TAX ATION

San Beda College of LAW – ALABANG

GENERAL PRINCIPLES
b.Regulation – As in the case of taxes levied on
I. Concepts, Nature and Characteristics of excises and privileges like those imposed in
Taxation and Taxes. tobacco or alcoholic products or amusement
places like night clubs, cabarets, cockpits, etc.
In the case of Caltex Phils. Inc. vs COA
Taxation Defined: (G.R. No. 92585, May 8, 1992), it was held that
taxes may also be imposed for a regulatory
As a process, it is a means by which the purpose as, for instance, in the rehabilitation and
sovereign, through its law-making body, raises stabilization of a threatened industry which is
revenue to defray the necessary expenses of the affected with public industry like the oil industry.
government. It is merely a way of apportioning
the costs of government among those who in c.Reduction of Social Inequality – this is
some measures are privileged to enjoy its made possible through the progressive system of
benefits and must bear its burdens. taxation where the objective is to prevent the
under-concentration of wealth in the hands of few
As a power, taxation refers to the inherent individuals.
power of the state to demand enforced
contributions for public purpose or purposes.
d.Encourage Economic Growth – in the realm
of tax exemptions and tax reliefs, for instance,
Rationale of Taxation - The Supreme Court
the purpose is to grant incentives or exemptions
held:
in order to encourage investments and thereby
“It is said that taxes are what we pay for
promote the country’s economic growth.
civilized society. Without taxes, the government
would be paralyzed for lack of the motive power
to activate and operate it. Hence, despite the e.Protectionism – in some important sectors of
natural reluctance to surrender part of one’s the economy, as in the case of foreign
hard-earned income to the taxing authorities, importations, taxes sometimes provide protection
every person who is able must contribute his to local industries like protective tariffs and
share in the running of the government. The customs.
government for its part is expected to respond in
the form of tangible and intangible benefits Taxes Defined
intended to improve the lives of the people and
enhance their moral and material values. The Taxes are the enforced proportional
symbiotic relationship is the rationale of contributions from persons and property levied by
taxation and should dispel the erroneous notion the law-making body of the State by virtue of its
that it is an arbitrary method of exaction by those sovereignty for the support of government and
in the seat of power. for public needs.
Taxation is a symbiotic relationship,
whereby in exchange for the protection that the Essential Characteristic of Taxes [ LEMP3S ]
citizens get from the government, taxes are
paid.” (Commissioner of Internal Revenue vs 1.It is levied by the law-making body of the
Allegre, Inc.,et al., L-28896, Feb. 17, 1988) State
The power to tax is a legislative power
Purposes and Objectives of Taxation which under the Constitution only Congress can
exercise through the enactment of laws.
1.Revenue – to provide funds or property with Accordingly, the obligation to pay taxes is a
which the State promotes the general welfare and statutory liability.
protection of its citizens.
2.It is an enforced contribution
2.Non-Revenue [PR2EP] A tax is not a voluntary payment or
donation. It is not dependent on the will or
contractual assent, express or implied, of the
a.Promotion of General Welfare – Taxation
person taxed. Taxes are not contracts but positive
may be used as an implement of police power in
acts of the government.
order to promote the general welfare of the
people. [see Lutz vs Araneta (98 Phil 148) and
Osmeňa vs Orbos (G.R. No. 99886, Mar. 31, 3.It is generally payable in money
1993)]

TAX ATION
San Beda College of LAW – ALABANG

Tax is a pecuniary burden – an exaction to a.It does not mean that only those who are able
be discharged alone in the form of money which to pay and do pay taxes can enjoy the privileges
must be in legal tender, unless qualified by law, and protection given to a citizen by the
such as RA 304 which allows backpay certificates government.
as payment of taxes. b.From the contributions received, the
government renders no special or commensurate
4.It is proportionate in character - It is ordinarily benefit to any particular property or person.
based on the taxpayer’s ability to pay. c.The only benefit to which the taxpayer is
entitled is that derived from his enjoyment of the
5.It is levied on persons or property - A tax privileges of living in an organized society
may also be imposed on acts, transactions, rights established and safeguarded by the devotion of
or privileges. taxes to public purposes. (Gomez vs Palomar, 25
SCRA 829)
6.It is levied for public purpose or purposes - d.A taxpayer cannot object to or resist the
Taxation involves, and a tax constitutes, a burden payment of taxes solely because no personal
to provide income for public purposes. benefit to him can be pointed out as arising from
the tax. (Lorenzo vs Posadas, 64 Phil 353)
7.It is levied by the State which has jurisdiction
over the persons or property. - The persons, 3.Lifeblood Theory
property or service to be taxed must be subject Taxes are the lifeblood of the government,
to the jurisdiction of the taxing state. being such, their prompt and certain availability
is an imperious need. (Collector of Internal
Revenue vs. Goodrich International Rubber Co.,
Theory and Basis of Taxation Sept. 6, 1965) Without taxes, the government
would be paralyzed for lack of motive power to
1.Necessity Theory activate and operate it.
Taxes proceed upon the theory that the
existence of the government is a necessity; that
it cannot continue without the means to pay its Nature of Taxing Power
expenses; and that for those means, it has the
right to compel all citizens and properties within 1.Inherent in sovereignty – The power of
its limits to contribute. taxation is inherent in sovereignty as an incident
In a case, the Supreme Court held that: or attribute thereof, being essential to the
Taxation is a power emanating from existence of every government. It can be
necessity. It is a necessary burden to preserve the exercised by the government even if the
State’s sovereignty and a means to give the Constitution is entirely silent on the subject.
citizenry an army to resist aggression, a navy to a.Constitutional provisions relating to the power
defend its shores from invasion, a corps of civil of taxation do not operate as grants of the power
servants to serve, public improvements designed to the government. They merely constitute
for the enjoyment of the citizenry and those limitations upon a power which would otherwise
which come with the State’s territory and be practically without limit.
facilities, and protection which a government is b.While the power to tax is not expressly
supposed to provide. (Phil. Guaranty Co., Inc. vs provided for in our constitutions, its existence is
Commissioner of Internal Revenue, 13 SCRA recognized by the provisions relating to taxation.
775). In the case of Mactan Cebu International
Airport Authority vs Marcos, Sept. 11, 1996, as an
2.The Benefits-Protection Theory incident of sovereignty, the power to tax has
The basis of taxation is the reciprocal duty been described as “unlimited in its range,
of protection between the state and its acknowledging in its very nature no limits, so that
inhabitants. In return for the contributions, the security against its abuse is to be found only in
taxpayer receives the general advantages and the responsibility of the legislative which imposes
protection which the government affords the the tax on the constituency who are to pay it.”
taxpayer and his property.
2.Legislative in character – The power to tax is
exclusively legislative and cannot be exercised by
Qualifications of the Benefit-Protection the executive or judicial branch of the
Theory: government.

TAX ATION
San Beda College of LAW – ALABANG

3.Subject to constitutional and inherent for which the taxing power may be used but the
limitations – Although in one decided case the degree of vigor with which the taxing power may
Supreme Court called it an awesome power, the be employed in order to raise revenue (I Cooley
power of taxation is subject to certain limitations. 179-181)
Most of these limitations are specifically provided
in the Constitution or implied therefrom while the •Constitutional Restraints Re: Taxation is
rest are inherent and they are those which spring the Power to Destroy
from the nature of the taxing power itself While taxation is said to be the power to
although, they may or may not be provided in the destroy, it is by no means unlimited. It is equally
Constitution. correct to postulate that the “power to tax is
not the power to destroy while the Supreme
Court sits,” because of the constitutional
Scope of Legislative Taxing Power [S2 A P K A restraints placed on a taxing power that violated
M] fundamental rights.
In the case of Roxas, et al vs CTA (April
1.subjects of Taxation (the persons, property or 26, 1968), the SC reminds us that although the
occupation etc. to be taxed) power of taxation is sometimes called the power
2.amount or rate of the tax to destroy, in order to maintain the general
3.purposes for which taxes shall be levied public’s trust and confidence in the Government,
provided they are public purposes this power must be used justly and not
4.apportionment of the tax treacherously. The Supreme Court held:
5.situs of taxation “The power of taxation is sometimes
6.method of collection called also the power to destroy. Therefore it
should be exercised with caution to minimize
Is the Power to Tax the Power to Destroy? injury to the proprietary rights of a taxpayer. It
must be exercised fairly, equally and uniformly,
In the case of Churchill, et al. vs lest the tax collector kill the ‘hen that lays the
Concepcion (34 Phil 969) it has been ruled that: golden egg’. And, in order to maintain the general
The power to impose taxes is one so public’ trust and confidence in the Government
unlimited in force and so searching in extent so this power must be used justly and not
that the courts scarcely venture to declare that it treacherously.”
is subject to any restriction whatever, except The doctrine seeks to describe, in an
such as rest in the discretion of the authority extreme, the consequential nature of taxation
which exercise it. No attribute of sovereignty is and its resulting implications, to wit:
more pervading, and at no point does the power a.The power to tax must be exercised with
of government affect more constantly and caution to minimize injury to proprietary rights of
intimately all the relations of life than through the a taxpayer;
exaction made under it. b.If the tax is lawful and not violative of any of
And in the notable case of McCulloch vs the inherent and constitutional limitations, the
Maryland, Chief Justice Marshall laid down the fact alone that it may destroy an activity or object
rule that the power to tax involves the power of taxation will not entirely permit the courts to
to destroy. afford any relief; and
According to an authority, the above c.A subject or object that may not be destroyed
principle is pertinent only when there is no power by the taxing authority may not likewise be
to tax a particular subject and has no relation to a taxed. (e.g. exercise of a constitutional right)
case where such right to tax exists. This opt-
quoted maxim instead of being regarded as a Power of Judicial Review in Taxation
blanket authorization of the unrestrained use of The courts cannot review the wisdom or
the taxing power for any and all purposes, advisability or expediency of a tax. The court’s
irrespective of revenue, is more reasonably power is limited only to the application and
construed as an epigrammatic statement of the interpretation of the law.
political and economic axiom that since the Judicial action is limited only to review
financial needs of a state or nation may outrun where involves:
any human calculation, so the power to meet 1.The determination of validity on the tax in
those needs by taxation must not be limited even relation to constitutional precepts or provisions.
though the taxes become burdensome or 2.The determination, in an appropriate case, of
confiscatory. To say that “the power to tax is the the application of the law.
power to destroy” is to describe not the purposes

clearly manifest therein that legislative intention example: real estate tax to exempt embraces indirect taxes. Macaraig. (Maceda vs privilege. community tax. the sum or sums to be raised. Acetylene Co.Administrative Feasibility – tax laws should taxes are not included. such refers to taxation) the tax faces on one person. sales tax. 2. 1987) requires taxation to be equitable and uniform.When the consumer or end-user of a government would be in keeping with the manufacturer product is tax-exempt. 2. just and effective cannot claim exemption from the payment of administration. the manufacturer be capable of convenient. the due date thereof and the time and 1. capitation or poll taxes – taxes of to the contractee.When the transaction itself is the one that is tax-exempt but through error the seller pays the II. 1963) A. The 1987 Constitution Internal Revenue et. and approximate the needs Important Points to Consider of government expenditure. vs Commissioner of (ability-to-pay principle). shifted or passed to another person.As to Burden or excises to be taxed.Indirect Taxes – taxes wherein the incidence taxpayer and is referred to as tax administration) of or the liability for the payment of the tax falls The two processes together constitute the on one person. but the burden thereof can be “taxation system”.17. property B. example: community tax et. Indirect 2.Levy – determination of the persons. L-19707.supra) examples: income tax. but the evident intention is to fixed amount upon all persons of a certain class exempt the contractor so that such contractor within the jurisdiction of the taxing power without may no longer shift or pass on any tax to the regard to the amount of their property or contractee. al. but must hold it in trust for Classification of Taxes buyer. or the engaging in an occupation.. Feb. Inc. the enjoyment of a sellers passed on to him.al. TAX ATION San Beda College of LAW – ALABANG Aspects of Taxation 1. the seller gets the refund. examples: income tax. then the buyer of the product or service sold has a right to 3. customs Basic Principles of a Sound Tax System [FAT] duties excise taxes on certain specific goods 1. L-10963. (American Rubber Co. Aug. value-added tax. exemption covers only those taxes for which such consumer or end-user is directly liable. case.As to Subject matter 3. examples: VAT.. L-31092. estate tax or donor’s tax .Direct Taxes – taxes wherein both the manner of levying and collecting taxes (strictly “incidence” as well as the “impact” or burden of speaking.Collection – consists of the manner of donor’s tax.Theoretical Justice – the tax burden should be the manufacturer might have passed on to him. 27.When the law granting tax exemption of a certain class within the jurisdiction of the specifically includes indirect taxes or when it is taxing power.. inc.Where the exemption from indirect tax is given 1. such principle. in proportion to the taxpayer’s ability to pay (Phil. neither can the consumer or buyer of the product demand the refund of the tax that 3. Classifications and Distinction tax and shifts the same to the buyer.Fiscal Adequacy – the sources of tax revenue should coincide with.Personal. (this includes payment by the 2. estate tax enforcement of the obligation on the part of those who are taxed. 1987) 2.Property Taxes – taxes on things or property 4.Excise Taxes – charges imposed upon the be reimbursed the amount of the taxes that the performance of an act. April 30. the contractor may claim tax occupations or businesses in which they may be exemption on the transaction (Commissioner of engaged in. Hence. percentage taxes. Neither an excess regarding Indirect Taxes: nor a deficiency of revenue vis-à-vis the needs of 1. Internal Revenue vs John Gotamco and Sons.

Examples: educational fund tax under Real Regressive Tax: tax the rate of which Property Taxation decreases as the tax base increases. estate tax.demand of sovereignty proprietorship E.e. bridge of the like.As to Purpose examples: national internal revenue taxes. example: real property taxes. it exists when there are more indirect taxes imposed than direct taxes. unit or number. Government. and other government government or private percentage taxes individuals or entities F.Progressive Tax – the rate or the amount of to amount imposed the cost of construction the tax increases as the amount of the income or or maintenance of the earning (tax base) to be taxed increases.generally intended to 1.General/Fiscal/Revenue – tax imposed for the general purposes of the government.Penalty vs Tax according to De Leon) Penalty – any sanctions imposed as a punishment for violations of law or acts deemed injurious.imposed by the examples: real estate tax. Government units.Special/Regulatory – tax imposed for special Regressive Tax purposes.Special Assessment vs Tax tax Special Assessment – an enforced proportional contribution from owners of lands especially or peculiarly benefited by public 1. wines. with regressive system of taxation. no limit as 3.Regressive Tax – the tax rate decreases as the individuals or entities amount of income or earning (tax base) to be taxed increases. customs Tax vs Toll duties 1.e.Ad Valorem Tax – tax based on the value of the article or thing subject to tax. Toll – sum of money for the use of Examples: taxes on distilled spirits. to achieve some social or A regressive tax. i.generally. donor’s used tax 4. to raise 2..imposed by the government government or private 2. 3. professional tax all taxes •Regressive System of Taxation vis-à-vis 2. 2.Mixed Tax – tax rates are partly progressive and partly regressive.amount depends on 1. VAT.National Tax – tax imposed by the National improvements.As to Scope or authority imposing the c. i.paid for the use of of the government another’s property 3. of a public nature. must not be confused economic needs.As to Date 2. 1. public improvement examples: income tax.Toll vs Tax to be taxed. .imposed only by the 2.paid for the support 2.As to Measure of Application focuses on indirect taxes. 2. VAT.. generally applied to the consideration and fermented liquors which is paid for the use of a road. Tax vs Penalty 1.Proportionate Tax – tax rates are fixed on a raise revenue conduct flat tax base. Regressive System of Taxation: D. Note: We have no regressive taxes (this is b. customs duties 1. or by some standard of weight or Taxes distinguished from other Impositions measurement and which requires no assessment beyond a listing and classification of the subjects a.Specific Tax – tax imposed per head.imposed only by the 4. something. Examples: income taxes. TAX ATION San Beda College of LAW – ALABANG C.demand of 1.designed to regulate 4. and almost examples: real estate tax.Municipal/Local Tax – tax imposed by Local revenues for governmental needs.

assignable public expenses assigned 2. assessed by sovereign reward of an officer for express or implied authority to defray specific purposes 2.for regulation 3. (see Progressive taxation does not include exemption from special Development Corp.not a personal liability the person assessed of the person assessed. 1.non-payment makes Assessment not necessarily make the act or business 1.generally payable in 3. vs Quezon City. in view of the exempting proviso in 3. related cases) 2. Of Baguio. delicts or quasi-delicts between of regulation.may be subject to taxing power police power to set-off or set-off or compensation 4.imprisonment is a 5. 1. but if regulation is imposition of special assessments as well.( see the primary purpose.an exercise of the 3. maybe considered both Sec. charitable and 5. cannot be 2. a tax and a license fee. May 31.an exercise of the 4.The general rule is that the imposition is a tax if educational purposes are not exactly exempt its primary purpose is to generate revenue and from real property taxes but are exempt from the regulation is merely incidental. 172 SCRA assessment. TAX ATION San Beda College of LAW – ALABANG persons and property to exercise privilege Tax vs Special 6.based on law 1. the fact that incidentally Aban) revenue is also obtained does not make the 3 .imposed also on 5.Licenses for the regulation or restriction of non- well as on benefits benefits useful occupations or enterprises received 3.generally not subject 4. 234 of the Local Government Code.Licenses for revenue only 4.amount is limited to compensation the amount of tax to be the necessary expenses 5.imposed on the right poll tax .personal liability of 2. 1967 and apply to special assessments.no imprisonment for paid of inspection and sanction for non. Art.based wholly on 2. and that exemption from taxes may Regarding Special Assessments: not include exemption from license fees. VI of the Constitution does not City of Butuan. L-12647.based on necessity as 3. however. (see American Mail Line vs Sec. contracts.Some limitations apply only to one and not to Important Points to Consider the other.based on contracts.An extraction.levied only on land the act or business illegal property and excise illegal 2.for revenue purposes 2.non-payment does 6. Three kinds of licenses are i. 71 Importance of the distinctions Phil 547) between tax and license fee: 1.The general rule is that an exemption from imposition of a tax. created by imposed under the police power for the purposes law.The power to regulate as an exercise of police the constitutional or statutory provisions on tax power does not include the power to impose fees exemptions. parties for their private interest or resulting from their own acts or omissions.License or Permit Fee vs Tax e.general application 4.Since special assessments are not taxes within 2.Licenses for the regulation of useful involved occupations.may be paid in kind purposes money 3.enforced contribution 1. non-payment of debt regulation payment of tax except 5.However. exclusively used for religious. properties which are actually.exceptional both as (see Apostolic Prefect time and place vs Treas. it follows that the exemption under for revenue purposes.generally no limit in 4. directly and 4.legal compensation or 1. 3. Tax vs License/Permit Fee Tax vs Debt 1. his liability is limited recognized in the law: only to the land 1. 28(3).generally.e.But a tax may have only a regulatory purpose. 629) d.Debt vs Tax License or Permit fee – is a charge Debt is based upon juridical tie.imposed on persons.

TAX ATION
San Beda College of LAW – ALABANG

6.governed by special 6.governed by the
prescriptive periods ordinary periods of 4.Tariff – it may be used in 3 senses:
provided for in the Tax prescriptions a.As a book of rates drawn usually in
Code alphabetical order containing the names of
7.does not draw 7.draws interest when several kinds of merchandise with the
interest except only so stipulated, or in case corresponding duties to be paid for the same.
when delinquent of default b.As duties payable on goods imported or
exported (PD No. 230)
General Rule: Taxes are not subject to set-off or c.As the system or principle of imposing duties
legal compensation. The government and the on the importation/exportation of goods.
taxpayer are not creditors and debtors or each
other. Obligations in the nature of debts are due 5.Internal Revenue – refers to taxes imposed by
to the government in its corporate capacity, while the legislative other than duties or imports and
taxes are due to the government in its sovereign exports.
capacity (Philex Mining Corp. vs CIR, 294 SCRA
687; Republic vs Mambulao Lumber Co., 6 SCRA 6.Margin Fee – a currency measure designed to
622) stabilize the currency.

Exception: Where both the claims of the 7.Tribute – synonymous with tax; taxation
government and the taxpayer against each other implies tribute from the governed to some form of
have already become due and demandable as sovereignty.
well as fully liquated. (see Domingo vs Garlitos, L-
18904, June 29, 1963)
8.Impost – in its general sense, it signifies any
tax, tribute or duty. In its limited sense, it means
a duty on imported goods and merchandise.
Pertinent Case:
Inherent Powers of the State
Philex Mining Corp. vs Commissioner of
Internal Revenue 1.Police Power
G.R. No. 125704, Aug. 28, 1998 2.Power of Eminent Domain
3.Power of Taxation
The Supreme Court held that: “We have
consistently ruled that there can be no offsetting Distinctions among the Three Powers
of taxes against the claims that the taxpayer may
have against the government. A person cannot Taxation Police Eminent
refuse to pay a tax on the ground that the Power Domain
government owes him an amount equal to or PURPOSE
greater than the tax being collected. The - levied for - exercised - taking of
collection of a tax cannot await the results of a the to promote property for
lawsuit against the government.” purpose of public public use
raising welfare thru
f.Tax Distinguished from other Terms. revenue regulations
AMOUNT OF EXACTION
1.Subsidy – a pecuniary aid directly granted by - no limit - limited to - no exaction,
the government to an individual or private the cost of compensation
commercial enterprise deemed beneficial to the regulations, paid by the
public. issuance of government
the license
or
2.Revenue – refers to all the funds or income surveillance
derived by the government, whether from tax or
BENEFITS RECEIVED
from whatever source and whatever manner.
- no special - no direct - direct benefit
or direct benefits but results in the
3.Customs Duties – taxes imposed on goods benefits a healthy form of just
exported from or imported into a country. The received economic compensation
term taxes is broader in scope as it includes but the standard of
customs duties. enjoyment society or

TAX ATION
San Beda College of LAW – ALABANG

of the “damnum 5.International Comity
privileges absque
of living in injuria” is b.Constitutional Limitations or those
an attained expressly found in the constitution or implied
organized from its provision
society
NON-IMPAIRMENT OF CONTRACTS
1.Due process of law
- the - contract - contracts may
impairment may be be impaired 2.Equal protection of law
rule subsist impaired 3.Freedom of Speech and of the press
TRANSFER OF PROPERTY RIGHTS 4.Non-infringement of religious freedom
- taxes paid - no transfer - property is 5.Non-impairment of contracts
become but only taken by the 6.Non-imprisonment for debt or non-payment
part of restraint on gov’t upon of poll tax
public the exercise payment of just 7.Origin of Appropriation, Revenue and Tariff
funds of property compensation
Bills
right exists
SCOPE
8.Uniformity, Equitability and Progressitivity of
Taxation
- affects all - affects all - affects only
persons, persons, the particular 9.Delegation of Legislative Authority to Fx Tariff
property property, property Rates, Import and Export Quotas
and excise privileges, comprehended 10.Tax Exemption of Properties Actually,
and even Directly, and Exclusively used for Religious
rights Charitable
BASIS 11.Voting requirements in connection with the
- public - public -public Legislative Grant of Tax Exemption
necessity necessity necessity, 12.Non-impairment of the Supreme Courts’
and the private property jurisdiction in Tax Cases
right of the is taken for 13.Tax exemption of Revenues and Assets,
state and public use including Grants, Endowments, Donations or
the public to Contributions to Education Institutions
self-
protection c. Other Constitutional Provisions related
and self- to Taxation
preservation
AUTHORITY WHICH EXERCISES THE POWER
1.Subject and Title of Bills
- only by - only by the - may be
the government granted to 2.Power of the President to Veto an items in an
governmen or its public service, Appropriation, Revenue or Tariff Bill
t or its political companies, or 3.Necessity of an Appropriation made before
political subdivisions public utilities money
subdivision 4.Appropriation of Public Money
s 5.Taxes Levied for Special Purposes
6.Allotment to LGC
III. Limitations on the Power of Taxation
Inherent Limitations
Limitations, Classified
A. Public Purpose of Taxes
a.Inherent Limitations or those which restrict 1.Important Points to Consider:
the power although they are not embodied in the a.If taxation is for a public purpose, the tax
Constitution [P N I T E] must be used:
a.1) for the support of the state or
1.Public Purpose of Taxes a.2) for some recognized objects of
2.Non-delegability of the Taxing Power governments or
a.3) directly to promote the welfare of
3.Territoriality or the Situs of Taxation the community (taxation as an implement of
4.Exemption of the Government from taxes police power)

TAX ATION
San Beda College of LAW – ALABANG

b.The term “public purpose” is synonymous
with “governmental purpose”; a purpose B. Non-delegability of Taxing Power
affecting the inhabitants of the state or
taxing district as a community and not 1. Rationale: Doctrine of Separation of
merely as individuals. Powers; Taxation is purely legislative,
Congress cannot delegate the power to
c. A tax levied for a private purpose others.
constitutes a taking of property without due
process of law. 2. Exceptions:
a. Delegation to the President (Art.VI. Sec.
d. The purposes to be accomplished by 28(2) 1987 Constitution)
taxation need not be exclusively public. Although The power granted to Congress under this
private individuals are directly benefited, the tax constitutional provision to authorize the President
would still be valid provided such benefit is only to fix within specified limits and subject to such
incidental. limitations and restrictions as it may impose,
tariff rates and other duties and imposts include
e. The test is not as to who receives the tariffs rates even for revenue purposes only.
money, but the character of the purpose for Customs duties which are assessed at the
which it is expended; not the immediate result of prescribed tariff rates are very much like taxes
the expenditure but rather the ultimate. which are frequently imposed for both revenue-
raising and regulatory purposes (Garcia vs
g. In the imposition of taxes, public purpose Executive Secretary, et. al., G.R. No. 101273, July
is presumed. 3, 1992)

b. Delegations to the Local Government
2. Test in determining Public Purposes in (Art. X. Sec. 5, 1987 Constitution)
tax It has been held that the general principle
against the delegation of legislative powers as a
a. Duty Test – whether the thing to be consequence of the theory of separation of
threatened by the appropriation of public revenue powers is subject to one well-established
is something which is the duty of the State, as a exception, namely, that legislative power may be
government. delegated to local governments. The theory of
non-delegation of legislative powers does not
b. Promotion of General Welfare Test – apply in maters of local concern. (Pepsi-Cola
whether the law providing the tax directly Bottling Co. of the Phil, Inc. vs City of Butuan, et .
promotes the welfare of the community in equal al., L-22814, Aug. 28, 1968)
measure.
c. Delegation to Administrative Agencies
with respect to aspects of Taxation not legislative
Basic Principles of a Sound Tax System in character.
(FAT) example: assessment and
collection
a. Fiscal Adequacy – the sources of tax revenue
should coincide with, and approximate the needs 3.Limitations on Delegation
of government expenditure. Neither an excess
nor a deficiency of revenue vis-à-vis the needs of a. It shall not contravene any
government would be in keeping with the Constitutional provisions or inherent limitations of
principle. taxation;
b. The delegation is effected either by the
b. Administrative Feasibility – tax laws should Constitution or by validly enacted legislative
be capable of convenient, just and effective measures or statute; and
administration. c. The delegated levy power, except when
the delegation is by an express provision of
c. Theoretical Justice – the tax burden should Constitution itself, should only be in favor of the
be in proportion to the taxpayer’s ability to pay local legislative body of the local or municipal
(ability-to-pay principle). The 1987 Constitution government concerned.
requires taxation to be equitable and uniform.

location of the subject matter of the tax 1.kind and Classification of the Tax b.2) In order that the functions of the imposition of the tax [S2 A P K A M]. the government may tax itself in the absence of any 1. The means employed must be a.Factors to Consider in determining Situs of Taxation Constitutional Limitations a.source of income deprived of life.Important Points to Consider: intervention of the state. charters or law creating them. properties. the elements that enter into the a.2) Property which is wholly and a. A person may be taxed.Territoriality or Situs of Taxation means 4.However.1) sovereign equality among states b. Reasons for Exemptions: 2. .Important Points to Consider: b. 1. a. the non-delegability rule exemption applies only to government entities is not violated. functions are generally subject to tax in the b. delegation is invalid. liberty or property without f. business or due process of law x x x.2) usage among states that when one c. The interest of the public generally D.place where the privilege. Exemption of the Government from Taxes as distinguished from those of a particular class require the 1. the government Administration . through which the government immediately and directly exercises its sovereign powers (Infantry Post Exchange vs Posadas. 3 “No person shall be e. 54 Phil 866) C. but if what is involved is 2. the tax since it cannot be collected b.3) foreign government may not be sued there is between him and the taxing state.The grounds for the above rule are: be compensation. 1 Art.Important Points to Consider: constitutional limitations. the only tax administration.Notwithstanding the immunity.Every system of taxation would be taxing itself to raise money to consists of two parts: pay over to itself. where b. a without its consent so that it is useless to assess privity of relationship justifying the levy. and excise within the territory of the taxing power because: E. regulation.” occupation is being exercised Requisites : 1. or tax government shall not be unduly impede. b. under the jurisdiction of the latter even if he is outside the taxing state.citizenship of the person a. Territoriality or Situs of Taxation 3. and and b.Unless otherwise provided by law. the fundamental basis of the enter into the territory of another.Government-owned or controlled “place of taxation” depending on the nature corporations.4) reciprocity among states 2. a.It is an inherent mandate that taxation absence of tax exemption provisions in their shall only be exercised on persons. International Comity b. the the course of its operations.Basis: Sec.Due Process of Law c. there is an right to tax is the capacity of the government implied understanding that the power does not to provide benefits and protection to the intend to degrade its dignity by placing itself object of the tax.The property of a foreign state or exclusively within the jurisdiction of government may not be taxed by another. the steps taken for its assessment and a.3) To reduce the amount of money that collection or tax administration has to be handed by the government in If what is delegated is tax legislation.Tax Legislation vis-à-vis Tax the tax so laid and thus.1) To levy tax upon public property reasonably necessary to the would render necessary new taxes on accomplishment for the purpose other public property for the payment of and not unduly oppressive.1) Tax laws do not operate beyond a country’s territorial limit. another state receives none of the protection for which a tax is supposed to b.domicile or residence of the person d. TAX ATION San Beda College of LAW – ALABANG 4. when performing proprietary of taxes being imposed.

or changing 4. The rule of actually in the nature of a condition or permit of taxation shall be uniform and equitable. This doctrine prohibits class does not constitute a restraint on press freedom legislation which discriminates against some and since it is not imposed for the exercise of a favors others. Equitable means fair. capricious. However. III. A business license may not be 1. III. 5 Art. passed abridging the freedom of speech.Non-impairment of Contracts subject of it is found. However. impairs the obligation.Basis: Sec.Basis: Sec. Must not be based upon substantial distinctions a. shall be forever be allowed. 235 SCRA 630) taxed at the same rate. No law shall be or whimsical manner. an annual registration liabilities imposed fee on all persons subject to the value-added tax 2. because reasonable method of procedure this is hardly attainable. The rule of uniformity does not call for compliance with fair and perfect uniformity or perfect equality. Lingayen Gulf Electric. There is curtailment of press a. Important Points to Consider: imposing a generally applicable sales and use tax 1. The deprivation was done under infringes no constitutional limitation. reasonable a. 3 “ xxx Nor shall any freedom and freedom of thought if a tax is levied person be denied the equal protection of the in order to suppress the basic right of the people laws. Must be germane to the purpose of law. and SCRA 27) 4. the obligation of contract shall be passed.Equal Protection of the Law b.Basis: Sec. The the exercise of the right.Non-infringement of Religious Freedom 2. III. the Constitution or the Free of taxation.Uniformity. under the Constitution. A tax is uniform when the same force and effect in every place where the 6. Important Points to Consider: 2.Freedom of Speech and of the Press held that in order that due process of law must not be done in an arbitrary. and free exercise and enjoyment of religious 5. 28(1) Art. A law which changes the terms of the or on the taxpayers’ ability to pay contract by making new conditions. Equal protection of the laws required for the sale or contribution of printed signifies that all persons subject to legislation materials like newspaper for such would be shall be treated under circumstances and imposing a prior restraint on press freedom conditions both in the privileges conferred and 3. Uniformity (equality or equal on the sale of religious materials by a religious protection of the laws) means all taxable articles organization. Inequality which results in singling out those in the contract. b. VI. prescribed by law.Important Points to Consider: places stress on direct rather than indirect taxes. Equitability and b. a. made respecting an establishment of religion 4. In a string of cases. “No law impairing and proportionate to one’s ability to pay.Requisites for a Valid Classification 1. TAX ATION San Beda College of LAW – ALABANG 3. Must not be limited to exiting conditions or prohibiting the free exercise thereof. License fees/taxes would constitute a restraint on the freedom of worship as they are a. The deprivation was done after 5. 4 Art. privilege but only for the purpose of defraying part of cost of registration. Progressive system of Taxation b. (see the authority of a valid law or of Commissioner vs.Basis: Sec. x x x” 3. 10 Art.1 Art. just. Exercise of Religion clause does not prohibit b. Important Points to Consider: Progressivity of Taxation 1. “No law shall be 3. 164 the constitution. or dispenses with those one particular class for taxation or exemption expressed. 2.” 3. Important Points to Consider: 1.Basis: Sec. discrimination or preference. of expression or of the pressx x x “ 2. 1. despotic. Must not be arbitrary 5. . Must play equally to all members of a profession and worship. the Supreme Court 4. The only. Congress shall evolve a progressive system 2. without class. (see Tolentino vs Secretary of or kinds or property of the same class shall be Finance.

LGC) property actually indispensable but extends to 2. revise. orders of lower courts in x x x all cases Directly and Exclusively used for Religious. However. 24 Art. churches and parsonages or repeal by the Congress when the public interest convents appurtenant thereto. VIII. modify or affirm on appeal or certiorari x x x final judgments and 10. VIII. the property b. VI. charitable or 7. “No law granting but the Senate may propose or concur with any tax exemption shall be passed without amendments. Imports and Export Quotas Courts’ jurisdiction in Tax Cases a.Non-imprisonment for non-payment of educational purposes shall be exempt from poll tax taxation. directly and exclusively used for religious. other taxes as prescribed by law. The non-impairment rule. VI “x x x The a. bill authorizing 11. The word “exclusively” means of interest at the rate of 24% per annum which “primarily’.” b.Basis: Sec. 28(4) Art. Important Points to Consider: must be actually. mosques.Tax Exemption of Properties Actually. bills of local with the Legislative Grant for tax exemption application. and enumerated in Sec. The above provision requires the amendments” but also “to propose concurrence of a majority not of attendees amendments”. and improvements actually. alteration or institutions. x(2) Review.” the concurrence of a majority of all the b. “The Congress Congress may. and President to fix within specified limits. does not apply to public utility franchise since a a. TAX ATION San Beda College of LAW – ALABANG 2. 20 Art. shall be added to the unpaid amount from due 4. necessary for the accomplishment of said Thus.Basis: Sec.” other duties or imposts within the framework Sec. 5 (2) Art. import and export Court of its jurisdiction over cases quotas.Delegation of Legislative Authority to 12. 28(2) Art. 5 hereof. non-profit cemeteries. Important Points to Consider: a. 5 (2b) Art.Basis: Sec. by law. The exemption is not limited to date until it is paid. however.” power is not only to “only concur with b. 161. NIRC) a. The only penalty for delinquency in the purposes mentioned. directly and exclusively used for 1. 101(9)(3).Basis: Sec. and private bills shall originate exclusively in the House of Representatives. impost.Origin or Revenue. Lest of the tax exemption: the use imprisoned for debt or non-payment of poll and not ownership of the property tax. Appropriation and charitable and educational organizations would Tariff Bills nevertheless qualify for donor’s gift tax exemption.” 2. Voting Requirements in connection increase of the public debt. “The Supreme of the national development program of the Court shall have the following powers: x x government. and all lands. Charitable and Educational Purposes . III. The constitutional exemption non-payment of the tax and for non-payment of applies only to property tax.Basis: Sec.Basis: Sec. gifts made in favor or religious 8. The prohibition is against facilities which are incidental to and reasonably “imprisonment” for “non-payment of poll tax”. (Sec. of Finance. the Senator’s members of the Congress. 6. 9. “Charitable franchise is subject to amendment. 28(3) Art. Under the above provision. payment is the payment of surcharge in the form 3. prescribe. it would seem that under existing law. (Sec. violation of the community tax law other than for 5. a. revenue or tariff bills. To be tax-exempt. (Tolentino vs Sec. tonnage and wharfage dues. a person is subject to imprisonment for purposes. VI. and apportion the jurisdiction of the various subject to such limitations and restrictions as courts but may not deprive the Supreme it may impose. “All appropriation. tariff rates. “No person shall be 1. VI. authorize the shall have the power to define. Non-impairment of the Supreme Fix Tariff Rates. involving the legality of any tax. so requires. building. constituting a quorum but of all members of supra) the Congress.

however. 29(2). donations or contributions used library and school facilities. a. non-profit educational institutions: 1. directly campus. of proprietary (for profit) educational institutions require prior 2. or toll or any penalty imposed in 3. Art.” c. “Subject to the faculty development. VI of the 1987 DOF order governing the tax exemption of non. Canteens operated by mere or indirectly for the use. 1987 Constitution) 2. 137- 87. 29(1). non- profit educational institution covers income. VI of the 1987 2.Appropriation of Public Money for the income derived from canteen. Important Points to Consider: Taxation 1. all grants. in short. . however. 26(1) property. 4(4) Art. Art. and improvements actually. but it also extends to incidental 4.Necessity of an Appropriation made before money may be paid out of the The following are some of the highlights of the Treasury (Sec. directly and exclusively for educational embrace only one subject which shall be purpose. or the Expanded Value Added Tax Law (RA 4. The tax exemption is not only limited to “No money shall be paid out of the revenues and assets derived from strictly school Treasury except in pursuance of an appropriation operations like income from tuition and other made by law. ROTC. Their tax exemption is an Appropriation. Revenue or Tariff bill but the veto proprietary or non-profit. benefit. the revenue. actually. 1. directly. 16. trust fund and similar arrangements. etc. 13. use must be school-related. Tax exemptions. including grants. royalties. directly and exclusively for educational purposes shall be exempt from tax. fees. or System of dormitory facilities. Religion (Sec. like the grant of scholarships. expressed in the title thereof. supra. professional chairs. bill was not followed. and donor’s taxes. applied. dated Dec. denomination.Subject and Title of Bills (Sec. 1987 3. paid or employed.Department of Finance Order No.Basis: Sec.” 3. In the case. the exemption →in the Tolentino E-VAT case. XIV. is limited to property tax. or system of religion or of any priest. Income which is unrelated to school relation thereto. and exclusively used for “The President shall have the power to educational purposed are exempt from property veto any particular item or items in an tax. endowments. bookstore and benefit of any Church. 4. preacher. and establishment of conditions prescribed by law. school building expansion. support of any concessionaires are taxable. the E-vat. Constitution) stock.” Other Constitutional Provisions related to b. The said constitutional provision granting 7716) was also questioned on the ground that tax exemption to non-stock. The exemption granted to non-stock. sectarian institution. Constitution) the facilities mentioned must not only be owned and operated by the school itself but such ”No public money or property shall be facilities must be located inside the school appropriated. To be exempt from tax or duty. non-profit the constitutional requirement on the title of a educational institution is self-executing. Lands. VI of the 1987 Constitution) 6. shall not affect the item or items to which he does not object. Sect. endowments. Buildings. 27(2). Art. Assets.Power of the President to Veto items in legislative implementation. The use of the school’s income or assets donations or contributions to Educational must be in consonance with the purposes for Institutions which the school is created. library.” miscellaneous feed such as matriculation. property or donation must be used “Every Bill passed by Congress shall actually. (Sec. of incidental income. and custom duties.” operations like income from bank deposits. sect. In the case or religious and charitable entities and non-profit cemeteries. 5. assets. church. Revenue or Tariff Bill not self-executing. Tax Exemptions of Revenues and dividends and rental income are taxable. whether the educational institution is Appropriation. TAX ATION San Beda College of LAW – ALABANG assessment.

X of the 1987 3.D. as determined by law.Real Property – is subject to taxation in the State in which it is located whether the A legal situs cannot be given to property owner is a resident or non-resident. 1956 to stabilize the merely a fiction of law and is not allowed to stand prices of imported crude oil. TAX ATION San Beda College of LAW – ALABANG minister. the Supreme Court ruled that or dignitary is assigned to the armed forces or to insurance premium paid on a fire insurance policy any penal institution. and the insurance policy is delivered to the 29(3). preacher. or government orphanage covering property situated in the Phils. This is because the Philippines Government must get something in return for the “All money collected or any tax levied protection it gives to the insured property in the for a special purpose shall be treated as a special Phils. In a decide case. there is room for applying the mobilia rule. 6. Constitution the power of the legislative to fix situs is “Local Government units shall have a undoubted.Allotment to Local Governments →Basis: Sec. if any. which means ”movable follow the person. VI of the 1987 Constitution) insured therein. or the state in which he corporation 99886. just share. this special fund is legislative jurisdiction exists. or other religious teacher or dignitary as In the case of Manila Electric Co. purpose for which a special fund was created has been fulfilled or abandoned the balance. G.” the situs of personal →An example is the Oil Price Stabilization property is the domicile of the owner. of the owner. property nor the person is within the protection of the taxing state →Rule of Lex Rei Sitae . 31. vs Yatco such except when such priest.” the constitutional mandate Example: shares of stock may have situs is not violated.Protection b.. (see Sec. 104. minister (69 Phil 89). 2. No. 2. Even though the fire insurance contract was executed outside the 5. This is Fund created under P. et al. according to the for purposes of taxation in a state in which they court.Persons – Poll tax may be levied upon •Some Basic Considerations Affecting persons who are residents of the State. and by reason of such protection.” According to this maxim.The maxim of Mobilia Sequuntur shall be transferred to the general funds of the Personam and Situs of Taxation government. Situs of Taxation 1. 6. Situs of Taxation 1. in the national taxes which shall be automatically Example: our law fixes the situs of released to them.Situs of Taxation literally means the Place 4.” taxable in the Phils. Situs of Taxation and Double Taxation certain intangibles are not categorically spelled out. Art.R.Basic Rule – state where the subject to be Criteria in Fixing Tax Situs of Subject of taxed has a situs may rightfully levy and collect Taxation the tax a. transferred from the general fund to a “trust liability account. in the way of taxation of personalty in the place it was held that where under an executive where it has its actual situs and the requisite order of the President. Art. It the insurer is benefited thereby. remains as a special fund subject to COA are permanently kept regardless of the domicile audit (Osmeňa vs Orbos. Mar. The OPSF.Legislative Power to Fix Situs If no constitutional provisions are violated.” intangible personal property for purposes of the estate and gift taxes. and is for the purpose of taxation where neither the taxable only there. 1993) is organized.Taxes levied for Special Purpose (Sec. are or leprosarium. Phils. the fund and paid out for such purpose only.Double Taxation and the Situs Limitation (see later topic) of Taxation. 1997 NIRC) Note: In those cases where the situs for IV.

donee. and Transaction – power to levy an excise tax depends upon the place where the business is done.Obnoxious or Direct Duplicate Taxation d.Same kind or character of tax e. and 1.Tax Credit – an amount subtracted from an protection of the laws of jurisdiction other than individual’s or entity’s tax liability to arrive at the the domicile of the owner total tax liability Remedy – taxation jurisdiction may provide: →A deduction differ from a tax credit in that a a.Same taxing authority Collector 70 PHIL 325.Same purpose a situs elsewhere. jurisdictions.Permissive or Indirect Duplicate jurisdiction and even those who are neither Taxation (Double taxation in its broad sense) – residents nor citizens provided the income is This is the opposite of direct double taxation and derived from sources within the taxing state. 4.A tax upon the same property imposed by intangible.Same property is taxed twice should be.A tax upon depositions in the bank for their deposits and a tax upon the bank for their V. or where shares.A tax upon a corporation for its capital stock g. like income or 6.Business.Intangible Personal Property – situs or (Double taxation in its strict sense) .Tax Deduction – subtraction from gross c. is subject to taxation in several taxing two different states.Income – properly exacted from persons who are residents or citizens in the taxing 2. however.A tax on the mortgage as personal property when the mortgaged property is also taxed at its full value as real estate.Within the same jurisdiction 11622. of the •Instances of Double Taxation in its Broad occupation is engaged in of the transaction Sense not place. Fisher L. TAX ATION San Beda College of LAW – ALABANG c.The use to which the property may have income in arriving a taxable income been devoted. (see Wells Fargo Bank v.A tax upon a corporation for its capital stock be subject to taxation in the state where the as a whole and upon the shareholders for their transferor was a citizen or resident. is not legally objectionable. The absence of one or more of the foregoing requisites of the obnoxious direct tax makes it indirect.Gratuitous Transfer of Property – as a whole and upon the shareholders for their transmission of property from donor to shares. is not controlling when it is inconsistent with express provisions of Requisites: statute or when justice demands that it 1. the property is located.Variance in the concept of “domicile” for •Means to Reduce the Harsh Effect of tax purposes.Exemption or allowance of deductions or deduction reduces taxable income while credit tax credit for foreign taxes reduces tax liability . Although the owner resides in another jurisdiction. as where the property has in fact 2.In the personal property is the domicile of the objectionable or prohibited sense means that the owner. f.During the same taxing period 6.Enter into treaties with other states the state where it has actual situs – where it is physically located. said taxed only once. or from a decedent to his heirs may 3. Multiplicity of Situs property in which such deposits are invested 5. principle. 1.Multiple distinct relationship that may arise with respect to intangible personality. 3. 1961) 5. January. This happens due to: a.An excise tax upon certain use of property There is multiplicity of situs when the and a property tax upon the same property. and same subject of taxation. Occupation. 2. Taxation b. all of which may receive the 2. Collector v. 4.Tangible Personal property – taxable in b. in accordance with the principle same property is taxed twice when it should be “MOBILIA SEQUUNTUR PERSONAM”. Double Taxation →Rule of Lex Rei Sitae Two (2) Kinds of Double Taxation 1.

Failure to declare for taxation purposes true Forms of Escape from Taxation and actual income derived from business for two consecutive years. should. it may not be tax is transferred from a factor of production invoked as a defense against the validity of tax through the factors of distribution until it finally laws. 4. TAX ATION San Beda College of LAW – ALABANG Impact of taxation – is the point at 3. Relations among Shifting. Impact and •Constitutionality Incidence of Taxation – the impact is the initial Double Taxation in its stricter sense is phenomenon.Principle of Reciprocity which a tax burden finally rests or settles down.Where a tax is imposed by the National b.Exemption 5.Backward Shifting – effected when Government and another by the city for the the burden of tax is transferred from the exercise of occupation or business as the taxes consumer or purchaser through the factors of are not imposed by the same public authority distribution to the factor of production (City of Baguio vs De Leon. whenever possible. aside from the tax.Tax Evasion – is the use of the taxpayer of taxpayer.Tax on manufacturer’s products and capitalized value of future taxes which the another tax on the privilege of storing exportable purchaser expects to be called upon to pay copra in warehouses within a municipality are imposed as first tax is different from the second 3.The taxpayer may seek relief under the Uniformity Rule or the Equal Protection →Indicia of Fraud in Taxation guarantee. endeavors to recoup himself by improving his is something not favored. and • Six Basic Forms of Escape from b. a license fee is manufacturer or producer upon whom the tax has imposed in the exercise of police power.Onward Shifting – this occurs when b.When a Real Estate dealer’s tax is imposed the tax is shifted two or more times either for engaging in the business of leasing real estate forward or backward in addition to Real Estate Tax on the property leased and the tax on the income desired as they 2.Treaties with other States Incidence of Taxation – is the point on 5. a. 1968) c. broader sense is not necessarily so. Such taxation. and prevented. fearing the loss of his market if he should add the tax to the price.Substantial underdeclaration of income tax Taxation returns of the taxpayer for four consecutive years 1. Oct. else .Shifting – Transfer of the burden of a tax by of legally permissible alternative tax rates or the original payer or the one on whom the tax method of assessing taxable property or income was assessed or imposed to another or someone in order to avoid or reduce tax liability.Evasion tantamount.Capitalization.Doubts as to whether double taxation has been imposed should be resolved in favor of the 4.Forward Shifting – the burden of prohibit double taxation. pays the tax and Exception: Double Taxation while not forbidden.Where. fiscally speaking.Capitalization →Evasion of the tax takes place only when 3. Evasion of Taxation is 4. the shifting is the intermediate undoubtedly unconstitutional but that in the process. and the incidence is the result. 31. a.Exemptions which a tax is originally imposed. Kinds of Shifting: General Rule: Our Constitution does not a.Transformation there are no proceeds. hence. defined – the reduction in are different kinds of tax the price of the taxed object equal to the c. to the absence 5.Shifting coupled with overstatement of deduction. it has process of production thereby turning out his been held.Tax Avoidance – is the use by the taxpayer 1. be avoided units of products at a lower cost. b.Transformation – The method whereby the d.Avoidance of taxation. 6. 2. The reason is to avoid injustice and illegal or fraudulent means to defeat or lessen the unfairness. settles on the ultimate purchaser or consumer a. been imposed. payment of a tax.

Partial Exemption – One where collection government of its right to collect what otherwise of a part of the tax is dispensed with would be due to it. a a.He who claims an exemption must justify that the legislative intended to exempt him by Bothelo Shipping Corp. 277.Tax Exemption – is a grant of immunity. L-20960. June 29. G. CIR vs PAL.Tax exemptions must be strictly construed supposed to receive a full equivalent therefore (Phil. Acetylene vs CIR. reciprocity or to lessen the rigors of international double or multiple taxation which occur where Distinction between Tax Evasion and there are many taxing jurisdictions. and in this sense is prejudicial thereto. the public represented by the Government is 4. to particular persons or corporations from the obligations to pay taxes.May be based on some ground of public taxpayer has the legal right to decrease the policy. 17.Implied Exemption – Exist whenever grantee particular persons. exemption must be able to justify by the clearest grant of organic or statute of law. Manila Jockey Club. 49 PHIL 466. but the contract must contain the other essential 3. (CIR vs 2. L-21633. (Asiatic C.Grounds for Tax Exemptions convincingly proved that he is exempt 1. At times the law contrary to the intent authorizes condonation of taxes on equitable of the sponsors of the considerations.May be based on a contract in which case. to encourage new amount of what otherwise would be his taxes and necessary industries. (Visayan Cebu 1967.Total Exemption – Connotes absolute valid cause or consideration.Nature of Tax Exemption granted by organic or statute of law 1.May be created in a treaty on grounds of permits. Local Government tax law but Code) nevertheless do not violate the letter of F. 2. TAX ATION San Beda College of LAW – ALABANG →Tax Avoidance is not punishable by law. not a ground for Tax Exemption accomplished by accomplished by There is no tax exemption solely on the breaking the letter legal procedures or ground of equity..Kinds of Tax Exemptions the law 1. 1965) 3. 31. as in the Avoidance taxation of income and intangible personal property Tax Evasion vs Tax Avoidance E. immunity 3. such as. Aug. a 2. (Sec 276. Feb.Equity. words too plain to be mistaken. L-19707. and he who claims an rational basis. Oct.Express Exemption – Whenever expressly B. emanate from Legislation express or implied.It is generally revocable by the government deemed exempt as they fall outside the scope of unless the exemption is founded on a contract the taxing provision itself which is protected from impairment. 27.As to extent elements of contracts. for example.Rationale of tax Exemption Petroleum vs Llanes.As to basis a. but equity can be used as a of the law means which maybe basis for statutory exemption.As to form a.It implies a waiver on the part of the b.Principles Governing the Tax Exemption 4.Constitutional Exemptions – Immunities from taxation which originate from the VI.It is not necessarily discriminatory so long as 1. or altogether avoid by means which the law 3. Collector of Public interest would be subserved by the Internal Revenue vs.Exemptions from taxation are highly the exemption has a reasonable foundation or disfavored by law.Statutory Exemptions – Those which A. Exemption from Taxation Constitution b. 1967) . for example. 98 PHIL exemption allowed which the law-making body 670) considers sufficient to offset monetary loss entailed in the grant of the exemption.He who claims exemptions should D. such as.It is merely a personal privilege of the b. 1968) Terminal vs CIR. L-19530. properties or excises are 2.

and This doctrine. except for the legislative intent.Tax Exemptions are not presumed. should be liberally construed to afford self-executing (Opinion No. performing strictly religious.Interpretation and Construction of Tax 1. are construed law itself.The exemptions. No. VII.On the interpretation and construction of tax application (Fernandez vs Fernandez. (CIR vs 7. 20. which may include legislative demands or express that it shall have a enactment. legislative intention must be considered. was rejected by educational functions the Supreme Court. Jan.Tax laws are neither political nor penal in 2.The exemptions (or equivalent provisions. disbursement of public funds derived from taxation that the taxpayer’s suit may be allowed.Constitutional grants of tax exemptions are measure. directly involves the illegal retroactive effect. 1987. hence. 1999) 8. 104171. 130. Of protection as a corollary. No.Deductions for income tax purposes partake of the nature of tax exemptions. saying that it was not convinced of the wisdom and proprietary thereof. Important Points to Consider VIII. liberally in favor of the grantee in the following: Example: NIRC provides for statutes of a. CA. vs CIR. tax statutes are construed nature they are deemed laws of the occupied strictly against the government and liberally territory rather than the occupying enemy. much like a tax exemption is by prescription may be allowed to offset never favored or presumed by law (CIR vs CA. 104 PHIL General Rule: Taxes must only be imposed 1062) prospectively Taxpayer’s Suit . PHIL934) 2. TAX ATION San Beda College of LAW – ALABANG 5.Exemptions from certain taxes granted under special circumstances to special classes of persons. being a remedial 6. the penalty imposed. Imprescriptibility of Taxes such as tax amnesty and tax condonation) are not presumed and when granted are strictly General Rule: Taxes are imprescriptible construed against the grantee. Exception: When provided otherwise by the tax 5.The law on prescription. 1999) to taxes arising from the same transaction on 10. . (Collector vs UST.Tax exemption are personal.When the law so provides for such liberal limitation in the assessment and collection of construction. (Lealda Important Point to Consider Electric Co.Other Doctrines in Taxation and that it may work to tempt both the collecting agency and the taxpayer to delay and neglect Prospectivity of Tax Laws their respective pursuits of legal action within the period set by law. 100 PHIL 288) 3. (Hilado vs Collector. 30. Sec. charitable.Tax laws not being penal in character. G.R. 4. unsettled tax liabilities should be pertinent only G.It is only when an act Exception: The language of the statute clearly complained of. Feb. 99 statutes. L-16428. taxes therein imposed b. construed in favor of the taxpayer. 108576.A tax amnesty. however. Apr.The rule of strict construction of tax which an overpayment is made and exemption should not be applied to organizations underpayment is due. the exceptions to the Justice) law on prescription be strictly construed. 24.In order to declare a tax transgressing the Statutes due process clause of the Constitution it must be Important Points to Consider: so harsh and oppressive in its retroactive 1. the 3. however.The rule of strict construction against the government is not applicable where the language rule in the Constitution against the passage of the of the tax law is plain and there is no doubt as to ex post facto laws cannot be invoked. they are Doctrine of Equitable Recoupment strictly construed against the tax payer It provides that a claim for refund barred 9.In case of doubt. 1963) 1.R.

City and Municipal Government” assessors and treasures for local and real property taxes. No. Assessment and Collection of all political subdivisions. national internal revenue taxes. a.The tax laws are presumed valid. summoning. 1. subordinates with respect to the July 31. Exclusive and original power to 6 Feb 1997 that like other principles of law. G. The head of the appropriate correct application of statutes (E. TAX ADMINISTRATION AND ENFORCEMENT e. penalties and fines connected 6. estoppel does not apply to Commissioner with respect to receipt deprive the government of its right to raise of payments of internal revenue taxes defenses even if those defenses are being raised authorized to be made through banks. al. decided in its favor by the Court of Tax Appeals and the ordinary courts. d. public officers do not block the subsequent b. fees d. vs. Bureau of Internal Revenue and the examining and taking testimony of Bureau of Customs for internal revenue persons for purposes of ascertaining and customs law enforcement. al. and c.Exemptions in favor of the Government. L-23041.. Execution of judgment in all cases 7. G. Effecting and administering the supervisory and police powers conferred to it by the Tax Code or other Agencies Involved in Tax Administration laws. Rodriguez.A.) Commissioner: The principle of tax law enforcement is: a. only for the first time on appeal (CIR vs Procter & Gamble Phil. Rule of “ No Estoppel Against the 2. subject to review by admits of exceptions in the interest of the Secretary of Finance. L- 19627.The power to tax is presumed to exist.Exemptions to traditional exemptees. Obtaining information. the interpret provisions of the NIRC and non-application of estoppel to the government other tax laws. Banks duly accredited by the Similarly. as.) collection of energy tax. et. 66838. 117982. TAX ATION San Beda College of LAW – ALABANG c.R. C. c. its b.. 1969. It is the correctness of any return or in noteworthy to note that the BIR is determining the liability of any person largely decentralized in that a great for any internal revenue tax. f. the state cannot be estopped by the neglect of its Agents and Deputies for Collection of agents and officers. Estoppel does not apply to Under Sec. the preclude the subsequent findings on taxability following are constituted as agents of the (Ibid. The Commissioner of Customs and his The Government is not estopped by the subordinates with respect to the mistakes or errors of its agents. government office and his Inc. Abad. et. 12 of the 1997 NIRC. Enforcement of all forfeitures. Provincial. erroneous collection of national internal revenue application and enforcement of law by taxes on imported goods. No. June 27. It is a settled rule of law that in the performance of its governmental functions. Nowhere is it more true than National Internal Revenue Taxes in the field of taxation (CIR vs. 1968). . delegated to the Regional Directors and Revenue District Officers. such and charges. or in extent of tax enforcement duties are collecting any such liability.R. therewith. 15 April 1988.) Bureau of Internal Revenue Exceptions: • Powers and Duties The Court ruled in Commissioner of Internal Revenue vs. those in favor of charitable institutions. Collector of Internal Revenue.

or it 81446. 104151 and 105563. No. 1988) deficiency stated therein. is an assessment wherein the tax assessor has no power to act at all Estoppel Against the Taxpayer (Victorias Milling vs.This result to the taxpayer. TAX ATION San Beda College of LAW – ALABANG justice and fair play. Cruz. The liability test of judicial scrutiny it must be based on is determined and is. Vs. 10 July 1998) b. (CIR Classifications: vs C. The amount ascertained exceeds that which is shown as 3. 13 Mar 1968) While the principle of estoppel may not be d. (Sec. No amount is shown in the investigation if he finds no ground to return or.R. 1997 NIRC) 104781. . 98 Phil 290) Nature and Kinds of Assessments  In the absence of any proof of any irregularities in the performance of An assessment is the official action of official duties. 10 Mar 1995) a. 8 Aug 1988 may be the notice to the effect that the  All presumptions are in favor of tax amount therein stated is due from the assessments (Dayrit vs. vs CIR. CTA. value is (Caltex vs. No amount of tax due from a taxpayer.R. reinvestigation have the effect of placing him in estoppel. 56 [A] {1]. C. G.R. In CIR vs. therefore.C. to compel him to assess a tax after 2. acceding to the taxpayers request. Assessments are prima facie inasmuch as his previous requests for presumed correct and made in good faith. CTA. as where injustice will c. the taxpayer made several exercise of that power (Ibid. this is not assessment wherein the assessor has necessarily true in case of the taxpayer. 104 Phil 819.This is an assessment made by the tax assessor 2. G. G. Assessments should not be based on whereby the correct amount of the tax presumptions no matter how logical the is determined after an examination or presumption might be. The amount is finding of value is required to prove reflected in the tax return that is filed not only that the appraised value is by him and the tax is paid at the time erroneous but also what the proper he files his return. 23 Oct 1992). Illegal and Void Assessments. (Sy Po. L-39910. (Sec. Savellano.Tax is assessed by  A party challenging an appraiser’s the taxpayer himself. The taxpayer cannot later on be permitted to raise the defense of prescription 1.  The taxpayer has the duty of proving otherwise (Interprovincial Autobus vs. an assessment will not an administrative officer determining the be disturbed.) requests for the reinvestigation of its tax liabilities such that the government. postponed the collection Principles Governing Tax Assessments of its liability. The taxpayer did not file any Commissioner to assess will result in the return at all. Assessment is discretionary on the part tax by the taxpayer in his of the Commissioner. vs. (Bisaya Land  Failure to present proof of error in the Transportation Co. L-24213. L- 36181 and L-36748. Mandamus will not lie return. assess. Self-assessment. CIR. Deficiency Assessment. the power to assess but errs in the Suyac. taxpayer that the payment of the tax or 26 Sept. 56 [B] ]1] encroachment on executive functions and [2] 1997 NIRC) (Meralco Secuirities Corp. assessed for the following reasons: 1. 105 Phil 1338) assessment will justify judicial affirmation of said assessments. In order to stand the investigation is conducted. Erroneous Assessment – This is an invoked against the government.C. Mandamus to compel the 3. No. actual facts.

into the income tax returns of taxpayers may be authorized: 4. (City Lumber vs. The tax or the deficiency of the tax so assessed shall be paid When the method is used. employers. the administrator should be the party to whom the assessment should be sent (Republic vs. (Sec gathered by internal revenue officers from 6[A]. When the production or inspection thereof is authorized by the taxpayer 5. 1997 NIRC) modified. 33 of the settled that the power to make final Secretary of Finance. changed or amended. 8829. clients or patients. the exercise of his discretion there is evidence of arbitrariness and grave abuse of discretion as to go beyond The aforesaid rule. 8 June 1993). An authorized upon the written order of assessment signed by an employee for the President of the Philippines. if for example. When the inspection of the return is to assess taxes may be delegated. if a person fails to file a return or other document at the time prescribed by The Tax Code requires that after the return law. Best Evidence Obtainable refers to any statement or declaration has in the meantime data. in the result. lessees. No. and in behalf of the Commissioner of 2. is subject to statutory authority (Maceda vs. dela Rama. assessments cannot be delegated. inquiry G. however. Hence. the upon notice and demand from the Commissioner Commissioner makes or amends the return from or from his duly authorized representative. or any evidence been actually served upon the taxpayer. et. Assessments must be directed to the right himself (Vera vs Cusi L-33115. 1966). TAX ATION San Beda College of LAW – ALABANG Except: records. In the following cases. Assessment Based on the Best Evidence the decedent Obtainable Means Employed in the Assessment of Taxes The law authorizes the Commissioner to assess taxes on the basis of the best evidence obtainable in the following cases: A. 58 Phil 360) 4. However. being assessed is an estate of a decedent. within three (3) days from facie correct and sufficient for all legal purposes. statement or declaration filed in any office can obtain through testimony or otherwise. 29 June party. the Commissioner or his duly authorized 2. papers. L- 21108. The authority vested in the Commissioner 1. L-18611. record. he willfully or otherwise files a false or representative shall examine the same and fraudulent return or other document. Domingo. al. 30 Jan 1964). tenants. the taxpayer 1979). Macaraig. the same may be (Sec. and not the heirs of B. The 3. However. authorized to receive the same shall not be Assessments made as such are deemed prima withdrawn. Posadas. Examination of Returns: Confidentiality Rule 1. vs. (Cu Unjieng. Although Sec. 1997 NIRC) government offices or agencies. documents. with whom provides that tax returns shall constitute public the taxpayer had previous transactions or from . it is necessary to know that these are confidential in nature and may not be inquired The BIR Commissioner may be into in unauthorized cases under pain of penalty compelled to assess by mandamus if in of law provided for in Sec 270 of the 1997 NIRC. it is the Finance Regulation No. or is filed.R. When inspection is authorized under Internal Revenue is valid. corporations. When the production of the tax return person to whom a duty is delegated is material evidence in a criminal case cannot lawfully delegate that duty to wherein the Government is interested another. 6 [B]. etc. 29 Nov. provided that no notice for audit or investigation of such return. 71 of the 1997 NIRC vendees and from all other sources. the date of such filing. certain exceptions. assess the correct amount of tax. Any his knowledge and from such information as he return.

is not declaring his correct income. C. on the basis of the preceding year or quarter. the value of the property shall be inventory-taking of goods of any taxpayer as whichever is the higher of : (1) the fair market a basis for assessment. 1997 NIRC) confidential under R. 204 (A) (@) of the Tax Code by reason business subject to tax. That he intends to leave the that a report required by law as basis for the Philippines or remove his property assessment of any internal revenue tax has not therefrom. The Supreme Court. or d. any taxpayer who has filed an application for compromise of his tax liability a. In this case. 1997 NIRC) appeal. However. for examination the factory’s books of accounts and records. or such portion thereof wines seized and the sworn statements of the as may be unpaid. Inquiry into Bank Deposits observation or surveillance. the immediate payment of the tax for the period so declared terminated and the tax for the The investigators. on Commissioner (Sec. so BIR investigators raided the The written decision to terminate the tax factory and seized different brands of alcoholic period shall be accompanied with a request for beverages. a decedent to determine his gross The Commissioner shall declare the tax period estate. 6 [C]. incomplete or erroneous. the penalties prescribed unless paid within the assessed the corresponding deficiency income time fixed in the demand made by the and specific taxes. TAX ATION San Beda College of LAW – ALABANG whom he received any income.A. or (2) the fair market value as shown in the schedule of values of the Provincial and City Assessors for If there is reason to believe that a person real tax purposes (Sec 6 [E]. Notwithstanding any contrary provisions of R. Said taxes shall be due and factory’s employees on the quantity of raw payable immediately and shall be subject to all materials consumed in the manufacture of liquor.A. Surveillance and Presumptive Gross Sales and Receipts E. In that case. D. upheld the legality of the assessment. collection of the tax for the past or there was a demand made by the Commissioner current quarter or year or to render the on the Silver Cup Wine Company owned by same totally or partly ineffective petitioner’s deceased husband Po Bien Seng. the Commissioner is authorized to inquire into the bank deposits of. the application for compromise shall not be considered unless and until he waives in . Inventory-Taking. The unless such proceedings are begun demand was for the taxpayer to submit to the BIR immediately. bank deposits are (Sec. value as determined by the Commissioner. after ascertaining b. That the taxpayer is retiring from under Sec. sales or receipts for internal revenue tax purposes. 1405. 6 [d]. That the taxpayer hides or conceals his any such report is false. Termination of Taxable Period 1. been filed or when there is reason to believe that c. property. The finding made in the surveillance may be used as a basis for Examination of bank deposits enables the assessing the taxes for the other months or Commissioner to assess the correct tax liabilities quarters of the same or different taxable years. his business operation may be placed under F. of taxpayers. That he performs any act tending to A case in point on the use of the best obstruct the proceedings for the evidence obtainable is Sy Po vs CTA. of his financial incapacity to pay his tax liability. Fixing of Real Property Values The Commissioner is authorized at any time For purposes of computing any internal during the taxable year to order the revenue tax. and of a taxpayer terminated at any time when it shall come to his knowledge: 2. 1997 NIRC). 1405 and other general or special laws.

TAX ATION San Beda College of LAW – ALABANG writing his privilege under R. This reasonable on the basic which is the leading case of Perez vs. Conviction in such cases. . reason to believe that any such report is false. 6[B]. accounts do not clearly reflect his income. 43. of the same taxable year. 103 assumption that most assets are Phil 1167. 1997 NIRC). rests on proof beyond reasonable doubt. 1997 NIRC. taxpayer is in a position to explain the discrepancy. in nature. notable among income. The basis of using the Net Worth Method of investigation is Revenue Memorandum The Government may be Circular No. Basic Concept and Theory (b) That there is evidence of a possible source or sources of The method is an extension of the basic income to account for the increase accounting principle: assets minus liabilities in net worth or the expenditures equals net worth. (Perez vs. This method of forced to resort to the net worth investigation. 43-72. Court. he Net Worth Method in Investigation refuses to produce them (Inadequate Records). the need for evidence of a obtainable whenever a report required by law as likely source of income becomes a basis for the assessment of any national internal prerequisite for a successful revenue tax shall not be forthcoming within the prosecution. The Legal Source of authority for use of burden of proof is upon the taxpayer the Method to show that his net worth increase The Commissioner’s authority to use the was derived from non-taxable sources. in civil cases. The method is a practical necessity if a derived from a taxable source and fair and efficient system of collecting revenue is that when this is not true. or if he has books. the to be maintained. when the taxpayer for a broad and general investigatory power to is criminally prosecuted for tax assess the proper tax on the best evidence evasion. or the taxpayer has no books. holding that skillful concealment is an inevitable barrier to proof. The burden of proof is time fixed by law or regulation. as in any incomplete or erroneous. supra) Moreover. net worth method and other indirect methods of As stated by the Supreme establishing taxable income is found in Sec. for.A. criminal case. the assessor need 1997 NIRC. CTA. The theory is that the matter. otherwise known as “inventory method of proof where the few records method of income tax verification” is a very of the taxpayer were destroyed. The increase or decrease in net worth is adjusted by adding all non-deductible items and subtracting therefrom In all leading cases on this non-taxable receipts. 6[F]. to effective method of determining taxable income require more would be tantamount to and deficiency income tax due from a taxpayer. This authority has been upheld by the not prove the specific source of courts in a long line of cases. or when there is always with the Government. 1405. provides However. Sec. courts are unanimous in unexplained increase in net worth of a taxpayer is holding that when the tax case is civil presumed to be derived from taxable sources. CTA. The taxpayer’s net worth is (Need for evidence of the sources determined both at the beginning and at the end of income). or under Conditions for the use of the method other general or special laws. and such waiver shall constitute the authority of the Commissioner to inquire into bank deposits of the taxpayer (a) That the taxpayer's books of (Sec. direct proof of sources of income is not essential-that the government is not required to negate all possible non-taxable sources of the alleged net worth increases.

which may either be 25% or . 6. premiums paid on any life taxpayer’s non-compliance with certain insurance policy. vs. L-21551. election expenses and other (1) civil penalty. TAX ATION San Beda College of LAW – ALABANG 8. income taxes paid. erroneously listed although equitable credit adjustments were already paid. sweepstakes winnings. inheritance and gift Additions to the tax consist of the: taxes. 9. considered to be the cornerstone of a net worth case. and the like or opening net worth. gifts and bequests the starting point or opening net received. whole superstructure usually fails. 1969) taxable items. non-deductible contributions. estate. 3. like the taxpayer’s 3. i.. otherwise known expenses against public policy. living or family Additions to the tax are increments expenses. the taxpayer’s entries in the books deductible expenditures were relating to indebtedness to certain made and correct. the 2. CIR. net capital loss. proceeds of life insurance investigation under this method policies. losses from sales or exchanges refusal or failure to pay taxes and/or other of property between members violations of taxing provisions.e. (c) That there is a fixed starting point 10. 5. that the validity of the result of any 4. Inc. Additions to the Tax 1. 30 Sept. legal requirements. fair and creditors. other non-deductible taxes. inheritance. adjustments to avoid the inclusion of what otherwise are non-taxable receipts. 7. personal. must be added to the increase or decrease in the net worth: 1. interest on government securities and the like (d) That the circumstances are such that the method does not reflect Increase in net worth are not the taxpayer’s income with taxable if they are shown not to be the reasonable accuracy and certainty result of unreported income but to be and proper and just additions of the result of the correction of errors in personal expenses and other non. They are: This is an essential condition. be affirmatively established with These items are necessary some definiteness. compensation for injuries or The courts have uniformly stressed sickness. (Proper adjustments to conform to the income tax laws) Enforcement of Forfeitures and Penalties Proper adjustments for non- deductible items must be made. a date beginning with a taxable year or prior to it. worth is proven to be wrong. The Statutory Offenses and Penalties following non-deductibles. to the basic tax incident due to the 2. at which time the On the other hand. as the case may be. will depend entirely upon a correct 5. of the family. gifts to others. non-taxable capital gains. 4. as surcharge. opening net worth. non-taxable taxpayer’s financial condition can items should be deducted therefrom. 6. (Fernandez Hermanos given by way of eliminating non. If 1.

and charges Cu Unjieng. 1975) imposed in the Tax Code. fees. L-35677. 1985) account of riots directed against the 4. with any authority to waive or dispense with the collection therof.A.(Philippine Refining Company vs. The amount so added to the tax the instances when the imposition of the shall be collected at the same time.R. 10 (Secs. 30. applicable regulations thereby or a government owned or controlled resulting in delay in the payment of corporation. . Additions to the tax or deficiency excuse payment of the surcharge (CIR vs. the Internal Revenue is not vested with any imposition of the surcharge may be authority to waive or dispense with the dispensed with (Cagayan Electreic collection thereof. 248 and 249 [C]. not due to willful neglect. G. and it is accept them without the additional shown that the failure to file it in due time was due to a reasonable cause. CA. however. 27 mandatory and the Commissioner of (now. 47 Phil nature of the violation. 1188794. If the withholding agent is the 1. 26 Dec. show b. 5431 abolished the income tax exemptions of corporations (including Surcharge electric power franchise grantees) The payment of the surcharge is except those exempt under Sec. 1997 NIRC). Where a doubt existed on the part of the Bureau as to whether or not R.. General Considerations on the Addition to tax An extension of time to pay taxes granted by the Commissioner does not a. tax apply to all taxes. the employee thereof taxes. 25 Sept. G. 460) (2) interest either for a deficiency The Commissioner is not vested tax or delinquency as to payment. a mistake in the interpretation of the political subdivisions or instrumentalities. does not authorize where such return or list is voluntarily the Commissioner to extend the time filed by the taxpayer without notice prescribed for the payment of taxes or to from the CIR or other officers. 247[b]. 8 May 1996). The penalty and interest are not (3) other civil penalties or penal but compensatory for the administrative fines such as for failure to concomitant use of the funds by the file certain information returns and taxpayer beyond the date when he is violations committed by withholding supposed to have paid them to the agents. A Subsequent reversal by the BIR of a liable for the additions to the tax prior ruling relied upon by the taxpayer prescribed (Sec. No. Supreme Court held that the fact that on 60126. 6 Aug. Sec. (CIR vs. 1997 NIRC) Government.A. the Power & Light Co. (CIR vs.R. 1983) 3. The following cases.. vs. TAX ATION San Beda College of LAW – ALABANG 50 % of the tax depending upon the penalty (Lim Co Chui vs. 1997 NIRC) such may also be a ground for dispensing as the 25% surcharge and the 20% with the 25% surcharge. c. they were return or list within the time prescribed prevented from paying their internal by law. Posadas. In one case. (Connel Bros. in 25% surcharge had been waived: the same manner. supra). L- responsible for the withholding and 15470. revenue taxes on time. In the case of failure to make and file a Chinese on certain dates. 247 to 252. CIR. Co. vs CIR. and as part of the tax. Where the taxpayer in good faith made government or any of its agencies. 1963) remittance of the tax shall be personally 2. L-26869. No. (Secs. 1997 NIRC) Aug. interest per annum on the delinquency Republic Cement Corp. C.

in order to avoid the before the date prescribed for its payment. 1997 NIRC) I. (Sec. Delinquency interest 2. 249[d]. Compromise 5. Administrative 1. Judicial which no return is required.Other as imposed and provided by BIR term is defined in this code. but . Excise tax 1. Distraint of Personal Property 2. Criminal Action surcharge or interest thereon on the due date appearing in • Distraint of Personal Property the notice and demand of the Commissioner. or amount of tax due on the return. Levy of Real Property This kind of interest is imposed in case 3. Estate Tax and dono’r tax 3. REMEDIES OF THE GOVERNMENT or such higher rate as may be prescribed by rules and regulations. from the date prescribed for payment until the amount is fully paid. which shall be assessed and collected from the date prescribed for its payment until the full • Enumeration of the Remedies payment thereof (Sec. or imposition of the surcharge. Administrative Offenses 1. tangible or intangible.Income tax 2. Tax Lien of failure to pay: 4. Remedies or (2) The amount of the tax due for II. or such Refund Excess Withholding Tax higher rate as may be prescribed y rules and regulations. Civil Action (3) A deficiency tax. 1997 NIRC) 1.Seizure by the government of personal property. Failure of a Withholding Agent to twenty percent (20%) per annum. Other Administrative any return required to be filed. Forfeiture (1) The amount of the tax due on 6. TAX ATION San Beda College of LAW – ALABANG no surcharge will be added to the fails to pay the tax or any installment thereof. Distraint. Deficiency interest 6. Failure to File Certain Information Returns Interest 2. the where the Commissioner has authorized an taxpayer must make a statement extension of time within which to pay a tax or a showing all the facts alleged as deficiency tax or any part thereof. Imposed when a person required to pay the tax is qualified and elects to pay the tax on KINDS installment under the provisions of the Code. 249 [B]. reasonable causes for failure to file the 1997 NIRC) return on time in the form of an affidavit. 249 [A]. if the taxes are not 3. as the 7. to be followed by its public sale. Interest on Extended Payment voluntarily paid. which should be attached to the return. shall be subject to the interest of 20% per annum. In any part of such amount or installment on or such case. to enforce the payment of faces. Sources of revenues: (Sec. Documentary stamp taxes Any deficiency in the tax due. or 1. VAT Interest is classified into: 4. Failure of a Withholding Agent to Collect and Remit Taxes This is an increment on any unpaid amount of tax. Other percentage taxes 5. or any 2. assessed at the rate of 3.

treasurer or time required. TAX ATION San Beda College of LAW – ALABANG a. . 1. Warrant shall be sufficient P100 (Sec. Constructive – The owner is merely place of sale and the articles distrained.00 taxpayer. taxpayer’s personal property. manager. RDO P1. Disposition of proceeds of the sale. In case of intangible property. Period with in to assess or collect has not issuing corporation. In case of intangible property: 1. Where amount involved does not exceed 2. Sale at public auction to highest bidder personal property. 205 TC). manager. In case of Tangible Property: Effected by having a list Effected by requiring of the distraint property the taxpayer to sign a a. Taxpayer is delinquent in the payment of a. association. 1. Posting of notice is not less than two Taxpayer is also diverted of the power places in the municipality or city and of control over the property notice to the taxpayer specifying time and b. b. company or yet prescribed. signed by the officer. other responsible officer of the 4. Serve warrant upon taxpayer and president. Constructive Distraint 1. at An immediate step for Such immediate step is the dwelling or place of business collection of taxes not necessary. Subsequent demand for its payment. warrant upon taxpayer and upon 3.000. 4. • In case of constructive distraint.000. Time and place of sale. Stocks and other securities tax. requisite no. Statement of the sum demanded.00 only of a delinquent property of any 2. same from whom property was taken. c. Debts and credits Sec. it is being questioned. 1 is not essential (see b. Leaving a copy of the warrant with the person owing the debts When remedy not available: or having in his possession such credits or his agent. of distraint or or by leaving a list of left either with the owner or person garnishment. Who may effect distraint Amount Involved Actual vs. commissioner or his due In excess of Made on the property May be made on the authorized representative P1.000. disposing of his property. Actual – There is taking of possession 1. abatement of the collection of tax as the cost of c. Serving a copy of the 2. Bank Accounts – garnishment same might even be more than P100. Requisites: 2. tax due and with someone of suitable age where amount due is may not be definite or and discretion definite. taxpayer whether or less delinquent or not There is actual taking or Taxpayer is merely possession of the prohibited from How Actual Distraint Effected property. authority for such person to pay In keeping with the provision on the CIR his credits or debts. Procedure: treasurer or responsible officer of the bank. 206 TC) 1. Service of warrant of distraint upon of personal property out of the taxpayer or upon person in possession of taxpayer into that of the government. prohibited from disposing of his 3. Taxpayer must fail to pay delinquent tax at president.000. Copy of an account of the property or by service or warrant receipt of the property distrained. 2.

Penalty due. goods distrained shall be restored to the owner. distrained property on behalf of the 2. When the amount of the bid for the property under distraint is not equal to the Distraint and Levy compared amount of the tax or is very much less than the actual market value of articles. Obligate him to preserve the same properties. a. Both are summary remedies for collection the CIR or his deputy may purchase the of taxes. If at any time prior to the consummation on said purchase price at 15% per annum of the sale.enforceable through out the Philippines a. Taxpayer is intending to leave the owner. To remove his property there from. Amount of tax and 2. Philippines. sufficient age and discretion. with out a duly authenticated certificate showing the authority of the CIR. Bank accounts may be distrained with out sale or declaration of forfeiture. Levy – Act of seizure of real property in order to How constructive Distraint Effected enforce the payment of taxes. penalties and are or where the money or any part of it interest thereon from date of delinquency came from. Bank shall turn over to CIR so much of the bank accounts as • Levy of Real Property may be sufficient. Advertisement of the time and place of Grounds of Constructive Distraint sale. a. 5. 1. to the date of sale together with interest 2. Procedure: c. and property is located. 4. the taxes are not voluntarily to paid. the redemption. BIR c. or 3. accounts for no inquiry is made. TAX ATION San Beda College of LAW – ALABANG 2. Disposition of proceeds of sale. Time to redeem: one year from date of Note: sale or forfeiture . Taxpayer acts tending to obstruct a. Officer shall write upon the certificate a property distrained. Where Taxpayer or person in possession c. refuses to sign: . him b. Redemption of property sold or forfeited 4. In the presence of two witnesses of levy is made. Sale at public auction to highest bidder. Possession pending redemption – owner simply seizes so much of the deposit with not deprived of possession out having to know how much the deposits d. b. Name of taxpayer b. Person entitled: Taxpayer or anyone for collection proceedings. The property may be sold at public sale. 5. leave 3. subject to tax. Service of written notice to: a copy in the premises where a. . The excess shall be turned over to 2.Begins from registration of the deed of 1. all proper charges are paid to from date of purchase to date of the officer conducting the same. involved is not more than P100. International Revenue officer shall prepare property in any manner. Sign a receipt covering property • The requisites are the same as that of distrained distraint. 3.Cannot be extended by the courts. 1. The taxpayer. Taxpayer hides or conceals his property. Prohibit him from disposing the property from disposing the 1. RD where property is located. violating the confidential nature of bank . Both cannot be availed of where amount national government. b. Require taxpayer or person in possession after seizure. if 1. description of the property upon which b. Officer shall prepare list of the 2. Price: Amount of taxes. Taxpayer is retiring from any business 6.

Distraint authorized where there is no bidder or the A tax lien is distinguished from disttraint in highest bid is not sufficient to pay the that. from a competent court 2. 1. penalties and costs. A reasonable doubt as to the validity if the Exists from time assessment is made by claim against the taxpayer exists. a. Levy – Taxpayer can redeem properties regardless of its owner. real or personal. reciprocal concessions. including all expenses. 1. demonstrates a clear inability to pay the 3. although it need not be the 5. 40% of basic tax assessed – other 2. 10% of the basic tax assessed – in case of financial incapacity. Duration: 1.00 or judgment creditor. either 1. Attaches not only from time the warrant declaration of forfeiture. Failure to file notice of such lien in the a. to assess or collect. by collected. The financial position of the taxpayer and costs. Tax redemption lien is directed to the property subject to the tax. established by law as a security 2. Distraint – forfeiture by government. The remedy of distraint or levy may be • Compromise repeated if necessary until the full amount. in default of the payment of taxes. Criminal violations. Philippines when a person liable to pay a tax neglects or fails to do so upon When taxes may be compromised: demand. is Compromise: A contract whereby the parties. purchases or P1. Nature: 3. provided Levy – forfeiture by government Enforcement of Tax Lien vs. 1. When basic tax involved exceeds office of register of Deeds. 3 and 4. rates. of the taxpayer. there is no Levy – real property more tax liability. Effectivity against third persons: b. There must be an offer by taxpayer or CIR. Prescription of the right of the government cases. Taxpayer must have a tax liability. Minimum compromise rate: Extinguishment of Tax Lien a. This is superior to judgment claim of 1. levied upon and sold/forfeited to the government. the CIR until paid. with interests. except: belonging to the taxpayer. Those involving fraud. • Enforcement of Tax Lien Requisites: Tax Lien: A legal claim or charge on property. Extent: assessed tax. Where settlement offered is less 4. 2. Subject to approval of Evaluation Board 3. TAX ATION San Beda College of LAW – ALABANG 3. Only when notice of such lien is filed by the CIR in the Register of Deeds Limitations: concerned. It is the duty of the Register of Deeds private individuals or parties concerned upon registration of the 2. b. to transfer the was served but from the time the tax was title to the property with out of an order due and demandable. Distraint – Taxpayer no given the right of property in respect to the tax is assessed. Payment or remission of the tax b. Destruction of the property subject to the than the prescribed minimum lien. Under nos. Upon all property and rights to property 3. .000. not 4. in distraint the property seized must be that taxes. of an amount to be paid by taxpayer. penalties 2. 2.000. There must be acceptance of the offer in A lien in favor of the government of the settlement of the original claim. 1 and 2. Distraint – personal property  In case Nos. the taxpayer is still liable. Note: Note: 1. avoid litigation or put an end to one already commenced. Those already filed in court 4.

plus the proceeding is duly made. Regard it as rescinded and insists upon of such articles. a return of the taxes and penalties. manufactured oils. Dies for printing or making IR stamps. enforce the compromise. anyone for him b. Note: judgment of condemnation and The Register of Deeds is duty sale in a legal action or proceeding. All apparatus used in or 1. TAX ATION San Beda College of LAW – ALABANG injurious to the public health or Delegation of Power to Compromise prejudicial to the enforcement of the law: (at least 20 days after GR: The power to compromise or abate shall not seizure) be delegated by the commissioner. To whom paid – Commissioner or a. playing cards The CIR may either: 6. (wine. interest and cost of the sale 3. in consequence of a default or be lawful stamps. forfeiture shall become absolute. It is pain in lieu of a criminal prosecution. Effect of failure to redeem – the specific forfeited property. notice of not less than 20 days. cigarettes. the same non-essential items a may be collected only if the taxpayer is petroleum products) willing to pay them. To be destroyed – by order of the • Other Administrative Remedies CIR when the sale for consumption or use of the following would be . distilled spirits E: The Regional Evaluation Board may 2. 2. products. liquors compromise the assessment issued by the 3. bound to transfer the title of property civil or criminal. When forfeited property to be destroyed court. the original demand. When available: 6. Finance. manufactured or removed in violation of the Tax Code. Forfeiture: Implies a divestiture of property with in imitation of or purport to out compensation. it is with 1. and other less. All other articles subject to 1. No bidder for the real property a. cigars regional offices involving basic taxes of P 500 K or 4. c. labels and tags. manufactured products of tobacco Remedy in case of failure to comply: 5. Time to redeem – with in one (1) insufficient to pay the taxes. 2. In case of real property – by a 7. necessity of an order from a competent 4. Effect: Transfer the title to the specific the approval of the Secretary of thing from the owner to the government.  Enforcement of forfeiture 2. To be sold or destroyed – depends upon the discretion of CIR Compromise Penalty 1.With in two days thereafter. Amount to be paid – full amount of . b. or about the illicit production 2. Public sale: provided. Includes the idea of not only losing but 5. How enforced: d. or sold: a. mineral violation. miscellaneous products. as the case may forfeited to the government with our require. year from forfeiture penalties and costs. It is a certain amount of money which the exercise tax. b. Where to be sole: also having the property transferred to another a. 1. b. In case of personal property – by the Revenue Collection Officer seizure and sale or destruction of e. If highest bid is for an amount b. Personal entitled – taxpayer or exposed for sale. Right of Redemption: a. taxpayer pays to compromise a tax automobile. tags. 3. Private sale: provided. labels or offense. there is with out the consent of the owner and wrongdoer. Since it is voluntary in character.

the liability of any person government may still collect the tax in the same 10. 8. b. Imposition of surcharge and Actions instituted by the interest. after decision on taxes. importer’s bond 14. A. 2. Reason: Tax is an obligation. criminal liability since the duty to pay the tax is 12. Manufacturer’s and incapacity his tax liability. TAX ATION San Beda College of LAW – ALABANG 1. generally facie showing of willful attempt to evade. a. case. Estate and donor’s tax b. Criminal Action tax and its accessory A direct mode of collection of penalties. Knowingly and fraudulently CTA evades payment of IR taxes. the judgment of which shall not his tax liability shall have only impose the penalty but also order become final and executory. independent of any attempt 13. Inspection of books An assessment of a tax deficiency Books of accounts and other is not necessary to a criminal prosecution accounting records of taxpayer for tax evasion. Conducted by Legal Officer of BIR equivalent to 10% of revenues. 3. Use of National Tax Register Does not exonerate taxpayer his civil 9. 3. Limited to violations of any depending on the amount involved) penal law or regulation When assessment made has administered by the BIR. 000. A deceased person to following instances: determine gross estate a. Giving reward to informers – Sum 2. search and seizure taxes in regular courts (RTC or MTCs. Requiring filing of bonds – in the a. within three years after date the tax return was due or was filed Effect of Acquittal on Tax Liability: whichever is later. for recovery and/or fine or penalty imposed and of taxes. Making arrest. does not arise from 11. Reason to believe that records do not correctly Will not operate to extinguish taxpayer’s reflect declaration in return. become final and executory for failure or committed with in the view of the taxpayer to: Internal Revenue Officer or EE. Registration of Taxpayers. business or occupation or Civil and Criminal Actions: to practice a profession can be 1. accounts of . whichever is lower. Civil Action 4. Person failed to issue Effect of Satisfaction of Tax Liability on Criminal receipts and invoices Liability b. Dispute same by filing protest with 6. Obtaining information on tax liability to pay the tax due. payment of taxes. Requiring proof of filing income tax returns • Judicial Remedies Before a license to engage in trade. 7. collected or P1. provided there is a prima must be preserved. Thus. in case of action. Inventory – Taking of stock-in-trade action. Appeal adverse decision of CIR to a. Exporter’s bond by reasons of financial d. or enforcement of a fine. government to collect internal revenue 5. Prescribing presumptive gross sales a criminal act. Prescribing real property values imposed by statute. Any taxpayer who filed b. Government of the Philippines. Willfully refuses to pay such B. Must be with the approval of the surcharges or fees recovered CIR. Deportation in case of aliens – on CIR the following grounds b. or receipt: a. Inquiring into bank deposit on past of taxpayers to evade payment.000. Excise taxes application for compromise c.00 per penalty or forfeiture. Brought in the name of the issued. and making surveillance.

Collector. May 20. It shall be considered as filed on such last must amount to intentional day. (Basilan Estates.) Exceptions: (Sec. False return Taxes. TAX ATION San Beda College of LAW – ALABANG This is true in case the criminal action is necessary and required to permit the based on the act to taxpayer of filing a false and computation and assessment of taxes fraudulent tax return and failure to pay the tax. General Rule: correct tax due. Intentional and substantial • An affidavit executed by a revenue office overstatement of deductions of indicating the tax liabilities of a taxpayer exemption and attached to a criminal complaint for c. Kei & Co. vs. Phoenix. 1. Intentional and substantial prescriptive period. avoiding the tax. The fraud contemplated by law is prescribed by law for the filing thereof actual and not constructive. 1974) amended return (CIR vs. A mere mistake the government right to assess the tax is not a fraudulent intent. . 4 SCRA 872) become final and executory. understatement of tax liability of vs. 1999) a. 1987) b. (Sinforo Alca vs. Pascoi Realty Corp. assessment. vs. statue of from the discovery of falsity or fraud. 1966) • A return filed before the last day b. Recurrence of the foregoing tax evasion. Aug. Keir. the • In computing the prescriptive period for fact of fraud shall be judicially assessment. • Fraud may be established by the following the law does not require that the : (Badges of Fraud) demand/notice be received within the a. Internal Revenue Taxes shall be fact whether intentional. the latter is deemed made taken cognizance of in the civil or when notice to this effect is released. in case it is filed a. Where a return was filed but the same was Purpose: false or fraudulent – within ten (10) years For purposes of Taxation. Inc. impute fraud in the assessment because they do not contain information notice/demand for payment. criminal action for the collection mailed or sent by the Commissioner to the thereof. Sept. 222 paragraph (a)) correct address of the taxpayer. SCRA 17. limitation is primarily designed to protect the rights of the taxpayer’s against unreasonable Note: investigation of the taxing authority with respect • Fraudulent return to assessment and collection of Internal Revenue vs. The filing thereof is intended and It merely implies a I. 29. Commissioner 21. assessed within three (3) years after the last day prescribed by law for the filing of the return or from the day the • Nature of Fraud: return was filed. ( CIR vs. 222 ic) the grounds for the extinction of criminal action. c. 23. • Instances/Circumstances negating fraud: June 29. Where no return was filed . Prescription of Government’s Right to Deceitful with the aim of evading the Assess Taxes: deviation from truth of A. Dec. Fraud is never presumed and the beyond the period prescribed thereof. (Sec. 30. Commissioner. (Aznar shall commence from the filing of the case. 1964) Note: The satisfaction of civil liability is not one of B. cannot be deemed an circumstances. When the Commissioner fails • A transcript sheets are not returns. circumstances consisting it must be (Section 203 of the Tax Code) alleged and proved to exist by clear & convincing evidence Note: (Republic vs. wrongdoing with the sole object of • In case a return is substantially amended. CA April 30. A fraud assessment which has 1965. 2.within ten (10) • PRESCRIPTIVE PERIODS/STATUTE OF years after the date of discovery of the LIMITATION omission. However. Republic the taxpayer.

return – a court proceeding for the b. at anytime c. March • Limitations: 31. date of assessment. Where a fraudulent/false return a. When the Commissioner failed to (Carmen vs. may be collected be particular period of assessment. been assessed within the period of e. Assessment of unpaid taxes. Where no return is required by law. 3.the three (3) year period of limitation have tax should be collected within 3 agree in writing to the extension of said years after the return was due or period. without assessment. Where an assessment was made – sure” as to the real amount of the Any internal revenue tax which has taxpayer’s net income. without assessment. Where no assessment was made 3. of the period previously agreed upon. Where the BIR itself appeared. The waiver to be valid must be executed by the parties before the 2. “not 1. was filed. c. 3. where the Note: bases of which is not required by law to be • Distinction reported in a return such as excise taxes. Where the commissioner and the and a return was filed and the taxpayer. Ayala Securities Corp. before the expiration of the same is not fraudulent or false. . documentary stamp tax. at anytime b. 2.. the ordinary 5-year period (now Note: 3 years) would apply (Rep. Exceptions: • Limitations: 1. 1962) a. upon in writing before the 2. General Rule: d. the expiration of 5-year period. The agreement to extend the same within ten years after the discovery should be mode before the expiration of the falsity or fraud. Nov. which has C) Imprescriptible Assessments: been assessed within the period 1. The agreement extending the period of with intent to evade taxes was filed prescription should be in writing and a proceeding in court for the duly signed by the taxpayer and the collection of the tax may be filed commissioner. The commissioner can not valid agree within 10 years after the discovery to reduce the prescriptive period to of the omission. TAX ATION San Beda College of LAW – ALABANG b. Prescription of Government’s Right to time in his memorandum which Collect Taxes was filed the CTA after he had rested his case. Note: B. tax is imprescriptible. appears that there was an assessment. Assessment of compensating and the case is appealed to the CTA. allege in his answer to the 1980) taxpayer’s petition for review when 4.. Waiver of statute of limitations – any internal revenue tax. whichever is later. A waiver is inefficient I it is executed collection of such tax may be filed beyond the original three year. the tax distinct or levy of by a proceeding sought to be assessed becomes in court within the period agreed imprescriptible. Note: 4. A mere understatement of income limitation may be collected by does not prove fraud. When the Commissioner raised the question of fraud only for the first II. 21. In such case. A. When the taxpayer omits to file a lapse of the prescriptive period. unless there distraint or levy or by proceeding in is a sufficient evidence shaving court within 5 years following the fraudulent intent. less than that granted by law. vs. Where there is a written waiver or • The 10-year prescriptive period for renunciation of the original 3-year collector thru action does not apply if it limitation signed by the taxpayer. Where the law does not provide for any agreed upon. Ret.

Collection by summary remedies – It is to the expiration of the period agreed effected by summary methods when upon. both the commissioner C. Where before the expiration of the is ten years. March 30. Day of the commission of the violation. prescriptive period. When a proceeding is instituted from the last assessment. by a surety bond – the government . Where assessment of the commissioner is protected & appealed a. vs. During which the to the CTA – the collection begin when Commissioner is prohibited the government file its answer to from making the assessment taxpayer’s petition for review. 3. on making an assessment and the 2. (Rep. of be valid. may be raised: a. lower court but pending decision on appeal. b. TAX ATION San Beda College of LAW – ALABANG a. if know. 7. writing to its assessment after such time. Agreement to extend period of vs. Note: Prescription is till binding to the • When it should commence? : The five (5) year prescriptive period shall begin to run Taxpayer although made beyond from the such a. If not known. Where a tax obligation is secured court. Interruption of the Prescriptive Period between the commission and the taxpayer – the prescriptive period 1. Rules of Prescription In Criminal Cases Prescription. Where the government makes discovery and the institution of judicial another assessment on the basis of proceeding for its investigation and reinvestigation requested by the punishment. Agreement renouncing III. (RTC) shall be suspended for the period. or beginning distraint/levy or . It must be made before the period of prescription A. In criminal case – It can be raised even contractual obligation within a if the case has been decided by the period of ten years. taxpayer – the prescriptive period • When it is interrupted: for collection should be counted a. • When it should run again : When the proceeding is dismissed for reason not 5. Rule: All violations of any provision of the Expiration of the period agreed upon to tax code shall prescribe after five (5) an agreement waiving the defense years. time prescribed for the assessment of the tax. In civil case – If not raised in the lower 6. When the offender is absent from the Philippines. Collection by judicial action – The beginning of distraint/levy or a collection begins by filing the proceeding in court for collection complaint with the proper court. the government avail of distraint and 2. the period for collection is counted • When does the defense of prescription from the last revised assessment. against the guilty person Lopez. Where the action is brought to enforce a compromise entered into IV. 1963) b. from the time of 4. Where the assessment is revised Constituting because of an amended return – jeopardy. forfeit a bond and enforce such b. When tax is deemed collected for and the taxpayer have consented in purposes of the prescriptive period. The running of statute of limitations levy procedure. it is bailed permanently. the tax may be assessed prior 1. b.If can not be raised for the first time on may proceed thru a court action to appeal.

Filing of a petition or request for d. taxpayer is entitled. When the taxpayer requests deemed waived. The question of prescription is not granted by commissioner. When the taxpayer is out of Judicial the Philippines. Appeal to the Court of Tax Appeals . and /or the taxpayer. Entering into compromise 2. Philippines. 2. In criminal cases for violation of tax code – the period shall not run when a. In the event that the collection of the tax the running of the prescriptive has already prescribed. of the tax before the criminal action may  When CTA suspends the be instituted. Filing of claim for tax credit located. A mere request for 4. the government period. cannot invoke the principle of Equitable The request must not be a recumbent by setting. Note: Administrative If the taxpayer informs the Commissioner of any change in (1) Before Payment address the statute will not be suspended. The prescriptive provided in the tax code reinvestigation without any over ride the statute of non-claims in the action or the part of the settlement of the deceased’s estate. Filing of claim for tax refund. his authorized representative (2) After Payment 3. and as defense it must be raised reasonably otherwise it is deemed Note: waived. from filing an ordinary • Reason: No requirement for assessment action to collect the tax. a.g. Substantial tax against a tax refused to which the issues must be raised. The law on prescription remedial measure proof that its collection may should be interpreted liberally in order to jeopardizes the government protect the taxpayer. Commissioner does not interrupt 5.  Filing a petition for review in Note: the CTA from the decision of • A petition for reconsideration of a tax the Commissioner. otherwise it is b. taxpayer b. e. collection of tax liability of the taxpayer pursuant to Nota Bene: Section 11 of RA 1125 upon 1. The defense of prescription must be raised by the taxpayer on time. (1) Civil action 3. for reinvestigation which is 3. with sufficient discretion and and no property could be b. When the warrant of distraint reconsideration or or levy is duly served upon reinvestigation (Administrative any of the following person: Protest). c. TAX ATION San Beda College of LAW – ALABANG a proceeding in court and for the offender is absent from the 60 days thereafter.off the prescribed mere pro-former. e. When the taxpayer cannot be located in the address given TAXPAYER’S REMEDIES by him in the return. jurisdictional. 1. The assessment does not suspend the criminal commissioner is prevented action. Member of his household a.

or Taxpayer or his duly authorized representative c. Action for Damages over and automatically applied the same amount claimed against the (2) Criminal Action estimated tax liabilities for the taxable quarter or quarters of the succeeding a. as the case registered mail or personal delivery.4. When an article locally purchased or imported by an exempt person. When the excise tax due on excisable Revenue officials and articles has not been paid. reinvestigation. may be. the computation of the tax as appearing on the face of the return. (3. (c) designation and following cases: authority to act for and in behalf of the taxpayer. and (d) date of receipt a. machineries. Issuance of written a Preliminary Assessment Notice (PAN) after review and evaluation by the Formal Letter of Demand and Assessment Assessment Division or by the Commissioner or Notice shall be sent to the taxpayer only by his duly authorized representative. such as. he or both. 6. Procedure otherwise. calling for payment reinvestigation of an assessment on the basis of of the taxpayer’s tax liability. TAX ATION San Beda College of LAW – ALABANG b. vehicles.a plea for the transferred to non-exempt persons. or employees. shall be considered in default. When the finding for the deficiency tax thereof. Filing of complaint against taxable year. Action to contest forfeiture of creditable withholding tax for a taxable chattel. of the letter of demand showing the following: (a) Assessment Notice shall not be required in the his name. traded or Request for reconsideration. in which case.2. the formal letter of demand and assessment notice shall be void. or b. but not limited to. When a discrepancy has been Disputed Assessment determined between the tax withheld and the amount actually remitted by the withholding agent. or erring Bureau of Internal d. (b) signature. and spare parts. Issuance of a Formal Letter of Demand and Assessment Notice issued by the Commissioner Issuance of Assessment or his duly authorized representative. if acknowledged or received by a person other than the taxpayer himself. the laws.a plea for shall be caused to be issued. 12-99 dated Sept. rules and regulations. or jurisprudence on which the assessment is based. 228 of the 1997 NIRC) If sent by personal delivery. and period was determined to have carried c. Shall state the facts. 1999). capital ADMINISTRATIVE PROTEST equipment. re-evaluation of an assessment on the basis of existing records without need of additional If the taxpayer fails to respond within fifteen evidence. When a taxpayer who opted to claim a may administratively protest against a Formal refund or tax credit of excess . a formal letter of demand and assessment notice Request for reinvestigation.1.1. Revenue Regulations taxpayer intends to present in the No. (Sec. 1999). A valid PAN shall be in writing stating the law and facts on which the assessment is made. the taxpayer or his duly authorized representative shall acknowledge receipt thereof in the duplicate copy Under Sec. Revenue Regulations No. 6. 228 of the 1997 NIRC a Pre. inclusive of the newly-discovered or additional evidence that a applicable penalties (3. It may involve a question of fact or law (15) days from the date of receipt of the PAN. It may also involve question of fact or law or both. 12-99 is the result of mathematical error in dated Sept. e. has been sold.

f. Name of the taxpayer and address for the immediate past three taxable years. as a Under Sec. 2142 & 2154 of the Civil request for reinvestigation. Code). Legal Basis b. applicable surcharge and/or interest. For this purpose. reinvestigation of an assessment shall be  Collection letter to be issued calling for accompanied by a waiver of the Statute of the payment of deficiency tax. applicable law. and decision shall become final and executory i. either administratively or judicially through an appeal in the CTA. the from receipt of the assessment notice. the support of the protest. if the taxpayer fails to file an administrative protest within the reglementary 30-day Failure of taxpayer to state the facts. Itemized statement of the findings to which the taxpayer agrees. Date of receipt of assessment notice or Scope of Claims letter of demand. rules and regulations. the taxpayer g. Documentary evidence as it may deem necessary and relevant to support its protest to be submitted within sixty Several issues in the assessment notice but (60) days from the filing of the protest. or is the agreed portion of the tax is paid not acted upon within one hundred eighty (180) first. or assessment becomes final. which the Commissioner may credit or refund taxes: . Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence Legal Principle of quasi-contracts or that he intends to present it it is a solutio indebiti (see Art. upon the filing of the protest.  As provided in Sec. 27. the assessment shall become final (Revenue Regulation No.  No action shall be taken on the disputed Effect of taxpayer’s failure to file an issues until payment of deficiency taxes administrative protest or to appeal BIR’s decision on undisputed issues to the CTA  Prescriptive period for assessment or collection of taxes on disputed issues shall be suspended. the render his protest void and without force and assessment can no longer be disputed effect. Contents: a. Fund Insurance Co) d. the protest shall not be deemed validly filed unless payment of If the protest is denied in whole or part. e. and Assessment Notice Number. Taxable periods covered by the principle of solutio indebiti (CIR vs. TAX ATION San Beda College of LAW – ALABANG Letter of Demand and Assessment notice within amount should be paid immediately thirty (30) days from date of receipt thereof. or from lapse of the h. Amounts and kind/s of tax involved.) tax or taxes attributable to the undisputed A request for reconsideration or issues. days from submission of documents.  Assessed already tax collectible. 228 of the Tax Code. Statement of facts and/or law in one hundred (180)-day period: otherwise. Itemized schedule of the adjustments adversely affected by the decision or inaction with which the taxpayer does not may appeal to the CTA within 30 days from agree. including Limitations in favor of the Government. The Government is within the scope of the c. if any. 204 and 209 of the 1997 NIRC basis for computing the tax due. Fireman’s assessment. jurisprudence on which his protest is based shall  After the lapse of the 30-day period.  Taxpayer required to pay the deficiency 12-85. 1985. taxpayer only disputes/protests validity of some If the taxpayer fails to comply with this of the issues requirement. receipt of the said decision. dated Nov.

107 Phil 232). vs. 1997 (a) Erroneously or illegally assessed or NIRC).. categorical language. therefore. Oct. (c) Any sum alleged to have been 204 (c) & 229 1997 NIRC) excessive or in any manner wrongfully collected The value of internal revenue stamps  Requirement a condition precedent and when they are returned in good condition by the non-compliance therewith bars recovery purchaser may also be redeemed.  It must be shown that payment was an Palanca Jr. of taxes relative thereto (Panay  Except: Tax credit or tax refund where on Electric Co. vs. 7. 819) . Inc. CTA Case No. Claim for refund or tax credit must be A tax is illegally collected if filed or the suit proceeding thereof must be payments are made under duress. such payment appears clearly to have been erroneous. Acetylene Co. become between the two parties (government part of the state moneys subject to and taxpayer) as to the proper tax to expenditure and perhaps already spent or be paid and of the proper appropriated (CIR vs. TAX ATION San Beda College of LAW – ALABANG is made. 1962). Categorical demand for reimbursement fact. 229. 29. but also the judicial claim or the action for  Refund claim partakes of the nature of an refund the taxpayer should commence exemption which cannot be allowed unless with the CTA (see Gibbs vs. (Sec. and TAX REFUND TAX CREDIT Statutory Requirements for Refund Claims There is actually a The government reimbursement of issues a tax credit a. L-11875. CIR 87 Phil 96). as for instance in a case where he is not aware of the existing exemption in his favor at the time payments were made c. (CIR vs.. period may be had when: collectible and accepted by the (1) there is a pending litigation government. Collector of granted in the most explicit and Internal Revenue. Inc. (Sec. which can be applied  Reasons: (a) to afford the commissioner after proper an opportunity to correct the action of verification. 1321. Collector of the face of the return upon which payment Internal Revenue 103 Phil.. against subordinate officer and (b) to notify the any sum that may be government that the taxes sought to be due and collectible refunded are under form the taxpayer  question and that. Li Yao. Dec. collected internal revenue taxes Taxpayer pays under the mistake of b. independent single act of voluntary  Suspension of the 2-yaer prescriptive payment of a tax believed to be due. L-16626. and which therefore. such notice (2) the commissioner in that litigated should then be borne in mind in case agreed to abide by the decision of estimating the revenue available for the Supreme Court as to the collection expenditure (Bermejo vs. (Phil. Commissioner. commenced in court within two (2) years from date of payment of tax or penalty (b) Penalties imposed without authority regardless of any supervening event.  Refers not only to the “administrative” Necessity of Proof for Refund Claims claim that the taxpayer should file within 2 years from date of payments with the BIR. Nov. Johnson and  Taxpayer may file an action for refund in Sons the CTA even before the Commissioner  Failure to discharge burden of giving proof decides his pending claim in the BIR is fatal to claim (Commissioner of Internal Revenue vs. in relation to the disputed tax. interpretation of the taxpayer’s charter 28. 1966). Written claim for refund or tax credit the tax memo covering the filed by the taxpayer with the Commissioner amount determined to be reimbursable  This requirement is mandatory. 1963).

disputed assessment or claim for tax refund or credit. Interest on Tax Refund b. Refund or credit after such time earn following: interest at the rate of 6% per annum. Tax assessed has not been paid. or effectively zero-rated Coll.R. pay interest on taxes refunded to the taxpayer c. the decision payment of the last installment (CIR vs becomes final and executory. Jr. TAX ATION San Beda College of LAW – ALABANG  Even if the 2-year period has lapsed the Victorias Milling Corp. supra) the taxpayer adversely affected has not received the decision or ruling. Taxpayer has filed with the Commissioner of Internal Revenue a petition for the reconsideration or The Government cannot be required to cancellation of the assessment. starting after the lapse of the 3-month period to the date the reund or credit is made ( Sec 79 (c) (2) 1997 Corporations NIRC) 2-year prescriptive period for overpaid quarterly income tax is counted not from the date the corporation files its quarterly APPEAL to the CTA income tax return. suspended for reasons of equity and other 2. Co. but from the end of the taxable  Motion for reconsideration suspends the year (Gibbs vs. 1995). Final decision or ruling has been unless: rendered on such petition. Commissioner of Internal running of the 30 –day period of perfecting Revenue. G.. Phil. (Republic vs. Jan.R. taxpayer may appeal the same within thirty (30) days after receipt. the wages of employees. No. Suit or proceeding in the CTA is made 1.. it could not Prescriptive period counted not from become final and executory. 18 SCRA 861) to the BIR. No. otherwise. 2-year period computed from the end of the taxable quarter when the sales Requirements for Appeal in Disputed transactions were made (Sec. it would be merely pro VAT Registered Person whose sales are zero-rated forma. d. No. 112 (A) Assessment 1997 NIRC).. Nov. (Roman Catholic Archbishop vs. a. Jan. TMX Sales. R. 1992). L-16683. Must advance new grounds not previously alleged to toll the reglementary period. Inc. American Life Ins. 1125)  Appeal equivalent to a judicial action 2-year period is counted form the  In the absence of appeal. 11. May 29. 31.. he could not appeal the same to the CTA within 30 Withholding Taxes days from notice. But where Palanca. Effect of Failure to Appeal Assessment . G. Taxes payable in installment (Sec. Inc. 15. 1962). but from the date the final adjusted return is filed after the taxable year (Commissioner of Internal  Adverse decision or ruling rendered by the Revenue vs. In case of Income Tax withheld on special circumstances. L-19607. the date the tax is withheld and remitted De la Rama. supra) an appeal. Commissioner of Internal Revenue in 83736. Hence. 105208. 29. (CIR vs.. Any excess of the taxes withheld over the  2-year prescriptive period for filing of tax tax due from the taxpayer shall be returned or refund or credit claim computed from date credited within 3 months from the fifteenth (15th) of payment of tax of penalty except in the day of April.A. The Commissioner acted with within 30 days from receipt of the patent arbitrariness decision Arbitrariness presupposes inexcusable or obstinate disregard of legal provisions (CIR vs. same is not jurisdictional and may be 1966).

1997 NIRC) otherwise violate the provisions of the tax Action is partakes of the nature of an ordinary code. Taxpayer has filed with the CIR a enforcement of the provisions of the Tax Code written claim for refund or tax credit who commits any of the following offenses: within 2 years from payment of the tax or penalty. 7) Making or signing any false entry or entries in any book. and c. 231. declined. Taxpayer barred. mentioned in no. (see Secs. government. period of two years from the date of 2) Willful oppression and harassment of a payment regardless of any taxpayer who refused. agent or employee of the BIR a. TAX ATION San Beda College of LAW – ALABANG Revenue officer acting negligently or in bad faith or with willful oppression would be a. in an action for personally liable. failure to report duty. ND . 204. OFFICIALS 8) allowing or conspiring or colluding with another to allow the unauthorized withdrawal or recall of any return or Taxpayer may file an action for damages statement after the same has been against any internal revenue officer by reason of officially received by the BIR. b. 3) Knowingly demanding or receiving sums or compensation not authorized or ACTION CONTESTING FORFEITURE OF prescribed by law. or as otherwise required by law. superior officer. FILING OF CRIMINAL COMPLAINT AGAINST REVENUE OFFICERS Requirements for Appeal in Refund and Tax Credit A taxpayer may file a criminal complaint against any official. or nay false certificate ACTION FOR DAMAGES AGAINST REVENUE or return. file claim for forfeiture. the owner desiring to contest or submit a report or assessment on a the validity of the forfeiture may bring an action: txpayer without the appropriate a. down or rejected any of his offers 229 1997 NIRC). or offering or undertaking to seizing the property or in possession submit a report or assessment less than thereof upon filing of the proper bond to the amount due the government for any enjoin the sale. 5. or b. He ceases to be an officer of the collection of the tax by the law and becomes a private wrongdoer. Suit or proceeding is instituted in the 1) Extortion or willful oppression through the CTA also within the same prescriptive use of his office. any act done in the performance of official duty 9) Having knowledge or information of any or neglect of duty. consideration or compensation. After the sale and within 6 months to conspiring or colluding with another or recover the net proceeds realized at the others to defraud the revenues or sale (see. or return. from using defense of excessive or illegal assessment. or any other agency charged with the b. turned supervening cause. In case of seizure of personal property under 5) Offering or undertaking to accomplish. Sec. Before sale or destruction of the property examination of the books of account or tax to recover the property from the person liability. Tax has been paid. taxpayer’s recourse is under Art 27 of the such knowledge or information to their Civil Code. CHATTEL 4) Willfully neglecting to give receipts as by law required or to perform any other duties enjoined by law. Assessment is considered correct. In case of willful neglect of violation of the Tax Code. civil action for recovery of personal property or 6) Neglecting or by design permitting the the net proceeds of its sale which must be violation of the law or any false certificate brought in the ordinary courts and not the CTA.

In abatement uses such as: b. Government Remedies: c. (see. Claim for refund—a written claim for refund may be submitted by the importer: a. 1204. articles entered under of any charge or complaint for any warehousing entry not violation of the Tax Code. demanding a. TCC. TAX ATION San Beda College of LAW – ALABANG 10) Without the authority of law. 269. while the goods are still within the customs jurisdiction. Seizures The tax liability of the importer constitutes Generally applied when the penalty a personal debt to the government. in the hands or under the control of the importer or a. person who is aware thereof. unless the importation is merely attempted. . arrival. after the tax due. B. seized property. b. Judicial Action 2. b. abandoned articles. other than contraband. Extrajudicial sale shall have been established by proper 1. after liability to a. respectively of the taxpayer Note: Goods in the collector’s This is availed of when the possession or of Customs authorities importation is neither nor pending payment of customs duties improperly made are beyond the reach of attachment. on missing packages. withdrawn nor the duties and 1997 NIRC) taxes paid thereon within the Remedies under the period provided under Section Tariff and Customs Code 1908. taxes or other charges collectible by the Proceeds of sale are applied to the Bureau of Customs. Property in the customs custody shall be subject to sale under the following c. A. TCC) imposed when the importation is unlawful and it may be exercised This is availed of when the tax lien is lost even where the articles are not or by the release of the goods. or accepting money or other things of value fore the compromise or settlement b. Any deficiency or excess is expiration of the period allowed for the account or credit. or 1. deficiencies in the contents of 3. the provision of this code: and regardless of the ownership while still in the custody or control of the d. no longer in Customs Custody. Sec. Taxpayer’s Remedies In the case of attempted Administrative Recourse importation. articles lost or destroyed after such conditions. Sale of Property packages or shortage before arrival of the goods in the Philippines. administrative fine or forfeiture may be affected only. for the satisfaction of the same. is fine or forfeiture which is enforceable by action (Sec. Enforcement or tax lien administrative or judicial proceedings in conformity with A tax lien attaches on the goods. Any articles subject to a valid government lien for customs duties.

Commissioner of Custom in cases involving: Actual Distraint. property. Judicial relief 3. Civil Action see earlier discussion on the 8. TCC) 2. for manifest classical errors. Taxpayer is also liability but not from the possible diverted of the power of control over the criminal liability. Effected by having a list Effected by requiring d) other matters arising under the of the distraint property the taxpayer to sign a customs Law or other laws or by service or warrant receipt of the property administered by the Revenue of of distraint or or by leaving a list of Customs. Taxpayer is merely There is actual taking or prohibited from c) fines forfeitures or other penalties possession of the disposing of his imposed in relation thereto. Criminal Action subject Distraint of Personal Property c. Levy of Real Property 2. only of a delinquent taxpayer whether b) seizures. Forfeiture a. In seizure cases 7. dead or injured animals. . tax due where amount due is may not be definite or Enumeration of the Remedies definite.Seizure by the government of property personal property. (see section 1701-1708. TAX ATION San Beda College of LAW – ALABANG d. garnishment. Distraint of Personal Property f. property. tangible or intangible. Note: The owner or importer may c. Tax Lien In drawback cases where the goods 4. same An immediate step for Such immediate step is Remedies of the Government collection of taxes not necessary. Protest 6. Actual – There is taking of possession of abandon either expressly or By personal property out of the taxpayer into importation in favor of the Government that of the government. Constructive – The owner is merely of Appeals which has exclusive prohibited from disposing of his personal jurisdiction to review decisions of the property. if the taxes are not voluntarily subject paid. fees or Made on the property property of any other money charges. Settlement of case by the payment of fine or redemption of forfeited Distraint. to enforce the payment of faces. and property. In case of thus relieving himself of the tax intangible property. to be followed by see earlier discussions on the its public sale. and 1. Compromise are re-exported 5. Constructive Distraint May be made on the a) liability for customs duties. The taxpayer may appeal to the Court d. it is being questioned. Other Administrative Remedies see the earlier discussions on “Customs Protest Cases” Judicial b. articles lost or destroyed Administrative e. detention or release of taxpayer. delinquent or not property affected.

Debts and credits on the abatement of the collection of tax as the cost of same might even be more than P100. Taxpayer is delinquent in the payment of tax. signed by the officer. RDO or less a. Period with in to assess or collect has not yet prescribed. 8. treasurer or other responsible officer of the issuing When remedy not available: corporation. 206 TC) manager. b. 5. 1 is not essential taxpayer and upon president. c. Subsequent demand for its payment. 6. requisite no. left either with the owner or person . 205 TC). (see Sec. Amount How constructive Distraint Effected Who may effect distraint Involved 3. Bank shall turn over to CIR so much of the bank accounts as may be sufficient.00 to P1. Serve warrant upon taxpayer and president. 3. Disposition of proceeds of the sale. 3. 7.00 4. 4. Bank Accounts – garnishment notice to the taxpayer specifying time and place of sale and the articles distrained.000. Taxpayer must fail to pay delinquent tax at 4. authority for such person to pay CIR his credits or debts.000. Where amount involved does not exceed P100 (Sec.000.000. In case of constructive Serving a copy of the warrant upon distraint. Posting of notice is not less than two places in the municipality or city and c. Service of warrant of distraint upon taxpayer or upon person in possession of 4. 6. In case of intangible property: time required. Leaving a copy of the warrant with the person owing the debts Procedure: or having in his possession such credits or his agent. commissioner or his due In excess of 3. Warrant shall be sufficient taxpayer’s personal property. manager. Require taxpayer or person in possession authorized representative P1. at the dwelling or place of business Requisites: and with someone of suitable age and discretion 5. Sign a receipt covering property distrained b. with out the authority of distrained. In keeping with the provision b. the CIR. 3. company or association. Sale at public auction to highest bidder treasurer or responsible officer of the bank. a. TAX ATION San Beda College of LAW – ALABANG from whom property was taken. Prohibit him from disposing the property from disposing the property in a. Statement of the sum demanded. Copy of an account of the property any manner. Obligate him to preserve the same How Actual Distraint Effected properties. Time and place of sale. 7. Stocks and other securities 8. In case of Tangible Property: c.

Taxpayer is retiring from any business subject to tax. Philippines. the taxes are not voluntarily paid. . RD where property is located. Service of written notice to: 8. 4. If at any time prior to the consummation him of the sale. Sale at public auction to highest bidder. Distraint and Levy compared . out having to know how much the deposits are or where the money or any part of it Redemption of property sold or forfeited came from. 10. To remove his property there from. Name of taxpayer b. the CIR or his deputy may purchase the g. the f. The requisites are the same as that of distraint. Taxpayer hides or conceals his property. seizure. c. Taxpayer acts tending to obstruct collection proceedings. Grounds of Constructive Distraint . Cannot be extended by the courts. 10. Disposition of proceeds of sale. all proper charges are paid to the officer conducting the same. d. The from date of purchase to date of property may be sold at public sale. The taxpayer. h. Officer shall write upon the certificate a description of the property upon which 7. Penalty due. International Revenue officer shall prepare a. TAX ATION San Beda College of LAW – ALABANG 4. Bank accounts may be distrained with out violating the confidential nature of bank 12. 8. if after redemption. Taxpayer is intending to leave the levy is made. Possession pending redemption – owner distrained property on behalf of the not deprived of possession national government. Note: 11. BIR simply seizes so much of the deposit with The excess shall be turned over to owner. enforceable through out the Philippines 6. accounts for no inquiry is made. In the presence of two witnesses of sufficient age and discretion. Price: Amount of taxes. Person entitled: Taxpayer or anyone for 5. a. or 9. c. than the actual market value of articles. Time to redeem: one year from date of goods distrained shall be restored to the sale or forfeiture owner. e. and 9. Begins from registration of the deed of 6. Advertisement of the time and place of sale. Officer shall prepare list of the a duly authenticated certificate showing property distrained. property under distraint is not equal to the amount of the tax or is very much less . Amount of tax and copy in the premises where property is located. penalties and Levy of Real Property interest thereon from date of delinquency to the date of sale together with interest Levy – Act of seizure of real property in on said purchase price at 15% per annum order to enforce the payment of taxes. Where Taxpayer or person in possession Procedure: refuses to sign: 7. When the amount of the bid for the sale or declaration of forfeiture. leave a b.

In case Nos. TAX ATION San Beda College of LAW – ALABANG 7. established by law as a security in default of the payment of 4. by reciprocal concessions. including all expenses. Effectivity against third persons: 8. . levied upon and sold/forfeited to the government. 7. This is superior to judgment claim of Tax Lien—a legal claim or charge on private individuals or parties property. Taxpayer must have a tax liability. Distraint – forfeiture by government. Payment or remission of the tax Levy – forfeiture by government authorized where there is no bidder or the 6. Distraint concerned upon registration of the declaration of forfeiture.\ or put an end to one already commenced. the taxpayer Note: is still liable. Under nos. Nature: Compromise A lien in favor of the government of the Philippines when a person liable to pay a Compromise—a contract whereby the tax neglects or fails to do so upon parties. collected. is regardless of its owner. It is the duty of the Register of Deeds Enforcement of Tax Lien vs. There must be an offer by taxpayer or CIR. Both cannot be availed of where amount involved is not more than P100. Duration: Requisites: Exists from time assessment is made by 4. 5. although it need not be the 6. The remedy of distraint or levy may be property in respect to the tax is assessed. Note: Enforcement of Tax Lien 3. penalties and costs. there is no more tax liability. not Extinguishment of Tax Lien provided 5. avoid litigation demand. 7. 8. 9. 1 and 2. penalties and costs. Tax repeated if necessary until the full lien is directed to the property subject to the tax. Upon all property and rights to property belonging to the taxpayer. 5. of an amount to be paid by taxpayer. either real or personal. with interests. in distraint the property seized must be that from a competent court of the taxpayer. 3. amount. was served but from the time the tax was due and demandable. taxes. Destruction of the property subject to the Levy – Taxpayer can redeem properties lien. 3 and 4. Distraint – Taxpayer no given the right of judgment creditor. redemption 8. Extent: 6. 2. Prescription of the right of the government highest bid is not sufficient to pay the to assess or collect. Attaches not only from time the warrant taxes. the CIR until paid. Failure to file notice of such lien in the office of register of Deeds. Both are summary remedies for collection of taxes. Distraint – personal property Only when notice of such lien is filed by the CIR in the Register of Deeds Levy – real property concerned. purchases or 10. to transfer the A tax lien is distinguished from disttraint in title to the property with out of an order that.

willing to pay them. If highest bid is for an amount 4. There must be acceptance of the offer in Compromise Penalty settlement of the original claim. 4. except: Enforcement of forfeiture a. b. General Rule: The power to compromise or abate shall not be delegated by the d. d. When forfeited property to be destroyed Remedy in case of failure to comply: or sold: The CIR may either: c. . in consequence b.00 or . 10% of the basic tax assessed – in case of financial incapacity. No bidder for the real property b. With in two days thereafter. In case of personal property – by Delegation of Power to Compromise seizure and sale or destruction of the specific forfeited property. regional offices involving basic taxes of P 500 K or less. c. When basic tax involved exceeds P1. enforce the compromise. Minimum compromise rate: 8. 5. The financial position of the taxpayer 6. 9. Regard it as rescinded and insists upon prejudicial to the enforcement of the original demand. TAX ATION San Beda College of LAW – ALABANG 6. 5. 11. Where settlement offered is less than the prescribed minimum 10. Those involving fraud. It includes the idea of not only losing but also having the property transferred to another with out the consent of the Limitations: owner and wrongdoer. c. Those already filed in court Forfeiture—implies a divestiture of property with out compensation. It is a certain amount of money which the When taxes may be compromised: taxpayer pays to compromise a tax violation. the same demonstrates a clear inability to pay the may be collected only if the taxpayer is assessed tax. as the case may may compromise the assessment issued by the require. How enforced: rates. Since it is voluntary in character. It is pain in lieu of a criminal prosecution. In case of real property – by a commissioner. penalties and costs. Effect: Transfer the title to the specific thing from the owner to the government. judgment of condemnation and sale in a legal action or proceeding. of a default or offense.000. 4. or or use of the following would be injurious to the public health or 4. A reasonable doubt as to the validity if the claim against the taxpayer exists. Exception: The Regional Evaluation Board civil or criminal. When available: a. 3. Subject to approval of Evaluation Board insufficient to pay the taxes. a return of the proceeding is duly made. a. 6.000. Criminal violations. 40% of basic tax assessed – other exposed for sale. cases. To be destroyed – by order of the CIR when the sale for consumption 3.

Willfully refuses to pay such tax and its accessory penalties. Right of Redemption: 9. Making arrest. non-essential items a petroleum Before a license to engage in trade. Requiring filing of bonds – in the following 6. products) manufactured or business or occupation or to practice a removed in violation of the Tax profession can be issued. automobile. the approval of the Secretary of committed with in the view of the Internal Finance. Giving reward to informers – Sum stamps. Imposition of surcharge and interest. (wine. in equivalent to 10% of revenues. labels or tags. c. Where to be sold: 7. a. Time to redeem – with in one (1) year from forfeiture d. surcharges imitation of or purport to be or fees recovered and/or fine or penalty lawful stamps. Manufacturer’s and importer’s bond exercise tax.00 per case. All apparatus used in or about instances: the illicit production of such articles. g. 13. tobacco Other Administrative Remedies 5. Exporter’s bond 3. Knowingly and fraudulently evades payment of IR taxes. Code. Public sale: provided. it is with regulation administered by the BIR. and other government with our necessity of an order from a manufactured products of competent court. To be sold or destroyed – depends upon the discretion of CIR c. Deportation in case of aliens – on the following grounds f. imposed and collected or P1. after decision on h. 4. mineral products. Estate and donor’s tax b. whichever is lower. Requiring proof of filing income tax returns oils. search and seizure notice of not less than 20 days. Private sale: provided. 000. Revenue Officer or EE. Excise taxes d. manufactured 5. Effect of failure to redeem – forfeiture shall become absolute. 2. Limited to violations of any penal law or d. To whom paid – Commissioner or seizure) the Revenue Collection Officer 1. labels and tags. miscellaneous products. Inspection of books . cigars Note: The Register of Deeds is duty bound to transfer the title of property forfeited to the 4. plus and executory. distilled spirits j. liquors 3.000. TAX ATION San Beda College of LAW – ALABANG the law: (at least 20 days after i. All other articles subject to d. there is 8. playing cards 4. Dies for printing or making IR 6. Amount to be paid – full amount of his tax liability shall have become final the taxes and penalties. Personal entitled – taxpayer or anyone for him c. cigarettes. 12. interest and cost of the sale 10.

Statute Of Limitation Purpose: C. depending on the Books of accounts and other accounting amount involved) records of taxpayer must be preserved. Reason to believe that records do not correctly reflect declaration in return. Thus. Obtaining information on tax liability of any person D. Registration of Taxpayers. the 13. Civil Action For purposes of Taxation. criminal liability since the duty to pay the tax is imposed by statute. 2. Inventory – Taking of stock-in-trade and judgment of which shall not only impose making surveillance. the penalty but also order payment of taxes. for recovery of taxes. A deceased person to determine gross estate Effect of Satisfaction of Tax Liability on Criminal Liability d. Criminal Action A direct mode of collection of taxes. invoices Effect of Acquittal on Tax Liability: d. Appeal adverse decision of CIR to CTA 12. Brought in the name of the Government of Note: The satisfaction of civil liability is not one of the Philippines. Prescribing presumptive gross sales or receipt: An assessment of a tax deficiency is not necessary to a criminal prosecution for tax evasion. Use of National Tax Register d. or enforcement of a fine. Must be with the approval of the CIR.\ Does not exonerate taxpayer his civil liability to pay the tax due. 14. penalty or Prescriptive Periods / forfeiture. the grounds for the extinction of criminal action. 1. the 15. Judicial Remedies This is true in case the criminal action is based on the act to taxpayer of filing a false and Civil and Criminal Actions: fraudulent tax return and failure to pay the tax. c. does not arise from a criminal act. Conducted by Legal Officer of BIR 3. Any taxpayer who filed application for compromise by reasons of financial Will not operate to extinguish taxpayer’s incapacity his tax liability. Dispute same by filing protest with CIR 11. Prescribing real property values government may still collect the tax in the same action. TAX ATION San Beda College of LAW – ALABANG courts (RTC or MTCs. in case of action. Person failed to issue receipts and facie showing of willful attempt to evade. provided there is a prima c. on past of taxpayers to evade payment. statue of limitation Actions instituted by the government to is primarily designed to protect the rights of the collect internal revenue taxes in regular taxpayer’s against unreasonable investigation of . c. independent of any attempt 17. Inquiring into bank deposit accounts of Reason: Tax is an obligation. generally within three years after date the When assessment made has become final tax return was due or was filed whichever and executory for failure or taxpayer to: is later. 16.

the CTA after he had rested his case. Commissioner. Recurrence of the foregoing tax evasion. TAX ATION San Beda College of LAW – ALABANG the taxing authority with respect to assessment and collection of Internal Revenue Taxes. the fact of fraud shall commence from the filing of the shall be judicially taken cognizance of amended return (CIR vs. Keir. vs. in case it is alleged and proved to exist by clear & filed beyond the period prescribed thereof. . intent. assessment.within ten (10) question of fraud only for the first time years after the date of discovery of the in his memorandum which was filed omission. A transcript sheets are not returns. Dec. cannot be deemed an circumstances. Intentional and substantial overstatement of deductions of 4. 30. the latter is deemed made when notice to this effect is released. 4 SCRA 872) collection thereof. taxpayer. (Basilan Estates. Intentional and substantial demand/notice be received within the understatement of tax liability of the prescriptive period. A shall be considered as filed on such last mere mistake is not a fraudulent day. In case a return is substantially amended. A fraud assessment which has become the government right to assess the tax final and executory. ( CIR vs. (Sinforo Alca vs. SCRA 17. Assess Taxes: Nature of Fraud: General Rule: Internal Revenue Taxes shall be assessed within three (3) years after the last day a. convincing evidence (Republic vs. because they do not contain information a. Republic vs. 222 ic) c. 1966) Note: b. Fraud is never presumed and the prescribed by law for the filing of the return or circumstances consisting it must be from the day the return was filed. When the Commissioner raised the 5. However. 222 paragraph (a)) 3. Inc. Phoenix. Pascoi Realty Corp. 1964) b. An affidavit executed by a revenue office exemption indicating the tax liabilities of a taxpayer and attached to a criminal complaint for f. CA April 30. When the Commissioner failed to allege in his answer to the taxpayer’s petition for review when the case is appealed to the CTA. In computing the prescriptive period for assessment. 6. vs. the law does not require that the d. Where a return was filed but the same was false or fraudulent – within ten (10) years Prescription of Government’s Right to from the discovery of falsity or fraud. Aug. 1999) Instances/Circumstances negating fraud: 5. May 20. The fraud contemplated by law is actual and not constructive. June 29. (Sec. Fraud may be established by the mailed or sent by the Commissioner to the following : (Badges of Fraud) correct address of the taxpayer. 29. (Section 203 of the Tax Code) Sept. Where no return was filed . c. 23. in the civil or criminal action for the 1965. When the Commissioner fails impute necessary and required to permit the fraud in the assessment computation and assessment of taxes notice/demand for payment. Kei & Co. (Aznar case. Exceptions: (Sec. Commissioner 21. 1974) 2. Collector. It must 1. A return filed before the last day amount to intentional wrongdoing with prescribed by law for the filing thereof the sole object of avoiding the tax. 1987) e.

“not (Carmen vs. TAX ATION San Beda College of LAW – ALABANG reported in a return such as excise taxes. Where an assessment was made – Any internal revenue tax which has been c. Exceptions: Note: Limitations: 8. if it appears that there was an assessment. Where the law does not provide for any particular period of assessment. d. A mere understatement of income documentary stamp tax. The agreement extending the period of assessed within the period of limitation prescription should be in writing and may be collected by distraint or levy or duly signed by the taxpayer and the by proceeding in court within 5 years commissioner. The commissioner can not valid agree Note: The 10-year prescriptive period to reduce the prescriptive period to for collector thru action does not apply less than that granted by law.. General Rule: Note: Limitations: 1. Waiver of statute of limitations – any 3. does not prove fraud. where the internal revenue tax. vs. March 31. D. sure” as to the real amount of the 21. whichever renunciation of the original 3-year is later. the tax may be filed without assessment. before the expiration of the Prescription of Government’s three (3) year period of limitation have Right to Collect Taxes agreed in writing to the extension of said period. following the date of assessment. Ayala Securities Corp. which has been bases of which is not required by law to be assessed within the period agreed . Assessment of compensating and e. at anytime within ten e. The agreement to extend the same 2. Where no return is required by law. the tax 9. Where there is a written waiver or return was due or was filed. When the taxpayer omits to file a sought to be assessed becomes return – a court proceeding for the imprescriptible.the tax should be collected within 3 years after the 8. at anytime within 2.. Where no assessment was made and a should be mode before the expiration return was filed and the same is not of the period previously agreed upon. fraudulent or false. 4. limitation signed by the taxpayer. A waiver is inefficient I it is executed years after the discovery of the falsity beyond the original three year. 1962) 1. E. Assessment of unpaid taxes. 7. f. 1980) taxpayer’s net income. d. Where the BIR itself appeared. The waiver to be valid must be intent to evade taxes was filed a executed by the parties before the proceeding in court for the collection of lapse of the prescriptive period. the tax 10 years after the discovery of the is imprescriptible. Nov. Ret. omission. 10. collection of such tax may be filed without assessment. unless there is a sufficient evidence shaving fraudulent intent. or fraud. In such case. Where a fraudulent/false return with d. Where the commissioner and the taxpayer. the ordinary 5-year period (now 3 years) Imprescriptible Assessments: would apply (Rep.

(RTC) prescribed for the assessment of the tax. if know. During which the Commissioner is prohibited from making the assessment or Note: beginning distraint/levy or a proceeding in court and for 60 days thereafter. e. Day of the commission of the violation. Philippines. Where a tax obligation is secured by a surety bond – the government may When it should run again: proceed thru a court action to forfeit a bond and enforce such contractual When the proceeding is dismissed for obligation within a period of ten years. Where the government makes another assessment on the basis of d. Where the action is brought to enforce When does the defense of a compromise entered into between prescription may be raised: the commission and the taxpayer – the prescriptive period is ten years.g. In criminal case – It can be raised even if 4. Lopez. Collection by judicial action – The collection begins by filing the 4. c. reason not Constituting jeopardy. Where the assessment is revised the guilty person because of an amended return – the period for collection is counted from d. The running of statute of limitations on making an assessment and the beginning of distraint/levy or a proceeding in court Rules of Prescription in Criminal Cases for collection shall be suspended for the period. 5. 14. 13. Interruption of the Prescriptive Period 5. collection should be counted from the last assessment. Rule: All violations of any provision of the tax code shall prescribe after five (5) years. taxpayer’s petition for review. When tax is deemed collected for be raised for the first time on appeal. When the offender is absent from the the last revised assessment. d. Where assessment of the have consented in writing to its commissioner is protected & appealed assessment after such time. it is bailed permanently. from the time of discovery reinvestigation requested by the and the institution of judicial proceeding taxpayer – the prescriptive period for for its investigation and punishment. (Rep. When it is interrupted: March 30. In civil case – If not raised in the lower court. 11. vs. When a proceeding is instituted against 12. both the commissioner and the taxpayer 6. If not known. TAX ATION San Beda College of LAW – ALABANG upon. 1963) c. c. may be collected be distinct or The five (5) year prescriptive period shall levy of by a proceeding in court within begin to run from the: the period agreed upon in writing before the expiration of 5-year period. purposes of the prescriptive period. Where before the expiration of the time complaint with the proper court. if can not F. Collection by summary remedies – It is the case has been decided by the lower effected by summary methods when court but pending decision on appeal. the tax may to the CTA – the collection begin when be assessed prior to the expiration of the the government file its answer to period agreed upon. the government avail of distraint and levy procedure. When it should commence? .

taxpayer revenue taxes. . TAX ATION San Beda College of LAW – ALABANG a. and charges. Power of the Commissioner to tax assessment does not suspend the Interpret Tax Laws and to Decide Tax criminal action. or the part of the Commissioner does not interrupt the running of 10. Member of his household with decided in its favor by the Court of Tax sufficient discretion and no Appeals and the ordinary courts. recumbent by setting. and the enforcement of all forfeitures. Bureau of Internal Revenue. SEC. Nota Bene: The commissioner is prevented from filing an ordinary action to collect the 6. The defense of prescription must be raised Section 11 of RA 1125 upon proof that by the taxpayer on time. including the execution of judgments in all cases 6. When CTA suspends the collection of tax liability of the taxpayer pursuant to 7. fees. Philippines. The law on prescription remedial measure tax. cannot invoke the principle of Equitable Substantial issues must be raised.The Bureau of Internal Revenue shall be under e. When the taxpayer requests for raised reasonably otherwise it is deemed reinvestigation which is granted by waived. located in the address given by him in the return.off the prescribed tax against a tax refused to which the d. The property could be located. The request has already prescribed. In criminal cases for violation of tax Internal Revenue shall have a chief to be code – the period shall not run known as Commissioner of Internal when the offender is absent from Revenue. government and /or the taxpayer. 4. commissioner. In the event that the collection of the tax the prescriptive period. Chief Officials of the Bureau of Internal Revenue.The power to interpret the for assessment of the tax before the provisions of this Code and other tax laws criminal action may be instituted. shall be under the exclusive and original . When the warrant of distraint or the supervision and control of the levy is duly served upon any of the Department of Finance and its powers and following person: duties shall comprehend the assessment and collection of all national internal 4. __________________________________________________ _____SOME IMPORTANT PROVISIONS ON THE TAX Note: If the taxpayer informs the REFORM ACT OF 1997 Commissioner of any change in address the statute will not be SEC. The question of prescription is not jurisdictional. Commissioner and four (4) assistant chiefs to be known as Deputy Commissioners. b. otherwise it is its collection may jeopardizes the deemed waived. should be interpreted liberally in order to protect the taxpayer. . 9. hereinafter referred to as the the Philippines. 2. Powers and Duties of the suspended. 5. When the taxpayer cannot be taxpayer is entitled. When the taxpayer is out of the conferred to it by this Code or other laws. penalties. Filing a petition for review in the CTA from the decision of the Commissioner. Reason: No requirement Cases. Note: A petition for reconsideration of a SEC.The Bureau of g. Bureau shall give effect to and administer the supervisory and police powers f. The prescriptive provided in the tax code Note: A mere request for over ride the statute of non-claims in the reinvestigation without any action settlement of the deceased’s estate. 8. and as defense it must be c. the government must not be a mere pro-former. 3. his authorized representative and fines connected therewith. .

data. -controlled corporations. and financial (A) Examination of Returns and statements of corporations. costs and volume of production. insurance return has been filed as required companies. or any person having to review by the Secretary of Finance. may be liable to pay any internal record. fees or other charges. . or other data which may be revenue tax. and to give testimony. investigation. management or possession of any object with respect to which a tax (B) To obtain on a regular basis is imposed. to appear before the matters arising under this Code or other Commissioner or his duly laws or portions thereof administered by authorized representative at a time the Bureau of Internal Revenue is vested and place specified in the in the Commissioner. TAX ATION San Beda College of LAW – ALABANG jurisdiction of the Commissioner. refunds of internal revenue entries relating to the business of taxes. or from any office or nothing in this Section shall be officer of the national and local construed as granting the governments. or in collecting any such time to time of any revenue district liability. any information such as. and their members. regional operating under the provisions of this Code. under oath. and the Administration and Enforcement. papers. from any person other than the person whose internal revenue tax The provisions of the foregoing liability is subject to audit or paragraphs notwithstanding. . or in evaluating tax compliance. and to Summon. person concerned. SEC. . or in making a return when none has been made. authorized representative may associations. 6.After a fund companies. government Commissioner the authority to agencies and instrumentalities. and Take Testimony of may be relevant or material to such Persons. - names. but not limited SEC. Power of the Commissioner to (D) To take such testimony of the Obtain Information. mutual Determination of Tax Due. joint accounts. the correct amount of tax: Provided. or any imposed in relation thereto. possession. joint ventures of authorize the examination of any consortia and registered taxpayer and the assessment of partnerships. however. 5.In ascertaining the correctness inquiry. That failure to (C) To summon the person liable for file a return shall not prevent the tax or required to file a return. records. or Commissioner from authorizing the any officer or employee of such examination of any taxpayer. or in determining (E) To cause revenue officers and the liability of any person for any internal employees to make a canvass from revenue tax. inquire into bank deposits other including the Bangko Sentral ng than as provided for in Section 6(F) Pilipinas and government-owned or of this Code. paper. subject person. or region and inquire after and the Commissioner is authorized: concerning all persons therein who (A) To examine any book. subject to the summons and to produce such exclusive appellate jurisdiction of the books. or other Court of Tax Appeals. Power of the Commissioner to to. and of any return. inquiry. or care of the books of accounts and other The power to decide disputed accounting records containing assessments. custody. addresses. penalties the person liable for tax. and all persons relevant or material to such owning or having the care. headquarters of multinational the Commissioner or his duly companies. as Examine. or other other person. Make assessments and Prescribe receipts or sales and gross additional Requirements for Tax incomes of taxpayers.

or amended: Provided. receipts. together with a determining his internal revenue tax request for the immediate payment liabilities. sales payable immediately and shall be or receipts for internal revenue tax subject to all the penalties hereafter purposes. changed. That within failed to issue receipts and invoices three (3) years from the date of such in violation of the requirements of filing. after taking into Returns. In case a person fails to file a required return or other document at (D) Authority to Terminate Taxable the time prescribed by law. Sections 113 and 237 of this Code. incomplete or erroneous.When it shall come to the willfully or otherwise files a false or knowledge of the Commissioner that fraudulent return or other document. a taxpayer is retiring from business the Commissioner shall make or subject to tax. the same may be modified. receipts. taxpayer terminated at any time and order inventory-taking of goods of shall send the taxpayer a notice of any taxpayer as a basis for such decision. the provisions of this Code. . Reports and account the sales. the same or different taxable years . or Period. under observation or preceding year or quarter. records do not correctly reflect the statement or declaration has in the declarations made or to be made in meantime been actually served a return required to be filed under upon the taxpayer. statement of declaration and such assessment shall be filed in any office authorized to deemed prima facie correct. tax liabilities of such person. the Commissioner Receipts. Statements. . or is through testimony or otherwise.When a report or other taxable base of other required by law as a basis for the persons engaged in similar assessment of any national internal businesses under similar situations revenue tax shall not be or circumstances or after forthcoming within the time fixed considering other relevant by laws or rules and regulations or information may prescribe a when there is reason to believe minimum amount of such gross that any such report is false. sales and taxable base. shall declare the tax period of such at any time during the taxable year. performing any act tending to which shall be prima facie correct obstruct the proceedings for the and sufficient for all legal purposes. or is intending to amend the return from his own leave the Philippines or to remove knowledge and from such his property therefrom or to hide or information as he can obtain conceal his property. natural or terminated and the tax for the juridical. or may place the business of the tax for the period so declared operations of any person. or such surveillance if there is reason to portion thereof as may be unpaid. unless paid within the as the basis for assessing the taxes time fixed in the demand made by for the other months or quarters of the Commissioner. the (B) Failure to Submit Required Commissioner.The Commissioner may. believe that such person is not and said taxes shall be due and declaring his correct income. or when there is reason to believe further. surveillance and to Prescribe unless such proceedings are begun Presumptive Gross Sales and immediately. TAX ATION San Beda College of LAW – ALABANG Any return. The findings may be used prescribed. That no notice for audit or that the books of accounts or other investigation of such return. income other Documents. receive the same shall not be When it is found that a person has withdrawn: Provided. the and such amount so prescribed shall Commissioner shall assess the be prima facie correct for purposes proper tax on the best evidence of determining the internal revenue obtainable. collection of the tax for the past or current quarter or year or to render (C) Authority to Conduct Inventory. the same totally or partly ineffective taking. .

The (2) of this Code by reason of Commissioner may prescribe the financial incapacity to pay manner of compliance with any his tax liability.Notwithstanding any such denial to the Secretary of contrary provision of Republic Act Finance. Register Tax Agents. (2) any taxpayer who has filed an application for (H) Authority of the Commissioner to compromise of his tax Prescribe Additional Procedural or liability under Sec. That the following . . For the members of which shall serve purposes of computing any internal for three (3) years. the value of the designate from among the senior property shall be. Commissioner is hereby authorized statements. or recommendation of the (2) the fair market value as Commissioner. 1405 and other general or appeal within sixty (60) days from special laws. Failure of the hereby authorized to inquire into Secretary of Finance to rule on the the bank deposits of: Appeal within the prescribed period shall be deemed as approval of the (1) a decedent to determine application for accreditation of the his gross estate. representatives who are denied accreditation by the Commissioner (F) Authority of the Commissioner and/or the national and regional to inquire into Bank Deposit accreditation boards may appeal Accounts. one (1) higher of: chairman and two (2) members for each board. . the Bureau for taxpayers. and such waiver shall constitute the powers vested in him under the pertinent authority of the Commissioner to inquire into the provisions of this Code to any or such bank deposits of the taxpayer. reports. documentary or procedural In case a taxpayer files an application to requirement in connection with the compromise the payment of his tax liabilities on submission or preparation of his claim that his financial position demonstrates financial statements accompanying a clear inability to pay the tax assessed. 1405 or under other general or The Commissioner may delegate the special laws. before. - Republic Act No. TAX ATION San Beda College of LAW – ALABANG (E) Authority of the Commissioner to and their representatives who Prescribe Real Property Values. whichever is the officials of the Bureau. 204 (A) Documentary Requirements. determine the fair Commissioner shall create national market value of real properties and regional accreditation boards.The prepare and file tax returns. the Commissioner is receipt of such appeal. and shall revenue tax. upon and moral fitness. individuals and recommendation of the Commissioner: general professional partnerships Provided. Authority of the until he waives in writing his privilege under Commissioner to Delegate Power. his the tax returns. shown in the schedule of Individuals and general professional values of the Provincial and partnerships and their City Assessors. The subject to such limitations and restrictions Commissioner shall accredit and as may be imposed under rules and register. upon consultation with competent Within one hundred twenty (120) appraisers both from the private and days from January 1. however. . located in each zone or area. 1998. . application shall not be considered unless and SEC. and appellant. based on their regulations to be promulgated by the professional competence. subordinate officials with the rank (G) Authority to Accredit and equivalent to a division chief or higher. protests. and to divide the Philippines into other papers with or who appear different zones or areas and shall. subject to such rules (1) the fair market value as and regulations as the Secretary of determined by the Finance shall promulgate upon the Commissioner. who shall rule on the No. integrity Secretary of finance. the public sectors. 7.

000) or less. the heads of the approval of the Evaluation Board which shall be Legal. be compromised by a regional Where the basic tax involved exceeds One million evaluation board which shall be pesos (P1. demonstrates a clear inability to pay the (c) The power to compromise or assessed tax. may assessed tax. and For cases of financial incapacity. Assessment and Collection. and (B) Abate or Cancel a Tax Liability. however. internal revenue taxes All criminal violations may be shall be assessed within three (3) years after the compromised except: (a) those already last day prescribed by law for the filing of the filed in court. or (b) those involving fraud. a minimum recommendation of the compromise rate equivalent to Commissioner.Except as provided in Section 222. under Sec. as may minimum compromise rate be determined by rules and equivalent to ten percent (10%) of regulations to be promulgated by the basic assessed tax. return. the Assistant rates. 204 (A) and (B) of this Code. 204. TAX ATION San Beda College of LAW – ALABANG powers of the Commissioner shall not be Compromise. discovered by forty percent (40%) of the basic regional and district officials.000. costs involved do not justify the collection of the SEC. any tax liability: Provided. For purposes of this Section. and. in his discretion. Officer having jurisdiction over the taxpayer. or subject to excise tax are produced (2) The administration and collection or kept. abate. and the Secretary of finance. when: Finance. That The compromise settlement of any tax assessments issued by the regional liability shall be subject to the following offices involving basic deficiency minimum amounts: taxes of Five hundred thousand pesos (P500. redeem or return was filed. 203. . Provided. when: (d) The power to assign or reassign internal revenue officers to (1) The tax or any portion thereof appears establishments where articles to be unjustly or excessively assessed. No credit or refund of taxes or on such last day. Authority of the Commissioner to credit or refund within two (2) years after the payment of the tax or penalty: Provided. as members. . the compromise shall be subject to the Regional Director. That in a case where a return is filed refund the value of internal revenue stamps when beyond the period prescribed by law. . and no proceeding in court without assessment for the collection of such taxes shall (C) Credit or refund taxes erroneously or illegally be begun after the expiration of such period: received or penalties imposed without authority. a change unused stamps that have been rendered return filed before the last day prescribed by law unfit for use and refund their value upon proof of for the filing thereof shall be considered as filed destruction. or revoke or modify any existing (2) The financial position of the taxpayer ruling of the Bureau. Period of Limitation Upon amount due. of the claim against the taxpayer exists. Abate and Refund or Credit delegated: Taxes. penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for SEC.The Commissioner may - (a) The power to recommend the promulgation of rules and (A) Compromise the Payment of any regulations by the Secretary of Internal Revenue Tax. upon For other cases. the three they are returned in good condition by the (3)-year period shall be counted from the day the purchaser.000) or where the settlement composed of the Regional Director offered is less than the prescribed minimum as Chairman. Assessment and Collection composed of the Commissioner and the four (4) Divisions and the Revenue District Deputy Commissioners. a minor criminal violations. (b) The power to issue rulings of (1) A reasonable doubt as to the validity first impression or to reverse.

every six improvements thereon. and other personal property of In case the taxpayer or the person having the whatever character. Any request for conversion into refund of unutilized tax credits may be allowed. That the original copy of the Tax Credit order payment of the taxes subject of the Certificate showing a creditable balance is criminal case as finally decided by the surrendered to the appropriate revenue officer for Commissioner. and property of a delinquent taxpayer or any reasons for the exercise of power: Provided. stating therein the following SEC. without the express authority of the Commissioner. where the property distrained is located. leave a copy thereof in the premises (b) By civil or criminal action. and property and. excluding withholding amount of tax involve is not more than taxes. amount compromised or abated.To safeguard the addresses of taxpayers whose cases have been interest of the Government. That a return filed showing an Either of these remedies or both overpayment shall be considered as a written simultaneously may be pursued in the claim for credit or refund. among others: names and Property of a Taxpayer. proceedings for collecting the tax due or which CHAPTER II may be due from him. for which the taxpayer is directly liable. in the presence of two (2) witnessed. credits. That the remedies of distraint provisions of this Code may be applied against and levy shall not be availed of where the any internal revenue tax. . in his opinion. amount may place under constructive distraint the involved. CIVIL REMEDIES FOR COLLECTION OF TAXES The constructive distraint of personal property shall be affected by requiring the taxpayer or any SEC. a report on the exercise of his powers under this Section. after which the said property shall be deemed to have been placed under constructive distraint. the Commissioner the subject of abatement or compromise. further. debts. Constructive Distraint of the facts and information. and by levy upon real revenue officer effecting the constructive property and interest in rights to real distraint shall proceed to prepare a list of such property. 205. (a) By distraint of goods. That in no case shall a tax refund be given The Bureau of Internal Revenue shall resulting from availment of incentives granted advance the amounts needed to defray pursuant to special laws for which no actual costs of collection by means of civil or payment was made. or effects. discretion of the authorities charged with the collection of such taxes: Provided. (6) months. or is intending to leave Oversight Committee in Congress that shall be the Philippines or to remove his property constituted to determine that said powers are therefrom or to hide or conceal his property or to reasonably exercised and that the government is perform any act tending to obstruct the not unduly deprived of revenues. One hundred pesos (P100). and any increment thereto resulting same intact and unaltered and not to dispose of from delinquency shall be: the same . the personal property. as well as of real property and Senate and House of Representatives. chattels. TAX ATION San Beda College of LAW – ALABANG however. . . verification and cancellation: Provided. including the preservation or transportation of personal property The Commissioner shall submit to the Chairmen distrained and the advertisement and sale of the Committee on Ways and Means of both the thereof. 206. is retiring from any the said report shall be presented to the business subject to tax. fees or distrained and obligate himself to preserve the charges. subject to The judgment in the criminal case shall the provisions of Section 230 of this Code: not only impose the penalty but shall also Provided. bank be placed under constructive distraint refuses or accounts and interest in and rights to fails to sign the receipt herein referred to.in any manner whatever. criminal action. That taxpayer who. including stocks and possession and control of the property sought to other securities. Remedies for the Collection of person having possession or control of such Delinquent Taxes.The civil remedies for the property to sign a receipt covering the property collection of internal revenue taxes. A Tax Credit Certificate validly issued under the however.

including stocks and other proceed with the levy on the taxpayer's real securities. Commissioner. failure of the person owing any delinquent tax or delinquent revenue to pay the same at the time In case the warrant of levy on real property is not required. subject to rules and Officer. interests in and rights to personal property of such persons . or if there be none. to the occupant of the property (A) Distraint of Personal Property. manager. To this end. upon recommendation of the provisions hereof.Upon the in question. tax. within and distraint any goods. or upon the Register of Deeds for the province or with his agent. chattels or effects.After the signed by himself. and the excess of One million pesos (P1. further. a copy of the warrant of distraint. .000. however. to which list shall be delinquent. 207. the personal property. the Commissioner One million pesos (P1. account of the goods. subject to rules Commissioner.000) or less. effects or other personal property distrained. Levy shall be affected by writing upon said certificate a description of the property upon Debts and credits shall be distrained by leaving which levy is made. and thirty (30) days after execution of the distraint. That a consolidated SEC. and property. or effects or other personal prescribed in this Section. or at the dwelling or place levied upon. chattels. and to the Revenue Regional Director: regulations promulgated by the Secretary of Provided. Said certificate shall the taxpayer and upon the president. or the personal property of the taxpayer is not sufficient Revenue District Officer. . chattels. the Commissioner or his duly authorized issued before or simultaneously with the warrant representative. which issued the said stocks or securities. That the Commissioner or his duly the distraining officer to the Revenue District authorized representative. written with the person owing the debts or having in his notice of the levy shall be mailed to or served possession or under his control such credits. business in respect to which the liability arose. shall seize or his duly authorized representative shall. be submitted by further. if the amount involved is in of distraint on personal property. real property may be property were taken. . That the Commissioner or his duly Finance.The officer serving the warrant required by the Commissioner as often as of distraint shall make or cause to be made an necessary. shall be left either with the expiration of the time required to pay the owner or person from whose possession such delinquent tax or delinquent revenue as goods. if the amount involved is to satisfy his tax delinquency. together with any increment a report on any levy shall be submitted by the thereto incident to delinquency. corporation. subsequent sale. any internal revenue added a statement of the sum demanded and officer designated by the Commissioner or his note of the time and place of sale. a copy of which. . before simultaneously or after the of business of such person and with someone of distraint of personal property belonging to the suitable age and discretion. bank accounts. TAX ATION San Beda College of LAW – ALABANG Philippines. duly authorized representative shall prepare a duly authenticated certificate showing the name Stocks and other securities shall be distrained by of the taxpayer and the amounts of the tax and serving a copy of the warrant of distraint upon penalty due from him. At the same time. within ten (10) Commissioner as often as necessary: Provided. to his agent or the manager of the SEC. shall have the authority to lift and regulations promulgated by the Secretary of warrants of levy issued in accordance with the Finance.000. upon recommendation of the authorized representative shall. and the levying officer to the Commissioner or his duly expenses of the distraint and the cost of the authorized representative: Provided. city where the property is located and upon the The warrant of distraint shall be sufficient delinquent taxpayer. or if he be absent from the authority to the person owning the debts or . debts. Summary Remedies. or charge. operate with the force of a legal execution treasurer or other responsible officer of the throughout the Philippines. days from receipt of the warrant. 208.in sufficient quantity to satisfy the Within ten (10) days after receipt of the warrant. company or association.000). That a consolidated report by the Revenue Regional Director may be required by the A report on the distraint shall. (B) Levy on Real Property. credits. have the power to lift such order of distraint: Provided. Procedure for Distraint and report by the Revenue Regional Director may be Garnishment.

and issue. and such advertisement shall cover a thereof furnished the corporation. company or association in public and conspicuous place in the barrio or shall make the corresponding entry in its books. and a copy of sale.If at any time upon the president. at for as internal revenue. the and regulations prescribed by the Secretary of said revenue officer shall sell the goods. .When the amount bid for the cause a notification to be exhibited in not less property under distraint is not equal to the than two (2) public places in the municipality or amount of the tax or is very much less than the city where the distraint is made.The Revenue District a report of his proceedings in writing to the Officer or his duly authorized representative. penalties such notice shall be at the Office of the Mayor of and costs due thereon. 210.Within two (2) days after SEC. upon SEC. Sale of Property Distrained and the sale. Report of Sale to Bureau of Internal Revenue. the taxpayer expenses chargeable upon each seizure and sale may discontinue all proceedings by paying the shall embrace only the actual expenses of seizure taxes. including expenses. the net proceeds therefrom shall be or effects.the credits belonging to the taxpayer to pay to the sale. At any time returned to the owner of the property sold. or with the approval of the Commissioner. the officer conducting the proceedings shall proceed to In the case of Stocks and other securities. . Bank accounts shall be garnished by serving a SEC. Advertisement and Sale. Finance. the goods or effects distrained shall be over to the Commissioner so much of the bank restored to the owner. the advertise the property or a usable portion thereof officer making the sale shall execute a bill of sale as may be necessary to satisfy the claim and cost which he shall deliver to the buyer. according to rules and regulations prescribed by the Secretary of Finance. One place for the posting of Government for the amount of taxes. the bank shall tun sale. 209. the officer making the same shall make Disposition of Proceeds. shall be description of the property to be sold. the actual market value of the articles offered for time and place of sale and the articles distrained. securities. accounts as may be sufficient to satisfy the claim of the Government. and a short pay the entire claim. Purchase by Government at Sale recommendation of the Commissioner. through SEC. public auction. Upon receipt of the copy of the bill of entrance of the municipal building or city hall and sale. Upon receipt of charges are paid to the officer conducting the the warrant of garnishment. If he does not do so. district in which the real estate lies and . the Commissioner or his deputy may The time of sale shall not be less than twenty (20) purchase the same in behalf of the national days after notice. if required to do so. and no charge shall be imposed for the Commissioner the amount of such debts or services of the local internal revenue officer or his credits. TAX ATION San Beda College of LAW – ALABANG having in his possession or under his control any and preservation of the property pending . newspaper of general circulation in the the corresponding certificates of stock or other municipality or city where the property is located. Release of Distrained Property warrant of garnishment upon the taxpayer and Upon Payment Prior to Sale.by transfer the stocks or other securities sold in the publication once a week for three (3) weeks in a name of the buyer. . company or period of a least thirty (30) days. It shall be association which issued the stocks or other effectuated by posting a notice at the main securities. the corporation. . or other personal property. subject to the rules At the time and place fixed in such notice. penalties and interest. SEC. twenty (20) days after levy. sale. . including remitted to the National Treasury and accounted stocks and other securities so distrained. The advertisement shall contain a statement of the amount of taxes and penalties so due and the time and place of sale. forthwith Upon Distraint. chattels. the city or municipality in which the property is distrained. specifying. Commissioner and shall himself preserve a copy other than the officer referred to in Section 208 of of such report as an official record. 211. 213.Within duly licensed commodity or stock exchanges. the name of the taxpayer Any residue over and above what is required to against whom taxes are levied. deputy. to the highest bidder for cash. Property so purchased may be resold by the Commissioner or his deputy. . treasurer or other prior to the consummation of the sale all proper responsible officer of the bank. this Code shall. 212. manager. The before the day fixed for the sale.

215. In either to the date of sale. or any one for him. and the on realty may be repeated if necessary until the Revenue District Officer shall forthwith pay over full amount due. entitled to the rents and other income thereof . 217. . the therefore. 218. case of personal property. or any one for him may the Revenue District Officer may. shall be turned over to the owner of the property. have the right of paying to the Revenue District sell and dispose of the same of public auction or Officer the amount of the public taxes. the Revenue District officer and shall declare the property forfeited to the the Revenue Regional Director. The Revenue Government in satisfaction of the claim in Collection Officer. and the advertisement the forfeiture shall become absolute. of his office. summary remedies provided for in this Code. and subsequent sale. In his monthly collection reports. or on the premises to be sold. entitle the person paying to the delivery of the certificate issued to the purchaser and a SEC. and interest thereon from the date of delinquency dispose of the same at private sale. 216. is to the purchaser the amount by which such collected. showing the proceedings of the sale. together with interest on said case. Want of Bidder. Injunction not Available to such taxes and penalties. city hall. penalties. Taxes. to of all taxes. upon registration with his the purchaser and setting out the exact amount office of any such declaration of forfeiture. Resale of Real Estate Taken for on the latter. and said Commissioner may. including all expenses. Redemption of Property Sold. Restrain Collection of Tax. Within one (1) year from the date of such The Revenue Collection Officer. out of his redeem said property by paying to the collection. the taxpayer. but if the property be not thus redeemed.The Commissioner shall have charge of such advances shall be reflected and supported any real estate obtained by the Government of by receipts. the Philippines in payment or satisfaction of taxes. . and said property thereafter shall be free form the lien of SEC.The certificate from the said Revenue District Officer remedy by distraint of personal property and levy that he has thus redeemed the property. as the officer conducting the proceedings shall SEC. 214. and an accounting of (15%) per annum from the date of purchase to the same shall rendered to the Chairman of the the date of redemption. shall then make out and make a return of his proceedings and the deliver to the purchaser a certificate from his forfeiture which shall be spread upon the records records. . be deprived of the restrain the collection of any national internal possession of the said property and shall be revenue tax. in consultation with the question and within two (2) days thereafter. . both in cases of personal and real property including improvements found SEC. together with interest thereon and the costs of including . property has thus been redeemed. . penalties and interest: Provided. penalties and costs. the proceeds of the sale shall be deposited purchase price at the rate of fifteen percent with the National Treasury. shall Revenue district Officer. Forfeiture to Government for determine and as the notice of sale shall specify. with prior approval of the Secretary of Finance. the excess from a competent court.No court shall have the authority to grant an injunction to The owner shall not. shall be entered upon the records of the Revenue the Internal Revenue Officer conducting the sale Collection Officer.the preservation or transportation in sale. TAX ATION San Beda College of LAW – ALABANG the sale shall proceed and shall be held either at until the expiration of the time allowed for its the main entrance of the municipal building or redemption.In case there is no bidder for real property exposed for sale as herein above Within five (5) days after the sale. transfer the title of the property forfeited to the however. fee or charge imposed by this Code. penalties or costs arising under this Code SEC. upon approval by forfeiture. upon the delinquent taxpayer. or in compromise or adjustment of any claim Within one (1) year from the date of sale. That in case the proceeds of the sale Government without the necessity of an order exceeds the claim and cost of sale. shall giving of not less than twenty (20) days notice. advance an amount sufficient to Commissioner or the latter's Revenue Collection defray the costs of collection by means of the Officer the full amount of the taxes and penalties. a return by the provided or if the highest bid is for an amount distraining or levying officer of the proceedings insufficient to pay the taxes. It shall be the duty of the Register of describing the property sold stating the name of Deeds concerned. however. and such payment shall Commission on Audit. Further Distraint or Levy.

this Code or other law enforced by the Bureau of The period so agreed upon may be Internal Revenue shall be brought in the name of extended by subsequent written the Government of the Philippines and shall be agreements made before the expiration of conducted by legal officers of the Bureau of the period previously agreed upon. . . That this lien shall not limitation as prescribed in paragraph (a) be valid against any mortgagee purchaser or hereof may be collected by distraint or judgment creditor until notice of such lien shall be levy or by a proceeding in court within five filed by the Commissioner in the office of the (5) years following the assessment of the Register of Deeds of the province or city where tax. That in a running of the Statute of Limitations will not be fraud assessment which has become final suspended.Civil and or levy or by a proceeding in court within criminal actions and proceedings instituted in the period agreed upon in writing before behalf of the Government under the authority of the expiration of the five (5) -year period. the property of the taxpayer is situated or (d) Any internal revenue tax. and when the taxpayer is out of the prescribed in Section 203 for the Philippines. TAX ATION San Beda College of LAW – ALABANG SEC. the tax may be assessed. distraint or levy a proceeding in court for collection. partnership. the fraud or omission: Provided. previously agreed upon. into any tax return filed in accordance with the provisions of any tax amnesty law or SEC. as the Limitations provided in Sections 203 and 222 on particular situation may require. Nature and Extent of Tax Lien. 219. the Commissioner of any change in address. The period so after demand. 220. that. Suspension of Running of Statute enforcement of statutory penalties of all sorts of Limitations. 221. Commissioner and the taxpayer have account (cuentas en participacion). neglects or refuses to pay the same the period agreed upon. with interests. Exceptions as to Period of suspended for the period during which the Limitation of Assessment and Collection of Commissioner is prohibited from making the Taxes. . however. Internal Revenue but no civil or criminal action for (e) Provided. both the any person. assessment or beginning distraint or levy or a proceeding in court and for sixty (60) days (a) In the case of a false or fraudulent thereafter. That nothing in the the recovery of taxes or the enforcement of any immediately preceding and paragraph (a) fine. at any time within ten (10) collected: Provided. the fact of fraud shall be is duly served upon the taxpayer. if the taxpayer informs years after the discovery of the falsity. the amount shall be a lien in favor agreed upon may be extended by of the Government of the Philippines from the subsequent written agreement made time when the assessment was made by the before the expiration of the period Commissioner until paid.The remedy for SEC. 222. in respect of any deficiency. which has located. . Commissioner. shall be SEC. been assessed within the period agreed upon as provided in paragraph (b) SEC. corporation. Form and Mode of Proceeding in hereinabove. . Remedy for Enforcement of decree. subject to the the making of assessment and the beginning of approval of the Commissioner. 223. and costs that may accrue in addition thereto (c) Any internal revenue tax which has upon all property and rights to property belonging been assessed within the period of to the taxpayer: Provided. and no property could (b) If before the expiration of the time be located.If assessment of the tax. penalties. his authorized judicially taken cognizance of in the civil or representative. may be collected by distraint Actions Arising under this Code. or a member of his household criminal action for the collection thereof.The running of the Statute of shall be by criminal or civil action. the tax may be assessed within revenue tax. when the taxpayer cannot be or a proceeding in court for the collection located in the address given by him in the return of such tax may be filed without filed upon which a tax is being assessed or assessment. with sufficient discretion. joint. association or agreed in writing to its assessment after insurance company liable to pay an internal such time. when the warrant of distraint or levy and executory. . when the taxpayer requests for a return with intent to evade tax or of failure reinvestigation which is granted by the to file a return. penalty or forfeiture under this Code shall be hereof shall be construed to authorize the filed in court without the approval of the examination and investigation or inquiry Commissioner. Statutory Penal Provisions.

Sales of forfeited chattels and TITLE X removable fixtures shall be effected. TAX ATION San Beda College of LAW – ALABANG judgment. The Amount so added to the tax the same for consumption or use would be shall be collected at the same time. as the case may acted negligently or in bad faith. or Officer. civil or criminal. of a corporation who as such officer. a penalty the Commissioner or his authorized deputies as equivalent to twenty-five percent (25%) of the taxes themselves are required to be paid. 247. Forfeitures. enforcement of the law. 226. or destruction. shall be accounted (1) Failure to file any return and for and dealt with the same way. and all (a) The additions to the tax or deficiency apparatus used I or about the illicit production of tax prescribed in this Chapter shall apply such articles may. when the sale of this Code. SEC. as well as dies for the printing or making of corporation. Remedy for Enforcement of action shall be satisfied by the Commissioner. 225. in the following cases: except as specially provided. Satisfaction of Judgment this Code or rules and regulations Recovered Against any Internal Revenue on the date prescribed. employee or member is under a duty to SEC. or costs shall be condemnation and sale in a legal action or paid or reimbursed in behalf of a person who has proceeding. specific forfeited property. - Distilled spirits. Forfeitures. be destroyed to all taxes. oppression. When Property to be Sold or Destroyed. be sold or destroyed liable for the additions to the tax in the discretion of the Commissioner. cigarettes. 224. or if removable fixtures of any sort shall be enforced the same be paid by the person used shall be by the seizure and sale. Disposition of funds Recovered in perform the act in respect of which the Legal Proceedings or Obtained from violation occurs. through the Solicitor General. SEC. - recovered and received for taxes. fines and penalties shall be paid to the tax required to be paid. other manufactured products of tobacco. 248. or remittance of the tax shall be personally labels may. as used in this Forfeited property shall not be destroyed until at Chapter. pay the tax due thereon as required under the provisions of SEC. . includes an officer or employee least twenty (20) days after seizure. The forfeiture of real property shall be enforced by a judgment of No such judgment. upon forfeiture. (c) the term "person". . in the injurious to public health or prejudicial to the same manner and as part of the tax. of the repaid or reimbursed to him. the employee thereof internal revenue stamps and labels which are in responsible for the withholding and imitation of or purport to be lawful stamps. All other articles subject to excise tax. been manufactured or removed in violation of this or a government-owned or controlled Code.all judgments and monies SEC. fees and charges imposed in by order of the Commissioner.When an action is brought against any (2) Unless otherwise authorized by Internal Revenue officer to recover damages by the Commissioner. and the amount due. . in addition to forfeitures. or with willful require. so far as STATUTORY OFFENSES AND PENALTIES practicable. . cigars.The forfeiture of chattels and upon approval of the Secretary of Finance. (b) If the withholding agent is the Government or any of its agencies. damages or costs recovered in such SEC. liquors. (A) There shall be imposed. prescribed herein. any . 227. costs. and the Commissioner is notified of other than those with whom the such action in time to make defense against the return is required to be filed. or same. damages. filing a return reason of any act done in the performance of with an internal revenue officer official duty. Civil Penalties. which have political subdivisions or instrumentalities. in the same manner and under the same conditions as the public notice and the time CHAPTER I and manner of sale as are prescribed for sales of ADDITIONS TO TAX personal property distrained for the non-payment of taxes. upon forfeiture. General Provisions.

(B) In case of willful neglect to file the (D) Interest on Extended Payment. be Subsection (A) hereof. . .000) for each failure: deductions. or SEC. as the term is defined in this Code. 249. or aids or (B) Deficiency Interest. by this Code or who willfully fails to withhold such tax. willful neglect. Provided. further. receipts or income record. however.Any pay: . TAX ATION San Beda College of LAW – ALABANG (3) Failure to pay the deficiency tax (1) The amount of the tax due on any within the time prescribed for its return to be filed. be imposed for all such failures during a calendar year shall not exceed Twenty-five thousand pesos (A) In General. or payment in the notice of (2) The amount of the tax due for which assessment. 252. of tax due for which no return is interest at the rate prescribed in required to be filed. and remit any tax imposed payment until the amount is fully paid. . which interest shall form part of payment. as determined by the part thereof unpaid from the date of notice and Commissioner pursuant to the rules and demand until it is paid. statement or list. receipts or income or for overstatement of One thousand pesos (1. the tax. which interest shall be liable upon conviction to a penalty equal to the assessed and collected from the date prescribed total amount of the tax not withheld. Interest. regulations to be promulgated by the Secretary of Finance.In case of failure to refund Excess Withholding Tax. . shall payment thereof. . there shall be assessed and regulations. on or before Subsection (A) hereof until the amount is the date prescribed for its fully paid. person failing to file. That the aggregate amount to SEC. .Any person required to and regulations. keep or supply the same. receipts collected interest at the rate hereinabove or income. but fails to pay the tax or made. or supply any information required by this in an amount exceeding thirty percent Code or by the Commissioner on the date (30%) of that declared per return. or a substantial overstatement prescribed on the tax or deficiency tax or any of deductions. in case. there shall be assessed and underdeclaration of taxable sales. shall constitute SEC. interest at the rate of twenty percent (20%) per annum.If any return within the period prescribed by this person required to pay the tax is qualified and Code or by rules and regulations. .000). and a prescribed therefor. SEC. or the full amount and collected on the unpaid amount. or not for its payment until the full payment thereof. That information return.Any deficiency in the abets in any manner to evade any such tax or the tax due. as mentioned herein. upon notice and shall render the taxpayer liable for demand by the Commissioner. or any part of such fifty percent (50%) of the tax or of the amount or installment on or before the date deficiency tax. or where the been made on the basis of such return Commissioner has authorized an extension of before the discovery of the falsity or fraud: time within which to pay a tax or a deficiency tax Provided. shall. any payment has prescribed for its payment. the penalty to be imposed shall be any installment hereof. or no return is required. or account for and remit such tax. account for. accounted for and remitted. Failure to File Certain Information prima facie evidence of a false or Returns. collected on any unpaid amount of tax. or any surcharge or the amount of tax shown on any interest thereon on the due date return required to be filed under appearing in the notice and demand of the the provisions of this Code or rules Commissioner. or keep any failure to report sales.In the case of each failure to file an fraudulent return: Provided. from the date prescribed for withhold. unless it is shown that such claim of deductions in an amount failure is due to reasonable cause and not to exceeding (30%) of actual deductions. . or (4) Failure to pay the full or part of (3) A deficiency tax.There shall be assessed and (P25. 250. be paid by the substantial underdeclaration of sales. Failure of a Withholding Agent to such higher rate as may be prescribed by rules Collect and Remit Tax. 251. or in elects to pay the tax on installment under the case a false or fraudulent return is willfully provisions of this Code. That a substantial or any part thereof. Failure of a Withholding Agent to (C) Delinquency Interest. in addition to other be subject to the interest prescribed in penalties provided for under this Chapter. there shall.

what’s being assessed was a limitation. upon the exercise of the advancement therefore redound greatly to the privilege of receiving the properties. to select the subjects of taxation and it has been buildings and improvements used exclusively for repeatedly held that “irregularities which result religious purposes. (CIR vs Algue 158 SCRA 9) The exemption under Sec. is expected to respond in the form of The phrase “used exclusively for educational tangible and intangible benefits intended to purposes” is not limited to property actually improve the lives of the people and enhance their indispensable therefor but extends to facilities. Hence. TAX ATION San Beda College of LAW – ALABANG employer/withholding agent who fails or refuses (American Bible Society vs. Therefore. the latter prevails. churches. specifically the right to disseminate religious information. As between CASES and DOCTRINES taxation and religion. every (Abra Valley College vs. This kind of general welfare. This symbiotic which are incidental to and reasonably necessary relationship is the rationale of taxation and to the accomplishment of said purposes should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. These taxes are property from a singling out of one particular class for taxes as contra-distinguished from excise taxes. VI of the Constitution only covers property taxes assessed It is said that taxes are what we pay for on cemeteries. 22(3) Art. natural reluctance to surrender part of one's hard earned income to the taxing authorities. moral and material values. churches. the contention of plaintiff tax is not within the exempting provision of the that the Act was promulgated not for public constitution. The government for its part. taxation or exemption infringe no Constitutional In the case at bar. Thus.” donee’s gift tax not on the properties themselves. is liable to pay the said gift tax. no reason is seen why the state may not levy taxes to raise funds for their prosecution and The exemption under Sec. Without taxes. The gift tax was an excise tax upon the use made The sugar industry’s promotion. City of Manila to refund excess withholding tax shall. and parsonages or civilized society. VI of the attainment. and parsonages or inherent in the power to tax that a State be free convents. in addition 101 PHIL 386) to the penalties provided in this Title. would be paralyzed for lack of the motive power buildings and improvements used exclusively for to activate and operate it. the government convents. which refers to lots used as home of the priest who preside over the church must include not only the lot actually occupied by the church but also the adjacent ground destined to meet the ordinary incidental uses of man. appurtenant thereto and all lands. Aquino 162 SCRA person who is able to must contribute his share in 106) the running of the government. 22(3) Art. Province of Ilocos Norte 51 PHIL 352 Exemption from payment of land tax. . (Lutz vs Araneta 98 Phil 148) (Lladoc vs. the petitioner as purpose cannot be upheld. appurtenant thereto and all lands. Commissioner of Internal If objective and methods are alike constitutionally Revenue 14 SCRA 292) valid. Taxation may be made the Constitution only covers taxes assessed on implement of the state's police power. despite the religious purposes. substituted by the Head of the Diocese. protection and of the properties. It is cemeteries. be liable to a penalty to the total amount of refunds which It was contended that said ordinances imposing was not refunded to the employee resulting from license fee on the distribution and sale of bibles any excess of the amount withheld over the tax and other religious literature. impair the free actually due on their return exercise of religion. (Bishop of Nueva Segovia vs.

June 4. In the first case. instead filed a petition with the CA alleging grave the CIR issued Rev. respectively. An assessment is not necessary before its president and treasurer before the DOJ. 1. 1973) Issues: This is because double taxation is not prohibited by the Constitution. 1993. It did not state a demand or period Facts: for payment. Inc. Whether or not the criminal complaint for there is double taxation only when the same tax evasion can be construed as an person is taxed by the same jurisdiction for the assessment. file a criminal complaint for tax evasion. Such evasion may be instituted. They joint affidavit examine the books of accounts and other was meant to support the criminal complaint for accounting records of Pascor Realty and tax evasion. The G. The CA sustained the CTA decision and Cebu/Cebu Portland Cement Co. the DOJ cannot be construed as a formal assessment. the Commissioner denied private Subject Matter: Criminal Action respondent’s request for reconsideration (reinvestigation on the ground that no formal assessment has been issued which the latter CIR V CA elevated to the CTA on a petition for review. Cebu February 20.434. 128315. (Fortune) as foreign brands subject report as assessment which may be appealed to to a higher tax rate. City of he CTA. No. or to file a received a subpoena from the DOJ in connection criminal case against the taxpayer. June 29. CIR had. 1995. 1995.R. Commissioner filed a issue an assessment.65 and P3. license tax constitutes a regulatory measure in the exercise of police power. specific period. 1993. 37-93 which abuse of discretion and lack of jurisdiction on the reclassified certain cigarette brands part of CTA for considering the affidavit/report of manufactured by private respondent Fortune the revenue officers and the endorsement of said Tobacco Corp. it was not meant to be a notice of Development Corp. or to do both. It was addressed to the Secretary of The CIR authorized certain BIR officers to Justice not to the taxpayer. Tax of an assessment. 1987 and tax due and a demand to private respondents for 1988. 1996 Commissioner’s motion to dismiss on the ground of the CTA’s lack of jurisdiction inasmuch as no Facts: formal assessment was issued against private A task force was created on June 1. A criminal charge respondents filed immediately an urgent request need not only be supported by a prima facie for reconsideration on reinvestigation disputing showing of failure to file a required return. discretion on On March 23. vs.236. 1995. dismissed the petition. al. (PRDC) for 1986. Assessment An assessment must be sent to and received by the taxpayer. The fact that the complaint recommendation for the issuance of an was sent to the DOJ. The revenue officer’s affidavit (GR No. TAX ATION San Beda College of LAW – ALABANG (San Miguel Brewery. The examination resulted in the payment thereof. Neither the Tax Code nor the revenue regulations governing the protest assessments provide a specific definition or form Subject Matter: Criminal Action. vs. In a letter dated. On August 3. 119322. May 17. The the tax assessment and tax liability. Whether or not an assessment is business tax is a license tax to engage in the necessary before criminal charges for tax business of wholesale liquor in Cebu City. in such tax evasion cases. 1993 respondent was denied by CTA and ordered the to investigate tax liabilities of manufacturers Commissioner to file an answer but did not engaged in tax evasion schemes. No. criminal complaint for tax evasion against PRDC.015. the annual 2.35 respondent. Fortune . and must demand payment of the taxes described therein within a CIR V PASCOR REALTY & DEV’T CORP et. Private criminal charges can be filed. whereas that which Held: is imposed by the ordinance is a typical tax or The filing of the criminal complaint with revenue measure. shows that commissioner intended to for 1986 and 1987. with the criminal complaint. Memo Circ. not to On March 1. On July 1.498. and not to private assessment of P7. Furthermore. 1999) merely contained a computation of respondent’s tax liability. same purpose. private respondents whether to issue an assessment. Naga.

On April 1. there is the 8. 1953. 1958. ad Before the tax liabilities of Fortune are valorem and VAT for 1992 with payment due finally determined. the court opined for fraudulent tax evasion can be initiated. on September malfeasance at the very least. duties in the regular course in ensuring that the In the meantime. 1974) non-payment of the correct income. TAX ATION San Beda College of LAW – ALABANG questioned the validity of said reclassification as correct taxes were paid. All motions filed thereafter were denied. Fortune was assessed deficiency income. AZNAR’s properties prayer for preliminary injunction praying the CIR’s were placed under distraint and levy. of BIR personnel’s equal protection of laws. that private respondents have willfully attempted 1993. 1994. 1947 and 1948 had before any complaint for fraudulent tax evasion prescribed at the time the assessment was made. Doubting the truth of the A subpoena was issued on September 8. Meanwhile 256. complaint with the DOJ against private respondent Fortune. correct taxes were paid by Fortune. it cannot be correctly asserted within 30 days from receipt. the fact that a tax is due must on September 7. private respondents filed reduced to P381. the Commissioner filed a first be proved. The complaint was referred to Facts: the DOJ Task Force on revenue cases which found Matias Aznar died on May 15. 564% for 1947. On September 12. But it filed a verified motion to of the net worth method. examined by the BIR. The trial court granted the petition for a writ of preliminary injunction to enjoin the Issues: preliminary investigation on the complaint for tax Whether or not the right of the evasion pending before the DOJ.66 which was later January 4. His sufficient basis to further investigate the charges income tax returns from 1945 to 1951 were against Fortune. that AZNAR’s returns were false because the under-declaration of income constituted a Held: deviation from the truth. Substantial under- dismiss or alternatively. 486% for 1949. the Commissioner 1993 directing private respondent to submit their ordered the investigation of the case on the basis counter-affidavits. November 28. Held: Issue: On the issue of prescription the count Whether the basis of private respondent’s applied the 10-year prescriptive period and ruled tax liability first be settled before any complaint that prescription had not set in. The court stated that Fraud cannot be presumed. 946% 1950. 1993. on August 3. The CTA found dismissed/set aside or alternatively. the Fortune’s production activities to see to it that the period of 10 years provided for in the law from . private respondent moved for to evade or defeat any tax under Secs. 1993 resolved that said reclassification was of presumption that BIR personnel performed their doubtful legality and enjoined its enforcement. 1951. complaint and prosecutor’s orders be 1955. ruling that the Commissioner to assess AZNAR’s deficiency tax liability of private respondents first be settled income taxes for 1946. The CTA.07 upon reinvestigation. it must have been with the making a proper assessment of tax liabilities due connivance of cooperation of certain BIR officials to false or fraudulent returns intended to evade and employees who supervised and monitored payment of taxes or failure to the returns. much less evidence. can be initiated. income that he had reported.096.032. 95% reconsideration/reinvestigation of the August 13. But there is no being violative of the right to due process and allegation. 490% 1993 assessment of taxes due. ad valorem and VAT for 1992. the BIR notified AZNAR of a affidavit. 254 and reconsideration of said assessment. If there was the ordinary prescriptive period of 5 years (now 3 fraud on willful attempt to evade payment of ad years) would apply under normal circumstances valorem taxes by private respondent through the but whenever the government is placed at a manipulation of the registered wholesale price of disadvantage as to prevent its lawful agent from the cigarettes. 1993. 1997 NIRC. On was denied and thus treated as their counter. that the that AZNAR made substantial under-declarations preliminary investigation be suspended pending of his income as follows: he under-declared his determination by CIR of Fortune’s motion for income for 1946 by 227%. tax delinquency of P723. 1952. a petition for certiorari and prohibition with On February 20. AZNAR appealed to the CTA. a motion to suspend but declarations of income were discovered. its corporate officers and 9 other corporations and their respective corporate officers for alleged fraudulent tax evasion for AZNAR CASE (August 23. for 1948.

fraud or omission even seems to be inadequate and should be the one enforced. TAX ATION San Beda College of LAW – ALABANG the discovery of the falsity. .