chapter 9 - tax

8/13/2019 Chapter 9 - TAX

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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINESBY: Benjamin B. Aban JUICY NOTES (PROF. CABANEIRO) A2011 2

Chapter 9: COURT OF TAX APPEALS. Page 2of 3

Compromise penalties and the CTA Compromise Penaltiesare amounts collected by the BIR in lieu of

CRIMINAL PROSECUTION for violations committed by taxpayers, the

payment of which is based on a compromise agreement validlyentered into between the taxpayer and the Commissioner.

Collection of compromise penalties comes within the scope of Sec. 7of RA 1125 which speaks of penalties imposed in relation thereto

and that therefore follows that the CTA has jurisdiction thereon. [USLife Insurance Co. v. Commissioner CTA Case No. 1267 Dec.29, 1964]

What decision is appealable?

When it constitutes the final action taken by him, or his authorizeddeputies with respect to the taxpayers liability.

The appealable decision is that letter of denial where theCommissioner not only demanded payment of the tax but whereinhe also gave the warning that in the event that the taxpayer fails topay the same, the Commissioner would be constrained to enforcethe collection thereof by means of the remedies prescribed by law.[Surigao Electric Co. v. Commissioner 85 SCRA 547]

However, the filing of a judicial action for collection, i.e., criminaland civil action during the pendency of an administrative protest,constitutes a denial of the protest. [Commissioner v. UnionShipping ]. In such a situation, the taxpayer may file an appealwith the Court of Tax Appeals.

Whose decisions are appealable?? Decisions of the Commissioner of Internal Revenue are by statutory

provision appealable to the CTA, but it appears that under Rev. REg.12-85, decisions of the Regional Director of a revenue region of theBIR is also appealable.

There is a court ruling to the effect that the decisions of a RegionalDirector may be appealable to the CTA,[Fortalez, Jr. v. Collector,Resolution, CTA Case no. 1257, Dec. 22, 1964]

Appeals on customs cases seem to be limited only to decisions of theCommissioner of Customs

Prescription of assessment and action The defense of prescription of assessment should be raised while the

case is pending with the BIR, whereas, the defense of prescription of

action may be raised for the first time, even on appeal to the CTA,but not for the first time in an appeal with the SC.

Who may appeal to the CTA? Any person, association or corporation affected by a decision of the

Commissioner of Internal Revenue or the Collector of Customs.

Collection case in RTC while appeal is pending in the CTA If the Bureau of Internal Revenue, during the pendency of an appeal

in the CTA, files a civil action in the RTC, for the collection of the taxliability, the taxpayer may file a motion in the RTC for the dismissal

of the case on the ground that there is no basis for collecting the taxdue where the assessment thereof is still under dispute in the CTA.

Tax collection not suspended during appeal An appeal to the CTA from a decision of the Commissioner shall not

suspend the collection of the payment or collection of the tax liabilityof the taxpayer, unless a motion to the effect, shall have been

presented to the CTA and granted by it on the ground that suchcollection jeopardizes the interest of the government and/or thetaxpayer.

No injunction to restrain tax collection

General rule: No court shall have the authority to grant an injunctionto restrain the collection of any national internal revenue tax, fee orcharge imposed by the NIRC, [Sec. 218, NIRC].

Exception: CTA may suspend or restrain the collection of the taxwhen, in its opinion, the collection of the tax may jeopardize theinterest of the government and/or the taxpayer, [Sec. 11, RA1125]


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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINESBY: Benjamin B. Aban JUICY NOTES (PROF. CABANEIRO) A2011 3

Chapter 9: COURT OF TAX APPEALS. Page 3of 3

Requisites for injunction1. That the collection of the tax may jeopardize the interest of the

government and/or the taxpayer.

2. That the taxpayer is willing to deposit the amount equal to the taxesassessed or to a bond amounting to not more than twice the valueof the tax being assessed.

3. That the CTA may issue an injunction only in the exercise of itsappellate jurisdiction.

The thirty-day prescriptive period of appeal

The thirty-day prescriptive period starts to run from the date thetaxpayer receives the appealable decision of the Commissioner.

The 30 day period is jurisdictional. The failure of the taxpayer toappeal from a decision of the Commissioner on time renders the

assessment final, executory and demandable. Requests or motions filed by the taxpayer with the BIR for the

reconsideration of the Commissioners decision operate to suspendthe running of the 30 day prescriptive period.

However, mere reiterations of previous petitions for reconsiderationdo not suspend the running of the prescriptive period. Pro formamotions, which do not raise new issues, will not suspend the period.

Remedy if taxpayer fails to appeal within the 30 day period None. Failure to appeal renders the assessment FINAL and

EXECUTORY since the period to appeal is jurisdictional and non-extendible .

Interlocutory orders Interlocutory orders of the CTA are not appealable.

Appeal from decisions of the CTA

One motion for reconsideration may be allowed for decisions of theCTA.

Pro Forma Request for Reconsideration one that is submitted onlyfor purposes of delay and will NOT interrupt the running of theprescriptive period.

Decisions of the CTA are appealed to the Court of Appeals through averified petition for review. [Sections 1 and 5, Rule 43, Rules ofCourt]

Appeals period is fifteen (15) days from receipt of the decisions orjudgment. The Court of Appeals may grant an additional period offifteen (15) days only within which to file the petition for review. No

further extension shall be granted except for the most compellingreasons and in no case to exceed fifteen (15) days. [Section 4, Rule43, Rules of Court]

Ancillary Jurisdiction of the CTA The ancillary jurisdiction of the CTA such as the power to issue writs

of prohibition and injunction is only SUPPLEMENTARY to its appellatejurisdiction. The power to issue writs exists only in cases appealed toit. There has to be a main action first pending before it.

When decision of the CTA is adverse to the Government

The Solicitor General, being the chief legal officer of thegovernment, is aptly the officer who should appeal to the CA or SC.

Findings of fact of CTA not reviewable Findings of fact of the CTA, when supported by substantial evidence,

is final.

Damages in CTA proceedings Section 16 of RA 1125 provides that where an appeal is found to be

frivolous or that proceedings have been instituted merely for delay,the CTA may assess damages against the appellant in an amountnot exceeding P500 which shall be collected in the same manner as

fine or other penalties authorized by law.

Other Matters:The tax court has no advisory jurisdiction. Hence, advisory opinions such asthose relating to actions for declaratory relief are outside its jurisdiction. Itdoes NOT have criminal jurisdiction either.

chapter 9 - tax

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