DOCUMENTARY STAMP TA
JURISDICTION: The CTA shall exercise:
a. EXCLUSIVE APPELLATE JURISDICTION to review by appeal:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs; 5. Decisions of the Central Board of Assessment
Appeals in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of the Tariff and Customs Code;
11 RA 9282, which amended RA 1125, expanded the jurisdiction of the CTA and elevated it to the level of the Court of Appeals.
Q: Is the CTA a special court or a regular court? It is a
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision to impose or not to impose said duties.
b. Jurisdiction over cases involving CRIMINAL OFFENSES:
1. EXCLUSIVE ORIGINAL JURISDICTION over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of Customs:
EXCEPTION: That offenses or felonies where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA shall be appellate.
NOTE: Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filling of such civil action separately from the criminal action will be recognized.
2. EXCLUSIVE APPELLATE JURISDICTION in criminal offenses:
a) Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases originally decided by them, in their respected territorial jurisdiction.
b) Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
c. Jurisdiction over TAX COLLECTION CASES: 1. EXCLUSIVE ORIGINAL JURISDICTION in
tax collection cases involving final and executory assessments for taxes, fees, charges and penalties.
EXCEPTION: Collection cases where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by the
proper Municipal Trial Court,
Metropolitan Trial Court and Regional Trial Court.
2. EXCLUSIVE APPELLATE JURISDICTION in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection cases originally decided by them, in their respective territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.
IV. COLLECTION LETTER/WARRANTS A. Collection of Deficiency Taxes
Within what time period must collection of internal revenue taxes be made? Return filed was
NOT false or
fraudulent
No return filed, or the return was false or fraudulent. Collection with PRIOR
ASSESSMENT -
should be made within three years from the date of assessment of the tax.
by distraint or levy, or by judicial proceedings
Collection with PRIOR
ASSESSMENT -
should be made within five years from the date of assessment (based on §222c) by distraint or levy, or by judicial proceedings Collection WITHOUT PRIOR ASSESSMENT – should be made within three years from the date of filing of return or date return is due, whichever is LATER (based on §203) by judicial proceedings Collection WITHOUT PRIOR ASSESSMENT – should be made within ten years after the discovery of the falsity, fraud or omission to file a return.
by judicial proceedings
If tax was assessed within the different period agreed upon by the Commissioner and the taxpayer, it 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 5-yr period. (§222d)
When shall the period for assessment or collection of taxes be suspended? (§223)
The running of the statute of limitations provided in §203 and §222 shall be suspended for the period:
1. 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
2. When the taxpayer requests for a REINVESTIGATION which is granted by the Commissioner
CASE LAWS: CIR vs. WYETH (September 30, 1991) The statutory period of limitation for collection may be interrupted when, by the taxpayer’s repeated requests or positive acts, the government has been, for good reasons, persuaded to postpone collection to make him feel the demand was not unreasonable or that no harassment or injustice was meant by government. RR 12-85
RECONSIDERATION – refers to a plea of re-evaluation of the assessment on the basis of existing records WITHOUT NEED OF ADDITIONAL EVIDENCE. It may involve both question of fact or of law or both
REINVESTIGATION – refers to a plea of re- evaluation of an assessment on the basis of NEWLY-DISCOVERED EVIDENCE that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or law or both.
PHIL GLOBAL COMMUNICATION vs. CIR (October 31, 2006) A re- evaluation of existing records which results from a request for reconsideration does not toll the running of the prescription period for the collection of an assessed tax. The law distinctly limits the suspension of the running of the statute of limitations to instances when reinvestigation is requested by a taxpayer and is granted by the CIR. 3. 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, but if the taxpayer informs the Commissioner of any change in address, the running of the statute of limitations shall not be suspended
4. 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 is located
5. When the taxpayer is OUT OF THE PHILIPPINES
B. Remedies of the taxpayer against a tax erroneously or illegally paid
When may taxes be refunded or credited?
Taxes may be refunded or credited in the following cases:
Taxes erroneously or illegally assessed or collected
Penalties imposed without authority
Value of internal revenue stamps when they are returned in good condition by the purchaser
Unused stamps that have been rendered unfit for use (Commissioner may redeem, change or refund their value upon proof of destruction)
Any sum alleged to have been excessively or in any manner wrongfully collected
Q: What is the nature of a claim for refund? It partakes of the nature of an exemption and is strictly construed against the claimant. The burden of proof is on the taxpayer claiming the refund that he is entitled to the same. [CIR v. Tokyo Shipping (1995)]
Q: When are there erroneously paid, or illegally assessed or collected taxes?
Taxes are erroneously paid when a taxpayer pays under a mistake of fact, such as, he is not aware of an existing exemption in his favor at the time that payment is made. Taxes are illegally collected when payments are made under duress. Q: What is the difference between a tax credit and refund?
They are essentially modes of recovering taxes that have been either erroneously or illegally paid to the government. REFUND takes place when there is actual reimbursement. TAX CREDIT takes place upon the issuance of a tax certificate or tax credit memo, which can be applied against any sum that may be due and collected from the taxpayer.
Q: Is payment under protest necessary in claims for refund?
No. Section 229 of the NIRC is specific on this point when it provides that a suit or proceeding for tax refund may be maintained “whether or not such tax, penalty or sum has been paid under protest or duress.”
What is the procedure for obtaining a refund or tax credit?
First, the taxpayer must file a claim for refund before the Commissioner within two years from the date of payment. (§229) [GENERAL RULE] o EXCEPTIONS to the rule requiring a
claim for refund: When on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid (e.g. mathematical errors), the Commissioner may refund or credit the tax even without a written claim therefor. o NOTE: A return filed showing an
overpayment shall be considered as a written claim for credit or refund. (§204C)
But how shall the date of payment be
determined?
i. If the income tax is withheld at source the taxpayer is deemed to have paid his tax liability at the end of the taxable year.
o CASE LAW: GIBBS vs. COMMISSIONER (November 29, 1965) A taxpayer who
contributes to the withholding tax system, does so not really to deposit an amount to CIR, but, in truth, to perform and extinguish his tax obligation for the year concerned. He is paying his tax liabilities for that year. Consequently, a taxpayer whose income is withheld at the source will be deemed to have paid his tax liability when the same falls
due at the end of the tax year. It is from this
latter date then, or when the tax liability falls due, that the 2-year prescriptive period starts to run with respect to payments effected thru the withholding tax system.
ii. If the income is paid on a quarterly basis the two-year period is counted from the time of filing the final adjustment return.
o CASE LAW: CIR vs. TMX SALES (January 16, 1992) When a tax is paid in installments, the prescriptive period should be counted from the date of final payment or the last installment. This rule proceeds from the theory that there is no payment until the
entire tax liability is completely paid. Further,
it is only upon the filing of the Final Adjustment Return would the taxpayer be able to ascertain if he still has to pay additional income tax or if he is entitled to a refund. The filing and payment of quarterly income tax should only be considered as
mere installments of the annual tax due. It should be treated as advances or portions of
the annual tax due.
What should the taxpayer do if his claim for refund is denied or is not acted upon by the Commissioner?
o SITUATION 1: The Commissioner denies the claim for refund the taxpayer may appeal to the CTA within thirty (30) days from the receipt of the Commissioner’s decision AND within two years from the date of payment. (Note that §229 states that ‘no such
suit or proceeding shall be filed after the expiration of the 2-year period regardless of any supervening cause that may arise after payment’)
o SITUATION 2: The Commissioner does not act on the claim, and the two-year period is about to lapse the taxpayer must file a claim before the CTA before the 2-year period lapses, otherwise he may no longer file a claim before the CTA in case the Commissioner renders an adverse decision beyond the 2-year period.
NOTE HOWEVER! Is the two-year period jurisdictional with respect to the CTA?
NO. Even if the two-year period had already lapsed, the same is not a jurisdictional defect which, upon grounds of justice and equity, may be set aside by the court. [(COMMISSIONER vs. PHILAMLIFE (May 29, 1995)]
If the Commissioner grants the refund, within what time must it be claimed?
A refund check or warrant must be claimed or cashed within five years from the date such warrant or check was mailed or delivered, otherwise it shall be forfeited in favor of the government and the amount thereof shall revert to the general fund.
What can be done with a Tax Credit Certificate? Tax credit certificates (TCCs) can be applied against all internal revenue taxes, excluding withholding tax.
TCCs which remain unutilized after five years from the date of issue shall be considered as invalid, unless revalidated. If not revalidated, the amount covered by the TCC shall revert to the general fund
C. Remedies of the State for Collection of Taxes
GENERALLY, the remedies of distraint, levy or civil or criminal action may be pursued SIMULTANEOUSLY. (§205) Remedies of distraint and levy may be repeated if necessary until the full amount due, including all expenses, is collected. (§217)
o HOWEVER, the remedies of distraint and levy shall not be available where the amount of the tax involved is not more than One hundred pesos.
o Q: When may the government avail of the remedies of collection? When the assessment shall have become final, executory and demandable.
NOTE: A court MAY NOT GRANT AN INJUNCTION to restrain the collection of any national internal revenue tax, fee or charge imposed under the NIRC. (§218)
o EXCEPTION: Under Section 11 of RA 1125, as amended by RA 9282, suspension is allowed when the following conditions concur: 1. it is an appeal to the CTA from a decision
of the Commissioner of Internal Revenue or Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may be, and
2. in the opinion of the Court of Tax Appeals, the collection may jeopardize the interest of the Government and/or the taxpayer.
Q: In case of suspension, what may the taxpayer be required to do? Either to deposit the amount claimed or to file a
surety bond for not more than double the
amount with the Court.
Q: What are tax liens? (Sec. 219, NIRC)
When a taxpayer neglects or refuses to pay his internal revenue tax liability after demand, the amount so demanded shall be a lien in favor of the government from the time the assessment was made by the CIR until paid with interest, penalties, and costs that may accrue in
addition thereto upon ALL PROPERTY AND RIGHTS TO PROPERTY BELONGING to the taxpayer. o HOWEVER, the lien shall not be valid against any
mortgagee, purchaser or judgment creditor until NOTICE of such lien shall be filed by the Commissioner in the Office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located.
o Q: What is the difference between seizure under forfeiture an a seizure to enforce a tax lien? There is a great difference between a seizure under forfeiture and a seizure to enforce a tax lien. In the former all the proceeds derived from the sale of the thing forfeited are turned over to the Collector of Internal Revenue; in the latter, the residue of such proceeds over and above what is required to pay the tax sought to be realized, including expenses, is returned to the owner of the property. [BPI v. Trinidad]
ADMINISTRATIVE REMEDIES