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Time and
again, taxpayers have faced tax assessments which are
issued against them by the Bureau of Internal Revenue (BIR).
It must be noted that while specific remedies are
available to taxpayers and the BIR alike, these must,
however, be exercised in consonance with the tenets of
due process of law.
Both
must abide by the legal process which is strictly
governed by the rules of procedure that mandate the
availability of a particular remedy only for a certain
period.
This
principle was further entrenched in jurisprudence when
the Supreme Court ruled in the case of Commissioner of
Internal Revenue v. BF Goodrich Philippines Inc. (G.R.
104171, February 24, 1999) that “the purpose of
safeguarding taxpayers from any unreasonable
examination, investigation or assessment, our tax law
provides a statute of limitations in the collection of
taxes. Thus, the law on prescription, being a remedial
measure, should be liberally construed in order to
afford such protection. As a corollary, the exceptions
to the law on prescription should perforce be strictly
construed.”
Considering the same, it is best for taxpayers to use
extraordinary prudence and vigilance at every stage of
the assessment process, which often entails
administrative and judicial proceedings.
This
brings to mind the recent ruling of the Court of Tax
Appeals (CTA) in the case of Fil-Hispano Holdings
Corporation v. Commissioner of Internal Revenue, CTA EB
343, June 12, 2008, where the taxpayer was assessed for
deficiency creditable withholding and documentary-stamp
taxes on the contract of sale of land and improvements
that it previously entered into as seller in December
2001.
In its
own interpretation of the statute of limitations
provided under Section 228 of the Tax Code, as enforced
under Revenue Regulations 12-99, the taxpayer alleged
that it had timely filed its petition for review before
the CTA.
The CTA
en banc ruled otherwise and held that although the
taxpayer had timely filed its protest, it failed to file
supporting documents within 60 days since what it had in
fact filed was merely a letter indicating their decision
to file an appeal with the CTA. In view of such failure
to file relevant supporting documents, the CTA said the
reckoning point for the 180-day period within which the
assessment shall be deemed final due to inaction of the
Commissioner of Internal Revenue (CIR) should have been
the date when the protest was filed, excluding the
60-day period to file supporting documents.
The
subsequent failure of the taxpayer to file a petition
for review with the CTA within 30 days from the lapse of
the 180-day period, reckoned from the date the protest
was filed, renders the assessment final, executory and
demandable. In this case, the taxpayer did not wait for
the decision of the CIR and instead availed itself of
the option to appeal its assessment with the CTA
following the 180-day rule.
The CTA
also declared that denial of the petition for review
would still be proper even if the letter filed by the
taxpayer is considered as a relevant supporting
document, since it was admitted by the latter that the
petition would still be filed three days late under the
circumstances.
To cover
all bases, the CTA also held that although the decision
rendered by the revenue region was further reiterated in
a letter subsequently sent to the taxpayer, and was
allegedly not yet final, this, in effect, would result
in a situation where such taxpayer has prematurely filed
its petition, since the same was made prior to the
expiration of the 180-day period given to the
commissioner to act on the matter.
Accordingly, the mistakes made by the taxpayer was fatal
to his case as it must be remembered that in the
instance that a statutory remedy provides as a condition
precedent that the action to enforce it must be
commenced within a prescribed time, such requirement is
jurisdictional and failure to comply therewith may be
raised in a motion to dismiss. (Ker & Company, Ltd. v.
Court of Tax Appeals, G.R. 168498, June 16, 2006.)
From the
forgoing, it is obvious that tax assessments should be
taken seriously. Each stage of the assessment has its
own purpose, and the remedies available to taxpayers
should be utilized at the proper time.
The
author is an associate of BDB Law. If you have any
comments or questions concerning the article, you can
e-mail the author at olivergil.m.beltran@bdblaw.com.ph
or call 856-2952. |
