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TAXATION LAW REVIEW. Sababan. 2008 ed.

Ppg 181-200
BEFORE the 15th day of
CHAPTER XXI: REMEDIES the FOURTH MONTH
following the close of
 There are two remedies provided in the NIRC:
the FISCAL YEAR for
1. The remedies of the Government, and
2. The remedies of the taxpayer those using the fiscal
year (Sec 77B)
A.THE REMEDIES OF THE GOVERNMENT PRESCRIPTIVE PERIOD
begins to run from the begins to run from the
 The Code provides the Government with TWO deadline: April 15 or time the return is filed.
remedies: the 15th day of the 4th
(1) Assessment, and month following the
(2) Collection
close of the fiscal year.
2 KINDS OF ASSESSMENT AND COLLECTION:
(a) Normal or ordinary assessment and
collection ↓ Sec. 203; and
(b) The Abnormal or extraordinary
Q: Suppose the return for the calendar year
assessment and collection ↓ Sec. 222
2006 is filed by the taxpayer on April 10,
2007, when will the prescriptive period
NORMAL OR ORDINARY ASSESSMENT AND
begin to run?
COLLECTION (Sec. 203)
A: the prescriptive period will begin to run AFTER
: available to the Government if there was
APRIL 15, 2007 – the DEADLINE for filing the
a return filed by the taxpayer and such
return for 2006
return is not FALSE OR FRAUDULENT
Q: Suppose the return for 2005 was filed on
: Govt may only make the assessment
April 12, 2007, when will the prescriptive
under this section w/in 3 years after the last
period begin to run?
day prescribed by law for the filing of the
return – NOT FROM THE TIME OF PAYMENT.
A: the period will commence from ARPIL 12,
2007.
: when the return is filed beyond the
A careful analysis of the case wouls show that the
period of filing prescribed by law, the 3year
return was filed beyond the period for filing the
period shall be counted from the day of the
return. The return was for the calendar year 2005
filing of the return
(thus, the return should have been filed before
April 15, 2006) but only filed in 2007. The return
2 INSTANCES CONTEMPLATED ↓ THIS
was filed long AFTER the deadline. Thus, the
SECTION:
prescription period should commence from the
date the return is filed – APRIL 12, 2007.
FIRST SECOND
– the return is filed – when the return is Note: for collection, the Code does not provide
BEFORE/ AT THE TIME filed beyond the period for a prescriptive period.
prescribed by law w/c prescribed by law. Author’s note: the prescriptive period for
is ON OR BEFORE abnormal is 5 years from assessment, hence it
APRIL 15 of each year can be concluded that the prescriptive period for
covering the income for normal is also 5 years. It will create an absurd
situation where there is no prescriptive period
the preceding taxable
under the normal but there is a prescriptive
year for those using the period for abnormal. It is more logical to conclude
calendar year; (Sec 51 that the legislature intended to provide a
c 1)OR prescriptive period under the normal collection.

-- the return is ABNORMAL OR EXTRAORDINARY


filed BEFORE/ AT THE ASSESSMENT AND COLLECTION
TIME prescribed by law
w/c is ON OR : resorted to by the Govt in the ff cases:
(OFF)

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
(1) notice of informal conference;
(1) The taxpayer OMITS or FAILS to file his (2) preliminary notice of assessment
return (PAN);
(2) The taxpayer FILED a return but the (3) formal letter of demand and notice to
return was FRAUDULENT pay the tax (FAN).
(3) The return filed by the taxpayer was
FALSE. PROCEDURE FOR ASSESSMENT:
Notice of Informal Conference
: an error in the return filed by the
taxpayer does not imply fraud or that the same is w/in 15 days from receipt of notice
FALSE.
FILE A REPLY
: legal presumption the return filed is
TRUE and CORRECT. ∴ the burden of proof lies in
the govt to prove that such return is fraudulent or
false. FAILED TO FILE A REPLY FILED A REPLY

2 REMEDIES (options) ↓ THIS KIND OF


ASSESSMENT AND COLLECTION:
SEND NOTCIE AGAIN PRELIMINARY NOTICE
(1) assess and collect, and OF ASSESSMENT (PAN)
(2) collection w/o assessment

(1) For assessment and collection – prescriptive 15 days upon


period is 10years from the DISCOVERY of the receipt of PAN
non-filing of the return or the fraudulent or FILE A REPLY
false return. (Sec 222 a)

period for collection prescribes AFTER 5


years from date of FINAL ASSESSMENT (Sec
FAILED TO FILE A
222 c)

(2) Govt opts to collect w/o assessment – there


would be NO PRESCRIPTIVE PERIOD for
REPEAT PAN DECLARE IN DEFAULT,
assessment. SEND FORMAL LETTER
OF DEMAND AND
period for collection prescribes within NOTICE TO PAY TAX
10years from the DISCOVERY of the non-filing
of the return or the fraudulent or false w/in 30days fr receipt of
return. FAN

Q: Can the BIR just collect w/o assessment?


FILE A PROTEST:
A: Fortune Tobacco case – YES. Since the return
filed was FRAUDULENT, the BIR can avail of the 2 KINDS OF PROTESTS:
remedy of collection without assessment. The BIR (1) Motion for reconsideration
-60 day period NOT applicable
is allowed to exercise that option.
(2) Motion for reinvestigation –
B.PROCEDURE FOR ASSESSMENT (Sec228; 60 days from filing of protest
RR No. 12-99

Sec 228 provides for 2 STEPS for ASSESSMENT:

(1) pre-assessment notice; and SUBMIT COMPLETE


(2) final assessment notice SET OF DOCUMENTS

 RR No. 12-99 provides for 3 STEPS:

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
BIR IS GIVEN 180 DAYS MATHEMATICAL ERROR in the
TO DECIDE computation of the tax
appearing on the face of the
return;

∴ (2) When a DISCREPANCY has been
PROTEST IS DENIED; determined between the tax
or F
180 HAS LAPSED withheld and the amount
A actually remitted by the
W/in 30 days from N withholding agent;
denial/lapse IS
IS (3) When a taxpayer who opted to
APPEAL to the Court of
S claim a refund or tax credit of
Tax Appeals IN excess creditable withholding
U tax for a taxable period was
E determined to have CARRIED
W/in 15 days from receipt OVER and automatically applies
D
the same amount claimed
Motion for IN
against the estimated tax
Reconsideration with T
the DIVISION
liabilities for the taxable
H quarter or quarters of the
succeeding taxable year;
W/in 15 days from receipt
APPEAL to the Court of (4) When the EXCISE TAX DUE on
Tax Appeals EN BANC excisable articles has not been
paid;

W/in 15 days from receipt (5) When an article locally


APPEAL to the purchased or imported by an
SUPREME COURT exempt person, such as, but
not limited to, vehicles, capital
equipment, machineries and
spare parts, has been SOLD,
TRADED OR TRANSFERRED TO
NON-EXEMPT PERSONS.

In the foregoing instances, the taxpayer


shall receive a final assessment notice
without the benefit of a pre-assessment
notice.

b. FINAL ASSESSMENT NOTICE (FAN)

from the flowchart, FAN is issued when:


a. PRE-ASSESSMENT NOTICE (PAN)
(1) The taxpayer having received a
As a rule: PAN is issued to a taxpayer PAN, fails to respond within the
- who fails to file a return, or period provided for by the rules
- files a return but fails pay the tax, and regulations (Sec 228, last
- pays the tax, but the same is par)
INSUFFICIENT
(2) ↓ the five instances
 Sec 228, when is PAN NOT enumerated ↓ Sec 228 where
NECESSARY: (MD CES) pre-assessment is NOT
necessary.
(1) When the finding for deficiency
tax is the result of c. PROTEST

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
after receipt of FAN, taxpayer ≠ Q:PENDING APPEAL, can the BIR still amend
immediately appeal to the CTA. the final assessment?

A: 2 VIEWS:
1. Batangas v. Collector – SC held that
: BEFORE AN APPEAL, a PROTEST must the BIR may still amend the
FIRST be FILED by the taxpayer. assessment during the pendency of
the appeal to avoid multiplicity of
PROTEST  an action disputing the final suits.
assessment.
2. Guerrerro v. Commissioner – SC held
: in accordance w/ the rule in Admin Law - that BIR ≠ amend the assessment
the exhaustion of administrative SINCE IT IS NO LONGER A DISPUTED
remedies. ASSESSMENT.

: after filing protest, BIR – given a period Author’s Note: favors the first ruling.
of 180 days w/in w/c to decide on the matter.

IF MR: the 180-day period is to be


committed on the day the protest has been
filed. e. APPEAL TO THE SC

IF MI: the 180-day period shall be  after appealing to CTA, and after
reckoned on the day the documents or rendering an unafvorable decision, taxpayer may
receipts were filed with the 60-day period of file a motion for reconsideration of said decision
time. within 15 dyas from receipt of the decision of the
CTA sitting IN DIVISION.
: Upon denial of the protest/ lapse of the
180-day period w/o the BIR acting on the
protest, the tacpayer may appeal to the CTA  if decision is still UNFAVORABLE, to the
w/in 30days from receipt of the dnial or lapse of CTA En Banc.
the period; otherwise the decision shall
become FINAL, EXECUTORY and if CTA EB still renders an unfavourable
DEMANDABLE. decision, taxpayer has remedy to file PETITION
FOR CERTIORARI↓ RULE 65, only on the ground
Q: If the taxpayer, during the pendency of of GRAVE ABUSE OF DISCRETION amounting to
his protest, received a notice of an action lack/excess of jurisdiction.
for collection filed by the BIR, what is his
proper remedy? SEVERAL INSTANCES WHERE THE FINAL
ASSESSMENT BECOMES FINAL AND
A: Yabes v. Flojo + Union Shipping Lines v. EXECUTORY: (SONA)
Commissioner – SC held that the subsequent
filing of a collection suit by the BIR may be (1) SUPPORTING DOCUMENTS NOT filed
considered as a denial of the request for protest, w/in the 60-day period
hence, the proper remedy of the taxpayer
is to appeal the denial to the CTA. (2) Protest NOT filed ON TIME;
d. APPEAL TO THE CTA (3) NO APPEAL was filed with the CTA w/in
30days after the lapse of the 180-day
 if protest is DENIED, in whole or in part; period; and
 or the 180-day period has already
lapsed w/o the BIR acting upon the protest
(4) There was an APPEAL FILED but it was
taxpayer may appeal the denial to the BEYOND the period to appeal.
CTA w/in 30days from the receipt of the denial or
the lapse of the period C.FORMS OF PROTEST

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
: Protest is a remedy afforded to the : made by a TP who is not satisfied with the
taxpayer in cases where the BIR issues a final action of the provincial, city or municipal assessor
assessment to the taxpayer . in the assessment of his property.

3 FORMS OF PROTEST AFFORDED TO THE : TP may, w/in 60days from date of receipt
TAXPAYER: of the written notice of assessment, appeal to the
Local Board of Assessment Appeals (LBAA)
(1) ↓ Local Tax of the province or city.
(2) ↓ Real Property Tax
(3) ↓ Tariff and Customs Code : BEFORE THIS PROTEST MAY BE
ENTERTAINED, Sec 252 LGC requires TP FIRST
NB: A 4th may be added – ADMIN PROTEST ↓ PAYS THE TAX. (PAYMENT UNDER
NIRC. PROTEST)

1. PROTEST ↓ LOCAL TAX (Sec 195, LGC) : Protest may only be filed w/in 30 days
from the payment of the tax. (the words “paid
LGC provides: when the local treasurer or his duly under protest” shall be annotated on the tax
authorized representative finds that receipt)
correct taxes, fees, or charges have not
been paid, he shall issue a notice of : LBAA shall decide w/in 120 days from
assessment stating the nature of the tax, receipt of the appeal. The Board after hearing,
fee, or charge the amount of deficiency, the shall render a decision based on substantial
surcharges, interest and penalties. evidence.

: it is from this assessment that the : LBAA- renders unfavourable decision, TP


taxpayer may file a protest w/in 60days from may appeal to the Central Board of
receipt of notice of assessment. If taxpayer does Assessment Appeals (CBAA) – if still
not file the protest w/in said period, the unfavourable  CTA then to SC.
assessment shall become final and
executor. 3. PROTEST ↓ THE TARIFF AND CUSTOMS
CODE (Sec 2313, as amdd by RA No. 7651)
:local treasures shall decide the protest
within 60days from its filing. He may either : appeals ↓ TCC include those requests for
grant/deny the protest. protests as well as for FORFEITURES.

: GRANT – if he finds that it is, FIRST SITUATION ↓ TCC:


wholly or partly, meritorious. : if importer loses his case, remedy =
- ∴ he shall issue a notice APPEAL w/in 15 days OFFICE OF THE
CANCELING wholly or COMMISSIONER
partly the assessment.
: Commr rules for the Govt – importer may
: DENY – wholly/party, if he file appeal to the CTA sitting IN DIVISION w/in 30
finds that the assessment is days from recipt of the decision.
wholly or partly CORRECT, w/
NOTICE to the taxpayer : CTA for Govt – importer to file MR before
the same division w/in 15days  still
: the taxpayer is given a period of 30days unfavourable appeal before the CTA En
from receipt of denial or the lapse of the Banc.
60-day period, w/in w/c to appeal to the court of
competent jurisdiction – RTC. : CTA EB – still unfavourable, importer
appeal w/in 15 days from receipt of decision 
: RTC – renders unfavourable decision, TP SC
may appeal to CTA EN BANC – is still
unfavourable  SC. SECOND SITUATION ↓ TCC:
: importer prevails over the
2. PROTEST ↓ REAL PROPERTY TAX (Secs government.
226, 230, 252 LGC)

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
: in this case, there will be an AUTOMATIC A: GR: NO.
REVIEW w/n 5days. 2 EXECEPTIONS: (1) there is evidence to
prove that the assets of the corporation were
: AUTOMATIC REVIEW shall be filed before taken by the SH; or (2) if the SH has unpaid
1. SEC of FINANCE – if value of subscription.
commodity = P5M or 
2. Office of Commr – if value of : the amount to be compromised – limited by the
commodity is < P5M Code. For cases of financial incapacity, the
minimum rate shall be equivalent to 10% of the
: in 2 above, the Commr is given a period of basic assessed tax. For other cases, the minimum
30dyas w/in w/c to decide. rate shall be equivalent to 40% of the basic
assessed tax. In other words, the minimum
: if Commr REVERSES the ruling, ∴ he amount to be assessed shall be:
rules for the Govt, this decision shall become (1) In cases of financial inacapacity – not
FINAL AND EXECUTORY. < 10% of the original assessment; and
(2) For other cases, not < 40% of the
: if Commr AFFIRMS the Collector/ does original assessment.
not render a decision w/in 30-day period, then
AUTOMATIC REVIEW before the Sec of Finance. Q: Is there any instance where the amount
assessed is lower than the limitations
: from this Atutomatic Review the decision provided?
of the Sec – if unfavourable to importer-TP, shall
be appealable to CTA. A: GR: the compromised amount should not be
( what is appealable is the Sec’s decision lower than the limitations provided by the Code.
from AR of Commr’s decision ↓ RA 9282.)
EXC: where the basic tax involved exceeds P1M
D. COMPROMISE or where the settlement offered is less than the
prescribed rates, the compromise shall be subject
Commr may compromise payment of any internal to the approval of the Evaluation Board w/c shall
revenue tax ↓ 2 INSTANCES: be composed of the Commr and 4 Deputy
Commrs.
(1) When a reasonable doubt exists as to
the validity of the claim ≠ the TP E. REMEDIES FOR COLLECTION OF
(2) When the financial position of the TP DELINQUENT TAXES (Sec 205))
demonstrates a clear inability to pay
the assessed tax. 2 GROUPS OF REMEDIES PROVIDED BY THE
CODE:
Q: May the govt compromise both criminal
and civil cases? Suppose the civil case is 1. JUDICIAL ACTION:
already final and executory, can it still be a. Civil action
subject to compromise? b. Criminal action

A: in civil cases, the govt may compromise the 2. ADMINISTRATIVE ACTION


liability of the TP at ANY STAGE of the proceeding a. Distraint
except when the case is already final and b. Levy
executory. In this case, if the govt would allow a c. Tax lien
compromise even if the case is already final and
executory, the doctrine of separation of powers NB: a determination of whether the final
will be violated. assessment is under normal/abnormal
assessment/collection is material in order to
In criminal cases, compromise is allowed except if determine the remedies available to the govt.
the criminal case is already filed before the RTC
or if the case involves fraud. in case of abnormal, where the return
filed is false or fraudulent, the govt may
Q: Suppose the corporation is already not only avail of judicial action, also of levy or
dissolved, can the stockholder still be distraint.
compelled to pay the tax liability?
F. DISTRAINT

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
- bank accounts
3 KINDS OF DISTRAINT:
1. Constructive How distraint is made:
2. Distraint of intangible properties
3. Actual Distraint Stocks and other securities:
: shall be distrained by serving a copy of
(1) CONSTRUCTIVE DISTRAINT (Sec 206) the warrant of distraint upont the tp and
upon the president, manager, treasurer, or
the Commr may place ↓ CD the property of a other responsible officer of the corporation,
delinquent TP or any TP who in his opinion is: company or association, w/c issued the
(1) Retiring from any business subject to said stocks or securities.
tax;
Debs and other credits:
(2) Intending to leave the Phils; : shall be distrained by leaving with the
person owing the debts or having in his
(3) Intending to remove his properties in possession or under his control such
the Phils; credits, or his agent, a copy of the warrant
of distraint.
(4) Intending to hide/conceal his property; Bank accounts:
: shall be garnished by serving a warrant
(5) Intending to perform any act tending of garnishment upon the tp and upon the
to obstruct proceedings for collecting president, manager, treasurer, or other
tax due/ w/c may be due to him. responsible officer of the bank.

(3) ACTUAL DISTRAINT (Secs 207 a and 209)


: subject of distraint = PERSONAL
PROPERTY OF TP : means that the personal property of the
tp is PHYSICALLY taken by the distraining
this is effected by: officer.

(1) Requiring the TP or any person having : w/in 10days from receipt of warrant, a
possession or control of such property report on the distraint shall be submitted by the
to sign a receipt covering the property distraining officer to the Revenue District
distrained; and Officer and to the Revenue Regional
Director.
(2) Obligate himself to preserve the same
intact and unaltered and not to : prop distrained  SOLD in PUBLIC
dispose of the same in any manne AUCTION.
whatever, w/o the authority of the
Commr. :209 provides that a notice shall be posted
in not less than 2 public places in the
municipality or city where the distraint is
if TP or person authorized REFUSES/ made, specifying the time and place of sale and
FAILS to sign receipt, the revenue officer effecting articles distrained. The time of sale shall
the CD shall proceed to prepare a list of such not be less than 20 days after notice to the
property and in the presence of 2 witnesses, owner or possessor of the property and the
leave a copy thereof in the premises where the publication or posting of such notice.
property distrained is located, after w/c the said
property shall be deemed to have been placed ↓ : w/in 2 days after the sale, the officer
CD. making the same shall make a report of his
proceedings in writing to the Commr and
(2) DISTRAINT OF INTANGIBLE PROPERTIES shall himself preserve a copy of such report as
(Sec 208) an official record (Sec 211)

Intangible props w/c can be ↓ distraint: : NO RIGHT OF REDEMPTION in sale of


- stocks and other securities personal prop distrained ABSOLUTE
- debts and other credits RULE

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200

: OWNER has RIGHT OF PRE-EMPTION:


:Sec 210 provides, if at any time (1) The Register of Deeds of the province
prior to the consummation of the sale all or city where the prop is located; and
charges are paid to the officer conducting
the sale, the good or effects distrained shall be (2) Upon the delinquent TP, or if he is
restored to the owner. ABSENT from the Phils, to his agent or
the manager of the business in respect
DURING AUCTION SALE, 2 instances w/c to w/c the liability arose, of if there be
may happen: none, to the occupant of the property
(1) There is a BIDDER but the bid is in question.
enough
(2) NO BIDDER/ there is a BIDDER but bid
is NOT enough. : Sec 213 provides: that any time before the day
fixed for the sale, the TP may discontinue all
: in (1), when the amount is insufficient to proceedings by paying the taxes, penalties and
cover the amount of the liability, Sec217 allows interest.  RIGHT OF PRE-EMPTION afforded to
the govt to conduct further distraint as necessary TP.
until the full maount due, including all expenses,
is collected. If there’s an excess, such shall be Q: by way of comparison, in the case of
returned to TP. levy, is there also NO RIGHT OF
REDEMPTION as in the case of distraint?
: Sec 212 – provides for the rule when the
amount bid for the property ↓ distraint is ≠ equal A: unlike in cases of distraint, in cases of levy of
to the amount of the tax or is very much less real prop, the TP is afforded, NOT ONLY w/ the
than the acgtual market value of the articles RIGHT OF PRE-EMPTION but also the RIGHT OF
offered for sale. the Commr/his deputy may REDEMPTION as provided in sec 214, w/c
purchase the same in behalf of the Natl Govt for provides:
the amount of the taxes, penalties and costs : that w/in 1 year from the date of
thereon. sale, the DQ TP, or any one for him, shall have
:the govt shall purchaser the the RIGHT OF PAYING to the RDO the
property and thereafter SELL the same in amount of public taxes, penalties, and
AUCTION. if proceeds are insufficient, NO interest thereon from the date of
FURTHER distraint may be conducted by the govt. delinquency to the date of sale xxx, and such
payment shall entitle the person paying to the
Nota Bene: Sec 217 is applicable ONLY to the delivery of the certificate issued to the purchaser
situation where there is a BIDDER or there is a and a certificate from the said RDO that he has
bidder and the BID is NOT ENOUGH. In case of REDEEMED the property.
any excess, the same shall be returned to the TP,
but shall be remitted to the National Treasury. : Sec 216: in case the real prop is levied
by the govt, it shall be SOLD IN PUBLIC
G. LEVY AUCTION.
 it is required however, that the
 this remedy is applicable to real Commr shall give not less than 20days
property notice before the sale and
dispotsition of the real prop in public auction.
: Sec 207 B : real property may be levied upon, The real prop levied may also be
before, simultaneously or after the distraint of sold in a PRIVATE SALE but this sale
personal property belonging to the delinquent TP. is subject to the PRIOR APPROVAL of
the Sec of Finance.

RESULTS if PROP SOLD in PUBLIC AUCTION:


How effected: (1) There is a bidder and the bid is
: by writing upon the certificate, a enough; or
description of the property upon w/c levy is (2) NO BIDDER/ there is a bidder but bid is
made NOT enough.
: at the same time, WRITTEN NOTICE of
the levy shall be MAILED to/ SERVED UPON:

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
:Sec 215: governs the situation where ↓ RAs 1125 and 9282, the CTA is allowed
there is NO bidder. to isse writs of injunctions provided the contested
in case where there is no bidder for real tax is ↓ the NIRC.
prop levied and sold at public auction or if
the highest bid is for an amount insufficient to I. TAX LIEN (Sec 219)
pay the tax due,
the Internal Revenue Officer conducting in cases where the TP neglects / refuses
the sale shall declare the prop forfeited to the to pay an internal revenue tax, the amount due
Govt in satisfaction of the claim in question and shall constitute as a lien in favor of the govt from
w/in 2 days thereafter, shall make a return the time the assessment was made until payment
of his proceedings thereof is made.

RD is also mandated by the Code to  proviso : the lien constituted shall NOT
transfer the title of prop forfeited to the govt w/o BE VALID ≠ any mortgagee, purchaser or
the necessity of an order from a competent court. judgment creditor until the notice of such lien is
 the tp is given 1 year from the date of filed by the Commr to the Office of the RD of the
forfeiture to REDEEM the property. If there is NO province / city where the prop of the tp is situated
REDEMPTION MADE, forfeiture ∴ BECOMES or located. before such lien can affect the rights
ABSOLUTE! No further levy is allowed by the code of the mortgagee or purchases of such property,
in this case. the lien shall FIRST be registered with the Office
of the Reigster of Deeds.
In case of (1) above: the rules on distraint of real
prop shall be applicable. If there’s still deficiency Q: Suppose the govt levied a parcel of land
after the proceeds are applied to w/c is being foreclosed by the mortgagee.
Which of the two shall be preferred?
the tax liability, there SHALL BE FURTHER LEVY
on the real props of the tp. A: IT DEPENDS. Before the right of a mortgagee
is affected, the lien created must FIRST be
registered with the Office of the Register of
In case of (2) above, the property is FORFEITED Deeds – in this case, the govt shall be preferred;
by the govt. (in contrast, in cases of distraint, the otherwise, it is the mortgagee who will prevail
prop shall be PURCHASED by the govt) over the government.
Q:What is the implication of this difference?
A: in case the prop is forfeited, the TITLE TO THE
PROP IS AUTOMATICALLY TRANSFERRED TO THE J. APPROVAL OF THE COMMISSIONER (Sec
GOVT AFTER REGISTRATION OF SUCH 220)
FORFEITURE WITH THE RD;
 BEFORE an action, civil or criminal, may
While in cases of distraint, where the prop is be filed in court, the Commissioner must FIRST
PURCHASED by the govt, the TITLE TO THE PROP APPROVE such filing of the action.
IS NOT AUTOMATICALLY REGISTERED IN THE
NAME OF THE GOVT. : the action or proceeding must be
instituted ↓ the name of the Govt of the
H. INJUNCTION (Sec 218) Philippines.

: refers to a PROHIBITORY INJUNCTION – the Sec 220 + Sec 7 sec7 provides that the
purpose is to “restrain the collection of any Commr may delegate the powers vested in him
National Internal Revenue tax, fee, or charge.” under the Code to any or such subordinate official
with the rank equivalent to a division chief or
:218 prohibits any court to have any higher.
authority to grant an injunction for the purpose
abovementioned. POWERS of the COMMR w/c ≠ be
DELEGATED (RICA):
: the prohibition shall ≠ be applied to
taxes other than those mentioned in the NIRC. (1) The power to RECOMMEND the
promulgation of rules and regulation
CTA – given authority to issue writs of by the Sec of Finance
injunction.

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
(2) The power to ISSUE rulings of first
impression or to reverse, revoke or A: NO. the running of the prescriptive period shall
modify any existing ruling of the be suspended when he is out of the country. ∴
Bureau; the tp, for 15 years was out of the country,
suspension is AUTOMATIC in this case. The action
(3) The power to COMPROMISE or ABTE ↓ has not yet prescribed.
sec 204 A and B of the Code, any tax
liability; and L. CLAIM FOR REFUND (Sec 229)

(4) The power to ASSIGN or REASSIGN claim or refund shall first be filed before
internal revenue officers to the Commr BEFORE a suit or proceeding shall be
establishments where articles subject maintained in any court for the recovery of any
to excise tax are produced or kept. national internal revenue tax alleged to have
been erroneously or illegally assessed or
Sec 4 adds: the Commr has the exclusive collected, or of any penalty claimed to have been
and original jurisdiction to interpret the provisions collected w/o authority, or of any sum alleged to
of the NIRC, subject to review by the Sec of have been excessively, or in any manner
Finance. wrongfully, collected.
: ↓ said sec, the Commr has the power to
DECIDE disputed assessment, refunds of internal : the suit/proceeding shall be filed after
revenue taxes, fees or charges, penalties the expiration of 2 years from the payment of the
imposed in relation thereto, or other matters tax. However, the Code further provides that the
arising ↓ the NIRC or other laws or portions Commr may, although there is no written claim
thereof administered by the BIR.  this decision for refund or credit filed by the tp, refund or
is subject to the exclusive appellate jurisdiction of credit any tax, if upon the face of the return
the CTA. upon w/c payment was made, such payment
appears clearly to have been erroneously made.
K. SUSPENSION OF THE RUNNING OF
STATUTE OF LIMITATIONS (Sec 223) HOW TO DETERMINE PERIOD IN COMPUTING
TAX REFUND:
: the periods ↓ 203 and 222 shall be
SUSPENDED for the following reasons: TP – classified into INDIVIDUAL and
CORPORATIONS.
(1) When the TP REQUESTS for a
REINVESTIGATION w/c is GRANTED by INDIVIDUAL: reckoning period should be
the Commr. on the day the tax has been paid.
if paying ↓ the withholding tax system:
(2) When the TP ≠ be LOCATED in the the period shall start at the end of the taxable
address given by him in the return year.
filed upon w/c a tax is being assessed  if paying by way of installment: the
or collected, PROVIDED – that if the TP period shall be reckoned on the date of the last
informs the Commr of any change in instalment.
address, the running of the statute of for tps subjected to distraint/levy: if prop
limitations will NOT BE SUSPENDED. was sold in public auction, the date the proceeds
were applied for the satisfaction of the tax
liability shall be considered.
(3) When the warrant or distraint or levy is
DULY SERVED upon the TP, his CORPORATE TPS 2 groups are also
authorized rep or a mem of his considered: the EXISTING and NON-EXISTING
household with sufficient discretion, CORPOS.
and no prop could be located; and EXISTING NON-EXISTING
2-yr period starts to run 2-yr period commences
(4) When the tp is OUT of the country. from the day the from the day the
annual adjusted return annual return is filed.
Q: after 15 years, A, a Filipino tp, went back
to the Phils. The BIR assessed him ↓ the is filed – since it is only For these types of
normal assessment. Has the action from this time that the corpos, upon receipt of
prescribed? tax liability can be the notice from SEC of

♥ NOTES
TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200
correctly determined. the dissolution of the
corpo, a return should
be filed after 30 days.
The dissolved corpo is
not required to wait for
the end of the taxable
year to file the return.

2-YEAR PERIOD IS ABSOLUTE.

: even if there’s a supervening event w/c


could prevent the tp from filing a written claim
for refund/credit, the claim should still be filed
w/in the 2-year period.

BUT if the Commr has not yet acted on the


claim and the 2yr period is abpout to expire, tp’s
remedy = file appeal with CTA sitting in
DIVISION. The inaction of the Commr can be
considered a DENIAL.

: if BIR denies the claim w/in the 2yr


period, tp’s remedy = file appeal with CTA
w/in 30days from the denial. NOTE that such 30-
day period MUST BE WITHIN THE 2-YEAR
PERIOD.
∴ if there are only 21 days remaining in
the 2-year period and the BIR denied the
claim, tp has only 21 days w/in w/c to file his
appeal.

EXCEPTION  Sec 204 C: a return filed showing


an OVERPAYMENT shall be considered as a
written claim for refund. in that case, no written
claim for refund or credit is required to be filed.

:In cases of written claim for refund or


credit in determining the gross value of
the estate, the Commr may open the bank
account of the tp. written consent is NOT
REQUIRED. But in cases of compromise ↓
204 A, written consent is required for the
Commr to inquire into the bank account of
the tp.

♥ NOTES