Aban Review

TAX ATIONSan Beda College of LAW – ALABANG GENERAL PRINCIPLES b.Regulation – As in the case of taxes levied on I. Concepts, Nature and Characteristics of excises and privileges like those imposed in Taxation and Taxes. tobacco or alcoholic products or amusement places like night clubs, cabarets, cockpits, etc. In the case of Caltex Phils. Inc. vs COA Taxation Defined: (G.R. No. 92585, May 8, 1992), it was held that taxes may also be imposed for a regulatory As a process, it is a means by which the purpose as, for instance, in the rehabilitation and sovereign, through its law-making body, raises stabilization of a threatened industry which is revenue to defray the necessary expenses of the affected with public industry like the oil industry. government. It is merely a way of apportioning the costs of government among those who in c.Reduction of Social Inequality – this is some measures are privileged to enjoy its made possible through the progressive system of benefits and must bear its burdens. taxation where the objective is to prevent the under-concentration of wealth in the hands of few As a power, taxation refers to the inherent individuals. power of the state to demand enforced contributions for public purpose or purposes. d.Encourage Economic Growth – in the realm of tax exemptions and tax reliefs, for instance, Rationale of Taxation - The Supreme Court the purpose is to grant incentives or exemptions held: in order to encourage investments and thereby “It is said that taxes are what we pay for promote the country’s economic growth. civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the e.Protectionism – in some important sectors of natural reluctance to surrender part of one’s the economy, as in the case of foreign hard-earned income to the taxing authorities, importations, taxes sometimes provide protection every person who is able must contribute his to local industries like protective tariffs and share in the running of the government. The customs. government for its part is expected to respond in the form of tangible and intangible benefits Taxes Defined intended to improve the lives of the people and enhance their moral and material values. The Taxes are the enforced proportional symbiotic relationship is the rationale of contributions from persons and property levied by taxation and should dispel the erroneous notion the law-making body of the State by virtue of its that it is an arbitrary method of exaction by those sovereignty for the support of government and in the seat of power. for public needs. Taxation is a symbiotic relationship, whereby in exchange for the protection that the Essential Characteristic of Taxes [ LEMP3S ] citizens get from the government, taxes are paid.” (Commissioner of Internal Revenue vs 1.It is levied by the law-making body of the Allegre, Inc.,et al., L-28896, Feb. 17, 1988) State The power to tax is a legislative power Purposes and Objectives of Taxation which under the Constitution only Congress can exercise through the enactment of laws. 1.Revenue – to provide funds or property with Accordingly, the obligation to pay taxes is a which the State promotes the general welfare and statutory liability. protection of its citizens. 2.It is an enforced contribution 2.Non-Revenue [PR2EP] A tax is not a voluntary payment or donation. It is not dependent on the will or contractual assent, express or implied, of the a.Promotion of General Welfare – Taxation person taxed. Taxes are not contracts but positive may be used as an implement of police power in acts of the government. order to promote the general welfare of the people. [see Lutz vs Araneta (98 Phil 148) and Osmeňa vs Orbos (G.R. No. 99886, Mar. 31, 3.It is generally payable in money 1993)] TAX ATION San Beda College of LAW – ALABANG Tax is a pecuniary burden – an exaction to a.It does not mean that only those who are able be discharged alone in the form of money which to pay and do pay taxes can enjoy the privileges must be in legal tender, unless qualified by law, and protection given to a citizen by the such as RA 304 which allows backpay certificates government. as payment of taxes. b.From the contributions received, the government renders no special or commensurate 4.It is proportionate in character - It is ordinarily benefit to any particular property or person. based on the taxpayer’s ability to pay. c.The only benefit to which the taxpayer is entitled is that derived from his enjoyment of the 5.It is levied on persons or property - A tax privileges of living in an organized society may also be imposed on acts, transactions, rights established and safeguarded by the devotion of or privileges. taxes to public purposes. (Gomez vs Palomar, 25 SCRA 829) 6.It is levied for public purpose or purposes - d.A taxpayer cannot object to or resist the Taxation involves, and a tax constitutes, a burden payment of taxes solely because no personal to provide income for public purposes. benefit to him can be pointed out as arising from the tax. (Lorenzo vs Posadas, 64 Phil 353) 7.It is levied by the State which has jurisdiction over the persons or property. - The persons, 3.Lifeblood Theory property or service to be taxed must be subject Taxes are the lifeblood of the government, to the jurisdiction of the taxing state. being such, their prompt and certain availability is an imperious need. (Collector of Internal Revenue vs. Goodrich International Rubber Co., Theory and Basis of Taxation Sept. 6, 1965) Without taxes, the government would be paralyzed for lack of motive power to 1.Necessity Theory activate and operate it. Taxes proceed upon the theory that the existence of the government is a necessity; that it cannot continue without the means to pay its Nature of Taxing Power expenses; and that for those means, it has the right to compel all citizens and properties within 1.Inherent in sovereignty – The power of its limits to contribute. taxation is inherent in sovereignty as an incident In a case, the Supreme Court held that: or attribute thereof, being essential to the Taxation is a power emanating from existence of every government. It can be necessity. It is a necessary burden to preserve the exercised by the government even if the State’s sovereignty and a means to give the Constitution is entirely silent on the subject. citizenry an army to resist aggression, a navy to a.Constitutional provisions relating to the power defend its shores from invasion, a corps of civil of taxation do not operate as grants of the power servants to serve, public improvements designed to the government. They merely constitute for the enjoyment of the citizenry and those limitations upon a power which would otherwise which come with the State’s territory and be practically without limit. facilities, and protection which a government is b.While the power to tax is not expressly supposed to provide. (Phil. Guaranty Co., Inc. vs provided for in our constitutions, its existence is Commissioner of Internal Revenue, 13 SCRA recognized by the provisions relating to taxation. 775). In the case of Mactan Cebu International Airport Authority vs Marcos, Sept. 11, 1996, as an 2.The Benefits-Protection Theory incident of sovereignty, the power to tax has The basis of taxation is the reciprocal duty been described as “unlimited in its range, of protection between the state and its acknowledging in its very nature no limits, so that inhabitants. In return for the contributions, the security against its abuse is to be found only in taxpayer receives the general advantages and the responsibility of the legislative which imposes protection which the government affords the the tax on the constituency who are to pay it.” taxpayer and his property. 2.Legislative in character – The power to tax is exclusively legislative and cannot be exercised by Qualifications of the Benefit-Protection the executive or judicial branch of the Theory: government. TAX ATION San Beda College of LAW – ALABANG 3.Subject to constitutional and inherent for which the taxing power may be used but the limitations – Although in one decided case the degree of vigor with which the taxing power may Supreme Court called it an awesome power, the be employed in order to raise revenue (I Cooley power of taxation is subject to certain limitations. 179-181) Most of these limitations are specifically provided in the Constitution or implied therefrom while the •Constitutional Restraints Re: Taxation is rest are inherent and they are those which spring the Power to Destroy from the nature of the taxing power itself While taxation is said to be the power to although, they may or may not be provided in the destroy, it is by no means unlimited. It is equally Constitution. correct to postulate that the “power to tax is not the power to destroy while the Supreme Court sits,” because of the constitutional Scope of Legislative Taxing Power [S2 A P K A restraints placed on a taxing power that violated M] fundamental rights. In the case of Roxas, et al vs CTA (April 1.subjects of Taxation (the persons, property or 26, 1968), the SC reminds us that although the occupation etc. to be taxed) power of taxation is sometimes called the power 2.amount or rate of the tax to destroy, in order to maintain the general 3.purposes for which taxes shall be levied public’s trust and confidence in the Government, provided they are public purposes this power must be used justly and not 4.apportionment of the tax treacherously. The Supreme Court held: 5.situs of taxation “The power of taxation is sometimes 6.method of collection called also the power to destroy. Therefore it should be exercised with caution to minimize Is the Power to Tax the Power to Destroy? injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, In the case of Churchill, et al. vs lest the tax collector kill the ‘hen that lays the Concepcion (34 Phil 969) it has been ruled that: golden egg’. And, in order to maintain the general The power to impose taxes is one so public’ trust and confidence in the Government unlimited in force and so searching in extent so this power must be used justly and not that the courts scarcely venture to declare that it treacherously.” is subject to any restriction whatever, except The doctrine seeks to describe, in an such as rest in the discretion of the authority extreme, the consequential nature of taxation which exercise it. No attribute of sovereignty is and its resulting implications, to wit: more pervading, and at no point does the power a.The power to tax must be exercised with of government affect more constantly and caution to minimize injury to proprietary rights of intimately all the relations of life than through the a taxpayer; exaction made under it. b.If the tax is lawful and not violative of any of And in the notable case of McCulloch vs the inherent and constitutional limitations, the Maryland, Chief Justice Marshall laid down the fact alone that it may destroy an activity or object rule that the power to tax involves the power of taxation will not entirely permit the courts to to destroy. afford any relief; and According to an authority, the above c.A subject or object that may not be destroyed principle is pertinent only when there is no power by the taxing authority may not likewise be to tax a particular subject and has no relation to a taxed. (e.g. exercise of a constitutional right) case where such right to tax exists. This opt- quoted maxim instead of being regarded as a Power of Judicial Review in Taxation blanket authorization of the unrestrained use of The courts cannot review the wisdom or the taxing power for any and all purposes, advisability or expediency of a tax. The court’s irrespective of revenue, is more reasonably power is limited only to the application and construed as an epigrammatic statement of the interpretation of the law. political and economic axiom that since the Judicial action is limited only to review financial needs of a state or nation may outrun where involves: any human calculation, so the power to meet 1.The determination of validity on the tax in those needs by taxation must not be limited even relation to constitutional precepts or provisions. though the taxes become burdensome or 2.The determination, in an appropriate case, of confiscatory. To say that “the power to tax is the the application of the law. power to destroy” is to describe not the purposes Fiscal Adequacy – the sources of tax revenue should coincide with. community tax. L-10963. inc. in proportion to the taxpayer’s ability to pay (Phil. Feb. percentage taxes.Property Taxes – taxes on things or property 4. TAX ATION San Beda College of LAW – ALABANG Aspects of Taxation 1. but the evident intention is to fixed amount upon all persons of a certain class exempt the contractor so that such contractor within the jurisdiction of the taxing power without may no longer shift or pass on any tax to the regard to the amount of their property or contractee. 2. estate tax enforcement of the obligation on the part of those who are taxed.When the consumer or end-user of a government would be in keeping with the manufacturer product is tax-exempt. L-19707.Where the exemption from indirect tax is given 1. Acetylene Co. the contractor may claim tax occupations or businesses in which they may be exemption on the transaction (Commissioner of engaged in. the manufacturer be capable of convenient. (this includes payment by the 2.Levy – determination of the persons.When the transaction itself is the one that is tax-exempt but through error the seller pays the II. examples: income tax. estate tax or donor’s tax . but must hold it in trust for Classification of Taxes buyer. value-added tax. example: community tax et. property B.. 1963) A. 2. The 1987 Constitution Internal Revenue et. Aug. exemption covers only those taxes for which such consumer or end-user is directly liable. but the burden thereof can be “taxation system”. Indirect 2. sales tax. Hence. case. Inc. the sum or sums to be raised. or the engaging in an occupation. examples: VAT. April 30. shifted or passed to another person. L-31092. al. the due date thereof and the time and 1. then the buyer of the product or service sold has a right to 3.Theoretical Justice – the tax burden should be the manufacturer might have passed on to him. such principle.Collection – consists of the manner of donor’s tax. and approximate the needs Important Points to Consider of government expenditure.As to Subject matter 3.As to Burden or excises to be taxed. (American Rubber Co. neither can the consumer or buyer of the product demand the refund of the tax that 3. capitation or poll taxes – taxes of to the contractee. the seller gets the refund. vs Commissioner of (ability-to-pay principle). Macaraig.Direct Taxes – taxes wherein both the manner of levying and collecting taxes (strictly “incidence” as well as the “impact” or burden of speaking.Indirect Taxes – taxes wherein the incidence taxpayer and is referred to as tax administration) of or the liability for the payment of the tax falls The two processes together constitute the on one person.. Neither an excess regarding Indirect Taxes: nor a deficiency of revenue vis-à-vis the needs of 1. 1987) 2. just and effective cannot claim exemption from the payment of administration. clearly manifest therein that legislative intention example: real estate tax to exempt embraces indirect taxes. 1987) requires taxation to be equitable and uniform. customs Basic Principles of a Sound Tax System [FAT] duties excise taxes on certain specific goods 1.When the law granting tax exemption of a certain class within the jurisdiction of the specifically includes indirect taxes or when it is taxing power.Excise Taxes – charges imposed upon the be reimbursed the amount of the taxes that the performance of an act. Classifications and Distinction tax and shifts the same to the buyer.17.. (Maceda vs privilege.Administrative Feasibility – tax laws should taxes are not included. such refers to taxation) the tax faces on one person.al. 27.Personal. Internal Revenue vs John Gotamco and Sons. the enjoyment of a sellers passed on to him.supra) examples: income tax. TAX ATION San Beda College of LAW – ALABANG C.generally intended to 1.e.generally.e.Special Assessment vs Tax tax Special Assessment – an enforced proportional contribution from owners of lands especially or peculiarly benefited by public 1.Ad Valorem Tax – tax based on the value of the article or thing subject to tax.paid for the use of of the government another’s property 3.amount depends on 1. 2.General/Fiscal/Revenue – tax imposed for the general purposes of the government.As to Scope or authority imposing the c.Regressive Tax – the tax rate decreases as the individuals or entities amount of income or earning (tax base) to be taxed increases. Tax vs Penalty 1. public improvement examples: income tax.Mixed Tax – tax rates are partly progressive and partly regressive.National Tax – tax imposed by the National improvements.. unit or number. and other government government or private percentage taxes individuals or entities F. Government units.Proportionate Tax – tax rates are fixed on a raise revenue conduct flat tax base. customs Tax vs Toll duties 1.As to Measure of Application focuses on indirect taxes. 3.designed to regulate 4.imposed by the government government or private 2.imposed only by the 2. Toll – sum of money for the use of Examples: taxes on distilled spirits. i. professional tax all taxes •Regressive System of Taxation vis-à-vis 2.Specific Tax – tax imposed per head.demand of sovereignty proprietorship E. Examples: educational fund tax under Real Regressive Tax: tax the rate of which Property Taxation decreases as the tax base increases. and almost examples: real estate tax. bridge of the like. Note: We have no regressive taxes (this is b. VAT. must not be confused economic needs.Municipal/Local Tax – tax imposed by Local revenues for governmental needs.Progressive Tax – the rate or the amount of to amount imposed the cost of construction the tax increases as the amount of the income or or maintenance of the earning (tax base) to be taxed increases. VAT.imposed by the examples: real estate tax. Regressive System of Taxation: D. estate tax. wines. something.imposed only by the 4. of a public nature.As to Purpose examples: national internal revenue taxes. Examples: income taxes. to achieve some social or A regressive tax.As to Date 2. i. ..demand of 1. it exists when there are more indirect taxes imposed than direct taxes. with regressive system of taxation.Toll vs Tax to be taxed.paid for the support 2. donor’s used tax 4. or by some standard of weight or Taxes distinguished from other Impositions measurement and which requires no assessment beyond a listing and classification of the subjects a. 1. Government.Penalty vs Tax according to De Leon) Penalty – any sanctions imposed as a punishment for violations of law or acts deemed injurious. no limit as 3. to raise 2.Special/Regulatory – tax imposed for special Regressive Tax purposes. 2. customs duties 1. generally applied to the consideration and fermented liquors which is paid for the use of a road. example: real property taxes. properties which are actually.generally no limit in 4.imposed on the right poll tax .Since special assessments are not taxes within 2.imposed on persons.But a tax may have only a regulatory purpose.exceptional both as (see Apostolic Prefect time and place vs Treas.imprisonment is a 5.Some limitations apply only to one and not to Important Points to Consider the other. vs Quezon City.non-payment makes Assessment not necessarily make the act or business 1. contracts.Licenses for the regulation or restriction of non- well as on benefits benefits useful occupations or enterprises received 3.non-payment does 6. L-12647.personal liability of 2.generally payable in 3.an exercise of the 4. his liability is limited recognized in the law: only to the land 1. charitable and 5. Tax vs License/Permit Fee Tax vs Debt 1. a tax and a license fee. Of Baguio.based wholly on 2. however. 1967 and apply to special assessments. delicts or quasi-delicts between of regulation.( see the primary purpose. maybe considered both Sec.generally not subject 4. assessed by sovereign reward of an officer for express or implied authority to defray specific purposes 2. TAX ATION San Beda College of LAW – ALABANG persons and property to exercise privilege Tax vs Special 6.An extraction.for regulation 3.License or Permit Fee vs Tax e.generally. (see American Mail Line vs Sec. in view of the exempting proviso in 3.The general rule is that an exemption from imposition of a tax. 234 of the Local Government Code. Art. VI of the Constitution does not City of Butuan.based on contracts.based on necessity as 3.levied only on land the act or business illegal property and excise illegal 2. it follows that the exemption under for revenue purposes.based on law 1. May 31.Licenses for revenue only 4.may be paid in kind purposes money 3. related cases) 2.no imprisonment for paid of inspection and sanction for non. 1. non-payment of debt regulation payment of tax except 5. created by imposed under the police power for the purposes law. Three kinds of licenses are i. 3. cannot be 2. 172 SCRA assessment.The power to regulate as an exercise of police the constitutional or statutory provisions on tax power does not include the power to impose fees exemptions.However.may be subject to taxing power police power to set-off or set-off or compensation 4. exclusively used for religious.general application 4.legal compensation or 1.imposed also on 5.Licenses for the regulation of useful involved occupations.Debt vs Tax License or Permit fee – is a charge Debt is based upon juridical tie.an exercise of the 3.amount is limited to compensation the amount of tax to be the necessary expenses 5.not a personal liability the person assessed of the person assessed. 1. (see Progressive taxation does not include exemption from special Development Corp. parties for their private interest or resulting from their own acts or omissions.e. the fact that incidentally Aban) revenue is also obtained does not make the 3 .enforced contribution 1.assignable public expenses assigned 2.for revenue purposes 2. 28(3). but if regulation is imposition of special assessments as well. and that exemption from taxes may Regarding Special Assessments: not include exemption from license fees. 629) d. 71 Importance of the distinctions Phil 547) between tax and license fee: 1.The general rule is that the imposition is a tax if educational purposes are not exactly exempt its primary purpose is to generate revenue and from real property taxes but are exempt from the regulation is merely incidental. directly and 4. TAX ATION San Beda College of LAW – ALABANG 6.governed by special 6.governed by the prescriptive periods ordinary periods of 4.Tariff – it may be used in 3 senses: provided for in the Tax prescriptions a.As a book of rates drawn usually in Code alphabetical order containing the names of 7.does not draw 7.draws interest when several kinds of merchandise with the interest except only so stipulated, or in case corresponding duties to be paid for the same. when delinquent of default b.As duties payable on goods imported or exported (PD No. 230) General Rule: Taxes are not subject to set-off or c.As the system or principle of imposing duties legal compensation. The government and the on the importation/exportation of goods. taxpayer are not creditors and debtors or each other. Obligations in the nature of debts are due 5.Internal Revenue – refers to taxes imposed by to the government in its corporate capacity, while the legislative other than duties or imports and taxes are due to the government in its sovereign exports. capacity (Philex Mining Corp. vs CIR, 294 SCRA 687; Republic vs Mambulao Lumber Co., 6 SCRA 6.Margin Fee – a currency measure designed to 622) stabilize the currency. Exception: Where both the claims of the 7.Tribute – synonymous with tax; taxation government and the taxpayer against each other implies tribute from the governed to some form of have already become due and demandable as sovereignty. well as fully liquated. (see Domingo vs Garlitos, L- 18904, June 29, 1963) 8.Impost – in its general sense, it signifies any tax, tribute or duty. In its limited sense, it means a duty on imported goods and merchandise. Pertinent Case: Inherent Powers of the State Philex Mining Corp. vs Commissioner of Internal Revenue 1.Police Power G.R. No. 125704, Aug. 28, 1998 2.Power of Eminent Domain 3.Power of Taxation The Supreme Court held that: “We have consistently ruled that there can be no offsetting Distinctions among the Three Powers of taxes against the claims that the taxpayer may have against the government. A person cannot Taxation Police Eminent refuse to pay a tax on the ground that the Power Domain government owes him an amount equal to or PURPOSE greater than the tax being collected. The - levied for - exercised - taking of collection of a tax cannot await the results of a the to promote property for lawsuit against the government.” purpose of public public use raising welfare thru f.Tax Distinguished from other Terms. revenue regulations AMOUNT OF EXACTION 1.Subsidy – a pecuniary aid directly granted by - no limit - limited to - no exaction, the government to an individual or private the cost of compensation commercial enterprise deemed beneficial to the regulations, paid by the public. issuance of government the license or 2.Revenue – refers to all the funds or income surveillance derived by the government, whether from tax or BENEFITS RECEIVED from whatever source and whatever manner. - no special - no direct - direct benefit or direct benefits but results in the 3.Customs Duties – taxes imposed on goods benefits a healthy form of just exported from or imported into a country. The received economic compensation term taxes is broader in scope as it includes but the standard of customs duties. enjoyment society or TAX ATION San Beda College of LAW – ALABANG of the “damnum 5.International Comity privileges absque of living in injuria” is b.Constitutional Limitations or those an attained expressly found in the constitution or implied organized from its provision society NON-IMPAIRMENT OF CONTRACTS 1.Due process of law - the - contract - contracts may impairment may be be impaired 2.Equal protection of law rule subsist impaired 3.Freedom of Speech and of the press TRANSFER OF PROPERTY RIGHTS 4.Non-infringement of religious freedom - taxes paid - no transfer - property is 5.Non-impairment of contracts become but only taken by the 6.Non-imprisonment for debt or non-payment part of restraint on gov’t upon of poll tax public the exercise payment of just 7.Origin of Appropriation, Revenue and Tariff funds of property compensation Bills right exists SCOPE 8.Uniformity, Equitability and Progressitivity of Taxation - affects all - affects all - affects only persons, persons, the particular 9.Delegation of Legislative Authority to Fx Tariff property property, property Rates, Import and Export Quotas and excise privileges, comprehended 10.Tax Exemption of Properties Actually, and even Directly, and Exclusively used for Religious rights Charitable BASIS 11.Voting requirements in connection with the - public - public -public Legislative Grant of Tax Exemption necessity necessity necessity, 12.Non-impairment of the Supreme Courts’ and the private property jurisdiction in Tax Cases right of the is taken for 13.Tax exemption of Revenues and Assets, state and public use including Grants, Endowments, Donations or the public to Contributions to Education Institutions self- protection c. Other Constitutional Provisions related and self- to Taxation preservation AUTHORITY WHICH EXERCISES THE POWER 1.Subject and Title of Bills - only by - only by the - may be the government granted to 2.Power of the President to Veto an items in an governmen or its public service, Appropriation, Revenue or Tariff Bill t or its political companies, or 3.Necessity of an Appropriation made before political subdivisions public utilities money subdivision 4.Appropriation of Public Money s 5.Taxes Levied for Special Purposes 6.Allotment to LGC III. Limitations on the Power of Taxation Inherent Limitations Limitations, Classified A. Public Purpose of Taxes a.Inherent Limitations or those which restrict 1.Important Points to Consider: the power although they are not embodied in the a.If taxation is for a public purpose, the tax Constitution [P N I T E] must be used: a.1) for the support of the state or 1.Public Purpose of Taxes a.2) for some recognized objects of 2.Non-delegability of the Taxing Power governments or a.3) directly to promote the welfare of 3.Territoriality or the Situs of Taxation the community (taxation as an implement of 4.Exemption of the Government from taxes police power) TAX ATION San Beda College of LAW – ALABANG b.The term “public purpose” is synonymous with “governmental purpose”; a purpose B. Non-delegability of Taxing Power affecting the inhabitants of the state or taxing district as a community and not 1. Rationale: Doctrine of Separation of merely as individuals. Powers; Taxation is purely legislative, Congress cannot delegate the power to c. A tax levied for a private purpose others. constitutes a taking of property without due process of law. 2. Exceptions: a. Delegation to the President (Art.VI. Sec. d. The purposes to be accomplished by 28(2) 1987 Constitution) taxation need not be exclusively public. Although The power granted to Congress under this private individuals are directly benefited, the tax constitutional provision to authorize the President would still be valid provided such benefit is only to fix within specified limits and subject to such incidental. limitations and restrictions as it may impose, tariff rates and other duties and imposts include e. The test is not as to who receives the tariffs rates even for revenue purposes only. money, but the character of the purpose for Customs duties which are assessed at the which it is expended; not the immediate result of prescribed tariff rates are very much like taxes the expenditure but rather the ultimate. which are frequently imposed for both revenue- raising and regulatory purposes (Garcia vs g. In the imposition of taxes, public purpose Executive Secretary, et. al., G.R. No. 101273, July is presumed. 3, 1992) b. Delegations to the Local Government 2. Test in determining Public Purposes in (Art. X. Sec. 5, 1987 Constitution) tax It has been held that the general principle against the delegation of legislative powers as a a. Duty Test – whether the thing to be consequence of the theory of separation of threatened by the appropriation of public revenue powers is subject to one well-established is something which is the duty of the State, as a exception, namely, that legislative power may be government. delegated to local governments. The theory of non-delegation of legislative powers does not b. Promotion of General Welfare Test – apply in maters of local concern. (Pepsi-Cola whether the law providing the tax directly Bottling Co. of the Phil, Inc. vs City of Butuan, et . promotes the welfare of the community in equal al., L-22814, Aug. 28, 1968) measure. c. Delegation to Administrative Agencies with respect to aspects of Taxation not legislative Basic Principles of a Sound Tax System in character. (FAT) example: assessment and collection a. Fiscal Adequacy – the sources of tax revenue should coincide with, and approximate the needs 3.Limitations on Delegation of government expenditure. Neither an excess nor a deficiency of revenue vis-à-vis the needs of a. It shall not contravene any government would be in keeping with the Constitutional provisions or inherent limitations of principle. taxation; b. The delegation is effected either by the b. Administrative Feasibility – tax laws should Constitution or by validly enacted legislative be capable of convenient, just and effective measures or statute; and administration. c. The delegated levy power, except when the delegation is by an express provision of c. Theoretical Justice – the tax burden should Constitution itself, should only be in favor of the be in proportion to the taxpayer’s ability to pay local legislative body of the local or municipal (ability-to-pay principle). The 1987 Constitution government concerned. requires taxation to be equitable and uniform. b.Unless otherwise provided by law.location of the subject matter of the tax 1. A person may be taxed.1) To levy tax upon public property reasonably necessary to the would render necessary new taxes on accomplishment for the purpose other public property for the payment of and not unduly oppressive. liberty or property without f. the fundamental basis of the enter into the territory of another. when performing proprietary of taxes being imposed.Notwithstanding the immunity.Important Points to Consider: b. functions are generally subject to tax in the b.The grounds for the above rule are: be compensation. The interest of the public generally D.1) sovereign equality among states b. the government Administration . The means employed must be a.3) To reduce the amount of money that collection or tax administration has to be handed by the government in If what is delegated is tax legislation.However.” occupation is being exercised Requisites : 1. there is an right to tax is the capacity of the government implied understanding that the power does not to provide benefits and protection to the intend to degrade its dignity by placing itself object of the tax. Reasons for Exemptions: 2. and excise within the territory of the taxing power because: E. 1 Art. 1. 3 “No person shall be e. Territoriality or Situs of Taxation 3.place where the privilege.Government-owned or controlled “place of taxation” depending on the nature corporations. business or due process of law x x x. through which the government immediately and directly exercises its sovereign powers (Infantry Post Exchange vs Posadas.Important Points to Consider: constitutional limitations. or tax government shall not be unduly impede. delegation is invalid.1) Tax laws do not operate beyond a country’s territorial limit. the non-delegability rule exemption applies only to government entities is not violated. a.2) usage among states that when one c. under the jurisdiction of the latter even if he is outside the taxing state. the tax since it cannot be collected b. but if what is involved is 2.Basis: Sec.The property of a foreign state or exclusively within the jurisdiction of government may not be taxed by another. .kind and Classification of the Tax b. the government may tax itself in the absence of any 1.Due Process of Law c. charters or law creating them. the steps taken for its assessment and a.3) foreign government may not be sued there is between him and the taxing state. the the course of its operations.2) In order that the functions of the imposition of the tax [S2 A P K A M].It is an inherent mandate that taxation absence of tax exemption provisions in their shall only be exercised on persons. another state receives none of the protection for which a tax is supposed to b.4) reciprocity among states 2. regulation. a without its consent so that it is useless to assess privity of relationship justifying the levy. the elements that enter into the a.citizenship of the person a. Exemption of the Government from Taxes as distinguished from those of a particular class require the 1.Factors to Consider in determining Situs of Taxation Constitutional Limitations a.Important Points to Consider: intervention of the state. 54 Phil 866) C. the only tax administration. International Comity b. TAX ATION San Beda College of LAW – ALABANG 4.2) Property which is wholly and a.Territoriality or Situs of Taxation means 4. properties. where b.source of income deprived of life.Tax Legislation vis-à-vis Tax the tax so laid and thus. a.Every system of taxation would be taxing itself to raise money to consists of two parts: pay over to itself.domicile or residence of the person d. and and b. the obligation of contract shall be passed.Basis: Sec.Basis: Sec. despotic. Progressive system of Taxation b. TAX ATION San Beda College of LAW – ALABANG 3. 164 the constitution. of expression or of the pressx x x “ 2.Uniformity. a. 5 Art. without class. III. There is curtailment of press a.Requisites for a Valid Classification 1. Congress shall evolve a progressive system 2. Must not be based upon substantial distinctions a. 4 Art. under the Constitution. The rule of uniformity does not call for compliance with fair and perfect uniformity or perfect equality. Must be germane to the purpose of law. just. 3 “ xxx Nor shall any freedom and freedom of thought if a tax is levied person be denied the equal protection of the in order to suppress the basic right of the people laws. (see Tolentino vs Secretary of or kinds or property of the same class shall be Finance. III.Important Points to Consider: places stress on direct rather than indirect taxes. Must not be limited to exiting conditions or prohibiting the free exercise thereof. passed abridging the freedom of speech. The rule of actually in the nature of a condition or permit of taxation shall be uniform and equitable. (see the authority of a valid law or of Commissioner vs. Must not be arbitrary 5. No law shall be or whimsical manner. Lingayen Gulf Electric. and free exercise and enjoyment of religious 5. The the exercise of the right. Uniformity (equality or equal on the sale of religious materials by a religious protection of the laws) means all taxable articles organization. 235 SCRA 630) taxed at the same rate. Must play equally to all members of a profession and worship. A tax is uniform when the same force and effect in every place where the 6. 10 Art. made respecting an establishment of religion 4. b. x x x” 3. . impairs the obligation.1 Art. and SCRA 27) 4. or dispenses with those one particular class for taxation or exemption expressed. III. because reasonable method of procedure this is hardly attainable.Freedom of Speech and of the Press held that in order that due process of law must not be done in an arbitrary.Non-infringement of Religious Freedom 2. Exercise of Religion clause does not prohibit b.Basis: Sec. 2. 28(1) Art.Equal Protection of the Law b. prescribed by law.Basis: Sec. Important Points to Consider: 2. shall be forever be allowed. Important Points to Consider: 1. capricious. This doctrine prohibits class does not constitute a restraint on press freedom legislation which discriminates against some and since it is not imposed for the exercise of a favors others. In a string of cases. A business license may not be 1. Important Points to Consider: Progressivity of Taxation 1. However. privilege but only for the purpose of defraying part of cost of registration. “No law impairing and proportionate to one’s ability to pay. the Supreme Court 4. The only. Inequality which results in singling out those in the contract. A law which changes the terms of the or on the taxpayers’ ability to pay contract by making new conditions. the Constitution or the Free of taxation. However. discrimination or preference. reasonable a.Non-impairment of Contracts subject of it is found. The deprivation was done after 5. Equal protection of the laws required for the sale or contribution of printed signifies that all persons subject to legislation materials like newspaper for such would be shall be treated under circumstances and imposing a prior restraint on press freedom conditions both in the privileges conferred and 3.” 3.Basis: Sec. Important Points to Consider: imposing a generally applicable sales and use tax 1. 1. License fees/taxes would constitute a restraint on the freedom of worship as they are a. Equitable means fair. The deprivation was done under infringes no constitutional limitation. VI. Equitability and b. “No law shall be 3. an annual registration liabilities imposed fee on all persons subject to the value-added tax 2. or changing 4. revenue or tariff bills. directly and exclusively used for religious. and private bills shall originate exclusively in the House of Representatives. however. (Tolentino vs Sec. tariff rates. TAX ATION San Beda College of LAW – ALABANG 2. “All appropriation. Important Points to Consider: must be actually. bills of local with the Legislative Grant for tax exemption application.” other duties or imposts within the framework Sec. a person is subject to imprisonment for purposes. and apportion the jurisdiction of the various subject to such limitations and restrictions as courts but may not deprive the Supreme it may impose. “The Congress Congress may. “The Supreme of the national development program of the Court shall have the following powers: x x government. III. prescribe. 5 (2b) Art. The above provision requires the amendments” but also “to propose concurrence of a majority not of attendees amendments”. VIII. VIII. Voting Requirements in connection increase of the public debt. 101(9)(3). payment is the payment of surcharge in the form 3. (Sec.Non-imprisonment for non-payment of educational purposes shall be exempt from poll tax taxation. The constitutional exemption non-payment of the tax and for non-payment of applies only to property tax. VI. authorize the shall have the power to define. and all lands. The exemption is not limited to date until it is paid. x(2) Review. violation of the community tax law other than for 5. mosques. involving the legality of any tax. VI. charitable or 7. other taxes as prescribed by law. churches and parsonages or repeal by the Congress when the public interest convents appurtenant thereto. VI “x x x The a. However. tonnage and wharfage dues. bill authorizing 11. Under the above provision.” b. so requires.” the concurrence of a majority of all the b. by law. and enumerated in Sec. modify or affirm on appeal or certiorari x x x final judgments and 10.Basis: Sec. revise. orders of lower courts in x x x all cases Directly and Exclusively used for Religious. alteration or institutions. The only penalty for delinquency in the purposes mentioned. Appropriation and charitable and educational organizations would Tariff Bills nevertheless qualify for donor’s gift tax exemption. NIRC) a.Basis: Sec. import and export Court of its jurisdiction over cases quotas.” 2. building.Basis: Sec. gifts made in favor or religious 8. the property b.” power is not only to “only concur with b. Lest of the tax exemption: the use imprisoned for debt or non-payment of poll and not ownership of the property tax.Tax Exemption of Properties Actually. and improvements actually. 28(3) Art. “Charitable franchise is subject to amendment. Imports and Export Quotas Courts’ jurisdiction in Tax Cases a.Origin or Revenue. and President to fix within specified limits. The word “exclusively” means of interest at the rate of 24% per annum which “primarily’. constituting a quorum but of all members of supra) the Congress. the Senator’s members of the Congress. “No person shall be 1.Basis: Sec. 5 (2) Art.Basis: Sec. LGC) property actually indispensable but extends to 2.Basis: Sec. 20 Art. does not apply to public utility franchise since a a. The non-impairment rule. of Finance. 24 Art. VI. necessary for the accomplishment of said Thus. 28(4) Art. shall be added to the unpaid amount from due 4. impost. (Sec. Charitable and Educational Purposes . 28(2) Art.Delegation of Legislative Authority to 12. 9. it would seem that under existing law. Non-impairment of the Supreme Fix Tariff Rates. non-profit cemeteries. 6. To be tax-exempt. Important Points to Consider: a. a. directly and exclusively used for 1. The prohibition is against facilities which are incidental to and reasonably “imprisonment” for “non-payment of poll tax”. 161. “No law granting but the Senate may propose or concur with any tax exemption shall be passed without amendments. 5 hereof. The said constitutional provision granting 7716) was also questioned on the ground that tax exemption to non-stock. non-profit educational institutions: 1. donations or contributions used library and school facilities. In the case.” c.Subject and Title of Bills (Sec. endowments. Constitution) the facilities mentioned must not only be owned and operated by the school itself but such ”No public money or property shall be facilities must be located inside the school appropriated. endowments. and improvements actually. 4(4) Art. Religion (Sec.Necessity of an Appropriation made before money may be paid out of the The following are some of the highlights of the Treasury (Sec. 5. Art. The exemption granted to non-stock. sectarian institution. fees. including grants. 1. of proprietary (for profit) educational institutions require prior 2. (Sec.” Other Constitutional Provisions related to b. and donor’s taxes. however. In the case or religious and charitable entities and non-profit cemeteries. the exemption →in the Tolentino E-VAT case. whether the educational institution is Appropriation. Tax Exemptions of Revenues and dividends and rental income are taxable. Revenue or Tariff Bill not self-executing. directly campus. 1987 3.Basis: Sec. Art.” operations like income from bank deposits. Art. of incidental income. Tax exemptions. 29(2). actually. benefit. The use of the school’s income or assets donations or contributions to Educational must be in consonance with the purposes for Institutions which the school is created. 13.Appropriation of Public Money for the income derived from canteen.” 3. all grants. or system of religion or of any priest. or the Expanded Value Added Tax Law (RA 4. 137- 87. expressed in the title thereof. support of any concessionaires are taxable. non- profit educational institution covers income. To be exempt from tax or duty. supra. XIV. a.Department of Finance Order No. 1987 Constitution) 2. trust fund and similar arrangements. TAX ATION San Beda College of LAW – ALABANG assessment. denomination. applied. 27(2). in short. sect. 26(1) property. property or donation must be used “Every Bill passed by Congress shall actually. shall not affect the item or items to which he does not object. or toll or any penalty imposed in 3. Assets. church.” miscellaneous feed such as matriculation. directly and exclusively for educational embrace only one subject which shall be purpose. 29(1).Power of the President to Veto items in legislative implementation. Constitution) stock. dated Dec. the revenue. directly. and exclusively used for “The President shall have the power to educational purposed are exempt from property veto any particular item or items in an tax. Sect. Revenue or Tariff bill but the veto proprietary or non-profit. Lands. bill was not followed. ROTC. Buildings. VI of the 1987 Constitution) 6. . but it also extends to incidental 4. VI of the 1987 DOF order governing the tax exemption of non. directly and exclusively for educational purposes shall be exempt from tax. Income which is unrelated to school relation thereto. royalties. is limited to property tax. preacher. and custom duties. assets. etc. Canteens operated by mere or indirectly for the use. 4. and establishment of conditions prescribed by law. library. “Subject to the faculty development. Their tax exemption is an Appropriation. or System of dormitory facilities. paid or employed. however. professional chairs. use must be school-related. VI of the 1987 2. non-profit the constitutional requirement on the title of a educational institution is self-executing. like the grant of scholarships. Important Points to Consider: Taxation 1. 16. bookstore and benefit of any Church. the E-vat. The tax exemption is not only limited to “No money shall be paid out of the revenues and assets derived from strictly school Treasury except in pursuance of an appropriation operations like income from tuition and other made by law. school building expansion. the Supreme Court ruled that or dignitary is assigned to the armed forces or to insurance premium paid on a fire insurance policy any penal institution. the fund and paid out for such purpose only. in the national taxes which shall be automatically Example: our law fixes the situs of released to them. No. 1997 NIRC) Note: In those cases where the situs for IV. 6. G.Double Taxation and the Situs Limitation (see later topic) of Taxation. 1956 to stabilize the merely a fiction of law and is not allowed to stand prices of imported crude oil. It the insurer is benefited thereby. this special fund is legislative jurisdiction exists. 1993) is organized.” the constitutional mandate Example: shares of stock may have situs is not violated.” According to this maxim. Mar.Allotment to Local Governments →Basis: Sec. or the state in which he corporation 99886.Legislative Power to Fix Situs If no constitutional provisions are violated. VI of the 1987 Constitution) insured therein. The OPSF. transferred from the general fund to a “trust liability account. This is because the Philippines Government must get something in return for the “All money collected or any tax levied protection it gives to the insured property in the for a special purpose shall be treated as a special Phils. TAX ATION San Beda College of LAW – ALABANG minister.Protection b. Phils. 6. which means ”movable follow the person. as determined by law. purpose for which a special fund was created has been fulfilled or abandoned the balance. are or leprosarium. Art. there is room for applying the mobilia rule. 31. Even though the fire insurance contract was executed outside the 5. Art. remains as a special fund subject to COA are permanently kept regardless of the domicile audit (Osmeňa vs Orbos. preacher. in the way of taxation of personalty in the place it was held that where under an executive where it has its actual situs and the requisite order of the President. Constitution the power of the legislative to fix situs is “Local Government units shall have a undoubted. of the owner.D. and is for the purpose of taxation where neither the taxable only there. or other religious teacher or dignitary as In the case of Manila Electric Co.” intangible personal property for purposes of the estate and gift taxes. and by reason of such protection. Situs of Taxation 1. This is Fund created under P. Situs of Taxation and Double Taxation certain intangibles are not categorically spelled out. vs Yatco such except when such priest. according to the for purposes of taxation in a state in which they court. X of the 1987 3. property nor the person is within the protection of the taxing state →Rule of Lex Rei Sitae . Situs of Taxation 1. 2.Taxes levied for Special Purpose (Sec.” the situs of personal →An example is the Oil Price Stabilization property is the domicile of the owner. or government orphanage covering property situated in the Phils. and the insurance policy is delivered to the 29(3). 104. (see Sec. just share.Situs of Taxation literally means the Place 4. et al. In a decide case. 2.Basic Rule – state where the subject to be Criteria in Fixing Tax Situs of Subject of taxed has a situs may rightfully levy and collect Taxation the tax a.” taxable in the Phils. if any.Persons – Poll tax may be levied upon •Some Basic Considerations Affecting persons who are residents of the State. minister (69 Phil 89).R.The maxim of Mobilia Sequuntur shall be transferred to the general funds of the Personam and Situs of Taxation government..Real Property – is subject to taxation in the State in which it is located whether the A legal situs cannot be given to property owner is a resident or non-resident. A tax upon the same property imposed by intangible. as where the property has in fact 2.Permissive or Indirect Duplicate jurisdiction and even those who are neither Taxation (Double taxation in its broad sense) – residents nor citizens provided the income is This is the opposite of direct double taxation and derived from sources within the taxing state.Variance in the concept of “domicile” for •Means to Reduce the Harsh Effect of tax purposes. Although the owner resides in another jurisdiction. TAX ATION San Beda College of LAW – ALABANG c.Tax Deduction – subtraction from gross c. however. principle. all of which may receive the 2. January.Exemption or allowance of deductions or deduction reduces taxable income while credit tax credit for foreign taxes reduces tax liability .A tax upon a corporation for its capital stock g. 1.Tangible Personal property – taxable in b.In the personal property is the domicile of the objectionable or prohibited sense means that the owner. Fisher L.The use to which the property may have income in arriving a taxable income been devoted. 4.Tax Credit – an amount subtracted from an protection of the laws of jurisdiction other than individual’s or entity’s tax liability to arrive at the the domicile of the owner total tax liability Remedy – taxation jurisdiction may provide: →A deduction differ from a tax credit in that a a. 3. is subject to taxation in several taxing two different states. the property is located. Occupation.Intangible Personal Property – situs or (Double taxation in its strict sense) . donee. 2. 4.A tax on the mortgage as personal property when the mortgaged property is also taxed at its full value as real estate. f.Multiple distinct relationship that may arise with respect to intangible personality.During the same taxing period 6. is not controlling when it is inconsistent with express provisions of Requisites: statute or when justice demands that it 1. Double Taxation →Rule of Lex Rei Sitae Two (2) Kinds of Double Taxation 1.Enter into treaties with other states the state where it has actual situs – where it is physically located.Same kind or character of tax e. (see Wells Fargo Bank v.Same property is taxed twice should be.Gratuitous Transfer of Property – as a whole and upon the shareholders for their transmission of property from donor to shares.Same taxing authority Collector 70 PHIL 325. 1961) 5.Business.An excise tax upon certain use of property There is multiplicity of situs when the and a property tax upon the same property.A tax upon a corporation for its capital stock be subject to taxation in the state where the as a whole and upon the shareholders for their transferor was a citizen or resident. jurisdictions. and Transaction – power to levy an excise tax depends upon the place where the business is done. Taxation b. is not legally objectionable.Income – properly exacted from persons who are residents or citizens in the taxing 2. and same subject of taxation. in accordance with the principle same property is taxed twice when it should be “MOBILIA SEQUUNTUR PERSONAM”. like income or 6.Obnoxious or Direct Duplicate Taxation d. said taxed only once. This happens due to: a.Within the same jurisdiction 11622. or from a decedent to his heirs may 3. Collector v.Same purpose a situs elsewhere.A tax upon depositions in the bank for their deposits and a tax upon the bank for their V. or where shares. and 1. of the •Instances of Double Taxation in its Broad occupation is engaged in of the transaction Sense not place. Multiplicity of Situs property in which such deposits are invested 5. The absence of one or more of the foregoing requisites of the obnoxious direct tax makes it indirect. fearing the loss of his market if he should add the tax to the price. the shifting is the intermediate undoubtedly unconstitutional but that in the process.Exemption 5.Failure to declare for taxation purposes true Forms of Escape from Taxation and actual income derived from business for two consecutive years. been imposed. Impact and •Constitutionality Incidence of Taxation – the impact is the initial Double Taxation in its stricter sense is phenomenon.Tax Evasion – is the use of the taxpayer of taxpayer. 31.Principle of Reciprocity which a tax burden finally rests or settles down. TAX ATION San Beda College of LAW – ALABANG Impact of taxation – is the point at 3. a license fee is manufacturer or producer upon whom the tax has imposed in the exercise of police power.Avoidance of taxation. b.Doubts as to whether double taxation has been imposed should be resolved in favor of the 4.Onward Shifting – this occurs when b. Such taxation. 2.Where a tax is imposed by the National b.Where. it may not be tax is transferred from a factor of production invoked as a defense against the validity of tax through the factors of distribution until it finally laws. and prevented. Oct.Tax Avoidance – is the use by the taxpayer 1.The taxpayer may seek relief under the Uniformity Rule or the Equal Protection →Indicia of Fraud in Taxation guarantee. Evasion of Taxation is 4. and • Six Basic Forms of Escape from b.Forward Shifting – the burden of prohibit double taxation.Backward Shifting – effected when Government and another by the city for the the burden of tax is transferred from the exercise of occupation or business as the taxes consumer or purchaser through the factors of are not imposed by the same public authority distribution to the factor of production (City of Baguio vs De Leon. broader sense is not necessarily so. a.Treaties with other States Incidence of Taxation – is the point on 5.Transformation – The method whereby the d. whenever possible.Shifting – Transfer of the burden of a tax by of legally permissible alternative tax rates or the original payer or the one on whom the tax method of assessing taxable property or income was assessed or imposed to another or someone in order to avoid or reduce tax liability.Capitalization. 1968) c. endeavors to recoup himself by improving his is something not favored. defined – the reduction in are different kinds of tax the price of the taxed object equal to the c.Exemptions which a tax is originally imposed. aside from the tax. Relations among Shifting. else . 6. 4. pays the tax and Exception: Double Taxation while not forbidden. fiscally speaking. hence. and the incidence is the result. to the absence 5. a.Tax on manufacturer’s products and capitalized value of future taxes which the another tax on the privilege of storing exportable purchaser expects to be called upon to pay copra in warehouses within a municipality are imposed as first tax is different from the second 3.Evasion tantamount.Capitalization →Evasion of the tax takes place only when 3.Transformation there are no proceeds.Substantial underdeclaration of income tax Taxation returns of the taxpayer for four consecutive years 1. Kinds of Shifting: General Rule: Our Constitution does not a. The reason is to avoid injustice and illegal or fraudulent means to defeat or lessen the unfairness.When a Real Estate dealer’s tax is imposed the tax is shifted two or more times either for engaging in the business of leasing real estate forward or backward in addition to Real Estate Tax on the property leased and the tax on the income desired as they 2. it has process of production thereby turning out his been held. should. be avoided units of products at a lower cost. settles on the ultimate purchaser or consumer a. payment of a tax.Shifting coupled with overstatement of deduction. Acetylene vs CIR. At times the law contrary to the intent authorizes condonation of taxes on equitable of the sponsors of the considerations.Grounds for Tax Exemptions convincingly proved that he is exempt 1. 2.Equity. such as. 49 PHIL 466.It implies a waiver on the part of the b. but the contract must contain the other essential 3. Aug.Kinds of Tax Exemptions the law 1. not a ground for Tax Exemption accomplished by accomplished by There is no tax exemption solely on the breaking the letter legal procedures or ground of equity.Nature of Tax Exemption granted by organic or statute of law 1.Exemptions from taxation are highly the exemption has a reasonable foundation or disfavored by law. 98 PHIL exemption allowed which the law-making body 670) considers sufficient to offset monetary loss entailed in the grant of the exemption. Collector of Public interest would be subserved by the Internal Revenue vs. L-21633. Oct. June 29. for example.As to form a. as in the Avoidance taxation of income and intangible personal property Tax Evasion vs Tax Avoidance E. (CIR vs 2.It is not necessarily discriminatory so long as 1. a a. L-19707.Constitutional Exemptions – Immunities from taxation which originate from the VI.It is generally revocable by the government deemed exempt as they fall outside the scope of unless the exemption is founded on a contract the taxing provision itself which is protected from impairment. (Visayan Cebu 1967. reciprocity or to lessen the rigors of international double or multiple taxation which occur where Distinction between Tax Evasion and there are many taxing jurisdictions.He who claims an exemption must justify that the legislative intended to exempt him by Bothelo Shipping Corp.Rationale of tax Exemption Petroleum vs Llanes.Tax Exemption – is a grant of immunity. but equity can be used as a of the law means which maybe basis for statutory exemption.Express Exemption – Whenever expressly B. G. to particular persons or corporations from the obligations to pay taxes.As to extent elements of contracts. for example. and in this sense is prejudicial thereto. 1968) Terminal vs CIR.May be based on some ground of public taxpayer has the legal right to decrease the policy.Partial Exemption – One where collection government of its right to collect what otherwise of a part of the tax is dispensed with would be due to it. L-19530. the public represented by the Government is 4.Tax exemptions must be strictly construed supposed to receive a full equivalent therefore (Phil.He who claims exemptions should D.May be created in a treaty on grounds of permits. 17. Exemption from Taxation Constitution b.As to basis a. Local Government tax law but Code) nevertheless do not violate the letter of F. emanate from Legislation express or implied. or altogether avoid by means which the law 3. words too plain to be mistaken. to encourage new amount of what otherwise would be his taxes and necessary industries. (Asiatic C. Manila Jockey Club. a 2. TAX ATION San Beda College of LAW – ALABANG →Tax Avoidance is not punishable by law.Implied Exemption – Exist whenever grantee particular persons.It is merely a personal privilege of the b. 31.. Feb. properties or excises are 2. exemption must be able to justify by the clearest grant of organic or statute of law.Total Exemption – Connotes absolute valid cause or consideration. 1965) 3.Principles Governing the Tax Exemption 4.May be based on a contract in which case. and he who claims an rational basis. 1967) . immunity 3. L-20960. (Sec 276. 277. CIR vs PAL.Statutory Exemptions – Those which A. 27. such as. Tax laws are neither political nor penal in 2.It is only when an act Exception: The language of the statute clearly complained of. 1999) to taxes arising from the same transaction on 10.R. saying that it was not convinced of the wisdom and proprietary thereof. construed in favor of the taxpayer. vs CIR. 104171. 20. No.In order to declare a tax transgressing the Statutes due process clause of the Constitution it must be Important Points to Consider: so harsh and oppressive in its retroactive 1.The law on prescription. unsettled tax liabilities should be pertinent only G. 1987. (CIR vs 7. taxes therein imposed b. directly involves the illegal retroactive effect.Constitutional grants of tax exemptions are measure. was rejected by educational functions the Supreme Court. should be liberally construed to afford self-executing (Opinion No. however. (Hilado vs Collector. disbursement of public funds derived from taxation that the taxpayer’s suit may be allowed.Tax laws not being penal in character. (Collector vs UST. performing strictly religious. much like a tax exemption is by prescription may be allowed to offset never favored or presumed by law (CIR vs CA.Exemptions from certain taxes granted under special circumstances to special classes of persons. 1999) 8. except for the legislative intent. Sec. are construed law itself. 4. the 3. 100 PHIL 288) 3.On the interpretation and construction of tax application (Fernandez vs Fernandez. which may include legislative demands or express that it shall have a enactment. VII.Deductions for income tax purposes partake of the nature of tax exemptions. hence. PHIL934) 2. and This doctrine.Tax Exemptions are not presumed. 104 PHIL General Rule: Taxes must only be imposed 1062) prospectively Taxpayer’s Suit .Interpretation and Construction of Tax 1. 99 statutes. Jan. being a remedial 6.The exemptions (or equivalent provisions. No. Exception: When provided otherwise by the tax 5. 108576. L-16428. however. 30.Tax exemption are personal. TAX ATION San Beda College of LAW – ALABANG 5. Important Points to Consider VIII.The exemptions. (Lealda Important Point to Consider Electric Co. Apr. Feb.R. they are Doctrine of Equitable Recoupment strictly construed against the tax payer It provides that a claim for refund barred 9.When the law so provides for such liberal limitation in the assessment and collection of construction. liberally in favor of the grantee in the following: Example: NIRC provides for statutes of a. 24. Of protection as a corollary. the exceptions to the Justice) law on prescription be strictly construed. legislative intention must be considered. 1963) 1. G. 130.The rule of strict construction against the government is not applicable where the language rule in the Constitution against the passage of the of the tax law is plain and there is no doubt as to ex post facto laws cannot be invoked.The rule of strict construction of tax which an overpayment is made and exemption should not be applied to organizations underpayment is due. tax statutes are construed nature they are deemed laws of the occupied strictly against the government and liberally territory rather than the occupying enemy.A tax amnesty.Other Doctrines in Taxation and that it may work to tempt both the collecting agency and the taxpayer to delay and neglect Prospectivity of Tax Laws their respective pursuits of legal action within the period set by law. . Imprescriptibility of Taxes such as tax amnesty and tax condonation) are not presumed and when granted are strictly General Rule: Taxes are imprescriptible construed against the grantee. CA. the penalty imposed. charitable.In case of doubt. a. June 27. al. c. Obtaining information.) Bureau of Internal Revenue Exceptions: • Powers and Duties The Court ruled in Commissioner of Internal Revenue vs. estoppel does not apply to Commissioner with respect to receipt deprive the government of its right to raise of payments of internal revenue taxes defenses even if those defenses are being raised authorized to be made through banks. No. Assessment and Collection of all political subdivisions. the preclude the subsequent findings on taxability following are constituted as agents of the (Ibid. 1969.) collection of energy tax.Exemptions to traditional exemptees. the interpret provisions of the NIRC and non-application of estoppel to the government other tax laws.) Commissioner: The principle of tax law enforcement is: a. 1968). penalties and fines connected 6.. Abad. 12 of the 1997 NIRC. vs.The tax laws are presumed valid. et. summoning. 1. public officers do not block the subsequent b. Provincial. G. Bureau of Internal Revenue and the examining and taking testimony of Bureau of Customs for internal revenue persons for purposes of ascertaining and customs law enforcement. Enforcement of all forfeitures. such and charges. TAX ADMINISTRATION AND ENFORCEMENT e. d. Estoppel does not apply to Under Sec. TAX ATION San Beda College of LAW – ALABANG c. as. f. national internal revenue taxes. L- 19627. G. Nowhere is it more true than National Internal Revenue Taxes in the field of taxation (CIR vs. The Commissioner of Customs and his The Government is not estopped by the subordinates with respect to the mistakes or errors of its agents. fees d.A. C.The power to tax is presumed to exist. Execution of judgment in all cases 7. It is the correctness of any return or in noteworthy to note that the BIR is determining the liability of any person largely decentralized in that a great for any internal revenue tax.R.R. delegated to the Regional Directors and Revenue District Officers. or in extent of tax enforcement duties are collecting any such liability. Effecting and administering the supervisory and police powers conferred to it by the Tax Code or other Agencies Involved in Tax Administration laws. Collector of Internal Revenue. al. The head of the appropriate correct application of statutes (E. 15 April 1988. L-23041. Rule of “ No Estoppel Against the 2. therewith.. government office and his Inc. Exclusive and original power to 6 Feb 1997 that like other principles of law. and c. only for the first time on appeal (CIR vs Procter & Gamble Phil. . 117982. Banks duly accredited by the Similarly. erroneous collection of national internal revenue application and enforcement of law by taxes on imported goods. the state cannot be estopped by the neglect of its Agents and Deputies for Collection of agents and officers. Rodriguez. subject to review by admits of exceptions in the interest of the Secretary of Finance. its b. those in favor of charitable institutions. subordinates with respect to the July 31. City and Municipal Government” assessors and treasures for local and real property taxes. 66838. decided in its favor by the Court of Tax Appeals and the ordinary courts. et.Exemptions in favor of the Government. No. It is a settled rule of law that in the performance of its governmental functions. Savellano. or it 81446. L- 36181 and L-36748. L-24213. C. is an assessment wherein the tax assessor has no power to act at all Estoppel Against the Taxpayer (Victorias Milling vs. 13 Mar 1968) While the principle of estoppel may not be d.) requests for the reinvestigation of its tax liabilities such that the government. 10 Mar 1995) a. CIR. CTA. Assessments are prima facie inasmuch as his previous requests for presumed correct and made in good faith. 23 Oct 1992). The taxpayer cannot later on be permitted to raise the defense of prescription 1.This is an assessment made by the tax assessor 2. as where injustice will c.R. assessed for the following reasons: 1. The liability test of judicial scrutiny it must be based on is determined and is. 8 Aug 1988 may be the notice to the effect that the  All presumptions are in favor of tax amount therein stated is due from the assessments (Dayrit vs. Erroneous Assessment – This is an invoked against the government. the taxpayer made several exercise of that power (Ibid. Assessments should not be based on whereby the correct amount of the tax presumptions no matter how logical the is determined after an examination or presumption might be. TAX ATION San Beda College of LAW – ALABANG justice and fair play. G. this is not assessment wherein the assessor has necessarily true in case of the taxpayer. 104151 and 105563. Deficiency Assessment. No amount is shown in the investigation if he finds no ground to return or.R. CTA. The amount ascertained exceeds that which is shown as 3. No amount of tax due from a taxpayer. L-39910. value is (Caltex vs. assess. 56 [A] {1]. G. The amount is finding of value is required to prove reflected in the tax return that is filed not only that the appraised value is by him and the tax is paid at the time erroneous but also what the proper he files his return. taxpayer that the payment of the tax or 26 Sept. Assessment is discretionary on the part tax by the taxpayer in his of the Commissioner.C. (Bisaya Land  Failure to present proof of error in the Transportation Co. Illegal and Void Assessments. G.C. (CIR Classifications: vs C. vs CIR. 98 Phil 290) Nature and Kinds of Assessments  In the absence of any proof of any irregularities in the performance of An assessment is the official action of official duties. actual facts. Self-assessment. The taxpayer did not file any Commissioner to assess will result in the return at all. 56 [B] ]1] encroachment on executive functions and [2] 1997 NIRC) (Meralco Secuirities Corp. 104 Phil 819. No. 10 July 1998) b. acceding to the taxpayers request. reinvestigation have the effect of placing him in estoppel. (Sy Po. Mandamus to compel the 3. Mandamus will not lie return. In order to stand the investigation is conducted. vs. . In CIR vs. to compel him to assess a tax after 2.This result to the taxpayer. the power to assess but errs in the Suyac. (Sec.R. No. (Sec. 105 Phil 1338) assessment will justify judicial affirmation of said assessments.Tax is assessed by  A party challenging an appraiser’s the taxpayer himself. 1988) deficiency stated therein. 1997 NIRC) 104781. therefore. an assessment will not an administrative officer determining the be disturbed. Vs. Cruz. postponed the collection Principles Governing Tax Assessments of its liability.  The taxpayer has the duty of proving otherwise (Interprovincial Autobus vs. However. 1997 NIRC) modified. however. or is filed. Best Evidence Obtainable refers to any statement or declaration has in the meantime data. 6 [B]. assessments cannot be delegated. 1997 NIRC) government offices or agencies. papers. record. 58 Phil 360) 4. The authority vested in the Commissioner 1. or any evidence been actually served upon the taxpayer. When the production of the tax return person to whom a duty is delegated is material evidence in a criminal case cannot lawfully delegate that duty to wherein the Government is interested another. if for example. L-18611. authorized to receive the same shall not be Assessments made as such are deemed prima withdrawn. if a person fails to file a return or other document at the time prescribed by The Tax Code requires that after the return law. with whom provides that tax returns shall constitute public the taxpayer had previous transactions or from . The tax or the deficiency of the tax so assessed shall be paid When the method is used. dela Rama. and not the heirs of B. (City Lumber vs. Assessments must be directed to the right himself (Vera vs Cusi L-33115. al. L- 21108. tenants. documents.R. the same may be (Sec. 1966). 8829. within three (3) days from facie correct and sufficient for all legal purposes. corporations. When the inspection of the return is to assess taxes may be delegated. 33 of the settled that the power to make final Secretary of Finance. the taxpayer 1979). the administrator should be the party to whom the assessment should be sent (Republic vs. 29 Nov. (Cu Unjieng. is subject to statutory authority (Maceda vs. it is the Finance Regulation No. Any his knowledge and from such information as he return. in the result. statement or declaration filed in any office can obtain through testimony or otherwise. provided that no notice for audit or investigation of such return. Examination of Returns: Confidentiality Rule 1. Domingo. the Commissioner or his duly authorized 2. (Sec gathered by internal revenue officers from 6[A]. Hence. being assessed is an estate of a decedent. inquiry G. he willfully or otherwise files a false or representative shall examine the same and fraudulent return or other document. Although Sec. certain exceptions. However. Posadas. the upon notice and demand from the Commissioner Commissioner makes or amends the return from or from his duly authorized representative. Macaraig. clients or patients. assess the correct amount of tax. 8 June 1993). it is necessary to know that these are confidential in nature and may not be inquired The BIR Commissioner may be into in unauthorized cases under pain of penalty compelled to assess by mandamus if in of law provided for in Sec 270 of the 1997 NIRC. No. TAX ATION San Beda College of LAW – ALABANG Except: records. and in behalf of the Commissioner of 2. The 3. When inspection is authorized under Internal Revenue is valid. 29 June party. When the production or inspection thereof is authorized by the taxpayer 5. employers. etc. lessees. An authorized upon the written order of assessment signed by an employee for the President of the Philippines. 71 of the 1997 NIRC vendees and from all other sources. Assessment Based on the Best Evidence the decedent Obtainable Means Employed in the Assessment of Taxes The law authorizes the Commissioner to assess taxes on the basis of the best evidence obtainable in the following cases: A. the date of such filing. In the following cases. 30 Jan 1964). changed or amended. et. vs. into the income tax returns of taxpayers may be authorized: 4. the exercise of his discretion there is evidence of arbitrariness and grave abuse of discretion as to go beyond The aforesaid rule. collection of the tax for the past or there was a demand made by the Commissioner current quarter or year or to render the on the Silver Cup Wine Company owned by same totally or partly ineffective petitioner’s deceased husband Po Bien Seng.A. Inventory-Taking. 204 (A) (@) of the Tax Code by reason business subject to tax. or d. upheld the legality of the assessment. That the taxpayer hides or conceals his any such report is false. 1405. sales or receipts for internal revenue tax purposes. Notwithstanding any contrary provisions of R. or such portion thereof wines seized and the sworn statements of the as may be unpaid. the value of the property shall be inventory-taking of goods of any taxpayer as whichever is the higher of : (1) the fair market a basis for assessment. the Commissioner is authorized to inquire into the bank deposits of. 6 [C]. any taxpayer who has filed an application for compromise of his tax liability a. so BIR investigators raided the The written decision to terminate the tax factory and seized different brands of alcoholic period shall be accompanied with a request for beverages. That the taxpayer is retiring from under Sec. In this case. The finding made in the surveillance may be used as a basis for Examination of bank deposits enables the assessing the taxes for the other months or Commissioner to assess the correct tax liabilities quarters of the same or different taxable years. and of a taxpayer terminated at any time when it shall come to his knowledge: 2. Surveillance and Presumptive Gross Sales and Receipts E. property. the penalties prescribed unless paid within the assessed the corresponding deficiency income time fixed in the demand made by the and specific taxes. In that case. C. Termination of Taxable Period 1. 1997 NIRC) confidential under R. That he performs any act tending to A case in point on the use of the best obstruct the proceedings for the evidence obtainable is Sy Po vs CTA. That he intends to leave the that a report required by law as basis for the Philippines or remove his property assessment of any internal revenue tax has not therefrom. 1405 and other general or special laws. However. of his financial incapacity to pay his tax liability. incomplete or erroneous. 6 [d]. of taxpayers. 1997 NIRC). The Supreme Court. on the basis of the preceding year or quarter. the application for compromise shall not be considered unless and until he waives in . been filed or when there is reason to believe that c. a decedent to determine his gross The Commissioner shall declare the tax period estate. Fixing of Real Property Values The Commissioner is authorized at any time For purposes of computing any internal during the taxable year to order the revenue tax. after ascertaining b. Inquiry into Bank Deposits observation or surveillance. value as determined by the Commissioner. on Commissioner (Sec. bank deposits are (Sec. The unless such proceedings are begun demand was for the taxpayer to submit to the BIR immediately. for examination the factory’s books of accounts and records. the immediate payment of the tax for the period so declared terminated and the tax for the The investigators. D. is not declaring his correct income. Said taxes shall be due and factory’s employees on the quantity of raw payable immediately and shall be subject to all materials consumed in the manufacture of liquor. or (2) the fair market value as shown in the schedule of values of the Provincial and City Assessors for If there is reason to believe that a person real tax purposes (Sec 6 [E].A. TAX ATION San Beda College of LAW – ALABANG whom he received any income. his business operation may be placed under F. 1997 NIRC) appeal. The theory is that the matter. notable among income. This authority has been upheld by the not prove the specific source of courts in a long line of cases. rests on proof beyond reasonable doubt. provides However. 1997 NIRC. 1997 NIRC). The burden of proof is time fixed by law or regulation. accounts do not clearly reflect his income. or when there is always with the Government. or the taxpayer has no books. when the taxpayer for a broad and general investigatory power to is criminally prosecuted for tax assess the proper tax on the best evidence evasion. taxpayer is in a position to explain the discrepancy. The basis of using the Net Worth Method of investigation is Revenue Memorandum The Government may be Circular No. to effective method of determining taxable income require more would be tantamount to and deficiency income tax due from a taxpayer. . Court.A. This reasonable on the basic which is the leading case of Perez vs. The taxpayer’s net worth is (Need for evidence of the sources determined both at the beginning and at the end of income). (Perez vs. CTA. holding that skillful concealment is an inevitable barrier to proof. 43. direct proof of sources of income is not essential-that the government is not required to negate all possible non-taxable sources of the alleged net worth increases. The increase or decrease in net worth is adjusted by adding all non-deductible items and subtracting therefrom In all leading cases on this non-taxable receipts. the need for evidence of a obtainable whenever a report required by law as likely source of income becomes a basis for the assessment of any national internal prerequisite for a successful revenue tax shall not be forthcoming within the prosecution. The Legal Source of authority for use of burden of proof is upon the taxpayer the Method to show that his net worth increase The Commissioner’s authority to use the was derived from non-taxable sources. in civil cases. otherwise known as “inventory method of proof where the few records method of income tax verification” is a very of the taxpayer were destroyed. in nature. or if he has books. courts are unanimous in unexplained increase in net worth of a taxpayer is holding that when the tax case is civil presumed to be derived from taxable sources. as in any incomplete or erroneous. Basic Concept and Theory (b) That there is evidence of a possible source or sources of The method is an extension of the basic income to account for the increase accounting principle: assets minus liabilities in net worth or the expenditures equals net worth. and such waiver shall constitute the authority of the Commissioner to inquire into bank deposits of the taxpayer (a) That the taxpayer's books of (Sec. 1405. the assessor need 1997 NIRC. for. 103 assumption that most assets are Phil 1167. The method is a practical necessity if a derived from a taxable source and fair and efficient system of collecting revenue is that when this is not true. This method of forced to resort to the net worth investigation. supra) Moreover. of the same taxable year. Sec. Conviction in such cases. or under Conditions for the use of the method other general or special laws. 6[F]. criminal case. TAX ATION San Beda College of LAW – ALABANG writing his privilege under R. net worth method and other indirect methods of As stated by the Supreme establishing taxable income is found in Sec. the to be maintained. 6[B]. reason to believe that any such report is false. he Net Worth Method in Investigation refuses to produce them (Inadequate Records). CTA. 43-72. interest on government securities and the like (d) That the circumstances are such that the method does not reflect Increase in net worth are not the taxpayer’s income with taxable if they are shown not to be the reasonable accuracy and certainty result of unreported income but to be and proper and just additions of the result of the correction of errors in personal expenses and other non. to the basic tax incident due to the 2. election expenses and other (1) civil penalty. 6. at which time the On the other hand. net capital loss. The Statutory Offenses and Penalties following non-deductibles. fair and creditors. proceeds of life insurance investigation under this method policies. as the case may be. (c) That there is a fixed starting point 10.. 5. Additions to the Tax 1. must be added to the increase or decrease in the net worth: 1. other non-deductible taxes. as surcharge. personal. compensation for injuries or The courts have uniformly stressed sickness. vs. 4. If 1. non-taxable taxpayer’s financial condition can items should be deducted therefrom. of the family. estate. a date beginning with a taxable year or prior to it. sweepstakes winnings. legal requirements. income taxes paid. be affirmatively established with These items are necessary some definiteness. premiums paid on any life taxpayer’s non-compliance with certain insurance policy. living or family Additions to the tax are increments expenses. worth is proven to be wrong. will depend entirely upon a correct 5. which may either be 25% or .e. like the taxpayer’s 3. 1969) taxable items. 3. non-deductible contributions. that the validity of the result of any 4. 30 Sept. gifts to others. whole superstructure usually fails. and the like or opening net worth. non-taxable capital gains. CIR. otherwise known expenses against public policy. inheritance and gift Additions to the tax consist of the: taxes. 7. considered to be the cornerstone of a net worth case. i. (Fernandez Hermanos given by way of eliminating non. the taxpayer’s entries in the books deductible expenditures were relating to indebtedness to certain made and correct. adjustments to avoid the inclusion of what otherwise are non-taxable receipts. TAX ATION San Beda College of LAW – ALABANG 8. gifts and bequests the starting point or opening net received. L-21551. opening net worth. losses from sales or exchanges refusal or failure to pay taxes and/or other of property between members violations of taxing provisions. the 2. 9. erroneously listed although equitable credit adjustments were already paid. They are: This is an essential condition. inheritance. Inc. 6. (Proper adjustments to conform to the income tax laws) Enforcement of Forfeitures and Penalties Proper adjustments for non- deductible items must be made. The penalty and interest are not (3) other civil penalties or penal but compensatory for the administrative fines such as for failure to concomitant use of the funds by the file certain information returns and taxpayer beyond the date when he is violations committed by withholding supposed to have paid them to the agents. 248 and 249 [C].(Philippine Refining Company vs. G. applicable regulations thereby or a government owned or controlled resulting in delay in the payment of corporation. L- responsible for the withholding and 15470. No. tax apply to all taxes. G. show b. 25 Sept. 26 Dec. 8 May 1996). 1997 NIRC) Aug. vs CIR. interest per annum on the delinquency Republic Cement Corp.A. If the withholding agent is the 1. Sec. . L-35677. does not authorize where such return or list is voluntarily the Commissioner to extend the time filed by the taxpayer without notice prescribed for the payment of taxes or to from the CIR or other officers. (Connel Bros. Additions to the tax or deficiency excuse payment of the surcharge (CIR vs. 1997 NIRC). 460) (2) interest either for a deficiency The Commissioner is not vested tax or delinquency as to payment. (Secs. and it is accept them without the additional shown that the failure to file it in due time was due to a reasonable cause. Supreme Court held that the fact that on 60126. 47 Phil nature of the violation.R. 1975) imposed in the Tax Code. 27 mandatory and the Commissioner of (now. the employee thereof taxes.. 1983) 3. General Considerations on the Addition to tax An extension of time to pay taxes granted by the Commissioner does not a. 10 (Secs. No. they were return or list within the time prescribed prevented from paying their internal by law. revenue taxes on time. vs.R. (CIR vs. C. L-26869. a mistake in the interpretation of the political subdivisions or instrumentalities. Where the taxpayer in good faith made government or any of its agencies. and as part of the tax. In the case of failure to make and file a Chinese on certain dates. 1997 NIRC) such may also be a ground for dispensing as the 25% surcharge and the 20% with the 25% surcharge. 1997 NIRC) Government. 5431 abolished the income tax exemptions of corporations (including Surcharge electric power franchise grantees) The payment of the surcharge is except those exempt under Sec. 6 Aug. A Subsequent reversal by the BIR of a liable for the additions to the tax prior ruling relied upon by the taxpayer prescribed (Sec. 1188794. 1985) account of riots directed against the 4. not due to willful neglect. In one case. 30. 1963) remittance of the tax shall be personally 2. with any authority to waive or dispense with the collection therof. and charges Cu Unjieng. The following cases. fees. (CIR vs. The amount so added to the tax the instances when the imposition of the shall be collected at the same time. Posadas.. Co. supra). c. CIR. the Internal Revenue is not vested with any imposition of the surcharge may be authority to waive or dispense with the dispensed with (Cagayan Electreic collection thereof.A. TAX ATION San Beda College of LAW – ALABANG 50 % of the tax depending upon the penalty (Lim Co Chui vs. Where a doubt existed on the part of the Bureau as to whether or not R. however. the Power & Light Co. CA. 247[b]. 247 to 252. in 25% surcharge had been waived: the same manner. to enforce the payment of faces. Sources of revenues: (Sec. Other percentage taxes 5. the where the Commissioner has authorized an taxpayer must make a statement extension of time within which to pay a tax or a showing all the facts alleged as deficiency tax or any part thereof. which should be attached to the return. from the date prescribed for payment until the amount is fully paid. Failure of a Withholding Agent to Collect and Remit Taxes This is an increment on any unpaid amount of tax. Remedies or (2) The amount of the tax due for II. In any part of such amount or installment on or such case. in order to avoid the before the date prescribed for its payment. shall be subject to the interest of 20% per annum.Income tax 2. if the taxes are not 3. or imposition of the surcharge. 249 [B]. Civil Action (3) A deficiency tax. Interest on Extended Payment voluntarily paid. Distraint of Personal Property 2. Judicial which no return is required. as the 7. Delinquency interest 2. 1997 NIRC) 1. TAX ATION San Beda College of LAW – ALABANG no surcharge will be added to the fails to pay the tax or any installment thereof. VAT Interest is classified into: 4. or amount of tax due on the return. Failure to File Certain Information Returns Interest 2. Deficiency interest 6. or 1. Distraint. or such Refund Excess Withholding Tax higher rate as may be prescribed y rules and regulations. assessed at the rate of 3. 1997 NIRC) I. or any 2. 249 [A]. Excise tax 1. Levy of Real Property This kind of interest is imposed in case 3. which shall be assessed and collected from the date prescribed for its payment until the full • Enumeration of the Remedies payment thereof (Sec. (Sec. Imposed when a person required to pay the tax is qualified and elects to pay the tax on KINDS installment under the provisions of the Code. Administrative Offenses 1.Seizure by the government of personal property. Tax Lien of failure to pay: 4. 249[d]. Administrative 1. Criminal Action surcharge or interest thereon on the due date appearing in • Distraint of Personal Property the notice and demand of the Commissioner. Forfeiture (1) The amount of the tax due on 6.Other as imposed and provided by BIR term is defined in this code. to be followed by its public sale. REMEDIES OF THE GOVERNMENT or such higher rate as may be prescribed by rules and regulations. Estate Tax and dono’r tax 3. Failure of a Withholding Agent to twenty percent (20%) per annum. Documentary stamp taxes Any deficiency in the tax due. Compromise 5. Other Administrative any return required to be filed. reasonable causes for failure to file the 1997 NIRC) return on time in the form of an affidavit. but . tangible or intangible. 000. Where amount involved does not exceed 2. Requisites: 2. Serve warrant upon taxpayer and president. of distraint or or by leaving a list of left either with the owner or person garnishment. tax due and with someone of suitable age where amount due is may not be definite or and discretion definite.00 taxpayer. Period with in to assess or collect has not issuing corporation. In case of Tangible Property: Effected by having a list Effected by requiring of the distraint property the taxpayer to sign a a. Constructive – The owner is merely place of sale and the articles distrained. Constructive Distraint 1. Copy of an account of the property or by service or warrant receipt of the property distrained.000. manager. 206 TC) 1. other responsible officer of the 4. b. abatement of the collection of tax as the cost of c. Who may effect distraint Amount Involved Actual vs. Bank Accounts – garnishment same might even be more than P100. same from whom property was taken. In case of intangible property: 1. 1.00 only of a delinquent property of any 2. it is being questioned. treasurer or time required. 4. Stocks and other securities tax. Debts and credits Sec. disposing of his property. • In case of constructive distraint. Warrant shall be sufficient P100 (Sec. warrant upon taxpayer and upon 3. TAX ATION San Beda College of LAW – ALABANG a. Leaving a copy of the warrant with the person owing the debts When remedy not available: or having in his possession such credits or his agent. Posting of notice is not less than two Taxpayer is also diverted of the power places in the municipality or city and of control over the property notice to the taxpayer specifying time and b. Statement of the sum demanded. 1 is not essential (see b. Disposition of proceeds of the sale. signed by the officer. 2. association. company or yet prescribed. at An immediate step for Such immediate step is the dwelling or place of business collection of taxes not necessary. commissioner or his due In excess of Made on the property May be made on the authorized representative P1. Taxpayer is delinquent in the payment of a. RDO P1. authority for such person to pay In keeping with the provision on the CIR his credits or debts. Taxpayer must fail to pay delinquent tax at president.000. prohibited from disposing of his 3. taxpayer whether or less delinquent or not There is actual taking or Taxpayer is merely possession of the prohibited from How Actual Distraint Effected property. c. In case of intangible property. Procedure: treasurer or responsible officer of the bank. . Serving a copy of the 2. 1. requisite no. Service of warrant of distraint upon of personal property out of the taxpayer or upon person in possession of taxpayer into that of the government. Subsequent demand for its payment. manager. 205 TC).000. Time and place of sale. taxpayer’s personal property. Actual – There is taking of possession 1. Sale at public auction to highest bidder personal property. goods distrained shall be restored to the owner.Cannot be extended by the courts. Taxpayer is intending to leave the owner. Taxpayer is retiring from any business 6. Time to redeem: one year from date of Note: sale or forfeiture . and property is located. Bank accounts may be distrained with out sale or declaration of forfeiture. 1. Where Taxpayer or person in possession c. Officer shall write upon the certificate a property distrained. In the presence of two witnesses of levy is made. subject to tax. Obligate him to preserve the same properties. the redemption. 5. involved is not more than P100. Redemption of property sold or forfeited 4. TAX ATION San Beda College of LAW – ALABANG 2. Possession pending redemption – owner simply seizes so much of the deposit with not deprived of possession out having to know how much the deposits d. violating the confidential nature of bank . Both cannot be availed of where amount national government. The excess shall be turned over to 2. . Person entitled: Taxpayer or anyone for collection proceedings. all proper charges are paid to from date of purchase to date of the officer conducting the same. Prohibit him from disposing the property from disposing the 1.Begins from registration of the deed of 1. a. Disposition of proceeds of sale. refuses to sign: . to the date of sale together with interest 2. Sign a receipt covering property • The requisites are the same as that of distrained distraint. accounts for no inquiry is made. Name of taxpayer b. penalties and are or where the money or any part of it interest thereon from date of delinquency came from. Sale at public auction to highest bidder. Bank shall turn over to CIR so much of the bank accounts as • Levy of Real Property may be sufficient. Procedure: c. Taxpayer hides or conceals his property. leave 3. sufficient age and discretion. the taxes are not voluntarily to paid. Penalty due.enforceable through out the Philippines a. him b. distrained property on behalf of the 2. b. 5. Officer shall prepare list of the 2. a. with out a duly authenticated certificate showing the authority of the CIR. The taxpayer. Philippines. Require taxpayer or person in possession after seizure. description of the property upon which b. Service of written notice to: a copy in the premises where a. Advertisement of the time and place of Grounds of Constructive Distraint sale. Taxpayer acts tending to obstruct a. RD where property is located. If at any time prior to the consummation on said purchase price at 15% per annum of the sale. Amount of tax and 2. The property may be sold at public sale. 1. BIR c. if 1. 3. To remove his property there from. or 3. Levy – Act of seizure of real property in order to How constructive Distraint Effected enforce the payment of taxes. When the amount of the bid for the property under distraint is not equal to the Distraint and Levy compared amount of the tax or is very much less than the actual market value of articles. 4. b. Price: Amount of taxes. International Revenue officer shall prepare property in any manner. Both are summary remedies for collection the CIR or his deputy may purchase the of taxes. in default of the payment of taxes. 3 and 4. Criminal violations. 1. with interests. There must be acceptance of the offer in A lien in favor of the government of the settlement of the original claim. although it need not be the 5. Minimum compromise rate: Extinguishment of Tax Lien a. 1. Levy – Taxpayer can redeem properties regardless of its owner. A reasonable doubt as to the validity if the Exists from time assessment is made by claim against the taxpayer exists. the taxpayer is still liable. Upon all property and rights to property 3. Duration: 1. Attaches not only from time the warrant declaration of forfeiture. to assess or collect. It is the duty of the Register of Deeds private individuals or parties concerned upon registration of the 2. Philippines when a person liable to pay a tax neglects or fails to do so upon When taxes may be compromised: demand. The financial position of the taxpayer and costs. avoid litigation or put an end to one already commenced. there is no Levy – real property more tax liability. Failure to file notice of such lien in the a. demonstrates a clear inability to pay the 3. Payment or remission of the tax b. except: belonging to the taxpayer. rates. TAX ATION San Beda College of LAW – ALABANG 3. Subject to approval of Evaluation Board 3. Those involving fraud. 1. to transfer the was served but from the time the tax was title to the property with out of an order due and demandable. Nature: 3.000. of an amount to be paid by taxpayer. is Compromise: A contract whereby the parties. reciprocal concessions. by collected. Distraint – personal property  In case Nos. Distraint authorized where there is no bidder or the A tax lien is distinguished from disttraint in highest bid is not sufficient to pay the that. levied upon and sold/forfeited to the government. real or personal. Distraint – Taxpayer no given the right of property in respect to the tax is assessed. 1 and 2. in distraint the property seized must be that taxes. established by law as a security 2. from a competent court 2. Those already filed in court 4. Note: Note: 1. provided Levy – forfeiture by government Enforcement of Tax Lien vs. There must be an offer by taxpayer or CIR. • Enforcement of Tax Lien Requisites: Tax Lien: A legal claim or charge on property. . Taxpayer must have a tax liability. The remedy of distraint or levy may be • Compromise repeated if necessary until the full amount. Effectivity against third persons: b. 40% of basic tax assessed – other 2. Extent: assessed tax.000. 2. When basic tax involved exceeds office of register of Deeds. 10% of the basic tax assessed – in case of financial incapacity. either 1. penalties 2. Where settlement offered is less 4. of the taxpayer. This is superior to judgment claim of 1. a. Tax redemption lien is directed to the property subject to the tax. Distraint – forfeiture by government. penalties and costs. b. 2. Under nos.00 or judgment creditor. purchases or P1. not 4. Prescription of the right of the government cases. including all expenses. the CIR until paid. Only when notice of such lien is filed by the CIR in the Register of Deeds Limitations: concerned. Destruction of the property subject to the than the prescribed minimum lien. 1. Time to redeem – with in one (1) insufficient to pay the taxes. When available: 6. All apparatus used in or 1. b. It is a certain amount of money which the exercise tax. manufactured or removed in violation of the Tax Code. products. Amount to be paid – full amount of . there is with out the consent of the owner and wrongdoer. taxpayer pays to compromise a tax automobile. 2. as the case may forfeited to the government with our require. Finance. 3. mineral violation. year from forfeiture penalties and costs. Note: judgment of condemnation and The Register of Deeds is duty sale in a legal action or proceeding. a return of the taxes and penalties. Personal entitled – taxpayer or exposed for sale. No bidder for the real property a. cigars regional offices involving basic taxes of P 500 K or 4. TAX ATION San Beda College of LAW – ALABANG injurious to the public health or Delegation of Power to Compromise prejudicial to the enforcement of the law: (at least 20 days after GR: The power to compromise or abate shall not seizure) be delegated by the commissioner. Includes the idea of not only losing but 5. notice of not less than 20 days. forfeiture shall become absolute. or sold: a. How enforced: d. (wine. playing cards The CIR may either: 6. tags. plus the proceeding is duly made. To whom paid – Commissioner or a. manufactured oils. Forfeiture: Implies a divestiture of property with in imitation of or purport to out compensation. the same non-essential items a may be collected only if the taxpayer is petroleum products) willing to pay them. miscellaneous products. Where to be sole: also having the property transferred to another a. cigarettes. When forfeited property to be destroyed court. Dies for printing or making IR stamps. Effect of failure to redeem – the specific forfeited property. b. Regard it as rescinded and insists upon of such articles. Public sale: provided. To be destroyed – by order of the • Other Administrative Remedies CIR when the sale for consumption or use of the following would be . manufactured products of tobacco Remedy in case of failure to comply: 5. All other articles subject to 1. necessity of an order from a competent 4. c. Private sale: provided. b. In case of real property – by a 7. or about the illicit production 2. in consequence of a default or be lawful stamps. distilled spirits E: The Regional Evaluation Board may 2. the original demand. Effect: Transfer the title to the specific the approval of the Secretary of thing from the owner to the government. enforce the compromise. It is pain in lieu of a criminal prosecution. If highest bid is for an amount b. bound to transfer the title of property civil or criminal. liquors compromise the assessment issued by the 3.  Enforcement of forfeiture 2. labels or offense. Right of Redemption: a. interest and cost of the sale 3. 2. anyone for him b. In case of personal property – by the Revenue Collection Officer seizure and sale or destruction of e. it is with 1. labels and tags. Since it is voluntary in character.With in two days thereafter. To be sold or destroyed – depends upon the discretion of CIR Compromise Penalty 1. and other less. 000. Requiring proof of filing income tax returns • Judicial Remedies Before a license to engage in trade. Reason to believe that records do not correctly Will not operate to extinguish taxpayer’s reflect declaration in return. provided there is a prima must be preserved. and making surveillance. government to collect internal revenue 5. Deportation in case of aliens – on CIR the following grounds b. b. within three years after date the tax return was due or was filed Effect of Acquittal on Tax Liability: whichever is later. case. Registration of Taxpayers. Limited to violations of any depending on the amount involved) penal law or regulation When assessment made has administered by the BIR. collected or P1. become final and executory for failure or committed with in the view of the taxpayer to: Internal Revenue Officer or EE. accounts of . or enforcement of a fine. Any taxpayer who filed b. 7. Inquiring into bank deposit on past of taxpayers to evade payment. for recovery and/or fine or penalty imposed and of taxes. whichever is lower. Government of the Philippines. A. Person failed to issue Effect of Satisfaction of Tax Liability on Criminal receipts and invoices Liability b. A deceased person to following instances: determine gross estate a. search and seizure taxes in regular courts (RTC or MTCs. Requiring filing of bonds – in the a. 000. 3. Making arrest. Prescribing real property values imposed by statute. Conducted by Legal Officer of BIR equivalent to 10% of revenues. business or occupation or Civil and Criminal Actions: to practice a profession can be 1. the liability of any person government may still collect the tax in the same 10. Obtaining information on tax liability to pay the tax due. Estate and donor’s tax b. Giving reward to informers – Sum 2. Excise taxes application for compromise c. Manufacturer’s and incapacity his tax liability. Must be with the approval of the surcharges or fees recovered CIR. Criminal Action tax and its accessory A direct mode of collection of penalties. 8. a. 2. Thus. TAX ATION San Beda College of LAW – ALABANG 1. or receipt: a. the judgment of which shall not his tax liability shall have only impose the penalty but also order become final and executory. Inventory – Taking of stock-in-trade action. in case of action. Prescribing presumptive gross sales a criminal act. payment of taxes. Exporter’s bond by reasons of financial d.00 per penalty or forfeiture. Dispute same by filing protest with 6. does not arise from 11. Reason: Tax is an obligation. Use of National Tax Register Does not exonerate taxpayer his civil 9. generally facie showing of willful attempt to evade. Inspection of books An assessment of a tax deficiency Books of accounts and other is not necessary to a criminal prosecution accounting records of taxpayer for tax evasion. Knowingly and fraudulently CTA evades payment of IR taxes. importer’s bond 14. Brought in the name of the issued. Appeal adverse decision of CIR to a. independent of any attempt 13. Willfully refuses to pay such B. Civil Action 4. 3. Imposition of surcharge and Actions instituted by the interest. criminal liability since the duty to pay the tax is 12. after decision on taxes. statue of from the discovery of falsity or fraud. 1999) a. 2. (Aznar shall commence from the filing of the case. 1964) Note: The satisfaction of civil liability is not one of B. Intentional and substantial • An affidavit executed by a revenue office overstatement of deductions of indicating the tax liabilities of a taxpayer exemption and attached to a criminal complaint for c. 1987) b. The fraud contemplated by law is prescribed by law for the filing thereof actual and not constructive. . TAX ATION San Beda College of LAW – ALABANG This is true in case the criminal action is necessary and required to permit the based on the act to taxpayer of filing a false and computation and assessment of taxes fraudulent tax return and failure to pay the tax. 222 ic) the grounds for the extinction of criminal action. When the Commissioner fails • A transcript sheets are not returns. Aug. impute fraud in the assessment because they do not contain information notice/demand for payment. assessed within three (3) years after the last day prescribed by law for the filing of the return or from the day the • Nature of Fraud: return was filed. Sept. criminal action for the collection mailed or sent by the Commissioner to the thereof. Dec. A fraud assessment which has 1965. General Rule: correct tax due. Republic the taxpayer. Prescription of Government’s Right to Deceitful with the aim of evading the Assess Taxes: deviation from truth of A. avoiding the tax. Inc. Intentional and substantial prescriptive period. Commissioner 21. Phoenix. in case it is filed a. • Instances/Circumstances negating fraud: June 29. the latter is deemed made taken cognizance of in the civil or when notice to this effect is released. Kei & Co. Collector.) Exceptions: (Sec. Internal Revenue Taxes shall be fact whether intentional. 1. 30. cannot be deemed an circumstances. 29. 23. Fraud is never presumed and the beyond the period prescribed thereof. • Fraud may be established by the following the law does not require that the : (Badges of Fraud) demand/notice be received within the a. Recurrence of the foregoing tax evasion. Pascoi Realty Corp. CA April 30. limitation is primarily designed to protect the rights of the taxpayer’s against unreasonable Note: investigation of the taxing authority with respect • Fraudulent return to assessment and collection of Internal Revenue vs. Where a return was filed but the same was Purpose: false or fraudulent – within ten (10) years For purposes of Taxation. circumstances consisting it must be (Section 203 of the Tax Code) alleged and proved to exist by clear & convincing evidence Note: (Republic vs. May 20. It shall be considered as filed on such last must amount to intentional day.within ten (10) • PRESCRIPTIVE PERIODS/STATUTE OF years after the date of discovery of the LIMITATION omission. vs. vs. False return Taxes. The filing thereof is intended and It merely implies a I. assessment. 1966) • A return filed before the last day b. Commissioner. wrongdoing with the sole object of • In case a return is substantially amended. Keir. (Basilan Estates. However. 1974) amended return (CIR vs. A mere mistake the government right to assess the tax is not a fraudulent intent. SCRA 17. ( CIR vs. the • In computing the prescriptive period for fact of fraud shall be judicially assessment. c. Where no return was filed . 4 SCRA 872) become final and executory. 222 paragraph (a)) correct address of the taxpayer. understatement of tax liability of vs. (Sec. (Sinforo Alca vs. Nov. Where the BIR itself appeared. upon in writing before the 2. documentary stamp tax. 21. whichever is later. the expiration of 5-year period. without assessment. at anytime b. tax is imprescriptible. Assessment of compensating and the case is appealed to the CTA. appears that there was an assessment. In such case. 1962) a.the three (3) year period of limitation have tax should be collected within 3 agree in writing to the extension of said years after the return was due or period. The agreement to extend the same within ten years after the discovery should be mode before the expiration of the falsity or fraud. March • Limitations: 31. A. A waiver is inefficient I it is executed collection of such tax may be filed beyond the original three year. the tax distinct or levy of by a proceeding sought to be assessed becomes in court within the period agreed imprescriptible. before the expiration of the same is not fraudulent or false. TAX ATION San Beda College of LAW – ALABANG b. Where no return is required by law. Exceptions: • Limitations: 1. Prescription of Government’s Right to time in his memorandum which Collect Taxes was filed the CTA after he had rested his case.. Where there is a written waiver or • The 10-year prescriptive period for renunciation of the original 3-year collector thru action does not apply if it limitation signed by the taxpayer. The waiver to be valid must be executed by the parties before the 2. The agreement extending the period of with intent to evade taxes was filed prescription should be in writing and a proceeding in court for the duly signed by the taxpayer and the collection of the tax may be filed commissioner. Note: B. unless there distraint or levy or by proceeding in is a sufficient evidence shaving court within 5 years following the fraudulent intent. Where no assessment was made 3. Assessment of unpaid taxes. vs. A mere understatement of income limitation may be collected by does not prove fraud. c. 3. was filed. Ayala Securities Corp. When the taxpayer omits to file a lapse of the prescriptive period. Where a fraudulent/false return a. may be collected be particular period of assessment. date of assessment. where the Note: bases of which is not required by law to be • Distinction reported in a return such as excise taxes. 2. Note: 4. the ordinary 5-year period (now Note: 3 years) would apply (Rep. Where the law does not provide for any agreed upon. The commissioner can not valid agree within 10 years after the discovery to reduce the prescriptive period to of the omission. return – a court proceeding for the b.. Ret. without assessment. which has C) Imprescriptible Assessments: been assessed within the period 1. 3. Where an assessment was made – sure” as to the real amount of the Any internal revenue tax which has taxpayer’s net income. of the period previously agreed upon. allege in his answer to the 1980) taxpayer’s petition for review when 4. Where the commissioner and the and a return was filed and the taxpayer. Waiver of statute of limitations – any internal revenue tax. When the Commissioner raised the question of fraud only for the first II. “not 1. . less than that granted by law. at anytime c. When the Commissioner failed to (Carmen vs. General Rule: d. been assessed within the period of e. In criminal case – It can be raised even contractual obligation within a if the case has been decided by the period of ten years. Agreement to extend period of vs. if know. 7. 3. 1963) b. against the guilty person Lopez.If can not be raised for the first time on may proceed thru a court action to appeal. When the offender is absent from the Philippines. on making an assessment and the 2. from the time of 4. Interruption of the Prescriptive Period between the commission and the taxpayer – the prescriptive period 1. the government avail of distraint and 2. prescriptive period. Where before the expiration of the is ten years. Note: Prescription is till binding to the • When it should commence? : The five (5) year prescriptive period shall begin to run Taxpayer although made beyond from the such a. time prescribed for the assessment of the tax. b. • When it should run again : When the proceeding is dismissed for reason not 5. Where the action is brought to enforce a compromise entered into IV. (RTC) shall be suspended for the period. Agreement renouncing III. of be valid. may be raised: a. TAX ATION San Beda College of LAW – ALABANG a. When tax is deemed collected for and the taxpayer have consented in purposes of the prescriptive period. writing to its assessment after such time. lower court but pending decision on appeal. Day of the commission of the violation. forfeit a bond and enforce such b. taxpayer – the prescriptive period • When it is interrupted: for collection should be counted a. (Rep. by a surety bond – the government . it is bailed permanently. March 30. both the commissioner C. Where a tax obligation is secured court. Collection by judicial action – The beginning of distraint/levy or a collection begins by filing the proceeding in court for collection complaint with the proper court. or beginning distraint/levy or . During which the to the CTA – the collection begin when Commissioner is prohibited the government file its answer to from making the assessment taxpayer’s petition for review. Collection by summary remedies – It is to the expiration of the period agreed effected by summary methods when upon. It must be made before the period of prescription A. Rules of Prescription In Criminal Cases Prescription. b. Where the assessment is revised Constituting because of an amended return – jeopardy. If not known. the period for collection is counted • When does the defense of prescription from the last revised assessment. Where the government makes discovery and the institution of judicial another assessment on the basis of proceeding for its investigation and reinvestigation requested by the punishment. In civil case – If not raised in the lower 6. the tax may be assessed prior 1. The running of statute of limitations levy procedure. Where assessment of the commissioner is protected & appealed a. When a proceeding is instituted from the last assessment. Rule: All violations of any provision of the Expiration of the period agreed upon to tax code shall prescribe after five (5) an agreement waiving the defense years. vs. When the warrant of distraint reconsideration or or levy is duly served upon reinvestigation (Administrative any of the following person: Protest). 1. Member of his household a. When the taxpayer requests deemed waived. taxpayer is entitled. his authorized representative (2) After Payment 3. Filing of a petition or request for d. e. of the tax before the criminal action may  When CTA suspends the be instituted. and as defense it must be raised reasonably otherwise it is deemed Note: waived. The law on prescription remedial measure proof that its collection may should be interpreted liberally in order to jeopardizes the government protect the taxpayer. c. Commissioner does not interrupt 5. from filing an ordinary • Reason: No requirement for assessment action to collect the tax.off the prescribed mere pro-former. a. otherwise it is b. the government period. The assessment does not suspend the criminal commissioner is prevented action. cannot invoke the principle of Equitable The request must not be a recumbent by setting. A mere request for 4. jurisdictional. Filing of claim for tax credit located.g. The prescriptive provided in the tax code reinvestigation without any over ride the statute of non-claims in the action or the part of the settlement of the deceased’s estate. TAX ATION San Beda College of LAW – ALABANG a proceeding in court and for the offender is absent from the 60 days thereafter. and /or the taxpayer. 2. When the taxpayer cannot be located in the address given TAXPAYER’S REMEDIES by him in the return. Appeal to the Court of Tax Appeals . collection of tax liability of the taxpayer pursuant to Nota Bene: Section 11 of RA 1125 upon 1. for reinvestigation which is 3. When the taxpayer is out of Judicial the Philippines. Philippines. Substantial tax against a tax refused to which the issues must be raised. Note: Administrative If the taxpayer informs the Commissioner of any change in (1) Before Payment address the statute will not be suspended. (1) Civil action 3. e. The defense of prescription must be raised by the taxpayer on time. The question of prescription is not granted by commissioner. with sufficient discretion and and no property could be b. Entering into compromise 2. Filing of claim for tax refund. taxpayer b.  Filing a petition for review in Note: the CTA from the decision of • A petition for reconsideration of a tax the Commissioner. In criminal cases for violation of tax code – the period shall not run when a. In the event that the collection of the tax the running of the prescriptive has already prescribed. 1. the taxpayer or his duly authorized representative shall acknowledge receipt thereof in the duplicate copy Under Sec. in which case.a plea for the transferred to non-exempt persons. 1999). e. or jurisprudence on which the assessment is based. of the letter of demand showing the following: (a) Assessment Notice shall not be required in the his name. 12-99 is the result of mathematical error in dated Sept. (3. 12-99 dated Sept. he or both. When the finding for the deficiency tax thereof. the formal letter of demand and assessment notice shall be void. traded or Request for reconsideration. Filing of complaint against taxable year. 6. machineries. the computation of the tax as appearing on the face of the return. Issuance of written a Preliminary Assessment Notice (PAN) after review and evaluation by the Formal Letter of Demand and Assessment Assessment Division or by the Commissioner or Notice shall be sent to the taxpayer only by his duly authorized representative. 228 of the 1997 NIRC a Pre. 6. It may also involve question of fact or law or both.4.2. capital ADMINISTRATIVE PROTEST equipment. It may involve a question of fact or law (15) days from the date of receipt of the PAN. inclusive of the newly-discovered or additional evidence that a applicable penalties (3. a formal letter of demand and assessment notice Request for reinvestigation. (c) designation and following cases: authority to act for and in behalf of the taxpayer. (b) signature. but not limited to.1. Revenue Regulations taxpayer intends to present in the No. as the case registered mail or personal delivery. or b.a plea for shall be caused to be issued. may be. (Sec. Revenue Regulations No. calling for payment reinvestigation of an assessment on the basis of of the taxpayer’s tax liability. Shall state the facts. 228 of the 1997 NIRC) If sent by personal delivery. vehicles. and (d) date of receipt a. 1999). When the excise tax due on excisable Revenue officials and articles has not been paid. if acknowledged or received by a person other than the taxpayer himself. and period was determined to have carried c. such as. Action to contest forfeiture of creditable withholding tax for a taxable chattel. the laws. When an article locally purchased or imported by an exempt person. Action for Damages over and automatically applied the same amount claimed against the (2) Criminal Action estimated tax liabilities for the taxable quarter or quarters of the succeeding a. Procedure otherwise. and spare parts. re-evaluation of an assessment on the basis of existing records without need of additional If the taxpayer fails to respond within fifteen evidence. Issuance of a Formal Letter of Demand and Assessment Notice issued by the Commissioner Issuance of Assessment or his duly authorized representative. reinvestigation. TAX ATION San Beda College of LAW – ALABANG b. When a discrepancy has been Disputed Assessment determined between the tax withheld and the amount actually remitted by the withholding agent. rules and regulations. or Taxpayer or his duly authorized representative c. A valid PAN shall be in writing stating the law and facts on which the assessment is made. or employees. shall be considered in default. has been sold. When a taxpayer who opted to claim a may administratively protest against a Formal refund or tax credit of excess . or erring Bureau of Internal d. the protest shall not be deemed validly filed unless payment of If the protest is denied in whole or part.  No action shall be taken on the disputed Effect of taxpayer’s failure to file an issues until payment of deficiency taxes administrative protest or to appeal BIR’s decision on undisputed issues to the CTA  Prescriptive period for assessment or collection of taxes on disputed issues shall be suspended. 204 and 209 of the 1997 NIRC basis for computing the tax due. For this purpose.  Assessed already tax collectible. Itemized statement of the findings to which the taxpayer agrees.  As provided in Sec. the taxpayer g. the assessment shall become final (Revenue Regulation No. or is the agreed portion of the tax is paid not acted upon within one hundred eighty (180) first. the support of the protest. Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence Legal Principle of quasi-contracts or that he intends to present it it is a solutio indebiti (see Art. receipt of the said decision. 2142 & 2154 of the Civil request for reinvestigation. days from submission of documents. Name of the taxpayer and address for the immediate past three taxable years. 27.) tax or taxes attributable to the undisputed A request for reconsideration or issues. Documentary evidence as it may deem necessary and relevant to support its protest to be submitted within sixty Several issues in the assessment notice but (60) days from the filing of the protest.  Taxpayer required to pay the deficiency 12-85. TAX ATION San Beda College of LAW – ALABANG Letter of Demand and Assessment notice within amount should be paid immediately thirty (30) days from date of receipt thereof. Taxable periods covered by the principle of solutio indebiti (CIR vs. including Limitations in favor of the Government. Date of receipt of assessment notice or Scope of Claims letter of demand. and Assessment Notice Number. as a Under Sec. Fireman’s assessment. or assessment becomes final. Fund Insurance Co) d. The Government is within the scope of the c. Itemized schedule of the adjustments adversely affected by the decision or inaction with which the taxpayer does not may appeal to the CTA within 30 days from agree. which the Commissioner may credit or refund taxes: . rules and regulations. taxpayer only disputes/protests validity of some If the taxpayer fails to comply with this of the issues requirement. the from receipt of the assessment notice. applicable law. applicable surcharge and/or interest. and decision shall become final and executory i. 228 of the Tax Code. either administratively or judicially through an appeal in the CTA. if any. e. Legal Basis b. reinvestigation of an assessment shall be  Collection letter to be issued calling for accompanied by a waiver of the Statute of the payment of deficiency tax. 1985. dated Nov. Statement of facts and/or law in one hundred (180)-day period: otherwise. or from lapse of the h. jurisprudence on which his protest is based shall  After the lapse of the 30-day period. f. if the taxpayer fails to file an administrative protest within the reglementary 30-day Failure of taxpayer to state the facts. Contents: a. Amounts and kind/s of tax involved. upon the filing of the protest. Code). the render his protest void and without force and assessment can no longer be disputed effect. vs. Inc. CTA Case No. therefore.  Refers not only to the “administrative” Necessity of Proof for Refund Claims claim that the taxpayer should file within 2 years from date of payments with the BIR.. as for instance in a case where he is not aware of the existing exemption in his favor at the time payments were made c. Claim for refund or tax credit must be A tax is illegally collected if filed or the suit proceeding thereof must be payments are made under duress. Commissioner. 1963). of taxes relative thereto (Panay  Except: Tax credit or tax refund where on Electric Co. Oct. which can be applied  Reasons: (a) to afford the commissioner after proper an opportunity to correct the action of verification. (Sec. and TAX REFUND TAX CREDIT Statutory Requirements for Refund Claims There is actually a The government reimbursement of issues a tax credit a. 7. 1321. interpretation of the taxpayer’s charter 28. 819) . Collector of the face of the return upon which payment Internal Revenue 103 Phil. against subordinate officer and (b) to notify the any sum that may be government that the taxes sought to be due and collectible refunded are under form the taxpayer  question and that. vs. Nov. in relation to the disputed tax. become between the two parties (government part of the state moneys subject to and taxpayer) as to the proper tax to expenditure and perhaps already spent or be paid and of the proper appropriated (CIR vs. (Sec. 1997 (a) Erroneously or illegally assessed or NIRC). but also the judicial claim or the action for  Refund claim partakes of the nature of an refund the taxpayer should commence exemption which cannot be allowed unless with the CTA (see Gibbs vs. commenced in court within two (2) years from date of payment of tax or penalty (b) Penalties imposed without authority regardless of any supervening event. (Phil. and which therefore. collected internal revenue taxes Taxpayer pays under the mistake of b.. 29. 107 Phil 232). such payment appears clearly to have been erroneous. Inc. such notice (2) the commissioner in that litigated should then be borne in mind in case agreed to abide by the decision of estimating the revenue available for the Supreme Court as to the collection expenditure (Bermejo vs. CIR 87 Phil 96). (c) Any sum alleged to have been 204 (c) & 229 1997 NIRC) excessive or in any manner wrongfully collected The value of internal revenue stamps  Requirement a condition precedent and when they are returned in good condition by the non-compliance therewith bars recovery purchaser may also be redeemed. Johnson and  Taxpayer may file an action for refund in Sons the CTA even before the Commissioner  Failure to discharge burden of giving proof decides his pending claim in the BIR is fatal to claim (Commissioner of Internal Revenue vs. Categorical demand for reimbursement fact. L-11875.  It must be shown that payment was an Palanca Jr. TAX ATION San Beda College of LAW – ALABANG is made. Dec. (CIR vs. Written claim for refund or tax credit the tax memo covering the filed by the taxpayer with the Commissioner amount determined to be reimbursable  This requirement is mandatory. 229. Acetylene Co. 1966). Collector of granted in the most explicit and Internal Revenue. 1962). independent single act of voluntary  Suspension of the 2-yaer prescriptive payment of a tax believed to be due. Li Yao. L-16626. period may be had when: collectible and accepted by the (1) there is a pending litigation government.. categorical language. G. it could not Prescriptive period counted not from become final and executory. Nov. (Roman Catholic Archbishop vs. American Life Ins. Hence. Taxpayer has filed with the Commissioner of Internal Revenue a petition for the reconsideration or The Government cannot be required to cancellation of the assessment. But where Palanca. 11.. 29. L-19607. 105208. the decision payment of the last installment (CIR vs becomes final and executory. the date the tax is withheld and remitted De la Rama. 15. Any excess of the taxes withheld over the  2-year prescriptive period for filing of tax tax due from the taxpayer shall be returned or refund or credit claim computed from date credited within 3 months from the fifteenth (15th) of payment of tax of penalty except in the day of April. No. 1125)  Appeal equivalent to a judicial action 2-year period is counted form the  In the absence of appeal. Jr. Suit or proceeding in the CTA is made 1. d. Taxes payable in installment (Sec.R. but from the date the final adjusted return is filed after the taxable year (Commissioner of Internal  Adverse decision or ruling rendered by the Revenue vs. 1992). a. May 29. Jan. Phil. Refund or credit after such time earn following: interest at the rate of 6% per annum. 1962). otherwise. the wages of employees. disputed assessment or claim for tax refund or credit. No. TMX Sales. but from the end of the taxable  Motion for reconsideration suspends the year (Gibbs vs.. Inc. supra) the taxpayer adversely affected has not received the decision or ruling. taxpayer may appeal the same within thirty (30) days after receipt. No. 112 (A) Assessment 1997 NIRC). Co.A. 2-year period computed from the end of the taxable quarter when the sales Requirements for Appeal in Disputed transactions were made (Sec. it would be merely pro VAT Registered Person whose sales are zero-rated forma. Final decision or ruling has been unless: rendered on such petition. Effect of Failure to Appeal Assessment .. 1995).. Must advance new grounds not previously alleged to toll the reglementary period. The Commissioner acted with within 30 days from receipt of the patent arbitrariness decision Arbitrariness presupposes inexcusable or obstinate disregard of legal provisions (CIR vs. pay interest on taxes refunded to the taxpayer c.. Tax assessed has not been paid. starting after the lapse of the 3-month period to the date the reund or credit is made ( Sec 79 (c) (2) 1997 Corporations NIRC) 2-year prescriptive period for overpaid quarterly income tax is counted not from the date the corporation files its quarterly APPEAL to the CTA income tax return. TAX ATION San Beda College of LAW – ALABANG  Even if the 2-year period has lapsed the Victorias Milling Corp. Commissioner of Internal Revenue in 83736. 31. same is not jurisdictional and may be 1966). Interest on Tax Refund b. or effectively zero-rated Coll. G. Inc. (Republic vs. L-16683. suspended for reasons of equity and other 2. 18 SCRA 861) to the BIR. R. he could not appeal the same to the CTA within 30 Withholding Taxes days from notice.R. supra) an appeal. Commissioner of Internal running of the 30 –day period of perfecting Revenue. Jan. (CIR vs. In case of Income Tax withheld on special circumstances. or nay false certificate ACTION FOR DAMAGES AGAINST REVENUE or return. He ceases to be an officer of the collection of the tax by the law and becomes a private wrongdoer. b. Before sale or destruction of the property examination of the books of account or tax to recover the property from the person liability. Taxpayer has filed with the CIR a enforcement of the provisions of the Tax Code written claim for refund or tax credit who commits any of the following offenses: within 2 years from payment of the tax or penalty. or as otherwise required by law. government. civil action for recovery of personal property or 6) Neglecting or by design permitting the the net proceeds of its sale which must be violation of the law or any false certificate brought in the ordinary courts and not the CTA. In case of seizure of personal property under 5) Offering or undertaking to accomplish. turned supervening cause. declined. Assessment is considered correct. Sec. failure to report duty. 231. mentioned in no. from using defense of excessive or illegal assessment. superior officer. CHATTEL 4) Willfully neglecting to give receipts as by law required or to perform any other duties enjoined by law. TAX ATION San Beda College of LAW – ALABANG Revenue officer acting negligently or in bad faith or with willful oppression would be a. the owner desiring to contest or submit a report or assessment on a the validity of the forfeiture may bring an action: txpayer without the appropriate a. 204. Suit or proceeding is instituted in the 1) Extortion or willful oppression through the CTA also within the same prescriptive use of his office. or any other agency charged with the b. 7) Making or signing any false entry or entries in any book. FILING OF CRIMINAL COMPLAINT AGAINST REVENUE OFFICERS Requirements for Appeal in Refund and Tax Credit A taxpayer may file a criminal complaint against any official. or return. ND . 1997 NIRC) otherwise violate the provisions of the tax Action is partakes of the nature of an ordinary code. OFFICIALS 8) allowing or conspiring or colluding with another to allow the unauthorized withdrawal or recall of any return or Taxpayer may file an action for damages statement after the same has been against any internal revenue officer by reason of officially received by the BIR. or b. consideration or compensation. 5. agent or employee of the BIR a. down or rejected any of his offers 229 1997 NIRC). taxpayer’s recourse is under Art 27 of the such knowledge or information to their Civil Code. Taxpayer barred. in an action for personally liable. and c. any act done in the performance of official duty 9) Having knowledge or information of any or neglect of duty. Tax has been paid. (see Secs. After the sale and within 6 months to conspiring or colluding with another or recover the net proceeds realized at the others to defraud the revenues or sale (see. 3) Knowingly demanding or receiving sums or compensation not authorized or ACTION CONTESTING FORFEITURE OF prescribed by law. file claim for forfeiture. period of two years from the date of 2) Willful oppression and harassment of a payment regardless of any taxpayer who refused. In case of willful neglect of violation of the Tax Code. or offering or undertaking to seizing the property or in possession submit a report or assessment less than thereof upon filing of the proper bond to the amount due the government for any enjoin the sale. withdrawn nor the duties and 1997 NIRC) taxes paid thereon within the Remedies under the period provided under Section Tariff and Customs Code 1908. Any articles subject to a valid government lien for customs duties. is fine or forfeiture which is enforceable by action (Sec. Extrajudicial sale shall have been established by proper 1. Seizures The tax liability of the importer constitutes Generally applied when the penalty a personal debt to the government. arrival. on missing packages. or accepting money or other things of value fore the compromise or settlement b. abandoned articles. respectively of the taxpayer Note: Goods in the collector’s This is availed of when the possession or of Customs authorities importation is neither nor pending payment of customs duties improperly made are beyond the reach of attachment. while the goods are still within the customs jurisdiction. articles lost or destroyed after such conditions. no longer in Customs Custody. Judicial Action 2. Any deficiency or excess is expiration of the period allowed for the account or credit. B. after the tax due. 269. Claim for refund—a written claim for refund may be submitted by the importer: a. A. the provision of this code: and regardless of the ownership while still in the custody or control of the d. unless the importation is merely attempted. taxes or other charges collectible by the Proceeds of sale are applied to the Bureau of Customs. articles entered under of any charge or complaint for any warehousing entry not violation of the Tax Code. Property in the customs custody shall be subject to sale under the following c. TAX ATION San Beda College of LAW – ALABANG 10) Without the authority of law. (see. person who is aware thereof. In abatement uses such as: b. seized property. TCC) imposed when the importation is unlawful and it may be exercised This is availed of when the tax lien is lost even where the articles are not or by the release of the goods. b. administrative fine or forfeiture may be affected only. deficiencies in the contents of 3. demanding a. b. Taxpayer’s Remedies In the case of attempted Administrative Recourse importation. TCC. Sec. after liability to a. or 1. Government Remedies: c. in the hands or under the control of the importer or a. for the satisfaction of the same. 1204. other than contraband. Sale of Property packages or shortage before arrival of the goods in the Philippines. . Enforcement or tax lien administrative or judicial proceedings in conformity with A tax lien attaches on the goods. dead or injured animals. tangible or intangible. Actual – There is taking of possession of abandon either expressly or By personal property out of the taxpayer into importation in favor of the Government that of the government. and 1. detention or release of taxpayer. In seizure cases 7. it is being questioned. articles lost or destroyed Administrative e. Constructive Distraint May be made on the a) liability for customs duties. TCC) 2. Settlement of case by the payment of fine or redemption of forfeited Distraint. tax due where amount due is may not be definite or Enumeration of the Remedies definite. Taxpayer is also liability but not from the possible diverted of the power of control over the criminal liability. garnishment. Judicial relief 3. Distraint of Personal Property f. delinquent or not property affected. and property. Compromise are re-exported 5. only of a delinquent taxpayer whether b) seizures. property. to be followed by see earlier discussions on the its public sale. The taxpayer may appeal to the Court d. (see section 1701-1708. TAX ATION San Beda College of LAW – ALABANG d. In case of thus relieving himself of the tax intangible property. property. Forfeiture a. Effected by having a list Effected by requiring d) other matters arising under the of the distraint property the taxpayer to sign a customs Law or other laws or by service or warrant receipt of the property administered by the Revenue of of distraint or or by leaving a list of Customs. if the taxes are not voluntarily subject paid. Constructive – The owner is merely of Appeals which has exclusive prohibited from disposing of his personal jurisdiction to review decisions of the property. Other Administrative Remedies see the earlier discussions on “Customs Protest Cases” Judicial b. Commissioner of Custom in cases involving: Actual Distraint. Levy of Real Property 2. for manifest classical errors. Tax Lien In drawback cases where the goods 4. Civil Action see earlier discussion on the 8.Seizure by the government of property personal property. . Protest 6. fees or Made on the property property of any other money charges. Taxpayer is merely There is actual taking or prohibited from c) fines forfeitures or other penalties possession of the disposing of his imposed in relation thereto. same An immediate step for Such immediate step is Remedies of the Government collection of taxes not necessary. Note: The owner or importer may c. Criminal Action subject Distraint of Personal Property c. to enforce the payment of faces. TAX ATION San Beda College of LAW – ALABANG from whom property was taken. Statement of the sum demanded. company or association. at the dwelling or place of business Requisites: and with someone of suitable age and discretion 5. Copy of an account of the property any manner. treasurer or other responsible officer of the issuing When remedy not available: corporation. a. Stocks and other securities 8. Taxpayer must fail to pay delinquent tax at 4.000. 205 TC). 6. Service of warrant of distraint upon taxpayer or upon person in possession of 4. left either with the owner or person . 6. Warrant shall be sufficient taxpayer’s personal property. In case of intangible property: time required. Serve warrant upon taxpayer and president. Bank shall turn over to CIR so much of the bank accounts as may be sufficient. Require taxpayer or person in possession authorized representative P1. authority for such person to pay CIR his credits or debts.000. with out the authority of distrained. Where amount involved does not exceed P100 (Sec.00 to P1. 8. 5. 7. In keeping with the provision b. 3. Prohibit him from disposing the property from disposing the property in a.000.00 4. signed by the officer. Time and place of sale. Period with in to assess or collect has not yet prescribed. the CIR. 3. c. 206 TC) manager. 4. Posting of notice is not less than two places in the municipality or city and c. 7. In case of constructive Serving a copy of the warrant upon distraint. Sale at public auction to highest bidder treasurer or responsible officer of the bank. Leaving a copy of the warrant with the person owing the debts Procedure: or having in his possession such credits or his agent. Disposition of proceeds of the sale. manager. Amount How constructive Distraint Effected Who may effect distraint Involved 3. requisite no. Subsequent demand for its payment. Sign a receipt covering property distrained b. Bank Accounts – garnishment notice to the taxpayer specifying time and place of sale and the articles distrained. RDO or less a. 1 is not essential taxpayer and upon president. (see Sec. In case of Tangible Property: c. Obligate him to preserve the same How Actual Distraint Effected properties. Debts and credits on the abatement of the collection of tax as the cost of same might even be more than P100. 3. b.000. Taxpayer is delinquent in the payment of tax. commissioner or his due In excess of 3. Price: Amount of taxes. Cannot be extended by the courts. Note: 11. a. or 9. accounts for no inquiry is made. Bank accounts may be distrained with out violating the confidential nature of bank 12. Disposition of proceeds of sale. To remove his property there from. In the presence of two witnesses of sufficient age and discretion. Amount of tax and copy in the premises where property is located. Taxpayer is retiring from any business subject to tax. than the actual market value of articles. Taxpayer hides or conceals his property. penalties and Levy of Real Property interest thereon from date of delinquency to the date of sale together with interest Levy – Act of seizure of real property in on said purchase price at 15% per annum order to enforce the payment of taxes. Where Taxpayer or person in possession Procedure: refuses to sign: 7. Distraint and Levy compared . and 9. Service of written notice to: 8. Officer shall prepare list of the a duly authenticated certificate showing property distrained. if after redemption. the CIR or his deputy may purchase the g. . Name of taxpayer b. h. 10. BIR simply seizes so much of the deposit with The excess shall be turned over to owner. seizure. If at any time prior to the consummation him of the sale. Advertisement of the time and place of sale. e. Penalty due. International Revenue officer shall prepare a. leave a b. Philippines. Officer shall write upon the certificate a description of the property upon which 7. RD where property is located. property under distraint is not equal to the amount of the tax or is very much less . Possession pending redemption – owner distrained property on behalf of the not deprived of possession national government. 4. The requisites are the same as that of distraint. Begins from registration of the deed of 6. TAX ATION San Beda College of LAW – ALABANG 4. The taxpayer. out having to know how much the deposits are or where the money or any part of it Redemption of property sold or forfeited came from. Time to redeem: one year from date of goods distrained shall be restored to the sale or forfeiture owner. Person entitled: Taxpayer or anyone for 5. Taxpayer is intending to leave the levy is made. 10. all proper charges are paid to the officer conducting the same. When the amount of the bid for the sale or declaration of forfeiture. The from date of purchase to date of property may be sold at public sale. Sale at public auction to highest bidder. d. enforceable through out the Philippines 6. c. 8. c. Grounds of Constructive Distraint . the f. Taxpayer acts tending to obstruct collection proceedings. the taxes are not voluntarily paid. Failure to file notice of such lien in the office of register of Deeds. Taxpayer must have a tax liability. This is superior to judgment claim of Tax Lien—a legal claim or charge on private individuals or parties property. Tax repeated if necessary until the full lien is directed to the property subject to the tax. to transfer the A tax lien is distinguished from disttraint in title to the property with out of an order that. of an amount to be paid by taxpayer. Nature: Compromise A lien in favor of the government of the Philippines when a person liable to pay a Compromise—a contract whereby the tax neglects or fails to do so upon parties. the taxpayer Note: is still liable.\ or put an end to one already commenced. Upon all property and rights to property belonging to the taxpayer. 3. 7. There must be an offer by taxpayer or CIR. 3 and 4. Distraint – Taxpayer no given the right of judgment creditor. avoid litigation demand. Note: Enforcement of Tax Lien 3. 9. levied upon and sold/forfeited to the government. The remedy of distraint or levy may be property in respect to the tax is assessed. 7. Both cannot be availed of where amount involved is not more than P100. 5. amount. Distraint concerned upon registration of the declaration of forfeiture. Payment or remission of the tax Levy – forfeiture by government authorized where there is no bidder or the 6. the CIR until paid. 5. 1 and 2. collected. is regardless of its owner. . in distraint the property seized must be that from a competent court of the taxpayer. Duration: Requisites: Exists from time assessment is made by 4. In case Nos. with interests. Distraint – personal property Only when notice of such lien is filed by the CIR in the Register of Deeds Levy – real property concerned. redemption 8. Extent: 6. Distraint – forfeiture by government. 8. established by law as a security in default of the payment of 4. Effectivity against third persons: 8. not Extinguishment of Tax Lien provided 5. Prescription of the right of the government highest bid is not sufficient to pay the to assess or collect. It is the duty of the Register of Deeds Enforcement of Tax Lien vs. Both are summary remedies for collection of taxes. Destruction of the property subject to the Levy – Taxpayer can redeem properties lien. including all expenses. 2. Under nos. penalties and costs. was served but from the time the tax was due and demandable. there is no more tax liability. taxes. although it need not be the 6. either real or personal. purchases or 10. by reciprocal concessions. TAX ATION San Beda College of LAW – ALABANG 7. penalties and costs. Attaches not only from time the warrant taxes. 9. 3. If highest bid is for an amount 4. A reasonable doubt as to the validity if the claim against the taxpayer exists. penalties and costs. cases. the same demonstrates a clear inability to pay the may be collected only if the taxpayer is assessed tax. . With in two days thereafter. When basic tax involved exceeds P1. a return of the proceeding is duly made. Exception: The Regional Evaluation Board civil or criminal. Where settlement offered is less than the prescribed minimum 10. Since it is voluntary in character. How enforced: rates. TAX ATION San Beda College of LAW – ALABANG 6. regional offices involving basic taxes of P 500 K or less. 10% of the basic tax assessed – in case of financial incapacity. willing to pay them. a. judgment of condemnation and sale in a legal action or proceeding.000. c. in consequence b. 5. General Rule: The power to compromise or abate shall not be delegated by the d. 11. It is a certain amount of money which the When taxes may be compromised: taxpayer pays to compromise a tax violation.00 or . of a default or offense. Subject to approval of Evaluation Board insufficient to pay the taxes. enforce the compromise. The financial position of the taxpayer 6. Criminal violations. It includes the idea of not only losing but also having the property transferred to another with out the consent of the Limitations: owner and wrongdoer. When forfeited property to be destroyed Remedy in case of failure to comply: or sold: The CIR may either: c. 5. In case of personal property – by Delegation of Power to Compromise seizure and sale or destruction of the specific forfeited property. 4. d. Regard it as rescinded and insists upon prejudicial to the enforcement of the original demand. To be destroyed – by order of the CIR when the sale for consumption 3. No bidder for the real property b. In case of real property – by a commissioner. 4. It is pain in lieu of a criminal prosecution. Those already filed in court Forfeiture—implies a divestiture of property with out compensation. 6. When available: a.000. 40% of basic tax assessed – other exposed for sale. There must be acceptance of the offer in Compromise Penalty settlement of the original claim. Minimum compromise rate: 8. as the case may may compromise the assessment issued by the require. Effect: Transfer the title to the specific thing from the owner to the government. c. Those involving fraud. or or use of the following would be injurious to the public health or 4. except: Enforcement of forfeiture a. b. it is with regulation administered by the BIR. Imposition of surcharge and interest. Right of Redemption: 9. there is 8. cigarettes. miscellaneous products. Willfully refuses to pay such tax and its accessory penalties. mineral products. Code. Effect of failure to redeem – forfeiture shall become absolute. c. imposed and collected or P1. distilled spirits j. labels and tags. automobile. Exporter’s bond 3. Making arrest. interest and cost of the sale 10. whichever is lower. Personal entitled – taxpayer or anyone for him c. Inspection of books . tobacco Other Administrative Remedies 5. Time to redeem – with in one (1) year from forfeiture d. a. Deportation in case of aliens – on the following grounds f. 13. playing cards 4. Where to be sold: 7. All apparatus used in or about instances: the illicit production of such articles. Requiring proof of filing income tax returns oils. Estate and donor’s tax b. Limited to violations of any penal law or d. Manufacturer’s and importer’s bond exercise tax. Excise taxes d. after decision on h.00 per case. 12. labels or tags. Dies for printing or making IR 6. Amount to be paid – full amount of his tax liability shall have become final the taxes and penalties. Public sale: provided. cigars Note: The Register of Deeds is duty bound to transfer the title of property forfeited to the 4. 000. (wine. All other articles subject to d.000. products) manufactured or business or occupation or to practice a removed in violation of the Tax profession can be issued. in equivalent to 10% of revenues. the approval of the Secretary of committed with in the view of the Internal Finance. To be sold or destroyed – depends upon the discretion of CIR c. non-essential items a petroleum Before a license to engage in trade. To whom paid – Commissioner or seizure) the Revenue Collection Officer 1. liquors 3. Requiring filing of bonds – in the following 6. 2. search and seizure notice of not less than 20 days. g. Private sale: provided. plus and executory. Revenue Officer or EE. TAX ATION San Beda College of LAW – ALABANG the law: (at least 20 days after i. manufactured 5. Knowingly and fraudulently evades payment of IR taxes. and other government with our necessity of an order from a manufactured products of competent court. surcharges imitation of or purport to be or fees recovered and/or fine or penalty lawful stamps. 4. Giving reward to informers – Sum stamps. statue of limitation Actions instituted by the government to is primarily designed to protect the rights of the collect internal revenue taxes in regular taxpayer’s against unreasonable investigation of . Conducted by Legal Officer of BIR 3. depending on the Books of accounts and other accounting amount involved) records of taxpayer must be preserved. Person failed to issue receipts and facie showing of willful attempt to evade. Obtaining information on tax liability of any person D. or enforcement of a fine. TAX ATION San Beda College of LAW – ALABANG courts (RTC or MTCs. c. Criminal Action A direct mode of collection of taxes. A deceased person to determine gross estate Effect of Satisfaction of Tax Liability on Criminal Liability d. does not arise from a criminal act. the 13. criminal liability since the duty to pay the tax is imposed by statute. provided there is a prima c. 16. in case of action. invoices Effect of Acquittal on Tax Liability: d. independent of any attempt 17. the 15. Any taxpayer who filed application for compromise by reasons of financial Will not operate to extinguish taxpayer’s incapacity his tax liability. Prescribing presumptive gross sales or receipt: An assessment of a tax deficiency is not necessary to a criminal prosecution for tax evasion. penalty or Prescriptive Periods / forfeiture. the grounds for the extinction of criminal action. Reason to believe that records do not correctly reflect declaration in return. Appeal adverse decision of CIR to CTA 12. on past of taxpayers to evade payment. Inventory – Taking of stock-in-trade and judgment of which shall not only impose making surveillance. for recovery of taxes. Civil Action For purposes of Taxation. Statute Of Limitation Purpose: C. Judicial Remedies This is true in case the criminal action is based on the act to taxpayer of filing a false and Civil and Criminal Actions: fraudulent tax return and failure to pay the tax. generally within three years after date the When assessment made has become final tax return was due or was filed whichever and executory for failure or taxpayer to: is later. Thus. Dispute same by filing protest with CIR 11. Inquiring into bank deposit accounts of Reason: Tax is an obligation. Registration of Taxpayers.\ Does not exonerate taxpayer his civil liability to pay the tax due. 14. Use of National Tax Register d. 2. Must be with the approval of the CIR. the penalty but also order payment of taxes. Brought in the name of the Government of Note: The satisfaction of civil liability is not one of the Philippines. c. Prescribing real property values government may still collect the tax in the same action. 1. SCRA 17. Fraud is never presumed and the prescribed by law for the filing of the return or circumstances consisting it must be from the day the return was filed. June 29. When the Commissioner failed to allege in his answer to the taxpayer’s petition for review when the case is appealed to the CTA. (Sec. (Basilan Estates. taxpayer. Inc. ( CIR vs. in case it is alleged and proved to exist by clear & filed beyond the period prescribed thereof. vs. Where no return was filed . vs. the fact of fraud shall commence from the filing of the shall be judicially taken cognizance of amended return (CIR vs. (Section 203 of the Tax Code) Sept. Keir. Intentional and substantial demand/notice be received within the understatement of tax liability of the prescriptive period. Dec.within ten (10) question of fraud only for the first time years after the date of discovery of the in his memorandum which was filed omission. 1987) e. Where a return was filed but the same was false or fraudulent – within ten (10) years Prescription of Government’s Right to from the discovery of falsity or fraud. Assess Taxes: Nature of Fraud: General Rule: Internal Revenue Taxes shall be assessed within three (3) years after the last day a. However. A fraud assessment which has become the government right to assess the tax final and executory. 30. When the Commissioner raised the 5. In computing the prescriptive period for assessment. When the Commissioner fails impute necessary and required to permit the fraud in the assessment computation and assessment of taxes notice/demand for payment. assessment. It must 1. 1964) b. Intentional and substantial overstatement of deductions of 4. Recurrence of the foregoing tax evasion. Commissioner. 4 SCRA 872) collection thereof. 23. (Aznar case. Phoenix. c. A transcript sheets are not returns. In case a return is substantially amended. 6. intent. The fraud contemplated by law is actual and not constructive. convincing evidence (Republic vs. cannot be deemed an circumstances. TAX ATION San Beda College of LAW – ALABANG the taxing authority with respect to assessment and collection of Internal Revenue Taxes. A return filed before the last day amount to intentional wrongdoing with prescribed by law for the filing thereof the sole object of avoiding the tax. Collector. May 20. (Sinforo Alca vs. because they do not contain information a. the CTA after he had rested his case. 1999) Instances/Circumstances negating fraud: 5. Aug. Commissioner 21. 222 paragraph (a)) 3. Pascoi Realty Corp. 1966) Note: b. Exceptions: (Sec. A shall be considered as filed on such last mere mistake is not a fraudulent day. Kei & Co. CA April 30. An affidavit executed by a revenue office exemption indicating the tax liabilities of a taxpayer and attached to a criminal complaint for f. 222 ic) c. Republic vs. . the latter is deemed made when notice to this effect is released. Fraud may be established by the mailed or sent by the Commissioner to the following : (Badges of Fraud) correct address of the taxpayer. 29. in the civil or criminal action for the 1965. the law does not require that the d. 1974) 2. whichever renunciation of the original 3-year is later. March 31. before the expiration of the Prescription of Government’s three (3) year period of limitation have Right to Collect Taxes agreed in writing to the extension of said period. Where the BIR itself appeared. General Rule: Note: Limitations: 1. Nov. Where no assessment was made and a should be mode before the expiration return was filed and the same is not of the period previously agreed upon. vs. When the taxpayer omits to file a sought to be assessed becomes return – a court proceeding for the imprescriptible. Where a fraudulent/false return with d. if it appears that there was an assessment. Waiver of statute of limitations – any 3. the ordinary 5-year period (now 3 years) Imprescriptible Assessments: would apply (Rep. the tax 10 years after the discovery of the is imprescriptible. 1980) taxpayer’s net income. following the date of assessment. Ayala Securities Corp. unless there is a sufficient evidence shaving fraudulent intent. which has been bases of which is not required by law to be assessed within the period agreed . limitation signed by the taxpayer. omission. at anytime within 2.. at anytime within ten e. or fraud. Ret. sure” as to the real amount of the 21. the tax may be filed without assessment.. Exceptions: Note: Limitations: 8. collection of such tax may be filed without assessment. 4. Where no return is required by law. where the internal revenue tax. The agreement to extend the same 2. A waiver is inefficient I it is executed years after the discovery of the falsity beyond the original three year. Where the commissioner and the taxpayer. A mere understatement of income documentary stamp tax. Assessment of unpaid taxes. Where there is a written waiver or return was due or was filed. The agreement extending the period of assessed within the period of limitation prescription should be in writing and may be collected by distraint or levy or duly signed by the taxpayer and the by proceeding in court within 5 years commissioner. D. 7. d. 1962) 1. Where an assessment was made – Any internal revenue tax which has been c. f. TAX ATION San Beda College of LAW – ALABANG reported in a return such as excise taxes. In such case. E. the tax 9. Assessment of compensating and e.the tax should be collected within 3 years after the 8. fraudulent or false. d. “not (Carmen vs. 10. Where the law does not provide for any particular period of assessment. The waiver to be valid must be intent to evade taxes was filed a executed by the parties before the proceeding in court for the collection of lapse of the prescriptive period. The commissioner can not valid agree Note: The 10-year prescriptive period to reduce the prescriptive period to for collector thru action does not apply less than that granted by law. does not prove fraud. c. Where a tax obligation is secured by a surety bond – the government may When it should run again: proceed thru a court action to forfeit a bond and enforce such contractual When the proceeding is dismissed for obligation within a period of ten years. In criminal case – It can be raised even if 4. (Rep. If not known. may be collected be distinct or The five (5) year prescriptive period shall levy of by a proceeding in court within begin to run from the: the period agreed upon in writing before the expiration of 5-year period. Where the action is brought to enforce When does the defense of a compromise entered into between prescription may be raised: the commission and the taxpayer – the prescriptive period is ten years. from the time of discovery reinvestigation requested by the and the institution of judicial proceeding taxpayer – the prescriptive period for for its investigation and punishment. Day of the commission of the violation. Philippines. the government avail of distraint and levy procedure. Where before the expiration of the time complaint with the proper court. 5. vs. Collection by summary remedies – It is the case has been decided by the lower effected by summary methods when court but pending decision on appeal. When it should commence? . c. 13. purposes of the prescriptive period. The running of statute of limitations on making an assessment and the beginning of distraint/levy or a proceeding in court Rules of Prescription in Criminal Cases for collection shall be suspended for the period. In civil case – If not raised in the lower court. d. Where assessment of the have consented in writing to its commissioner is protected & appealed assessment after such time. both the commissioner and the taxpayer 6. Rule: All violations of any provision of the tax code shall prescribe after five (5) years. During which the Commissioner is prohibited from making the assessment or Note: beginning distraint/levy or a proceeding in court and for 60 days thereafter. if can not F. (RTC) prescribed for the assessment of the tax. Lopez. When the offender is absent from the the last revised assessment. taxpayer’s petition for review. 11. When a proceeding is instituted against 12. 14. it is bailed permanently.g. When tax is deemed collected for be raised for the first time on appeal. Collection by judicial action – The collection begins by filing the 4. if know. the tax may to the CTA – the collection begin when be assessed prior to the expiration of the the government file its answer to period agreed upon. reason not Constituting jeopardy. collection should be counted from the last assessment. e. When it is interrupted: March 30. Where the government makes another assessment on the basis of d. Where the assessment is revised the guilty person because of an amended return – the period for collection is counted from d. 1963) c. Interruption of the Prescriptive Period 5. TAX ATION San Beda College of LAW – ALABANG upon. located in the address given by him in the return. Bureau of Internal Revenue. In the event that the collection of the tax the prescriptive period. Filing a petition for review in the CTA from the decision of the Commissioner. Powers and Duties of the suspended. 3. Note: A petition for reconsideration of a SEC. 4. . __________________________________________________ _____SOME IMPORTANT PROVISIONS ON THE TAX Note: If the taxpayer informs the REFORM ACT OF 1997 Commissioner of any change in address the statute will not be SEC. The question of prescription is not jurisdictional. 2. TAX ATION San Beda College of LAW – ALABANG a. and charges. Power of the Commissioner to tax assessment does not suspend the Interpret Tax Laws and to Decide Tax criminal action. and the enforcement of all forfeitures. otherwise it is its collection may jeopardizes the deemed waived. the government must not be a mere pro-former.off the prescribed tax against a tax refused to which the d. his authorized representative and fines connected therewith. commissioner. or the part of the Commissioner does not interrupt the running of 10. When the taxpayer cannot be taxpayer is entitled. The prescriptive provided in the tax code Note: A mere request for over ride the statute of non-claims in the reinvestigation without any action settlement of the deceased’s estate. SEC. Philippines. should be interpreted liberally in order to protect the taxpayer. The defense of prescription must be raised Section 11 of RA 1125 upon proof that by the taxpayer on time. government and /or the taxpayer.The Bureau of Internal Revenue shall be under e. Nota Bene: The commissioner is prevented from filing an ordinary action to collect the 6. and as defense it must be c. When the warrant of distraint or the supervision and control of the levy is duly served upon any of the Department of Finance and its powers and following person: duties shall comprehend the assessment and collection of all national internal 4. The property could be located. The request has already prescribed. Bureau shall give effect to and administer the supervisory and police powers f. The law on prescription remedial measure tax. taxpayer revenue taxes. fees.The power to interpret the for assessment of the tax before the provisions of this Code and other tax laws criminal action may be instituted. recumbent by setting. 8. including the execution of judgments in all cases 6. When CTA suspends the collection of tax liability of the taxpayer pursuant to 7. hereinafter referred to as the the Philippines. Commissioner and four (4) assistant chiefs to be known as Deputy Commissioners. When the taxpayer requests for raised reasonably otherwise it is deemed reinvestigation which is granted by waived. 5. . b. Chief Officials of the Bureau of Internal Revenue. 9. Reason: No requirement Cases. In criminal cases for violation of tax Internal Revenue shall have a chief to be code – the period shall not run known as Commissioner of Internal when the offender is absent from Revenue. shall be under the exclusive and original . Member of his household with decided in its favor by the Court of Tax sufficient discretion and no Appeals and the ordinary courts. When the taxpayer is out of the conferred to it by this Code or other laws. cannot invoke the principle of Equitable Substantial issues must be raised. . penalties.The Bureau of g. That failure to (C) To summon the person liable for file a return shall not prevent the tax or required to file a return. . under oath. costs and volume of production. Make assessments and Prescribe receipts or sales and gross additional Requirements for Tax incomes of taxpayers. data. insurance return has been filed as required companies. mutual Determination of Tax Due. paper. and to give testimony. authorized representative may associations. person concerned. papers. -controlled corporations. from any person other than the person whose internal revenue tax The provisions of the foregoing liability is subject to audit or paragraphs notwithstanding. 6. or Commissioner from authorizing the any officer or employee of such examination of any taxpayer. . joint ventures of authorize the examination of any consortia and registered taxpayer and the assessment of partnerships. SEC. or in evaluating tax compliance. TAX ATION San Beda College of LAW – ALABANG jurisdiction of the Commissioner. and all persons relevant or material to such owning or having the care. . or any person having to review by the Secretary of Finance. or in making a return when none has been made. management or possession of any object with respect to which a tax (B) To obtain on a regular basis is imposed. headquarters of multinational the Commissioner or his duly companies. the correct amount of tax: Provided. regional operating under the provisions of this Code. custody. and Take Testimony of may be relevant or material to such Persons. but not limited SEC. or from any office or nothing in this Section shall be officer of the national and local construed as granting the governments. government Commissioner the authority to agencies and instrumentalities. or in determining (E) To cause revenue officers and the liability of any person for any internal employees to make a canvass from revenue tax. records. to appear before the matters arising under this Code or other Commissioner or his duly laws or portions thereof administered by authorized representative at a time the Bureau of Internal Revenue is vested and place specified in the in the Commissioner. or care of the books of accounts and other The power to decide disputed accounting records containing assessments. possession. or other other person. and to Summon. Power of the Commissioner to to. and the Administration and Enforcement. and of any return.After a fund companies.In ascertaining the correctness inquiry. addresses. or other Court of Tax Appeals. 5. any information such as. or other data which may be revenue tax. joint accounts. refunds of internal revenue entries relating to the business of taxes. subject to the summons and to produce such exclusive appellate jurisdiction of the books. - names. or region and inquire after and the Commissioner is authorized: concerning all persons therein who (A) To examine any book. inquiry. and their members. fees or other charges. inquire into bank deposits other including the Bangko Sentral ng than as provided for in Section 6(F) Pilipinas and government-owned or of this Code. penalties the person liable for tax. and financial (A) Examination of Returns and statements of corporations. or in collecting any such time to time of any revenue district liability. however. or any imposed in relation thereto. may be liable to pay any internal record. subject person. investigation. Power of the Commissioner to (D) To take such testimony of the Obtain Information. as Examine. . under observation or preceding year or quarter. or may place the business of the tax for the period so declared operations of any person. or is intending to amend the return from his own leave the Philippines or to remove knowledge and from such his property therefrom or to hide or information as he can obtain conceal his property. Reports and account the sales. the same may be modified. records do not correctly reflect the statement or declaration has in the declarations made or to be made in meantime been actually served a return required to be filed under upon the taxpayer. together with a determining his internal revenue tax request for the immediate payment liabilities. In case a person fails to file a required return or other document at (D) Authority to Terminate Taxable the time prescribed by law. or Period. changed. a taxpayer is retiring from business the Commissioner shall make or subject to tax. That no notice for audit or that the books of accounts or other investigation of such return.When it shall come to the willfully or otherwise files a false or knowledge of the Commissioner that fraudulent return or other document. taxpayer terminated at any time and order inventory-taking of goods of shall send the taxpayer a notice of any taxpayer as a basis for such decision. incomplete or erroneous. receipts. unless paid within the as the basis for assessing the taxes time fixed in the demand made by for the other months or quarters of the Commissioner. natural or terminated and the tax for the juridical. the provisions of this Code. income other Documents. collection of the tax for the past or current quarter or year or to render (C) Authority to Conduct Inventory. performing any act tending to which shall be prima facie correct obstruct the proceedings for the and sufficient for all legal purposes. sales payable immediately and shall be or receipts for internal revenue tax subject to all the penalties hereafter purposes. the same or different taxable years . . after taking into Returns. statement of declaration and such assessment shall be filed in any office authorized to deemed prima facie correct. or such surveillance if there is reason to portion thereof as may be unpaid.The Commissioner may. or amended: Provided. sales and taxable base.When a report or other taxable base of other required by law as a basis for the persons engaged in similar assessment of any national internal businesses under similar situations revenue tax shall not be or circumstances or after forthcoming within the time fixed considering other relevant by laws or rules and regulations or information may prescribe a when there is reason to believe minimum amount of such gross that any such report is false. the Commissioner Receipts. receive the same shall not be When it is found that a person has withdrawn: Provided. shall declare the tax period of such at any time during the taxable year. receipts. Sections 113 and 237 of this Code. . surveillance and to Prescribe unless such proceedings are begun Presumptive Gross Sales and immediately. That within failed to issue receipts and invoices three (3) years from the date of such in violation of the requirements of filing. the same totally or partly ineffective taking. the (B) Failure to Submit Required Commissioner. The findings may be used prescribed. Statements. the and such amount so prescribed shall Commissioner shall assess the be prima facie correct for purposes proper tax on the best evidence of determining the internal revenue obtainable. tax liabilities of such person. believe that such person is not and said taxes shall be due and declaring his correct income. TAX ATION San Beda College of LAW – ALABANG Any return. or is through testimony or otherwise. or when there is reason to believe further. - Republic Act No. . Failure of the hereby authorized to inquire into Secretary of Finance to rule on the the bank deposits of: Appeal within the prescribed period shall be deemed as approval of the (1) a decedent to determine application for accreditation of the his gross estate. reports. 1405 and other general or appeal within sixty (60) days from special laws. The subject to such limitations and restrictions Commissioner shall accredit and as may be imposed under rules and register. documentary or procedural In case a taxpayer files an application to requirement in connection with the compromise the payment of his tax liabilities on submission or preparation of his claim that his financial position demonstrates financial statements accompanying a clear inability to pay the tax assessed. who shall rule on the No. and shall revenue tax. Commissioner is hereby authorized statements. 204 (A) Documentary Requirements. or recommendation of the (2) the fair market value as Commissioner. his the tax returns.Notwithstanding any such denial to the Secretary of contrary provision of Republic Act Finance.The prepare and file tax returns. before. 1998. subordinate officials with the rank (G) Authority to Accredit and equivalent to a division chief or higher. For the members of which shall serve purposes of computing any internal for three (3) years. representatives who are denied accreditation by the Commissioner (F) Authority of the Commissioner and/or the national and regional to inquire into Bank Deposit accreditation boards may appeal Accounts. whichever is the officials of the Bureau. . based on their regulations to be promulgated by the professional competence. . 7. That the following . Register Tax Agents. however. . shown in the schedule of Individuals and general professional values of the Provincial and partnerships and their City Assessors. subject to such rules (1) the fair market value as and regulations as the Secretary of determined by the Finance shall promulgate upon the Commissioner. individuals and recommendation of the Commissioner: general professional partnerships Provided. and to divide the Philippines into other papers with or who appear different zones or areas and shall. and such waiver shall constitute the powers vested in him under the pertinent authority of the Commissioner to inquire into the provisions of this Code to any or such bank deposits of the taxpayer. the value of the designate from among the senior property shall be. Authority of the until he waives in writing his privilege under Commissioner to Delegate Power. determine the fair Commissioner shall create national market value of real properties and regional accreditation boards. (2) any taxpayer who has filed an application for (H) Authority of the Commissioner to compromise of his tax Prescribe Additional Procedural or liability under Sec. integrity Secretary of finance. the Bureau for taxpayers. upon and moral fitness. TAX ATION San Beda College of LAW – ALABANG (E) Authority of the Commissioner to and their representatives who Prescribe Real Property Values. one (1) higher of: chairman and two (2) members for each board. protests. the public sectors.The (2) of this Code by reason of Commissioner may prescribe the financial incapacity to pay manner of compliance with any his tax liability. and appellant. 1405 or under other general or The Commissioner may delegate the special laws. upon consultation with competent Within one hundred twenty (120) appraisers both from the private and days from January 1. application shall not be considered unless and SEC. the Commissioner is receipt of such appeal. located in each zone or area. Period of Limitation Upon amount due. or subject to excise tax are produced (2) The administration and collection or kept. any tax liability: Provided. however. or revoke or modify any existing (2) The financial position of the taxpayer ruling of the Bureau.000.The Commissioner may - (a) The power to recommend the promulgation of rules and (A) Compromise the Payment of any regulations by the Secretary of Internal Revenue Tax. a minimum recommendation of the compromise rate equivalent to Commissioner. of the claim against the taxpayer exists. TAX ATION San Beda College of LAW – ALABANG powers of the Commissioner shall not be Compromise. and For cases of financial incapacity. when: Finance. under Sec. For purposes of this Section. 203. return. and. Provided.000) or where the settlement composed of the Regional Director offered is less than the prescribed minimum as Chairman. the three they are returned in good condition by the (3)-year period shall be counted from the day the purchaser. penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for SEC. Officer having jurisdiction over the taxpayer. That in a case where a return is filed refund the value of internal revenue stamps when beyond the period prescribed by law. Abate and Refund or Credit delegated: Taxes. as may minimum compromise rate be determined by rules and equivalent to ten percent (10%) of regulations to be promulgated by the basic assessed tax. and no proceeding in court without assessment for the collection of such taxes shall (C) Credit or refund taxes erroneously or illegally be begun after the expiration of such period: received or penalties imposed without authority. in his discretion. No credit or refund of taxes or on such last day. a change unused stamps that have been rendered return filed before the last day prescribed by law unfit for use and refund their value upon proof of for the filing thereof shall be considered as filed destruction. discovered by forty percent (40%) of the basic regional and district officials. upon For other cases.Except as provided in Section 222. and (B) Abate or Cancel a Tax Liability. abate. costs involved do not justify the collection of the SEC. the compromise shall be subject to the Regional Director. . 204. as members. when: (d) The power to assign or reassign internal revenue officers to (1) The tax or any portion thereof appears establishments where articles to be unjustly or excessively assessed. Assessment and Collection composed of the Commissioner and the four (4) Divisions and the Revenue District Deputy Commissioners. a minor criminal violations. and the Secretary of finance. the heads of the approval of the Evaluation Board which shall be Legal. the Assistant rates. may assessed tax. be compromised by a regional Where the basic tax involved exceeds One million evaluation board which shall be pesos (P1. internal revenue taxes All criminal violations may be shall be assessed within three (3) years after the compromised except: (a) those already last day prescribed by law for the filing of the filed in court. redeem or return was filed. demonstrates a clear inability to pay the (c) The power to compromise or assessed tax. Authority of the Commissioner to credit or refund within two (2) years after the payment of the tax or penalty: Provided. 204 (A) and (B) of this Code. or (b) those involving fraud. Assessment and Collection. (b) The power to issue rulings of (1) A reasonable doubt as to the validity first impression or to reverse. . That The compromise settlement of any tax assessments issued by the regional liability shall be subject to the following offices involving basic deficiency minimum amounts: taxes of Five hundred thousand pesos (P500.000) or less. . and property and. fees or distrained and obligate himself to preserve the charges. after which the said property shall be deemed to have been placed under constructive distraint. proceedings for collecting the tax due or which CHAPTER II may be due from him. That the original copy of the Tax Credit order payment of the taxes subject of the Certificate showing a creditable balance is criminal case as finally decided by the surrendered to the appropriate revenue officer for Commissioner. 205. and by levy upon real revenue officer effecting the constructive property and interest in rights to real distraint shall proceed to prepare a list of such property.The civil remedies for the property to sign a receipt covering the property collection of internal revenue taxes. chattels. That the remedies of distraint provisions of this Code may be applied against and levy shall not be availed of where the any internal revenue tax. the Commissioner the subject of abatement or compromise. or is intending to leave Oversight Committee in Congress that shall be the Philippines or to remove his property constituted to determine that said powers are therefrom or to hide or conceal his property or to reasonably exercised and that the government is perform any act tending to obstruct the not unduly deprived of revenues. criminal action. Remedies for the Collection of person having possession or control of such Delinquent Taxes. (a) By distraint of goods. and property of a delinquent taxpayer or any reasons for the exercise of power: Provided. stating therein the following SEC. a report on the exercise of his powers under this Section. 206.in any manner whatever. in the presence of two (2) witnessed. in his opinion. debts. That a return filed showing an Either of these remedies or both overpayment shall be considered as a written simultaneously may be pursued in the claim for credit or refund. discretion of the authorities charged with the collection of such taxes: Provided. further. A Tax Credit Certificate validly issued under the however. the personal property. for which the taxpayer is directly liable. (6) months. credits. One hundred pesos (P100). and any increment thereto resulting same intact and unaltered and not to dispose of from delinquency shall be: the same . including stocks and possession and control of the property sought to other securities. That taxpayer who. subject to The judgment in the criminal case shall the provisions of Section 230 of this Code: not only impose the penalty but shall also Provided. as well as of real property and Senate and House of Representatives. That in no case shall a tax refund be given The Bureau of Internal Revenue shall resulting from availment of incentives granted advance the amounts needed to defray pursuant to special laws for which no actual costs of collection by means of civil or payment was made. Constructive Distraint of the facts and information. verification and cancellation: Provided. and other personal property of In case the taxpayer or the person having the whatever character. among others: names and Property of a Taxpayer. amount may place under constructive distraint the involved. without the express authority of the Commissioner. . where the property distrained is located.To safeguard the addresses of taxpayers whose cases have been interest of the Government. excluding withholding amount of tax involve is not more than taxes. amount compromised or abated. . including the preservation or transportation of personal property The Commissioner shall submit to the Chairmen distrained and the advertisement and sale of the Committee on Ways and Means of both the thereof. every six improvements thereon. CIVIL REMEDIES FOR COLLECTION OF TAXES The constructive distraint of personal property shall be affected by requiring the taxpayer or any SEC. Any request for conversion into refund of unutilized tax credits may be allowed. bank be placed under constructive distraint refuses or accounts and interest in and rights to fails to sign the receipt herein referred to. . or effects. TAX ATION San Beda College of LAW – ALABANG however. leave a copy thereof in the premises (b) By civil or criminal action. is retiring from any the said report shall be presented to the business subject to tax. That a consolidated report by the Revenue Regional Director may be required by the A report on the distraint shall. Said certificate shall the taxpayer and upon the president.000) or less. credits. duly authorized representative shall prepare a duly authenticated certificate showing the name Stocks and other securities shall be distrained by of the taxpayer and the amounts of the tax and serving a copy of the warrant of distraint upon penalty due from him. together with any increment a report on any levy shall be submitted by the thereto incident to delinquency. or if he be absent from the authority to the person owning the debts or . shall be left either with the expiration of the time required to pay the owner or person from whose possession such delinquent tax or delinquent revenue as goods. Commissioner. written with the person owing the debts or having in his notice of the levy shall be mailed to or served possession or under his control such credits. upon recommendation of the provisions hereof. before simultaneously or after the of business of such person and with someone of distraint of personal property belonging to the suitable age and discretion. chattels. That the Commissioner or his duly Finance. if the amount involved is in of distraint on personal property. subsequent sale. days from receipt of the warrant. chattels.The officer serving the warrant required by the Commissioner as often as of distraint shall make or cause to be made an necessary. . or the personal property of the taxpayer is not sufficient Revenue District Officer. operate with the force of a legal execution treasurer or other responsible officer of the throughout the Philippines. within and distraint any goods. manager. a copy of which.in sufficient quantity to satisfy the Within ten (10) days after receipt of the warrant. subject to rules and Officer. or at the dwelling or place levied upon. if the amount involved is to satisfy his tax delinquency. be submitted by further. and property. business in respect to which the liability arose.000). company or association. That the Commissioner or his duly the distraining officer to the Revenue District authorized representative. any internal revenue added a statement of the sum demanded and officer designated by the Commissioner or his note of the time and place of sale. real property may be property were taken. TAX ATION San Beda College of LAW – ALABANG Philippines. . or if there be none. At the same time. debts. including stocks and other proceed with the levy on the taxpayer's real securities. subject to rules Commissioner. (B) Levy on Real Property. and the levying officer to the Commissioner or his duly expenses of the distraint and the cost of the authorized representative: Provided.000. upon recommendation of the authorized representative shall. further. corporation. Levy shall be affected by writing upon said certificate a description of the property upon Debts and credits shall be distrained by leaving which levy is made. To this end. and thirty (30) days after execution of the distraint.After the signed by himself. and the excess of One million pesos (P1. . the Commissioner or his duly authorized issued before or simultaneously with the warrant representative. shall seize or his duly authorized representative shall. 207.Upon the in question. to which list shall be delinquent. however. have the power to lift such order of distraint: Provided. account of the goods.000. Summary Remedies. city where the property is located and upon the The warrant of distraint shall be sufficient delinquent taxpayer. and to the Revenue Regional Director: regulations promulgated by the Secretary of Provided. or charge. to the occupant of the property (A) Distraint of Personal Property. within ten (10) Commissioner as often as necessary: Provided. 208. failure of the person owing any delinquent tax or delinquent revenue to pay the same at the time In case the warrant of levy on real property is not required. effects or other personal property distrained. a copy of the warrant of distraint. tax. the personal property. to his agent or the manager of the SEC. or upon the Register of Deeds for the province or with his agent. . That a consolidated SEC. shall have the authority to lift and regulations promulgated by the Secretary of warrants of levy issued in accordance with the Finance. or effects or other personal prescribed in this Section. interests in and rights to personal property of such persons . the Commissioner One million pesos (P1. Procedure for Distraint and report by the Revenue Regional Director may be Garnishment. which issued the said stocks or securities. bank accounts. chattels or effects. at for as internal revenue. securities. according to rules and regulations prescribed by the Secretary of Finance. company or association in public and conspicuous place in the barrio or shall make the corresponding entry in its books. 211. upon SEC.Within duly licensed commodity or stock exchanges. . and a copy of sale. Upon receipt of charges are paid to the officer conducting the the warrant of garnishment. public auction. Release of Distrained Property warrant of garnishment upon the taxpayer and Upon Payment Prior to Sale. At any time returned to the owner of the property sold. if required to do so. the city or municipality in which the property is distrained. subject to the rules At the time and place fixed in such notice.When the amount bid for the cause a notification to be exhibited in not less property under distraint is not equal to the than two (2) public places in the municipality or amount of the tax or is very much less than the city where the distraint is made. Property so purchased may be resold by the Commissioner or his deputy. One place for the posting of Government for the amount of taxes. this Code shall. Sale of Property Distrained and the sale. TAX ATION San Beda College of LAW – ALABANG having in his possession or under his control any and preservation of the property pending . 210. treasurer or other prior to the consummation of the sale all proper responsible officer of the bank.by transfer the stocks or other securities sold in the publication once a week for three (3) weeks in a name of the buyer. SEC. . . shall be description of the property to be sold. Advertisement and Sale. and a short pay the entire claim. to the highest bidder for cash. or other personal property. the name of the taxpayer Any residue over and above what is required to against whom taxes are levied. the officer making the same shall make Disposition of Proceeds. manager. The before the day fixed for the sale. forthwith Upon Distraint. sale. the officer conducting the proceedings shall proceed to In the case of Stocks and other securities. 209. the and regulations prescribed by the Secretary of said revenue officer shall sell the goods. It shall be association which issued the stocks or other effectuated by posting a notice at the main securities. the goods or effects distrained shall be over to the Commissioner so much of the bank restored to the owner. The advertisement shall contain a statement of the amount of taxes and penalties so due and the time and place of sale. and issue.the credits belonging to the taxpayer to pay to the sale. the bank shall tun sale. penalties such notice shall be at the Office of the Mayor of and costs due thereon. Bank accounts shall be garnished by serving a SEC.Within two (2) days after SEC. the net proceeds therefrom shall be or effects. the advertise the property or a usable portion thereof officer making the sale shall execute a bill of sale as may be necessary to satisfy the claim and cost which he shall deliver to the buyer. . newspaper of general circulation in the the corresponding certificates of stock or other municipality or city where the property is located. company or period of a least thirty (30) days. 213. 212.If at any time upon the president. the Commissioner or his deputy may The time of sale shall not be less than twenty (20) purchase the same in behalf of the national days after notice.The Revenue District a report of his proceedings in writing to the Officer or his duly authorized representative. Commissioner and shall himself preserve a copy other than the officer referred to in Section 208 of of such report as an official record. twenty (20) days after levy. deputy. and such advertisement shall cover a thereof furnished the corporation. Purchase by Government at Sale recommendation of the Commissioner. chattels. accounts as may be sufficient to satisfy the claim of the Government. Report of Sale to Bureau of Internal Revenue. If he does not do so. the corporation. . and no charge shall be imposed for the Commissioner the amount of such debts or services of the local internal revenue officer or his credits. Finance. . the actual market value of the articles offered for time and place of sale and the articles distrained. district in which the real estate lies and . the taxpayer expenses chargeable upon each seizure and sale may discontinue all proceedings by paying the shall embrace only the actual expenses of seizure taxes. including remitted to the National Treasury and accounted stocks and other securities so distrained. including expenses. specifying. or with the approval of the Commissioner. Upon receipt of the copy of the bill of entrance of the municipal building or city hall and sale. through SEC. penalties and interest. the taxpayer. together with interest on said case. . Want of Bidder. It shall be the duty of the Register of describing the property sold stating the name of Deeds concerned. summary remedies provided for in this Code. penalties and interest: Provided. city hall. Taxes. Restrain Collection of Tax. and subsequent sale. 217. Within one (1) year from the date of such The Revenue Collection Officer. penalties. In his monthly collection reports. and said property thereafter shall be free form the lien of SEC. shall be entered upon the records of the Revenue the Internal Revenue Officer conducting the sale Collection Officer. 216.The Commissioner shall have charge of such advances shall be reflected and supported any real estate obtained by the Government of by receipts. and an accounting of (15%) per annum from the date of purchase to the same shall rendered to the Chairman of the the date of redemption. or any one for him. the therefore. property has thus been redeemed. showing the proceedings of the sale. fee or charge imposed by this Code. to of all taxes. of his office. but if the property be not thus redeemed. or on the premises to be sold. . out of his redeem said property by paying to the collection. 215. 214. shall be turned over to the owner of the property. advance an amount sufficient to Commissioner or the latter's Revenue Collection defray the costs of collection by means of the Officer the full amount of the taxes and penalties. or any one for him may the Revenue District Officer may. upon registration with his the purchaser and setting out the exact amount office of any such declaration of forfeiture. and the advertisement the forfeiture shall become absolute. both in cases of personal and real property including improvements found SEC. have the right of paying to the Revenue District sell and dispose of the same of public auction or Officer the amount of the public taxes. the Philippines in payment or satisfaction of taxes. be deprived of the restrain the collection of any national internal possession of the said property and shall be revenue tax. . In either to the date of sale. Resale of Real Estate Taken for on the latter. Injunction not Available to such taxes and penalties. upon approval by forfeiture. shall giving of not less than twenty (20) days notice. transfer the title of the property forfeited to the however. the excess from a competent court.the preservation or transportation in sale. and said Commissioner may. TAX ATION San Beda College of LAW – ALABANG the sale shall proceed and shall be held either at until the expiration of the time allowed for its the main entrance of the municipal building or redemption. is to the purchaser the amount by which such collected. . as the officer conducting the proceedings shall SEC. entitled to the rents and other income thereof . entitle the person paying to the delivery of the certificate issued to the purchaser and a SEC. including all expenses. .No court shall have the authority to grant an injunction to The owner shall not. penalties and costs. the Revenue District officer and shall declare the property forfeited to the the Revenue Regional Director. together with interest thereon and the costs of including .The certificate from the said Revenue District Officer remedy by distraint of personal property and levy that he has thus redeemed the property. the proceeds of the sale shall be deposited purchase price at the rate of fifteen percent with the National Treasury. and such payment shall Commission on Audit. and interest thereon from the date of delinquency dispose of the same at private sale. and the on realty may be repeated if necessary until the Revenue District Officer shall forthwith pay over full amount due. Redemption of Property Sold. upon the delinquent taxpayer. a return by the provided or if the highest bid is for an amount distraining or levying officer of the proceedings insufficient to pay the taxes. however. 218. Further Distraint or Levy. with prior approval of the Secretary of Finance. case of personal property. or in compromise or adjustment of any claim Within one (1) year from the date of sale. shall then make out and make a return of his proceedings and the deliver to the purchaser a certificate from his forfeiture which shall be spread upon the records records. shall Revenue district Officer. Forfeiture to Government for determine and as the notice of sale shall specify. in consultation with the question and within two (2) days thereafter. The Revenue Government in satisfaction of the claim in Collection Officer. penalties or costs arising under this Code SEC. That in case the proceeds of the sale Government without the necessity of an order exceeds the claim and cost of sale.In case there is no bidder for real property exposed for sale as herein above Within five (5) days after the sale. corporation. the property of the taxpayer is situated or (d) Any internal revenue tax. penalties. subject to the the making of assessment and the beginning of approval of the Commissioner. in respect of any deficiency. the Commissioner of any change in address. this Code or other law enforced by the Bureau of The period so agreed upon may be Internal Revenue shall be brought in the name of extended by subsequent written the Government of the Philippines and shall be agreements made before the expiration of conducted by legal officers of the Bureau of the period previously agreed upon. and when the taxpayer is out of the prescribed in Section 203 for the Philippines. 220. neglects or refuses to pay the same the period agreed upon. however. association or agreed in writing to its assessment after insurance company liable to pay an internal such time. into any tax return filed in accordance with the provisions of any tax amnesty law or SEC. as the Limitations provided in Sections 203 and 222 on particular situation may require. TAX ATION San Beda College of LAW – ALABANG SEC. if the taxpayer informs years after the discovery of the falsity. penalty or forfeiture under this Code shall be hereof shall be construed to authorize the filed in court without the approval of the examination and investigation or inquiry Commissioner. the fraud or omission: Provided. been assessed within the period agreed upon as provided in paragraph (b) SEC. at any time within ten (10) collected: Provided. joint. his authorized judicially taken cognizance of in the civil or representative. shall be SEC. when the taxpayer cannot be or a proceeding in court for the collection located in the address given by him in the return of such tax may be filed without filed upon which a tax is being assessed or assessment. 223. 222. Commissioner. the tax may be assessed within revenue tax. Exceptions as to Period of suspended for the period during which the Limitation of Assessment and Collection of Commissioner is prohibited from making the Taxes. . the tax may be assessed. both the any person. . That nothing in the the recovery of taxes or the enforcement of any immediately preceding and paragraph (a) fine. previously agreed upon. . when the warrant of distraint or levy and executory. distraint or levy a proceeding in court for collection. Suspension of Running of Statute enforcement of statutory penalties of all sorts of Limitations. when the taxpayer requests for a return with intent to evade tax or of failure reinvestigation which is granted by the to file a return. and costs that may accrue in addition thereto (c) Any internal revenue tax which has upon all property and rights to property belonging been assessed within the period of to the taxpayer: Provided. . Statutory Penal Provisions. or a member of his household criminal action for the collection thereof. the fact of fraud shall be is duly served upon the taxpayer.Civil and or levy or by a proceeding in court within criminal actions and proceedings instituted in the period agreed upon in writing before behalf of the Government under the authority of the expiration of the five (5) -year period. which has located. . may be collected by distraint Actions Arising under this Code. Internal Revenue but no civil or criminal action for (e) Provided. that. and no property could (b) If before the expiration of the time be located. Commissioner and the taxpayer have account (cuentas en participacion). 221. with sufficient discretion. That in a running of the Statute of Limitations will not be fraud assessment which has become final suspended. Remedy for Enforcement of decree.The running of the Statute of shall be by criminal or civil action. Form and Mode of Proceeding in hereinabove.If assessment of the tax. assessment or beginning distraint or levy or a proceeding in court and for sixty (60) days (a) In the case of a false or fraudulent thereafter. Nature and Extent of Tax Lien. The period so after demand. with interests. That this lien shall not limitation as prescribed in paragraph (a) be valid against any mortgagee purchaser or hereof may be collected by distraint or judgment creditor until notice of such lien shall be levy or by a proceeding in court within five filed by the Commissioner in the office of the (5) years following the assessment of the Register of Deeds of the province or city where tax. partnership. 219.The remedy for SEC. the amount shall be a lien in favor agreed upon may be extended by of the Government of the Philippines from the subsequent written agreement made time when the assessment was made by the before the expiration of the period Commissioner until paid. . Satisfaction of Judgment this Code or rules and regulations Recovered Against any Internal Revenue on the date prescribed. Civil Penalties. liquors. shall be accounted (1) Failure to file any return and for and dealt with the same way. as used in this Forfeited property shall not be destroyed until at Chapter. civil or criminal. - Distilled spirits. upon forfeiture. upon forfeiture. of the repaid or reimbursed to him. The Amount so added to the tax the same for consumption or use would be shall be collected at the same time. . or Officer. - recovered and received for taxes. (b) If the withholding agent is the Government or any of its agencies. prescribed herein. or with willful require. in the injurious to public health or prejudicial to the same manner and as part of the tax. General Provisions. All other articles subject to excise tax. . oppression. employee or member is under a duty to SEC. The forfeiture of real property shall be enforced by a judgment of No such judgment. or if removable fixtures of any sort shall be enforced the same be paid by the person used shall be by the seizure and sale. damages or costs recovered in such SEC. as the case may acted negligently or in bad faith. which have political subdivisions or instrumentalities. specific forfeited property. enforcement of the law. SEC. 224.The forfeiture of chattels and upon approval of the Secretary of Finance. so far as STATUTORY OFFENSES AND PENALTIES practicable. in the same manner and under the same conditions as the public notice and the time CHAPTER I and manner of sale as are prescribed for sales of ADDITIONS TO TAX personal property distrained for the non-payment of taxes. TAX ATION San Beda College of LAW – ALABANG judgment. fees and charges imposed in by order of the Commissioner. . damages. in addition to forfeitures. and all (a) The additions to the tax or deficiency apparatus used I or about the illicit production of tax prescribed in this Chapter shall apply such articles may. Forfeitures. as well as dies for the printing or making of corporation. 248. When Property to be Sold or Destroyed. Remedy for Enforcement of action shall be satisfied by the Commissioner. be destroyed to all taxes. when the sale of this Code. a penalty the Commissioner or his authorized deputies as equivalent to twenty-five percent (25%) of the taxes themselves are required to be paid. 247. be sold or destroyed liable for the additions to the tax in the discretion of the Commissioner. or remittance of the tax shall be personally labels may. or destruction. Disposition of funds Recovered in perform the act in respect of which the Legal Proceedings or Obtained from violation occurs. (c) the term "person".all judgments and monies SEC. in the following cases: except as specially provided. cigarettes. Forfeitures. cigars. pay the tax due thereon as required under the provisions of SEC. SEC. and the amount due. 225. other manufactured products of tobacco. . includes an officer or employee least twenty (20) days after seizure. fines and penalties shall be paid to the tax required to be paid. been manufactured or removed in violation of this or a government-owned or controlled Code. the employee thereof internal revenue stamps and labels which are in responsible for the withholding and imitation of or purport to be lawful stamps. any . 226. through the Solicitor General. (A) There shall be imposed. or costs shall be condemnation and sale in a legal action or paid or reimbursed in behalf of a person who has proceeding.When an action is brought against any (2) Unless otherwise authorized by Internal Revenue officer to recover damages by the Commissioner. and the Commissioner is notified of other than those with whom the such action in time to make defense against the return is required to be filed. or same. of a corporation who as such officer. costs.Sales of forfeited chattels and TITLE X removable fixtures shall be effected. 227. filing a return reason of any act done in the performance of with an internal revenue officer official duty. there shall. keep or supply the same. however. by this Code or who willfully fails to withhold such tax. Failure of a Withholding Agent to such higher rate as may be prescribed by rules Collect and Remit Tax. . account for. or a substantial overstatement prescribed on the tax or deficiency tax or any of deductions.Any pay: . collected on any unpaid amount of tax. . Failure to File Certain Information prima facie evidence of a false or Returns. there shall be assessed and regulations. . . or payment in the notice of (2) The amount of the tax due for which assessment. receipts or income or for overstatement of One thousand pesos (1. in case. upon notice and shall render the taxpayer liable for demand by the Commissioner. as the term is defined in this Code. or SEC. . or (4) Failure to pay the full or part of (3) A deficiency tax.000). . 251. the tax. in addition to other be subject to the interest prescribed in penalties provided for under this Chapter. and a prescribed therefor. shall constitute SEC. which interest shall be liable upon conviction to a penalty equal to the assessed and collected from the date prescribed total amount of the tax not withheld. TAX ATION San Beda College of LAW – ALABANG (3) Failure to pay the deficiency tax (1) The amount of the tax due on any within the time prescribed for its return to be filed. any payment has prescribed for its payment. 252. or any part of such fifty percent (50%) of the tax or of the amount or installment on or before the date deficiency tax. Interest. be paid by the substantial underdeclaration of sales. 249. as determined by the part thereof unpaid from the date of notice and Commissioner pursuant to the rules and demand until it is paid. be Subsection (A) hereof. . Provided. .If any return within the period prescribed by this person required to pay the tax is qualified and Code or by rules and regulations. regulations to be promulgated by the Secretary of Finance. of tax due for which no return is interest at the rate prescribed in required to be filed. unless it is shown that such claim of deductions in an amount failure is due to reasonable cause and not to exceeding (30%) of actual deductions. That information return. or no return is required. That the aggregate amount to SEC. or not for its payment until the full payment thereof. as mentioned herein. which interest shall form part of payment. or account for and remit such tax.000) for each failure: deductions. the penalty to be imposed shall be any installment hereof. or any surcharge or the amount of tax shown on any interest thereon on the due date return required to be filed under appearing in the notice and demand of the the provisions of this Code or rules Commissioner. or where the been made on the basis of such return Commissioner has authorized an extension of before the discovery of the falsity or fraud: time within which to pay a tax or a deficiency tax Provided.In case of failure to refund Excess Withholding Tax. or keep any failure to report sales. be imposed for all such failures during a calendar year shall not exceed Twenty-five thousand pesos (A) In General. or the full amount and collected on the unpaid amount.There shall be assessed and (P25. further. willful neglect.Any person required to and regulations. on or before Subsection (A) hereof until the amount is the date prescribed for its fully paid.In the case of each failure to file an fraudulent return: Provided. shall payment thereof. receipts or income record. accounted for and remitted. there shall be assessed and underdeclaration of taxable sales. from the date prescribed for withhold. and remit any tax imposed payment until the amount is fully paid. Failure of a Withholding Agent to (C) Delinquency Interest. statement or list. interest at the rate of twenty percent (20%) per annum. or in elects to pay the tax on installment under the case a false or fraudulent return is willfully provisions of this Code. SEC.Any deficiency in the abets in any manner to evade any such tax or the tax due. or aids or (B) Deficiency Interest. but fails to pay the tax or made. That a substantial or any part thereof. (B) In case of willful neglect to file the (D) Interest on Extended Payment. receipts collected interest at the rate hereinabove or income. person failing to file. 250. shall. or supply any information required by this in an amount exceeding thirty percent Code or by the Commissioner on the date (30%) of that declared per return. moral and material values. City of Manila to refund excess withholding tax shall. Taxation may be made the Constitution only covers taxes assessed on implement of the state's police power. 22(3) Art. what’s being assessed was a limitation. (CIR vs Algue 158 SCRA 9) The exemption under Sec. the contention of plaintiff tax is not within the exempting provision of the that the Act was promulgated not for public constitution. is expected to respond in the form of The phrase “used exclusively for educational tangible and intangible benefits intended to purposes” is not limited to property actually improve the lives of the people and enhance their indispensable therefor but extends to facilities. The government for its part. Aquino 162 SCRA person who is able to must contribute his share in 106) the running of the government. natural reluctance to surrender part of one's hard earned income to the taxing authorities. churches. the petitioner as purpose cannot be upheld. taxation or exemption infringe no Constitutional In the case at bar. As between CASES and DOCTRINES taxation and religion. Province of Ilocos Norte 51 PHIL 352 Exemption from payment of land tax. the latter prevails. appurtenant thereto and all lands. TAX ATION San Beda College of LAW – ALABANG employer/withholding agent who fails or refuses (American Bible Society vs. This symbiotic which are incidental to and reasonably necessary relationship is the rationale of taxation and to the accomplishment of said purposes should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. no reason is seen why the state may not levy taxes to raise funds for their prosecution and The exemption under Sec. . appurtenant thereto and all lands. the government convents. 22(3) Art. (Bishop of Nueva Segovia vs. is liable to pay the said gift tax. despite the religious purposes. (Lutz vs Araneta 98 Phil 148) (Lladoc vs. and parsonages or inherent in the power to tax that a State be free convents. in addition 101 PHIL 386) to the penalties provided in this Title. would be paralyzed for lack of the motive power buildings and improvements used exclusively for to activate and operate it. every (Abra Valley College vs. churches. VI of the attainment. and parsonages or civilized society. to select the subjects of taxation and it has been buildings and improvements used exclusively for repeatedly held that “irregularities which result religious purposes. Commissioner of Internal If objective and methods are alike constitutionally Revenue 14 SCRA 292) valid. VI of the Constitution only covers property taxes assessed It is said that taxes are what we pay for on cemeteries. These taxes are property from a singling out of one particular class for taxes as contra-distinguished from excise taxes. Without taxes. Thus. protection and of the properties. substituted by the Head of the Diocese. be liable to a penalty to the total amount of refunds which It was contended that said ordinances imposing was not refunded to the employee resulting from license fee on the distribution and sale of bibles any excess of the amount withheld over the tax and other religious literature. impair the free actually due on their return exercise of religion. The gift tax was an excise tax upon the use made The sugar industry’s promotion.” donee’s gift tax not on the properties themselves. which refers to lots used as home of the priest who preside over the church must include not only the lot actually occupied by the church but also the adjacent ground destined to meet the ordinary incidental uses of man. upon the exercise of the advancement therefore redound greatly to the privilege of receiving the properties. specifically the right to disseminate religious information. It is cemeteries. Hence. This kind of general welfare. Therefore. The revenue officer’s affidavit (GR No. Naga. not to On March 1. Fortune .236. the Commissioner denied private Subject Matter: Criminal Action respondent’s request for reconsideration (reinvestigation on the ground that no formal assessment has been issued which the latter CIR V CA elevated to the CTA on a petition for review. whereas that which Held: is imposed by the ordinance is a typical tax or The filing of the criminal complaint with revenue measure. They joint affidavit examine the books of accounts and other was meant to support the criminal complaint for accounting records of Pascor Realty and tax evasion.65 and P3. It did not state a demand or period Facts: for payment. Such evasion may be instituted. and must demand payment of the taxes described therein within a CIR V PASCOR REALTY & DEV’T CORP et. It was addressed to the Secretary of The CIR authorized certain BIR officers to Justice not to the taxpayer. 1993 respondent was denied by CTA and ordered the to investigate tax liabilities of manufacturers Commissioner to file an answer but did not engaged in tax evasion schemes. (PRDC) for 1986. No. Inc. instead filed a petition with the CA alleging grave the CIR issued Rev. with the criminal complaint.R. (Fortune) as foreign brands subject report as assessment which may be appealed to to a higher tax rate. The G. An assessment is not necessary before its president and treasurer before the DOJ. Furthermore. 1. June 29. license tax constitutes a regulatory measure in the exercise of police power.35 respondent. private respondents whether to issue an assessment. In the first case. June 4. TAX ATION San Beda College of LAW – ALABANG (San Miguel Brewery. in such tax evasion cases. 1995. 1973) Issues: This is because double taxation is not prohibited by the Constitution.498. 1996 Commissioner’s motion to dismiss on the ground of the CTA’s lack of jurisdiction inasmuch as no Facts: formal assessment was issued against private A task force was created on June 1. or to file a received a subpoena from the DOJ in connection criminal case against the taxpayer. 1999) merely contained a computation of respondent’s tax liability. The the tax assessment and tax liability. it was not meant to be a notice of Development Corp. On August 3. discretion on On March 23. On July 1. Assessment An assessment must be sent to and received by the taxpayer. May 17. respectively. A criminal charge respondents filed immediately an urgent request need not only be supported by a prima facie for reconsideration on reinvestigation disputing showing of failure to file a required return. the DOJ cannot be construed as a formal assessment. specific period. Whether or not the criminal complaint for there is double taxation only when the same tax evasion can be construed as an person is taxed by the same jurisdiction for the assessment. 1995. Memo Circ. the annual 2. and not to private assessment of P7. Neither the Tax Code nor the revenue regulations governing the protest assessments provide a specific definition or form Subject Matter: Criminal Action. Cebu February 20. Tax of an assessment. 1993. al. The CA sustained the CTA decision and Cebu/Cebu Portland Cement Co. The fact that the complaint recommendation for the issuance of an was sent to the DOJ. file a criminal complaint for tax evasion. vs. 1993. 1995. 119322. or to do both. Commissioner filed a issue an assessment. Private criminal charges can be filed. 37-93 which abuse of discretion and lack of jurisdiction on the reclassified certain cigarette brands part of CTA for considering the affidavit/report of manufactured by private respondent Fortune the revenue officers and the endorsement of said Tobacco Corp. vs. dismissed the petition. In a letter dated. CIR had. same purpose. Whether or not an assessment is business tax is a license tax to engage in the necessary before criminal charges for tax business of wholesale liquor in Cebu City. 128315. No.015.434. City of he CTA. The examination resulted in the payment thereof. 1987 and tax due and a demand to private respondents for 1988. criminal complaint for tax evasion against PRDC. shows that commissioner intended to for 1986 and 1987. Doubting the truth of the A subpoena was issued on September 8. the Fortune’s production activities to see to it that the period of 10 years provided for in the law from .096. TAX ATION San Beda College of LAW – ALABANG questioned the validity of said reclassification as correct taxes were paid. 1947 and 1948 had before any complaint for fraudulent tax evasion prescribed at the time the assessment was made. ruling that the Commissioner to assess AZNAR’s deficiency tax liability of private respondents first be settled income taxes for 1946. can be initiated. 1958. 1952. 946% 1950. 254 and reconsideration of said assessment. the fact that a tax is due must on September 7. 1994. The CTA found dismissed/set aside or alternatively. 1993. If there was the ordinary prescriptive period of 5 years (now 3 fraud on willful attempt to evade payment of ad years) would apply under normal circumstances valorem taxes by private respondent through the but whenever the government is placed at a manipulation of the registered wholesale price of disadvantage as to prevent its lawful agent from the cigarettes. its corporate officers and 9 other corporations and their respective corporate officers for alleged fraudulent tax evasion for AZNAR CASE (August 23. a petition for certiorari and prohibition with On February 20. Held: Issue: On the issue of prescription the count Whether the basis of private respondent’s applied the 10-year prescriptive period and ruled tax liability first be settled before any complaint that prescription had not set in. 486% for 1949. complaint with the DOJ against private respondent Fortune. His sufficient basis to further investigate the charges income tax returns from 1945 to 1951 were against Fortune. 1997 NIRC.66 which was later January 4. All motions filed thereafter were denied. it cannot be correctly asserted within 30 days from receipt. a motion to suspend but declarations of income were discovered. AZNAR’s properties prayer for preliminary injunction praying the CIR’s were placed under distraint and levy. 1953. private respondents filed reduced to P381. there is the 8. that AZNAR’s returns were false because the under-declaration of income constituted a Held: deviation from the truth. The trial court granted the petition for a writ of preliminary injunction to enjoin the Issues: preliminary investigation on the complaint for tax Whether or not the right of the evasion pending before the DOJ. The CTA. AZNAR appealed to the CTA. that private respondents have willfully attempted 1993. that the that AZNAR made substantial under-declarations preliminary investigation be suspended pending of his income as follows: he under-declared his determination by CIR of Fortune’s motion for income for 1946 by 227%. On April 1. the court opined for fraudulent tax evasion can be initiated. it must have been with the making a proper assessment of tax liabilities due connivance of cooperation of certain BIR officials to false or fraudulent returns intended to evade and employees who supervised and monitored payment of taxes or failure to the returns. Substantial under- dismiss or alternatively. much less evidence. 490% 1993 assessment of taxes due. 1993 resolved that said reclassification was of presumption that BIR personnel performed their doubtful legality and enjoined its enforcement. On was denied and thus treated as their counter. 564% for 1947. Fortune was assessed deficiency income.07 upon reinvestigation. private respondent moved for to evade or defeat any tax under Secs. examined by the BIR. of BIR personnel’s equal protection of laws.032. The complaint was referred to Facts: the DOJ Task Force on revenue cases which found Matias Aznar died on May 15. complaint and prosecutor’s orders be 1955. the BIR notified AZNAR of a affidavit. But there is no being violative of the right to due process and allegation. the Commissioner 1993 directing private respondent to submit their ordered the investigation of the case on the basis counter-affidavits. ad valorem and VAT for 1992. on August 3. ad Before the tax liabilities of Fortune are valorem and VAT for 1992 with payment due finally determined. the Commissioner filed a first be proved. tax delinquency of P723. on September malfeasance at the very least. for 1948. But it filed a verified motion to of the net worth method. 95% reconsideration/reinvestigation of the August 13. 1974) non-payment of the correct income. The court stated that Fraud cannot be presumed. 1993. duties in the regular course in ensuring that the In the meantime. 1951. November 28. correct taxes were paid by Fortune. income that he had reported. On September 12. Meanwhile 256. fraud or omission even seems to be inadequate and should be the one enforced. . TAX ATION San Beda College of LAW – ALABANG the discovery of the falsity. Documents Similar To Aban ReviewSkip carouselcarousel previouscarousel nextBenjamin Aban - Basic Law on Taxation Summaryuploaded by freegalado7 Rodriguez vs. Macapagal-Arroyouploaded by gianfranco0613Civic Federation Effective Tax Rates Report 2006_2015uploaded by Zoe GallandTaxation Cases 32 - 37uploaded by JoshuaLavegaAbrinaSummary Results of Phase 2uploaded by Zoe GallandBalane Willsuploaded by Yelena VictoriaDigest of Agriculture and Forest Tax Abatement Laws in New York Stateuploaded by New York Senate25603_49364_latest_tax_on_salary_calculator__fy_2012_13_ay_2013_14_.xlsuploaded by Ramakrishna LenkaTax 22222 fulltextuploaded by Florence Dueñas LagcaoTaxationuploaded by Ashley Levy San PedroTaxation Law - Reviewer (Aban) (1)uploaded by Kat PichayTaxwise or Otherwiseuploaded by Lyndon Cris FuentesLecture on Percentage Taxesuploaded by Glenn Aquinop901uploaded by bluehole66017RMC No 64-2012uploaded by Greg GomezAnnual Filing for Tax-Exempt Organizations, An overviewuploaded by express990Tally.erp 9 _ Post-Dated Voucher of Accounting & Inventory Vouchers Creation, Modification, Deletionsuploaded by Heemanshu Shah140864-1973-San Miguel Corp. v. Municipal Council Ofuploaded by Ariel MolinaTender Schedule PDFuploaded by D V BHASKARwp05_nipfp_037uploaded by Tufel NooraniCalifornia Tax Board: AB211 012903uploaded by TaxmanSt Return With Anne Xur Es 38913460uploaded by SalmanShoukatSchool Finance: Concept Paperuploaded by Senator Mike JohnstonGoods and Services Taxuploaded by aabc12345Revelstoke Financial Plan 2016-20uploaded by AlexCooperRTR2012 Taxation Bar Exam Quploaded by ClambeauxNotice: Antidumping: Glycine from— Chinauploaded by Justia.com2014 BIR-RMC Contentsuploaded by Mary Grace Caguioa Agas18 Cir vs CA Cta Ymcauploaded by zahreenamolinataxuploaded by Joel A. AguilarMore From borgyambuloSkip carouselcarousel previouscarousel nextBernabe vs Alejouploaded by borgyambuloTaiwan Kolin vs Kolinuploaded by borgyambulo151646308-Oblicon-Prof-Crisostomo-Uribe.pdfuploaded by borgyambuloMcdonalds vs Big Makuploaded by borgyambuloFujiki vs Marinayuploaded by borgyambuloDiaz vs Encantouploaded by borgyambuloMejoff v. Director of Prisonsuploaded by borgyambuloRepublic vs Uyuploaded by borgyambuloRepublic vs Cagandahanuploaded by borgyambuloDiaz vs Encanto.pdfuploaded by borgyambuloCity Govt of QC v Erictauploaded by borgyambuloGuy vs CAuploaded by borgyambuloOblicon Uribe.pdfuploaded by borgyambuloObligations and Contracts Uribe.pdfuploaded by borgyambuloSEC vs GMAuploaded by borgyambulo6. Capili v Peopleuploaded by borgyambuloDela Cruz vs Parasuploaded by borgyambuloEnriquez vs Sun Lifeuploaded by borgyambuloGreat Life vs CA Enriquez v Sunlife Great Life vs. CAuploaded by borgyambuloMacasano vs. Dioknouploaded by borgyambuloTatel vs. Municipality of Viracuploaded by borgyambuloDBP vs CAuploaded by borgyambulo7.-Lee-Pue-Liong-v-Chua.pdfuploaded by borgyambulo4. Daluraya v Olivauploaded by borgyambuloBalacuit vs CFI Agusanuploaded by borgyambuloTan vs Comelecuploaded by borgyambulo8.-People-v-Galvez.pdfuploaded by borgyambuloMMDA vs. Bel Aireuploaded by borgyambuloCases Lawuploaded by borgyambuloLLDA vs CAuploaded by borgyambuloFooter MenuBack To TopAboutAbout ScribdPressOur blogJoin our team!Contact UsJoin todayInvite FriendsGiftsSupportHelp / FAQAccessibilityPurchase helpAdChoicesPublishersLegalTermsPrivacyCopyrightSocial MediaCopyright © 2018 Scribd Inc. .Browse Books.Site Directory.Site Language: English中文EspañolالعربيةPortuguês日本語DeutschFrançaisTurkceРусский языкTiếng việtJęzyk polskiBahasa indonesiaMaster your semester with Scribd & The New York TimesSpecial offer for students: Only $4.99/month.Master your semester with Scribd & The New York TimesRead Free for 30 DaysCancel anytime.Read Free for 30 DaysYou're Reading a Free PreviewDownloadClose DialogAre you sure?This action might not be possible to undo. Are you sure you want to continue?CANCELOK