Tax 2 Finals (Remedies To Cta)

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mhealler | 404

BIR ORGANIZATION, FUNCTIONS AND TAX
ADMINISTRATION
(Sections 1 to 21 of the Tax Code, as amended)

XIV. PERIOD OF LIMITATION UPON COLLECTION
A. GENERAL RULE
Five (5) years from assessment or within period for
collection agreed upon in writing before expiration of
the 5-year period (Sec. 222, 1997 NIRC).
If no assessment has been made, the government has
three (3) years to collect reckoned from the last day
of filing the return or such date when the return was
filed if made after the period prescribed by law. The
supposed three-year assessment period is substituted
with collection.
B. EXCEPTIONS
1. Ten (10) years without assessment in case of
false or fraudulent return with intent to evade
or failure to file return (Sec. 222, 1997 NIRC).
If no return is filed, the governments right
to collect becomes imprescriptible.
2. When there is a waiver of the statute of
limitations.
Under RMO No. 20-90, in order for the waiver to
be valid, the following should be followed:
The waiver must be in the form identified in
RMO 20-90. This form may be reproduced
by the Office concerned but there should be
no deviation from such form. The phrase
but not after ______, 19__ should be
filled up.
Soon after the waiver is signed by the
taxpayer, the CIR or the revenue official
authorized by him shall sign the waiver
indicating that the BIR has accepted and
agreed to the waiver. The date of such
acceptance by the BIR should be indicated.
The waiver must be executed in 3 copies;
the second copy is for the taxpayer.
The date of receipt by the taxpayer must be
indicated in the original copy. Without the
date, it cannot be determined whether the
waiver was accepted by BIR before the
expiration of the three-year period.
It is necessary that the waiver be executed by
the parties before the lapse of the five-year
prescriptive period. The law does not authorize
the extension of the prescriptive period once
prescription has set in.
Tax waivers are supposed to extend, not reduce,
the prescriptive periods provided by law.
3. Revised assessment of the government
(prescriptive period for the collection is counted
from the last or revised assessment).
When a revised FAN is issued (assuming it has
been issued within the original prescriptive
period), the government has five (5) years to
collect from the date when the latest or revised
FAN has been mailed, released or sent.
4. Within 10 years from the time the right of
action accrues if the action is brought to
enforce a compromise.
Whenever the Governments action is for the
enforcement of a contractual obligation, the
applicable prescriptive period is no longer 5
years but ten (10) years under Art. 1144(1) of
the Civil Code.
The 10-year prescriptive period will run from the
time there is a breach of the compromise
agreement.
Grounds for compromise:
A reasonable doubt as to the validity of the
claim against the taxpayer exists.
- In which case, the taxpayer may be just
held liable to the extent of 40% of the
basic assessed tax.
The financial position of the taxpayer
demonstrates a clear inability to pay the
assessed tax.
- Taxpayer may pay only to the extent of
10% of the basic assessed tax.
C. GOVERNMENTS RIGHT TO RECOVER ERRONEOUSLY
REFUNDED TAX
When the Government makes an erroneous refund of
internal revenue taxes, the prescriptive period that
applies is the three (3) year period for making
assessments under Sec. 203 of the NIRC.
The prescriptive period for tax assessments should
apply because the demand of the Government on the
taxpayer to pay the erroneously refunded tax is in
effect an assessment. (Guagua Electric Light Plant Co.,
Inc. v. CIR)
2 TAXATION 2 FINALS| maru.mhealler | 404

XV. WHEN IS A TAX DEEMED COLLECTED
A. SUMMARY REMEDIES
Distraint of personal property
Levy of real property
Collection through summary remedies is effectuated
by summary methods when the Government avails of
a distraint and levy procedure prescribed in the Tax
Code (Secs. 207 to 214, NIRC)
B. JUDICIAL REMEDIES
The collection of the tax is begun by the
filing of a complaint with the proper court.
(Sec. 3, Rule 6, Rules of Court)
If the decision of the CIR on a protested
assessment is appealed to the CTA, the
collection of the tax is considered begun
when the Government files its answer to
the taxpayers petition for review.
Can the taxpayer enjoin the collection of taxes?
GR: NO, otherwise, it will hamper the operations of the
government. (lifeblood doctrine)
Sec. 218, NIRC (n)o court shall have the authority to
grant injunction to restrain the collection of any national
internal revenue tax, fee or charge imposed by this Code.
EXCEPTION: Suspension of the collection of the tax liability
is allowed when all of the following conditions concur:
1. Issued only by the CTA;
2. Issued by the CTA in its appellate jurisdiction; and
3. Collection may jeopardize the interest of the
Government and/or the taxpayer.
Suspension of collection may be granted by the CTA
upon this ground but the taxpayer must either
deposit the amount of taxes assessed or file a bond
amounting to not more than twice the value of the
tax being assessed Sec. 11, RA 1125).

XVI. SUSPENSION OF THE RUNNING OF THE
STATUTE OF LIMITATIONS FOR MAKING TAX
COLLECTIONS
The running of the prescriptive periods for assessment and
collection of taxes is suspended under any of the following
circumstances:
a. When the CIR is prohibited from making the
assessment or beginning distraint and levy or a
proceeding in court and for sixty (60) days thereafter;
b. When the taxpayer requests for the reinvestigation
which is granted by the CIR;
c. When the taxpayer cannot be located in the address
given by him in the return filed upon which a tax is
being assessed or collected; provided, that if the
taxpayer informs the CIR of any change in address,
the running of the Statute of Limitations will not be
suspended;
d. When the warrant of distraint and levy is duly served
upon the taxpayer, his authorized representative or a
member of his household with sufficient discretion
and no property could be located; and
e. When the taxpayer is out of the Philippines (Sec. 223,
NIRC)

XVII. ADMINISTRATIVE REMEDY AFTER PAYMENT
A. DEFINITION OF TERMS
TAX CREDIT a claim for the issuance of a tax credit
certificate, showing an amount owing from the
Government to the taxpayer which the latter is legally
authorized to credit or offset against national internal
taxes payable by him, except withholding taxes.
- Can only be applied against existing
national internal revenue tax liabilities
(i.e. income tax, VAT, etc). Cannot be
used to pay off local taxes or real
property taxes.
- Cannot be applied against a
withholding tax. Withholding taxes are
not the liability of the withholding
agent. (Can only be applied against any
internal revenue tax for which the
taxpayer is directly liable.
TAX REFUND a claim for the payment of cash for
taxes erroneously or illegally paid by the taxpayer to
the Government. (actual reimbursement)
TAX REFUND TAX CREDIT

The taxpayer asks for
restitution of the money
paid as tax

The taxpayer asks that the
money so paid be applied
to his existing tax liability

Two-year period to file
claim with the CIR starts
after the payment of the
tax or penalty

Two-year period starts
from the date such credit
was allowed (in case
credit is wrongly made).

CARRY OVER If the taxpayer has paid excess
quarterly income taxes, it may be entitled to a tax
credit or refund as shown in its final adjustment
return which may be carried over and applied against
the estimated quarterly income tax liabilities for the
taxable quarter of the succeeding taxable years.
- Once the taxpayer has exercised the
option to carry-over and to apply the
excess quarterly income tax against
income tax due for the taxable
quarters of the succeeding taxable
years, such option is irrevocable for
that taxable period and no application
for cash refund or issuance of a tax
credit certificate shall be allowed.
B. WHEN CLAIMS FOR TAX REFUND OR CREDIT IS
ALLOWED
Tax recovery or refunds may encompass the following
payments:
a. When the tax has been erroneously or illegally
assessed or collected;
b. When any penalty is claimed to have been
collected without authority;
c. When any sum is alleged to have been
excessively or in any manner wrongfully
collected;
d. When internal revenue stamps are returned in
good condition by the purchaser, value is
refunded; and
e. In the CIRs discretion, redeem or change unused
stamps that have been rendered unfit for use
and refund their value upon proof of
destruction.
Before recovery is allowed, two things must be
established:
(1) That there was an actual collection and receipt
by the Government of the tax sought to be
recovered; and
(2) That there is legal basis for granting the refund
or credit including verification of compliance
with the statutory requirements relative to the
filing of claims within the reglementary two-year
period.

CIR vs. PNB, GR No. 161997 (2005)
Claim for tax credit not barred by two-year prescriptive period
considering special circumstances
The amount of advance income tax voluntarily remitted to the BIR is
not, as a consequence of prior tax assessment or computation by the
taxpayer, based on business income and should not be treated as
similar to those national internal revenue taxes erroneously, illegally or
wrongfully paid as to be automatically covered by the two-year
limitation under Sec. 230 for the right to its recovery. When the P180
million advance income tax payment was tendered, no tax had been
assessed or due, or actually imposed and collected by the BIR. Neither
can such payment be considered as illegal having been made in
response to a call of patriotic duty to help the National Government.
The tax credit sought is not simply a case of excess payment, but rather
for the application of the balance of advance income tax payment for
subsequent taxable years after failure or impossibility to make such
application or carry over the preceding four-year period when no tax
liability was incurred by the petitioner due to losses in its operations. It
is truly inequitable to strictly impost the two-year prescriptive period as
to legally bar any request for the tax credit considering the special
circumstances under which the advance income tax payment was made
and the unexpected event (four years of business losses) which
prevented such application or carry over.
CIR vs. Alltel Intl. Resource Mgt., Inc. (CA 2002)
Respondent cannot be entitled to refund and at the same time be
liable for a tax deficiency assessment for the same year.
The fact of such deficiency assessment is intimately related to and
inextricably intertwined with the right of respondent bank to claim for a
tax refund for the same year.
To grant the refund without determination of the proper assessment
and the tax due would inevitably result in multiplicity of proceedings or
suits. If the deficiency assessment should subsequently be upheld, the
Government will be forced to institute anew a proceeding for the
recovery of erroneously refunded taxes which recourse must be filed
within the prescriptive period of ten years after discovery of the falsity,
fraud or omission in the false or fraudulent return involved. This would
necessarily require and entail additional efforts and expenses on the
part of the Government, impose a burden on and a drain of government
funds, and impede or delay the collection of much-needed revenue for
government operations. Thus, it is both logically necessary and legally
appropriate that the issue of the deficiency tax assessment be resolved
jointly with its claim for tax refund, to determine once and for all in a
single proceeding the true and correct amount of tax due or refundable.

Exxonmobil vs. CIR, GR No. 180909 (2011)
The proper party to question, or to seek a refund of, an indirect tax, is the statutory taxpayer, or the person on whom the tax is imposed by law and who
paid the same, even if he shifts the burden thereof to another.
On the issue of whether Exxon, as the distributor and vendor of petroleum products to international carriers registered in foreign countries which have
existing bilateral agreements with the Philippines, is the proper party to claim a tax refund for the excise taxes paid by the manufacturers, Caltex and Petron,
and passed on to it as part of the purchase price, the SC answered in the negative
Excise taxes are indirect taxes, the liability for payment of which falls on one person, but the burden of payment may be shifted to another. Here, the sellers
of the petroleum products or Jet A-1 fuel subject to excise tax are Petron and Caltex, while Exxon was the buyer to whom the burden of paying excise tax
was shifted.
The proper party to seek a refund of an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even if
he shifts the burden to another. Although the burden of an indirect tax can be shifted to the purchaser, the amount added or shifted becomes part of the
price. Thus, the purchaser does not really pay the tax per se but only the price of the commodity.
C. PROPER PARTY TO FILE A CLAIM FOR
REFUND/CREDIT
GR: Taxpayer who is made personally liable for tax
and who has actually made the payment of tax.
EXCEPTIONS:

Silkair Pte. Ltd. vs. CIR, GR No. 184398 (2010)
The proper party to seek a refund of an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even
if he shifts the burden thereof to another.
Claiming exemption from payment of excise taxes pursuant to Section 135 of the Tax Code and Article 4 of the Philippines Singapore Air Agreement, Silkair
filed a formal claim for refund with the Commissioner of Internal Revenue (CIR). Silkair alleged that it was the one who actually paid the excise taxes due on
the transactions while Petron merely remitted the payment to the BIR, thereby negating the tax exemption expressly granted to it.
Nonetheless, the Supreme Court held that the proper party to question, or seek a refund of an indirect tax is the statutory taxpayer, the person on whom
the tax is imposed by law and who paid the same even if he shifts the burden thereof to another.
Excise tax, whether classified as specific or ad valorem tax, is basically an indirect tax imposed on the consumption of a specified list of goods or products.
The tax is directly levied on the manufacturer upon removal of the table goods from the place of production but in reality, the tax is passed on to the end
consumer as part of the selling price of goods sold.
CIR vs. Procter & Gamble Phils., et. Al., GR No. 66838 (1991)
A withholding agent should be allowed to claim for tax refund because under the law, said agent is the one who is held liable.
Under Sec.53(c) of NIRC, the withholding agent who is "required to deduct and withhold any tax" is made " personally liable for such tax" and indeed is
indemnified against any claims and demands which the stockholder might wish to make in questioning the amount of payments effected by the withholding
agent in accordance with the provisions of the NIRC.
The withholding agent, P&G-Phil., is directly and independently liable for the correct amount of the tax that should be withheld from the dividend
remittances. The withholding agent is, moreover, subject to and liable for deficiency assessments, surcharges and penalties should the amount of the tax
withheld be finally found to be less than the amount that should have been withheld under law.
There is nothing to preclude the BIR from requiring P&G-Phil. to show some written or telexed confirmation by P&G-USA of the subsidiary's authority to
claim the refund or tax credit and to remit the proceeds of the refund., or to apply the tax credit to some Philippine tax obligation of, P&G-USA, before actual
payment of the refund or issuance of a tax credit certificate. A sovereign government should act honorably and fairly at all times, even vis-a-vis taxpayers.
Hence, P&G-Phil. should be properly regarded as a party-in-interest to bring suit for refund f taxes.

D. REQUISITES TO MAKE A CLAIM
The taxpayer must comply with the following
procedures in claiming a refund of, or tax credit for,
taxes and penalties which he alleges to have been
erroneously, illegally or excessively assessed or
collected:
1. He should file a written claim for refund with
the CIR;
- To afford the CIR an opportunity to
correct the action of subordinate
officers; and
- To notify the Government that the
taxes sought to be refunded are under
question and that, therefore, such
notice should then be borne in mind in
estimating the revenue available for
expenditure.
GR: A written claim is a mandatory requirement.
EXCEPTIONS:
Where on the face of the return upon which
payment was made, such payment appears
clearly to have been erroneously made;
Within 30 days after receipt of the adverse
decision or inaction of the CIR, and the
taxpayer filed an appeal before the CTA
2. The claim filed must state a categorical demand
for reimbursement;
- Must contain facts, basis of contention
3. The claim for refund or tax credit must be filed,
or the suit or proceeding therefor must be
commenced in court within two (2) years from
date of payment of the tax or penalty
regardless of any supervening cause.
GR: The period to file a claim for refund or tax
credit cannot be suspended notwithstanding any
supervening clause:
EXCEPTION: The prescriptive period for filing
claims for refund is suspended provided two
conditions are present:
a. There is a pending litigation between the
two parties the Government and the
taxpayer as to the proper tax to be paid
and of the proper interpretation of the
taxpayers charter in relation to the
disputed tax; and
b. The CIR in the litigated case agreed to abide
by the decision of the SC as to the collection
of taxes relative thereto, even if its beyond
the two-year prescriptive period (Panay
Electric v. CIR)
Commencement Of The Two (2) Year Period
a. Tax sought to be refunded is illegally or
erroneously collected
- from the date the tax was paid.
(Commissioner vs. Victorias Milling, GR
No. L-24108, January 31, 1968)
b. Tax is paid only in installments or only in part
- from the date the last or final
installment or payment because for
tax purposes, there is no payment
until the whole or entire tax liability is
fully paid.
c. Taxpayer merely made a deposit
- counted from the conversion of the
deposit to payment
- Merely making a deposit is not
equivalent to payment until the
amount is actually applied to the
specific purpose for which it was
deposited.
d. Tax has been withheld from source (through
the withholding tax system)
- counted from the date it falls due at
the end of the taxable year
- A taxpayer who contributes to the
withholding tax system does not really
deposit an amount to the government,
but in truth, performs and
extinguishes his tax obligation for the
year concerned. (Gibbs vs.
Commissioner, GR No. L-17406,
November 29, 1965)
e. End of taxable year vs. date of the filing of the
final adjusted return
- from the date when the final adjusted
return was filed.
- the rationale in computing this period
is the fact that it is only then the
corporation can ascertain whether it
made profits or incurred losses in its
business operations. (ACCRA
Investments vs. Court of Appeals, GR
No. 96322, December 20, 1991)

f. Date when quarterly income tax was paid vs.
date when final adjusted return was filed
- from the date when final adjusted
return was filed
- The filing of the quarterly income tax
return (Sec. 68) and payment of
quarterly income tax should only be
considered mere installments of the
annual tax due. (Commissioner vs.
TMX Sales, GR No. 83736, January 15,
1992)
g. Date when the final adjustment return was
actually filed (ex. Apr. 2) vs. Last day when the
adjustment return could still be filed (ex. Apr.
15)
- from the date the final adjustment
return was actually filed.
(Commissioner vs. Court of Appeals,
GR No 117254, January 21, 1999)
h. Tax was not erroneously or illegally paid but the
taxpayer became entitled to refund because of
supervening circumstances
- from the date the taxpayer becomes
entitled to refund and not from the
date of payment. (Commissioner vs.
Don Pedro Central Azucarera, GR No.
L-28467, Feb. 28, 1973)
PAYMENT UNDER PROTEST IS NOT NECESSARY
UNDER NIRC
A suit or proceeding for tax refund may be
maintained whether or not such tax, penalty or sum
has been paid under protest or duress (Sec. 229,
NIRC).
Note: Similarly, payment under protest is not
necessary in refund for local taxes. (See Sec. 196,
LGC). However, payment under protest is necessary in
claim for refund for real property taxes (Sec. 252,
LGC) and for customs duties (Sec. 2308, TCC).

CIR vs. PERF Realty Corp., GR No. 163345 (2008)
Failure to indicate option of tax refund or tax credit is not fatal to a
claim for refund.
Section 76 of the 1997 Tax Code offers two options:
(1) filing for tax refund and
(2) availing of tax credit.

The two options are alternative and the choice of one precludes the
other. However, failure to indicate a choice will not bar a valid request
for a refund, should this option be chosen by the taxpayer later on. The
reason for requiring that a choice be made in the Final Adjustment
Return upon its filing is to ease tax administration, particularly the self-
assessment and collection aspects. A taxpayer that makes a choice
expresses certainty or preference and thus demonstrates clear
diligence. Conversely, a taxpayer that makes no choice expresses
uncertainty or lack of preference and hence shows simple negligence
or plain oversight.
CIR vs. Arturo V. Parcero vs. Primetown Property
Group, GR No. 162155 (2007)
The rule is that the two-year prescriptive period is reckoned from the
filing of the final adjusted return. But how should the two-year
prescriptive period be computed?
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of
the Administrative Code of 1987 deal with the same subject matter
the computation of legal periods. Under the Civil Code, a year is
equivalent to 365 days whether it be a regular year or a leap year.
Under the Administrative Code of 1987, however, a year is composed
of 12 calendar months. Needless to state, under the Administrative
Code of 1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of
computing legal periods under the Civil Code and the Administrative
Code of 1987. For this reason, we hold that Section 31, Chapter VIII,
Book I of the Administrative Code of 1987, being the more recent law,
governs the computation of legal periods. Lex posteriori derogat priori.

E. PROCESS FOR CLAIMING TAX REFUND OR CREDIT
For purposes of tax refund, it is necessary that the
claim for refund in the BIR (administrative claim) as
well as any action or proceeding for tax refund in the
CTA (judicial claim) should be both commenced
within two (2) years counted from the date of
payment of the tax, regardless of any supervening
clause.
Taxpayer pays tax liability

Taxpayer files in writing with the CIR a claim for credit or refund
within two (2) years after payment of the tax or penalty

If CIR denies claim for refund OR
If the CIR does not act on the claim within the 2-year period

Appeal to the Court of Tax Appeals (CTA) within 30 days from
receipt of final decision of CIR, or before the lapse of the 2-year
period in case of CIRs inaction. OTHERWISE, taxpayer may no longer
file a claim before the CTA.

The Party adversely affected by the CTA Divisions decision may file
one motion for reconsideration/new trial within 15 days from
receipt of decision. If the MR is denied file a petition for review with
the CTA en banc

Appeal to the Supreme Court within 15 days from receipt of the
CTA en banc decision under Rule 45 of the Rules of Court
EXAMPLE:
Filed ITR for year 2007 on April 15, 2008 and paid the
tax. Taxpayer has until April 15, 2010 to file a claim
for refund. Suppose taxpayer filed a claim for tax
refund before the CIR within the 2-year period.
However, it took the CIR more than 2 years from the
date the tax was paid within which to decide the
claim for refund.
The CIRs decision is one of denial of the claim for
refund. If the taxpayer appealed to the CTA within the
reglementary 30 day period, taxpayers action will still
not prosper.
Although the taxpayer filed his claim for refund with
the CIR within 2 year period, he did not institute his
action for recovery within the same period of 2 years
in the CTA.

CIR vs. Far Eat Bank & Trust Company, GR No. 173854 (2010)
A taxpayer claiming for a tax credit or refund of creditable
withholding tax must comply with the following requisites:
1) The claim must be filed with the CIR within the two-year
period from the date of payment of the tax;
2) It must be shown on the return that the income received was
declared as part of the gross income; and
3) The fact of withholding must be established by a copy of a
statement duly issued by the payor to the payee showing the
amount paid and the amount of the tax withheld.

FEBTC failed to prove that the income derived from rentals and sale of
real property were included in the gross income as reflected in its
return.
To establish the fact of withholding, the Bank submitted Certificates of
Creditable Tax Withheld at Source and Monthly Remittance Returns of
Income Taxes Withheld, which pertain to rentals and sales of real
property, respectively. However, respondents 1994 Annual Income
Tax Return shows that the gross income was derived solely from sales
of services. In fact, the phrase "NOT APPLICABLE" was printed on the
schedules pertaining to rent, sale of real property, and trust income.
Thus, based on the entries in the return, the income derived from
rentals and sales of real property upon which the creditable taxes were
withheld were not included in respondents gross income as reflected
in its return. Since no income was reported, it follows that no tax was
withheld. To reiterate, it is incumbent upon the taxpayer to reflect in
his return the income upon which any creditable tax is required to be
withheld at the source.
Atlas Consolidated Mining vs. CIR, GR No. 145526 (2007)
It has always been the rule that those seeking tax refunds or credits bear
the burden of proving the factual basis of their claims and of showing, by
words too plain to be mistaken, that the legislature intended to entitle
them to such claims.
First, a judicial claim for refund or tax credit in the CTA is by no means an
original action, but rather an appeal by way of petition for review of a
previous, unsuccessful administrative claim.
Therefore, as in every appeal or petition for review, a petitioner has to
convince the appellate court that the quasi-judicial agency a quo did not
have any reason to deny its claims.
Second, cases filed in the CTA are litigated de novo. Thus, a petitioner
should prove every minute aspect of its case by presenting, formally
offering and submitting its evidence to the CTA.
Since it is crucial for a petitioner in a judicial claim for refund or tax
credit to show that its administrative claim should have been granted in
the first place, part of the evidence to be submitted to the CTA must
necessarily include whatever is required for the successful prosecution
of an administrative claim.

F. INTEREST ON TAX REFUNDS
GR:
Government cannot be required to pay interest on
taxes refunded to the taxpayer in the absence of a
statutory provision clearly or expressly directing or
authorizing such payment. (Commissioner vs.
Sweeney, GR No. L-12178, August 29, 1959)
EXCEPTIONS:
a. When the CIR acted with patent arbitrariness.
Arbitrariness presupposes inexcusable or
obstinate disregard of legal provisions.
(Commissioner vs. Victorias Milling, GR No. L-
19667, Nov. 29, 1966)
b. Under Sec. 79(C)(2) with respect to income taxes
withheld on the wages of the employees. Any
excess of the taxes withheld over the tax due
from the taxpayer shall be returned or credited
within three months from the fifteenth (15
th
) day
of April. Refunds or credits made after such time
shall earn interest at the rate of 6% per annum,
starting from the lapse of the three-month
period to the date the refund or credit is made.
G. FORFEITURE OF TAX REFUND AND TAX CREDIT
1. Forfeiture of refund in favor of the government
when a refund check or warrant remains
unclaimed or uncashed within five (5) years from
date of mailing or delivery.
2. Forfeiture of Tax Credit a tax credit certificate
which remains unutilized after five (5) years from
date of issue, shall be invalid, unless revalidated
(Sec. 230, 1997 NIRC).

XVIII. JUDICIAL REMEDIES
A. CIVIL ACTION
1. Appeal to the Court of Tax Appeals (Sec. 228,
1997 NIRC).
2. Action to contest forfeiture of chattel, at any
time before the sale or destruction thereof, to
recover the same, and upon giving proper bond,
enjoin the sale; or after the sale and within 6
months, an action to recover the net proceeds
realized at the sale (Sec. 231, 1997 NIRC); and
3. Action for damages against a revenue officer by
reason of any act done in the performance of
official duty (Sec. 227, 1997 NIRC).
B. CRIMINIAL ACTION
1. Filing of criminal complaint against erring BIR
officials and employees.
2. Injunction when the CTA in its opinion, the
collection by the BIR may jeopardize taxpayer.

REMEDIES OF THE GOVERNMENT
XIX. KINDS OF REMEDIES
A. Tax Lien
B. Compromise and Abatement
C. Civil Action
D. Criminal Action
E. Distraint
F. Levy
G. Forfeiture
H. Suspension of Business Operation in Violation of VAT
Laws
I. Additions to the Tax Due
J. Others

XX. TAX LIEN
When a taxpayer neglects or refuses to pay his internal
revenue tax liability after demand, the amount so
demanded shall be a lien in favour of the Government
from the time assessment was made by the Commissioner
until paid with interest, penalties and costs that may
accrue in addition thereto upon all property and rights to
property belonging to the taxpayer (Sec. 219, NIRC).
CIR vs. Aichi Forging Company of Asia, GR No. 184823
(2010)
Section 112 (A) of the National Internal Revenue Code (NIRC) is the
applicable provision in determining the start of the two-year period
for claiming a refund or credit of unutilized input value-added tax
(VAT). Sections 204 (C) and 229 of the NIRC are inapplicable as both
provisions apply only to instances of erroneous payment or illegal
collection of internal revenue taxes. Thus, the two-year period should
be reckoned from the close of the taxable quarter when the sales
were made.
Section 112(D) of the National Internal Revenue Code clearly provides
that the Commissioner of Internal Revenue (CIR) has 120 days, from
the date of the submission of the complete documents in support of
the application [for tax refund/credit, within which to grant or deny
the claim. However, if after the 120-days period, the CIR fails to act on
the application for tax refund or credit, the remedy of the taxpayer is to
appeal the inaction of the CIR to the Court of Tax Appeals (CTA within
30 days. In this case, the administrative and the judicial claims were
simultaneously filed on September 30, 2004. Taxpayer did not wait for
the decision of the CIR or the lapse of the 120-day period. Therefore,
the filing of the judicial claim with the CTA was premature.

A tax lien is a legal claim or charge on property, either real
or personal, established by law as a security in default of
the payment of taxes. Generally, it attaches to the
property irrespective of ownership or transfer thereof.
A. NATURE AND EXTENT
A tax lien attaches not only from the service of
the warrant of distraint of personal property but
from the time the tax became due and
demandable.
The lien attaches as soon as FAN is issued which
is a categorical demand to pay the amount
stipulated and the taxpayer refuses to pay the
same.
It extends upon all properties of the taxpayer
real, personal tangible, personal intangible
properties.
Regardless of ownership or transfer, lien follows
the property
Tax lien is superior and is given preference over
any other claim of any other creditor, in respect
of any and all properties of the insolvent.
B. EFFECTIVITY AGAINST THIRD PERSONS
The lien shall not be valid against any mortgage,
purchaser or judgment creditor until notice of
such lien shall be filed by the Commissioner in
the Office of the Register of Deeds of the
province or city where the property of the
taxpayer is situated or located (Sec. 219, NIRC).

LIEN DISTRAINT

Directed against the
property subject to the
tax

Need not be directed
against the property
subject to tax

Regardless of the owner
of the property

Property seized must be
owned by the taxpayer

XXI. COMPROMISE AND ABATEMENT
A. DEFINITION OF TERMS
1. Compromise
- A contract whereby the parties, by
reciprocal concessions, avoid litigation
or put an end to one already
commenced (Art. 2028, New Civil
Code).
2. Abatement
- The entire tax liability, interest or
surcharge of the taxpayer is cancelled
3. Compromise Penalty
- It is an amount of money that the
taxpayer pays to compromise a tax
violation. This is paid in lieu of criminal
prosecution. A taxpayer cannot be
compelled to pay a compromise
penalty. If he does not want to pay,
the CIR must institute a criminal
action.
COMPROMISE
Requisites:
1. The taxpayer must have a tax liability.
2. There must be an offer (by the taxpayer of an
amount to be paid by the taxpayer)
3. There must be an acceptance (by the
Commissioner or taxpayer as the case may be) of
the offer in the settlement of the original claim.
Officers authorized to compromise:
a. The Commissioner of Internal Revenue (CIR) with
respect to criminal and civil cases arising from
violations of the Tax Code [Secs. 7(C) and 204,
1997 NIRC]. This power of the CIR is
discretionary and once exercised by him cannot
be reviewed or interfered with by the Courts.
(Koppel, Philippines vs. Commissioner, GR No. L-
1977, September 21, 1950)
b. By the Regional Evaluation Board composed of:
i. the Regional Director as Chairman,
ii. Assistant Regional Director, the
heads of the Legal, Assessment and
Collection Divisions, and
iii. the Revenue District Officer having
jurisdiction over the taxpayer, as
members;
on assessments issued by the regional
offices involving basic taxes of P500,000 or less,
and minor criminal violations.
Grounds for Compromise:
1. Reasonable doubt as to validity of the claim
against the taxpayer exists

2. Financial position of the taxpayer demonstrates
a clear inability to pay assessed tax
Reasonable doubt as to validity of the claim against the
taxpayer exists
a. The delinquent account or disputed assessment is
one resulting from a jeopardy assessment.
b. The assessment seems to be arbitrary in nature,
appearing to be based on presumptions, and there is
reason to believe that its is lacking in legal and/or
factual basis; or
c. The taxpayer failed to file an administrative protest
on account of the alleged failure to receive notice of
assessment or preliminary assessment and there is
reason to believe that its is lacking in legal and/or
factual basis; or
d. The taxpayer failed to file a request for
reinvestigation/reconsideration within 30 days from
receipt of final assessment notice and there is reason
to believe that its is lacking in legal and/or factual
basis; or
e. The taxpayer failed to elevate to the CTA an adverse
decision of the Commissioner, or his authorized
representative, in some cases, within 30 days from
receipt thereof and there is reason to believe that its
is lacking in legal and/or factual basis; or
f. The assessment were issued on or after Jan. 1, 1998,
where the demand notice allegedly failed to comply
with the formalities prescribed under Sec. 228 of the
1997 NIRC; or
g. Assessments made based on the Best Evidence
Obtainable Rule and there is reason to believe that
the same can be disputed by sufficient and
competent evidence.
h. The assessment was issued within the prescriptive
period for assessment as extended by the taxpayer's
execution of Waiver of the Statute of Limitations the
validity or authenticity of which is being questioned
or at issue and there is strong reason to believe and
evidence to prove that it is not authentic. (RR. 30
2002)
i. The assessment is based on an issue where a court of
competent jurisdiction made an adverse decision
against the Bureau, but for which the Supreme Court
has not decided upon with finality. (RR. 08-2004).
Financial position of the taxpayer demonstrates a clear
inability to pay assessed tax [Sec. 204(A), 1997 NIRC). In
such case, the taxpayer should waive the confidentiality
privilege on bank deposits under RA No. 1405 [Sec. 6(F)(2),
NIRC].
Financial Incapacity. The offer to compromise based on
financial incapacity may be accepted upon showing that:
a. The corporation ceased operation or is already
dissolved. Provided, that tax liabilities corresponding
to the Subscription Receivable or Assets
distributed/distributable to the stockholders
representing return of capital at the time of cessation
of operation or dissolution of business shall not be
considered for compromise;
b. The taxpayer, as reflected in its latest Balance Sheet
supposed to be filed with the Bureau of Internal
Revenue, is suffering from surplus or earnings deficit
resulting to impairment in the original capital by at
least 50%;
Assets - Liabilities = NET WORTH
Ex.
100M - 50M = 50M
60M Orig. Capital
(10M) Earnings
Not compromisable. Because the
earnings deficit which is (10M) does not result to
impairment of original capital 60M to the extent
of at least 50%.
But if:
100M - 50M = 50M
100M Orig. Capital
(50M) Earnings
Compromisable. Because this time the
earnings deficit which is (50M) results to the
impairment of the original capital 100M to the
extent of at least 50%
c. The taxpayer is suffering from a networth deficit
(total liabilities exceed total assets);
Assets - Liabilities = NET WORTH
For this provision to apply, it must
result to a NEGATIVE NET WORTH or
INSOLVENCY
Ex.
100M - 200M = (100M) Negative Net Worth
d. The taxpayer is a compensation earner with no
other source of income and the familys gross
monthly compensation does not exceed
(P10,500/month if single; P21,000/month if married),

and that it appears that the taxpayer possesses no
other leviable/ distrainable assets, other than his
family home;
e. The taxpayer has been granted by the SEC or by any
competent tribunal a moratorium or suspension of
payments to creditors, or otherwise declared
bankrupt or insolvent. (Sec. 3, RR. 07-2001)
Minimum Compromise Rates (MCR) of any tax liability
a. In case of financial incapacity:
MCR = 10% of the basic assessed tax
b. Other cases:
MCR = 40% of the basic assessed tax [Sec.
204(A), 1997 NIRC]
Approval of the compromise by the Evaluation Board is
required when
a. the basic tax involved exceeds P1,000,000.00, or
b. the settlement offered is less than the MCR.
NOTE: The MCR may be less than the prescribed rates of
10% or 40%, as the case may be, provided it is approved by
the Evaluation Board (composed of the BIR Commissioner
and the four BIR Deputy Commissioners).
Cases which may be compromised:
1. Delinquent accounts
2. Cases under administrative protests
3. Civil tax cases being disputed before the courts
4. Collection cases filed in courts
5. Criminal violations, other than those already filed in
court or those involving criminal tax fraud; and,
GR: Criminal cases may be compromised
EXCEPTIONS:
Those already filed in court;
Those involving tax fraud (absolute
prohibition).
If case is still with the prosecutor, as a rule it cannot
be compromised unless the prosecutor approves the
compromise
6. Cases covered by pre-assessment notices but
taxpayer is not agreeable to the findings of the audit
office as confirmed by the review office. (Sec.2, Rev.
Reg. 7-2001)
Cases which may NOT be compromised:
1. Withholding tax cases;
- Because taxpayer is merely the tax
imposed is not the withholding agents
tax liability. Rather, it is his obligation
to remit.
- EXCEPTION: If withholding agent can
invoke provision of law that casts
doubt on whether or not he is really
liable and he has not withheld the tax,
he may offer compromise.
- EXCEPTION TO EXCEPTION: If he has
already withheld the tax, no longer
compromisable.
2. Criminal tax fraud cases whether or not filed in court;
3. Criminal violations already filed in court;
4. Delinquent accounts with duly approved schedule of
installment payments;
- The Government already has bested
right as to the scheduled payments.
5. Cases where final reports of reinvestigation or
reconsideration have been issued resulting to
reduction in the original assessment and the
taxpayer is agreeable to such decision.
- By giving his conformity to the revised
assessment, the taxpayer admits the
validity of the assessment and his
capacity to pay the same.
- If a revised FAN has been issued but
the taxpayer disagrees thereto, the
same is still compromisable.
6. Cases which become final and executory after final
judgment of a court, where compromise is
requested on the ground of doubtful validity of the
assessment (RR. 302002);
- If a judgment has become final and
executory but on ground of financial
incapacity, insolvency, receivership,
suspension of payment, etc. (ground is
not reasonable doubt), the case is still
compromisable.
7. Estate tax cases where compromise is requested on
the ground of financial incapacity of the taxpayer.
(RR. 302002)

Remedies in case the taxpayer refuses to abide by the
compromise:
1. Enforce the compromise
a. If it is a judicial compromise, it can be enforced
by mere execution. A judicial compromise is one
where a decision based on the compromise
agreement is rendered by the court on request
of the parties.
b. Any other compromise is extrajudicial and like
any other contract can only be enforced by court
action.
2. Regard it as rescinded and insist upon original
demand (Art. 2041, Civil Code).

ABATEMENT
Grounds for Abatement:
1. The tax or any portion thereof appears to be
unjustly or excessively assessed; [Sec. 204(B), 1997
NIRC].
a. When the filing of the return/payment is made at
the wrong venue;
b. When the taxpayers mistake in payment of his tax
is due to erroneous written official advice of a
revenue officer;
c. When the taxpayer fails to file the return and pay
the tax on time due to substantial losses from
prolonged labor dispute, force majeure, legitimate
business reverses, provided, however, the
abatement shall only cover the surcharge and the
compromise penalty and not the interest imposed
under Sec. 249 of the Code;
d. When the assessment is brought about or the
result of taxpayers non-compliance with the law
due to a difficult interpretation of said law.
e. When the taxpayer fails to file the return and pay
the correct tax on time due to circumstances
beyond his control, provided, however, the
abatement shall only cover the surcharge and the
compromise penalty and not the interest imposed
under Sec. 249 of the Code;
f. Late payment of the tax under meritorious
circumstances (ex. Failure to beat bank cut-off
time, surcharge erroneously imposed, etc.) (Sec. 2,
Rev. Reg. 13-2001)
2. The administration and collection costs involved do
not justify the collection of the amount due [Sec.
204(B), 1997 NIRC].
a. Abatement of penalties on assessment confirmed
by the lower court but appealed by the taxpayer to
a higher court
b. Abatement of penalties on withholding tax
assessment under meritorious circumstances
c. Abatement of penalties on delayed installment
payment under meritorious circumstances
d. Abatement of penalties on assessment reduced
after reinvestigation but taxpayer is still contesting
reduced assessment; and
e. Such other circumstances which the Commissioner
may deem analogous to the enumeration above.
(Sec. 3, Rev. Reg. 13-2001)
3. The Commissioner may also, even without a claim
therefor, refund or credit any tax where on the face
of the return upon which payment was made such
payment appears clearly to have been erroneously
paid (Sec. 229, 1997 NIRC)).
Distinction between Compromise and Abatement
COMPROMISE ABATEMENT
involves a reduction of the
taxpayers liability
the entire tax liability, interest,
surcharge or penalty of the
taxpayer is cancelled
Grounded on:
1. Reasonable doubt as to
validity of the claim against the
taxpayer exists
2. Financial position of the
taxpayer demonstrates a clear
inability to pay assessed tax
Grounded on:
1. The tax or any portion
thereof appears to be unjustly or
excessively assessed;
2. The administration and
collection costs involved do not
justify the collection of the
amount due.
3. Other meritorious cases.
1.
CIR is authorized to compromise or abate taxes.
However the power to compromise can be delegated by the CIR if
PNOC vs. CA, GR No. 109976 & 112800 (2005)
PNOC could not apply for a compromise under E.O. No. 44 because its
tax liability was not a delinquent account or a disputed assessment as
of 31 December 1985.
PNOC's tax liability could not be considered a delinquent account since
(1) it was not self-assessed, because the BIR conducted an investigation
and assessment of PNOC and PNB after obtaining information regarding
the non-withholding of tax from private respondent Savellano; and (2)
the demand letter, issued against it on 08 August 1986, could not have
been a deficiency assessment that became final and executory by 31
December 1985. The tax liability of PNB as withholding agent also did
not qualify for compromise under E.O. No. 44.
The BIR Commissioner's discretionary authority to enter into a
compromise agreement is not absolute and the CTA may inquire into
allegations of abuse thereof.

(a) the amount of basic taxes does not exceed P500,000 and (b)
minor criminal violations.

COMPROMISE PENALTY
Nature of Compromise Penalty
A compromise penalty is a certain amount of money
which the taxpayer pays to compromise a tax
violation. This is paid in lieu of a criminal prosecution.
The CIR has no power to impose and collect the so-
called compromise penalties in the absence of a
compromise agreement validly entered into between
the taxpayer and the CIR.
Distinction between Compromise and Compromise
Penalty
COMPROMISE COMPROMISE PENALTY
an amount of money paid by the
taxpayer to settle his civil
liability for tax assessed
an amount of money paid by the
taxpayer to compromise a tax
violation which may be subject
of a criminal prosecution
the basis of the amount paid is
the basic tax assessed
based on gross sales or receipts
during the year or the tax due
minimum amount is limited to
the amount prescribed by the
Government
the amount set depends on the
nature of the tax violation and
the minimum amount is
generally note less than P 1,000

XXII. CIVIL ACTION
For tax remedy purposes, these are actions instituted by
the government to collect internal revenue taxes. It
includes filing by the government with the probate court
claims against the deceased taxpayer.
A. FEATURES
1. Actions or proceedings instituted in behalf of the
Government under the authority of the Tax Code
or other law enforced by the CIR shall be
brought in the name of the Government of the
Philippines and shall be conducted by the legal
officers of the BIR;
2. But no civil action for the recovery of taxes or
the enforcement of any fine, penalty or
forfeiture shall be filed without the approval of
the CIR;
3. The filing of a civil case is tantamount to a denial
of the request for reinvestigation (remedy is to
file with the CTA).
B. TWO WAYS OF ENFORCING CIVIL TAX LIABILITY
(1) By filing a civil case for the collection of a sum of
money with the proper court; and
(2) By filing an answer to the petition for review
filed by the taxpayer with the CTA.
C. WHERE TO FILE
1. Court of Tax Appeals where the principal
amount of taxes and fees, exclusive of charges
and penalties claimed is 1M and above.
2. Regular Courts where the principal amount of
taxes and fees, exclusive of charges and
penalties claimed is less than 1M. (Sec. 7, RA No.
9282)
D. WHEN TO FILE
1. The taxpayer fails to file an administrative
protest with the CIR within 30 days from receipt
of the FAN; or
2. Failure of the taxpayer to appeal the decision to
the CTA within 30 days from receipt of the
decision; or
3. When the BIR does not rule on the taxpayers
protest within 180 days and the taxpayer fails to
file an appeal within 30 days from the
expiration of the 180-day period.
E. WHEN THE CIR IS NOT REQUIRED TO RULE ON A
PENDING PROTEST BEFORE FILING A COLLECTION
CASE

Republic vs. Liam Tian Teng Sons, Inc. GR No. L-21731 (1966)
Nowhere in the Tax Code is the CIR required to rule first on a taxpayer's
request for reinvestigation before he can go to court for the purpose of
collecting the tax assessed.
Section 305 of the same Code withholds from all courts, except the CTA
under Section 11 of Republic Act 1125, the authority to restrain the
collection of any national internal-revenue tax, fee or charge, thereby
indicating the legislative policy to allow the CIR much latitude in the
speedy and prompt collection of taxes.
The CIR is authorized to collect delinquent internal revenue taxes either
by distraint and levy or by judicial action or both simultaneously. The only
requisite before he can collect the tax is that he must first assess the
same within the time fixed by law. And in the case of a false or
fraudulent return with intent to evade the tax or of a failure to file a
return, a proceeding in court for the collection of such tax may be begun
without assessment.

XXIII. CRIMINAL ACTION
A. FEATURES
1. Actions or proceedings instituted in behalf of the
Government under the authority of the Tax Code
or other law enforced by the BIR shall be
brought in the name of the Government of the
Philippines and shall be conducted by the legal
officers of the BIR;
2. But no criminal action for the recovery of taxes
or the enforcement of any fine, penalty or
forfeiture shall be filed without the approval of
the CIR;
3. The acquittal of the taxpayer in a criminal action
does not necessarily result in the exoneration of
the said taxpayer from his civil liability to pay
taxes;
4. Subsidiary imprisonment in cases of non-
payment of the fine due to taxpayers insolvency
BUT not for the failure to pay the tax due.

B. PURPOSE
Although tax laws are civil and not penal in nature,
the tax code provides for criminal violations for the
following purpose/s:
Primary: To enforce the statutory penalties as
found in the tax code.
Secondary: To penalize the taxpayer for his non-
compliance with the tax laws; To collect the tax
liability.
C. WHERE TO FILE
1. Court of Tax Appeals in cases of criminal
offenses of the Tax Code or other tax laws where
the principal amount of taxes and fees, exclusive
of other charges and penalties is 1M and above.
2. Regular Courts if the principal amount is less
than 1M.
3. RTC in cases where the tax liability cannot be
measured or there is no pecuniary estimation of
the liability.
D. WHEN TO FILE
- All violations of any [penal] provision of the Tax
Code shall prescribe after five (5) years.
- Prescription shall begin to run from the day of
the commission of the violation of the law, and if
the same be not known at the time, from the
discovery thereof and the institution of judicial
proceedings for its investigation and
punishment.
Note: When the civil action arising out of a
tax delinquency is extinguished by prescription,
considering that under the law, the Government has
only five years from date of assessment of tax within
which to collect the tax, it is still possible for such tax
to be collected by criminal action inasmuch as actions
of this kind prescribe only after the lapse of five years
counted from the discovery of the crime and the
institution of proceedings for its investigation and
punishment.
E. CIVIL LIABILITY IN CRIMINAL CASES
- If corporation, partnership or any other entity
that is not a natural person, liability shall be
imposed on the persons responsible.
- In case the taxpayer is acquitted in a criminal
action, it does not necessarily result to the
exoneration of the taxpayer from his liability to
pay taxes.
Lucas G. Adamson vs. CA GR No. 120935 & 124557 (2009)
When fraudulent tax returns are involved as in the cases at bar, a
proceeding in court after the collection of such tax may be begun
without assessment.
Before an assessment is issued, there is, by practice, a pre-assessment
notice sent to the taxpayer. In contrast, the criminal charge is filed
directly with the DOJ. Thereafter, the taxpayer is notified that a criminal
case had been filed against him, not that the commissioner has issued an
assessment. It must be stressed that a criminal complaint is instituted
not to demand payment, but to penalize the taxpayer for violation of the
Tax Code.
Here, upon investigation of the examiners of the BIR, there was a
preliminary finding of gross discrepancy in the computation of the capital
gains taxes due from the sale of two lots of AAI shares, first to APAC and
then to APAC Philippines, Limited. The examiners also found that the
VAT had not been paid for VAT-liable sale of services for the third and
fourth quarters of 1990. Arguably, the gross disparity in the taxes due
and the amounts actually declared by the private respondents
constitutes badges of fraud.
In Ungab v. Cusi, the SC ruled:
An assessment of a deficiency is not necessary to a criminal
prosecution for willful attempt to defeat and evade the
income tax. A crime is complete when the violator has
knowingly and willfully filed a fraudulent return, with intent
to evade and defeat the tax. The perpetration of the crime is
grounded upon knowledge on the part of the taxpayer that
he has made an inaccurate return, and the government's
failure to discover the error and promptly to assess has no
connections with the commission of the crime.

- The subsequent payment of the civil liability by
payment or prescription does not extinguish the
taxpayers criminal liability.
F. THE JUDGMENT SHALL NOT ONLY IMPOSE THE
PENALTY BUT SHALL ALSO ORDER THE PAYMENT OF
THE TAXES SUBJECT OF THE CRIMINAL CASE AS
FINALLY DECIDED BY THE CIR (Sec. 205, NIRC)
- Two fold purpose of the criminal case.

XXIV. DISTRAINT
A. DEFINITION
Distraint is a remedy whereby the collection of
delinquent taxes is enforced on the goods, chattels or
effects and other personal property of whatever
character of the taxpayer, including stocks and other
securities, debts, credits, bank accounts and interests
in and rights to personal property (Sec. 205[a], NIRC).
B. FEATURES
1. Summary administrative enforcement remedy
enforced on personal property;
2. Amount of tax involved must exceed P100;
3. No forfeiture is allowed to the government;
4. No right of redemption is allowed to the
taxpayer;
5. The remedy may be repeated if necessary until
the full amount of tax delinquency due and all
expenses is/are collected.
C. KINDS OF DISTRAINT (and its requisites)
1. ACTUAL DISTRAINT
- Resorted to when at the time required for
payment, a person fails to pay his
delinquent tax obligation (Sec. 207[A],
NIRC). Distraint consists in the actual
seizure and taking possession of personal
property of the taxpayer.
- Requisites:
a. There is delinquency, and delinquency
can only happen if there is a demand
for payment;
b. There is failure to pay the tax on time;
and
c. The distraint must be made within five
(5) years from FAN.
2. CONSTRUCTIVE DISTRAINT
- Issued where no actual tax delinquency of
the taxpayer is necessary before the same
is resorted to by the Government.
- The remedy of constructive distraint may be
availed of in the following instances:
a. Taxpayer is delinquent
b. The taxpayer is retiring from any
business subject to tax;
c. He intends to leave the Philippines;
d. He removes his property therefrom;
e. Taxpayer hides or conceals his
property;
f. He performs any act tending to
obstruct the proceedings for collecting
the tax due or which may be due from
him (Sec. 206, NIRC)
ACTUAL DISTRAINT CONSTRUCTIVE DISTRAINT
Made only on the property of a
delinquent taxpayer
Made on the property of any
taxpayer, whether delinquent or
not
There is taking of possession
The taxpayer is merely
prohibited from disposing of his
property
Effected by leaving a list of
distrained property or by service
of a warrant of distraint or
garnishment
Effected by requiring the
taxpayer to sign a receipt of the
property or by the revenue
officer preparing and leaving a
list of such property
An immediate step for collection
of taxes
Not necessarily so
Both
Are summary remedies for the collection of taxes;
NOTE: Refer only to personal property; and cannot be availed of
where the amount of the tax involved is not more than P100

D. PROCEDURE IN EFFECTING DISTRAINT
`
Either by the CIR or his duly authorized representative; or by the
Revenue District Officer

Commencement of distraint proceedings

With respect to:
1. Personal property
1. upon the owner of the goods, chattels, or other personal
property; or
2. upon the person from whose possession such properties
are taken.
2. Stocks and other securities
(a) upon the taxpayer; and
(b) upon the president, manager, treasurer or other
responsible officer of the corporation, company or
association which issued the said stock and securities.
3. Bank accounts shall be garnished by serving a warrant of
distraint
(a) upon the taxpayer; and
(b) upon the president, manager, treasurer, or other
responsible officer of the bank.
Note: Upon receipt of the warrant of distraint, the bank shall turn
over to the Commissioner so much of the bank accounts as may be
sufficient to satisfy the claim of the government.
4. Debts and credits
(a) persons owing or having in his possession the debts;
(b) or under his control such credits; or
(c) upon his agent.
Note: The warrant of distraint shall be sufficient authority to the
person owing the debts or having in his possession or under his
control any credits belonging to the taxpayer to pay to the
Commissioner the amount of such debts or credits.

Notice specifying the time and place of sale and the articles
distrained. The posting shall be made in not less than two (2) public
places in the city or municipality where the distraint is made. The
time shall not be less than 20 days after notice to the owner or
possessor of the property. One place for posting of such notice is at
the Office of the Mayor of such city or municipality.

Sale must be made at a public auction to the highest bidder.
Any residue over and above what is required to pay the entire claim,
including expenses shall be returned to the owner of the property
sold.
If at any time prior to the consummation of the sale, all proper
charges are paid to the officer conducting the sale, the goods or
effects distrained shall be restored to the owner (Sec. 210, NIRC).
The Government shall purchase the property in the amount equal to
the tax liability in case:
The amount of bid is not equal to the amount of tax;
The amount of bid is very much less than the FMV of
the articles offered for sale; or
There is no bidder.
Note: A warrant of distraint may be issued during the pendency
of a protest to a FAN. The issuance is tantamount to a denial of
protest in which case the taxpayer may appeal to the CTA within
thirty (30) days from receiving the warrant.

PROCEDURE FOR CONSTSTRUCTIVE DISTRAINT

CIR shall require the taxpayer or any person having possession or
control of such property to
(a) sign a receipt covering the property distrained and
(b) obligate himself to
1. preserve the same intact and unaltered and
2. not to dispose of the same in any manner whatsoever
without the express authority of the Commissioner of
Internal Revenue.
Service of Warrant of Distraint (Sec. 208)
Taxpayer must sign receipt

Posting of Notice (Sec. 209, NIRC)

Sale of Property Distrained

Taxpayers obligation to preserve

If the taxpayer or person in possession of the property refuses or
fails to sign the receipt referred to, the revenue officer effecting the
constructive distraint shall (a) proceed to prepare a list of such
property and (b) in the presence of two (2) witnesses leave a copy
thereof in the premises where the property distrained is located,
after which the said property shall be deemed to have been placed
under constructive distraint.

XXV. LEVY
A. DEFINITION
Levy refers to the act of seizure of real property in
order to enforce the payment of taxes. The property
may be offered in a public sale, if after seizure, the
taxes are not voluntarily paid.
B. FEATURES
1. Summary administrative enforcement remedy
enforced on real property
2. Amount of tax involved must exceed P100
3. Forfeiture is allowed to the Government
4. Right of redemption is allowed to the taxpayer
5. May be made before, simultaneously or after
distraint
6. The remedy may be repeated if necessary until
the full amount of tax delinquency due and all
expenses is/are collected.
C. PROCEDURE IN EFFECTING A LEVY

Preparation of a duly authenticated certificate containing:
i. description of the property levied;
ii. name of the taxpayer, and
iii. the amounts of tax and penalty due from him. This certificate
shall operate with the force of a legal execution throughout the
Philippines (Sec. 207B, 1997 NIRC).

Service of written notice to:
a. the delinquent taxpayer; or
b. if he is absent from the Philippines, to his agent or manager of
the business in respect to which the liability arose; or
c. to the occupant of the property.
d. the proper Register of Deeds shall also be notified of the levy
(Sec. 207B, 1997 NIRC).

The advertisement shall contain:
1. the amount of tax and penalties due;
2. name of the taxpayer against whom taxes are levied;
3. short description the property to be sold.
The advertisement shall be made within 20 days after the levy, and
the same shall be for a period of at least 30 days. It shall be
effectuated by:
a. posting a notice at the main entrance of the municipal
building or city hall and in a public and conspicuous
place in the barrio or district in which the real
property lies; and
b. by publication once a week for 3 weeks in a
newspaper of general circulation in the municipality
or city where the property is located (Sec. 213, CTRP).

At any time before the day fixed for the sale, the taxpayer may
discontinue all proceedings by paying the taxes, penalties and
interest.
Prepare Certificate of Levy
Advertisement of the Time and Place of
Sale

Remedy when taxpayer didnt sign
receipt
Service of Notice
Sale

In case the proceeds of the sale exceeds the claim and cost of sale,
the excess shall be turned over to the owner of the property.
D. REDEMPTION OF THE PROPERTY SOLD
Within 1 year from the date of sale, the property may
be redeemed by the delinquent taxpayer or anyone
from him, upon payment of the taxes, penalties and
interest thereon from the date of delinquency to the
date of sale, together with interest on purchase price
at 15% per annum from the date of sale to the date of
redemption. (Sec. 214, NIRC).

DISTRAINT VS. LEVY

DISTRAINT LEVY

Refers to personal property

Refers to real property

Forfeiture by the government
is not provided

Forfeiture is authorized

The taxpayer is not given the
right of redemption with
respect to distrained personal
property.

The right of redemption is
granted in case of real
property levied upon and sold,
or forfeited to the
government.
Both
Are summary remedies for the collection of taxes; and
Cannot be availed of where the amount of the tax involved is
not more than P100

XXVI. FORFEITURE
A. DEFINITION
Forfeiture is the divestiture of property without
compensation, in consequence of a default or
offense.
B. PROPERTY SUBJECT OF FORFEITURE
1. Real Property
2. Personal Property
Articles or properties or any production
materials used in the unlicensed production
of exciseable articles;
Exciseable articles which have been paid of
excise taxes and yet still retained in the
production or warehouse area;
Those which have not passed for customs
the proper procedure before claiming the
property or goods imported.
C. MANNER OF ENFORCEMENT
a. In case of personal property The forfeiture of
chattels and removable fixtures of any sort is
enforced by seizure and sale or destruction of
the specific forfeited property.
b. In case of real property The forfeiture of real
property is enforced by a judgment of
condemnation and sale in a legal action or
proceeding, civil or criminal, as the case may
require.
c. In case of distilled spirits, liquors, cigars,
cigarettes manufactured, products of tobacco
and apparatus used for their production Upon
forfeiture, may be destroyed by order of the
Commissioner where the sale may be injurious
to public health or prejudicial to law
enforcement.
d. Other articles subject to excise tax which have
been manufactured or removed in violation of
the Code, dies for printing or making fake
revenue stamps and labels Upon forfeiture
may be sold or destroyed at the discretion of
the Commissioner. Forfeited property shall not
be destroyed until at least 20 days from seizure.
D. EFFECT OF FORFEITURE
The effect is to transfer the title to the specific thing
from the owner to the government. All the proceeds
in case of a sale go to the coffers of the government.
In seizure for the enforcement of a tax lien, the
residue, after deducting the tax liability and expenses
CIR vs. UCPB, GR No. 179063 (2009)
For purposes of reckoning the one-year redemption period in the case
of individual mortgagors, or the three-month redemption period for
juridical persons/mortgagors, the same shall be reckoned from the
date of the confirmation of the auction sale which is the date when the
certificate of sale is issued.
The CIR argues that he has the more reasonable position: the
redemption period should be reckoned from the date of the auction sale
for; otherwise, the taxing authority would be left at the mercy of the
executive judge who may unnecessarily delay the approval of the
certificate of sale and thus prevent the early payment of taxes. But the
Supreme Court had occasion under its resolution in Administrative
Matter 99-10-05-0 to rule that the certificate of sale shall issue only
upon approval of the executive judge who must, in the interest of
fairness, first determine that the requirements for extrajudicial
foreclosures have been strictly followed
Here, the executive judge approved the issuance of the certificate of
sale to UCPB on March 1, 2002. Consequently, the three-month
redemption period ended only on June 1, 2002. Only on this date then
did the deadline for payment of CWT and DST on the extrajudicial
foreclosure sale become due.

will go to the taxpayer (Bank of the Phil. Island vs.
Trinidad, GR No. 16014, October 4, 1941).

XXVII. SUSPENSION OF BUSINESS OPERATIONS IN
VIOLATION OF VAT LAWS (Sec. 115, NIRC)
A business may be temporarily suspended for a period of
not less than 5 days for any of the following violations:
1. Of a VAT-registered person
a. Failure to issue receipts or invoices;
b. Failure to file a VAT return;
c. Understatement of taxable sales or
receipts by 30% or more of his correct
taxable sales or receipts for the taxable
quarter.
2. Failure of any person to register as required
under the Tax Code

XXVIII. ADDITIONS TO THE TAX DUE (Sec. 247-252,
NIRC)
These are increments to the basic tax incident due to the
taxpayers non-compliance with certain legal
requirements.
A. KINDS OF ADDITIONS TO THE TAX
1. CIVIL PENALTY OR SURCHARGE
The payment of the surcharge is mandatory and
the CIR is not vested with any authority to waive
or dispense with the collection thereof.
25% Civil Penalty or Surcharge
a. Failure to file any return and pay the tax
due thereon; or
b. filing a return with an internal revenue
officer other than those with whom the
return is required to be filed; or
c. Failure to pay the deficiency tax within the
time prescribed for its payment in the
notice of assessment; or
d. Failure to pay the full or part of the amount
of tax shown on any return or the full
amount of tax due for which no return is
required to be filed, on or before the date
prescribed for its payment. (Sec. 248)
50% Civil Penalty or Surcharge
The 50% surcharge is not a criminal penalty but a
civil or administrative sanction provided
primarily as a safeguard for the protection of the
State revenue and to reimburse the Government
for the heavy expense of investigation and the
loss resulting from the taxpayers fraud (Castro
vs. CIR, L-12174, Apr. 26, 1962)
a. In case of willful neglect to file the return
within the period prescribed by the Code,
or
will not apply in case a taxpayer,
without notice from the
Commissioner, or his duly authorized
representative, voluntarily files the
said return (only 25% shall be
imposed)
50% surcharge shall be imposed in
case the taxpayer files the return only
after prior notice in writing from the
Commissioner or his duly authorized
representative (Sec. 4.2, Rev. Reg. 12-
99)
b. in case a false or fraudulent return is
willfully made
Prima Facie Evidence
substantial underdeclaration
(exceeding 30% of that declared) of
taxable sales, receipts or income,
or a substantial overstatement
(exceeding 30% of actual deductions)
of deductions (Sec. 248)
2. 20% INTEREST (per annum)
The interest shall be computed only on the basic
deficiency tax (surcharge is not included in the
computation).
a. Deficiency Interest
Any deficiency in the tax due shall be
subject to the interest of 20% per annum
which shall be assessed and collected from
the date prescribed for its payment until
the full payment thereof (Sec. 249[B],
NIRC).
b. Delinquency Interest In case of failure to
pay:
The amount of the tax due on any
return required to be filed; or
The amount of the tax due for which
no return is required; or

A deficiency tax, or any surcharge or
interest thereon on the due date
appearing in the notice and demand of
the CIR (Sec. 249[C], NIRC).
c. Interest of Extended Payment An interest
of 20% p.a. shall be assessed and collected
in the following cases:
When a taxpayer elects to pay the tax
on installment but fails to pay the tax
or any instalment thereof on or before
the date prescribed for its payment;
Where the CIR has authorized an
extension of time within which to pay
a tax or a deficiency tax or any part
thereof (Sec. 249[D], NIRC).
3. COMPROMISE PENALTY
4. OTHER CIVIL PENALTIES AND ADMINISTRATIVE
FINES
The Government can impose administrative fines
and penalties for specific and different
violations.
Example of violations:
Failure to file certain information
returns (Sec. 250, NIRC)
Failure of a Withholding Agent to
collect and remit tax (Sec. 251, NIRC).
Failure of a Withholding Agent to
refund excess withholding tax (Sec.
252, NIRC).
Failure to register on time.
Failure to file an ITR during an income
tax holiday (liable for penalties but not
for surcharge or interest because there
is no basis for tax liability; taxpayer is
on income tax holiday)
In the foregoing examples, the erring taxpayer
will be subjected to fines or penalties but the
penalties are not increments to the basic tax
due.
B. KINDS OF NON-COMPLIANCE WHICH WILL ENTAIL
INCREMENTS TO THE BASIC TAX DUE
1. Refusal to pay taxes
2. Failure to pay the full amount of taxes
3. Failure to pay taxes on time
4. Filing a return in the wrong venue
5. Violations of taxing provisions
6. Others

XXIX. OTHER MATTERS
A. CRIMES AND OFFENSES
Should the Government decide to file a criminal case
for violation of the tax code, it can be against:
1. The Principal Any person convicted of a crime
penalized by the tax code;
2. Any person who wilfully aids or abets in the
commission of a crime penalized in the tax code;
3. Any person who causes the commission of any
such offense by another.
B. PRESCRIPTION
Violations of the Code shall prescribe after five (5)
years, which shall run from
the commission or violation of the law
or if the same is not known at the time
from discovery thereof AND
the institution of judicial proceedings
for its investigation and punishment.
It is as if it is imprescriptible because:
- The Government may allege the
violation as a later discovery by the
internal revenue officers; or
- It would depend on the institution as
well of the judicial proceedings
EXAMPLE:
The Government denies knowledge of a criminal
offense committed by a certain taxpayer. It alleges
that it has only recently discovered the crim. So that if
the crime was discovered Jan. 2, 2012 but no judicial
proceedings have been instituted, the 5 year
prescriptive period would not start to run yet.
Note: For the prescriptive period to
commence, there must be commission or discovery of
that commission AND the institution of judicial
proceedings.
C. INFORMERS REWARD
Requisites:

1. Person is not an internal revenue official or
employee, or other public official or employee,
or his relative within the 6
th
degree of
consanguinity;
- Whether you have a relative who is an
IRO but not under the same tax
jurisdiction as you (i.e., youre from
Cebu, your relative is an officer in
Manila), the law does not distinguish,
you are still disqualified to receive the
reward.
- All public officials who may have
acquired information in the course of
duty or service, whether they have
retired or are still in service, can be an
informant but they are not qualified to
receive the reward.
2. Voluntarily gives definite and sworn
information:
Not yet in the possession of BIR;
Leading to discovery of fraud;
Resulting in:
- The recovery of revenues,
surcharges and fees; and/or
- Conviction of the guilty party
Not refer to a case already pending or
previously investigated or examined by
the CIR or his agents or the SOF or his
agents.
Monetary Award For:
A. For violations of the NIRC, a reward of 10% of
the revenues, surcharges, or fees recovered
and/or fine or penalty imposed and collected or
P 1 M per case, whichever is lower shall be given
to:
1. any person who voluntarily gives definite
and sworn information not yet in the
possession of the BIR leading to the
discovery of fraud upon the Internal
Revenue Laws and/or any violations thereof
2. an informer where the offender has offered
to compromise the violation of law
committed by him and his offer has been
accepted and collected by the CIR .
B. For the discovery and seizure of smuggled
goods
- a reward of 10% of the FMV of the
smuggled and confiscated goods or P 1 M
per case, whichever is lower, shall be given
to persons instrumental in the discovery
and seizure of such smuggled goods.
Taxability of the Reward:
The cash rewards of informers shall be subject to
income tax, collected as a final withholding tax, at a
rate of ten percent (10%).


Flowchart: Procedures for Distraint and Levy-NIRC
START
RCO - Revenue Collection Officer RDO - Revenue District officer
RRD - Revenue Regional Director LGU- Local Government Unit
Commissioner seizes sufficient
personal property to satisfy the
tax, charge & expenses of seizure
(Sec. 207 (A))
Delinquent tax
more than 1M?
Yes
Person owing any
delinquent tax to
fails to pay w/in
the time required
RDO seizes sufficient
personal property to satisfy
the tax, charges & expenses
of seizure (Sec. 207 (A))
No
Property may be resold and
the net proceeds shall be
remitted to the National
Treasury as internal revenue.
(Sec. 212)
RDO posts notice in at least 2 public
places in the municipality/city where
the distraint is made. One place of
posting must be at the mayors office.
Time of sale shall not be less than 20
days after the notice (Sec. 209)
Distraining Officer accounts for
the goods distrained (Sec. 208)
Goods shall be restored to owner,
if charges are paid (Sec. 210)
Officer
conducts
public auction
Bid less than
amount of tax/
FMV of goods
distrained?
Commissioner may purchase
property for the National
Government (Sec. 212)
Yes
No, bid just right
Officer sells the goods to the
highest bidder for cash or
with theCommissioners
approval, through commodity/
stock exchanges. (Sec. 209)
Excess of proceeds over the
entire claim, shall be returned
to the owner. No charge shall
be imposed for the services of
the officer (Sec. 209)
W/in 2 days after
the sale, officer
shall report to the
Commissioner.
(Sec. 211)
W/in 5 days after sale,
distraining officer shall enter
return of proceedings in the
records of RCO, RDO and
RRD (Sec. 213)
Real property may be levied
on before, simultaneously, or
after the distraint of personal
property (207 (B))
Internalrevenueofficer,
designated by the Commissioner,
shall prepare a certificate with the
force of a nationwide legal
execution (Sec. 207 B)
Levy shall be affected by writing upon said certificate a
description of the property. Notice of the levy shall be
served upon the Register of Deeds of LGU where the
property is located and upon the owner (Sec. 207 B)
Sale shall be held at the
main entrance of the
municipal/city hall, or on the
premises of the levied
property. (Sec. 213)
W/n 20 days after levy, officer shall post
notice at the main entrance of the
municipal/city hall & in public place in the
barrio/district where the real estate lies for
at least 30 days by AND publish it once a
week for 3 weeks. Owner may prevent
sale by paying all charges (Sec. 213)
W/n 10 days after receipt of the
warrant, levying officer shall
report to the Commissioner who
shall have the authority to lift the
warrant of levy (Sec. 207 B)
W/n 1 year from forfeiture,
the taxpayer, may redeem
said property by paying full
amount of the taxes and
charges (Sec. 215)
W/n 2 days, he shall make a return
of the forfeiture. Register of Deeds,
upon registration of forfeiture shall
transfer title to the Government w/o
court order. (Sec. 215)
Officer conducting the
sale shall forfeit the
property to the
Government (Sec. 215)
Yes No bidder or
highest bid
insufficient?
No, bid ok
Excess of proceeds
of the sale over claim
and cost of sale shall
be turned over to the
owner (Sec. 213)
W/n 5 days after the sale,
levying officer shall enter
return of the proceedings
upon the records of the RCO,
RDO and RRD (Sec. 213)
W/n 1 year from sale, the
owner may redeem, by paying
to the RDO the amount of the
taxes, penalties, and interest
thereon from the date of
delinquency to the date of sale,
and 15% per annum interest on
purchase price from the date
of purchase to the date of
redemption. (Sec. 214)
The Commissioner may,
after 20 days notice, sell
property at public auction
or at private sale with
approval of the SoF.
Proceedsshallbe
deposited with the National
Treasury (Sec. 216)
Owner shall not be
deprivedofthe
possession and shall
be entitled to the
fruits until 1 year
expires (Sec. 214)
Levy and distraint
may be repeated until
the full amount due,
and all expenses are
collected. (Sec. 217)

COURT OF TAX APPEALS

I. APPLICABLE LAW
A. REPUBLIC ACT NO. 1125
The Law Creating the Court of Tax Appeals
B. REPUBLIC ACT NO. 9282
An Act Expanding the Jurisdiction of the Court of Tax
Appeals, Elevating its Rank to the Level of a Collegiate
Court with Special Jurisdiction and Enlarging its
Membership
C. REPUBLIC ACT NO. 9503
An Act Enlarging the Organizational Structure of the
Court of Tax Appeals

II. REPUBLIC ACT NO. 1125
A. CREATION OF THE CTA
1. To have a centralized body well-versed in tax
matters, a regular court forming part of the
judicial system which would exclusively hear and
determine tax cases;
2. To prevent delay in their disposition in view of
the backlog of civil and criminal cases in the
dockets of the regular courts.
B. NATURE OF THE CTA
The CTA is a judicial (not merely an
administrative) body.
It is a court of special jurisdiction and can only
take cognizance of such matters as are clearly
within its jurisdiction.
It is not strictly governed by the technical rules
of evidence.

III. REPUBLIC ACT NOs. 9282 & 9503
A. THE COURT OF TAX APPEALS AND ITS JUSTICES
1. Same level as the Court of Appeals
With the passage of RA 9282, decisions of the
CTA are no longer appealable to the CA.
Under the modified appeal procedure, the
decision of the CTA division may be appealed to
the CTA en banc.
2. Possess all the inherent powers of a Court of
Justice
The CTA shall have jurisdiction over both the civil
and criminal aspect of a tax case.
3. Consists of 1 Presiding Justice and 8 Associate
Justices who shall hold office during good
behaviour until they reach the age of 70 or
otherwise become incapacitated to discharge
the duties of their office unless sooner removed.
4. Disqualifications
a. No justice or other officer or employee of
the CTA shall intervene, directly or
indirectly, in the management and control
of any private enterprise which in any way
may be affected by the functions of the
Court.
b. Justices shall be disqualified from sitting in
any case on the same grounds under Rule
137, ROC.
c. No person who has once served in the CTA
in a permanent capacity shall be qualified to
practice as counsel before the court for a
period of 1 year from his retirement or
resignation.
5. Place of Office: Manila
B. HEARING THE CASES
En Banc
Quorum: 5 justices
Decision or resolution
- Affirmative vote of majority of justices
present in case of simple decisions,
not involving reversal or modification
of previously decided cases.
- Affirmative vote of 5 members for the
reversal or modification of an existing
decision.
TFS, Inc. vs. CIR, GR No. 166829 (2010)
It is settled that an appeal must be perfected within the reglementary
period provided by law; otherwise, the decision becomes final and
executory. However, as in all cases, there are exceptions to the strict
application of the rules for perfecting an appeal.
The SC continued that while x x x petitioners excuse of inadvertence or
honest oversight of counsel deserves scant consideration x x x strong
compelling reasons such as serving the ends of justice and preventing a
grave miscarriage may nevertheless warrant the suspension of the rules.

In 3 Divisions (each consisting 3 justices)
Quorum: 2 justices
Decision or resolution:
- Affirmative votes of 2 members

IV. JURISDICTION OF THE CTA
A. EXCLUSIVE APPELLATE JURISDICTION (to review by
appeal)
1. Decisions of the CIR in cases involving
Disputed assessment

Refunds of internal revenue taxes, fees or
other charges, penalties in relation thereto
Other matters arising under the Tax Code
and other laws administered by the BIR

NCH Philippines vs. CIR, CTA No. 6840 (2007)
This Court has acquired exclusive appellate jurisdiction over the case
when petitioner appealed on December 23, 2003 with this Court,
respondent's said Decision on Disputed Assessment. Thereafter,
respondent lost jurisdiction over the assessed deficiencies covered by
said Decision in view of the fact that petitioner has already perfected its
appeal. The respondent has no more authority to issue the Amendment
to the Formal Letter of Demand on February 16, 2004 covering the
same taxable year and the same type of taxes. Hence, said Amendment
to the Formal Letter of Demand is null and void and is no longer binding
to petitioner, as petitioner has already appealed said Decision on
Disputed Assessment of respondent to this Court.
Vda. De San Agustin vs. CIR, GR No. 138485 (2002)
Failure to first file a written claim for refund, not fatal to appeal.
The present action involves a disputed assessment'; because from the
time petitioner received the assessment showing deficiency estate
taxes, penalties and surcharge, the executor already protested and
refused to pay the same, questioning the correctness and legality of
such assessments; and that the petitioner paid the disputed
assessments under protest before filing his petition for review with the
Court a quo. To hold that the taxpayer has now lost the right to appeal
from the ruling on, the disputed assessment but must prosecute his
appeal under section 306 of the Tax Code, which requires a taxpayer to
file a claim for refund of the taxes paid as a condition precedent to his
right to appeal, would in effect require of him to go through a useless
and needless ceremony that would only delay the disposition of the
case, for the CIR would certainly disallow the claim for refund in the
same way as he disallowed the protest against the assessment. The law,
should not be interpreted as to result in absurdities.
CIR vs. Union Shipping Corp., GR No. 66160 (1990)
The Commissioner should always indicate to the taxpayer in clear and
unequivocal language what constitutes his final determination of the
disputed assessment.
There appears to be no dispute that petitioner did not rule on private
respondent's motion for reconsideration, private respondent was left in
the dark as to which action of the Commissioner is the decision
appealable to the Court of Tax Appeals. Had he categorically stated that
he denies private respondent's motion for reconsideration and that his
action constitutes his final determination on the disputed assessment,
private respondent without needless difficulty would have been able to
determine when his right to appeal accrues and the resulting confusion
would have been avoided.
Under the circumstances, the Commissioner of Internal Revenue, not
having clearly signified his final action on the disputed assessment,
legally the period to appeal has not commenced to run. Thus, it was only
when private respondent received the summons on the civil suit for
collection of deficiency income on December 28, 1978 that the period to
appeal commenced to run.
CIR vs. Isabela Cultural Corp., GR No. 135210 (2000)
The Final Notice Before Seizure cannot but be considered as the
commissioner's decision disposing of the request for reconsideration
filed by respondent, who received no other response to its request. Not
only was the Notice the only response received; its content and tenor
supported the theory that it was the CIR's final act regarding the request
for reconsideration. The very title expressly indicated that it was a final
notice prior to seizure of property. The letter itself clearly stated that
respondent was being given "this LAST OPPORTUNITY" to pay;
otherwise, its properties would be subjected to distraint and levy.
CIR vs. Hambrecht & Quist Phils., GR No. 169225 (2010)
The appellate jurisdiction of the CTA is not limited to cases which
involve decisions of the CIR on matters relating to assessments or
refunds.
The CTA law clearly bestows jurisdiction to the CTA even on other
matters arising under the National Internal Revenue Code. Thus, the
issue of whether the right of the CIR to collect has prescribed, collection
being one of the duties of the BIR, is considered covered by the term
other matters. The fact that assessment has become final for failure to
protest only means that the validity or correctness of the assessment
may no longer be questioned on appeal. However, this issue is entirely
distinct from the issue of whether the right to collect has in fact
prescribed.
The Court ruled that the right to collect has indeed prescribed since there
was no proof that the request for reinvestigation was in fact
granted/acted upon by the CIR. Thus, the period to collect was never
suspended.

2. Inaction by the CIR in cases involving
Disputed assessments
- The CIR has 180 days to decide on
disputed assessments. The CTA
acquires jurisdiction if within the 30
day period after the inaction of the
CIR, the case is elevated to it for
review.
Refunds of internal revenue taxes, fees or
other charges, penalties in relation thereto
- When the 2 year period for the filing
for a claim for refund is about to lapse
and there is no decision coming from
the CIR, the same may be elevated to
the CTA for review.
Other matters arising under the Tax Code
and other laws administered by the BIR
3. Decisions, orders or resolutions of the RTC in
local tax cases originally decided or resolved by
them in the exercise of their original jurisdiction
4. Decisions of the Commissioner on Customs in
cases involving
Liability for customs duties, fees, or other
money charges
Seizure
Detention
Release of property affected
Fines, forfeitures or other penalties in
relation thereto
Other matters arising under the Customs
Law or other laws administered by the BOC
5. Decisions of the Central Board of Assessment
Appeals (CBAA) in the exercise of appellate
jurisdiction over cases involving the assessment
and taxation of real property originally decided
by the provincial or city board of assessment
appeals
6. Decisions of the SOF on customs cases elevated
to him automatically for review from decisions
of the Commissioner on Customs which are
adverse to the Government
- Normally, decisions of the COC are
elevated directly to the CTA. However,
the SOF may intervene in special cases
where the COC will decide in favour of
the taxpayer, hence, adverse to the
government. In this case, the decisions
of the SOF on such matters are
thereafter cognizable under the CTA.
7. Decisions of the Secretary of Trade and Industry
in the case of non-agricultural product,
commodity or article, and the Secretary of
Agriculture in the case of agricultural product,
commodity or article, involving dumping and
countervailing duties under the Tariff and
Customs Code, and safeguard measures under
RA No. 8800, where either party may appeal
the decision to impose or not to impose said
duties
B. JURISDICTION OVER THE FOLLOWING CRIMINAL
CASES (Government may directly file said cases with
the CTA covering amounts within its exclusive and
original jurisdiction)
1. Exclusive ORIGINAL Jurisdiction over all criminal
offenses arising from:
Violations of the Tax Code, Tariff and
Customs Code and Other laws
administered by the BIR or the BOC, where
the principal amount of taxes and fees,
exclusive of charges and penalties claimed
is 1M and above.
2. Exclusive APPELLATE jurisdiction of:
Violations of the NIRC, Tariff and Customs
Code and Other laws administered by the
BIR and the BOC originally decided by the
regular court where the principal amount of
taxes and fees is less than 1M or no
specified amount is claimed.
Judgments, resolutions or orders of the
RTC in tax cases originally decided by them.
Judgment, resolutions or orders of the RTC
in the exercise of their appellate
jurisdiction over tax cases originally decided
by the MeTC, MTC and MCTC via a petition
for review.
C. JURISDICTION OVER THE FOLLOWING TAX
COLLECTION CASES
1. Exclusive Original Jurisdiction in tax collection
cases involving final and executory assessments
where the principal amount of taxes, fees,
exclusive of charges and penalties claimed is 1M
and above.
2. Exclusive Appellate Jurisdiction in tax collection
cases:
Judgments, resolutions or orders of the RTC
originally decided by them, via an appeal.

Judgments, resolutions or orders of the RTC
in the exercise of its appellate jurisdiction in
tax collection cases originally decided by
the MeTC, MTC, and MCTC, via a petition
for review.

V. INJUNCTION IN TAX COLLECTION
GR:
No court shall have the authority to grant an
injunction to restrain the collection of any internal
revenue tax, fee or charge imposed by the Tax Code.
EXCEPTION:
The CTA may suspend or restrain the collection
of the tax when in its opinion, the collection of the tax may
jeopardize the interest of the Government and/or the
taxpayer.

VI. APPEAL
A. APPEALABLE DECISION
1. The final action taken by the CIR or his deputies
with respect to the taxpayers liability;
2. The letter of denial where the CIR no only
demanded payment of the amount assessed but
wherein he also gave the warning that in the
event the taxpayer failed to pay the same, the
CIR would be constrained to enforce the
collection thereof by means of remedies
prescribed by law;
3. The filing of a judicial action for collection during
the pendency of an administrative protest,
constitutes a denial of the protest;
4. Inaction by the CIR of a protest or claim for
refund/credit.
B. WHO MAY APPEAL; PERIOD TO FILE AN APPEAL
Any party (person, association or corporation)
adversely affected by a decision, ruling or
inaction of the CIR, COC, SOF, Secretary of Trade
and Industry, Secretary of Agriculture, CBAA or
the RTC may file an appeal with the CTA:
(a) Within thirty (30) days from the
receipt of such decision or ruling; OR
(b) After the expiration of the period
fixed by law, in which case the
inaction shall be deemed a denial
C. MODE OF AN APPEAL
GR:
Appeal may be made by filing a Petition for
Review under a procedure analogous to that under
Rule 42 of the ROC which shall be heard by the CTA
division.
A party adversely affected by the decision, order
or resolution of the CTA division may file a motion for
reconsideration or new trial before the same division.
EXCEPTION:
Appeal with respect to the decision and rulings
of the CBAA and the RTC in the exercise of its
appellate jurisdiction, may be made by filing a
Petition for Review under a procedure analogous to
that under Rule 43 of the ROC which shall be heard
by the CTA en banc.
A party adversely affected by a resolution of a
CTA division on a motion for reconsideration or new
trial may file a petition for review with the CTA en
banc.
Note:
A decision of the CBAA is ALWAYS appealable to
the CTA en banc.
But a decision of the RTC may be appealed to the
CTA division or CTA en banc.
CTA division if appealed decision of the
RTC was made in the exercise of its original
jurisdiction.
CTA en banc if appealed decision of the
RTC was made in the exercise of its
appellate jurisdiction.

PROCEDURE

Party adversely affected by a decision or
inaction of the CIR, COC, SOF, SOTI, SOA,
CBAA or RTC
Appeal to the CTA division (Rule 42 of
ROC) or en banc (Rule 43 of ROC) within
30 days from receipt of decision or after
expiration of period fixed by law

VII. ORDER OF THE CTA
A. CTA RULING, ORDER OR DECISION FAVORABLE TO
THE NATIONAL GOVERNMENT
The Court shall issue an order authorizing the
BIR, through the CIR, to seize and distraint any
goods, chattels, or effects, and the personal
property, including stocks and other securities,
debts, credits, bank accounts and interests in
and rights to personal property.
The Court shall issue an order authorizing the
BIR, through the CIR to levy the real property of
such persons in sufficient quantity to satisfy the
tax or charge together with any increment
incident to delinquency.
B. THE REMEDIES OF SEIZURE, DISTRAINT AND LEVY
SHALL NOT BE EXCLUSIVE AND SHALL NOT
PRECLUDE THE COURT FROM AVAILING OF OTHER
MEANS UNDER THE RULES OF COURT

Within 15 days from notice, a party
adversely affected by a ruling, order or
decision of the CTA division may file a
Motion for Reconsideration or New Trial
before the same division
Appeal to the CTA en banc
By a party adversely affected by a
resolution of the CTA division on a
MFR or New Trial
Direct Appeal to the CTA en banc
from decisions and rulings of the
CBAA and the RTC in the exercise
of its appellate jurisdiction
Appeal to the SC via Petition for Review
on Certiorari (Rule 45 of ROC)
(interlocutory orders of the CTA are not
appealable)

Tax 2 Finals (Remedies To Cta)

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