UP COLLEGE OF LAW LAW ON TAXATION TIPS AND HUNCHES

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TAX SUPPLEMENT:
ASSESSMENT OF NATIONAL INTERNAL REVENUE TAXES


Reproduced hereunder is a process flowchart incorporating RR 12-99 and RR 18-13 and
the clarificatory circular RMC 11-04 on the implementing rules on assessment of national internal
revenue taxes. A list of recent and relevant jurisprudence follows.

















































Taxpayei ieceives a Lettei of Authoiity fiom the BIR
BIR investigation oi examination of ietuins anu books of
accounts
CIR oi authoiizeu iepiesentative issues the PAN
!"#$% '()*+(,-.,/) -)(,01 20( 3**)**4)5.%
67 8)5)(39 (:9)% ; <)3(* 32.)( .=) 93*. 13<
-()*+(,>)1 >< 93? 20( 2,9,5@ 02 ().:(5 AB)+7
CD;E !FGHI
C7 $J+)-.,05*% F5 +3*) 02 239*) 0( 2(3:1:9)5.
().:(5 ?,.= ,5.)5. .0 )/31) .3J)*E
3**)**4)5. ?,.=,5 6D <)3(* 2(04 1,*+0/)(<
AB)+7 CCCE !FGHI 351 K3,/)(
!"#$% 'L! ,* 50. ()M:,()1 ,5 35< 02 .=) 20990?,5@% ANOPQNL! ,**:)* ,44)1,3.)9<I
67 F2 1)2,+,)5+< ,* .=) ()*:9. 02 43.=)43.,+39 )((0( ,5 +04-:.3.,05
C7 P,*+()-35+< >).?))5 .3J ?,.==)91 351 340:5. 3+.:399< ()4,..)1 ><
?,.==091,5@ 3@)5.
;7 #3J-3<)( 0-.)1 3 +93,4 02 ()2:51 0( +()1,. 02 )J+)** HK# ?=0 +3((,)1
0/)( 351 3:.043.,+399< 3--9,)1 .=) *34) 3@3,5*. )*.,43.)1 .3J 9,3>,9,.,)*
02 *:++))1,5@ <)3(
R7 $J+,*) .3J 1:) 50. -3,1
S7 L(.,+9) 90+399< -:(+=3*)1Q,4-0(.)1 >< .3JT)J)4-. -)(*05 =3* >))5 *091E
.(31)1E .(35*2)(()1 .0 505T)J)4-. -)(*05* AB)+7 CCUE !FGHI
Taxpayei fails to iesponu
within !" $%&' fiom uate of
ieceipt of PAN
Taxpayei pays the amount
assesseu anu the piocess enus
Taxpayei ieplies by uisagieeing
with the finuings of ueficiency
!" $%&' fiom ieceipt of PAN
A Foimal Lettei of Bemanu (FLB) anu Final Assessment Notice (FAN) shall be issueu calling foi payment of
taxpayei's ueficiency tax liability, inclusive of applicable penalties
!"#$% #=) NOPQNL! VWB# *.3.) .=) 23+.*E
93?E (:9)* 351 ()@:93.,05*E 0( X:(,*-(:1)5+)
05 ?=,+= .=) 3**)**4)5. ,* >3*)17
!"#$%&'($) "#$ +(($((,$-" '( .!/0 (Sec.
S.1.S RR 12-99,
as amenueu by RR 18-1S)

Paienthetically, the PAN must also contain
the facts, law, iules anu iegulations, oi
juiispiuuence on which the pioposeu
assessment is baseu.
Taxpayei pays the assessment. The piocess enus.
Taxpayei ignoies the FLBFAN anu fails to file a
valiu piotest within the time peiiou, %''('')(*+
',%-- .(/0)( 123456 (7(/8+09&6 $()%*$%.-(.
0iuinaiy collection follows (see NIRC).
Taxpayei uisputes the assessment :;+,;* <=
$%&'. Piotest pioceuuie follows. (*)) 5)J. -3@))
12"'3- 45
6+78+5$%
12"'3- 45
6+78+5$%
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109 >;'?8+($ 4''('')(*+' @A90+('+B
K=0: Taxpayei oi his authoiizeu iepiesentative oi tax agent
K=)5: C;+,;* <= $%&' fiom uate of ieceipt of the FLBFAN
K=3.: Taxpayei piotests the assessment by filing a wiitten iequest foi ieconsiueiation oi ieinvestigation
H05.)5.* 02 .=) '(0.)*.%
1. Natuie of piotest (ieconsiueiation oi ieinvestigation); if ieinvestigation, specify newauuitional eviuence
2. Bate of assessment notice
S. Applicable law, iules anu iegulations, oi juiispiuuence ielieu upon

0TBERWISE, piotest consiueieu DE2> %*$ C2FGEHF 1EIJK 43> K11KJF
Request foi Reconsiueiation
A plea of ie-evaluation of an assessment
Basis: existing iecoius, no auuitional eviuence
Questions of fact anuoi law
Request foi Reinvestigation
A plea of ie-evaluation of an assessment
Basis: Newly uiscoveieu oi auuitional eviuence
Question of fact anuoi law
Submit all ielevant suppoiting
uocuments :;+,;* L= $%&'
fiom uate of filing piotest
Failuie to submit within 6u
uays, assessment becomes
12345
!"#$% Y()9)/35. *:--0(.,5@ 10+:4)5.*Z ()2)( .0
.=0*) 10+:4)5.* 5)+)**3(< .0 *:--0(. .=) 9)@39
351 23+.:39 >3*)* ,5 1,*-:.,5@ 3**)**4)5.

!"#$% #=) .)(4 Y3**)**4)5. *=399 >)+04) 2,539Z 4)35*
.=3. .=) .3J-3<)( ,* >3(()1 2(04 1,*-:.,5@ .=)
+0(()+.5)** 02 .=) ,**:)1 3**)**4)5. >< ,5.(01:+.,05 02
5)? 0( 311,.,0539 )/,1)5+)7
CIR's authoiizeu iepiesentative
4112IMN the piotest, it
J43JK5N the assessment.
Piocess enus.
Piotest ;' *0+ %/+($ upon by
CIR's authoiizeu iepiesentative
within !O= $%&' counteu fiom:
1. uate of filing piotest
(in ieconsiueiation)
2. uate of submission of
uocuments (in
ieinvestigation)
CIR's authoiizeu iepiesentative
>K32KN the piotest
12"'3- 45
9/:;:$8

Appeal to CTA
within <= $%&' fiom
ieceipt of uecision
Auministiative
appeal oi iequest
foi ieconsiueiation
to CIR :;+,;* <=
$%&' fiom ieceipt
of uecision
Await the final
uecision of the CIR
oi uuly authoiizeu
iepiesentative on
the uisputeu
assessment
!"#$%
- !0 ()M:)*. 20( (),5/)*.,@3.,05 3990?)1 ,5 314,5
3--)39[ "59< ,**:)* (3,*)1 ,5 .=) 1)+,*,05 02 .=) HFG\*
1:9< 3:.=0(,])1 ()- *=399 >) )5.)(.3,5)1 >< HFG
- VG 02 HFG^* 1)5,39 02 -(0.)*. 0( 314,5 3--)39E *=399
!"# .099 .=) ;DT13< -)(,01 .0 3--)39 .0 H#L

Appeal to CTA
within <= $%&' fiom
expiiation of the
18u-uay peiiou
6+78+5$%
,+5<
If uenieu, appeal to
CTA.
6+78+5$%
,+5<
If uecision is uenial,
appeal to CTA
!"#$% F5 +3*) 02 ,53+.,05 ?,.=,5 .=) 6UDT13< -)(,01E
.=) 0-.,05* ),.=)( 3--)39 .0 H#L 0( 3?3,. 2,539
1)+,*,05 02 HFG 3() VW#WLOO_ )J+9:*,/)7 G)*0(. .0
05) >3(* .=) 0.=)(7
Inaction within
18u-uays
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NOTES ON THE PROCEDURE

1. The amendment deleted the Notice of Informal Conference
2. The amended RR 12-99 provides that the CIR or his duly authorized representative shall
issue the PAN, FLD/FAN, and the FDDA. The term duly authorized representative refers to
Revenue Regional Directors, Asst. Commissioner-Large Taxpayers Service, Asst.
Commissioner-Enforcement and Advocacy Service (RMC 11-2014)
3. Pursuant to RMC 39-2013:
a. Taxpayers shall file responses to PAN and protests to the FLD/FAN (requests for
reconsideration or reinvestigation) with the duly authorized representative of the CIR
who signed the PAN and FLD/PAN
b. Protests in the nature of requests for reconsideration elevated to the CIR arising from
inactions or adverse decisions of the duly authorized representatives shall be filed with
the Office of the CIR
4. Prior to issuance of PAN, taxpayer may be allowed to make voluntary payments of probable
deficiency taxes and penalties. (RMC 11-2014)


RELEVANT JURISPRUDENCE

1. So long as the parties are given the opportunity to explain their side, the requirements of
due process are satisfactorily complied with. (Calma v. CA, 1999)
4AAK45 FE JF4
Within Su uays fiom ieceipt of uecision oi lapse of the 18u-uay peiiou
Appeal is maue to the CTA uivision
CTA ueciues in favoi of taxpayei
0iueis the J43JK554F2E3 of the assessment
CTA ueciues in favoi of CIR
Piotest is >K32K> anu Assessment HAGK5>
Aggiieveu paity may file NRNNT to the CTA
Bivision within 1S uays. (Rule 8, Sec. S(b), Rev
Rules of CTA)
Aggiieveu paity fiom the iesolution on the
NRNNT may then file a Petition foi Review
befoie the CTA En Banc.
If CIR uoes not file
an NR, piocess
enus.
If taxpayei uoes not
file NR, he pays
CTA En Banc upholus uecision
in favoi of taxpayei
CTA en banc upholus the uecision
in favoi of the CIR
Aggiieveu paity may appeal
to the SC via Rule 4S
No appeal, piocess enus. No appeal, taxpayei pays.
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2. Failure to strictly comply with notice requirements prescribed under Sec. 228, NIRC and RR
12-99 is tantamount to a denial of due process. (Luang v. CIR, CTA Case No. 7967, 2012)


3. Suppose the BIR sent an assessment notice within the prescriptive period but the taxpayer
did not receive it within the same period, can he/she still use the defense of prescription?
a. NO. The assessment is deemed made when notice to this effect is released, mailed, or
sent by the Collector to the taxpayer. It is not required that the notice be received by
the taxpayer within the prescriptive period. (Basilan Estates, Inc. v. CIR and CTA, 1967)

4. Commissioner of Internal Revenue v. Isabela Cultural Corporation, 2001
a. An FLD/FAN issued reiterating immediate payment of deficiency taxes and penalties
previously made in the PAN is a denial of the response to the PAN.
b. A final demand letter for payment of delinquent taxes may be considered a decision on
a disputed assessment.

5. CIRs actions deemed equivalent to denial of protest:
a. Filing of collection suit against taxpayer (CIR v. Union Shipping)
b. Issuing a warrant of distraint and levy (Commissioner v. Algue)
c. Where there is a request for reconsideration, final demand letter from BIR (CIR v. Isabela
Cultural Corp)
d. Notice of delinquency (CIR v. Ayala Securities)
e. Demand letter from the CIR wherein the tenor thereof connotes a final determination of
a denial of the protest. However, the Court also stated that in the future,
commissioners should indicate clearly whether a decision is its final determination of
an assessment to avoid confusion. (Surigao v. CTA)

6. Failure to comply with the 30-day statutory period would bar the appeal and deprive the
CTA of its jurisdiction to entertain and determine the correctness of the assessment. It
renders the assessment final, executory, and demandable. (RCBC v. CIR)