) and pay VAT on their purchases (input tax). The Excess Output Tax
(EOPT) refers to a situation where the output tax exceeds the input tax.

Input Tax
  Definition: Input tax is the VAT that a business pays on its purchases of goods, services,
or imports that are used in the course of its trade or business.
 Sources: It includes VAT paid on local purchases from VAT-registered suppliers,
importation of goods, and services purchased from VAT-registered suppliers.
 Claiming Input Tax: Businesses can claim input tax credits for VAT paid on purchases,
which can be used to offset the output tax payable.

Output Tax

 Definition: Output tax is the VAT that a business charges on its sales of goods, services,
or properties.
 Calculation: It is calculated as a percentage of the gross selling price or gross receipts
from the sale of goods or services, typically at a rate of 12% in the Philippines.

Excess Output Tax (EOPT)

 Definition: Excess Output Tax occurs when the output tax (VAT collected on sales)
exceeds the input tax (VAT paid on purchases) for a given period.
 Implication: When EOPT occurs, it means the business owes the government the net
VAT amount, which is the difference between the output tax and the input tax.

Filing and Payment

1. VAT Returns: VAT-registered businesses are required to file monthly and quarterly
VAT returns using BIR Form 2550M (Monthly VAT Declaration) and BIR Form 2550Q
(Quarterly VAT Return).
2. Computation: In these returns, businesses report their total output tax and input tax for
the period.
o Monthly Return: Reflects VAT transactions for the month.
o Quarterly Return: Summarizes the VAT transactions for the quarter, taking into
account the amounts reported in the monthly returns.
3. Net VAT Payable: If the output tax exceeds the input tax, the net VAT payable (EOPT)
is remitted to the Bureau of Internal Revenue (BIR).

Example Calculation

1. Output Tax: Suppose a business has total sales of PHP 1,000,000 in a month. The output
tax at 12% is PHP 120,000.
2. Input Tax: During the same month, the business incurred purchases amounting to PHP
500,000 with an input tax of PHP 60,000.
3. Excess Output Tax (EOPT):
o Output Tax: PHP 120,000
o Input Tax: PHP 60,000
o EOPT: PHP 120,000 (Output Tax) - PHP 60,000 (Input Tax) = PHP 60,000
In this case, the business has an EOPT of PHP 60,000, which is the amount payable to the BIR
for that period.

Reporting and Compliance

 Record Keeping: Businesses must maintain proper records of their sales, purchases, and
VAT invoices to substantiate their input and output taxes.
 Audits and Inspections: The BIR may conduct audits to verify the accuracy of the VAT
returns and the legitimacy of the input tax credits claimed.
 Penalties for Non-Compliance: Failure to accurately report and remit VAT can result in
penalties, interest, and surcharges.

Understanding and managing input and output taxes, including EOPT, is crucial for businesses to
ensure compliance with Philippine VAT regulations and to optimize their tax liabilities.

7. Rate- run after tax evaders

The Run After Tax Evaders (RATE) program is a high-profile initiative by the Bureau of
Internal Revenue (BIR) in the Philippines aimed at curbing tax evasion and improving tax
compliance. This program targets individuals and entities that deliberately avoid paying taxes
through fraudulent means.

Key Features of the RATE Program

1. Objective:
o The main objective of the RATE program is to investigate, prosecute, and convict
tax evaders to enhance tax compliance and increase revenue collection for the
government.
2. Scope:
o The program targets both individuals and businesses that commit tax evasion,
which includes under-declaring income, falsifying documents, and other
fraudulent activities that result in non-payment or underpayment of taxes.
3. Implementation:
o The BIR, in coordination with the Department of Justice (DOJ), implements the
RATE program. Cases are built through investigations conducted by the BIR’s
National Investigation Division and other related departments.
4. Legal Framework:
o The RATE program operates under the provisions of the National Internal
Revenue Code (NIRC) of 1997, as amended, which sets forth the penalties and
sanctions for tax evasion and related offenses.

Process of the RATE Program

1. Investigation:
 o The BIR identifies potential tax evasion cases through audits, third-party
information, tips from the public, and other investigative methods.
o Detailed investigations are conducted to gather evidence of tax evasion.
2. Filing of Charges:
o Once sufficient evidence is gathered, the BIR files formal charges against the
alleged tax evaders with the DOJ.
o The DOJ evaluates the case and, if warranted, files criminal charges in court.
3. Prosecution:
o The cases are prosecuted in the judicial system, with the aim of securing
convictions and imposing penalties such as fines, imprisonment, or both.
o Convicted individuals or entities are also required to pay the taxes due, along with
interest and surcharges.

Achievements and Impact

1. Deterrence:
o The RATE program serves as a deterrent against tax evasion by demonstrating the
government’s commitment to enforcing tax laws and holding violators
accountable.
2. Revenue Collection:
o Successful prosecutions under the RATE program result in the recovery of unpaid
taxes, which contribute to the government’s revenue.
3. Public Awareness:
o High-profile cases under the RATE program raise public awareness about the
importance of tax compliance and the consequences of tax evasion.

Notable Cases

 The BIR has prosecuted several high-profile cases under the RATE program, involving
business magnates, celebrities, and large corporations. These cases typically attract media
attention and underscore the BIR's efforts to combat tax evasion.

Compliance and Voluntary Disclosure

 To avoid prosecution under the RATE program, taxpayers are encouraged to comply with
tax laws and fulfill their tax obligations accurately and timely.
 The BIR also promotes voluntary disclosure programs where taxpayers can rectify their
tax deficiencies without facing severe penalties.

Conclusion

The RATE program is a crucial tool in the Philippines' strategy to enforce tax laws and ensure
that individuals and businesses pay their fair share of taxes. By targeting tax evaders, the BIR not
only recovers lost revenue but also promotes a culture of compliance and integrity in the tax
system.
8. Sec 222 - may file w/o assessment

SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes.-

(a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return,
the tax may be assessed, or a proceeding in court for the collection of such tax may be filed
without assessment, at any time within ten (10) years after the discovery of the falsity, fraud or
omission: Provided, That in a fraud assessment which has become final and executory, the fact
of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection
thereof.

(b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax,
both the Commissioner and the taxpayer have agreed in writing to its assessment after such time,
the tax may be assessed within the period agreed upon. The period so agreed upon may be
extended by subsequent written agreement made before the expiration of the period previously
agreed upon.

(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.

(d) Any internal revenue tax, which has been assessed within the period agreed upon as provided
in paragraph (b) hereinabove, may be collected by distraint or levy or by a proceeding in court
within the period agreed upon in writing before the expiration of the five (5) -year period. The
period so agreed upon may be extended by subsequent written agreements made before the
expiration of the period previously agreed upon.

(e) Provided, however, that nothing in the immediately preceding and paragraph (a) hereof shall
be construed to authorize the examination and investigation or inquiry into any tax return filed in
accordance with the provisions of any tax amnesty law or decree.