Far Eastern University: Mortis Causa Will Be Subject To Estate Tax

Far Eastern University
Institute of Law
TRANSFER TAXES Transfer taxes are those taxes imposed upon the privilege granted by the state to the taxpayer so that he may transfer his property, either gratuitously or for a consideration, to another. Transfers for a valuable consideration may be subject to income tax, value-added tax and other business taxes, while those made gratuitously may be subject to estate tax and donors tax. Q. Distinguish a donation mortis from a donation inter !i!os. ausa
1. Benefit-Received Theory -considers

the service rendered by the government in the distribution of the estate of the decedent, either by law or in accordance with his wishes. +or the performance of these services and other benefits that accrue to the estate and the heirs, the ,tate collects the tax.
2. Privilege Theory/State Partnership

Theory inheritance is not a right but a privilege granted by the state, and large estate have been ac$uired only with the protection of the ,tate. -onse$uently, the ,tate as a passive and silent partner in the accumulation of property has the right to collect the share which is properly due to it.
S. A. While both are transfers without any onerous consideration, a donation mortis causa is a transfer that ta es effect on the death of the transferor thru the execution of a last will and testament or by legal succession, whereas a donation inter vivos is a transfer that ta es effect during the lifetime of the transferor thru the execution of a deed of donation. ! donation mortis causa will be subject to estate tax, whereas a donation inter vivos will be subject to donors tax. ESTATE TAX" Q. Define estate tax. S. A. Estate tax is a graduated tax imposed on the privilege of the decedent to transmit property at death and is based on the entire net estate, regardless of the number of heirs and relations to the decedent. "t is a transfer tax, not a property tax. T#E LA$ T#AT %&'ERNS T#E I()&SITI&N &F ESTATE TAX" The statute in force at the time of death of the decedent shall govern estate taxation I. Nature of Estate Tax"
3. Ability to Pay Theory receipt of

inheritance which is in the nature of an unearned wealth or windfall, place assets into the hands of the heirs and beneficiaries hereby creating an ability to pay the tax and thus contributes to government income.
4. Redistribution of Wealth Theory - the

receipt of inheritance is a contributing factor to the ine$ualities in wealth and incomes. The imposition of death tax reduces the property received by the successor, thus helping bring about a more e$uitable distribution of wealth in society. The tax base is the value of the property and the progressive scheme of taxation is precisely motivated by the desire to mitigate the evils of inheritance in the present form. III. Estate Tax Formu-a
#. tax on the right to transfer property at death and on certain transfers which are made by law e$uivalent to testamentary dispositions and is measured by the value of the property% &. it is imposed on the basis of the net estate considered as a unit. The first 'hp&((,((( of the net estate is exempt ). estate tax is not a property tax but rather an excise tax. *. it is an excise tax and its object is to the shifting of economic benefits and enjoyment of property from the dead to the living. II. Reasons *ustif+ing im,osition of estate tax the
.ross /state 0,ec. 123 4ess5 6eductions 0,ec. 173 8et share of the surviving spouse 8et taxable /state 9 Tax rate 0,ec.1*3 /state Tax 6ue 4ess5 Tax credit, if any 0,ec.17 :/; or ##( :<; /state Tax 6ue Rate" first &((,((( pesos exempt =ver &((,((( graduated rate of 2> &(> A. %R&SS ESTATE .%E/"
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1. Resident alien and Filipino decedent: A-- properties, real or personal, tangible or intangible, where!er situated. 2. Non-resident alien shall: &n-+ properties situated in the 'hilippines With respect to intangible personal property, its inclusion is subject to the ru-e of re i,ro it+ No tax sha-- 0e o--e ted in res,e t of intangi0-e ,ersona,ro,ert+" a. if the decedent at the time of his death was a citi?en and resident of a foreign country which at the time of his death did not impose a transfer tax in respect of intangible personal property of citi?ens of the 'hilippines not residing in that foreign country, =@ b. if the laws of the foreign country of which the decedent was a citi?en and resident at the time of is death allows a similar exemption from transfer taxes in respect of intangible personal property owned by +ilipino citi?ens not residing in that foreign country. Intangi0-e ,ersona- ,ro,ert+ ha!ing situs in the )hi-i,,ines" a. +ranchise which must be exercised in the 'hilippines% b. ,hares, obligations, or bonds issued by any corporation or sociedad anonima organi?ed or constituted in the 'hilippines in accordance with its laws% c. ,hares, obligations, or bonds issued by any foreign corporation, 12> of the business is located in the 'hilippines% d. ,hares, obligations, or bonds issued by any foreign corporation if such shares, obligations or bonds have ac$uired business situs 0i.e., they are used in furtherance of its business in the 'hilippines. 2
by any foreign corporation3 in the 'hilippines. e. ,hares or rights in any partnership, business or industry established within the 'hilippines. 1. IN2L3SI&NS IN T#E %R&SS ESTATE 1ar 456 &n 7une 85559 X too: out a -ife insuran e ,o-i + on his own -ife in the amount of )895559555.55. #e designated his wife9 ;9 as irre!o a0-e 0enefi iar+ to )<95559555.55 0ut9 in the -atter designation9 reser!ing his right to su0stantiate him for another. &n 5< Se,tem0er 85569 X died and his wife and son went to the insurer to o--e t the ,ro eeds of X4s -ife insuran e ,o-i +. Are the ,ro eeds of the insuran e to form ,art of the gross estate of X= Ex,-ain. S. A. =nly the proceeds of '#,(((,((( given to the son, A shall form part of the .ross /state of 9. Bnder the Tax -od, proceeds of life insurance shall form part of the gross estate of the decedent to the extent of the amount receivable by the beneficiary designated in the policy of the insurance except when it is expressly stipulated that the designation of the beneficiary is irrevocable. !s stated in the problem, only the designation of C is irrevocable. !s stated in the problem, only the designation of C is irrevocable while the insuredDdecedent reserved the right to substitute A as beneficiary for another person. !ccordingly, the proceeds received by C shall be excluded while the proceeds received by A shall be included in the gross estate of 9. (Sec. 85 (E) R.! 8"2") 1ar 45> ? Ra-,h Dona-d9 an Ameri an iti@en9 was a to, exe uti!e of a 3.S. om,an+ in the )hi-i,,ines unti- he retired in <AAA. #e ame to -i:e the )hi-i,,ines so mu h that fo--owing his retirement9 he de ided to s,end the rest of his -ife in the ountr+. #e a,,-ied for and was granted a ,ermanent resident status the fo--owing +ear. In the s,ring of 855B9 whi-e !a ationing in &r-ando9 F-orida9 3SA9 he suffered a heart atta : and died. At the time of his death9 he -eft the fo--owing ,ro,erties" .a/ 0an: de,osits with 2iti0an: (a:ati and 2iti0an: &r-ando9 F-oridaC .a/ a resthouse in &r-ando9 F-oridaC .0/ a ondominium unit in (a:atiC . / shares of sto : in the )hi-i,,ine su0sidiar+ of the 3.S. 2om,an+ where he wor:edC
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.d/ shares of sto : in San (igue- 2or,. and )LDTC .e/ shares of sto : in Disne+ $or-d in F-oridaC .f/ 3.S. treasur+ 0ondsC and .g/ ,ro eeds from a -ife insuran e ,o-i + issued 0+ a 3.S. or,oration. $hi h of the foregoing assets sha-- 0e in -uded in the taxa0-e gross estate in the )hi-i,,ines= Ex,-ain. S. A. !ll of @alph 6onalds assets shall be included in his taxable gross estate because he was a permanent 'hilippine resident at the time of his death. 0,ec. #(*, @! 1*&*3 Q. ? $hi h of the foregoing assets sha-- 0e in -uded in the taxa0-e gross estate in the )hi-i,,ines= Ex,-ain. <. De edent4s Interests 8. Transfer in 2ontem,-ation of Death 6. Re!o a0-e Transfer B. Transfer under %enera)ower of A,,ointment >. )ro eeds of -ife insuran e D. Transfer for Insuffi ient 2onsideration E. )rior Interests De edent4s Interests To the extent of the interest in property of the decedent at the time of his death.
enjoy the property or the income there from. Ex e,tion: in case of bona fide sale for an ade$uate and full consideration in money or moneyEs worth Amount in -uded in the %E5 interest therein 2ir umstan es ta:en into a ount a. !ge and state of health of the decedent at the time of gift, especially where he was aware of a serious illness% b. 4ength of time between the gift and the date of death% c. -oncurrent ma ing of a will or ma ing a will within a short time after the transfer.
1ar 45< A9 aged A5 +ears and suffering from in ura0-e an er9 on August <9 855< wrote a wi-- and9 on the same da+9 made se!erainter?!i!os gifts to his hi-dren. Ten da+s -ater9 he died. In +our o,inion9 are the inter? !i!os gifts onsidered transfers in ontem,-ation of death for ,ur,oses of determining ,ro,erties to 0e in -uded in his gross estate= Ex,-ain +our answer. S. A. Ces. When the donor ma es his will within a short time of , or simultaneously with, the ma ing of gifts, the gifts are considered as having been made in contemplation of death. 0@oces v. 'osadas, 21 'hil. #(13 =bviously, the intention of the donor in ma ing the inter-vivos gifts is to avoid the imposition of the estate tax and since the donees are li ewise his forced heirs who are called upon to inherit, it will create a presumption juris tantum that said donations were made mortis causa, hence, the properties donated shall be included as part of !s gross estate. Re!o a0-e Transfer
Transfer in 2ontem,-ation of Death it is the thought of death as the controlling motive which induces the disposition of the property for the purpose of avoiding the tax. "ncludes5 a. transfer by trust or otherwise, in contemplation of, or intended to ta e effect in possession or enjoyment at or after his death% or b. transfer by trust or otherwise, with retention or reservation of i. the possession or enjoyment of or the right to the income from the property, or ii. the right, either alone or in conjunction with any person, to designate the person who shall possess or !
a.
#ith reserved po#er to alter amend revo$e or terminate - transfer, by trust or otherwise, where the enjoyment thereof was subject to any change through the exercise of a power 0in whatever capacity exercisable3 by the decedent alone or by the decedent in conjunction with any other person 0without regard to when or from what source the decedent ac$uired such power3, to alter, amend, revo e or terminate%
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or #here an% such po#er is relin&uished in contemplation of the decedentEs death. Ex e,t" in case of bona fide sale for an ade$uate and full consideration in money or moneys worth !mount included in the 'E: interest therein Transfer under %enera- )ower of A,,ointment ! power of appointment is the right to designate the person or persons who will succeed to the property of the prior decedent. "t may be exercised by the decedent5 a. by will% or b. by deed executed in contemplation of, or intended to ta e effect in possession or enjoyment at, or after his death% c. by deed under which he has retained for his life or any period not ascertainable without reference to his death or for any period which does not in fact end before his death5 i. the possession or enjoyment of, or the right to the income from, the property% or ii. the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income there from% except in case of a bona fide sale for an ade$uate and full consideration in money or moneyEs worth. Ex e,tion" in case of bona fide sale for an ade$uate and full consideration in money and moneys worth !mount included in the 'E: interest therein Finds" a. %enera- ,ower of a,,ointment when it authori?es the donee to appoint any person he pleases, including himself, his spouse, his estate, his executor or administrator, and his creditor thus having full dominion over "
b.
b.
the property as though he owned it. S,e ia- ,ower of a,,ointment when the donee can appoint only among a restricted or designated class or persons other than himself.
)ro eeds of Life Insuran e <eneficiary is the estate of the deceased, his executor or administrator, irrespective of whether or not the insured retained the power of revocation% or <eneficiary is other than the decedents estate, executor or administration, when designation of beneficiary is revocable, that is, when the designation of the beneficiary is not expressly made irrevocable. The ,ro eeds of -ife insuran e are N&T taxa0-e in the fo--owing ases" a. 'roceeds of a group insurance policy ta en out by the company for its employees% b. !ccident insurance proceeds% c. !mount receivable by any beneficiary irrevocably designated in the policy of insurance by the insured% d. 'roceeds of insurance policies issued by the .,", to the government official and employees% e. <enefits accruing under the ,,, law% f. 'roceeds of life insurance payable to heirs of deceased members of military personnel Transfer for 2onsideration Insuffi ient
When the decedents property is transferred a. in contemplation of death, b. revocable transfers, or c. passed under a general power of appointment for a consideration in money or moneyEs worth Ex e,tion" bona fide sale
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!mount to (e included in the 'E: the excess of the fair mar et value 0+FG3, at the time of death, of the property otherwise to be included on account of such transaction, over the value of the consideration received therefore by the decedent. death3 less value
+FG0time of received )rior Interests
!ll transfers, trusts, estates, interests, rights, powers and relin$uishment of powers made, created, arising, existing, exercised or relin$uished before or after the effectivity of the Tax -ode. EXE()T A Guisition and transmission" .Se . HE/ a. the merger of usufruct of the owner of the na ed title% b. the transmission or delivery of the inheritance or legacy of the fiduciary heir or legatee to the fideicommissary% c. the transmission from the first heir, legatee or donee in favor of another beneficiary, in accordance with the will of the predecessor% d. all be$uests, devises, legacies, or transfers to social welfare, cultural and charitable institutions no part of the net income of which inures to the benefit of any individual% provided that not more that )(> of said be$uests, legacies or transfers shall be used by such institutions for administration purposes.
2. DED32TI&NS" 1ar 455 Dis uss the ru-e on situs of taxation with res,e t to the im,osition of the estate tax on ,ro,ert+ -eft 0ehind 0+ a non?resident de edent. +or resident aliens and citizens5
!ctual )uneral e*penses or 5+ o) the ,ross estate% or -2.. ..., $#I2#E'ER IS L&$EST Fust be duly supported by receipts or other evidence to show that they were actually incurred. Not confined to its ordinary or usual eaning! They include" a. mourning apparel of the surviving spouse and unmarried minor children of the deceases bought and used on the occasion of the burial% b. expenses for the deceaseds wa e, including food and drin s% c. publication charges for death notices% d. telecommunicati on expenses incurred in informing relatives of the deceased% e. cost of burial plot, tombstones, monument or mausoleum but not their up eep. "n case the deceased own a family estate or several burial lots, only the value corresponding to the plot where he is buried is deductible% f. interment andDor cremation fees and charges% and g. all other expenses incurred for the performance of the rites and ceremonies incident to interment. /xpenses incurred after the inter ent, such as for prayers, masses, entertainment, or the li e are not deductible. !ny portion of the funeral and burial expenses borne or defrayed by relatives and friends of the deceased are not deductible. 7udi ia- Ex,enses"
1.
expenses, losses, indebtedness, taxes, etc. .E?L?I?T/ i. Funera- Ex,enses"
ii.
Those incurred during the settlement of the estate but not beyond the last day prescribed by law, or the extension thereof,
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for the filing of the estate tax return 07 months after death3 Those incurred in the5 a. inventory ta ing of assets comprising the .@=,, /,T!T/, b. their administration, c. the payment of debts of the estate d. the distribution of the estate among the heirs. !ny unpaid amount should be supported by a sworn statement of account issued and signed by the creditor. It ma+ in -ude the fo--owing a. +ees of executor or administrator b. !ttorneys fees c. -ourt +ees d. !ppraisers fee e. -ler hire f. -osts of preserving and distributing the estate g. -osts of storing or maintaining property of the estate% and h. <ro erage fees for selling property of the estate. 2-aims against the
collect must not have been prescribed. e. the debt instrument must be notari?ed% f. if the loan was contracted within three 0)3 years before the death of the decedent, the administrator or executor shall submit a statement under oath showing the disposition of the proceeds of the loan. i!. 2-aims inso-!ent ,ersons" against
The amount of said claims has been initially included as part of the ./% The incapacity of the debtors to pay their obligations is proven, not merely alleged. 3n,aid mortgages" a. The value of the property mortgaged to the extent of the decedents interest therein, undiminished by such mortgage or indebtedness, is included in the ./% b. The indebtedness must have been contracted bona fide and for an ade$uate and full consideration in money or moneys worth% c. Gerification must be made as to who was the beneficiary of the loan proceeds. d. "f found to be merely an accommodation loan, the value of the unpaid loan must be included as a receivable of the estate. e. "f there is a legal impediment to recogni?e the same as receivable, said unpaid mortgage shall not be allowed as a deduction.
!.
iii.
estate5
6ebts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgments. ReGuisites for dedu ti0i-it+" a. the liability represents a personal obligation of the deceased existing at the time of his death except unpaid obligations incurred incident to his death% b. it was contracted in good faith and for ade$uate and full consideration in money or moneys worth% c. the claim must be valid in law and enforceable in court% d. the indebtedness must not have been condoned by the creditor or the action to $
!i.
Taxes" a. !ccrued as of the death of the decedent b. Bnpaid as of the time of death The fo--owing not dedu ti0-e" are
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#. income tax on income received after the death of the decedent% &. property taxes not accrued after death% ). estate tax. !ii. Losses"
ReGuisites for dedu ti0i-it+5 #. arising from fire, storm, shipwrec or other casualty, robbery, theft or embe??lement% &. not compensated by insurance or otherwise% ). not claimed as deduction in an income tax return of the taxable estate% *. incurred during the settlement of the estate 2. incurred before the last day for the payment of the estate tax 07 months after the decedents death3
from transfer of the property from a prior decedent% 2. In -usion of the ,ro,ert+ ? the property formed part of the ./ located in the 'hilippines of the prior decedent, or of the taxable gift of the donor within 2 years prior to the present decedents death% 3. )re!ious taxation of the ,ro,ert+ ? the estate tax or donors tax on the gift must have been finally determined and paid% 4. Identit+ of the ,ro,ert+ ? the property must be identified as the one received from the prior decedent, or something ac$uired in exchange therefore% and 5. No ,re!ious !anishing dedu tion on the property was allowed to the estate of the prior decedent. Limitations as to amount of dedu tion a--owa0-e" a. 'a-ue of ,ro,ert+ limited by the value of the property previously taxed as finally determined for the purpose of the prior transfer tax or the value of the property in the present decedents ./, WH"-H/G/@ ", 4=W/@. b. Dedu tion for mortgage or other -ien the initial value in I# above shall be reduced by the total amount paid, if any, by the present decedent on any mortgage or other lien on the property c. Dedu tion for E?L?I?T and T.).3 the value as reduced in I& above shall be further reduced by an amount which bears the ratio to the amounts allowed as deductions for /-4-"-T and T.'.B as the amount otherwise deductible for property previously taxed bears to the value of the decedents ./. d. )er entage of dedu tions the vanishing deduction shall be the value in I) multiplied by the following percentage of deduction5
8. 3se .T)3/"
Transfer for )u0-i
ReGuisites #. the disposition is in a last will and testament% &. to ta e effect after death% ). in favor of the government of the 'hilippines or any political subdivision thereof% and *. for exclusive public purpose. This should also include be$uests, devices, or transfers to social welfare, cultural and charitable institutions. 6. 'anishing dedu tionsI)ro,ert+ )re!ious-+ taxed" .'DI))T/ =perates to ease the harshness of successive taxation of the same property within a relatively short period of time 0up to 2 years3 occasioned by the untimely death of the transferee
@e$uisites .D?I?)?I?N/ Death ? the present decedent died within five years
1.
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#((> - if the #st transfer is within # year prior to the death of the present decedent% 1(> - more than # year but not more than & years% 7(> - more than & years but not more than ) years% *(> - more than ) years but not more than * years% &(> - more than * years but not more than 2 years. "n outline form, the computation o) vanishin, deduction is5 a. Galue ta en 0value of property at the time of the first transfer or at the time of the present decedents death, whichever is lower3 4ess5 Fortgage debt paid, if any /$uals5 "nitial <asis
captain of the locality where it is located% c. the total value of the family home must be included as part of the ./ of the decedent% and d. the amount deductible is the current +FG but not to exceed # million pesos. >. Dedu tion" Standard
# million pesos Without need substantiation
of
6.
(edi a- Ex,enses5 ReGuisites #. incurred within one year prior to his death% &. substantiated with receipts% and ). maximum of 'hp2((,(((
b.
"nitial basis 0/4"TJT'B3 K &nd deduction .ross /state c. "nitial <asis 4ess5 &nd deduction +inal <asis 9 'ercentage Ganishing deduction
4.
Fami-+ #ome5 The dwelling house including the land on which it is situated, where the husband and wife, or head of the family, and members of their family reside, as certified to by the <arangay -aptain of the locality. -haracteri?ed by permanency, that is, the place to which, whenever absent for business or pleasure, one still intends to return 06omicile3. =ne person may constitute only one family home ReGuisites a. said family home must be the actual residential home of the decedent and his family at the time of his death% b. said fact must be certified to by the barangay %
A,,ro!a- of the court where a probateDintestate proceeding is pending is not a mandatory re$uirement in the collection of estate taxes. =n the contrary, the probateDintestate court is prohibited from delivering any distributive share to any party unless there is certification from the -ommissioner that the estate taxes are already paid. E. Amount Re ei!ed 0+ #eirs 3nder R. A. No. BA<E
An+ amount received by the heirs from the decedents employer as a conse$uence of the death of the decedent employee in accordance with @.!. *L#M is allowed as a deduction provided that the amount of the separation benefit is included as part of the gross estate of the decedent. H. Net Share of the Sur!i!ing S,ouse in the 2on*uga)artnershi, or 2ommunit+ )ro,ert+ !fter deducting the allowable deductions appertaining to the conjugal or community
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properties included in the gross estate, the share of the surviving spouse must be removed to ensure that only the decedents interest in the estate is taxed. For non?resident a-ien?de edent" 1. expenses, losses, indebtedness, taxes, etc. .E?L?I?T/ &. transfers for public use 0T.'.B3% ). vanishing deduction% *. ,hare of surviving spouse in conjugal or community property. SETTLE(ENT &F T#E ESTATE TAX 8=T"-/ =+ 6/!TH f iled in all cases where the gross value of the estate exceeds twenty thousand pesos 0'&(,(((3, t he executor, administrator or any of the legal heirs, as the case may be, within two 0&3 months after the decedentEs death, or within a li e period after $ualifying as such executor or administrator, shall give a written notice thereof to the -ommissioner. /,T!T/ T!9 @/TB@8 f iled within six 073 months from the decedentEs death. E *tension o) time to )ile5 The -ommissioner or any @evenue =fficer shall have authority to grant, in meritorious cases, a reasonable extension not exceeding thirty 0)(3 days for filing the return. A n estate tax return is reGuired to 0e fi-ed" #. When the estate is subject to estate tax% &. When the estate is not subject to estate tax but the gross estate exceeds '&((,(((% or ). regardless of the amount of the gross estate, where the gross estate consists of registered or registrable property such as motor vehicle or &
shares of stoc or other similar property for which clearance from the <"@ is re$uired as a condition precedent for the transfer of ownership thereof in the name of the transferee. $ hen the gross estate ex eeds )89 5559 555 the estate tax return shall be accompanied by a statement which is -/@T"+"/6 by an "86/'/86/8T -/@T"+"/6 'B<4"- !--=B8T!8T stating5 #. The itemi?ed assets of the decedent with its corresponding gross value at the time of his death, or in the case of a non-resident, not citi?en of the 'hilippines, that part of his gross estate situated in the 'hilippines% &. The itemi?ed deductions from the gross estate% ). the amount of tax due, whether paid or still due and outstanding. $ here to fi-e" #! resident decedent"
accredited agent ban , or @evenue 6istrict =fficer, -ollection =fficer, or duly authori?ed Treasurer of the city or municipality in which the decedent was domi i-ed at the time of his death or if there be no -ega- residen e in the 'hilippines, with the /))ice o) the 0ommissioner. $! non-resident decedent" the @evenue 6istrict =ffice 0@6=3 where the exe utor or administrator is registered if not registered, with the R1/ havin, 2urisdiction over the e*ecutor or administrator3s le,al residence if there is no exe utor or administrator, with the /))ice o) the 0ommissioner )A;(ENT &F T#E ESTATE TAX %EN R3LE: at the time the return is filed.
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EX2E)T: When the -ommissioner finds that the payment on the due date of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs he may extend the time for payment of such tax or any part thereof not to exceed five 023 years, in case the estate is settled through the courts, or two 0&3 years in case the estate is settled extrajudicially.
Tax redit for estate taxes ,aid to a foreign ountr+" %enera-" the estate tax shall be credited with the amounts of any estate tax imposed by the foreign country Limitations a. +or estate taxes paid to one foreign country The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is ta en, which the decedents net estate situated within such country taxable under the 8"@- bears his entire net estate. 8et estate, +oreign country x 'hilippine credit /ntire net estate state tax limit K Tax
Note" The -"@ shall deny the application for extension where the re$uest for extension is by reason of5 negligence, intentional disregard of rules and regulations, or fraud on the part of the taxpayer, Lia0i-it+ for ,a+ment 1. -rimaril% lia(le5 executor or administrator before distributing the net estate to the heirs 2. Su(sidiar% lia(le5 the heir or beneficiary to the extent of his share in the inheritance ). The liability of & or more executors of administrators shall be severally. 1ar 45B '22 is the administrator of the estate of his father N%29 in the estate ,ro eedings ,ending 0efore the (( Regiona- Tria- 2ourt. Last +ear9 he re ei!ed from the 2ommissioner of Interna- Re!enue a defi ien + tax assessment for the estate in the amount of )<95559555. 1ut he ignored the noti e. Last month9 the 1IR effe ted a -e!+ on the rea- ,ro,erties of the estate to ,a+ the de-inGuen + tax. '22 fi-ed a motion with the ,ro0ate ourt to sto, the enfor ement and o--e tion of the tax on the ground that the 1IR shou-d ha!e se ured first the a,,ro!a- of the ,ro0ate ourt9 whi h had *urisdi tion o!er the estate9 0efore -e!+ing on its rea,ro,erties. Is '224s ontention orre t= S. A. 8o, G--s contention is not correct. The approval of the court, sitting in probate or as a settlement tribunal over the property of the deceased is not a mandatory re$uirement in the collection of taxes. The Tax -ode or any other pertinent law does not re$uire the probate or estate settlement courts approval of the ,tates claim for the estate taxes before the same can be enforced and collected. (4arcos v. 0! 5une 5 1667)
b. +or estate taxes paid to two or more foreign countries The total amount of the credit shall not exceed the same proportion of the tax against which such credit is ta en, which the decedents net estate situated outside the 'hilippines taxable under the 8"@- bears to his entire net estate. 8et estate outside the 'hilippines x 'hil. KTax credit /ntire net estate estate tax limit D&N&R4S TAX Donation is an act of liberality whereby a person disposed gratuitously of a thing or right in favor of another who accepts it. ReGuisites .2?I?D?A/ 1. a,a it+ of the donor to ma e donation% 2. donative intent or intent to ma e a gift on the part of the donor% 3. de-i!er+, whether actual or constructive% and 4. a e,tan e of the gift by the donee Donor4s Tax is a gift tax imposed upon a person to give his properties while he is still alive to whomever he wishes to extend his benevolent act of indness or otherwise.
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As,e ts of Donor4s Tax 8ot a property tax, but is a tax imposed on the transfer of property by way of gift inter vivos 6oes not apply unless and until there is a completed gift The transfer is perfected from the moment the donor nows of the acceptance of the donee "t is completed by the delivery of the donated property, either actual or constructive @enunciation by the surviving spouse of hisDher share in the conjugal partnership or absolute community after the dissolution of the marriage is subject to donors tax .eneral renunciation by an heir, including the surviving spouse, of hisDher share in the hereditary estate is not subject to tax, unless specifically and categorically done in favor of identified heirDs to the exclusion or disadvantage of the other coheirs in the hereditary estate. Tax Rate" .eneral5 &-#2>% 'hp#((,((( is exempt ,pecial rate5 )(> - in case of donation to a stranger Stranger 1ar 455 ? $hen the donee or 0enefi iar+ is a stranger9 the tax ,a+a0-e 0+ the donor sha-0e 65J of the net gifts. For ,ur,oses of this tax9 who is a stranger=
Intangi0-e )ersona- )ro,erties with Situs in the )hi-. ,ame in estate tax subject to the reciprocity rule.
Transfers su0*e t to donor4s tax" 1. Bpon the transfer by any person, resident or nonresident, of the property by ,i)t. Whether the transfer is in trust or otherwise, Whether the gift is direct or indirect, Whether the property is real or personal, tangible or intangible. 1ar 456 X is a friend of ;9 the hairman of )o-iti a- )art+ K9 who wants to run for )resident in the 855B e-e tions. Fnowing that ; needs funds for ,osters and streamers9 X is thin:ing of donating to ; )<>59555.55 for his am,aign. #e as:s +ou whether his intended donation to ; wi-- 0e su0*e t to the donor4s tax. a. $hat wou-d +our answer 0e= 0. $i-- +our answer 0e the same if he were to donate to )o-iti a- ,art+ K instead of to ; dire t-+= S. A. a3 Cs campaign donation is subject to 6onors Tax because the giver did not intend his contribution to be a return of value. He also has no intent to repay another what is his due. The main reason for the donation is personal affection or regard or philanthropy or charity. b3 The answer will be the same because the purpose for giving is to bolster the morale, the winning chance of the candidate andDor his party, and not to employ or buy. (08R v. !(ello 0!-'R S- No. 2719" 0:! 0ase No. "26; !pril 2. 166") 2. :rans)er )or insu))icient consideration Where property is transferred for less than an ade$uate and full consideration E*ception: transfer of real property classified as capital assets subjected to the capital gains tax !mount included in the net ,i)ts: the excess of the +FG of the property over the consideration received shall be deemed a gift. 1ar 4AE An inso-ent om,an+ had an outstanding o0-igation of )<559555.55 from a reditor. Sin e it ou-d not ,a+ the de0t9 the reditor agreed to a e,t ,a+ment through da ion en ,ago a ,ro,ert+ whi h had a
! person who is not a5 #. brother, sister 0whether by whole or half blood3, spouse, ancestor, and lineal descendant% or 2. a relative by consanguinity in the collateral within the *th civil degree ! legally adopted child is entitled to all the rights and obligations provided by law to legitimate children, and therefore, donation to him shall not be considered as donation made to stranger. 6onation made between business organi?ations and those made between an individual and a business organi?ation shall be considered as donation made to a stranger.
'a-uation of %ifts of )ro,ert+ The fair mar et value of the property given at the time of the gift shall be the value of the gift.
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mar:et !a-ue of )659555.55. In the da ion en ,ago do ument9 the 0a-an e of the de0t was ondoned. a. $hat is the tax effe t on the dis harge of the un,aid 0a-an e of the o0-igation on the de0tor or,oration= 0. Insofar as the reditor is on erned9 how is he effe ted taxwise as a onseGuen e of the transa tion= S. A. a3 The "nsolvent 6ebtor -orporation will be liable for the following taxes5 0#3 6ocumentary ,tamp Tax based on the consideration or value received or paid for the property, which is the amount of obligation extinguished, or on its fair mar et value, whichever is higher. This tax is payable by either party to the said sale. 0&3 8ormal -orporate Tax for the gain on sale of a non-capital !sset representing the difference between the outstanding obligation settled thru 6acion en 'ago minus the 8et <oo Galue of the asset given up. b3 The creditor can recogni?e a tax deductible <ad 6ebts write-off e$ual to the difference between the outstanding obligation settled thru 6acion en 'ago minus the mar et value of the asset received. Exem,tions" #. .ifts made by a resident5 a. dowries gifts on account of marriage before its celebration or within one year thereafter by parents to each of their legitimate, illegitimate or adopted children to the extent of the first 'hp#(,((( b. gifts made for the use of the national government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of said government% c. gifts in favor of educational, charitable, religious, cultural or social welfare corporation, institution, foundations, trust or philanthropic organi?ation, research institutions or organi?ations, accredited 8.=, ,ro!ided that not more than )(> of said gift shall be used by such donee for administrative purposes.
1ar 458 &n De em0er 5D9 855<9 L'N 2or,oration donated a ,ie e of 'a ant Lot situated in (anda-u+ong 2it+ to an a redited and du-+ registered non?sto :9 non?,rofit edu ationa- institution to 0e used 0+ the -atter in 0ui-ding a s,orts om,-ex for students. a. (a+ the donor -aim in fu-- as dedu tion from its gross in ome for the taxa0-e +ear 855< the amount of the donated -ot eGui!a-ent to its fair mar:et !a-ueI@ona- !a-ue at the time of the donation= Ex,-ain +our answer. 0. In order that donations to non?sto :9 non?,rofit edu ationa- institution ma+ 0e exem,t from the donor4s gift tax9 what onditions must 0e met 0+ the donee= S. A. a3 Ces, the donor may claim full deduction for having donated the lot to a nonstoc , non-profit educational institution where no part of the net income will inure to the benefit of any private individual. (Sec. 9" (<) 0hap. =88 R! 8"2") b3 +or the 6onor to be exempt from 6onors tax, the 6onee shall be5 0#3 !n educational andDor charitable, religious, cultural or social welfare corporation, institution, accredited non-government organi?ation, trust or philanthropic organi?ation or research institution or organi?ation% 0&3 Bse not more than thirty percent 0)(>3 of said gifts for administration purposes% 0)3 ! school, college or university andDor charitable corporation, accredited non-government organi?ation, trust or philanthropic organi?ation andDor research institution or organi?ation% 0*3 "ncorporated as a non-stoc entity% 023 'aying no dividends% 073 .overned by trustee who receive no compensation, and (7) 6evoting all its income, whether students fees or gifts, donations, subsidies or other accomplishment and promotion of the purposes enumerated in its !rticles of "ncorporation. (Sec. 1.1 (!)(9) :itle 888 0hap. 88 R! 8"2") &. .ifts made by a nonresident alien only gifts mentioned in letters 0b3 and 0c3 are exempt Tax 2redit" 2
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%enera-: the donors tax imposed by the Tax -ode upon a donor who was a citi?en or a resident at the time of donation shall be credited with the amount of any donors taxes imposed by the foreign country Limitations a. +or donors tax paid to one foreign country The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is ta en, which the net gifts situated within such country taxable under the 8"@- bears his entire net gift. 8et gifts in a foreign country x 'hil. KTax credit /ntire net gifts 6onors tax limit
authori?ed treasurer of the city or municipality where the donor is domiciled at the time the transfer, or if there can be no legal residence in the 'hilippines, with the -ommissioner. (. Non-resident donor 'hilippine /mbassy or -onsulate in the country where he is domiciled at the time of the transfer, or 6irectly with the =ffice of the -ommissioner. Lo&oL 'AL3E ADDED TAX .'AT/ 'a-ue?Added Tax .'AT/ is a percentage tax imposed at every stage of the distribution process on the sale, barter, exchange 0including transactions deemed by law as a sale3, or lease of goods, properties, or services in the course of trade or business, or on the importation of goods. Nature of 'AT #. !n indirect tax% hence, amount of the tax may be shifted or passed on to the buyer &. ! privilege tax% hence, the tax is imposed not on the goods, properties or services as such but on the sale, barter, exchange or lease of goods or properties, or the sale or performance of services for a fee, remuneration, etc ). ! uniform tax computed at the rate of (> or #&> of the gross selling price of goods or of gross receipts reali?ed from the sale of services *. !n ad valorem tax because it is based on the gross selling price or gross value in money, or gross receipts derived from the transaction 2. ! tax on the value added by every seller as the goods, properties or services pass along the distribution chain, unless the seller is exempt. )ur,oses of 'AT s+stem" #. reali?ing the system of taxing goods and services% &. simplifying tax administration% and ). ma ing the tax system more e$uitable, to enable the country to attain economic recovery. Transa tions su0*e t to <8J 'AT" .2R 21 $ILD FIRE F#( LS/
b.
+or donors taxes paid to two or more foreign countries The total amount to the credit shall not exceed the same proportion of the tax against which such credit is ta en, which the net gifts situated outside the 'hilippines taxable under the 8"@- bears to this entire net gifts. 8et gifts outside the 'hilippines x 'hil. KTax credit /ntire net gifts 6onors tax limit Donor4s Tax Return" To be filed within thirty 0)(3 days after the gift is made. The return shall be under oath in duplicate setting forth5 /ach gift made during the calendar year which is to be included in computing net gifts% The deductions claimed and allowable% !ny previous net gifts made during the same calendar year% The name of the donee% @elationship of the donor to the donee% and ,uch further information as may be re$uired by rules and regulations made pursuant to law. The tax is paid at the time the return is filed within said period. Fi-ed and ,aid5 a. Resident 1onor To an accredited agent ban , @6=, revenue -ollection =fficer or duly !
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<. Sa-es I Ser!i es 2ontractors Restaurants 2ommon carriers by sea or air 1ro ers $arehousing services Investors D lending Lessors of properties Dealers of securities Film lessors or distributors 8on-life insurance companies Royalty fees Electric -ompanies Franchise holders #otels, motels (illing, processing or repac ing services Land transportation services Similar services &. Transfers deemed sale for G!T purposes #&> 0', 6=.3 Transfer for )ersonal use or consumption 6istribution or transfer to Shareholders, investors or creditors Dissolution and creation of a new partnership 'roperties &riginally intended for sale or for use in the course of business -onsigned %oods, if actual sale is not made within sixty 07(3 days N&TE"
<usinesses where the aggregate sales or receipts do not exceed 'hp#, 2((, ((( during any #&-month period shall be considered principally for subsistence or livelihood and not in the course of trade or business, and shall be exempt from G!T. They shall, however, be subject to percentage tax e$uivalent to )> of their gross $uarterly sales or receipts, provided that the business is not G!T-registered. Transa tions su0*e t to 5J 'AT" A tua- Kero Rating a. Kero?rated transa tions9 ser!i es .E)&T I)IS/ Exempt under special law or agreements )rocessing, manufacturing or repac ing of goods N &ther transactions Transport of passengers and cargo from the 'hilippines to a foreign country ,ervices to 'ersons engaged in Industrial shipping ,ale of )ower generated through renewable sources of energy Industrial air transport operation services rendered in connection with it Subcontractors and other contractors in the manufacturing of goods M(> of its sale is for export 8ote5 NFust be subse$uently exported and paid for by acceptable foreign currency, it must be duly accounted for by the -entral <an . 0. Kero?rated .EF)/ transa tion9 goods
Min the ordinar+ ourse of trade or 0usinessN means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstoc , nonprofit private organi?ation 0irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests3, or government entity. The rule of regularity, to the contrary notwithstanding, services as defined in this -ode rendered in the 'hilippines by nonresident foreign persons shall be considered as being rendered in the course of trade or business.
1. Export sales .%&RAN%/ %old sold to <,' Those under the &mnibus 2.
investment code Raw material sold to export oriented enterprises Actual shipment of goods ,ale of raw materials to Nonresident buyers ,ale of %oods international buyers Foreign currency denominated sale Sa-es to whom" non-resident &f what" goods assembled or manufactured in the 'hilippines.
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3.
Ex e,t" automobiles and nonessential goods 0jewelries, perfumes, yachts, etc.3 To whom de-i!ered" resident of the 'hilippines. 'aid for in acceptable foreign currency duly accounted for in accordance with the <,' rules )ersons or entity deemed exempt under international law KER&?RATED
f. Transport of passengers and cargo by air or sea vessels from the 'hilippines to a foreign country% g. ,ale of power or fuel generated through renewable sources of energy. KER&?RATED EXE()T #. all G!T is removed #. removes the G!T from the goods, only at the exempt activity or transaction stage &. the taxpayer can claim the refund or &. the taxpayer is not input taxes passed on entitled to credit or to him by the refund of the input tax supplier, etc. or credit passed on to him by such input taxes on the supplier, etc. his non-?ero-rated transactions ). generally, taxable ). it is not ta en into sales are ta en into account in account in determining turn-over determining turn-over or G!T registration sales or sale for G!T purposes registration purposes Ru-es in -ease of residentia- units for 'AT ,ur,oses" 1. 4ease of property situated in the 'hilippine shall be subject to G!T irrespective of the place where the contract of lease or licensing agreement was executed if the property leased or used in the 'hilippines.
EFFE2TI'EL; TRANSA2TI&NS"
Sa-es to whom" persons or entities exempted under special laws or international agreements to which the 'hilippines is a signatory <. Kero?rated ser!i es" a. 'rocessing, manufacturing or repac ing of goods For" persons doing business outside the 'hilippines $hen" the goods are subse$uently exported 'aid for in acceptable foreign currency 6uly accounted for in accordance with the <,' rules b. ,ervices other than those provided in I&a rendered to5 'ersons engaged in business outside the 'hilippines or% 8on-resident persons not engaged in business When the services were rendered 'aid for in acceptable foreign currency 6uly accounted for in accordance with <,' rules c. ,ervices rendered to exempt entities under special laws and international agreements to which the 'hilippines is a signatory% d. ,ervices rendered to persons engaged exclusively in international shippingD international air transport operations% e. Those performed for an enterprise whose export sales exceed M(> of the annual production, by subcontractors andDor contractors duly accredited by the <oard of "nvestments or the /xport 6evelopment -ouncil in processing, converting or manufacturing goods% #
Residentia- units shall refer to apartments, houses, andDor lands on which anothers dwelling is located, used for residential purposes and shall include not only buildings, but also the parts or units thereof used solely as dwelling places 0e.g. dormitories, rooms and bed spaces3 except motels, motel rooms, hotel and hotel rooms. 2. "t li ewise includes apartment, houses, buildings, parts or units thereof used fro home industries, retail stores or other business purposes if the tenant thereof and his family actually live therein and used them principally for dwelling purposes. The term unit shall mean an apartment unit in the case of apartments, house in case of residential houses% per person in the case of dormitories, boarding houses and bed spaces% and per room in case of room for rent.
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Exem,t Transa tions" .AF) 1RI1E '&TE #EL&& %AR2I/
1.
,aleD importation of Agricultural and marine food products in their original state% livestoc and poultry generally used for human consumption% Note"
a.
products are considered in their original state even if they have undergone simple processes of preparation or preservation for the mar et free?ing, drying, salting, 0roiling, roasting, smo ing, and stripping .2ode"FreDS1RoSS/ b. rice, orn grits, sugar cane, molasses are always considered in their original state .2ode" Ri2o Su(o/
2.
,D" of Fertili?ers% seeds, seedlings and fingerlings% fish, prawn, livestoc and poultry feeds% 3. ,ervices subject to )ercentage tax% 4. ,D", printing, publication of 1oo s and any newspaper, maga?ine, review or bulletin, which appear at regular intervals with fixed price for subscription and which are not devoted principally for paid advertisements% 5. ,ervices Rendered by regional or area head$uarters established by Fultinational -orporations% 7. "nvestments owned by foreigners 7. ,ervices of 1an s, non-ban financial intermediaries performing $uasiban ing activities 8. ,ervices rendered pursuant to an Employer-employee relationship% 9. ,D" or lease of passenger or cargo 'essels and aircraft including engine, e$uipment and spare parts thereof% #(. "mportation of personal and household effects provided5 a. the effects belong to &verseas +ilipino wor ersDor non-residents coming to resettle in the 'hilippines. b. the effects are exempt under Tariff and -ustoms -ode 11. "mportation of 0.,/+3 goods, supplies, e$uipment and fuel by persons engaged in international shipping and air Transport operations% 12. Educational services rendered by government educational institutions and
private educational institutions accredited by 6ep/d, -H/6, T/,6!% 13. Fedical, dental, #ospital and veterinary services except those rendered by professionals% 14. Export sales by persons who are not G!T-registered 15. Lease of residential unit with a monthly rental less than '#(, (((% 16. Sa-e or lease of goods, properties or services where the gross annual sales andDor receipts is not &ver '#, 2((,(((.((% 17. &ther cooperatives 18. ,ervices by agricultural ontract %rowers and milling for others of @i-o ,u 0rice, corn grits, sugar cane3% 19. ,ales by Agricultural cooperatives registered with -6!% 20. ,ale of Real property utili?ed for low-cost and sociali?ed housing% 21. .ross receipts from lending activities by 2redit of multi-purpose cooperatives registered with the -6!% 22. Transactions exempt under special laws and International agreements to which the 'hilippines is a signatory except those under '.6. 2&L% Fi!e .>/ ,er ent 'AT ,ale to the government
2om,utation of the 'AT" #. for the ,ale of .oods or 'roperties #&> of the gross selling price or gross value in money 0effective +ebruary #, &((73 gross selling price means the total amount in money or its e$uivalent which the purchaser pays or is obligated to pay to the seller in consideration of the transaction, ex -uding the 'AT such tax shall be paid by the seller or the transferor &. for the "mportation of .oods #&> of the total value used by the <ureau of -ustoms in determining tariff and customs duties, excise taxes and other charges or% #&> of the landed cost plus excise taxes where the customs duties are determined on the basis of the $uantity or volume of the goods $
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such tax shall be paid by the importer prior to the release of the goods from -ustoms custody ). for the ,ale of ,ervices and Bse or 4ease of 'roperties #&> of the gross receipts derived from the sale or exchange of services gross receipts means the total amount in money or its e$uivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits and advanced payments a tua--+ or onstru ti!e-+ received during the taxable $uarter for the services performed or to be performed for another person, ex -uding 'AT Dedu tions or Ex -usions from the gross sa-esIre ei,ts" #. 6iscounts Fust be determined and granted at the time of sale /xpressly indicated in the invoice The amount thereof forms part of the gross sales duly recorded in the boo s of the seller The grant of which does not depend upon the happening of a future event
the value-added tax due from or paid by a G!T-registered person in the course of his trade or business on importation of goods or local purchase of goods or services, including lease or use of property, from a G!T-registered person.
0redita(le input ta*: any input tax evidenced by G!T invoice or official receipt on the following transactions5 a. 'urchaseD"mportation i. for sale ii. for conversion into or intended to form part of a finished product for sale including pac aging materials iii. for use as supplies in the course of business iv. for use as materials supplied in the sale of services v. for use in trade or business for which deduction for depreciation or amorti?ation is allowed b. 'urchase of services on which a G!T has actually been paid -reditable to5 i. the purchaser upon consummation of the sale and on importation of goods and properties ii. the importer upon payment of the G!T prior to the release of the goods from -ustoms custody iii. to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee, in case of purchase of services or lease or use of properties Ru-e on In,ut Tax on 2a,ita- %oods" #. if the aggregate ac$uisition cost of the capital goods, excluding G!T, exceeds '#, (((,(((.((% and &. where such goods are purchased or imported in a calendar month for use in trade or business for deduction for depreciation is allowed% ). then, the input tax shall be spread evenly over a period of 7( months, commencing from the month the ac$uisition was made *. provided, however, that if the estimated useful life of such goods is less
&. ,ales returns and allowances ! proper credit or refund was made The sales previously recorded as taxable sales $hen ma+ ,ro,ert+ di!idends 0e su0*e t to 'AT= 'roperty dividends which constitute stoc s in trade or properties primarily held for sale or lease declared as retained earnings on or after Oanuary #, #LL7 and distributed by the company to its shareholders shall be subject to G!T based on the ?onal value or fair mar et value at the time of distribution whichever is applicable.
Tax 2redits" &ut,ut tax the value-added tax due on the sale or lease of taxable goods or properties by any person re$uired to register In,ut tax 7
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than 2 years, then the input G!T shall be spread over such shorter period. ! G!T-@egistered person also engaged in non-vatable transactions shall be allowed tax credit as follows5 a. total input tax directly attributable to vatable transactions% b. ! ratable portion of any input tax which cannot be directly attributed to either activity% /xcess =utput or "nput Tax a. if, = P " % then, the excess shall be paid by the G!Tregistered person b. if, " P =% then, the excess shall be carried over to the succeeding $uarters or $uarters, provided5 the input tax carried over from the previous $uarter shall not exceed M(> of the output G!T the input tax attri0uta0-e to @ero? rated sa-es may, at the option of the taxpayer, be refunded or redited against other internal revenue taxes The excess input tax to be carried over from the preceding month or $uarter shall be reduced by5 a. amount of claim for refund or tax credit for G!T b. other adjustments, such as purchase returns or allowances c. input tax attributable to exempt sales Transitiona- in,ut tax redits is the input tax allowed to be credited against the output tax of a person who becomes liable to value-added tax or any person who elects to be a G!T-registered person, on his beginning inventory of goods, materials and supplies, e$uivalent to two percent 0&>3 of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whi he!er is higher. )resum,ti!e In,ut tax redits is the input tax credit allowed to persons liable for G!T where their purchases are not subject to input tax. The following persons are entitled to presumptive input tax credits5 a. 'ersons or firms engaged in the processing of sardines, mac erel and mil , and in manufacturing refined sugar, coo ing oil and pac ed noodle-based instant meals, e$uivalent to four percent 0*>3 of the gross value in money of their purchases of primary agricultural products which are used as inputs to their production. %
b. 'ublic wor s contractors, e$uivalent to one and one-half percent 0# #D&>3 of the contract price with respect to government contracts only in lieu of actual input taxes there from. Refunds or Tax 2redits for Kero?Rated or Effe ti!e-+ Kero?Rated Sa-es" a. taxpayer must be G!T-registered% otherwise, the transaction is exempt which does not entitle him to any refund or tax credit% b. application for a tax credit certificate or refund must be made within & years after the close of the taxable $uarter when the sales were made% c. to the extent that the input tax has not been applied against output tax. d. the transactions are paid for in an acceptable foreign currency and duly accounted for in accordance with <,' rules. e. in the case of a person whose registration is cancelled due to retirement from or cessation of business, or due to changes in or cessation of status, the application may be made within & years from the date of cancellation, etcQ f. in other appropriate cases, the -ommissioner shall grant refund or issue the tax credit certificate for creditable input taxes within #&( days from the date of submission of complete documents in support of the application Ru-e where the tax,a+er is engaged in @ero? rated or effe ti!e-+ @ero?rated transa tions and a-so in taxa0-e or exem,t sa-es" a. the amount of the creditable input tax due or paid which cannot be directly and entirely attributed any one of the transactions sha-0e a--o ated ,ro,ortionate-+ on the 0asis of the !o-ume of sa-es b. in case of a person ma ing ?ero-rated and non ?ero-rated sales, the input tax shall be allocated ratably between his ?ero-rated and non ?ero-rated sales $ithho-ding of 'AT" the .overnment or any of its political subdivisions, instrumentalities or agencies, including .=--s shall, 0efore ma:ing ,a+ment on account of purchase of goods and services dedu t and withho-d a fina'AT at the rate of >J of the gross ,a+ment thereof
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the payment for lease or use of properties or property rights to nonresident owners shall be subject to <5J withho-ding tax at the time of ,a+ment Lo&oL TAX RE(EDIES Agen ies In!o-!ed in Tax Administration #. <"@ &. <ureau of -ustoms ). 'rovincial, city, and municipal assessors and treasurers )owers and Duties of the 1IR %Sec! $& 'TRP( .Fe+" !.///
,tarts with the self-assessment by the taxpayer of his tax liability, filing of the tax return, and payment of the entire tax due shown on his return
(eans Em,-o+ed in the Assessment of Taxes %Sec! )& 'TRP( .Fe+" </T"-''/!/
1. Examination of tax returns 2. Bse of the 0est evidence obtainable 3. Inventory ta ing, surveillance and use of
presumptive gross sales and receipts 4. Termination of taxable period 5. )rescription of real property values 6. Examination of ban deposits to determine the correct amount of the gross estate 7. Accreditation and registration of tax agents. 8. )rescription of additional procedural or documentary re$uirements. The role of the government in assessment process includes the following5 i/ Examination of 0oo:s of a ounts and other a ounting re ords of tax,a+ers 0+ re!enue offi er to determine his orre t tax -ia0i-it+ .Letter of Authorit+? L&A/
1. Assessment
and collection of all national internal revenue taxes, fees, and charges 2. %ive effect to and administer the supervisory and police power conferred to it by the Tax -ode or other laws 3. Enforcement of all forfeitures, penalties and fines in connection therewith 4. Execution of judgments in all cases decided in its favor by the -ourt of Tax !ppeals and the ordinary courts I. NIR2 1ar 4AD ? (a+ the 2TA issue an in*un tion to en*oin the o--e tion of taxes 0+ the 1IR= Ex,-ain. 1ar 45< ? (a+ the ourts en*oin the o--e tion of re!enue taxes= Ex,-ain +our answer. %enera- Ru-e" Tax collection cannot be enjoined by court injunction. Tax -ode provides that no court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by this -ode. 0,ec. #1, 8"@-3 Ex e,tion" !n injunction that may be issued by the -T! in aid of its appellate jurisdiction under @! ##&2 TAX RE(EDIES 3NDER T#E
)eriod5 4etter of !uthority must be served to the concerned taxpayer within thirty 0)(3 days from its date of issuance otherwise it shall be null and void. @evenue officer is allowed only #&( days from the date of receipt of a letter of authority by the taxpayer to conduct the audit and submit the re$uired report of investigation. $ho ma+ issue -etter of authorit+= !fter a return has been filed, the commissioner or his duly authori?ed representative may authori?e the examination of the boo s of any taxpayer and the assessment of the correct amount tax. 0,ec. 7, 8"@-3 The revenue @egional 6irector shall approve and sign all 4!s for all audit cases within his regional jurisdiction9 EX2E)T 0#3 cases involving civil or criminal tax fraud under the jurisdiction of the tax fraud division of the enforcement service% &
A. )&$ER T& ASSESS"
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0&3 policy cases under audit by ,pecial Teams in the 8ational =ffice. 0@!F= )7-LL3 "f the taxpayer do not submit the documents or information re$uested by the <"@, the person may be re$uired to testify or the document may be summoned and re$uired to be presented to the <"@ Q. 2an the 1IR issue L&A more than on e within a taxa0-e +ear= S. A. No. <"@ officer are allowed to issue 4=! only once. EX2E)T" #. when <"@ determines that there is fraud or irregularities was committed by taxpayer &. taxpayer itself re$uest for an examination of his accounts ). when there is a need to verify the withholding taxes re$uired by the <"@. *. when capital gains tax must be verified. )ower of the 2ommissioner to assess defi ien + tax 0ased on 0est e!iden e o0taina0-e ,ec. 7< of @.!. 1*&* empowers the -ommissioner to assess the proper tax and ma e or amend the return based on the best evidence obtainable 0from his own nowledge and from such information as he can obtain through testimony or otherwise3 when5 #. a report re$uired by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by laws or rules and regulations% or &. there is reason to believe that any such report is i. fals e ii. inco mplete iii. erro neous. The return made by the -ommissioner, in this instance, shall be prima facie correct and sufficient for all legal purposes. ii/ )re,aration of tentati!e findings and ho-ding of informa- onferen e .Noti e of Informa- 2onferen e?NI2/
,oon after the completion of the tax audit, the revenue officer will render a written report stating5 a. the factual and legal basis of his findings b. whether the taxpayer agrees with his findings "f the taxpayer is not amenable, the taxpayer shall be informed in writing by the @evenue 6istrict =fficer of by the -hief of the 6ivision of the discrepancies in the taxpayers liability for the purpose of informal conference, in order to afford the taxpayer with an opportunity to present his side of the case. "f the taxpayer fails to respond within #2 days from date of receipt of the notice for informal conference, he shall be considered in default "n such a case, the @evenue 6istrict =fficer of the -hief of the 6ivision shall endorse the case to the !ssessment 6ivision for review and issuance of deficiency tax assessment, if warranted. iii/ Issuan e of )re-iminar+ Assessment Noti e .)AN/ "t is a communication issued by the @egional assessment 6ivision, or any other concerned <"@ office, informing a taxpayer who has been audited of the findings of the <"@ officer following the review of these findings. must show in detail the facts and law on which the proposed assessment is based, otherwise its fatal to <"@. "f the taxpayer disagrees with the findings stated in the '!8, he shall then have #2 days from his receipt of the '!8 to file a written reply contesting the proposed assessment.
Instan es wherein )AN is N& -onger reGuired" #. When the finding for any deficiency tax is the result of mathematical error in the computation of the tax appearing on the 20
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&.
).
*. 2.
face of the tax return filed by the taxpayer% When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable $uarter or $uarters of the succeeding taxable year% When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent% When an excise tax due on excisable articles has not been paid% or When an article locally purchased of imported by an exempt person, such as, but not limited to vehicles, capital e$uipment, machineries, and spare parts, has been sold, treated or transferred to non-exempt persons.
#. the computation of the sum due% &. giving notice to that effect to the taxpayer% and ). the ma ing, simultaneously with or sometime after the giving of notice, of a demand upon him for the payment of the tax deficiency stated.
!ssessment contains not only computation of tax liabilities but also a demand for payment within a prescribed period. >08R vs. -!S0/R 9.6 S0R! ".2?
8otice of assessment is presumed valid. "f the taxpayer contested such a determination, the burden of proving the determination wrong, together with the corresponding burden of first going forward with evidence, is on the taxpayer. > 0%anamid -hilippines 8nc. vs. 0! 922 S0R! ;96? Q. $hen is an assessment deemed made= S. A. - !n assessment is deemed made only when the collector of internal revenue releases, mails, or sends such notice to the taxpayer regardless whether the taxpayer received the notice within the prescriptive period. >@asilan Estates 8nc. vs. 08R 21 S0R! 17? Q. &n the 0asis of a Letter of Authorit+9 for the examination of the 0oo:s of a ounts and other a ounting re ords of )as or Rea-t+ and De!e-o,ment 2or,oration .)RD2/9 1IR examiners re ommended the issuan e of an assessment noti e in the amounts of )E mi--ion and ) 6 mi--ion for the +ears <AHD and <AHE res,e ti!e-+. &n (ar h <9 <AA>9 the 1IR fi-ed a riminaom,-aint with the De,artment of 7usti e against )RD29 its )resident and Treasurer a--eging e!asion of taxes in the totaamount of )<5 mi--ion. This was su,,orted 0+ an affida!it?re,ort of the examiners detai-ing the om,utation of the a--eged tax e!asion. )RD29 its )resident and Treasurer fi-ed an 3rgent ReGuest for Re onsiderationIRein!estigation dis,uting the tax assessment and tax -ia0i-it+. &n (ar h 869 <AA>9 )RD2 and its )resident and Treasurer re ei!ed a su0,oena in onne tion with the riminaom,-aint fi-ed 0+ the 1IR against them. In a -etter dated (a+ <E9 <AA>9 the 2ommissioner denied the urgent reGuest for re onsiderationIrein!estigation fi-ed 0+ )RD2 and its offi ers on the ground that
Q. $hat is a ,re?assessment noti e and what is its im,ortan e= S. A. - ! pre-assessment notice is a letter sent by the <ureau of "nternal @evenue to a taxpayer as ing him to explain within a period of fifteen 0#23 days from receipt why he should not be the subject of an assessment notice. !s a general rule, the <"@ could not issue an assessment notice without first issuing a pre-assessment notice because it is part of the due process rights of a taxpayer to be given notice in the form of a pre-assessment notice, and for him to explain why he should be the subject of an assessment notice. i!/ Issuan e of Forma- Assessment Noti e .FAN/ and -etter of demand if the taxpayer fails to respond within #2 days from date of receipt, he shall be considered in default in such a case, a formal letter of demand and +!8 shall be issued, calling for payment of the deficiency tax liabilities, inclusive of penalties. shall be sent personally or through registered mail TAX ASSESS(ENT? "t is the official action of an officer authori?ed by law in ascertaining the amount of tax due under the law from a taxpayer. This action necessarily involves5 2
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forma- assessment has as +et not 0een issued 0+ the 2ommissioner. Do +ou agree with the de ision of the 2ommissioner = Ex,-ain 0rief-+ S. A. - Ces, the affidavit-report of the examiners does not constitute an assessment that may be the subject of a motion for reconsiderationDreinvestigation. The affidavitreport merely contained a computation of the liabilities. "t did not state a demand or a period for payment. "t was not addressed to the taxpayers but to the 6epartment of Oustice. That the affidavit-report contained details of the tax liabilities does not ipso )acto ma e the same an assessment. "ts purpose was merely to support the criminal complaint for assessment. -learly, it was not meant to be a notice of the tax due and a demand for the payment thereof. The fact that the complaint itself was specifically directed and sent to the 6epartment of Oustice and not to the taxpayer shows that the intent of the <"@ was to file a criminal complaint for tax evasion, not to issue an assessment. !lthough the revenue officers recommended the issuance of an assessment, the commissioner instead opted to file a criminal complaint. What was received by the taxpayer was notice of the filing of the criminal case not a notice that the <"@ had made an assessment. 0-"@ v. 'ascor, "bid.3 Q. $hat assessmentN= is meant 0+ M*eo,ard+
Q. ? MXN 2or,oration fi-ed its in ome tax returns in 7anuar+9 <AA> for its in ome for the +ear <AAB. In & to0er9 <AAE9 (ar h9 <AAH and (a+9 <AAH9 MXN through it4s authori@ed re,resentati!e signed three .6/ se,arate wai!ers of the MStatute of Limitations under the NIR2.N The wai!ers were not signed 0+ the 1IR 2ommissioner or his agents. In <AAA9 the 1IR issued -etters of demand9 a om,anied 0+ assessment noti es as:ing the or,oration to ,a+ the defi ien + internare!enue taxes for its in ome for the +ear <AAB. MXN dis,uted the assessment and reGuested a rein!estigation. The 1IR 2ommissioner denied the ,rotest. MXN a,,ea-ed to the 2ourt of Tax A,,ea-s9 on the ground of ,res ri,tion. De ide. S. A. ? The <"@s authority to assess already prescribed. The three 0)3 waivers did not suspend the running of the prescriptive period. The only agreement that could suspend the running of the prescriptive period for the collection of the tax in $uestion is a written agreement between R9S corporation and the <"@ entered into before the expiration of the three 0)3 year prescriptive period extending the said period. ,ince, what is re$uired is the signatures of both the -ommissioner and the taxpayer, a unilateral waiver on the part of the taxpayer does not suspend the prescriptive period. 0-"@ v. -!, ..@. 8o. ##2M#&, +ebruary &2, #LLL 0-arnation case3 Q. $hat are the grounds for sus,ending statute of -imitations or ,res ri,ti!e ,eriods for assessment9 0eginning or distraint or -e!+ or ,ro eeding in ourt. S. A. - .rounds for suspending statute of limitations or prescriptive periods for assessment, beginning or distraint or levy or proceeding in court. The holding in -ommissioner of "nternal @evenue v. -ourt of !ppeals, et al., ..@. 8o. ##2M#&, +ebruary &2, #LLL 0-arnation case3 that the waiver of the period for assessment must be in writing and have the written consent of the <"@ -ommissioner is still doctrinal because of the provisions of ,ec. &&), 8"@- of #LLM which provides5 0#3 When the -ommissioner is prohibited from ma ing the assessment, or beginning distraint, or levy or proceeding in court and for sixty 07(3 days thereafter% 0&3 When the taxpayer re$uests for and is granted a reinvestigation by the commissioner%
S. A. ! delin$uency tax assessment which was assessed without the benefit of complete or partial audit by an authori?ed revenue officer, who has reason to believe that the assessment and collection of a deficiency tax will be jeopardi?ed by delay because of the taxpayers failure to comply with the audit and investigation re$uirements to present his boo s of accounts andDor pertinent records, or to substantiate all or any of the deductions, exemptions, or credits claimed in his return. :,ec. ).# 0a3, @ev. @egs. 8o. 7-&(((3 Q. $hat is the ,eriod for ma:ing an assessment= S. A. - The prescriptive periods for ma ing assessments are three 0)3 years from the last day within which to file a return or when the return was actually filed and ten years from discovery of the failure to file the tax return or discovery of falsity or fraud in the return.
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0)3 When the commissioner could not be located in the address given by him in the return filed upon which the tax is being assessed or collected% 0*3 When the warrant of distraint and levy is duly served upon the taxpayer, his authori?ed representative, or a member of his household with sufficient discretion, and no property could be located% and 023 When the taxpayer is out of the 'hilippines. Q. $hat is the ru-e in the the ,eriod of ,res ri,tion= onstru tion of
8. Su0mission of do umentar+ e!iden e and argument Within 7( days from date of filing of protest +ailure to submit would render the assessment final, executory and demandable 6. Denia- of ,rotest The taxpayer may appeal to the -ourt of Tax !ppeals 0-T!3 within )( days from date of receipt of the decision =therwise, the assessment shall become final, executory and demandable B. Ina tion of the 2IR +ailure to act on the protest within #1( days from date of submission of the re$uired documents would give rise to the right of the taxpayer to appeal The appeal should be made within &( days from the lapse of the said #1(-day period =therwise, the assessment shall become final, executory and demandable. Q. $hat are the reGuirements for a !a-id tax,a+er4s ,rotest= S. A. - The taxpayer shall state the facts, the applicable law, rules and regulations, or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect. "f therer are several issues involved in the disputed assessment and the taxpayer fails to state the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest against some of the several issues on which the assessment is based, the same shall be considered undisputed issue or issues, in which case, the taxpayer shall be re$uired to pay the corresponding deficiency tax or taxes attributable thereto. 0,ec. ).#.2, @ev. @egs. #&LL3 Q. Distinguish the remedies in the o--e tion of defi ien + tax and de-inGuen + tax. S. A. "n deficiency tax, the tax can immediately be collected administratively through the issuance of the warrant of distraint and levy, and by judicial action and the filing of a civil action for its collection in the ordinary court is a proper remedy, on the other hand, in delin$uency tax, the tax can be collected also through administrative and judicial remedies but has to 2!
S. A. - 4aw on prescription should be liberally construed in favor of the taxpayer. +or the purpose of safeguarding taxpayers from an unreasonable examination, investigation or assessment, our tax law provides a statute of limitation on the collection of taxes. Thus, the law on prescription, being a remedial measure, should be liberally construed in order to afford such protection. !s a corollary, the exceptions to the law on prescription should perforce be strictly construed. 0-"@ v. <.+. .oodrich 'hil., ..@. 8o. #(*#M#, +eb &*, #LLL3 1. )&$ER T& 2&LLE2T" De-inGuent Tax,a+er When the self-assessed tax per return filed on the prescribed date was not paid at all or was only partially paid, or The deficiency tax assessed by the <"@ became final and executory. Defi ien + tax The amount by which the income tax as determined by the <"@ exceeds the amount shown as tax per return, or "f no amount is shown or if no return is made, then the amount by which the tax as determined by the <"@ exceeds the amounts previously assessed 0or collected without assessment3 as a deficiency 2. )R&TEST <. Fi-ing of administrati!e ,rotest 0+ the tax,a+er against the assessment Within )( days from receipt of the +!8 +ailure to ma e such protest would render the assessment final, executory and demandable The prescriptive period for assessment or collection shall be suspended.
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go through the process of filing the protest against the assessment by the taxpayer and denial of such protest, and the filing of a civil action at the ordinary court for collection may be the subject of a motion to dismiss. "n addition, a petition for review must be filed with the -T! within the )( days to toll the running of the prescriptive period. II. RE(EDIES &F T#E %&'ERNE(NT F&R N&N?)A;(ENT &F TAXES !dministrative remedies a. tax lien b. distraint 0actual and constructive3 c. levy d. sale of property of a delin$uent taxpayer e. forfeiture of property f. compromise and abatement g. penalties and fines h. suspension of business operations. Oudicial @emedies a. civil action b. criminal action
have been filed in the register of deeds of the province or city where the property is located. <ut effectivity against third persons-only when notice of such lien is filed by the -ommissioner in the @egister of 6eeds in the provinceDcity where the property is situated 0,ec. &#L3 Note5 ,uperior to judgment claim of private property. 8. Distraint The collection of taxes is enforced on the goods, chattels or effects and other personal property, including stoc s and other securities, debts, credits and interest and rights to personal property.
$ho ma+ effe t distraint= a. -ommissioner or his duly authori?ed representative if the amount involved is more than '#,(((,(((.(( b. @evenue 6istrict =fficer if the amount involved is '#,(((,(((.(( or less than ReGuisites of distraint5 a. the taxpayer must be de-inGuent 0except in constructive distraint3 in the payment of tax% b. there must be a subse$uent demand for its payment 0assessment3% c. the taxpayer fai-s to ,a+ the tax at the time re$uired% and d. the period within which to assess or collect the tax has not +et ,res ri0ed. Finds5 a. A tua- distaint there is ta ing of possession of the property from the taxpayer by the government resorted to when at the time re$uired for payment, a person fails to pay his delin$uent tax obligation. Effe ted 0+" a. leaving a list of the distrained property, or b. by service of a warrant of distraint or garnishment )ro edure 2"
Note5 =ne or all of the remedies may be pursued simultaneously in the discretion of revenue authorities. Note5 6istraint or levy 8=T availed of where the amount of tax involved is 8=T F=@/ than '#(( /nforcement of administrative fine
A. Administrati!e Remedies <. Tax -ien ! legal claim or charge on property of the taxpayer as security for the payment of some debt or obligation. !ccrues when the taxpayer neglects or refuses to pay his tax liability after demand with interests, penalties and costs that may accrue in addition thereto. /xtent-upon all property and rights to property belonging to the taxpayer attaches not only from the time the warrant was served <BT from the time tax was due and demandable. The lien is not valid against any mortgagee, purchaser, or judgment creditor until notice of such lien shall
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a. .oods, effects, chattels and other personal property i. a copy of an account of the property distrained, signed by the officer, shall be left either from the owner or the person from whom the property was ta en or at the dwelling or place of business of such person and with someone of suitable age and discretion ii. statement of the sum demanded iii. time and place of sale b. ,toc s and other ,ecurities i. serving a copy of the warrant upon the taxpayer !86 upon the president, manager, treasurer or other responsible officer of the issuing corporation, company, association c. 6ebts and -redits i. leaving a copy of the warrant with the person owing the debts or having in his possession such credits or his agent ii. warrant shall be sufficient authority to pay the -ommissioner the amount of such debts or credits d. <an accounts 0garnishment3 i. serve a warrant of garnishment upon the taxpayer !86 upon the president, manger, treasurer or other responsible officer of the ban ii. ban shall turn over to the -ommissioner so much of the ban accounts as may be sufficient 0,ec. &(1 8"@-3 1ar 4AH ? 2an the 2ommissioner of InternaRe!enue inGuire into the 0an: de,osits of a tax,a+er= If so9 does his ,ower of the 2ommissioner onf-i t with R.A. <B5> .Se re + of 1an: De,osits Law/. S. A. Ces, the <"@ -ommissioner can in$uire into the deposits of a taxpayer under two 0&3 instances5 0#3 To determine the .ross /state of a decedent%
0&3 When a taxpayer applies for a compromise of his tax liability by reason of financial incapacity. 8o, the <"@ -ommissioners power is an exception to the <an ,ecrecy 4aw. (Sec. ; (F) R! 8"2") 1ar 456 X dies in +ear 8555 -ea!ing a 0an: de,osit of )8 (i--ion under *oint a ount with his asso iates in a -aw offi e. Learning of X4s death from the news,a,ers9 the 2ommissioner of Interna- re!enue wrote to e!er+ 0an: in the ountr+ as:ing them to dis -ose to him the amount of de,osits that might 0e outstanding in his name or *oint-+ with others at the date of his death. (a+ the 0an: ho-ding the de,osit refuse to om,-+ on the ground of the se re + of 1an: de,osit Law= S. A. 8o, the ban cannot refuse to comply with the <"@ -ommissioners re$uest. The 8"@- gave the authority to the -ommissioner to in$uire into the ban deposit of any taxpayer to determine into the ban deposit of any taxpayer to determine the .ross /state at the time of the death of said taxpayer. This is an exception to the ,ecrecy 4aw. (Sec. ; (F) R! 8"2") Note5 @eport on the 6istraint by the distraining officer must be submitted within #( days from receipt of the warrant to the @evenue 6istrict =fficer and to the @evenue @egional 6irector. The order of 6istraint may be lifted by the -ommissioner or his representative 0,ec. &(M ! 8"@-3 0. 2onstru ti!e distraint the owner is merely prohibited from disposing of this property issued even when there is no actual tax delin$uency availed of when taxpayer is5 a. retiring from any business subject to tax% b. intending to i. leave the 'hilippines% or ii. remove his property therefrom% or iii. hide or conceal his property% or c. he performs any act tending to obstruct the proceedings for collecting the tax due 2# )ro edure
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a. @e$uire the taxpayer or any person having control of the property to i. sign a receipt covering property distrained ii. obligate himself to preserve the same intact and unaltered iii. not to dispose of the property in any manner, without the authority of the -ommissioner b. Where taxpayer or person in possession refuses to sign5 i. distraining officer shall prepare a list of the property distrained ii. in the presence of & witnesses, leave a copy in the premises where the property is located 0,ec. &(7 8"@-3 Q. 2om,are a tuaonstru ti!e distraint. distraint from
purpose being to prevent the taxpayer from disposing of his property pending final determination of his tax liability. Q. Distinguish -ien from distraint. ,. !. 4ien is directed against the property subject to the tax, while distraint need not be directed against the property subject to the tax. "n lien, the ownership of the property is not necessary of the taxpayer, while in distraint, the property sei?ed must be owned by the taxpayer. 6. Le!+ "t refers to the act of sei?ure of rea,ro,ert+ in order to enforce the payment of taxes. The re$uisites for the exercise of the remedy of levy" same as in the remedy of distraint $hen5 before, simultaneously or after the distraint of personal property belonging to the taxpayer Effe ted 0+5 a. writing upon an authenticated certificate showing5 #. the name of the taxpayer, &. amounts of the tax and penalty due ). description of the property upon which levy is made. b. written notice of the levy shall be mailed to or served upon5 1. the @egister of 6eeds of the province or city where the property is located, and 2. the delin$uent taxpayer 3. if he is absent from the 'hilippines, to his agent or the manager of the business in respect to which the liability arose 4. if there be none, to the occupant of the property in $uestion. @eal property may be levied upon 0efore9 simu-taneous-+9 or after the distraint of personal property belonging to the delin$uent. The remedy by distraint and levy may be repeated if necessary until the full amount, including all expenses, is collected. )ro edure"
S. A. 0#3 <oth are summary remedies for the collection of taxes. 0&3 <oth refer only to personal property% 0)3 <oth cannot be availed of where the amount of the tax involved is not more than '#((% 0*3 !ctual distraint is made on the property only of delin$uent taxpayer, while constructive distraint may be made on the property of any taxpayer, whether delin$uent or not% 023 "n actual distraint, there is a ta ing of possession or transfer of control over the property distrained, while in constructive distraint, the taxpayer is merely prohibited from disposing of his property% 073 !ctual distraint is effected by leaving a list of the property distrained or by service of a warrant of distraint or garnishment, while contructive distraint may be effected by re$uiring the taxpayer to sign a receipt of the property or by the revenue officer preparing and leaving a list of such property% and 0M3 !ctual distraint is an immediate step for collection of delin$uent taxes, while constructive distraint is not necessarily so, its 2$
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0a3 internal revenue officer shall prepare a duly authenticated certificate showing the name of taxpayer, amounts of tax and penalty due. /nforceable throughout the 'hilippines 0b3 officer shall write upon the certificate a description of the property upon which levy is made 0c3 written notice of levy shall be mailed or served upon i. the @egister of 6eeds where the property is located and ii. the taxpayer or agentDmanager of the business in respect to the tax liability or to the occupant of the property 0d3 "f personal property of taxpayer is not sufficient to satisfy the tax due, levy on real property shall proceed within )( days after distraint 0e3 @eport on levy i. by levying officer 0#3 submitted within #( days from receipt of warrant 0&3 submitted to the -ommissioner or his representative ii. by the @evenue @egional 6irector-consolidated report, as may be re$uired by the -ommissioner 0f3 The warrant may be lifted by the -ommissioner or his representative B. Sa-e of ,ro,ert+
after notice to the owner or possessor of the property and the publication or posting of such notice c. ,ale of the property at i. public auction to the highest bidder for cash, or ii. through duly licensed commodity or stoc exchanges, with the approval of the -"@
8n case o) distrained propert%: a. notification specifying the time and place of sale and the articles distrained shall be exhibited i. in not less than & public places 0one place shall be at the office of the Fayor3 ii. in the municipality or city where the distraint is made b. The time of sale shall not be less than &( days 27
8n case o) levied -ropert%: a. advertisement of the time and place of sale of the taxpayers property or so much thereof as may be necessary to satisfy the claim within &( days after the levy, and it shall cover a period of at least )( days i. posting a notice at the main entrance of the municipal building or city hall and ii. in a public and conspicuous place in the barrio or district in which the real estate lies and iii. by publication once a wee for ) wee s in a newspaper of general circulation in the municipality or city where the property is located. b. sale at public auction to the highest bidder i. at the main entrance of the municipal building or city hall, or ii. on the premises to be sols, as the officer conducting the proceedings shall determine and as the notice shall specify c. disposition of proceeds of sale i. "n case the proceeds of the sale exceed the claim 0taxes, penalties, and interest3 and cost of the sale, the excess shall be turned over to the owner of the property. Redemption 0+ the tax,a+er
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Within # year from the date of sale, that is, from the registration of the registration of the deed of sale. <y the taxpayer or anyone for him by paying the full amount of5 Taxes 'enalties "nterests, and -osts of sale
2om,romise a contract whereby the parties by reciprocal concessions, avoid litigation or put an end to one already commenced. ReGuisites5 a. the taxpayer must have a tax liability% b. there must be acceptance 0by the -ommissioner or taxpayer as the case may be3 of the offer in the settlement of the original claim% c. there must be an offer 0by the taxpayer of an amount to be paid him3
-endin, rede ption of the property sold, the owner shall5 a. not be deprived of the possession of the property b. be entitled to the rents and other income thereof >. Forfeiture Effe ted when5 a. there is no bidder for the real property in the public sale, or b. if the amount of the highest bid is insufficient to pay the taxes, penalties and costs The @egister of 6eeds concerned shall5 a. Bpon registration of the ii. declaration for forfeiture, transfer the title of the property to the government b. Without the necessity of an order from a competent court Enfor ed 0+5 a. in case of personal property sei?ure and sale or destruction of the
i.
&ffi ers authori@ed to om,romise5 a. -ommissioner of "nternal @evenue is the only official vested with such power and discretion% b. ,ubordinate officials may preliminaril% enter into compromise. The effects are5 acceptance of an offer of compromise5 not )inal and may be reviewed by the -ommissioner% re2ection of an offer of compromise5 )inal and binding unless revo ed or set aside by the -ommissioner.
i. ii. property i. ii.
b. in case of real property judgment of condemnation and sale in a legal action or proceeding, civil or criminal, as the case may re$uire Redem,tion 0+ the tax,a+er a. ,ame as that of redemption in case of sale b. The # year period starts from the date of registration of the declaration of forfeiture 2om,romise and
A. 2om,romise of i!i- ases" .rounds 0civil cases3 a. When a reasonable doubt as to the validity of the claim against the taxpayer exists% b. When the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.
D. A0atement
Limitation as to amount of5 a. "n case of financial incapacity5 #(> of the basic assessed tax b. =ther cases5 *(> of the basic assessed tax The approval of the /valuation <oard 0composed of 2%
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the -"@ and the 6eputy -ommissioners3 is re$uired when5 a. The basic tax involved exceeds 'hp#,(((,(((% or b. The settlement offered is less than the F-@ Note" The F-@ may be less than the prescribed rates of #(> or *(>, as the case may be, provided it is approved by the /valuation <oard
Limitation as to o!erage5 a. With respect to the liability of the taxpayer for surcharges as their imposition is mandatory b. "n cases finally decided by the courts 1ar 45B After the tax assessment had 0e ome finaand una,,e-a0-e9 the 2ommissioner of internare!enue initiated the fi-ing of a i!i- a tion to o--e t the tax due from NX. After se!era- +ears9 a de ision was rendered 0+ the ourt ordering NX to ,a+ the tax due ,-us ,ena-ties and sur harges. The *udgment 0e ame fina- and exe utor+9 0ut attem,ts to exe ute the *udgment award were futi-e. Su0seGuent-+9 NX offered the 2ommissioner a om,romise sett-ement of >5J of the *udgment award9 re,resenting that this amount is a-- he ou-d rea--+ afford. Does the ommissioner ha!e the ,ower to a e,t the om,romise offer= Is it -ega- and ethi a-= Ex,-ain 0rief-+. S. A. Ces, the -ommissioner has the power to accept the compromise offered provided the case does not involve 0#3 /state taxes or 0&3 the doubtful validity of the tax assessment. (RR No. 9.-.2 Sec. 9 1ec 1; 2..2) The compromise offered also meets the minimum re$uirement of #(> of the assessment for cases involving financial incapacity. (Sec. 2." (!) R! 8"2") 1. 2om,romise in rimina- !io-ations"
,referentia- tax treatment under a s,e ia-aw. After in!estigation of it4s withho-ding tax returns for the taxa0-e +ear <AAE9 the 1IR issued a defi ien + withho-ding tax assessment in the amount of )<>59 555. &n (a+ <>9 <AAA9 0e ause of finan ia- diffi u-t+9 the defi ien + tax remained un,aid9 as a resu-t of whi h the assessment 0e ame finaand exe utor+. The 1IR a-so found that9 in !io-ation of the ,ro!isions of the NIR29 (ino-ta did not fi-e its fina- or,orate in ome tax return fro the taxa0-e +ear of <AAH9 0e ause it a--eged-+ in urred net -oss from its o,erations. &n (a+ <E9 85589 the 1IR fi-ed with the RT2 an a tion for o--e tion of the defi ien + withho-ding tax for <AAE. (a+ rimina- !io-ations of the Tax 2ode 0e om,romised= If (ino-ta ma:es !o-untar+ offer to om,romise the rimina- !io-ations for non?fi--ing and non?,a+ment of taxes for the +ear <AAH9 ma+ the ommissioner a e,t the offer= Ex,-ain. S. A. Ces, the -ommissioner may accept the offer to compromise the criminal violation for non-filing and nonpayment of taxes since the case has not been filed in court and no criminal tax fraud is involved. =nly a criminal violation already filed in court or one involving criminal tax fraud cannot be compromised. 0@@ 8o. )(-(&, ,ec. & :6ec #7, (&;3
Extent of dis retion5
a. (e)ore the complaint is )iled

#ith the prosecutor3s o))ice5 the -ommissioner has full discretion to compromise except those involving fraud% a)ter the complaint is )iled #ith the prosecutor3s o))ice (ut (e)ore the in)ormation is )iled #ith the court5 the -ommissioner can still compromise provided the prosecutor consented% a)ter the in)ormation is )iled #ith the court5 the -ommissioner is no longer permitted to compromise with or without the consent of the prosecutor.
b.
c.
!ll9 ex e,t5 a. those already filed in court b. those involving fraud.
1ar 458 (ino-ta )hi-i,,ines9 In . .(ino-ta/ is an E)KA?registered enter,rise en*o+ing 2&
Remedies when tax,a+er refuses or fai-s to a0ide 0+ a tax om,romise"
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a. enforce the compromise i. *udi iaom,romise can be enforced by mere exe ution ii. extra*udi ia- can only be enforced by ourt a tion b. regard it as res inded and insists upon original demand 0Art. 85B<9 N223 2om,romise )ena-t+ a. !n amount which the taxpayer pays to compromise a tax violation b. 'aid in lieu of criminal prosecution c. ! taxpayer cannot be compelled to pay a compromise penalty d. "f he does not want to pay, the -"@ must institute a criminal action. 1ar 45> State and dis uss 0rief-+ whether the fo--owing ases ma+ 0e om,romised or ma+ not 0e om,romised" a. De-inGuent a ountsC 0. 2ases under administrati!e ,rotest9 after issuan e of the fina- assessment noti e to the tax,a+er9 whi h are sti-- ,endingC . 2rimina- tax fraud asesC d. 2rimina- !io-ations a-read+ fi-ed in ourtC e. 2ases where finare,orts of rein!estigation or re onsideration ha!e 0een issued resu-ting in the redu tion of the origina- assessment agreed to 0+ the tax,a+er when he signed the reGuired agreement form. S. A. a3 6elin$uent account cases may be compromised based on the <"@s revenue regulation on the matter. b3 'ending cases under administrative protest, may be compromised based on the <"@s revenue regulation on the matter. c3 -riminal tax fraud cases, confirmed as such by the -ommissioner of "nternal @evenue or his duly authori?ed representative may not be compromised based on the <"@s revenue regulation on the matter. d3 -riminal violation already filed in court may not be compromised based on the <"@s revenue regulation on the matter. e) -ases where final reports of reinvestigation or reconsideration have been issued, resulting in the reduction of the original assessment agreed to by the taxpayer when he !0
signed the re$uired agreement form, may not be compromised. (RR No. 9.-.2 Sec. 9 1ec 1; 2..2)
C'
A0atement cancellation of the tax liability
%rounds" a. When the tax assessed or any portion thereof appears to be unjustly or excessively demanded, or b. When the administration and collection costs involved do not justify the collection of the amount due
%EN R3LE5 the power to

compromise and abate cannot be delegated by the -"@ EX2E)T" a. assessments issued by regional offices involving basic taxes of 'hp2((,((( or less% and b. minor criminal violations. E. )ena-ties and fines @efer to5 a. surcharges b. deficiency and delin$uency interest c. compromise penalty !. Surchar,es: 8ot really a penalty as used in criminal law but a civil administrative sanction designed primarily to5 a. protect the ,tate revenue, and b. reimburse the government for the expenses in investigating and the loss resulting from the taxpayers fraud. 'enalty of &2> of the amount due for5 a. +ailure to file any return and pay the tax due thereon% b. +iling a return with the wrong agent of the <"@, unless otherwise authori?ed by the -"@
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c. failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment% d. +ailure to pay the full or part of the tax as shown on the return on or before the due date @. 8nterest: a. 6eficiency interest &(> per annum from the date prescribed for its payment until the full payment thereof 0.
b. 6elin$uency interest "nterest of &(> or the Fanila @eference rate, whichever is higher, re$uired to be paid in case of failure to pay5 c. the amount of the tax due on any return re$uired to be filed% d. amount of the tax due for which return is re$uired% e. the deficiency tax or any surcharge or interest thereon, on the date appearing in the notice and demand of the -"@. 0ompromise: ,imilarities of compromise and compromise penalty5 a. They both imply mutual agreement. ! compromise penalty cannot be imposed in the absence of a showing that the taxpayer consented thereto. b. The -"@ has no power to impose and collect the compromise penalties in the absence of a compromise agreement validly entered into between the taxpayer and the -"@ om,romise from
1ar 45> Dani-o9 who is engaged in the trading 0usiness9 entrusted to his a ountant the ,re,aration of his in ome tax return and the ,a+ment of the tax due. The a ountant fi-ed a fa-sified tax return 0+ underde -aring the sa-es and o!erstating the ex,ense dedu tions 0+ Dani-o. Is Dani-o -ia0-e for the defi ien + tax and the ,ena-ties thereon= $hat is the -ia0i-it+9 if an+9 of the a ountant= Dis uss. S. A. Ces, 6anilo is liable for the deficiency tax. <ut he may be excused from paying the 2(> penalty for the falsified tax return. He did not willfully order the filing of a falsified return. +raud, with the intent to evade tax payment, cannot be presumed but must be clearly established. The accountant can be held liable, criminally and civilly, as follows5 0#3 +or willfully attempting to evade or defeat the payment of the tax5 a. ! fine of not less than 'H')(,((( but not more than 'H'#((,(((% b. "mprisonment of not less than two years but not more than four years% and c. ! civil suit to collect the tax. 0&3 +or willfully attempting to evade or defeat any tax5 a. ! fine of not less than 'H'2(,((( but not more than 'H'#((,(((% and b. "mprisonment of not less than two years but not more than six years. 0)3 When the offender is a -ertified 'ublic !ccountant, his -'! certificate shall be automatically revo ed or cancelled upon conviction.
Q. Distinguish om,romise ,ena-t+.
S. A. -ompromise is defined as an amount of money paid by the taxpayer to settle his civil liability for tax assessed, while compromise penalty is defined as an amount of money paid to compromise a tax violation that he has committed, which may be the subject of criminal prosecution. "n compromise, the basis of amount paid is the basic tax assessed, while in compromise penalty the basis is the gross sales or receipts during the year of the tax due. "n compromise, the minimum amount depends on the legal grounds used by the taxpayer, while in compromise penalty, it depends on the nature of the tax violation and
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the minimum amount is generally not less than 'H' #,(((. 1. 7udi ia- Remedies
1.
2i!i- A tions actions instituted by the government to collect internal revenue taxes. "t includes filing by the government with the probate court claims against the deceased taxpayer. Enfor ed 0+" a. filing a civil case for the collection of a sum of money with the proper regular court 0i.e. FT- or @T-3% or @esorted to only when tax becomes5 i. delin$ uent ii. collec tible -ollectibility arises when5 i. ,elfassessed tax shown in the return was not paid within the date prescribe by law% ii. +inal assessment is not protested administratively within )( days from date of receipt% iii. 8oncompliance with the condition laid in the approval of protest% iv. +ailur e to file a timely appeal to the -T! on the final decision of the -"@ or his authori?ed representative on the disputed assessment. 6efenses precluded by final and executory assessments5 i. "nvali dity or illegality of the assessment% and ii. 'resc ription of the governments right to assess.
b. filing an answer to the petition for review filed by the taxpayer with the -T! The fact that no civil action was filed before the ordinary courts to collect the tax liability is no ground for claiming that the right to collect had already prescribed. The answer filed by the government in the -T! is tantamount to the filing of a civil action for collection the regular court and has the effect of tolling the prescriptive period. 0Hermanos, "nc. vs. -"@, &L ,-@! 22&3 1ar 458 In the in!estigation of the withho-ding tax returns of AK (edina Se urit+ Agen + .AK (edina/ for the taxa0-e +ears <AAE and <AAH9 a dis re,an + 0etween the taxes withhe-d from its em,-o+ees and the amounts a tua--+ remitted to the go!ernment was found. A ording-+9 0efore the ,eriod of ,res ri,tion ommen ed to run the 1IR issued an assessment and a demand -etter a--ing for the immediate ,a+ment of the defi ien + withho-ding taxes in the totaamount of )8>59 555. 2ounse- for AK (edina ,rotested the assessment for 0eing nu-- and !oid on the ground that no ,re?assessment noti e had 0een issued. #owe!er9 the ,rotest was denied. 2ounse- then fi-ed a ,etition with the 2TA to restrain the o--e tion of the tax. $i-- the s,e ia- i!i- a tion for ,rohi0ition 0rought 0efore the 2TA under Se . << of R.A. No. <<8> ,ros,er= Dis uss +our answer. S. A. 8o, the action for prohibition before the -T! will not proper. 8o appeal to the -T! from the -ommissioner of "nternal @evenue shall suspend the taxpayers payment of his tax liability. -T! will not suspend collection because that will jeopardi?e the interest of the government with no injury to the taxpayer. (Sec. 11 R! 6282 4arch 9. 2..") 1ar 458 &n (ar h <>9 85559 the 1IR issued a defi ien + in ome tax assessment for the taxa0-e +ear <AAE against the 'a-era %rou, of 2om,anies .'a-era/ in the amount of )<5 (i--ion. 2ounse- for 'a-era ,rotested the assessment and reGuested a rein!estigation of the ase. During the in!estigation9 it was shown that 'a-era had 0een transferring its ,ro,erties to other ,ersons. As no additionae!iden e to dis,ute the assessment had !2
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0een ,resented9 the 1IR issued on 7une <59 8555 warrants of distraint and -e!+ on the ,ro,erties and ordered the fi--ing of an a tion in the RT2 for the o--e tion of the tax. 2ounse- for 'a-era fi-ed an in*un ti!e suit in the RT2 to om,e- the 1IR to ho-d the o--e tion of the tax in a0e+an e unti- the de ision on the ,rotest was rendered. a. 2an the 1IR fi-e the i!i- a tion for o--e tion9 ,ending de ision on the administrati!e ,rotest= Ex,-ain. 0. As ounse- for 'a-era9 what a tion wou-d +ou ta:e in order to ,rote t the interest of +our -ient= Ex,-ain +our answer. S. A. a3 Ces, the <"@ can file the civil action for collection. The <"@s warrant of distraint and levy on the properties and the filing of an action in the @T- for collection of the tax is the denial of the taxpayers protest. (FE@:0 v. 08R 0:! 0ase No. "892 Fe( ; 1667) b3 !s Galeras counsel, " shall file with the -T!, within thirty 0)(3 days from receipt of the copy of the <"@s complaint filed before the @T-, a petition for review with urgent petition for issuance of injunction to restrain tax collection pending appeal together with the filing of a surety bond for the total amount of assessment, inclusive of penalties incident to delin$uency. (FE@:0 v. 08R 0:! 0ase No. "892 Fe( ; 1667) 8. 2rimina- A tion & -ommon crimes punishable under the Tax -ode5 a. !ttempt to evade or de)eat a ta* !ny person who willfully attempts in any manner to evade or defeat any tax or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished. The conviction or ac$uittal shall not be a bar to the filing of a civil suit for the collection of taxes. 1ar 458 (r. 2han9 a manufa turer of garments9 was in!estigated for fai-ure to fi-e tax returns and to ,a+ taxes for the taxa0-e +ear <AAE. Des,ite the su0,oena du es te um issued to him9 he refused to ,resent and su0mit his 0oo:s of a ounts and a--ied re ords. In!estigators9 therefore9 raided his fa tor+ and sei@ed se!era- 0undies of manufa tured garments9 su,,-ies and un,aid !!
im,orted texti-e materia-s. After his a,,rehension and 0ased on the testimon+ of a former em,-o+ee9 defi ien + in ome and 0usiness taxes were assessed against (r. 2han on A,ri- <>9 8555. It was then that he ,aid the taxes. 2rimina- a tion was nonethe-ess instituted against him in the RT2 for !io-ation of the Tax 2ode. (r. 2han mo!ed to dismiss the rimina- ase on the ground that he had a-read+ ,aid the taxes assessed against him. #e a-so demanded the return of the garments and materia-s sei@ed from his fa tor+. #ow wi-- +ou reso-!e (r. 2han4s motion= S. A. " shall deny Fr. -hans motion to dismiss his criminal case. His failure to file his tax return is a criminal act in the Tax -ode. Fr. -han can be criminally prosecuted for such an offense, at the <"@s option, despite his complete payment of the taxes. !ny tax payment resolves the civil but not the criminal aspect of the case. The criminal charge need only be supported by a prima facie showing of failure to file a re$uired return. This fact need not be proven by an assessment. 0-"@ v. 'ascor% Bngab v. -"@, .@ 8os. 4- *#L#L-&*, :Fay )(, #L1(;3 (. Failure to )ile return suppl% correct and accurate in)ormation pa% ta* #ithhold and remit ta* and re)und e*cess ta*es #ithheld on compensation !ny person re$uired under the Tax -ode i. to pay any tax ii. ma e a return iii. eep any record iv. supply correct and accurate information v. withhold or remit taxes withheld vi. refund excess taxes withheld on compensation, who willfully violates these duties at the time or times re$uired by law shall be punished upon conviction in addition to other penalties 'rima facie evidence of a false or fraudulent return #. substantial underdeclaration of taxable sales,
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receipts or income or a substantial overstatement of deduction, as determined by the -ommissioner pursuant to the rules an regulations promulgated by the ,ecretary of +inance% &. failure to report sales, receipts or income in an amount exceeding )(> of actual deductions constitutes substantial overstatement of deductions. Note: 8o civil or criminal action for the recovery of taxes or the enforcement of any fine, penalty or forfeiture under this -ode shall be filed in court without the approval of the -ommissioner. The approval of the -ommissioner re$uired for the judicial enforcement of tax liability is not jurisdictional% lac of such approval merely affects the cause of action or capacity to sue. When the civil action arising out of a tax delin$uency is extinguished by prescription, it is still possible for such tax to be collected by criminal action inasmuch as actions of this ind prescribe only after the lapse of 2 years counted from the discovery of the crime. !n assessment is not necessary before a criminal charge can be filed provided there is a prima facie showing of a willful attempt to evade taxes.
for !io-ation of an+ ,ro!ision of the Tax 2ode ,res ri0es after fi!e .>/ +ears and9 in this ase9 the ,eriod ommen e to run on (ar h 659 <AAD when the ,re?assessment was issued. #ow wi-- +ou reso-!ed the motion= Ex,-ain +our answer. S. A. " shall deny the motion to dismiss because the <"@ action to collect has not prescribed. The prescriptive period is three 0)3 years from the deadline of income tax filing or on !pril #7, #LLM. With the <"@s final notice and demand letter served on !pril #2, #LLM, the tax assessment can no longer prescribe. (4am(ulao Aum(er v. Repu(lic 'R No. A97.;1 Sept 5 168") III. RE(EDIES &F TAX)A;ER
1.
administrati!e 0efore ,a+ment i. protest ii. entering into a compromise. b. after ,a+ment filing of -aim for refund or tax redit within two years from date of payment regardless of any supervening cause.
a.
2. a. i.
ii. iii. b. i. ii.
1ar 458 T; 2or,oration fi-ed its finaad*usted in ome tax return for <AA6 on A,ri<89 <AAB showing a net -oss from o,erations. After in!estigation9 the 1IR issued a ,re? assessment noti e on (ar h 659 <AAD. A finanoti e and demand -etter dated <> A,ri- <AAE was issued9 ,ersona--+ de-i!ered to and re ei!ed 0+ the om,an+4s hief a ountant. For wi--fu- refusa- and fai-ure of T; 2or,oration to ,a+ the tax9 warrants of distraint and -e!+ on its ,ro,erties were issued and ser!ed u,on it. &n 7anuar+ <59 85589 a rimina- harge for !io-ation of the Tax 2ode was instituted in the RT2 with the a,,ro!a- of the 2ommissioner. The om,an+ mo!ed to dismiss the riminaom,-aint on the ground that an a t !"
*udi ia- i!i- a tion a,,ea- to 2TA within )( days from receipt of decision on the protest or from the lapse of #1( days due to inaction of the -ommissioner% action to ontest forfeiture of hatte-% and action for damages rimina- a tion +iling of riminaom,-aint against erring 1IR offi ia- and em,-o+ees% and In*un tion when the -T! in its opinion the collection by the <"@ may jeopardi?e taxpayer.
A. )rotest of Assessment #. +ile a re$uest for reinvestigation or reconsideration within )( days from receipt of the assessment re$uest for reinvestigation-a plea for reevaluation of an assessment on the
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basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation. "nvolves a $uestion of fact or law or both. re$uest for reconsideration-a plea for reevaluation of the assessment on the basis of existing records without need of additional evidence. "nvolves a $uestion of fact or law or both. 0@evenue @egulation 8o. #&123 &. Within 7( days from filing of protest, all relevant supporting documents should have been submitted, otherwise, the assessment shall become +"8!4 0cannot be appealed3. 0,ec. &&1 8"@-3 A,,ea- of )rotest to the 2TA 0,ec. &&1 8"@-3 #. .rounds5 a3 if the protest is denied in whole or in part or b3 is not acted upon within #1( days from submission of documents &. !ppellate -ourt5 -ourt of Tax !ppeals ). 'eriod to appeal5 a3 within )( days from receipt of decision denying the protest or b3 )( days from the lapse of #1( day period
B.
3.
,how ,a+ment.
,roof
of
Tax redit - a claim for issuance of a tax credit certificate, showing an amount owing from the government to the taxpayer which the latter is legally authori?ed to credit or offset against national internal taxes payable by him, except withholding taxes. ,tarting date for counting the &-year period5 %EN. R3LE5 from the date of payment, regardless of any supervening cause that may arise after payment5 EX2E)TI&NS: #. -orporate "ncome tax Where a corporation paid $uarterly income taxes in any of the first ) $uarters during the taxable year but incurs a net loss during the taxable year, the &-year period for the filing of the claim for refund or credit shall be counted from the date of the fi-ing of the annual corporate "T@. &. "ncome tax paid in installments Where the tax paid had been paid in installment, the taxes are deemed paid, for purposes of determining the commencement of the &year period for filing a written claim for the refund or credit therefore on the date the -ast insta--ment was ,aid. Note" ! return filed showing an overpayment shall be considered as a written claim for credit or refund.
/ffect of failure to appeal5 the decision shall be final, executory and demandable Tax Refund or Tax 2redit %rounds" 1. tax is collected erroneous-+ or i--ega--+% 2. penalty is collected without authorit+% ). sum collected is excessive ReGuisites"
C.
1.
writing%
claim
must
be
in
2.
it must be filed with the -ommissioner within two +ears 0&3 after the payment of the tax or penalty% and
1ar 45> a/ State the onditions reGuired 0+ the Tax 2ode 0efore the 2ommissioner of Interna- Re!enue ou-d authori@e the refund or redit of taxes erroneous-+ or i--ega--+ re ei!ed.
!#
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0/ Does a withho-ding agent ha!e the right to fi-e an a,,-i ation for tax refund= Ex,-ain. S. A. a3 The <"@ -ommissioner can authori?e a tax refund or credit when5 #3 The taxpayer files a written claim for credit or refund with the <"@ or shows in the tax return an overpayment% &3 The claim is made within two 0&3 years after payment of the tax or penalty% )3 The taxpayer did not avail of any incentives under special laws where no actual payment was made. 0,ec. &(* 0-3, @! 1*&*3 b3 Ces, the withholding agent has the right to file for tax refund. He is a party in interest, having sufficient legal interest to bring a suit for refund of taxes illegally collected from him. 0-"@ v. -T! +eb ##, #LL&3 1ar 45> Is a defi ien + tax assessment a 0ar to a -aim for tax refund or tax redit= Ex,-ain. S. A. Ces, a deficiency tax assessment is a bar to a tax refund or tax credit. The taxpayer cannot be entitled to refund and at the same time be liable for a deficiency assessment for the same year. ! refund assumes that the tax return is true and correct. ! deficiency assessment creates doubt to the truth and accuracy of the @eturn. ,aid return cannot be the basis of a refund. (08R v. 0! 0it%trust B 0:! >5ul% 21 166"?) 1ar 458 a/ $hat must a tax,a+er do in order to -aim a refund of9 or tax redit for9 taxes and ,ena-ties whi h he a--eges to ha!e 0een erroneous-+9 i--ega--+ or ex essi!e or o--e ted= 0/ 2an the 2ommissioner grant a refund or tax redit e!en without a written -aim for it= S. A. a3 ! taxpayer shall file a claim with the -ommissioner of "nternal @evenue for the refund or for tax credit for taxes and penalties erroneously or illegally assessed or collected within two 0&3 years from the time the final adjusted tax return is file. (08R v. -hilam 'R No. 1.52.8 4a% 26 1665) b3 Ces, the -ommissioner may refund or credit any tax, even without a written claim, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. (!nscor <a,edorn Securities v. 08R 0!-'R S- No. "86.7 /ct 9 2..9)
I'.
)RES2RI)TI&N
)ur,ose5
'rescription periods are designed to secure the taxpayers against unreasonable investigation after the lapse of the period prescribed. They are also beneficial to the government because tax officers will be obliged to act promptly.
%enera- Ru-es5
#. when the tax law itself is silent on prescription, tax is imprescriptible% &. when no return is re$uired, tax is imprescriptible% ). defense of prescription is waivable% and *. provisions on prescriptions, being remedial in nature should be liberally interpreted to carry out its intent. )res ri,ti!e ,eriod ASSESS(ENT of taxes" for the
%ENERAL R3LE5 three years after the date the return is due or filed, whichever is later. EX2E)TI&NS5 1. )ailure to )ile a return5 ten 0#(3 years from the date of the discovery of the omission to file the return% 2. )alse or )raudulent return #ith intent to evade the ta*5 ten 0#(3 years from the date of the discovery of the falsity or fraud% 3. a,reement in #ritin,5 to the extension 0not reduction3 of the period to assess between the -ommissioner and the taxpayer before the expiration of the three year period. 8<5 the e*tended period a,reed upon can )urther (e e*tended (% a su(se&uent #ritten a,reement made (e)ore the e*piration o) the e*tended period previousl% a,reed upon.
4. #aiver or renunciation of the original

three 0)3 year limitation, signed by the taxpayer. 1ar OAD Distinguish a fa-se return from a fraudu-ent return. S. A. +alse return merely implies a decision from the truth or fact whether intentional or not, while fraudulent return is intentional and deceitful with the aim of evading the correct tax due.
!$
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1ar 458 $hat onstitutes ,rima fa ie e!iden e of a fa-se or fraudu-ent return to *ustif+ the im,osition of a >5J sur harge on the defi ien + tax due from a tax,a+er= Ex,-ain. S. A. The tax return is prima facie false or fraudulent when there is5 #3 ,ubstantial underdeclaration of taxable ,ales, @eceipts or "ncome% or &3 ,ubstantial overstatement of 6eductions The indications of substantial underdeclaration of ,ales, @eceipts or "ncome or substantial overstatement of 6eductions are5 #3 +ailure to report ,ales, @eceipts or "ncome in an amount exceeding thirty per cent 0)(>3 of that declared per return% and &3 ! -laim of 6eductions in an amount exceeding thirty per cent 0)(>3 of actual deductions. 0,ec. &*1 0<3, @! 1*&*3 )res ri,ti!e ,eriod for the 2&LLE2TI&N of taxes" Five (5) %ears - from assessment or within period for collection agreed upon in writing before expiration of the fiveyear period. :en (1.) %ears - without assessment in case of false or fraudulent return with intern to evade or failure to file return.
1.
the return is !a-id - it has complied substantially with the re$uirements of the law% and 2. the return is a,,ro,riate it is a return for the particular tax is re$uired by law. Note" ! de)ective ta* return is the same as i) no return #as )iled at all. Amended return #. !llowed when5 a. the amendment is made within ) years from the date of filing the original return% and b. no notice of audit or investigation of such return has, in the meantime, been actually served upon the taxpayer. &. /ffect on prescription5 a. The prescriptive period starts to run from the filing of the original return, if the same is sufficiently complete to enable the -"@ to intelligently determine the proper amount of tax to be assessed. b. However, where the amended return is substantially different from the original, the right to assess is counted from the filing of the amended return. )res ri,ti!e ,eriod for the fi-ing of 2RI(INAL A2TI&N" +ive 023 years from the day of commission of the violation, and if nown, from the discovery thereof and institution of judicial proceedings for investigation and punishment. the not the its
%rounds for sus,ension of the running of

,res ri,ti!e period for assessment and collection5 1. when the 2ommissioner is ,rohi0ited from ma ing the assessment or beginning the distraint or levy or proceeding in court, and for sixty days thereafter% 2. when the tax,a+er reGuests for a re onsideration which is granted by the -ommissioner% 3. when the tax,a+er annot 0e -o ated in the address given by him in the return, unless he informs the -ommissioner of any change in his address% 4. when the warrant of distraint or levy is duly served, and no ,ro,ert+ is -o ated% and 5. when the tax,a+er is out of the )hi-i,,ines.
%rounds for interru,tion of the period5

#. When proceedings are instituted against the guilty persons o <egin to run again if the proceedings are dismissed for reasons not constituting jeopardy &. offender is absent from the 'hilippines
Retroa ti!it+ of 1IR Ru-ings

%enera- Ru-e" 'rospective. Ex e,tions" !7
ReGuisites of a tax return for purposes of

starting the limitation5 running of the period of
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#. Where the taxpayer deliberately misstates or omits material facts from his return or any document re$uired of him by the <"@% &. Where the facts subse$uently gathered by the <"@ are materially different from the facts on which the ruling is based% and ). Where the taxpayer acted in bad faith. Lo&oL TARIFF P 23ST&(S 2&DE TARIFF custom duties, toll of tribute payable upon merchandise to the government. 23ST&( D3TIES which are assessed at the at the prescribed tariff rates which are li ely imposed for both revenue raising and for regulatory purposes. "t is the name given to taxes on the importation and exportation of commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a foreign country.: .arcia vs. /xecutive ,ec., ..@. no. #(#&M), Ouly ), #LL&; N.1" -ustoms duties and tariffs are synonymous with one another. They both refer to the taxes imposed on imported or exported wares, articles, or merchandise. )ur,oses of tariffs"
thereto, but all other laws and regulations that are subject to the <ureau of -ustoms 0<=-3 or otherwise within its jurisdiction. !s to the scope, Tariff and -ustom laws extend not only to the provisions of the T-- but to all other laws as well the enforcement of which is entrusted to the <=-. 13REA3 &F 23ST&(S .1&2/ D3TIES9 )&$ERS AND 73RISDI2TI&N &F T#E 1&2 .)ERAS/
1.
)revention and suppression of smuggling 2. Enforcement of customs laws and regulation ). @ecommend needful rules and regulations to the ,ecretary of +inance *. !ssess and collect customs duties 2. ,ei?ure and forfeiture ARTI2LES S317E2T T& 23ST&( D3TIES !rticles, when imported from any foreign country into the 'hilippines, shall be subject to duty upon each importation, even though previously exported from the 'hilippines, /9-/'T as otherwise specifically provided for in this -ode or in other laws. :,/-. #((, T=-; (ER2#ANDISE- the @evised !dministrative -ode defines merchandise, when used with reference to importation or exportation, to include goods, wares and in, general anything that nay be the subject or exportation. -hec s, money orders and dollar bills properly within the concept of merchandise as used in @evised !dministrative -ode, are merchandise. :<astida vs. -"@; Finds of %oodsI(er handise .FA22/
1.
Revenue tari))s those whose rates are relatively low so that goods may be readily imported and duties may be easily collected.
2.
-rotective tari))s those whose rates are relatively high to eep certain imports out of the domestic mar et or to raise domestic price on certain imports so that they may be manufactured profitably at domestically%
3.
@ar,ainin, tari))s those whose schedules include rates designed primarily for bargaining purposes or which contain some general provision for the imposition of higher duties upon products of countries whose tariff policies are considered unsatisfactory or unfair. S o,e of Tariff and 2ustom Laws "nclude not only the provisions of the Tariff and -ustom -ode 0T--3 and regulations pursuant !%
1. Freely importable D !rticles subject to

duty 06utiable .oods3 2. Absolutely 'rohibited importation 3. 2onditionally prohibited 0@egulated articles3 4. 2onditionally-free importation 0/xempt importation3 FREEL; I()&RTA1LE I D3TIA1LE %&&DS .2ode" AF) 'FA S(IT# RA)E S&1 ($A#/
1. Animals and animals product
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2. !nimal or vegetable Fats% oil and their

cleavage products 3. )ulp or wood% 4. 'egetable products 5. 'repared Foodstuffs% beverarages, spirits and vinegar% 6. Arms and ammunitions 7. Substitute for tobacco and manufactured tobacco 8. (ineral products 9. 'roducts of -hemical or allied Industries 10. Textile and textile products 11. #ides 0 s in, fur, leather3 12. 'lastic and Rubber articles 13. Artwor s, anti$ue 14. )earls other precious stones 15. Electrical and mechanical machineries 16. Stone, plaster, cements and other related articles 17. &ptical products, medical and surgical products 18. 1ase metals 19. (anufacturedDmiscellaneous articles 20. $ood and related articles 21. Aircraft, vessels, vehicles and all other mode of transportation 22. +ootwear, #eadgear, etc. :,/-. #(*, Title #, T--; A1S&L3TEL; )R&#I1ITED I()&RATTI&NS Q2ode" %A)IN%SR
1. 2.
e$uiptments
Animals and animal products Lottery and ,weepta es Arms and ammunitions Regulated drugs (otorclycles and cars 0used3
3. 4. 5.
2&NDITI&NALL;?FREE I()&RTATI&N .TEET# S#AR) S2RA( ST3)ID/
1.
historical boo s
Technical,
vocational,
2.
1. 2. 3. 4. 5.
6. 7.
%ambling 6evices Adulterated or misbranded drug in violation of the +ood and 6rugs !ct.0,/-. #(&,T--3 )ornographic and obscene materials Written or printed materials containing any matter advocating of Inciting Treason, sedition, rebellion materials. Heroine, marijuana and other dangerous drugs, Narcotics and pharmaceutical products EX2E)T when made by the government designed for medical purpose. %oods, articles in violation of copyright laws. !ll other articles Strictly prohibited by law
E$uipment used in salvaging vessels 3. Experimental and scientific research of plants and animals 4. Trailer chassis by a shipping company 5. #ousehold effects 6. Sea store supplies to the vessel or aircraft 7. #olders, containers and other receptacles for export 8. A$uatic products 9. Repac ed or reconditioned articles 10. )ublic entertainment or public display articles 11. Salvaged vessels and aircrafts 12. 2ost of repair of vessels and aircrafts 0increase in value3 13. Returned articles without substantial increase in value 14. Awards, prices 15. (ining e$uipment 0because mining industry is protected3 16. Sample items 17. Tourist and embassy personnels effect 18. 3rns and coffins containing human remains 19. )arts, tools and other supplies for aircraft including the aircraft itself 20. Instruments and implements used by professionals in film production &#. 6onated articles 0ex. relief goods3 Note" These articles which are exempt from import duties upon compliance with the formalities prescribed in or with regulations promulgated by the -ommissioner of -ustoms 2-assifi ation of 2ustom Duties
Note" !ll the above merchandiseDgoods cannot be brought in or out of the 'hilippines. 2&NDITI&NALL; )R&#I1ITED RE%3LATED ARTI2LES .ALAR(/ &R
!&
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#. =rdinary or @egular -ustom dutyimposed and collected merely as a source of revenue . a. !d Galorem- the duty is based on the mar et value or price of the imported article. b. ,pecific- the duty is based on the weight or volume of the imported article. &. ,pecial -ustom duties- imposed and collected in addition to ordinary customs duties usually to protect local industries against foreign competition. 1asis of Dutia0-e 'a-ue The dutiable value of the imported article subject to an ad valorem of duty shall be transaction value. T@!8,!-T"=8 G!4B/- is the price actually paid or payable for the goods when sold for export to the 'hilippines. "t is adjusted by adding certain expenses to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, the value of the materials, components, parts and items incorporated in the imported goods% amount of royalties and license fees% cost of transport% loading, unloading and handling charges% and the cost of the insurance.
&. ). *. 2. 7.
transaction value of identical goods transaction value of similar goods deductive value computed value other reasonable means or fallbac value ustom
1asis for dutia0-e weight for s,e ifi duties #. gross weight &. legal weight ). net weight FINDS &F S)E2IAL 23ST&( D3TIES
1ar 4A> ? 3nder the Tariff and 2ustoms 2ode9 what are a. dum,ing duties 0. ounter!ai-ing duties . mar:ing duties d. dis riminator+ duties= 1ar 4AE ? Ex,-ain 0rief-+ ea h of the s,e iaustoms duties authori@ed under the Tariff and 2ustoms 2ode.
1.
Dum,ing Dut+ imposed upon foreign products with value lower than their fair mar et value to the detriment of local products. @ate5 difference between the actual price and the normal value of the article. "mposing authority5 ,pecial -ommittee on !nti-6umping composed of the ,ec. of +inance as chairman% members5 ,ec. of 6T", and either the ,ec. of !griculture if the article in $uestion is agricultural product or the ,ec. of 4abor if nonagricultural product.
1ar O5> - ,tate and explain the basis of dutiable value of an imported article subject to an ad valorem tax under the Tariff and -ustoms -ode. S. A. The dutiable value of an imported article for an ad valorem tax is its Transaction Galue or the price actually paid or payable for the goods '4B, all other landing and incidental charges paid or incurred to bring the goods to a 'hilippine port of entry. "n case the transaction value cannot be determined or used, then the other methods can be used in succession, to include5 #3 Transaction Galue of "dentical .oods% &3 Transaction Galue of ,imilar .oods% )3 6eductive Galue% *3 -omputed Galue% 23 +allbac Galue. SeGuen e in Determination of 'a-ue #. transaction value "0
2.
2ounter!ai-ing Dut+ imposed upon foreign goods enjoying subsidy thus allowing them to sell at lower prices to the detriment of local products similarly situated. @ate5 e$uivalent to the bounty, subsidy or subvention "mposing authority5 ,ec. =f +inance
3.
(ar:ing Dut+- imposed upon those not properly mar ed as to place of origin of the goods. @ate5 2> ad valorem of articles "mposing authority5 -ommissioner of -ustom
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4.
Dis riminator+ Dut+- imposed upon goods coming from countries that discriminate against 'hilippine products. @ate5 any amount not exceeding #((> ad valorem of the subject articles "mposing authority5 president of the 'hilippines
Lia0i-it+ for 2ustom Duties %EN. R3LE" !ll importations exportations of goods are subject to custom duties. (Sec. 1.5 :00) EX2E)TI&NS" #. /xemption under the T-&. /xemptions granted government agencies or .=--s with existing contracts, commitments, agreements, or obligations with foreign countries. ). "nternational organi?ation pursuant to agreement and special law *. /xemption granted by the 'resident of the 'hilippines upon recommendation of 8/6!. Lia0i-it+ of im,orters for duties The -ode provides that all articles imported into the 'hilippines shall be held to be the property of the person to whom the same are consigned5 and the holder of the bill of lading duly endorse by the consignee thereof therein named, or if consigned to order by the consignor, shall be deemed the consignee thereof. The under writers of abandoned articles and the salvors of articles saved from a wrec at sea, along a coast, or in any area of the 'hilippines, maybe regarded as the consignees : ,ection #&(), Tariff and -ustom -ode; 3n-ess otherwise relieved by laws or regulation, the liability for duties, taxes, fees, and other charges attaching on importation constitutes a personal debt due to the importer of the government which can be discharged only by payment of said duties and charge. "t also constitutes a lien upon the articles imported which maybe enforced while such articles are in custody or subject to the control of the government. %o!ernment im,ortations
DRA$1A2F "t is a device resorted to for enabling a commodity affected by taxes to be exported and sold in foreign mar ets upon the same terms as if it not been taxed at all. "t may be full or partial. &T#ER 23ST&(S 2#AR%ES )A;A1LE FEES9 D3ES9 &R
#. Harbor +ees- are imposed on vessels entering into or departing from a port of entry of the 'hilippines. &. Wharfage duesare assessed against the cargo of a vessel engaged in foreign or coastwise trade, based on the $uantity weight or measure received andDor discharged by such vessel. ). <erthing duesare assessed against a vessel for mooring or berthing at a pier, wharf, or river at any port in the 'hilippines. *. ,torage duesare assessed on articles for storage in customs premises, cargo shed. 2. !rrastre duesare imposed on all imported and exported articles and baggage of passenger for their handling, receiving, and custody. 7. Tonnage duesare paid by the owner, agent, operator or master of a vessel engaged in foreign trade based on the net tonnage of the vessel or weight of the articles discharged or laden. M. =ther fees- charged and collected for services rendered and documents issued by the <=-. I()&RTATI&N 3NDER T22 Who are authori?ed to ma e import entryT #. The importer being holder of the bill of lading% &. ! customs bro er acting under authority of the holder of the bill% or ! person duly empowered to act as agent or attorneyin-fact. "
!ll importations by the government for its own use or that of its own subordinates branches or instrumentalities or corporations, agencies or instrumentalities owned or controlled by the government shall be subject to the duties, taxes , fees and charges provided in the Tariff and -ustoms -ode.:,ection #&(2, Tariff and -ustoms -ode;
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Returning residents $hen im,ortation terminated 0egins and deemed +or the purpose of conditionally free importation of personal and household effects, they are nationals who have stayed in a foreign country for a period of at least six 073 months. 1ALIF1A;AN +or the purpose of tax-free purchase at 'hilippine 6uty-free shops, he must be5 #. +ilipino citi?en who has been continuously out of the 'hilippines for a period of at least one 0#3 year% or &. +ilipino overseas wor er% or ). former +ilipino citi?en and his family who had been naturali?ed in a foreign country and comes or returns to the 'hilippines
1ar OA> ? $hen does im,ortation 0egin and when does it end= S. A. "mportation 0egins when carrying vessel or aircraft enters the jurisdiction of the 'hilippines with an intent to unload. "mportation terminates upon payment of the duties and other charges due upon the articles, or secured to be paid, at the port of entry ant the legal permit for withdrawal shall have been granted. "n the case of articles that are free of duties, taxes and other charges, importation is deemed terminated from the time they have-legally left the jurisdiction of the customs. Im,ort Entr+ ! declaration to the <=- showing the description, value, tariff classification and other particulars of the imported article to enable the customs authorities to determine the correct customs duties and internal revenue taxes due on the importation. A0andonment "t is the renunciation by an importer of all his interest in the property rights in the imported article. "t may be express or implied. Smugg-ing or 3n-awfu- Im,ortation !ny person who shall fraudulently import or bring into the 'hilippines, or assist "n doing so, any article, contrary to law, or shall receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale of such article after importations, nowing the same to have been imported contrary to law, shall be guilty of smuggling. 0sec. )7(# T--3 Fraudu-ent )ra ti es .2rimina- &ffense/ against 2ustom Re!enues under Se . 6D58 #. /ntry of imported articles by means of any false or fraudulent invoice. &. /ntry of goods at less than the true weight or measure. ). +illing of any false or fraudulent entry for the payment of drawbac s or refund of duties.
The term )amil% shall mean the spouse and children of the bali bayan who are not bali bayan in their own right traveling with the latter to the 'hilippines. FLEXI1LE TARIFF 2LA3SE !uthority of the 'resident to adjust the tariff rates prescribed under the Tariff and -ustoms -ode, which is the enabling law that made effective the delegation of the taxing power to the 'resident under the -onstitution. #. The -ongress may, by law, authori?e the 'resident to fix within specified limits and subject to such limitations and restrictions as it may impose5 a. tariff rates, import and export $uotas, tonnage and wharfage dues% and b. other duties or imports within the framewor of the national development program of the government 0!rt. G", ,ec. &10&3, -onstitution3 ,ec. *(#, T--5 "n the interest of national economy, general welfare andDor national security, the 'resident upon recommendation of the 8/6!, is empowered5 #. to increase, reduce, or remove existing protective rates of import duty, provided that the increase should not be higher than #((> ad valorem% &. to establish import $uota or to ban imports of any commodity% and ). to impose additional duty on all imports not exceeding #(> ad valorem. "2
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1ar 45< ? $hat do +ou understand 0+ the term Mf-exi0-e tariff -auseN as used in the Tariff and 2ustoms 2ode= S. A. This is a provision in the Tariff and -ustoms -ode, which implements the constitutionally delegated power of the 'resident of the 'hilippines, in the interest of national economy, general welfare andDor national security upon recommendation of the 8/6! to increase, reduce or remove existing protective rates of import duty, '@=G"6/6 TH!T, the increase should not be higher than #((> ad valorem% to establish import $uota or to ban imports of any commodity, to impose additional duty on all imports not exceeding #(> ad valorem. LI(ITATI&NS T& FLEXI1LE TARIFF 2LA3SE #. -onduct by the Tariff -ommission of an investigation in a public hearing. The commission shall also hear the views and recommendations of any government office, agency or instrumentality concerned. The commission shall submit their findings and recommendations to the 8/6! within )( days after the termination of the public hearing. The 8/6! thereafter submits the recommendation to the 'resident. &. The power of the 'resident to increase or decrease the rates of import duty within the abovementioned limits fixed in the -ode shall include the modification in the form of duty. "n such case the corresponding ad valorem or specific e$uivalents of the duty with respect to the imports from the principal competing foreign country for the most recent representative period shall be used as bases. 0,ec. *(#, T--3 T#E TARIFF 2&((ISI&NS .T2/ )&$ERS &F T#E TARIFF 2&((ISSI&N" .TARIFF/
4.
Industrial impact of tariff and customs code in coordination with 8/6! 5. Furnish report on subjects under investigation and results thereof 6. Furnish report needed by 8/6!, <=", ,ec. =f +inance, -entral <an TAX RE(EDIES 3NDER T#E TARIFF AND 23ST&(S 2&DE .T22/ TAX RE(EDIES &F T#E %&'ERN(ENT A. AD(INISTRATI'E <. <85B T22/ Tax Lien .se .
attaches on the goods, regardless of ownership, while still in the custody or control of the .overnment !vailed of when the importation is neither prohibited nor improperly made.
8. Administrati!e Fines and Forfeitures applied when the importation is unlawful and it may be exercised even where the articles are not or no longer in customs custody .B84/,, the importation is merely attempted in which case it may be effected only while the goods are still within the -ustoms jurisdiction or in the hands of a person who is aware thereof. 0sec. &2)# and &2)( T--3 Bnder ,ec. &2)( 0a3, T-- in order to warrant forfeiture, it is not necessary that the vessel or aircraft must itself carry the contraband. The complementary if collateral use of there -essna plane for smuggling operation is sufficient for it to be deemed to have been used in smuggling. >Alamado vs. 0ommissioner o) 0ustoms '.R. no. A-288.6 ma% 1; 1689? of
1.
T!@"++ @/4!T"=8, =+ TH/ 'hilippines with other counties 2. Arrangements and classification of tariffs 3. Rates of duties 0recommends only changes3
6. Redu tion 2ustom DutiesI 2om,romise
,ubject to approval of ,ec. of +inance 0sec. M(L, &)#7 T--3
4.
Sei@ure9 sear h9 arrest 0sec. &&(2, &&#(, &&## T--3
"!
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1. 73DI2IAL This remedy is normally availed of when the tax lien is lost by the release of the goods. -ivil action 0se. #&(* T--3 -riminal !ction TAX RE(EDIES &F T#E TAX)A;ER A. AD(INISTRATI'E <. )rotest !ny importer or interested party if dissatisfied with published value within #2 days from date of publication or within 2 days from the date of importer is entitled to refund if payment is rendered erroneous or illegal by events occurring after the payment. Taxpayer within #2 days from assessment. 0sec. &)(1,&&#( T--3
Within )( days from receipt of decision of the -ommissioner or ,ecretary of +inance to the division of the -T! 0sec. &*() T--, sec. M @! ##&2, as amended by sec. L @! L&1&3 The -T! empowers to issue injunction, it would appear that an importer may appeal without first paying the duties, such as in sei?ure, but not in protest cases. !ction to $uestion !bandonment
&. the legality of sei?ure ).
failure to file an import entry within )( days from the discharge of goods or having filed an entry fails to claim within #2 days but it shall not be so effective until so declared by the collector. 0sec. #1(# as amended by @! M72#3
Note" 'ayment under protest is necessary. 8. Refund ! written claim for refund may be submitted by the importer in abatement cases on missing pac ages, deficiencies in the contents of pac ages or shortages before arrival of the goods in the 'hilippines, articles, lost or destroyed after such arrival, dead or injured animals, and for manifest clerical errors% and 6rawbac cases where the goods are re-exported 0sec. #M(#-#M(1 T--3
RE(EDIES IN T#E 13REA3 &F 23ST&(S .1&2/ A. 23ST&( )R&TEST 2ASES These are cases which deal solely with liability for custom duties, fees, and other charges. Note" <efore filing a protest, there must first be a payment under protest. ReGuirements for ma:ing a )rotest #. must be in writing &. must point out the particular decision or ruling of the -ollector of -ustoms to which exception is ta en or objection made ). must state the grounds relied upon for relief *. must be limited to the subject matter of a single adjustment 2. must be filed when the amount claimed is paid or within #2 days after the payment 7. protest must furnish samples of goods under protest when re$uired. 1ar 458 ? $hene!er the de ision of the 2o--e tor of 2ustoms is ad!erse to the go!ernment9 it is automati a--+ e-e!ated to the ommissioner fro re!iew and9 if it is affirmed 0+ him9 it is automati a--+ e-e!ated to the Se retar+ of Finan e for re!iew. $hat is the 0asis of the automati re!iew ,ro edure in the 1ureau of 2ustoms= Ex,-ain +our answer. S. A. procedure The -ustoms is intended automatic review to protect the
6. Sett-ement of an+ sei@ure 0+ ,a+ment of fine or redem,tion <ut this shall not be allowed in any case where importation is absolutely prohibited or the release would contrary to law, or when there is an actual and intentional fraud 0sec. &)(M T--3. A,,eaWithin #2 days to the -ommissioner after notification by -ollector of his decision 0sec. &)#) T--3. 1. 73DI2IAL
B.
1.
A,,eal
""
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.overnments interest in collecting customs duties in sei?ure and protest cases. Without said automatic review, the -ommissioner of -ustoms or the ,ecretary of +inance would not now about any sei?ure or protest cases. ! -ustoms -ollector would have absolute discretion to determine whether or not the goods sei?ed are subject to payment of customs duties and taxes. 0Cao asin v. -=-, .@ 8o. 1*###, 6ec &&, #L1L3 1. SEIK3RE AND F&RFEIT3RE 2ASES These refer to the matters involving smuggling. "t is administrative and civil in nature and is directed against the res or imported articles and entails a determination of the legality of importation. Note5 These are a tion in rem. Smugg-ing or 3n-awfu- Im,ortation !ny person who shall fraudulently import or bring into the 'hilippines, or assist "n doing so, any article, contrary to law, or shall receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale of such article after importations, nowing the same to have been imported contrary to law, shall be guilty of smuggling 0sec. )7(# T--3.
#. documents filed at the custom house &. submission and acceptance of the documents 3. procedure of passing the goods through the custom house. > Rodri,ueC vs. 0! '.R. no. 115218 Septem(er 18 1665? Right of 2ustom &ffi ers to Effe t Sei@ure and Arrest #. Fay sei?e any vessel, aircraft, cargo, article, animal or other movable property when the same is subject to forfeiture or liable for any time as imposed under T--, rules and regulation. &. Fay exercise only in conformity with the laws and T--.0sec. &&(2 T--3 Arti -es su0*e t to Sei@ures and Forfeitures .2ode" FE3 3E 3) 1I(1&/
1. 2.
Note5 anything that was used for

smuggling is subject to confiscation. >Aladoc vs. 0om o) 0ustom R.R. A-288.6 4a% 1; 1689? /9-/'T -ommon carriers that are not privately chartered cannot be confiscated. Note5 Fere possession of the article in $uestion is liable B84/,, defendant could explain that his possession is lawful to the satisfaction of the court 0sec. )7(#,T--3 Note5 'ayment of the tax due after apprehension is not a valid defences. >Rodri,ueC vs. 0! '.R. no. 115218 Septem(er 18 1665? )ort of Entr+ ! domestic port open to both foreign and coastwise trade including airport of entry 0sec. )2#*, T--3. !ll articles imported into the 'hilippines whether subject to duty or not shall be entered through a customhouse at a port of entry. Three meanings of term MENTR;N "#
False declaration on articles Entry of vessel in a port other than the port of entry allowed 3. 3nlading of cargo before arrival on port of entry 4. 3nauthori?ed or fraudulent removal of cargo 6. Excessive sea stores 7. 3nmanifested articles 8. )rohibited importation or exportation 9. 1oxes, containers and receptacles used to conceal articles that are contrary to law 10. Illegally unladed cargo at port of destination 11. (isdeclared articles 12. 1east 13. &ffered articles or money to bribe customs officers Arti -e N&T su0*e t to Forfeiture or Sei@ure The forfeiture of vessel or aircraft or sei?ure of articles shall not be effected if it is established that the owner thereof or his agent in charge of the means of conveyance used as aforesaid has no nowledge of a participation in the unlawful act. In other words9 no forfeiture or sei@ure in the a0sen e of ,rima fa ie e!iden e. #&$E'ER9 that a prima facie presumption shall exist against the vessel, vehicle or aircraft under any of the following circumstances5 #. if the conveyance has been used for smuggling at least twice before%
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&. if the owner is not in the business for which the conveyance is generally used% and ). if the owner is financially not in a position to own such conveyance. D&2TRINE &F )RI(AR; 73RISDI2TI&N &'ER SEIK3RE AND F&RFEIT3RE 2ASES The prevailing doctrine is that the exclusive jurisdiction in sei?ure and forfeiture cases vested in the collector of customs precludes a regular court from assuming cogni?ance of such matter. "t is the settled rule that the <=ac$uires exclusive jurisdiction over imported goods, for the purpose of enforcement of the customs laws, form the moment the goods actually in its possession or control, even if no warrant of sei?ure or detention had previously been issued by the -ollector of -ustom in connection with sei?ure and forfeiture proceedings.
the authority of a nation within its territory is absolute and exclusive. The power to secure itself from injury may certainly be exercised beyond the limits of its territory. Q ? The 2o--e tor of 2ustoms issued a $arrant of Sei@ure and Detention of 8>9555 0aga of ri e9 0earing the name of MSN&$(AN9 (i--ed in )a-awanN shi,,ed on 0oard the (I' MA-0ertoN whi h was then do :ed at )ier D at 2e0u 2it+. The warrant was issued on the 0asis of a re,ort that the ri e had 0een i--ega--+ im,orted as it was -anded in )a-awan 0+ a foreign !esse- and then ,-a ed in sa :s mar:ed MSN&$(AN9 (i--ed in )a-awan.N It was then shi,,ed to 2e0u 2it+ on 0oard the (I' MA-0erto.N Forfeiture ,ro eedings were then started in the 2e0u 2it+ ustoms offi e. The onsignee then fi-ed a i!i- suit for in*un tion 0efore the 2e0u 2it+ RT29 whi h issued the in*un tion 0e ause there was a--eged -a : of ,ro0a0-e ause for ustoms to effe t the sei@ure. $as the issuan e of the in*un tion ,ro,er= S. A. ? 8o. There is no $uestion that @T-s are devoid of any competence to pass upon the validity or regularity of sei?ure and forfeiture proceedings conducted by the <ureau of -ustoms and to enjoin or otherwise interfere with these proceedings. The -ollector of -ustoms sitting in sei?ure and forfeiture proceedings has exclusive jurisdiction to hear and determine all $uestions touching on the sei?ure and forfeiture of dutiable goods. @T-s are precluded from assuming cogni?ance over such matters even through petitions of certiorari, prohibition or mandamus. 0The <ureau of -ustoms, et al., v. =gario, et al., ..@. 8o. #)1(1#, prom. Farch &(, &(((3 )-a es where sear hes and sei@ures ma+ 0e ondu ted #. @ight of police officer to entered enclosure W"TH=BT a warrant, /9-/'T a dwelling house &. ,earch with dwelling house must be with proper warrant ). right to search vehicles or aircrafts and person or articles conveyed therein *. @ight to search vehicles, beast and person 2. ,earch of person arriving from foreign countries. SETTLE(ENT &F F&RFEIT3RE 2ASES
Thus, the @T- do not have jurisdiction over sei?ure and forfeiture proceedings conducted by the <=-. /ven if a -ustom sei?ure is illegal, exclusive jurisdiction still belongs to the <=-. >5ao vs. 0! '.R. no. 1.";." /cto(er ; 1665? D&2TRINE &F #&T )3RS3IT ReGuisites" #. =ver Gessels a. an act is done in 'hilippine water which constitutes a violation of the T-b. a pursuit of such vessel began within the jurisdictional waters which may continue beyond the maritime ?one and the vessel may be sei?ed on the high seas. &. =ver "mported !rticles a. there is a violation of T-b. they may be pursued in the 'hilippines c. with the jurisdiction over them at any place therein for the enforcement of the law. 0&nd par. ,ec. 7(),T--3. 7urisdi tion of the 1&2 The <=- has the right of supervision and police authority over all seas within the jurisdiction of the 'hilippines and over all coasts, ports, harbours, bays, rivers and inland waters whether navigable from the sea or not. 0sec. 7(),T--3. Note5 "n !ssali vs. -ommissioner, &M,-@!)#&, the ,- held as a valid the interception and sei?ure of a vessel on the high seas, saying that "$
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%EN. R3LE" ,ettlement of cases by payment of fine or redemption of forfeited property is allowed. EX2E)TI&NS" #. the importation is absolutely prohibited or &. the surrender of the property to the person offering to redeem would be contrary to law or 3. when there is fraud. (sec. 29.7 :00) Note" !c$uittal in criminal charged is not a res judicata in sei?ure or forfeiture proceedings. ,ince criminal proceeding are actions in personam while the latter is action in rem. Note" <urden of proof in sei?ure or forfeiture case is on the claimant. (sec. 2595 :00) (ANIFEST Fanifest in coastwise trade for cargo and passengers transported from one place to another are re$uired when one or both of such places are a port of entry 0sec.L(7,T--3. Fanifest is not only re$uired to imported goods. "t is also re$uired for articles found on vessels or aircraft engaged in coastwise trade. Whether the act of smuggling is established or not under the principle of res ipsa lo&uitur. "t is enough that the cargo was unmanifested and that there was no showing that payment of duties thereon had been made for it to be subject to forfeiture. Thus, unmanifested cargo is subject to forfeiture. 1. S3R2#AR%E To overcharge or to charge again as in an accounting between parties. Arti -es Su0*e t to Sur harge Q2ode" DE(IR
1. 2.
vessels
Failure to exhibit documents 3nlawful navigation of unregistered
3.
1ringing of unmanifested war e$uipment 4. 3nlading of cargo before arrival at port of destination 5. False statement of destination 6. 3nlawful navigation without license 7. 1rea ing of placed by customs officials 8. 3nlawful departure 9. 'essels navigating without compliment officerD failure to produce manifest crew 10. Injury to voys 11. 'essel departing before entry is made 12. 3nlading at an improper place after arrival 14. Disappearance of manifested articles 15. &bstruction to boarding officials 16. (iscellaneous offenses Lo&oL L&2AL TAXATI&N Lo a- Taxation The power of a local government unit to create its own sources of revenue and levy taxes, fees, and charges subject with the basic policy of local autonomy
Fundamenta- )rin i,-es of Taxation #. Taxes should be uniform and e$uitable &. Taxes should be based on the taxpayers ability to pay ). Taxes should be levied and collected only for public purpose *. Taxes should not be unjust, excessive, oppressive or confiscatory 2. Taxes should not be contrary to law, public policy or national economic policy 7. Taxes should be progressive, not regressive Lo a- Taxing Authorit+ The power to tax is exercised by the 4.B concerned through an appropriate ordinance. 4.B may grant tax exemptions, incentives or reliefs as it may be necessary.
1. +ailure to pay Duties 0sec. &2(#,T--3 2. +ailure or refusal of a party to submit

evidence 0sec. &2(*,T--3 3. (isclassification, misdeclaration or under evaluation of article 4. +ailure to submit or supply invoice 0sec.&2(&,T--3 2. FINES Su0*e t to Fines .2ode" F313 F313 'I'3 D&(/ "7
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Residua- )ower in Lo a- Taxation 4.B may levy taxes, fees, or charges on any subject not specifically enumerated in the 4.-, taxed under the provisions of the 8"@- or other applicable laws.
Limitations to the Residua- )ower in Lo aTaxation #. -onstitutional limitations &. 4imitations prescribed in ,ec. #)) 4.). =rdinance levying such residual taxes shall not be enacted without any prior public hearing conducted for that purpose *. 'rinciple of 'reemption )rin i,-e of )reem,tion or Ex -usionar+ Do trine When the national government elects to tax a particular area, it impliedly withholds from the local government the delegated power to tax the same field.
#(. /state tax, inheritance, gifts, legacies and other ac$uisitions mortis causa ##. Taxes, fees or charges of goods carried into or out of the territorial jurisdictions of the 4.B #&. 'ercentage or Gat on sales, barters or exchanges or similar transaction of goods #). "ncome tax except on ban s and other financial institutions #*. Taxes on business enterprises certified by the <oard of "nvestments as pioneer or non-pioneer for a period of 7 and * years respectively from the date of registration #2. /xcise taxes on articles enumerated under the 8"@Taxes Im,osed 0+ )ro!in es #. Tax on transfer of real property li e sale, donation, barter or any mode of transferring ownership. <ut tax rate should not be more than 2(> of the #> of the total consideration or the fair mar et value, whichever is higher &. Tax on the business of printing or publication not exceeding 2(> of the #> of the gross annual receipts for the preceding calendar year. /xcept newly started business, the rate of which shall not exceed #D&( of the #> of the capital investment Q" A fixed annua- -i ense fee on those engaged in the 0usiness of generaenter,rise was a-so im,osed on the sa-e of 0i0-es 0+ a re-igious se t. Is this !a-id= S. A. 8o, because it violates the constitutionally guaranteed freedom of the press, and of religion.. !s a license fee is fixed in amount and unrelated to the receipts of the taxpayer, such a license fee, when applied to a religious sect is actually imposed as a condition for the free exercise of religion. ! license fee Rrestrains in advance those constitutional liberties of press and religion and inevitably tends to suppress their exercise.S Q" The E'AT Law im,oses a 'AT registration fee of )<9555.55 on non?'AT enter,rises whi h in -udes among others9 re-igious se ts whi h se--s and distri0utes re-igious -iterature. Is this !io-ati!e of re-igious freedom = S. A. 8o. The '#,(((.(( G!T registration fee, although a fixed amount is not imposed for the
Ex -uded Im,osition #. Taxes levied under 8"@-, unless provided by 4.&. Taxes under the Tariff and -ustoms -ode ). Taxes which contravenes existing governmental policies or which violates the fundamental principles of taxation *. Taxes under special laws Limitations on the Lo a- Taxing )ower #. Taxes, fees or charges for the registration of motor vehicles and for the issuance of licenses or driving permits &. Taxes, fees or charges on the national government or its agencies ). Taxes, fees or charges on countryside and barangay business enterprises *. Taxes, fees or charges on 'hilippine products exported 2. Taxes on premiums 7. Taxes on the gross receipts of transportation contractors or persons engaged in the transportation of passengers by air, land or water M. -ustoms duties, registration of vessel, tonnage dues 1. Taxes, fees or charges on agricultural and a$uatic products L. 6ocumentary stamp tax "%
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exercise of a privilege but only for the purpose of defraying part of the cost of registration. The registration re$uirement is a central feature of the G!T system. "t is designed to provide a record of tax credits because any person who is subject to the payment of the G!T pays an input tax, even as he collects an output tax on sales made or services rendered. The registration fee is thus more of an administrative fee, one not imposed on the exercise of a privilege, much less a constitutional right. 0Tolentino v. ,ecretary of +inance, et al., and companion cases, &)2 ,-@! 7)(3 ). +ranchise tax not exceeding 2(> of the #> of the gross annual receipts for the preceding year, within its territorial jurisdiction. 8ewly started business shall not exceed #D&( of the #> of the capital investment. Q" (era- o was granted a fran hise to o,erate an e-e tri -ight and ,ower ser!i e in 2a-am0a9 Laguna sometime in <AH6 under ).D. No. >><. 3nder the fran hise (era- o ,a+s 8J fran hise tax on of its gross re ei,ts and Man+ -aw to the ontrar+ notwithstanding 0e in -ieu of a-- taxes and assessments of whate!er nature im,osed 0+ an+ nationa- or -o a- authorit+ or earnings9 re ei,ts9 in ome and ,ri!i-ege of generation9 distri0ution and sa-e of e-e tri urrent.N )ursuant to the Lo a- %o!ernment 2ode9 the ,ro!in e of Laguna ena ted an ordinan e im,osing a fran hise of >5J of <J of the gross annua- re ei,ts of 0usiness en*o+ing a fran hise rea-i@ed during the ,re eding a-endar +ear within the ,ro!in e in -uding ities -o ated therein. Ru-e on the !a-idit+ of the tax ordinan e. S. A. The tax ordinance is valid. Bnder the now prevailing -onstitution, where there is neither a grant nor prohibition by statute, the tax power must be deemed to exist although -ongress may provide statutory limitations and guidelines. The basic rationale for the current rule is to safeguard the viability and selfsufficiency of local government units by directly granting them general and broad tax powers. The 4ocal .overnment -ode explicitly authori?es provinces and cities, notwithstanding Rany exemption granted by any law or other special lawS to impose a tax on businesses enjoying a franchise. "ndicative of the legislative intent to carry out the constitutional mandate of vesting broad tax powers to local government units, the 4ocal .overnment -ode has withdrawn tax exemptions or incentives theretofore enjoyed by certain entities. "&
"n addition, the 4ocal .overnment -ode contains a general repealing clause. The phrase in Rlieu of all taxesS has to give way to the peremptory language of the 4ocal .overnment -ode which specifically provides for the withdrawal of all exemptions. The -ourt has viewed its previous rulings as laying stress on the legislative intent of the amendatory law whether the tax exemption privilege is to be withdrawn or not rather than on whether the law can or cannot withdraw the tax exemption, without violating the constitution. 0Fanila /lectric -ompany v. 'rovince of 4aguna, et al., ..@. 8o. #)#)2L, Fay 2, #LLL3 The 4ocal .overnment -ode provisions on withdrawal of tax exemptions prescribes the general rule, vi?. the tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons are withdrawn with the effectivity of the 4ocal .overnment -ode except with respect to those expressly enumerated. 0-ity .overnment of ,an 'ablo, 4aguna, et al., v. @eyes, et al., ..@. 8o. #&MM(1, Farch &2, #LLL3 *. Tax on sand gravel and other $uarry resources extracted from public land not more than #(> of the fair mar et value in the locality Q" &n 7une 8D9 <AA89 the Sangguniang Panlala*igan of 1u-a an ,assed )ro!in ia&rdinan e No. 69 to ta:e effe t on 7u-+ <9 <AA89 whi h -e!ies a tax of <5J of the fair mar:et !a-ue in the -o a-it+ ,er u0i meter of ordinar+ stones9 gra!e-9 sand9 earth and other Guarr+ resour es extra ted from areas of ,u0-i -and within its territoria*urisdi tion. It now o--e ts the said tax u,on Guarr+ resour es extra ted from ,ri!ate -ands 0+ Re,u0-i 2ement. It -aims authorit+ to do so under the ,ro!isions of the Lo a- %o!ernment 2ode as we-- as under the Rega-ian theor+ of State ownershi, o!er a-natura- resour es. Is the o--e tion orre t = S. A. 8o, because the authority under the 4ocal .overnment -ode to collect taxes on $uarry resources applies only to those extracted from public lands. 0,ec. #)* in relation to ,ec. #)1, 4ocal .overnment -ode3 +urthermore, the 4ocal .overnment -ode prohibits local government units from collecting excise taxes on articles enumerated under the 8"@-, and taxes, fees or charges on petroleum products. 0,ec. #)) :h;, 4ocal .overnment -ode in relation to the Tax -ode3 The tax imposed is an excise tax upon the performance, carrying on, or the exercise of an activity. While the Tax
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-ode levies a tax on all $uarry resources, regardless of origin, whether extracted from public or private lands, the 4ocal .overnment -ode authori?es the local government unit to impose such taxes on those ta en from public lands. Thus, those extracted from private lands are taxable under the 8"@- and not by local government units. The @egalian doctrine may not be applied because taxes, being burdens, are not to be presumed beyond what the applicable statute expressly and clearly declares, tax statutes being construed stricitssimi 2uris against the government. 0The 'rovince of <ulacan, et al., v. The -ourt of !ppeals, etc., et al., &LL ,-@! **&3 2. 'rofessional tax reasonable rate determined by the 4.B but shall not exceed ' )((.(( 7. !musement tax not more )(> of the gross receipts from admission fees Q" )hi-i,,ine 1as:et0a-Asso iation ontested the defi ien + amusement tax assessed against it 0+ the 1IR for ondu ting the ,rofessiona- 0as:et0a-games and for the ession of ad!ertising and streamer s,a es to 'intage Enter,rises9 In . a/ Shou-d the amusement taxes 0e ,aid to the -o ago!ernment instead of the 1IR = 0/ Is the ession of ad!ertising and streamer s,a es to 'intage Enter,rises9 In . su0*e t to the ,a+ment of amusement taxes = S. A. a3 8o. 'rofessional bas etball games should pay the amusement taxes collected by the <"@ and not the amusement taxes collected by the local governments. The amusement tax which provinces and cities are allowed to collect under ,ec. #*( of the 4ocal .overnment -ode, refers to Ran amusement tax to be collected from proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement.S The authority to tax professional bas etball games is not included therein because it is a national tax provided for under ,ec. #&2 of the #LLM Tax -ode which provides that, RThere shall be collected from the proprietor, lessee or operator of coc pits, cabarets, night or day clubs, boxing exhibitions, professional bas etball games, Oai!lai and racetrac s, a tax e$uivalent to5 xxxx 0d3 +ifteen percent 0#2>3 in the case of professional bas etball games envisioned in 'residential 6ecree 8o. LM#5 -rovided #0
ho#ever That the tax herein shall be in lieu of all other percentage taxes of whatever nature and description% xxxS b3 Ces. The second to the last paragraph of ,ec. #&2 of the #LLM Tax -ode provides that, the term Rgross receipts embraces all the receipts of the proprietor, lessee or operator of the amusement place.. This term is broad enough to embrace the cession of advertising and streamer spaces as the same embraces all the receipts of the proprietor, lessee or operator of the amusement place. "t is thus, a national tax not a local tax. The recognition by the <"@ of such income from cession as a local tax is of no moment because the .overnment is never estopped by the mista e or error on the part of its agents, specially on the matter of taxes. 0'hilippine <as etball !ssociation v. -ourt of !ppeals, et al., ..@. 8o. ##L#&&, prom. !ugust 1, &(((3 M. !nnual fixed tax for every delivery truc or Fanufacturers, Wholesalers, @etailers of certain products. Taxes Im,osed 0+ (uni i,a-ities #. Fanufacturers, repac ers and compounders of li$uor, distilled spirits and wines &. Wholesalers, distributors or dealers of any article of whatever ind ). /xporters, manufacturers, wholesalers, retailers of essential commodities *. -ontractors and "ndependent -ontractors 2. <an s or other financial institutions 7. 'eddlers engaged in the sale of any merchandise or article of commerce M. <usiness which the 4.B may deem proper tax. <usinesses subject to G!T and excise tax, rate shall not exceed &> of the gross sales of the preceding calendar year Taxes Im,osed 0+ 2ities -ities may levy taxes and other charges which the province or municipalities may impose. "t may exceed the maximum rates allowed but not more than 2(> except rates of professional and amusement taxes.
Taxes Im,osed 0+ 1aranga+s #. Taxes on stores or retailers with the fixed business establishments with the gross sales for the preceding calendar year of ' 2(,((( or less 0barangays in the cities3 or ' )(,((( or less 0barangays in the municipalities3
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&. ,ervices or charges ). <arangay clearance Situs of Lo a- Taxation #. <usinesses maintaining or operating a branch or sales oulet shall record the sale in the branch or outlet ma ing the sale or transaction &. 8o branch or sales outlet in the city or municipality where the sale is made sale shall be recorded in the sales office ). ,ales recorded in the principal office - )(> shall be taxed by the city or municipality where the principal office is located - M(> shall be taxed by the city or municipality where the factory, project office or plant is located *. 'lantation located at a place other than the place where the factory is located, the M(> shall be divided as follows5 - 7(> to the city or municipality where the factory is located - *(> to the city or municipality where the plantation is located 2. & or more factories, plants or project offices located in different localities the M(> shall be prorated among the localities where the factories, plants or project offices are located in proportion to their respective volumes of production
#. 6iplomatic and consular representatives &. Transient visitors when their stay does not exceed ) months -lace o) pa%ment residence of the individual or where the principal office of the juridical entity is located :ime o) pa%ment on the #st day of Oanuary of each year but not later than #st day of +ebruary of each year -enalties )or delin&uencies &*> interest per annum from the due date until it shall be added on the amount due. )resentation of 2ommunit+ Tax 2ertifi ate on 2ertain & asions <. Indi!iduaa. When an individual subject to the community tax ac nowledges any document before a notary public, b. ta es the oath of office upon election or appointment to any position in the government service% c. receives any license, certificate or permit from any public authority% pays any tax or fee% d. receives any money from any public fund% e. transacts other official business% or f. receives any salary or wage from any person or corporation. The community tax certificate shall not be re$uired in the registration of a voter.
2ommunit+ Tax -ities or municipalities may levy a community tax in accordance with the provisions of !rt. 7 chapter &, title #, <oo & of 4.- 0sec. #27 4.-3
8. 2or,oration a. receives any license, certificate, or permit from any public authority, b. pays any tax or fee, c. receives money from public funds, or d. transacts other official business. The city or municipal treasurer deputi?es the barangay treasurer to collect the community tax in their respective jurisdictions. The proceeds of the community tax actually and directly collected by the city or municipal treasurer shall accrue entirely to the general fund of the city or municipality concerned. 'roceeds of the community tax collected through #
Indi!idua-s Lia0-e for 2ommunit+ Tax #. "nhabitants of the 'hilippines &. #1 years old and above ). @egularly employed on a wage or salary basis *. =ne engaged in business or occupation 2. =ne who owns real property with an assessed value of ' #,((( or more 7. =ne who is re$uired by law to file an income tax return @!T/5 ' 2.(( and an annual tax of ' #.oo foe every ' #, ((( of income regardless of whether from business, exercise of profession or from property which shall not exceed ' #,((( Exem,tion from 2ommunit+ Tax
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the barangay treasurers shall be apportioned as follows5 0,ec. #7*3 #. 2(> accrues to the general fund of the city or municipality concerned% and &. 2(> accrues to the barangay where the tax is collected. TAX RE(EDIES 3NDER T#E L&2AL %&'ERN(ENT 2&DE A. Tax Lo a- %o!ernment 3nits Remedies of
The treasurer of the concerned 4ocal .overnment Bnit shall file the collection case. The -T! has co jurisdiction over the tax collection cases of the 4.B
)res ri,ti!e )eriods under the L%2"
1.
#. "mpose penalties 0surcharges and penalty interest3 in case of delin$uency% &. !vail local governments liens% ). !dministrative action through distraint of goods, chattels and other personal property% and *. <y judicial action. 2i!i- remedies for o--e tion #. tax lien% &. distraint% ). levy% *. civil action% 2. purchase of property by 4.Bs for want of bidder% property distrained not disposed within #&( days from date of distraint considered sold to the 4.B. Note" /ither of these remedies or all may be pursued concurrently or simultaneously at the discretion of the local government unit concerned. Tax -ien- 4ocal taxes constitute a lien, superior to all liens, charges or encumbrances in favor of any person, enforceable by appropriate administrative of judicial action, not only upon any property or rights therein which may be the subject of the lien but also upon property used in business, occupation, practice of profession or calling, or exercise of privilege with respect to which the lien is imposed 7udi ia- a tion
!ssessment of 4ocal Taxes %enera- ru-e five years 023 from the date they became due. Ex e,tion: Dhen there is )raud or intent to evade the pa%ment o) ta*es )ees or char,es ten 0#(3 years from discovery of the fraud or intent to evade the payment. -ollection of 4ocal taxes5 +ive 023 years from the date of assessment by administrative or judicial action.
2.
"nterruption of the period of prescription5 a. The treasurer is legally prevented from ma ing the assessment or collection of the tax% b. The taxpayer re$uests for a reinvestigation and executes a waiver in writing before the expiration of the period within which to assess or collect% and c. The taxpayer is out of the country or otherwise cannot be located. 1. Remedies Tax,a+er under the L%2 <. AD(INISTRATI'E a3 'rior to assessment5 i3 !dministrative appeal to the ,ecretary of Oustice% and ii3 !ction for declaratory relief b3 !fter an assessment5 i3 'rotest of the assessment within 7( days from receipt of assessment. 'ayment under protest is not necessary.% or ii3 !ction for refund within & years from payment of tax to local revenue taxes the #2 of the
ivil action only% it precludes a criminal case as a proper remedy for collection of delin$uent local taxes.
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supervening cause applies in local taxation because the period for the filling of claims for refund is counted not necessarily from the date of payment but from the date the taxpayer is entitled to a refund or credit. iii3 @ight of redemption- # year from the date of sale or forfeiture. 0,/-. #ML, 4.-3 8. 73DI2IAL a/ a,,ea within 7( days from assessment of provincial, city or municipal assessor to 4ocal <oard of !ssessment !ppeals% within )( days from receipt of decision of 4<!! to -entral <oard of !ssessment !ppeals% in case of denial of refund or credit, appeal to the <oard of !ssessment !ppeals as in a protest case b) ourt a tion appeal of -<!!s decision to the ,upreme -ourt by certiorari% c) suit assai-ing !a-idit+ of tax9 re o!er+ or refund of taxes ,aid% d) suit to de -are in!a-idit+ of tax due to irregularity in assessment and o--e tion% e) suit assai-ing the !a-idit+ of tax sa-e A,,ea- to the Se retar+ of 7usti e" !ny $uestion on the constitutionality or legality of tax ordinances may be raised on appeal within )( days from the effectivity thereof To the ,ecretary of Oustice Who shall render a decision within 7( days from date of receipt of appeal ,uch appeal shall not suspend the effectivity of the ordinance, as well as the accrual and payment of the tax "n case of adverse decision or inaction by the ,ecretary of Oustice, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. )rotest within 7( days from receipt of assessment. 'ayment under protest not necessary.
)a+ment and su0seGuent refund or tax redit within two 0&3 years from payment of tax to local treasurer. Right of redem,tion one 0#3 year from the date of sale or from the date of forfeiture. A tion for de -arator+ re-ief in*un tion if irreparable damage would be caused to the taxpayer and no ade$uate remedy is available. REAL )R&)ERT; TAXATI&N 2hara teristi of Rea- )ro,ert+ Tax #. 6irect tax on the ownership of real property &. !d Galorem tax. The value is based on the tax base ). 'roporti on - the tax is calculated on the basis of a certain percentage of the value assessed *. "ndivisib le single obligation 2. 4ocal Tax )ro,erties Lia0-e 3nder Rea- )ro,ert+ Tax !ccording to the 4ocal .overnment -ode, @eal 'roperty liable for @eal 'rop tax is5 #. 4and, &. <uildings ). Fachinery and *. =ther improvements not otherwise exempted under said code 0,ec &)&, 4.-3 Note5 !lthough the term real property has not been expressly defined in the 4.-, early decisions of the ,upreme -ourt in 4indanao @us 0o. v 0it% !ssessor o) 0a,a%an de /ro ; S0R! E67F @oard o) !ssessment !ppeals v 4eralco 116 -<8A 928F 4anila Electric 0o. v @oard o) !ssessment !ppeals 1. S0R! ;8 seem to suggest that !rt *#2 of the -ivil -ode could also be controlling. 2-assifi ation of Lands for ,ur,oses of assessment :,ec &#1 0a3; 1. -ommercial 2. !gricultural 3. @esidential 4. Fineral 5. "ndustrial 6. Timberland 7. ,pecial S,e ia- 2-asses of Rea- )ro,ert+ 0sec &#7, 4.-3 #!
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#. Hospitals &. -ultural and scientific purposes ). owned and used by local water districts *. .=--s rendering essential public services in the supply and distribution of water andDor generation or transmission of electric power. )ro,erties Exem,t from Taxes 0,ec. &)*3 #. =wned by the @epublic of the 'hilippines or its political subdivisions /xcept5 when beneficial use has been granted to a taxable person &. -haritable institutions, churches, parsonages, and convents thereto, mos$ues, non-profit or religious cemeteries, buildings and improvements actually directly and exclusively used for religious, charitable or educational purposes. ). Fachinery and /$uipment actually, directly, and exclusively used by local Water districts and .=--s engaged in the supply and distribution of water andDor generation and transmission of electric power *. @eal property owned by duly registered -ooperatives under @! 7L)1 2. Fachinery U e$uipment for pollution control and /nvironment protection /xemptions previously granted, 0not falling within the above enumeration3 are withdrawn. Fundamenta- )rin i,-es in Assessment Rea)ro,ert+ Taxes .Art <AH/ #. -urrent and fair mar et value is the basis of appraisal 2. Bniformity in classification in each local govt unit should be observed ). !ctual use of the property should be the basis of classification *. appraisal, assessment, levy and collection should not be let to any private person. 2. e$uitable appraisal and assessment )R&2ED3RE" STE) < ? )R&)ERT; DE2LARATI&N &F REAL
assessor within 7( 6!C, from date of transfer a ,W=@8 statement containing +FG and description of property "f improvement on real property file wDin 7( 6!C, upon completion or occupation 0whichever is earlier3 ,W=@8 statement containing +FG and description of property
2. De -ared 0+ )ro!in ia- I 2it+ I (uni i,aAssessor 0,ec &(*3 only when the person under ,ec &(& refuses or fails to ma e the declaration within the prescribed time 8o oath is re$uired "+ +"4"8. +=@ /9/F'T"=8 0,ec &(73 person claiming exemptions must file with assessor sufficient documentary evidence to support claim within )( days from the date of 6/-4!@!T"=8 of property "f re$uired evidence is not submitted within )( days, the property will be listed as taxable in the roll. "f proven to be tax-exempt, property will be dropped from the roll Note5 "+ '@='/@TC 6/-4!@/6 +=@ TH/ +"@,T T"F/ 0,ec. &&&3 "f declared for #st time, real property shall be assessed for bac taxes for not more than #( yrs prior to the date of initial assessment taxes shall be computed on the basis of applicable schedule of values in force during the corresponding periods
STE) 8" LISTIN% &F REAL )R&)ERT; IN T#E ASSESS(ENTR&LLS 0,ec &(2, &(M3 !ll declaration shall be ept and filed under a uniform classification system to be established by the provincial, city or municipal assessor.
STE) 6" A))RAISAL AND 'AL3ATI&N &F REAL )R&)ER; 0,ec &#&-&#*, &&*-&&23 Determining Fair (ar:et 'a-ue A. Land #. !ssessor of the province, city, and municipalities gives summons to owners of affected properties #"
1. De -ared 0+ &wner or Administrator 0,ec

&(&-&()3 "f newly ac$uired property files with
Tax Law Study Guide


Institute of Law
&. !ssessor prepares a schedule of +FG for different classes of properties ). ,anggunian enacts an ordinance *. the schedule of +FG is published or posted 1. (a hiner+ #. +or <rand 8ew machinery5 +FG is ac$uisition cost 2. "n all other cases5 +FG K @emaining eco. 4ife 9 @eplacement /stimated /co. 4ife -ost
)eriod" a.within five 023 yrs from the date they become due b.within ten 0#(3 yrs. from discovery of fraud, in case there is fraud or intent to evade )res ri,tion sha-- 0e sus,ended when5 0,ec &M(, 4.-3 a.local treasurer is legally prevented to collect tax b.the owner of prop re$uests for reinvestigation and writes a waiver before expiration of period to collect c. the owner of the prop is out of the country or cannot be located RE(EDIES IN REAL )R&)ERT; TAXATI&N A. Remedies of Tax,a+er #. '!CF/8T B86/@ '@=T/,T 0,ec &2&3 file protest with prov, city, or mun. treasurer concerned indicate amount contested annotate on tax receipt Rpaid under protestS Within )( days, confirm protest in writing stating grounds therefor treasurer shall decide protest within 7( days Note" 8o protest shall be entertained un-ess TH/ T!9 ", +"@,T '!"6. "+ '@=T/,T 6/-"6/6 "8 +!G=@ of taxpayer, amount may either be a. refunded or b. applied as tax credit "+ 6/8"/6 or 8=T 6/-"6/6 W"TH"8 7( 6!C, <C T@/!,B@/@, a. taxpayer may appeal to board of assessment appeal or b. avail of remedies under -h ) title & <oo "" 04ocal <oard of !ssessment !ppeals and -entral <oard of !ssessment !ppeals3 &. @/+B86 "8 -!,/ =+ /9-/,,"G/ -=44/-T"=8 0,ec &2)3 +ile a written claim for refund within two 0&3 years from date taxpayer is entitled thereto Remedies of %o!ernment @emedies may be enforced either through administrative or judicial action or both, alternative or simultaneously. Bse or non##
STE) B" DETER(INE ASSESSED 'AL3E 0,ec &#13 )ro edure #. ta e the schedule of +FG &. !ssessed value K +FG 9 !ssessment level ). Tax K !ssessed value 9 Tax rate STE) >" )A;(ENT AND 2&LLE2TI&N &F TAX 'eriod5 Oanuary # of every year 0,ec &*73 tax shall constitute as superior lien 0,ec &*73 H=WT a. basic real prop tax in * e$ual installments 0Far )#, Oune )(,,ept. )(, 6ec. )#3 b. special levy - governed by ordinance Note5 "8T/@/,T for 4!T/ '!CF/8T two percent 0&>3 each month on unpaid amt. until the delin$uent amt is paid. provided in no case shall the total interest exceed thirty-six 0)73 months
Note5 +=@ !6G!8-/ and '@=F'T '!CF/8T a3 advance payment -discount not exceeding &(> of annual tax 0,ec &2#, 4.-3 b3 prompt payment -discount not exceeding #(> of annual tax due 0!rt )*& "@@3 $ho 2o--e ts= The provincial, city, municipal or barangay treasurer within which to collect. 0,ec &M(3.
Tax Law Study Guide


Institute of Law
use of one remedy shall not be a bar against the other 0,ec &213 #. !6F"8",T@!T"G/ a3 4evy on @eal property 0,ec &21 and &2L3 b3 ,ale of @eal 'roperty 0,ec &7(3 c3 4ocal .overnments 4ien 0,ec &273 d3 +urther 6istraint or 4evy 0,ec &723
Within )( days -=B@T =+ T!9 !''/!4, Within #2 days ,B'@/F/ -=B@T Lo&oL 2&3RT &F TAX A))EALS 2&()&SITI&N 'residing Oustice and 2 !ssociate Oustices Fay sit en banc or in two divisions, each division consisting of ) justices. He presiding justice and the most senior associate justice shall serve as chairmen of the two divisions. )&$ERS of the 2ourt of Tax A,,ea-
&. OB6"-"!4 0,ec &773-civil action filed by the local treasurer within 2 yrs. from due date 2ondonation and Remission The '@/,"6/8T may remit or reduce real prop tax in any province, city, municipalities if he deems that 'B<4"- "8T/@/,T so re$uires 0,ec &MM3 TH/ ,!8..B8"!8 concerned may -=86=8/ or @/6B-/ the tax in cases where a. there is a general failure of crops b. substan tial decrease in the price of products c. calamit y 0,ec &M73 0+ an ordinance - passed before Oan # of any year and upon recommendation of the 4ocal 6isaster -oordinating -ouncil A))EALS IN REAL )R&)ERT; TAXATI&N =W8/@ =@ "8T/@/,T '/@,=8 W"TH 4/.!4
1. 2. 3. 4.
+iles within 7( days #. Written 'etition under =ath &. With ,upporting 6ocuments Within 7( days 4=-!4 <=!@6 =+ !,,/,,F/8T !''/!4, 04<!! should decide win #&( 6!C, from receipt of petition3 Within )( days -/8T@!4 !''/!4, <=!@6 =+ !,,/,,F/8T
to administer oaths% to receive e!iden e% to summon witness by su0,oena% to in$uire production of papers or documents by subpoena duces tecu F 5. to punish ontem,t% 6. to ,romu-gate ru-es and regu-ations for the conduct of its business% 7. to assess damage against appellant if appeal to -T! is found to be frivolous or dilatory% 8. to sus,end the o--e tion of tax ,ending a,,ea-% and 9. to render de isions on case brought before it. 10. to issue order authori?ing distrait of personal property and -e!+ of real personal property. DISTRAINT &F )ERS&NAL )R&)ERT; AND LE'; &F REAL )R&)ERT; Bpon the issuance of any ruling, order or decision by the -T! favorable to the national government, the -T! shall issue an order authori?ing the <"@, through the commissioner5 #. to sei?e and distrait any goods, chattels, or effects and personal property, including stoc s and other securities, debts, credits, ban accounts, and interest in and rights to personal property andDor
#$
Tax Law Study Guide


Institute of Law
&. levy the real property of such persons in sufficient $uantity to satisfy the tax or charge together with any increment thereto incident to delin$uency. The remedy shall no be exclusive and shall not preclude the court from availing of other means under the @ules of -ourt. 73RISDI2TI&N &F T#E 2TA A. EX2L3SI'E A))ELATE 73RISDI2TI&N T& RE'IE$ 1; A))EAL <. de ision or ina tion of the 2IR in? &. a3 disputed assessment% refunds of internal revenue taxes, fees and other charges% penalties imposed in relation thereto% and b3 other matters arising under the 8"@-% or other law or part of law administered by <"@. 3. De isions9 order or reso-ution of the RT2s in -o a- tax ases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. 4. De isions of 2ommissioner of 2ustoms in ? a. cases involving liability from customs duties, fees and other money charges% sei?ures, detention or release of property affected% fines, forfeitures and other penalties imposed in relation thereto% and b. other matters arising under the -ustoms 4aw or other laws or part of laws administered by the <=-. 5. de isions of the 21AA in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the 4<!!%
1. 73RISDI2TI&N 2RI(INAL 2ASES
&'ER
1.
Ex -usi!e origina- *urisdi tion over all criminal offenses arising from !io-ations of the NIR2 or tariff and 2ustoms 2ode and other laws administered by the <"@ and <=-.#&$E'ER, offenses a3 where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than # million pesos, or b3 where there is no specified amount claimed sha-- 0e tried 0+ the regu-ar ourts and the *urisdi tion of the 2TA sha-0e a,,e--ate. The criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the -T!, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action shall be recogni?ed.
2.
a,,e--ate offenses5
Ex -usi!e *urisdi tion in criminal
a)
over appeals from the judgments, resolutions or orders of the RT2 in tax ases origina--+ de ided 0+ them%
b)
6.
de isions of the Se retar+ of Finan e on customs cases elevated to him automati a--+ for re!iew from decisions of the -ommissioner of -ustoms which are adverse to the government% 7. de isions of the Se retar+ of Trade and Industr+, in the case of non-agricultural products, and the Se retar+ of Agri u-ture in the case of agricultural products, involving dum,ing ad ounter!ai-ing duties
over ,etitions for re!iew of the *udgments9 reso-utions or orders of the RT2 in the exer ise of their a,,e--ate *urisdi tion over tax cases originally decided by the FT-. 2. 73RISDI2TI&N &'ER TAX 2&LLE2TI&N 2ASES #. Ex -usi!e origina- *urisdi tion in tax collection cases involving fina- and exe utor+ assessments for taxes, fees, charges and penalties. -ollection where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is -ess than < mi--ion ,esos #7
Tax Law Study Guide


Institute of Law
shall be tried by the proper FT- and @T-% &. Ex -usi!e a,,e--ate *urisdi tion in tax collection cases -a3 over appeals from the judgments, resolutions or orders of the @T- in tax collection cases originally decided by them% b3 over petitions for review of the judgments, resolutions or orders of the @T- in the exercise of their appellate jurisdiction over tax collection cases originally decided by the FT-. A))EAL $#& (A; A))EAL= An+ ,art+ ad!erse-+ affe ted by a decision, ruling or inaction of the -"@, -ommissioner of -ustoms, ,ec. of +inance, ,ec. of Trade and "ndustry or ,ec. of !griculture or the @T-, may file an appeal with the -T!5 #. within )( days after receipt of such decisions or &. !fter the expiration of the period fixed by law for action referred to in ,ection M0a3 @.!. L&1&, in which case the inaction shall be deemed a denial. (&DES &F A))EAL
jurisdiction this appeal shall be heard by a -T! /8 <!8-. ! party adversely affected by a resolution of a 6ivision of the -T! on a motion for reconsideration or new trial, may file a petition for review with the -T! /n <anc. 3. 'etition for @eview on -ertiorari may be filled by a party adverse affected by a decision or ruling of the -T! /n <anc, through a verified petition before the ,upreme -ourt, pursuant to @ule *2 of the @ules on -ivil 'rocedure. %EN. R3LE" 8ew issues cannot be raised for the first time on appeal. EX2E)TI&NS" #. defense of prescription @/!,=85 this is a statutory right (=isa%an Aand :ransport vs. 0ollector) &. errors of administrative officials @/!,=85 ,tate can never be in estoppel and 4ifeblood Theory (08R vs. -rocter and 'am(le -hilippines 4anu)acturin, 0orp.) N&TE" #owe!er9 this was reversed by the ,- in the case of -ommissioner vs. 'rocter and .amble, ..@. no. 771)1, 6ec. &, #LL# @esolution, held that Min the a0sen e of ex,-i it statutor+ ,ro!isions to the ontrar+9 the go!ernment must fo--ow the same ru-es of ,ro edure whi h 0ind ,ri!ate ,arties.N 2o--e tion of taxes ma+ 0e S3S)ENDED ,ending a,,ea- to the 2TA %EN. R3LE" 8o appeal ta en to the -T! shall suspend the payment, levy or distrait, andDor sale of any property of the taxpayer. EX2E)TI&NS" 1. there must be a showing that collection of the tax may *eo,ardi@e the interest of the go!ernment andIor tax,a+er% 2. de,osit of the amount claimed or file a surety bond for not more that double the amount of tax with the -ourt when re$uired% and 3. showing by taxpayer that appeal is not fri!o-ous or di-ator+. 2AN T#E 2TA EN7&IN 2&LLE2TI&N &F TAXES=
1. <y filling a petition for review under a

procedure analogous to that provided for under @ule *& of @ules on -ivil 'rocedure 6ecision, ruling or inaction of the -"@, -ommissioner of -ustoms, ,ec. of +inance, ,ec. of Trade and "ndustry or ,ec. of !griculture or the @T- this appeal shall be heard by a 6"G","=8 of the -T!. Within )( days from the receipt of the decision or ruling from the expiration of the period fixed by law for the official concerned to act, in case of inaction. ! party adversely affected by a ruling, order of a division of the -T! may file a motion for reconsideration or new trial before the same 6ivision. 2. <y filling a petition for review under a procedure analogous to that provided for under @ule *) of @ules on -ivil 'rocedure 6ecision, ruling or inaction of the -entral <oard of !ssessment and the @T- in the exercise of its appellate
#%
Tax Law Study Guide


Institute of Law
,ec. ## of @.!. ##&2 as amended by ,ec. L of @.!. L&1& grants -T! power to suspend collection of tax if such collection wor s to serious prejudice of either taxpayer or government. #&$E'ER, ,ec. &#1 of 8"@- provides no court any grant injunction to restrain collection of any tax, fee, charge imposed by the Tax code. Note" The provision in Tax -ode refers to courts =TH/@ TH!8 the -T!. >@la&uera vs. Rodri,ueC '.R. no. A-11265 4arch 26 1658? Note5 !ppeal to the -T! does not automatically suspend collection B84/,, -T! issues suspension order at any stage of proceedings. Lo&oL
#&
Tax Law Study Guide


Far Eastern University: Mortis Causa Will Be Subject To Estate Tax

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Far Eastern University: Mortis Causa Will Be Subject To Estate Tax

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1. Benefit-Received Theory -considers

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4. Redistribution of Wealth Theory - the

Tax Law Study Guide