Preface to our 2023 Pre-BAR Notes

You have received this Pre-Bar Notes as our COMMITMENT to you,

and as our continuing support to you as one of our Tax Reviewees who
purchased our 2023 Bar Reviewer in Tax Law.

Foremost, we REMIND you of your continuous Personal Commitments

to us to RESPECT our Copyrights to the 2023 Tax Reviewer including this
2023 Pre-Bar Notes. No photocopying, no sharing and no online posting
PLEASE, without our written permissions. We work hard to compile these
Bar review materials for you; this Pre-Bar notes are sent to you totally FREE-
of-any-professional-charges. As future lawyers, we trust your word “of
honor” to abide by your commitments.

Out of the topics included in the 2023 Tax Syllabus, we identified

POSSIBLE BAR questions that would be asked this Sept. 2023, based on the
following criteria:

(1) THE BASICS – of tax provisions or principles or rules that every Bar
candidate is expectedly to know. For example, it is basic that tax laws
apply only within the State’s territory.

(2) RECENT JURISPRUDENCE – although promulgated after the cut-

of date of June 30, 2022. These SC’s decisions reiterate the same rulings
in earlier decisions which were discussed in the 2023 Reviewer. For
example, due process must be strictly observed in the issuance of
assessment notices.

(3) SC EN BANC TAX DECISIONS – a few, which apply settled

principles. For example, right to privacy as a Constitutional limitation to
the power to tax.

(4) THE PONENTE CASES PROMULGATED BY THE 2023 BAR

CHAIRPERSON ASSOCIATE JUSTICE HERNANDO – also a few,
for obvious reason. The rulings are not novel, and were also touched
upon in the 2023 Reviewer. For example, the observance of the
jurisdictional 90+30 days (before 120+30 days) in refund claims of
unutilized input taxes arising from zero-rated sales.

(4) TO REINFORCE/CLARIFY TOPICS WHICH COULD CAUSE

CONFUSIONS – due to its intricacies. For example, VAT invoice vis-
à-vis VAT official receipts. 180+30 days vis-à-vis 90+30 days being
jurisdictional requirements. We reiterate here the old jurisprudence.

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(5) FOR OTHER REASONS – we deemed are potential Bar questions.
Others just FIO.

NOTE: Selected words in the suggested answer were EMPHASIZED by us

simply for your easy review & recollection.

ABBREVIATIONS: Some words were abbreviated. Pls refer to the 2023

Reviewer pages vii to ix.

ILLUSTRATIONS in italics: Included in the Answer in brackets [ ] just to

present its proper application. It need not be included in the Bar answer.

BRACKETED [ ]: Definitions and/or enumerations therein are for

references only and need not be included in the Bar answer.

HOW TO STUDY THIS PRE-BAR NOTES: Try answering in your own

words, before comparing your answers with the suggested answers.

AT THE END OF THIS NOTES: We provided you with a suggested

PRAYER to enforce your faith in the attainment of your dreams to be a
lawyer by passing this 2023 Bar.

ALSO AT THE END: Practical suggestions on HOW TO HANDLE THE

REMAINING BAR REVIEW DAYS PRIOR TO, ON AND AFTER THE
BAR DATE(S).

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 THE 2023 PRE-BAR NOTES PROPER IN TAXATION LAW
By: Dr. Atty. Vicky C. Fernandez

GENERAL PRINCIPLES

1. One of the constitutional limitations to the inherent power to tax

by the State is the right of the TP to privacy. Is this statement
accurate?

Answer:
Yes. While the tax regulations providing for the collection of personal
data of the Investors-TPs serve a compelling state interest, which is the
effective and proper collection of taxes, there is no assurance that the
information gathered and submitted pursuant to the questioned regulations
will be protected, and not be used for any other purposes outside the stated
purpose. The collection of information is not necessary for the BIR to carry
out its functions. (Reference: The Phil. Stock Exchange, Inc., Bankers Association of
The Phils., Phil. Association of Securities Brokers and Dealers, Inc., Fund Managers
Association of The Phils., Trust Officers Association of The Phils., & Marmon Holdings,
Inc. vs. SoF, CIR, & Chairperson of SEC, GR. No. 213860, July 5, 2022, SC en
banc decision)

2. What are the elements of a valid tax?

Answer:
Taxes are the enforced proportional contributions exacted by the State
from persons and properties pursuant to its sovereignty in order to support
the Gov’t and to defray all the public needs. Every tax has three elements,
namely: (a) it is an enforced proportional contribution from persons and
properties; (b) it is imposed by the State by virtue of its sovereignty; and (c)
it is levied for the support of the Gov’t. (Reference: Confederation for Unity,
Recognition and Advancement of Gov’t Employees (COURAGE), et al. v. CIR and the
SoF, GR. No. 213446, July 3, 2018)
[NOTE: Do not confuse this with the 5 requisites of a valid tax. See
Q&A#26 of the Reviewer. When asked if the tax is valid, check if the
questioned law complied with the 5 requisites. If not, it is not a valid tax.]

3. (A) What is the rule on construction in instances where TP anchors

its claim for tax refund on the absence of a law that imposes a tax?
(B) Is the CTA bound by the CIR’s interpretation of the tax

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 provisions?

Answer:
(A) Since TP does not seek to be exempt from tax, the rule on strict
construction of tax laws against the TP does not apply. TP is asking for
refund of taxes erroneously assessed and illegally collected on the ground
that there is no law that authorizes such exaction. The rule to be applied
here must be the well-settled doctrine of strict interpretation in the
imposition of taxes, such that the statute must be construed most
strongly against the gov’t and in favor of the TP. Non-taxability is the
rule, while taxability is the exception. As burdens, taxes should not be
unduly exacted nor assumed beyond the plain meaning of the tax laws.
Where there is doubt, tax laws must be construed strictly against the gov’t
and in favor of the TP.
(B) No. Interpretations placed upon a statute by the executive officers whose
duty is to enforce it, are not conclusive and will be ignored if judicially
found to be erroneous. The courts will not countenance administrative
issuances that override, instead of remaining consistent and in harmony
with, the law they seek to apply and implement. (Reference: Petron Corp. v.
CIR, GR No. 255961, March 20, 2023)
[NOTE: Ponente is the 2023 Bar Chairperson Associate Justice
Hernando. This is the Doctrine of Strict Construction of Tax Law in
favor of the TP]

4. What is the limitation to the power granted to the CIR to issue

rulings or opinions interpreting the provisions of the NIRC or
other tax law?

Answer:
The CIR cannot, in the exercise of such power, issue administrative
rulings or circulars inconsistent with the law sought to be applied.
Administrative issuances must not override, supplant or modify the law, but
must remain consistent with the law they intend to carry out. (Reference:
Confederation For Unity, Recognition & Advancement of Gov’t Employees (Courage),
et. al., v. CIR, et. a., GR No. 213446, July 3, 2018)

5. (A) Does the tax exemptions of PAGCOR under its Charter, extend
to its licensees? (B) Is PAGCOR who pays the 5% franchise tax
still subject to the corporate income tax, as its income tax
exemption was withdrawn by RA No. 9337? [FIO]

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Answer:
(A) No. The amendatory law, RA No. 9487 which gives PAGCOR the
authority to issue licenses for casino operations did not provide that
PAGCOR’s tax exemption extends to its licensees. There must be a
positive provision, not merely a vague implication, of the law creating
that exemption. Tax exemptions are strictly construed and must be
couched in clear language. If an exemption is found to exist, it must not
be enlarged by construction, since the reasonable presumption is that the
state has granted in express terms all it intended to grant at all. The tax
exemption granted to PAGCOR extends to entities that have a
contractual relationship with PAGCOR in connection with its operation
of casinos, as the tax exemptions granted were primarily meant to favor
only PAGCOR. The tax exemption does not include private entities that
were licensed to operate their own casinos, whose revenues from its
casino operations are not exempt from income tax.
(B) Under its Charter, PAGCOR's income is classified into two: (a) income
from its operations conducted under its Franchise (income from gaming
operations); and (b) income from its operation of necessary and related
services (income from other related services). The income tax
exemption, which was subsequently withdrawn by RA No. 9337, could
only pertain to PAGCOR's income from other related services. Its
income from gaming operations remains to be exempted under its
Charter. There is no need for Congress to grant tax exemption with
respect to its income from gaming operations as the same is already
exempted from all taxes of any kind or form, income or otherwise,
whether national or local, under its Charter, save only for the 5%
franchise tax. This exemption attached to the income from gaming
operations exists independently from the enactment of the amendments
to the NIRC. Moreover, its Charter, a special law, prevails over the
NIRC, a general law. It is a canon of statutory construction that a special
law prevails over a general law - regardless of their dates of passage
- and the special is to be considered as remaining an exception to the
general law. (Reference: Thunderbird Pilipinas Hotels & Resorts, Inc. v. CIR, GR
No. 211327, November 11, 2020)

6. (A) Are judicial interpretations placed upon a law considered laws?

(B) Are the retroactive application thereof violative of the principle
of non-retroactivity of laws and rulings? (C) In what instance, if
any, is judicial interpretations given prospective application?

Answer:
(A) No. While it is true that judicial decisions which apply or interpret the

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 Constitution or the laws are part of the legal system of the Phils., still
they are not laws. Judicial decisions, though not laws, are nonetheless
evidence of what the laws mean, and it is for this reason that they are
part of the legal system of the Phils.. Article 8 of the Civil Code
provides that judicial decisions applying or interpreting the law shall form
part of the legal system of the Phils. and shall have the force of law.
(B) No. The interpretation placed upon a law by a competent court merely
establishes the contemporaneous legislative intent of the interpreted law.
As such, judicial interpretation constitutes a part of the law as of the
date the statute is enacted.
(C) It is only when a prior ruling of the Court is overruled, and a different
view adopted, that the new doctrine may have to be applied prospectively
in favor of parties who have relied on the old doctrine and have acted in
good faith. Article 4 of the Civil Code provides that laws shall have no
retroactive effect unless the contrary is provided. The principle of
prospectivity applies not only to original or amendatory statutes and
administrative rulings and circulars, but also to judicial decisions. The
retroactive application of a law usually divests rights that have already
become vested or impairs the obligations of contract and hence, is
unconstitutional. The same consideration underlies court rulings giving
only prospective effect to decisions enunciating new doctrines. (Reference:
San Miguel Corp. v. CIR, GR No. 257697, April 12, 2023)
[NOTE: When the Court had issued a prior ruling/decision interpreting
the law, the new ruling/decision should be applied prospectively for
reason of due process. However, if the new ruling/decision interpreting
the law is made for the first time, its application is retroactive to the date
the law is enacted.]

INCOME TAX

7. (A) Are membership fees, assessment dues, and other fees

collected by recreational clubs subject to income tax? (B) Are they
subject to VAT? (C) Are all fees collected by the clubs not subject
to income tax?

Answer:
(A) No. Membership fees, assessment dues, and other fees of similar nature
only constitute contributions to and/or replenishment of the funds for
the maintenance and operations of the facilities offered by recreational
clubs to their exclusive members. They represent funds "held in trust"
by these clubs to defray their operating and general costs and hence, only
constitute infusion of capital. These fees are paid by the clubs' members

6
 without any expectation of any yield or gain, but only for the above-
stated purposes and in order to retain their membership therein.
(B) Since the association dues, membership fees, and other
assessments/charges do not arise from transactions involving the sale,
barter, or exchange of goods or property, nor generated by the
performance of services, they are not subject to VAT.
(C) No. Fees received by recreational clubs coming from their income-
generating facilities, such as bars, restaurants, and food concessionaires,
or from income-generating activities, like the renting out of sports
equipment, services, and other accommodations are subject to income
tax. Regardless of the purpose of the fees' eventual use, gain is already
realized from the moment they are collected because capital
maintenance, preservation, or upkeep is not their pre-determined
purpose. Recreational clubs are generally free to use these fees for
whatever purpose they desire and thus, considered as unencumbered
"fruits" coming from a business transaction. (Reference: Antel Sea View
Towers Condominium Corp. v. BIR, GR No. 247770, January 11, 2023)

8. (A) How are NRFCs taxed on its income? (B) Are income paid to
NRFC subject to withholding taxes? (C) What is the situs of
income derived from the payment of satellite air time fees by the
TP to a NRFC? (D) Are satellite airtime fees paid as consideration
for satellite communications time used by telecommunication
companies in the Phils. considered Phil.-sourced income?

Answer:
(A) The power to tax, though inherent in sovereignty, is limited within a
state's territorial jurisdiction. Thus, there must be an established nexus
between the subject (e.g., person, property, income, or business) and the
state that intends to tax it. Under our income tax law, this nexus is
established by one's residence and source of income. While
resident individuals and domestic corps. are taxed on their worldwide
income, foreign corps. are taxable only on income derive from sources
within the Phils.. In other words, the taxability of a foreign corp.'s
income is limited to that which is connected to Phil. territory or Phil.-
sourced income. Other income the foreign corp. may derive from foreign
sources is beyond the scope of the Phils.' taxing power.
(B) Yes. Since NRFCs are subject to the 35% final tax [now 25%] on its gross
income received during each taxable year from all sources within the
Phils., any tax due shall be withheld at source by the income payor
(withholding agent) who shall be responsible for filing the applicable
return and remitting the tax withheld to the BIR.

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(C) It is settled that where the inflow of wealth and/or economic benefits
proceeds from, that is the situs of the income. Since it occurs within Phil.
Territory, it enjoys protection of the Phil. gov’t. Making the services
available to Phil. subscribers, albeit through its local service provider, is
an endeavor that requires the intervention of the Phil. gov’t. In the
court’s view, it is only fair that the income be subjected to Phil. taxation
as a way of compensating the gov’t for the protection it accords the TP’s
arrangements, operations, and related transactions in the Phils. [NOTE:
Benefit of Protection Doctrine].
(D) Yes, they are. "Income" refers to the flow of wealth. It is an income
source if the particular property, activity, or service causes an increase in
economic benefits, which may be in the form of an inflow or
enhancement of assets or a decrease in liabilities with a corresponding
increase in equity other than that attributable to a capital contribution.
The income-generating activity takes place, not during the act of
transmission, but only upon the gateway's receipt of the call as routed by
the satellite. It is only when the call is actually routed to its gateway that
the TP is able to connect its local subscriber to the intended recipient of
the call. In short, the income-generating activity coincides with the
receipt of the routed call by gateways located within Phil. territory.
Hence, it is considered Phil.-source income. (Reference: Aces Phils. Cellular
Satellite Corp. v. CIR, GR No. 226680, August 30, 2022)

9. (A) Are assessments for withholding taxes (WHT) imprescriptible,

it being in the nature of a penalty? (B) Can fraud be imputed in
determining whether the return filed is false or fraudulent?

Answer:
(A) No. WHT are still internal revenue taxes, and are covered by the 3-years
prescription period. The word 'penalty' was used to underscore the
dynamics in the WHT system that it is the income of the payee being
subjected to tax and not of the withholding agent. It was never meant to
mean that WHT do not fall within the definition of internal revenue
taxes, especially considering that income taxes are the ones withheld by
the withholding agent. WHT do not cease to become income taxes just
because it is collected and paid by the withholding agent.
(B) No. The Court has refrained from sustaining findings of fraud upon
circumstances which, at most, create only suspicion. The mere
understatement of a tax is not itself proof of fraud for the purpose of tax
evasion. Bare allegation of falsity or fraudulency, without proof, is
insufficient to remove the present case outside the purview of the 3-year
prescriptive period. The extraordinary period of 10-years is a mere

8
 exception to the general 3-year rule and requires that there be proof that
the TP filed a false or fraudulent return. (Reference: CIR v. Parity Packaging
Corp., GR No. 249045, January 11, 2023)

10. (A) What is the CWT system? (B) When should the CWT be
withheld?

Answer:
(A) Under the CWT system, taxes withheld on certain income payments are
intended to equal or at least approximate the tax due of the payee on said
income. The income recipient is still required to file an ITR to report the
income and/or pay the difference between the tax withheld and the tax
due on the income. In the event that the income tax computed is more
than the CWT paid earlier, the difference shall be paid by the payee in
order for his income tax to be paid in full. Conversely, in case the income
tax calculated is less than the CWT paid, the overpayment of CWT shall
either be carried over to the next taxable period for the payee, or
refunded in its favor.
(B) The CWT should be withheld at the time an income payment is paid or
payable, or the income payment is accrued or recorded in the payor's
books, whichever comes first. The terms payable refers to the date the
obligation becomes due, demandable, or legally enforceable. (Reference:
Global Medical Center of Laguna, Inc. v. Ross Systems International, Inc., GR No.
230112, May 11, 2021, SC en banc decision)

11. What are the requisites in filing a claim for CWT refund?

Answer:
The requisites are: (1) the claim for refund is filed within the 2-year
prescriptive period; (2) the fact of withholding is established by a copy of a
statement duly issued by the payor (withholding agent) to the payee, showing
the amount of tax withheld therefrom; and (3) the income upon which the
taxes was withheld is included in the ITR of the payee-recipient as part of the
gross income. (Reference: CIR v. Cebu Holdings, Inc., GR No. 189792, June 20,
2018)

12. What is the Irrevocability Rule in claiming tax refund of excess

and/or unutilized CWT?

Answer:

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 Under the irrevocability rule, once the option to carry over and apply the
excess income tax against income tax due for the succeeding taxable years
has been made, such option shall be considered irrevocable for that taxable
period and no application for cash refund or issuance of a tax credit certificate
shall be allowed therefor. The irrevocability rule takes effect when the option
is exercised – the marking of the box "to be refunded" in the AITR, said act
constituted its exercise of the option. (Reference: Rhombus Energy, Inc., v. CIR,
GR No. 206362, August 1, 2018)

13. What are the options of a TP who overpaid its income tax?

Answer:
When the TP overpaid its income tax liability as adjusted at the close of
the taxable year, it has two options: (1) to be refunded or issued a TCC, or
(2) to carry-over such overpayment to the succeeding taxable quarters to be
applied as tax credit against income tax due. However, once the carry-over
option is taken, it becomes irrevocable such that the TP cannot later on
change its mind in order to claim a cash refund or the issuance of a TCC of
the very same amount of overpayment or excess tax credit. The irrevocability
is limited only to the option of carry-over, such that a TP is still free to change
its choice after electing a refund of its excess tax credit. But once it opts to
carry-over such excess creditable tax, after electing refund or issuance of
TCC, the carry-over option becomes irrevocable. Accordingly, the previous
choice of a claim for refund, even if subsequently pursued, may no longer be
granted. (Reference: University Physicians Services Inc. Management, Inc. v. CIR, GR
No. 205955, March 7, 2018)
[NOTE: Once option (2) is selected, the TP can no longer change it in
accordance with the irrevocability rule. However, if option (1) is selected,
the TP can still change it to option (2) but, once this is done, it can no
longer be changed.]

VALUE-ADDED TAX

14. Are BOI-registered enterprises required to prove that its direct

export sales to foreign entities are paid for in acceptable foreign
currency and accounted for in accordance with the BSP R&R, in
order to qualify for VAT zero-rating?

Answer:
Yes. An applicant for tax refund or credit must prove entitlement to the
claim and comply with all documentary and evidentiary requirements such as

10
VAT invoicing requirements provided by tax laws and regulations.
Additionally, it must show that the foreign entities paid for the goods in
acceptable foreign currencies and accounted for in accordance with BSP
R&R, to qualify for VAT zero-rating. The burden is on the TP to show strict
compliance with the conditions for the grant of tax refund or credit. (Reference:
Carmen Copper Corp. v. CIR, CTA EB No, 2428, April 5, 2023)

15. To qualify for VAT zero-rating for the purpose of VAT refund, the
export sales must be supported by what documents?

Answer:
(a) The sales invoice as proof of sale of goods.
(b) The bill of lading or airwaybill as proof of actual shipment of goods from
the Phils. to the foreign country.
(c) The bank credit advice, certificate of bank remittance, or any other
document to prove payment of the goods in acceptable foreign currency
or its equivalent in goods and services. (Reference: Carmen Copper Corp. v.
CIR, CTA EB No. 2428, April 5, 2023)

16. Is the failure to print the word “zero-rated” on the invoice or

receipt fatal to a claim for TCC/refund of input VAT on zero-rated
sales?

Answer:
Yes. The appearance of the word “zero-rated” on the face of invoice
covering zero-rated sales prevents buyers from falsely claiming input VAT
from their purchases when no VAT was actually paid. Otherwise, for any
claim for input VAT, the gov’t would be refunding money it did not collect.
Further, the printing of the word “zero-rated” on the invoice helps segregate
sales that are subject to 12% VAT from those sales that are zero-rated. This
requirement is reasonable and is in accord with the efficient collection of
VAT from the covered sales of goods and services. (Reference: J.R.A. Phils.,
Inc. v. CIR, GR No. 177127, October 11, 2010)

17. (A) Are the VAT-invoicing requirement applicable to imported

goods? (B) What document is sufficient to prove payment of input
VAT on importations?

Answer:
(A) No. It is the VAT-registered person who is required to issue a VAT

11
 invoice for every sale, barter or exchange of goods or properties. The
invoicing requirements under Sections 110 and 113 are not applicable to
imported goods sold by foreign sellers. Foreign sellers are not bound to
comply with the VAT invoicing requirements as they are not subject to
Phil. tax laws. As the foreign sellers of the imported goods are not
registered with the BIR and are not VAT-registered, they cannot be
expected to issue VAT invoices.
(B) The input taxes for the importation of goods must be substantiated by
the import entry or other equivalent document of the BOC showing
actual payment of VAT on the imported goods, such as the Statement of
Settlement of Duties and Taxes (SSDT) and the Single Administrative
Document (SAD). (Reference: Philex Mining Corp. v. CIR, CTA EB No.
2497, September 29, 2022)

18. What is the proper document in substantiating zero-rated sales of

services?

Answer:
VAT official receipt is indispensable to prove sales of services by a VAT-
registered TP. Sales invoice and document, other than official receipt, are not
proper in substantiating zero-rated sales of services in connection with a
claim for refund. A VAT invoice is necessary for every sale, barter or
exchange of goods or properties while a VAT official receipt properly
pertains to every lease of goods or properties, and for every sale, barter or
exchange of services. Thus, a VAT invoice and a VAT receipt should not be
confused as referring to one and the same thing; the law did not intend the
two to be used alternatively. (Reference: Nippon Express (Phils.) Corp. v. CIR, GR
No. 191495, July 23, 2018)

19. (A) Are commercial documents recognized as evidence of

commercial transactions? (B) Does the Certificate of Non-
Registration issued by the Phil. SEC require further
authentication? (C) What is Forgotten Evidence?

Answer:
(A) Yes. Commercial documents such as official receipt and sales invoice are
recognized as pieces of commercial transactions and are given probative
value with need of identification by the person who prepared the said
documents.
(B) The Certificate of Non-Registration issued by the Phil. SEC is a public
document, and in itself, is self-authenticating and requires no further

12
 authentication in order to be presented as evidence in court.
(C) Forgotten evidence refers to evidence already in existence or available
before or during a trial; known to and obtainable by the party offering it;
and could have been presented and offered in a seasonable manner, were
it not for the sheer oversight or forgetfulness of the party or the counsel.
Presentation of forgotten evidence is disallowed, because it results in a
piecemeal presentation of evidence, a procedure that is not in accord
with orderly justice and serves only to delay the proceedings. (Reference:
CIR v. AIG Shared Services Corp (Phils), CTA EB No. 2545, March 27, 2023)

20. Is the correctness of the VAT return an issue in claim for refund
under Section 112 of the NIRC?

Answer:
No. The issue under Section 112 is whether the TP is entitled to a refund
or credit on its unutilized input VAT. A claim for refund or credit under
Section 112 is not a claim for refund under Section 229 for erroneously or
illegally assessed or collected VAT; hence, the correctness of the VAT return
is not an issue and there is no need for the Court to determine whether the
TP is liable for deficient VAT. (Reference: CIR v. AIG Shared Services Corp (Phils),
CTA EB No. 2545, March 27, 2023)

21. Is the TP required in its claim for refund of excess/unutilized

input VAT to prove direct attributability of its input VAT to its
zero-rated sales?

Answer:
No. Input VAT does not need to come from purchases of goods that
form part of the finished product of the TP or that it must be used directly
in the chain of production. Section 112(A) merely provides that refund of
creditable input tax paid be attributable to such sales, except transitional input
tax, to the extent that such input tax has not been applied against output tax.
In short, the law does not require direct attributability of the input VAT from
the purchase of goods to the finished product whose sale is zero-rated, in
order for such input VAT to be refundable. When the law has made no
distinction, the courts ought not to recognize any distinction. It suffices that
the purchase of goods, properties, or services upon which the input VAT is
based, can be attributed to the zero-rated sales. (Reference: CIR v. Cargill Phils.,
Inc., GR Nos. 25540-71, January 30, 2023)

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22. For the purpose of computing the prescription period in the filing
of claims of refund of unutilized input VAT attributable to zero-
rated sales, what is the reckoning period?

Answer:
VAT refund may be filed within 2-years from the close of the taxable
quarter when the sales were made. The phrase when the sales were made
refers to zero-rated sales of the TP-claimant, and not to its purchase of goods
and services from which it incurred input VAT. Also, there must be a direct
relation of the purchases that incurred input VAT to the relevant zero-rated
sales that were made. Thus, without any zero-rated sales, the attribution
requirement or that the input tax due or paid on the purchase of goods and
services must be attributable to such sales cannot be fulfilled or complied
with. Without thisNo attribution, there is no entitlement to refund or tax
credit. (Reference: Maibara Geothermal, Inc. v. CIR, GR No. 250479, July 18, 2022)

TAX REMEDIES

23. (A) Is the State’s power to tax scale higher than the TP’s right to
due process? (B) Is it important to identify the authorized Revenue
Officer (RO) who will conduct the exam and assessment against
the TP?

Answer:
(A) No. Between the power of the State to tax and an individual's right to
due process, the scale favors the right of the TP to due process. It is
important to provide the TP adequate written notice of its tax liability.
An assessment is void if the TP is not notified in writing of the facts and
law on which it is made. To rule otherwise would tolerate abuse and
prejudice. The TP will be unable to file an intelligent appeal before the
CTA as it would be unaware on how the CIR appreciated the defense
raised in connection with the assessment. (References: Section 228, NIRC &
Sections 3.1.4 and 3.1.6, RR No. 12-99.)
(B) Yes. The TP needs to be informed that the RO knocking at its door has
the proper authority to examine its books of accounts. The only way for
the TP to verify the existence of that authority is when, upon reading the
LOA, there is a link between the said LOA and the RO who will conduct
the audit examination and assessment. Due process requires that TP
must have the right to know that the RO is duly authorized. Identifying
the authorized RO in the LOA is a jurisdictional requirement of a valid
audit or investigation by the BIR, and therefore, of a valid assessment.
(Reference: CIR v. Manila Medical Services, Inc., GR No. 255473, February 13,

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 2023)

24. Can a TP challenge the authority of the RO, for the very first time,
only in their MFR before the CTA en banc?

Answer:
Yes. The failure of the TP to raise at the earliest opportunity the RO's
lack of authority does not preclude the Court from considering the same
because the said issue goes into the intrinsic validity of the assessment itself.
The lack of authority renders the assessment void. The same is also true when
the original RO is transferred or reassigned and substituted by a new RO who
will continue the audit or investigation. In the latter case, a new or separate
or amended LOA is a requirement of due process and is not a mere formality
or technicality. (Reference: CIR v. Medtecs International Corp., Ltd., GR No.
241068-69, February 20, 2023)

25. (A) Can the assessment be invalidated for failure of the RO to

revalidate is existing LOA? (B) Can the WDL be issued validly
while the TP’s appeal of the FDDA to the CIR is still pending?
Answer:
(A) No. Nowhere in the Tax Code does it state that an LOA needs to be
revalidated after the lapse of 120-days for it to be continuously valid
(“revalidation rule”). The revalidation rule has already been withdrawn
starting June 1, 2010. There is no need for revalidation of the LOA even
if the prescribed audit period has been exceeded but the RO who fails to
complete the audit within the prescribed shall be subject to the applicable
administrative sanctions. The subject LOA remains valid despite RO’s
failure to finish the audit and submit the final investigation report within
120 days.
(B) The WDL is void, given its premature issuance. Since the WDL was
issued while the deficiency tax assessment was still pending appeal with
the CIR, it is void and should be of no force and effect. (Reference: Xpert
Air Services, Inc. v. CIR, CTA No. 10171, March 14, 2023)

26. What are the valid modes of service of assessment notice to the
TP?

Answer:
Section 3.1.6 of RR No. 18-2013 provides that notice (PAN/FLD/
FAN/FDDA) to the TP may be served by the CIR or his duly authorized

15
representative through the following modes:
(A) Personal service by delivering personally a copy thereof to the TP at its
registered or known address or wherever it may be found. A known
address shall mean a place other than the registered address where
business activities of the TP is conducted or its place of residence.
(B) Substituted service can be resorted to when the TP is not present at
the registered or known address.
- The notice may be left at the TP's registered address with its clerk
or with a person having charge thereof.
- If made to the known address where business activities of the TP
are conducted, the notice may be left with its clerk or with a person
having charge thereof.
- If the known address is TP’s place of residence, substituted service
can be made by leaving the copy with a person of legal age residing
therein.
- If no person is found in the TP's registered or known address, the
RO concerned shall bring a barangay official and 2-disinterested
witnesses to the address, to personally observe and attest to such
absence. The notice shall then be given to said barangay official.
Such facts shall be contained in the bottom portion of the notice, as
well as the names, official positions, and signatures of the witnesses.
- Should the party be found at its registered or known address or any
other place but refuse to receive the notice, the RO concerned shall
bring a barangay official and 2-disinterested witnesses in the
presence of the TP to personally observe and attest to such act of
refusal. The notice shall then be given to said barangay official. Such
facts shall be contained in the bottom portion of the notice, as well
as the names, official positions, and signatures of the witnesses.
"Disinterested witnesses" refers to persons of legal age other than
employees of the BIR.
(C) By registered mail to the registered or known address of the party with
instruction to the postmaster to return the mail to the sender after 10-
days, if undelivered.
- A copy of the notice may also be sent through reputable professional
courier service.
- If no registry or reputable professional courtier service is available in
the locality of the addressee, service may be done by ordinary mail.
- The server shall accomplish the bottom portion of the notice.
He/she shall also make a written report under oath before a notary
public or any person authorized to administer oath, setting forth the
manner, place and date of service, the name of the person/barangay
official/professional courier service company who received the same
and such other relevant information. The registry receipt issued by

16
 the post office or the official receipt issued by the professional
courier company containing sufficiently identifiable details of the
transaction shall constitute sufficient proof of mailing and shall be
attached to the case docket.
(D) Service to the tax agent/practitioner, who is appointed by the TP shall
be deemed service to the TP. (Reference: CIR v. South Entertainment Gallery,
Inc., GR No. 223767, April 24, 2023)

27. Is it necessary for the BIR to prove service of its assessment to the
TP?

Answer:
Yes. The registry receipt presented by the BIR as evidence merely proved
the fact of mailing, and nothing more. Nowhere can it be seen from the same
evidence that the subject assessment was actually served on and received by
the TP or by any of its authorized representative. Signature must appear on
the registry receipts showing receipt by the TP or by any of its authorized
representative. The registry receipt must likewise be accompanied by an
“instruction to the postmaster to return the mail to the sender after 10 days,
if undelivered,” and it must contain identifiable details of the transaction.
Moreover, the BIR must show that a written report under oath was made,
setting forth the manner, place and date of service, the name of the person
who received the same, and such other relevant information, as required by
the rules. Without BIR’s compliance with the requirements, there is no proof
that the TP received the assessment notice. (Reference: One Cypress Agri-Solution
Inc. v. CIR, CTA No. 9937, March 7, 2023)

28. Is it important to prove the release, mailing or sending of the

assessment notice to the TP?

Answer:
Yes. While assessments are upheld as made when notices are sent within
the prescribed period, even if received by the TP after its expiration, it is
more imperative that the release, mailing, or sending of the notice be clearly
and satisfactorily proved by the BIR. Mere notations made by the BIR
without the TP's intervention, notice, or control, and without adequate
supporting evidences, cannot suffice; otherwise, the TP would be at the
mercy of the BIR, without adequate protection or defense. The failure of the
BIR to prove the receipt of the assessment by the TP would necessarily lead
to the conclusion that no assessment was issued. (Reference: CIR v. Bank of the
Phil. Islands, GR No. 224327, June 11, 2018)

17
29. TP received a LOA with the 1st request for presentation of records
on Sept. 21, 2007, for the audit of its books for the tax year 2006. TP
ignored the three succeeding requests for records including the
subpoena duces tecum on Feb. 19, 2008. The CIR issued the NIC,
the PAN and the FAN on May 4, 2009, Apr. 6, 2010, and Apr. 15,
2010 respectively. Protest was filed by TP on May 14, 2010. On July
13, 2012, TP filed a Petition for Review with the CTA in Division.
TP claims its Right to Due Process was violated, as it was not given
the full 15-days from receipt of the PAN to filed its protest; hence,
the assessment is void. The CIR counters that protest against the
PAN is not indispensable, and TP was able to file its Protest to the
FAN. Is the CIR correct? Why or why not?

Answer:
The CIR is incorrect. Section 228 of the NIRC provides that prior to any
assessment, the CIR shall first notify the TP of its findings. Within the period
prescribed by the IRR, the TP shall be required to respond to the notice;
otherwise the CIR shall issue its assessment based on its findings. PAN is a
substantive and not merely a formal condition laid down by the law and its
rules. It would be meaningless to the concept of due process to provide the
TP with a copy of the PAN if TP’s right to respond to it is ignored.
Considering that the CIR immediately issued its FAN without giving the TP
15-days from receipt of the PAN to respond, the CIR deprives the TP of the
opportunity to respond to the PAN before being given the FAN. Here, the
TP was given only 9-days from receipt of PAN on Apr. 6 to the date of
receipt of FAN on Apr. 15, 2010 to contest the PAN before the FAN was
issued; consequently, the FAN is void. (Reference: CIR v. Next Mobile, Inc., GR
No. 232055, April 27, 2022)
[NOTE: The CIR has 3-years from the filing and payment of the 2006
AITR to audit and assess the TP. Since the last day for filing of the 2006
AITR was on Apr. 15, 2007, the BIR has until Apr. 15, 2010 to issue the
FAN. The FAN was issued by the CIR on Apr. 15, 2010 to avoid
prescription.]

30. TP received the PAN on Jan. 7, 2009, and it filed its reply on Jan.
22, 2009. Without awaiting the reply of the TP, the CIR issued its
FAN on Jan. 14, 2009, just 7 days after its PAN. The FAN was
received by the TP on Feb. 12, 2009, way beyond the 15-days period
for TP to respond. Was there a violation of due process? Why or
why not?

Answer:

18
 Yes, there was. The SC has enjoined strict observance by the CIR of the
prescribed procedure for the issuance of assessment notices in order to
uphold the TPs' constitutional rights. The 15-day period provided for the TP
to reply to a PAN should be strictly observed by the CIR. Only after receiving
the TP's response or in case of the TP's default, can CIR issue the
FLD/FAN. That the TP was able to file a protest to the FDL/FAN is of no
moment. (Reference: Prime Steel Mill, Inc. v. CIR, GR No. 249153, September 12,
2022)
[NOTE: In the immediately preceding Next Mobile case, the receipt by
the TP of the FAN was within the 15-days period given to the TP to
respond to the issued PAN. Here in this Prime Steel Mill case, the receipt
by the TP of the FAN was already after the 15-day period; however, the
date of the FAN was still within the 15-day period. In both instances, the
SC ruled that the TP’s right to due process was violated as the CIR
should wait for the 15-day period to lapse before issuing its FAN.]

31. Would a previous tax audit under a LOA bar another tax fraud
audit covering the same tax years?

Answer:
No. The TP cannot claim as excuse from the reopening of its books of
accounts the previous investigations and examinations. Under Section 235(a),
an exception was provided in the general rule on once-a-year audit
examination in case of fraud, irregularity or mistakes, as determined by the
CIR. The distinction between a regular audit and a tax fraud audit lies in the
fact that the former is conducted by the district offices of the BIR’s Regional
Offices, the authority emanating from the Regional Director, while the latter
is conducted by the Tax Fraud Division of the National Office only when
instances of fraud had been determined by the BIR. The non-declaration by
the TP of an amount exceeding 30% of its income declared in its return is
considered a substantial under-declaration of income, which constituted
prima facie evidence of false or fraudulent return. (Reference: CIR v. Hon. Raul
M. Gonzalez, SoJ, L. M. Camus Engineering Corp., GR No. 177279, October 13,
2010)

32. (A) Will the sentence “Please take note that the interest and the
total amount due will have to be adjusted if paid beyond the date
specified therein” appearing in the FAN/FLD make the
assessment void for the reason that the tax liability remains
indefinite? (B) In the imposition of the output VAT, is it necessary
that there should be a sale?

19
Answer:
(A) No, as long as the total amount of deficiency tax plus interest are definite
and certain on the due date indicated in the FAN. This despite a warning
from the BIR that additional interest (consequently affecting the total
amount due) shall continue to accrue beyond the due date. In
determining the validity of the assessment, what is crucial is the
definiteness of the amount indicated in the FAN with respect to the
deadline or due date provided. If the FDDA satisfies the requirements,
then the FDDA could not be wanting nor can the assessment be deemed
as void. While it is true that the computation of interest may not yet
appear definite, the same is only logical as BIR could not reasonably be
expected to know or foresee when the TP will actually settle the tax
obligation.
(B) Yes. There must be a sale, either (1) an actual or deemed sale for sale of
goods and/or properties; or, (2) a valuable consideration actually or
constructively for sale of services. Hence, there can be no imposition or
assessment of output VAT from an alleged undeclared sales arising from
under-declaration of importation. Importation is imposed an input
VAT. If the CIR is alleging that the TP has undeclared importation,
logically it can only argue it did not pay the corresponding input VAT.
However, non-payment of input VAT does not translate to non-payment
of output VAT. One cannot presume that what were imported were
immediately sold. A sales transaction can only be proved if the same is
duly supported by documentary evidence such as invoices (for sale of
goods) or official receipts (for sale of services). Absent such proof, the
alleged undeclared importation cannot be presumed to have resulted to
undeclared sales. (Reference: BASF Phils. Inc. v. CIR, CTA No. 10221,
November 3, 2022)

33. (A) Does the phrase "in the course of trade or business" includes
transactions incidental thereto? (B) In determining the
prescriptibility of the assessment, should the running of the
prescriptive period commence from the date of the filing of the
original return or amended return? (Very impt)

Answer:
(A) Yes. The transaction need not always be pursued with regularity or
habituality, as it can merely be occasional or isolated, provided that the
transaction is incidental to the main business activity or main purpose.
Although merely occasional or isolated, a transaction may still be
embraced in the definition of the phrase "in the course of the trade or
business" so long as it may be established that such transaction is

20
 incidental to the TP’s main business activity.
(B) The answer hinged on whether the amendment was substantial or not.
If the amendment is substantial, then the filing of the amended return
will be the reckoning point of the 3-year period of prescription for
assessment. If however, the contents of the return is not substantial as
when it is only the form that was changed but the amended return
showed the same amount of tax payable as the original return, then the
reckoning period is the filing of the original return. As long as the tax
payable in the original and the amended return are the same, then it
would not be considered a substantial amendment. (Reference: Lapanday
Foods Corp. v. CIR, GR No. 186155, January 17, 2023)
[NOTE: Ponente is Bar Chairperson Associate Justice Hernando]

34. Can the TP overturn the presumption that it filed false returns?

Answer:
Yes. While it is true that such a substantial under-declaration of sales,
receipts, or income results in a presumption of falsity or fraud, such
presumption can be overcome by evidence to the contrary. Indeed, in order
to escape from the application of the longer 10-year prescriptive period,
instead of the regular 3-years, the TP is bound to refute the presumption of
the falsity of the return and to prove that it had filed accurate returns.
(Reference: PET Plans, Inc. v. CIR, CTA No. 10002, March 23. 2023)

35. (A) Can the BIR issue collection letters without assessment
notices? (B) Can the BIR validly enforce collection through
judicial action even without an assessment?

Answer:
(A) No. In the normal course of tax administration and enforcement, the
BIR must first make an assessment then enforce the collection of the
amounts so assessed. An assessment is not an action or proceeding for
the collection of taxes. It is a step preliminary, but essential to warrant
distraint, if still feasible, and, also, to establish a cause for judicial action.
The BIR may summarily enforce collection only when it has accorded
the TP administrative due process, which vitally includes the issuance of
a valid assessment. A valid assessment sufficiently informs the TP in
writing of the legal and factual bases of the said assessment, thereby
allowing the TP to effectively protest the assessment and adduce
supporting evidence in its behalf.
(B) Yes. Unlike summary administrative remedies, the govt's power to

21
 enforce the collection through judicial action is not conditioned upon a
previous valid assessment. The NIRC expressly allows the institution of
court proceedings for collection of taxes without assessment within 5-
years from the filing of the tax return and 10-years from the discovery of
falsity, fraud, or omission, respectively. A judicial action for the collection
of a tax is begun: (a) by the filing of a complaint with the court of
competent jurisdiction, or (b) where the assessment is appealed to the
CTA, by filing an answer to the TP's petition for review wherein payment
of the tax is prayed for. Judicial action however must be done within the
prescriptive period for collection. (Reference: CIR v. Pilipinas Shell Petroleum
Corp., GR Nos. 197945, July 9, 2018)
[NOTE: The prescription period to collect under the regular/ordinary
3-years assessment period is 3-years; while under the extraordinary 10-
years assessment period in case of the 3F-Returns is 5-years. See
Q&A#280 of the Reviewer. Very Impt. This period to collect is tolled
only upon the exercise by the gov’t of available administrative or judicial
remedies. The latter is done by the filing of a collection case in court.
HOWEVER, if it was the TP who filed a case in court questioning the
payment of the tax, it is only when the Answer is filed by the CIR that
the period to collect is tolled. Also, see Q&A#58 below]

36. Is the collection of surcharges and interests in case of delinquency

mandatory?

Answer:
Yes. The intention of the law is to discourage delay in the payment of
taxes due the Gov’t and, in this sense, the surcharges and interests are not
penal but compensatory for the concomitant use of the funds by the TP
beyond the date when it is supposed to have paid them to the Gov’t. There
is no surcharge imposed in computing the deficiency tax assessment if paid
on or before the date specified in the FAN. However, if the deficiency tax is
not paid within the required date, the surcharges and interests becomes
automatically due. Exceptional cases where the Court deleted the
imposition of surcharges and interests were because of the TP's good faith
and the BIR's previous erroneous interpretations of the law. In those cases,
the TPs relied on a specific ruling issued by the BIR to the effect that it was
exempt from the payment of the assessed deficiency tax. (Reference: Thunderbird
Pilipinas Hotels & Resorts, Inc. v. CIR, GR No. 211327, November 11, 2020)

37. Is there any exception to the strict compliance with the requisites
for a valid waiver?

22
Answer:
In general, a waiver that did not comply with the requisites for validity
is considered invalid and ineffective to extend the prescriptive period to
assess the deficiency taxes. This notwithstanding, the non-compliance
thereto was considered by the SC as exceptions in the following instances:
(a) when the parties are in pari delicto or "in equal fault"; (b) when the parties
do not come to court with clean hands as they cannot be allowed to benefit
from their own wrongdoing. They should not be allowed to benefit from the
flaws in their own waivers and successfully insist on their invalidity in order
to evade its responsibility to pay taxes; (c) when one of the parties is estopped
from questioning the validity of its waivers; and (d) when there is negligence
in the execution of the waiver. (Reference: Asian Transmission Corp. v. CIR, GR
No. 230861, September 19, 2018)

38. Are civil actions to question the issued FDDA deemed instituted
with the criminal case for tax evasion?

Answer:
No, it is not. What is deemed instituted with the criminal action is only
the action to recover civil liability arising from the crime. Civil liability arising
from a different source of obligation, such as when the obligation is created
by law, such civil liability is not deemed instituted with the criminal action. It
is well-settled that the TP's obligation to pay the tax is an obligation that is
created by law and does not arise from the offense of tax evasion. As such,
it is not deemed instituted in the criminal case. (Reference: Macario Lim Gaw, Jr.
v. CIR, GR No. 222837, July 23, 2018)

39. Can Congress validly exclude taxes that will constitute the base
amount for the computation of the Internal Revenue Allotment if
the Constitution did not provide for such exclusion? (FIO)

Answer:
Even assuming that Section 284 of the LGC is erroneous since it does
not authorize any exclusion or deduction from the collections of the national
internal revenue taxes (NIRTs) for purposes of the computation of the
allocations to the LGUs, the SC enumerates the national taxes to be included,
but shall not be limited to, in the base for computing the just share the LGUs:
(1) The NIRTs enumerated in Section 21 of the NIRC, as amended, to be
inclusive of the VATs, excise taxes, and DSTs collected by the BIR and the
BOC, and their deputized agents; (2) Tariff and customs duties collected by
the BOC; (3) 50% of the VATs collected in the ARMM, and 30% of all other

23
national taxes collected in the ARMM; the remaining 50% of the VATs and
70% of the collections of the other national taxes in the ARMM shall be the
exclusive share of the ARMM pursuant to Section 9 and Section 15 of R.A.
No. 9054; (4) 60% of the national taxes collected from the exploitation and
development of the national wealth; the remaining 40% will exclusively
accrue to the host LGUs pursuant to Section 290 of the LGC; (5) 85% of the
excise taxes collected from locally manufactured Virginia and other tobacco
products; the remaining 15% shall accrue to the special purpose funds
pursuant created in R.A. No. 7171 and R.A. No. 7227; (6) The entire 50% of
the national taxes collected under Section 106, Section 108 and Section 116
of the NIRC in excess of the increase in collections for the immediately
preceding year; and, (7) 5% of the franchise taxes in favor of the national
gov’t paid by franchise holders in accordance with Section 6 of R.A. No. 6631
and Section 8 of R.A. No. 6632. (Reference: Congressman Hermilando I. Mandanas,
et.al. v. Executive Secretary, et.al., GR No. 199802, July 3, 2018)

LOCAL TAXATION

40. (A) Explain the application of the Doctrine/Rule of Exhaustion of

Administrative Remedies in RPT assessments. (B) Should the
Hierarchy of Courts Doctrine be observed in local tax cases?

Answer:
(A) The doctrine/rule requires that before a TP may seek intervention from
the court, the TP should have already exhausted all the remedies at the
administrative level. The LGC provides for 2-remedies in relation to
RPT assessments or tax ordinances: (1) Sections 226 and 252 thereof
provides that the TP questions the reasonableness of the amount
assessed before the city treasurer, then appeal to the LBAA; and (2)
Section 187 allows a TP to question the validity or legality of a tax
ordinance by filing an appeal before the SoJ before seeking judicial
intervention. However, this doctrine/rule admits of exceptions, one of
which is when strong public interest is involved. [Illustration: The alleged
exorbitant increase in RPT to be paid based on the assailed Ordinance triggers a
strong public interest against the imposition of excessive or confiscatory taxes. Courts
must therefore guard the public's interest against such gov’t action. Accordingly, the
Court exempts this case from the rule on administrative exhaustion.]
[NOTE: Payment under protest is mandatory in scenario (1) above; but
NOT required in scenario (2). See Q&A#382(c) of the Reviewer.]
(B) Yes. The hierarchy of courts doctrine prohibits parties from directly
resorting to the SC when relief may be obtained before the lower courts.
This doctrine is not an iron-clad rule; it also admits of exceptions, such

24
 as when the case involves matters of transcendental importance. These
circumstances allow the Court to set aside the technical defects and take
primary jurisdiction over the petition, stressing that the rules of
procedure are not inflexible tools designed to hinder or delay, but to
facilitate and promote the administration of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate,
rather than promote substantial justice, must always be eschewed.
[Illustration: The implementation of the Ordinance will directly and adversely affect
the property interests of more than 3-million residents, and as such, the case involves
matters of transcendental importance.] (Reference: Alliance of Quezon City (QC)
Homeowners' Association, Inc. v. The QC Gov’t, represented by Hon. Mayor
Herbert Bautista, QC Assessor's Office & QC Treasurer's Office, GR No.
230651, September 18, 2018, SC en banc decision)

41. Is the notice of sale to delinquent land owners and to the general
public an essential and indispensable requirement of law? Why or
why not?

Answer:
Yes. Notice of sale to the delinquent land owners and to the public in
general is an essential and indispensable requirement of law, the non-
fulfillment of which vitiates the sale. The holding of a tax sale despite the
absence of the requisite notice is tantamount to a violation of delinquent TP's
substantial right to due process. Administrative proceedings for the sale of
private lands for nonpayment of taxes being in personam, it is essential that
there be actual notice to the delinquent TP, otherwise the sale is null and void
although preceded by proper advertisement or publication. (Reference: Noemi
S. Cruz & Heirs of Hermenegildo T. Cruz, represented by Noemi S. Cruz v. City of
Makati, City Treasurer of Makati, The Register of Deeds of Makati, & Laverne Realty
and Development Corp., GR No. 210894, September 12, 2018)

42. (A) Who is personally liable for tax delinquency on RPT? (B) Does
the CTA have original jurisdiction over local tax cases?

Answer:
(A) In RPT, the unpaid tax attaches to the property. The personal liability
for RPT delinquency is generally on the owner of the RP at the time the
tax accrues. This is a necessary consequence that proceeds from the fact
of ownership. Nonetheless, where the tax liability is imposed on the
beneficial use of the RP, such as those owned but leased to private
persons or entities by the gov’t, or when the assessment is made on the

25
 basis of the actual use thereof, the personal liability is on any person who
has such beneficial or actual use at the time of the accrual of the tax.
[Beneficial use means that the person or entity has the use and
possession of the property. Actual use refers to the purpose for which
the property is principally or predominantly utilized by the person in
possession thereof.]
(B) No. The jurisdiction of the CTA is appellate, over decisions, orders, or
resolutions of the RTC, when the latter has ruled on a local tax case (one
which is in the nature of a tax case or which primarily involves a tax
issue). If the TP fails to appeal in due course, the right of the local gov’t
to collect the taxes due with respect to the property becomes absolute
upon the expiration of the period to appeal. The assessment becomes
final, executory and demandable, precluding the TP from assailing the
legality/validity (or reasonableness/correctness) of the assessment.
[Local tax cases include those involving the legality or validity of the
RPT assessment; protests of assessments; disputed assessments,
surcharges, or penalties; the legality or validity of a tax ordinance; claims
for tax refund/credit; claims for tax exemption; actions to collect the tax
due; and even prescription of assessments.] (Reference: Herarc Realty Corp.
v. The Provincial Treasurer of the Batangas, et al., GR No. 210736, September 5,
2018)

43. (A) May a TP who had protested and paid an assessment later on
institute an action for refund? (B) Differentiate the TP’s remedies
under Sections 195 and 196 of the LGC.

Answer:
(A) Yes. In asking the court to refund the assessed taxes it had paid, the TP
essentially alleged that the basis of the payment, which is the assessment
issued by the City Treasurer, is erroneous or illegal. A TP who had
protested and paid an assessment is not precluded from later on
instituting an action for refund or credit. Under the LGC, a TP facing an
assessment may protest it and alternatively: (1) appeal the assessment in
court, or (2) pay the tax and thereafter seek a refund.
(B) Sections 195 provides the procedure for contesting an assessment issued
by the LTr; whereas, the Section 196 provides the procedure for the
recovery of an erroneously paid or illegally collected tax, fee or charge.
Both are administrative remedies that the TP should first exhaust before
bringing the appropriate action in court.
(1) In S195, it is the written protest with the LTr that constitutes the
administrative remedy; while in S196, it is the written claim for
refund or credit with the same office.

26
(2) S195 is triggered by an assessment made by the LTr for nonpayment
of the correct taxes, fees or charges. S196 may be invoked by a TP
who claims to have erroneously paid a tax, fee or charge, or that such
tax, fee or charge had been illegally collected from him.
(3) Under S195, the TP may contest the assessment by filing a written
protest before the LTr within 60-days from receipt of the notice;
otherwise, the assessment shall become conclusive. Under S196, the
TP must first file a written claim for refund with the LTr within 2-
years from date of payment; otherwise, the refund claim shall have
prescribed.
(4) Under S195, the LTr has 60-days to decide said protest. S196 does
not expressly provide a specific period within which the LTr must
decide the written claim for refund or credit.
(5) Under S195, in case of denial of the protest or inaction by the LTr,
the TP may judicially appeal within 30-days; otherwise, the
assessment becomes conclusive. Under S196, the TP may initiate the
judicial claim within 2-year period from payment. The TP is not
required to await the decision of the LTr, otherwise, his judicial
action shall be barred by prescription.
(6) Unlike S195, S196 does not expressly mention an assessment made
by the LTr. This simply means that its applicability does not depend
upon the existence of an assessment notice. By consequence, a TP
may proceed to the remedy of refund of taxes even without a prior
protest against an assessment that was not issued in the first place.
This is not to say that an application for refund can never be
precipitated by a previously issued assessment, for it is entirely
possible that the TP, who had received a notice of assessment, paid
the assessed tax, fee or charge believing it to be erroneous or illegal.
The TP may subsequently direct his refund claim pursuant to S196.
(Reference: City of Manila and Office of the City Treasurer of Manila v. Cosmos
Bottling Corp., GR No. 196681, June 27, 2018)
[NOTE: Section 195. Protest of Assessment. – When the LTr or
his duly authorized representative finds that correct taxes, fees, or
charges have not been paid, he shall issue a notice of assessment
stating the nature of the tax, fee, or charge, the amount of deficiency,
the surcharges, interests and penalties. Within 60-days from the
receipt of the notice of assessment, the TP may file a written protest
with the LTr contesting the assessment; otherwise, the assessment
shall become final and executory. The LTr shall decide the protest
within 60-days from the time of its filing. If the LTr finds the protest
to be wholly or partly meritorious, he shall issue a notice cancelling
wholly or partially the assessment. However, if the LTr finds the
assessment to be wholly or partly correct, he shall deny the protest

27
 wholly or partly with notice to the TP. The TP shall have 30-days
from the receipt of the denial of the protest or from the lapse of the
60-day period prescribed herein within which to appeal with the
court of competent jurisdiction otherwise the assessment becomes
conclusive and unappealable. Section 196. Claim for Refund of
Tax Credit. – No case or proceeding shall be maintained in any
court for the recovery of any tax, fee, or charge erroneously or
illegally collected until a written claim for refund or credit has been
filed with the LTr. No case or proceeding shall be entertained in any
court after the expiration of 2-years from the date of the payment of
such tax, fee, or charge, or from the date the TP is entitled to a
refund or credit.]

44. Is payment of the disputed assessment mandatory under the LGC?

Answer:
No, except in the case of RPT. When a TP is assessed a deficiency local
tax, fee or charge, he may protest it under S195 without making payment of
such assessed tax, fee or charge. The LGC does not expressly require
"payment under protest" as a procedure prior to instituting judicial action.
The success of a judicial action questioning the validity or correctness of the
assessment is not necessarily hinged on the previous payment of the tax
under protest. Needless to say, there is nothing to prevent the TP from
paying the tax under protest or simultaneous to a protest. [Illustration: There
are compelling reasons why a TP would prefer to pay while maintaining a protest against
the assessment. For instance, a TP who is engaged in business would be hard-pressed to
secure a business permit unless he pays an assessment for business tax and/or regulatory
fees. Also, a TP may pay the assessment in order to avoid further penalties, or save his
properties from levy and distraint proceedings.] (Reference: City of Manila and Office of
the City Treasurer of Manila v. Cosmos Bottling Corp., GR No. 196681, June 27,
2018)
[NOTE: In assessment of RPT, payment under protest is mandatory.
Very impt]

45. What are the options of the TP in protesting or disputing a local

tax assessment?

Answer:
Where an assessment is to be protested or disputed, the TP may proceed
(a) without payment, or (b) with payment of the assessed tax, fee or charge.
Whether there is payment of the assessed tax or not, the TP must file a

28
protest in writing within 60-days from receipt of the notice of assessment;
otherwise, the assessment shall become final and conclusive. Additionally,
the subsequent court action must be initiated within 30-days from denial or
inaction by the LTr; otherwise, the assessment becomes conclusive and
unappealable. (Reference: City of Manila and Office of the City Treasurer of Manila v.
Cosmos Bottling Corp., GR No. 196681, June 27, 2018)

46. (A) In instances where the TP opted to protest the assessment

without payment, what is its procedural remedy? (B) Would it be
the same if the TP opted to make payment under protest?

Answer:
(A) Where no payment was made, the TP's procedural remedy is governed
strictly by S195. In case of denial of the protest, or inaction by the LTr,
the TP's only recourse is to appeal the assessment judicially. The appeal
does not seek a refund but only questions the validity or correctness of
the assessment.
(B) Where payment was made, the TP may maintain an action in court
questioning the validity and correctness of the assessment and at the
same time seeking a refund of the taxes. Once the assessment is set aside
by the court, it follows as a matter of course that all taxes paid under the
erroneous or invalid assessment are refunded to the TP. The TP cannot
successfully prosecute its theory of erroneous payment or illegal
collection of taxes without necessarily assailing the validity or correctness
of the assessment it had administratively protested. (Reference: City of
Manila and Office of the City Treasurer of Manila v. Cosmos Bottling Corp., GR
No. 196681, June 27, 2018)
[NOTE: The institution of the judicial action for refund should be made
within 30-days from the denial of or inaction on the letter-protest or
claim, not any time later, even if within 2-years from the date of payment.
The filing date of such judicial action necessarily falls on the beginning
portion of the 2-year period from the date of payment. The reason is
obvious. This is because an assessment was made, and if not appealed in
court within 30-days from decision or inaction on the protest, it becomes
conclusive and unappealable. The scenario wherein the administrative
claim for refund falls on the early stage of the 2-year period but the
judicial claim on the last day or late stage of such 2-year period does not
apply in this specific instance where an assessment is issued. DO NOT
CONFUSE this with S196, an action for the recovery of an erroneously
paid or illegally collected tax where NO assessment was issued.]

29
47. What are the two conditions that must be satisfied in order to
successfully prosecute an action for refund in case the TP had
received an assessment from the LTr?

Answer:
One, pay the tax and administratively assail within 60-days from receipt
of the notice of the assessment before the LTr, whether in a letter-protest or
in a claim for refund. Two, bring an action in court within 30-days from
decision or inaction by the LTr, whether such action is denominated as an
appeal from assessment and/or claim for refund of erroneously or illegally
collected tax. (Reference: City of Manila and Office of the City Treasurer of Manila v.
Cosmos Bottling Corp., GR No. 196681, June 27, 2018)

JUDICIAL REMEDIES

48. Is it proper for CTA En Banc to entertain TP-Petitioner’s

additional arguments, including alleged violation of its right to due
process, which matter was raised for the very first time on appeal
and only in its Supplemental Memorandum? (Very impt)

Answer:
As a rule, in deciding a case, the CTA may not limit itself to the issues
stipulated by the parties but may also rule upon related issues necessary to
achieve an orderly disposition of the case. However, this authority of passing
upon additional arguments not expressly contained in the parties' joint
stipulation of facts and issues submitted during the pre-trial stage is not
unbridled. Such new issues should be dealt with, based not only on
substantive law but in light of the relevant rules of evidence. The thrust of
proscribing a change of argument on appeal rests on upholding the basic
tenets of equity and fair play. When a party deliberately adopts a certain
theory and the case is decided upon that theory in the court below, he will
not be permitted to change the same on appeal, because to permit him to do
so would be unfair to the adverse party.
However, the SC has allowed derogation from this principle only in
exceptional cases and only if the factual bases of the new theory would not
require presentation of further evidence. The CTA En Banc, or even a
Division thereof, may consider arguments raised for the first time on appeal
or on MFR respectively, only if two conditions concur: one, these arguments
are related to the principal issue to be resolved by the court and is necessary
to achieve an orderly disposition of the case; and two, the resolution of these
new arguments would not require the presentation of additional evidence,
and must rely solely on factual bases that are already matters of record in the

30
case. (Reference: Prime Steel Mill, Inc. v. CIR, GR No. 249153, September 12, 2022)

49. TP on July 31, 2018 received a Final Notice Before Seizure (FNBS)
from the BIR. The following day, it immediately requested for and
received copies of the PAN, FAN, and the Preliminary Collection
Letter (PCL). On August 30, 2018, it filed a Petition for Review with
the CTA. How would you rule, and why?

Answer:
CTA exercises exclusive appellate jurisdiction to review by appeal
decisions or inactions of the CIR in cases involving disputed assessments. In
challenging the decisions or inactions of the CIR, there must first be a
disputed assessment. To properly dispute an assessment, a valid
administrative protest by the TP must be made by filing a request for
reconsideration or reinvestigation within 30-days from receipt of the FAN.
If the protest is denied or not acted upon within 180-days, the TP may appeal
to the CTA within 30-days from receipt of the decision or the lapse of the
180-day period; otherwise, the decision shall become final and executory and
demandable. What is appealable to the CTA are decisions of the CIR on the
protest of the TP against the assessment. There being no protest ruling by
the CIR, the dismissal by the CTA is proper as the Petition for Review filed
is premature. The TP did not exhaust the administrative remedy. It is
immaterial whether the receipt of the final assessment was through a valid
serve, or the TP’s own request or volition. Section 228 does not distinguish
how the final assessment was received by the TP. The non-filing of the
protest against the PCL led to the finality of the assessment. TP should have
filed a protest within 30-days from receipt of the FAN in August 1, 2018.
(References: CIR v. Four Seas Trading Corp., CTA EB No. 2507, April 5, 2023; &
V.Y.Domingo Jewellers, Inc., GR No. 221780, March 25, 2019)
[NOTE: In contrast, if the TP had priorly filed a protest, the receipt of
the FNBS is tantamount to a denial of the TP’s request for
reconsideration; hence, appeal to the CTA is proper.]

50. Is CTA a court of record?

Answer:
Yes. Section 8 of RA No.1125 provides that CTA is a court of record.
All cases filed before it are litigated de novo, and party litigants should prove
every minute aspect of their cases. Hence, the CTA’s decision is solely based
on evidence formally presented before it, notwithstanding pieces of evidence
that may have been submitted or not, to the CIR. (Reference: Carmen Copper

31
Corp. v. CIR, CTA EB No. 2428, April 5, 2023)

51. (A) Can the CTA resolve issues not raised and not disputed by both
parties in their pleadings? (B) Is the CTA empowered to decide on
issues beyond the stipulation of facts by the parties?

Answer:
(A) Yes. The CTA is empowered to rule on issues not brought by the parties
before it. Section 1, Rule 14 of the RRCTA provides that CTA is not
bound by the issues specifically raised by the parties but may also rule
upon related issues necessary to achieve an orderly disposition of the
case. The CTA is also justified in ruling on issues not disputed.
[Illustration: The requirement of proof of inward remittance of acceptable foreign
currency to substantiate the export sales of TP, the same being a related issue necessary
to achieve an orderly disposition of the case] (Reference: Carmen Copper Corp. v. CIR,
CTA EB No. 2428, April 5, 2023; & CIR v. Lancaster Phils. Inc., GR No.
183408, July 12, 2017)
(B) Yes. The parties' stipulation that the basis for denial of TP's claim for
administrative refund is purely legal, shall not deprive the CTA from
making its own determination of facts at the judicial level. The CTA has
the power to receive evidence in the exercise of its original jurisdiction.
In fact, jurisprudence dictates that the scope of the CTA's review covers
factual findings and that the claim for refund is litigated anew at the CTA
level. Moreover, considering that the claim for refund was on the alleged
erroneous payment of taxes, it was incumbent upon the TP to prove that
it was entitled to the refund. The TP has the burden of proof to establish
strict compliance with the conditions for the grant of tax refund or credit.
The TP must prove not only entitlement to the grant of the claim under
substantive law, but must also show compliance with all the documentary
and evidentiary requirements thereto. Tax refunds are construed strictly
against the TP, and liberally in favor of the State. [Illustration: The
stipulation made by the parties in open court clearly contradicts the evidence on record
which was submitted by the TP upon the filing of its Petition. It would have been
erroneous had the CTA relied merely on such stipulation that there was no question
as to the amount of taxes paid, when the documents supporting TP's claim for refund
clearly say otherwise.] (Reference: Tanduay Distillers, Inc., represented by its SVP
and CFO, Nestor C. Mendones v. CIR, GR No. 256740, February 13, 2023)

52. Is the CTA bound by the findings of the Independent CPA (ICPA)?

Answer:

32
 No, it is not. The CTA is free to either adopt, completely or partially, or
even disregard the ICPA’s findings and conclusions, after making its own
verification and evaluation of the same and the evidence on record. (Reference:
Carmen Copper Corp. v. CIR, CTA EB No, 2428, April 5, 2023)

53. The CIR assessed DOE for deficiency excise taxes. Contending
that its assessment has become final, executory and demandable,
the CIR issued Warrants, which DOE assailed in its filed Petition
for Review with the CTA. Did the CTA acquire jurisdiction over
the case? Why or why not?

Answer:
No, it did not. CTA is not the proper forum to resolve what it
characterized as a purely intra-governmental dispute solely between and
among the executive departments, bureaus, offices, agencies, and
instrumentalities of the National Gov’t, including GOCCs. The provisions
of P.D. No. 242, now embodied in the Revised Administrative Code, which
especially deals with the resolution of disputes, claims, and controversies
between departments, bureaus, offices, agencies, and instrumentalities of the
gov’t is correctly given precedence, and carves out such disputes from the
jurisdiction of the CTA, as provided in the NIRC and R.A. No. 1125. Such
disputes, claims, and controversies, solely between or among executive
agencies, including disputes on tax assessments, must perforce be submitted
to administrative settlement by the SoJ or the Solicitor General, as the case
may be. P.D. No. 242 should prevail as against laws defining the general
jurisdiction of the CTA. This is consistent with the fundamental rule that
special laws prevail over general laws. P.D. No. 242 should be read as an
exception to the general rule set in R.A. No. 1125 and the NIRC that the
CTA has jurisdiction over tax disputes involving laws administered by the
BIR. (Reference: DOE v. CTA, GR No. 260912, August 17, 2022)

54. (A) Are factual findings of the CTA accorded with highest respect
by the SC? (B) Who has the burden to prove that the FDDA was
received by the TP? (C) Differentiate a question of law and a
question of fact.

Answer:
(A) Yes, the SC accords the factual findings of the CTA with the highest
respect. These findings of facts can only be disturbed on appeal if they
are not supported by substantial evidence or there is a showing of gross
error or abuse on the part of the CTA. In the absence of any clear and

33
 convincing proof to the contrary, the Court presumes that the CTA
rendered a decision which is valid in every respect.
(B) The CIR has the burden to prove the receipt of the FDDA when the TP
denied its receipt.
(C) A question of law exists when doubt or difference arises as to what is
the applicable law given a certain set of facts. On the other hand, there
is a question of fact when doubt arises as to the truth or falsity of the
alleged facts. (Reference: CIR v. Manila Medical Services, Inc., GR No. 255473,
February 13, 2023)

55. DKS filed a Motion for Partial Reconsideration to the CTA’s

original Decision, which motion was granted resulting to an
adjusted amount of DKS’s refund representing its unutilized input
VAT attributable to its zero-rated receipts. Not satisfied with the
Amended Decision, DKS filed a Petition for Review before the
CTA En Banc. The Petition however was dismissed. Was the
dismissal proper or not? Why or why not?

Answer:
The dismissal was proper. DKS directly filed its Petitions with the CTA
En Banc to challenge the Amended Decision, without filing its MFR or
MNT. For CTA En Banc to take cognizance of an appeal via a petition for
review, a MFR or MNT must first be filed with the CTA in Division that
issued the questioned amended decision. The contention that the filing of the
MFR would be tantamount to the filing of a second MFR, which is a
prohibited pleading, lacks merit. An amended decision is a different decision,
and thus, is a proper subject of a new MFR. (Reference: CIR v. Deutsche Knowledge
Services Pte. Ltd., GR No. 241337, March 13, 2023)

56. (A) Is the non-submission of the compromise agreement entered

into during litigation, by and between the CIR and the TP, fatal?
(B) What is the recourse of a TP when its protest against the
assessment is not acted upon by the CIR? (C) Is the Deputy CIR
authorized to re-open the case for deficiency taxes, and would this
serve as a ground to nullity the finality of the FDDA? (D) Is the
Principle of Solutio indebiti applicable between the CIR and the
TP with FDDA?

Answer:
(A) Yes, it is. A compromise agreement is a contract whereby the parties
make reciprocal concessions, avoid litigation, or put an end to one

34
 already commenced. The validity of the compromise agreement
depends on its fulfillment of the requisites and principles of contracts
dictated by law; its terms and conditions being not contrary to law,
morals, good customs, public policy and public order. Compromise may
be the favored method to settle disputes, but when it involves taxes, it
may be subject to closer scrutiny by the courts. A compromise agreement
involving taxes would affect not just the TP and the BIR, but also the
whole nation, the ultimate beneficiary of the tax revenues collected. Since
no compromise agreement was submitted, the court cannot scrutinize
the same. Before the Court can sanction a compromise agreement as
valid and consequently dismiss a pending case by its virtue, the existence
of such compromise agreement must first be established.
(B) If the administrative protest was denied in whole or in part, or not acted
upon within 180-days from submission of documents, the TP adversely
affected by the decision or inaction may appeal the same to the CTA
within 30-days from receipt of the denial or the lapse of the 180-day
period; otherwise, the decision shall become final, executory and
demandable.
(C) No. The CIR is given the exclusive power to issue rulings of first
impression or to reverse, revoke or modify any existing ruling of the BIR.
This power cannot be delegated. Neither can the approval of the re-
opening of the case for the deficiency taxes be delegated even to a
Deputy CIR. Thus, the re-opening having no basis in law, cannot be used
as a ground to nullify the finality of FDDA.
(D) There is solutio indebiti when: (1) payment is made when there exists no
binding relation between the payor, who has no duty to pay, and the
person who received the payment; and (2) the payment is made through
mistake and not through liberality or some other cause. Neither of these
elements is present when the TP, as a payor, has a binding relation with
the BIR as the taxing authority. The finality of the FDDA rendered the
assessments demandable, enforceable, and collectible. Hence, there is no
mistake. (Reference: City of Makati v. CIR, GR No. 200395, March 15, 2023)

57. (A) Are the findings of facts of the CTA reviewable by the SC in
Appeals under Rule 45? (B) Can the CTA disregard technical rules
of evidence? (C) In claims for refunds of creditable input tax, what
is the period within which to file the claim?

Answer:
(A) In general, the findings of facts of the CTA, when supported by
substantial evidence, will not be disturbed on appeal. Due to the nature
of its functions, the tax court dedicates itself to the study and

35
 consideration of tax problems and necessarily develops expertise
thereon, and unless there has been an abuse of discretion on its part, the
Court accords the highest respect to the factual findings of the CTA. The
party must show that the findings of acts are not supported by evidence,
or that the judgment is premised on a misapprehension of facts, or when
the lower courts overlooked certain relevant facts which, if considered,
would justify a different conclusion. The failure to establish any such
compelling reason will not warrant the reversal of the CTA's findings in
the case.
(B) Yes. The CTA is not governed strictly by the technical rules of evidence.
The law creating the CTA specifically provides that proceedings before
it shall not be governed strictly by the technical rules of evidence. The
paramount consideration remains the ascertainment of truth. Claimants
should be allowed to prove every minute aspect of their claims by
presenting, formally offering and submitting to the CTA all evidence
required for the successful prosecution of their claims. Procedural rules
should not hamper the CTA to effectively and fully appreciate the facts
of the case and to ascertain the truth of the allegations to arrive at a just
determination of a controversy. [Illustration: While the document cannot be
considered newly discovered evidence, as it was already in the possession and knowledge
of the TP at the time it filed its claim, the CTA can still find and uphold the
admission of the said letter, in the interest of substantial justice. Justice would be better
served if the TP was allowed a final opportunity to prove that its judicial claim was
timely filed.]
(C) The VAT-registered TP must file its application for refund or issuance
of TCC with the BIR within 2-years from the close of the taxable quarter
when the sales were made. The CIR has 90-days to grant or deny such
claim for refund from the date of submission of complete documents in
support of the application that has been timely filed within the 2-year
period. The TP must file an appeal with the CTA within 30-days from
the receipt of the decision denying the claim or after the expiration of
the 90-day period, whichever is earlier. The 90+30-day periods are both
mandatory and jurisdictional such that non-compliance with these
periods renders a judicial claim for refund of creditable input tax
premature. If the BIR deems in the course of its investigation that
additional documents are needed, it shall give notice to the TP; in which
case, the TP has 30-days from the receipt of the request to produce the
requested documents, and the BIR has 90-days to decide on the claim
from receipt of such complete documents. All documents, filings, and
submissions must be done within 2-years from the close of taxable
quarter. (Reference: CIR v. Vestas Services Phils., Inc., GR No. 255085, March
29, 2023)
[NOTE: Ponente in this case is Bar Chairperson Associate Justice

36
 Hernando. DO NOT CONFUSE the 180+30 days to appeal in denial
of protest to FAN, with the 90+30 days to appeal denial of input VAT
refund involving zero-rated sales.]

58. Can the CTA enjoin the CIR from collecting deficiency taxes
against the TP on the ground that the right to collect the same had
already expired? (B) What is the prescription period to collect
taxes? (C) How is the administrative action for the collection of
taxes initiated? (D) How is judicial action for the collection of tax
initiated? (Very impt)

Answer:
(A) Yes, it can. Though the general rule is, injunction is not available to
restrain the collection of taxes; it admits of one exception: when the
collection may jeopardize the interest of the gov’t or the TP. The issue
of prescription of the CIR' s right to collect taxes is one such exception.
(B) When an assessment is timely issued, the CIR has 3-years within which
to collect the assessed tax; or 5-years for assessments issued within the
extraordinary period of 10 years in cases of 3F Returns.
(C) It is initiated by distraint, or levy. The distraint and levy proceedings are
validly begun or commenced by the issuance of a warrant of distraint and
levy and service thereof on the TP.
(D) The judicial action for the collection of a tax is initiated: (a) by the filing
of a complaint with the court of competent jurisdiction; or (b) where the
assessment is appealed to the CTA by the TP, by filing an answer to TP's
petition for review wherein payment of the tax is prayed for. (Reference:
CIR v. CTA & QL development, Inc., GR No. 258947, March 29, 2022)

59. (A) What is jurisdiction and how is jurisdiction conferred over the
(1) subject matter; (2) person; and (3) res? (B) When can lack of
jurisdiction over the subject matter be raised? (C) Can estoppel
confer jurisdiction over the subject matter?

Answer:
(A) Jurisdiction is defined as the power and authority of a court to hear, try
and decide a case. (1) Jurisdiction over the subject matter is conferred
by the Constitution or by law. It may not be conferred by the consent or
agreement of the parties. (2) Jurisdiction over the person is acquired by
its voluntary submission to the authority of the court or through the
exercise of its coercive processes. (3) Jurisdiction over the res is obtained
by actual or constructive seizure placing the property under the orders

37
 of the court.
(B) The lack of jurisdiction over the subject matter may be raised at any stage
of the proceedings, even on appeal.
(C) No. Estoppel, being in the nature of a forfeiture, is not favored by law.
It is to be applied rarely - only from necessity, and only in extraordinary
circumstances. The doctrine must be applied with great care and the
equity must be strong in its favor. When misapplied, the doctrine of
estoppel may be a most effective weapon for the accomplishment of
injustice. A judgment rendered without jurisdiction over the subject
matter is void. No laches will even attach when the judgment is null and
void for want of jurisdiction. (Reference: CIR v. CTA 3rd Division &
Citysuper, Inc., GR No. 239464, May 10, 2021)

60. (A) Does the CTA have exclusive jurisdiction in cases of appeal
from the decision of CBAA? If so, does this include the power to
issue preliminary injunction? (B) How about the jurisdiction to
issue writs?

Answer:
(A) Yes to both. RA No. 1125 as amended provides for the exclusive
appellate jurisdiction of the CTA en banc to review by appeal, decisions
of the CBAA. CTA has the exclusive power to enjoin the levy of taxes
and to auction off TP's properties in relation to the tax case pending
before it on appeal.
(B) The CTA has the power to determine WON there has been grave abuse
of discretion amounting to lack or excess of jurisdiction in the issuance
of an interlocutory order in cases falling within its exclusive appellate
jurisdiction. The CTA, by constitutional mandate, is vested with
jurisdiction to issue writs in order for it, as an appellate court, to
effectively exercise its appellate jurisdiction. (Reference: Phil. Ports Authority
v. The City of Davao, Sangguniang Panglungsod ng Davao City, City Mayor of
Davao City, City Treasurer of Davao City, City Assessor of Davao City, &
CBAA, GR No. 190324, June 6, 2018)

61. Does the CTA have exclusive jurisdiction over judicial claim for
refund arising from unutilized input VAT?

Answer:
Yes. However, in order for the CTA to acquire jurisdiction over a judicial
claim for refund or tax credit arising from unutilized input VAT, the said
claim must first comply with the mandatory 120+30-day [now, 90+30-day]

38
waiting period. Any judicial claim for refund or tax credit filed in
contravention of said period is rendered premature, depriving the CTA of
jurisdiction. The failure to comply violates a mandatory provision of law -
the doctrine of exhaustion of administrative remedies. Considering that the
petition is prematurely filed and thus without a cause of action, the CTA does
not acquire jurisdiction over the petition. (Reference: Team Sual Corp. (formerly
Mirant Sual Corp.) v. CIR, GR Nos. 201225-26, April 18, 2018)

-End of PreBar Notes Proper-

OUR SUGGESTED PRAYER

(repeat daily, when you wake up and before you sleep)

I, ____(your full name in the Bar Application)___, desire

to pass the 2023 Bar Examination and be a lawyer. This I ask
in harmony for the whole world and in accordance with the
Divine Will, under Grace and in a perfect manner. Thank
you so much Father that you have heard me. You said: Ask
and it shall be given.” This I BELIEVE is true!

OUR SUGGESTED THINGS TO DO COME BAR DAY

1. Wear comfortable attire.

2. Bring your own non-perishable food/snack & water. (Saves time)
3. Be confident & be kind to yourself. You did all you could within the
time frame given to review for the 2023 Bar.

4. On Sept.15th & 16th, review only the subjects to be given on Sept.17

On Sept.18th & 19th, review only the subjects to be given on Sept.20

39
 On Sept.21-23, review only the subjects to be given on Sept.24

5. Before the 1st Bar day, go to the location of your Bar Center and, if
allowed, to the room you are assigned to. Time how long it took you,
using your usual mode of transportation, from your home to reach
your assigned room. Add 15-minutes allowance.
6. On the Bar date, especially on the FIRST DAY, be at your assigned
Bar room at least 1-hour early. You need to set up your computer
etc., and to give time allowance for any last-minute contingencies or
questions you might want to raise. Also, there are last minute
instructions given that you would not want to miss.

7. Once you are inside the Bar room, forget everything unrelated to the
Bar, and everybody. FOCUS! Pray silently for Divine guidance in
answering the Bar questions. Use the lavatory early. Sip only the
water, to avoid frequent visits to the restroom. (Saves time)
8. RELAX while reading and answering the Bar Exam. It is only when
you are in a relax mode that you can easily recall what you had
studied.
9. READ the question first, before reading the given scenario. (To
enable you to zero in on the important details immediately, and to
ignore the rest)
10. Be mindful of the TIME. You have 4-hours to answer 20-questions,
with a 5% rating for each correct answer. Do not spend more than
10-MINUTES for each question.

11. If you are sure of your answer, start with yes or no (if it is answerable
that way), followed by the relevant law provision or jurisprudence.
If you are unsure of the answer, do not answer immediately with yes
or no, provide the nearest relevant general rule to the question asked,
then conclude accordingly. (The examiner could give you points for
knowing the general rule, even if your conclusion is incorrect)
12. Provide short to the point answers. Try not to skip any question.
Try to answer in two sentences, at least. (If you will not have enough
time to revisit the question later, at least you have provided an
answer) If you have enough time after answering all the 20-
questions, you can go back and review your answers. If your time is
tight, go back and review only the questions where you are not sure
of your answer, or your answer is too short. UNLESS you are sure,
do not change your answer. Usually, your first answer is the correct
one.

13. After each subject exam, move on to the next subject exam. Do not

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 discuss, do not ask, do not check if your answer is right or wrong.
Do that on or after Sept. 25. Use your time from 12noon to 2pm, to
de-stress and/or to review for the next subject exam.

14. After finishing your exam every Bar day, go home immediately, eat,
and then sleep. Avoid unnecessary calls. You need to refresh your
whole body, after a challenging day. Leave the review of the next
subject to the following day.

REMEMBER the objective of the 2023 Bar: To show the SC that you have
what it takes to be a lawyer! Endeavor then to show that you have met the
standard and basic legal knowledge in your 2023 Bar answers. I have
confidence that you would!

PREPARE
BELIEVE
And, be READY!

-Our prayers are with you!

POST NOTE: Pls keep our Tax Reviewer as a keepsake of us and your Tax
Bar Review with us. This will seal your personal commitment to us. We truly
appreciate this.

ONCE THE BAR RESULT IS OUT: PM or email us at

[email protected] so we could formally congratulate you on
your success, and welcome you to the Legal Profession!

Good luck!

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