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SEC. 218. Injunction not Available to Restrain Collection of Tax. - 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 Code.
1. GENERAL RULE
Commissioner of Internal Revenue vs. Cebu Portland Cement Co.
G.R. No. L-29059, 15 December 1987
Facts: CTA decision ordered the petitioner CIR to refund to the Cebu Portland Cement Company, respondent, P 359,408.98 representing overpayments of ad valorem taxes on cement sold by it. Execution of judgement was opposed by the petitioner citing that private respondent had an outstanding sales tax liability to which the judgment debt had already been credited. In fact, there was still a P4 M plus balance they owed. The Court of Tax Appeals, in holding that the alleged sales tax liability of the private respondent was still being questioned and therefore could not be set-off against the refund, granted private respondent's motion. The private respondent questioned the assessed tax based on Article 186 of the Tax Code, contending that cement was adjudged a mineral and not a manufactured product; and thusly they were not liable for their alleged tax deficiency. Thereby, petitioner filed this petition for review. Issue: Whether or not assessment of taxes can be enforced even if there is a case contesting it.
Held: The argument that the assessment cannot as yet be enforced because it is still being contested loses sight of the urgency of the need to collect taxes as "the lifeblood of the government." If the payment of taxes could be postponed by simply questioning their validity, the machinery of the state would grind to a halt and all government functions would be paralyzed. That is the reason why, save for the exception in RA 1125 , the Tax Code provides that injunction is not available to restrain collection of tax. Thereby, we hold that the respondent Court of Tax Appeals erred in its order.
CHURCHILL v RAFFERTY
1915) Trent J
Plaintiffs put up a billboard on private land in Rizal Province "quite a distance from the road and strongly built". Some residents (German and British Consuls) find it offensive. Act # 2339 allows the defendent, the Collector of Internal Revenue, to collect taxes from such property and to remove it when it is offensive to sight. Court of first Instance prohibited the defendant to collect or remove the billboard.
1.May the courts restrain by injunction the collection of taxes?
2.Is Act # 2339 unconstitutional because it deprives property without due process of law in allowing CIR to remove it if it is offensive?
1.an injunction is an extraordinary remedy and not to be used if there is an adequate remedy provided by law; here there is an adequate remedy, therefore court may not do so.
Writ of injunction by the courts is an extraordinary preventive remedy. Sections 139 and 140 of the Act forbids the use of injunction and provides a remedy for any wrong. Ads cover landscapes etc. safety and morals. multiplicity of suits or a cloud upon title to real estate will result. Billboards are legitimate. There must be a further showing that there are special circumstances such as irreparable injury. as such state must necessarily regulate industries. Practically.sec 100 of act 2339 gives power to the CIR to remove offensive billboards. Now industry is organized along lines which make it possible for large combinations of capital to profit at the expense of socio-economic progress of the nation by controlling prices and dictating to industrial workers wages and conditions of labor. Billboard that cannot be seen by people are useless. taxation. Civil actions like injunction suits are of a special extraordinary character. Those noises and smells though ostensibly regulated for health reason are actually regulated for more aesthetic reasons. Once police power was reserved for common nuisances. comfort. State interferes with private property through. Only under the last are the benefits derived from the maintenance of a healthy economic standard of society and aka damnum absque injuria. etc. RATIONALE: 1. signboards after due invstigation. Ordinary (adequate) remedies are in the law itself. and such is the usual course in bringing suits against illegal(?) taxes. whether legal or illegal. therefore can be regulated by police power. The question becomes is that a reasonable exercise of police power affecting the advertising industry? Police power is reasonable insofar as it properly considers public health. It is said par 2 sec 56 Act 136 confers original jurisdiction upon CFI to hear and determine all civil actions but civil actions at that time had a well-defined meaning. The state will not function since taxes are not paid (and judges will become unpaid!). they are not garbage but can be offensive in certain circumstances. Other courts in US hold the view that police power cannot interfere with private property rights for purely aesthetic purposes. no law nor jurisprudence that says it is not allowed to sue after having paid the tax. Various industries have regulated and even offensive noises and smells coming from those industries. The legislature had already defined the only action previously and that is the payment of the tax under protest then suit. Section 139 also does not diminish power of the courts because the power is still there if there is no adequate remedy available but sec 140 gives an adequate remedy. Collector v Reyes – NO DIGEST . State may interfere in public interest but not final. There is. safety. The basic idea of civil polity in US is gov't should interfere with individual effort only to the extent necessary to preserve a healthy social and economic condition of society. But this court is of the opinion that unsightly advertisements which are offensive to the sight are not dissociated from the general welfare of the public. eminent domain and police power. Pay it under protest. it also deprives them of property without due process of law and it diminishes the power of the courts_. if the courts can do so then there will be an insane number of suits enjoining the collection of taxes by tax avoiders. cannot be restrained by the courts by injunction. also general social and economic life of the nation. 2. Court is final. Taxes. As to the diminishment of power of the courts. What is more aesthetic than sight which the ad industry is wooing us with.unsightly advertisements which are offensive to the sight are not dissociated from the general welfare of the public.2. it's void. the Philippine courts never had the power to restrain the collection of taxes by injunction. blahblahblah (consti1). signs. of course. and act is constitutional. If nothing can justify a statute. _Plaintiffs say that those sections are unconstitutional because by depriving taxpayers remedy. It has increased the toll on life and affects public health. The success of billboards lie not upon the use of private property but on channels of travel used by the general public. Police power has been expanding.
we find the action of the court justified under section 11 of Republic Act No. Trinidad. even if it refers to a collection of by court action. which will not be granted while the rights between the parties are undetermined.. fee. and it is a ruling laid down in this jurisdiction that the authority to issue injunction is “limited.Collector v Avelino – Ratio: hile the law is that “No court shall have authority to grant an injunction to restrain the collection of any national internal revenue tax. 591. Sarasola vs. to those cases where there is no ‘plain. or charge imposed by this code” (Section 305 of the National Internal Revenue Code). however. adequate. for what the court merely enjoined is the enforcement by distraint and levy which was found to be in violation of the law. as in other cases where equitable relief is sought. except in extraordinary cases where material and irreparable injury will be done”. distraint. That when in the opinion of the Court the collection by the Bureau of Internal Revenue or the Commissioner of Customs may chanroblesvirtuallawlibrary . 1125. What is prohibited is the injunction against judicial collection which is not the case here. In any event. 40 Phil. which cannot be compensated in damages ” (Churchill and Tait vs. 252). however. levy.. which provides: cralaw chanroblesvirtuallawlibrary “No appeal taken to the Court of Tax Appeals from the decision of the Collector of Internal Revenue or the Collector of Customs shall suspend the payment. these authorities are not here controlling. 32 Phil. and complete remedy at law’ . Rafferty. and/or sale of any property of the taxpayer for the satisfaction of his tax liability as provided by existing law: Provided. 580. for we are not here concerned with an injunction to restrain the collection of tax but with one to restrain the exercise of the right to collect it by distraint and levy.
Case No. In both cases. It is true that the court did not require the taxpayer to deposit the amount claimed or to file a bond as required by law before granting the relief. rule or regulations or part thereof. P. inconsistent with the provisions of this Act is hereby repealed” (section 21). It will be noted in our resolution granting the injunction . To require a bond under such a situation would indeed be illogical and improper. at any stage of the proceeding. This section must be deemed to have modified section 305 of the National Internal Revenue Code in view of the repealing clause contained in said Act to the effect that “Any law or part of law. 42). suspend the collection and require the taxpayer either to deposit the amount claimed or file a surety bond for not more than double the amount with the court.jeopardize the interest of the Government and/or the taxpayer the Court at any stage of the proceeding may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court. A. The following observations made by the Court of Tax Appeals are correct: chanroblesvirtuallawlibrary “‘The facts and the questions of law involved in this incident are no different from those involved in the petition for injunction in the case of A. the Collector of Internal Revenue employed summary methods of collection beyond the three year period of limitation fixed in the aforesaid section of the National Internal Revenue Code. Reyes (C.. but such action is justified considering that the court found the action of the Collector to be contrary to law. T. or any executive order.” It therefore appears from the above that when in the opinion of the court the collection of the tax by the Collector of Internal Revenue may jeopardize the interest of the taxpayer it may.
after three years from the time the taxpayer has filed his income tax returns or from the time when he should have filed the same. P. we may in the sound use of our discretion suspend by injunction the collection of taxes by the Collector of Internal Revenue and at the same time not require the tax-payer to file a bond if the method employed by the Collector of Internal Revenue in the collection of the tax is not sanctioned by . supposing that under those circumstances in the Reyes case as well as in the present one. the taxpayer for one reason or another fails or refuses to file the bond fixed by this Court? Are we to allow then the Collector of Internal Revenue after such failure on the part of the taxpayer to file the required bond. Reyes case that no bond was required of the Petitioner to guarantee the payment of the deficiency income tax demanded by the Respondent. P. Reyes the filing of any bond as a condition precedent to the granting of the preliminary injunction on good grounds. Moreover.prayed for in the A. Having held in said case as we are holding in the case at bar that the Collector of Internal Revenue cannot. it would seem illogical and inconsistent on our part on the other hand to require the filing of a bond as a condition precedent to the enjoining of such act or acts by the Collector of Internal Revenue which he have held to be illegal. to go on with the summary collection of the assessment thru administrative methods which methods we have held to be in violation of the provisions of the National Internal Revenue Code? We believe and so hold that under section 11 of Republic Act No. make any summary collection of the deficiency income taxes demanded thru administrative methods and that the warrant of distraint and levy as well as the contemplated sale at public auction of the properties of the taxpayer are null and void being as they are in violation of section 51 (d) of the National Internal Revenue Code. We refrained from requiring of the Petitioner A. 1125.
"No appeal taken to the CTA from the decision of the Commissioner . Mode of Appeal. however. which shall hear the case en banc. order or decision of a Division of the CTA may file a motion for reconsideration of new trial before the same Division of the CTA within fifteens (15) days from notice thereof: Provide. "All other cases involving rulings. from the expiration of the period fixed by law to act thereon.law’“. A party adversely affected by a ruling. That with respect to decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court in the exercise of its appellate jurisdiction appeal shall be made by filing a petition for review under a procedure analogous to that provided for under rule 43 of the 1997 Rules of Civil Procedure with the CTA.Any party adversely affected by a decision. That in criminal cases. A Division of the CTA shall hear the appeal: Provided. 2. the Secretary of Finance. 11. EXCEPTION Sec 11 RA 9282 "SEC. the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. . however. Who May Appeal. "Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided. the Commissioner of Customs. orders or decisions filed with the CTA as provided for in Section 7 shall be raffled to its Divisions. ruling or inaction of the Commissioner of Internal Revenue. Effect of Appeal. the general rule applicable in regular Courts on matters of prosecution and appeal shall likewise apply.
No suspension of collection of tax. – Where the collection of the amount of the taxpayer’s liability. levy. 2. Who may file. Rule 12. "In criminal and collection cases covered respectively by Section 7(b) and (c) of this Act. the Government may directly file the said cases with the CTA covering amounts within its exclusive and original jurisdiction. sought by means of a demand for payment. or sale of any property of the taxpayer for the satisfaction of his tax liability as provided under existing laws. and/or sale of any property of the taxpayer for the satisfaction of his tax liability as provided by existing law: Provided. provincial. distraint or sale of any property of the taxpayer.of Internal Revenue or the Commissioner of Customs or the Regional Trial Court. by levy. except as hereinafter prescribed. That when in the opinion of the Court the collection by the aforementioned government agencies may jeopardize the interest of the Government and/or the taxpayer the Court any stage of the proceeding may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court. except as herein prescribed. – No appeal taken to the Court shall suspend the payment. levy. may jeopardized the interest of the Government or the taxpayer. When to file. (RCTA. as the case may be shall suspend the payment. as provided under existing laws. an interested party may file a motion for the suspension of the collection of the tax liability. the Secretary of Trade and Industry and Secretary of Agriculture. distraint. 1a) SEC. city or municipal treasurer or the Secretary of Finance. however. 3. sec. (n) SEC. or by whatever means. distraint. Revised Rules of CTA RULE 10SUSPENSION OF COLLECTION OF TAX SECTION 1. – The motion for the suspension of the collection of the tax may be filed together with the petition for review .
5. 6. upon receipt of the opposition. sec. Contents and attachments of the motion. if uncontroverted. Rule 12. – In the selection and qualification of surety companies. which. Affidavits and other documentary evidence in support thereof shall be attached thereto. or in a separate motion filed by the interested party at any stage of the proceedings. (RCTA. the Court. sec. for the sake of expediency. within five days after receipt of a copy of the motion.or with the answer. except criminal cases. 4) SEC. the adverse party shall. Rule 12. NATURE AND EXTENT OF TAX LIEN . the Court may grant the motion if the movant shall deposit with the Court an amount in cash equal to the value of the property or goods under dispute or filing with the Court of an acceptable surety bond in an amount not more than double the disputed amount or value.M. 2) SEC. and the Court shall give preference to the motion over all other cases. (RCTA. 04-7-02-SC. file an opposition thereto. 7. 3a) SEC. sec. 2004 E. which shall state clearly and distinctly the facts and the grounds relied upon in support of the opposition. 4. – The motion for the suspension of the collection of the tax shall be verified and shall state clearly and distinctly the facts and the grounds relied upon in support of the motion. Rule 12. – The movant shall. both parties shall submit their respective evidence. (RCTA. Hearing of the motion. set the motion for hearing at the next available motion day. Rule 12. would be admissible in evidence as proof of the facts alleged in the motion. motu proprio or upon motion of the parties. if any. – Unless a shorter period is fixed by the Court because of the urgency of the motion. However. sec. 5a) SEC. may consolidate the hearing of the motion for the suspension of the collection of the tax with the hearing on the merits of the case. the parties and the Court shall be guided by Supreme Court Circular A. No. Opposition. Corporate surety bonds. (RCTA. dated July 20. If warranted. At the hearing.
a minimum compromise rate equivalent to ten percent (10%) of the basic assessed tax. with interests. association or insurance company liable to pay an internal revenue tax. partnership. or t (2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax. Authority of the Commissioner to Compromise. 204.SEC. when: (1) A reasonable doubt as to the validity of the claim against the taxpayer exists. a minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax. penalties. joint-account (cuentas en participacion). F. corporation. 219. The compromise settlement of any tax liability shall be subject to the following m minimum amounts: For cases of financial incapacity. Nature and Extent of Tax Lien. Where the basic tax involved exceeds One million . COMPROMISE AND ABATEMENT SEC.The Commissioner may (A) Compromise the Payment of any Internal R Revenue Tax. . That this lien shall not be valid against any mortgagee purchaser or judgment creditor until notice of such lien shall be filed by the Commissioner in the office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located. Abate and Refund or Credit Taxes. and costs that may accrue in addition thereto upon all property and rights to property belonging to the taxpayer: Provided. neglects or refuses to pay the same after demand. the amount shall be a lien in favor of the Government of the Philippines from the time when the assessment was made by the Commissioner until paid.If any person. and For other cases. .
including that on sales of securities.000) or where the settlement offered is less than the prescribed minimum rates.000. All criminal violations may be compromised except: (a) those already filed in court.pesos (P1. or (b) those involving fraud. 6-2000 and 7-2001 Security Bank v CIR: elative to the second issue. SBC claims that based on the terms and conditions of the compromise agreement between it and then BIR Commissioner Tan. (B) Abate or Cancel a Tax Liability. the whole DST assessment for 1983. using the entire 1983 DST deficiency . SBC further claims that the contemporaneous and subsequent acts of revenue officials in accepting its offer of payment. when: (1) The tax or any portion thereof appears to t be unjustly or excessively assessed. or (2) The administration and collection costs involved do not justify the collection of the amount due. is deemed included thereunder. the compromise shall be subject to the approval of the Evaluation Board which shall be composed of the Commissioner and the four (4) Deputy Commissioners. RR-30-2002 (Not accessible) - Implements certain provisions of the Tax Code relative to the compromise settlement of internal revenue tax liabilitiess superseding RR Nos.
15. There is nothing clearer from the plain reading of the first paragraph of the subject compromise agreement than the fact that the only subject matter thereof is the “assessment relating to Non-negotiable Promissory Notes issued prior to October 15. not involving documentary stamp tax on all types of promissory notes issued prior to Oct. 1984 are not included in.assessment. nor .022. Again.857.63 as the tax base. were indicative of the fact that the DST due on said sales of securities for the year 1983 has been duly settled pursuant to the said compromise agreement of August 15. the same compromise agreement expressly reiterated. the exclusions thereto as follows: VI.803. we disagree.” To emphasize the limited scope thereof. 1984. in its Section VI. EXCLUSIONS: Other issues raised in the tax assessments or which may be raised for open and assessed/pre-assessed years respectively. clearly including the sales of securities with repurchase agreement for the year 1983 in the amount of P3. 1988.
while the DST assessed in the latter is on the act of “issuing” promissory notes (taxed under Section 180).affected by this (Emphasis supplied). Besides. compromise.” and this definite meaning is what is deemed incorporated in the compromise agreement entered into by and between SBC and the BIR. which was the subject of the reassessment being questioned in this case. 1984. The DST assessed on the former arises from the act of “selling” securities (presently taxed under Section 176). being limited as it is to DST on promissory notes issued prior to October 15. in gratia argumenti. is definitely not within the scope of the compromise agreement. which does not include “securities. even assuming. The issue of DST assessment on sales of securities with repurchase agreement. unless a different definition is therein . It is evident from the separate provisions governing the two that the law treats these two instruments differently. that promissory notes may be included under the generic term “securities.” securities cannot be included under the specific term “promissory notes” so as to be deemed within the scope of the same compromise agreement. This Court simply cannot agree with SBC that securities and promissory notes for purposes of the subject Compromise Agreement are one and the same thing. To be sure. the term “promissory note” has a definite meaning under the negotiable instruments law.
the BIR requested PNOC to settle the aforementioned tax liability.The same was accepted by BIR Commissioner Bienvenido Tan -Meanwhile.expressly agreed upon. Tan acted with grave abuse of discretion in entering into a compromise agreement with PNOC which immensely lessened his informer’s reward . which was violative of P. 109976 – April 26. PNOC offered to compromise the same by proposing that it be set-off against a claim by NAPOCOR for tax refund/credit (the amount of the tax refund was supposedly a receivable account of PNOC from NAPOCOR) -The proposalwas found premature by the BIR as NAPOCOR’s claim was still under process. questioning the legality of the compromise agreement between the BIR and PNOC -While his Motion for Reconsideration was yet pending with the BIR. 2005 -TirsoSavellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings and yields from the money placements of PNOC. which is not the case.R. Philippine National Oil Company vs Court of Appeals G. Savellano filed a Petition for Review with the CTA claiming Comm. Savellano wrote the BIR to demand payment of the balance of his reward. 44. so PNOC amended its offer and offered to pay an amount representing 30% of the basic tax in accordance with E.O. 1931 (which withdrew all tax exemptions of GOCCs) -Acting on such information. A month after receiving his last installment for the reward. Savellano sought a reconsideration of the decision. to which the BIR (through Comm.Savellano was paid the informer’s reward (15% of the tax collected from PNOC and PNB).D. Tan) replied that Savellano was no longer owed by them as he had already received an amount equal to 15% of the compromise agreement proposed by PNOC.
PNB had become final and unappealable 3. Savellano is entitled to be paid the remainder of his informer’s reward Ratio: . Compromise agreement between PNOC and BIR is void for being contrary to law and public policy 2. The withholding tax assessment vs. Savellano was entitled to the balance of his informer’s reward -The CA concurred with the CTA decision and affirmed the same.-Ultimately. Was the CTA finding that the deficiency withholding tax assessment against PNB was already final and unappealable and unenforceable valid? 3. new BIR Commissioner Jose Ong. hence the case at bar Issue/s: 1. Was the CTA declaration finding the compromise agreement between the BIR and PNOC valid? 2. They likewise ordered that upon payment by PNOC. found meritorious Savellano’s Motion for Reconsideration and ordered the PNB to pay the deficiency withholding tax on the interest earnings from PNOC’s money placements -The CTA later on likewise found the compromise agreement entered into between the BIR and PNOC as without any force and effect. Was the CTA order directing payment of additional informer’s reward for Savellano valid? Held: 1.
Later on. Savellano is entitled to additional informer’s award since the BIR had already collected the full amount of the tax assessment against PNB. 316(1) of the 1977 NIRC) G. (Sec. REPUBLIC 504 S 528 (October 16. and neither was there any tax assessment issued by the BIR vs them. Anghaba din ng Ratio. PNOC and PNB were both silent about their tax liabilities until they were assessed thereon. 2006) FACTS: Proton sold 13 vehicles to Devmark Textile which were paid in tax credit certificates and also acquired other tax credit certificates of Devmark with a total of P 30 M. LIABILITY OF CORPORATE OFFICES AND STOCKHOLDERS Proton Pilipinas v Republic PROTON PILIPINAS vs.1. Nor is there a deficiency assessment present. I think this might be the only or at least the main issue/premise where tax is heavily involved. it was discovered that the tax credit certificates were found to be fake and spurious. PNOC could not apply for a compromise under E. The finance officials and officers of Devmark were sued for Anti-Graft before the Sandiganbayan. (Try to make it more specific or particular by infusing your own understanding of E. duties and taxes to the Bureau of Customs. This is alien to me so I won’t elaborate too much. 44.O. .O. Neither PNOC or PNB conducted self-assessment. 3. 44 because its tax liability was not a delinquent account or a disputed assessment. Proton used the tax credit certificates for payment of customs. PNOC’s tax liability could not be considered a delinquent account because it was not self-assessed as the BIR conducted an investigation after receiving information from Savellano.) 2. grabe. foundation nalangito to make your work easier. The CTA and the CA declared as final and unappealable (and thus unenforceable) the assessment vs PNB since PNB failed to protest it within the 30-day prescribed period.
and COMPROMISE PENALTY SEC. filing a return with an internal revenue officer other than those with whom the return is required to be filed. in addition to the tax required to be paid. any payment has been made on the basis of such return before the discovery of the falsity or fraud: Provided. being a civil aspect of the criminal case. Proton refused payment since the tax collection should be with the Sandiganbayan. (B) In case of willful neglect to file the return within the period prescribed by this Code or by rules and regulations. receipts or income. INTEREST. and not with the RTC and that the collection case in the RTC is a prejudicial question. on or before the date prescribed for its payment. . or (4) Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code or rules and regulations. or the full amount of tax due for which no return is required to be filed. The government is not precluded from pursuing the collection of unpaid customs duties and taxes. It could proceed independently of each other. That a substantial underdeclaration of taxable sales. the Bureau filed a collection case against Proton before the RTC and pursued a criminal case for estafa against Devmark. the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax. (A) There shall be imposed. as . V.Civil Penalties. in the following cases: f (1) Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on the date prescribed. in case. a penalty equivalent to twenty-five percent (25%) of the amount due. or (3) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. IMPOSITION OF SURCHARGE. or in case a false or fraudulent return is willfully made. or a substantial overstatement of deductions.Since the tax credit certificates were found to be fake and spurious. 248. or (2) Unless otherwise authorized by the Commissioner. HELD: The SC ruled that the tax collection case is separate and distinct from the Sandiganbayan case and is not a prejudicial question. In the collection case.
In the case of each failure to file an information return. Failure to File Certain Information Returns. Civil Penalties. unless it is shown that such failure is due to reasonable cause and not to willful neglect. or aids or abets in any manner to evade any such tax or the payment thereof. . in addition to the penalties provided in this Title. receipts or income or for overstatement of deductions. 252. statement or list. or account for and remit such tax. That the aggregate amount to be imposed for all such failures during a calendar year shall not exceed Twenty-five thousand pesos (P25. upon notice and demand by the Commisssioner. SEC. shall render the taxpayer liable for substantial underdeclaration of sales. SEC. keep or supply the same. be paid by the person failing to file. shall. and remit any tax imposed by this Code or who willfully fails to withhold such tax. as mentioned herein. Failure of a Withholding Agent to Collect and Remit Tax. or supply any information required by this Code or by the Commissioner on the date prescribed therefor. be liable to a penalty to the total amount of refunds which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their return. 251. there shall.000). or not accounted for and remitted.Any employer/withholding agent who fails or refuses to refund excess withholding tax shall. be liable upon conviction to a penalty equal to the total amount of the tax not withheld. account for. . however. shall constitute prima facie evidence of a false or fraudulent return: Provided. Failure of a Withholding Agent to refund Excess Withholding Tax. further. receipts or income in an amount exceeding thirty percent (30%) of that declared per return.000) for each failure: Provided. Any person required to withhold. — . in addition to other penalties provided for under this Chapter. RR-12-99 SECTION 4. One thousand pesos (1. SEC. That failure to report sales. or keep any record.determined by the Commissioner pursuant to the rules and regulations to be promulgated by the Secretary of Finance. 250. and a claim of deductions in an amount exceeding (30%) of actual deductions.
receipts or income. a penalty equivalent to twenty-five percent (25%) thereof.1. cdasia 4.1. receipts or income in an amount exceeding thirty percent (30%) of that declared per return. on or before the date prescribed for its payment. receipts or income or for overstatement of deductions. or 4.1 In case of willful neglect to file the return within the period prescribed by the Code. or in case a false or fraudulent return is willfully made. 4.1.2. — There shall be imposed. voluntarily files the said return. or 4. as determined by the Commissioner or his duly authorized representative.2 Section 6 (A) of the Code provides that any tax return filed by a . or a substantial overstatement of deductions. only 25% surcharge shall be imposed for late filing and late payment of the tax in lieu of the above 50% surcharge. the 50% surcharge shall be imposed in case the taxpayer files the return only after prior notice in writing from the Commissioner or his duly authorized representative. as mentioned herein: Provided. in case any payment has been made on the basis of such return before the discovery of the falsity or fraud: Provided. That a substantial underdeclaration of taxable sales. further.2 Unless otherwise authorized by the Commissioner.1. shall render the taxpayer liable for substantial underdeclaration of sales. that the term "willful neglect to file the return within the period prescribed by the Code" shall not apply in case the taxpayer. in any the following cases: 4. the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax. or 4.4. further.1 Twenty-Five Percent (25%) Surcharge. filing a return with an internal revenue officer other than those with whom the return is required to be filed.2. or the full amount of tax due for which no return is required to be filed.4 Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code or rules and regulations. without notice from the Commissioner or his authorized representative.1 Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on the date prescribed. That failure to report sales. shall constitute prima facie evidence of a false or fraudulent return: Provided. and a claim of deductions in an amount exceeding thirty percent (30%) of actual deductions. in which case.3 Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. in addition to the basic tax required to be paid.2 Fifty Percent (50%) Surcharge: 4. Conversely.
" Thus. 1999. 1999 but the taxpayer voluntarily filed his tax return. changed or amended" by the taxpayer "within three (3) years from date of such filing" provided. P129.24 Total amount due (excluding suggested compromise for late filing and late payment of the tax) ========= Only one 25% surcharge shall be imposed for late filing of the return and late payment of the tax. however. without notice from the BIR.000.0415524) ———— ————— P4.155.24 P29. inclusive of surcharge (if applicable) and interest: 5. only on June 30. been actually served upon the taxpayer. has been filed only after issuance of the Letter of Authority for the investigation of the taxpayer's tax return or such amendment has been made in the course of the said investigation. — Illustration: Income tax return for the calendar year 1998 was due for filing on April 15. Mode of Procedures in Computing for the Tax and/or Applicable Surcharge. the taxpayer shall be liable for delinquency penalties consisting of 25% surcharge. from 4-15-99 to 6-30-99 (P100. statement or declaration has.155.000. The tax due per return amounts to P100. — Shown hereunder are illustrative cases for the computation and assessment of the tax. p.taxpayer "may be modified. computed from due date of the tax until date of payment.155. that "no notice for audit or investigation of such return. computed as follows: Calendar Year 1998 Income tax due per return P100. cda SECTION 5.a. if upon investigation. such taxpayer shall remain liable to the 50% civil penalty regardless that the taxpayer has filed his amended tax return.000. plus 20% interest per annum.000.00 times 25%) P25. it is determined that the taxpayer's originally filed tax return is false or fraudulent.24 . In this case. if the said amended tax return.00 Add: 25% surcharge for late filing and late payment (P100.1 Late filing and late payment of the tax. however. in the meantime.000.00 times .00 20% int.
00 times .00 P100. — Illustration: The taxpayer's 1998 income tax return is required to be filed through the authorized agent bank under the jurisdiction of RDO East Makati. 1999. without prior authorization from the BIR.000.00 P25.000 times 50%) P50.155.00 20% int.24 .00 Add: 50% surcharge for willful neglect to file the return and late payment of the tax (P100.000.000.00 ========= 5.00.000.2415524) ————— ————— P24.000.2 The tax return is filed on time but filed through an internal revenue officer other than with whom the return is required to be filed. the taxpayer filed his tax return and paid the tax through the authorized agent bank under the jurisdiction of RDO Davao City.3 Late filing and late payment due to taxpayer's willful neglect. only after the said notice.000.00 P100. The tax due per return is P100.24 P74. he filed his tax return and paid the tax. on June 30.a. fr. — Illustration: The taxpayer did not file his income tax return for the calendar year 1997 which was due for filing on April 15.000.000. 4-15-98 to 6-30-99 (P100.00. He was notified by the BIR of his failure to file the tax return. But.000. p. 1998. for which reason.155. Calendar Year 1997 Income tax due per return P100. Tax due and paid per return is P100.000. Calendar Year 1998 Income tax due per return Add: 25% surcharge ————— Total amount due P125.00 Less: Amount paid ————— Amount still due P25.5.
— As a rule. the basic deficiency income tax . it was disclosed that its deduction.00 P174.000. if the amount due inclusive of penalties is not paid on or before the due date stated on the demand letter. Upon verification of its accounting records.a.00.000. amounting to P100. from gross income. After deduction of income tax paid per return filed. 2: ABC CORPORATION filed its income tax return for calendar year 1997 and paid on time its income tax shown thereunder.00 on April 15. of representation expenses in the amount of P200. Illustration No. LLpr Calendar Year 1997 Tax due per pre-audit P120.000.000. The corporation was duly notified of the said discrepancy through a Preliminary Assessment Notice.24 Less: Amount assessed and paid per tax return filed P100.000. 1999. the income tax due after investigation amounts to P170. from 4-15-98 to 6-30-99 (P20. Said taxpayer was investigated.00 Add: 20% int.05 ========= Illustration No.05 ————— Amount still due P24.000.155.831.00. Upon preaudit of his return. However. no surcharge is imposed on deficiency tax and on the basic tax. 1998. 1: Taxpayer filed on time his income tax return for calendar year 1997 and paid P100.00 did not meet all the statutory requisites for deductibility.Total amount due (excluding suggested compromise for late filing and late payment of the tax) ========= 5.000. p.000.000. the corresponding surcharge shall be imposed. Based on the 35% income tax rate on corporations applicable in the year 1997. The taxpayer is assessed for deficiency income tax in a letter of demand and assessment notice issued on June 30.4 Penalty or penalties for deficiency tax.00 ————— Deficiency income tax P20.00 times .831. it was disclosed that he erroneously computed the tax due.2415524) P4. The correct amount of tax due is P120.
000 times .67 ————— Total amount still due ========= Illustration No. Failing to protest on time against the preliminary assessment notice.2415524) P16.00.00 . excluding penalties.a. At the applicable income tax rate of 35% for the year 1997. amounted to P175.908. upon investigation.amounts to P70. 1999.000.00 Add: 20% int.000.00.00. a formal letter of demand and assessment notice was issued on May 31.000. 1999. p. said corporation is liable for the civil penalties of 50% surcharge for having filed a false or fraudulent return. the deficiency.000. excluding penalties.00. fr. computed as follows: Calendar Year 1997 Income tax due per investigation Less: Income tax paid per return ————— P350.000. However. 4-15-98 to 6-30-99 (P70. requiring payment of the assessment not later than June 30. Calendar Year 1997 Income tax due per investigation Less: Income tax paid per return ————— Deficiency income tax P70.000. On its net income of P1. the income tax due is P350. it was disclosed that its income tax return was false or fraudulent because it did not report a taxable income amounting to another P500.00 P86.00. its income tax amounted to P175. Failing to protest on time against the preliminary assessment notice.000. Deducting its payment per return filed. 3: XYZ CORPORATION filed its income tax return for calendar year 1997 with a net taxable income of P500.000. 1999.00 P175. It was duly informed of this finding through a Preliminary Assessment Notice. per investigation.000. 1999 calling for payment of the deficiency income tax on or before June 30. plus 20% interest per annum on the deficiency.000.000. llcd In this case.67 P170. a formal letter of demand and assessment notice was issued on May 31.908.000.00 P100.000.00.
192. Assuming. p.a. otherwise.000. from 7-1-99 to 7-31-99 (P304. and assuming further that this assessment has already become final and collectible.67 P129.079. the deadline for payment of the assessment.771.00 Total amount due P304.00 times 50%) 20% int. such taxpayer shall be liable for the civil penalties incident to late payment. — In general.271.67 times .771. 4-15-98 to 6-30-99 (P175. in the amount of P304.Deficiency income tax P175.771. further.00 Add: 50% surcharge for filing a fraudulent or false return (P175.67.67 times 25%) P76.46 ————— ————— Total amount due (excluding suggested compromise penalty for late payment) P386.044.0166667) P5.771. In this case. 3.00 times .92 20% interest p. the civil penalties for late payment shall be computed as follows: Calendar Year 1997 Total deficiency income tax assessed on May 31.272.67 Add: 25% surcharge for late payment (P304.54 P81. is not paid by June 30. that the corporation pays its tax assessment only by July 31. Illustration: Based on the above Illustration No. 1999.67 P87.a.000. Scenario 4. such corporation shall be considered late in payment of the said assessment.2415524) ————— ————— P42. 1999 P304. assuming that the calendar year 1997 deficiency income tax assessment against XYZ CORPORATION.67 ========= 5.771.000.13 . the deficiency tax assessed shall be paid by the taxpayer within the time prescribed in the notice and demand.5 Late payment of a deficiency tax assessed. 1999.500. fr.771.
000. — DEF CORPORATION.000. however.000.000.000. cdasia Example: Calendar Year 1998 Income tax due per return P1. in the amount of P1. in four (4) monthly installments. 53 of the Tax Code. 20% interest per annum for the extended payment shall be imposed.000.00 plus P12.500. In this case. computed based on the diminishing balance of the "unpaid amount".500.03 interest) —————— P262. no 25% surcharge shall be imposed for late payment of the tax since its deadline for payment has been duly extended. due to financial incapacity.03 . Conversely. 1999. in which case.03 P12.00 Add: 20% int. — Illustration No.000.a. from 4-15-99 to 5-15-99 (P750. Its request has been duly approved pursuant to Sec.00 times .6 Computation of 20% interest per annum in case of partial or installment payment of a tax liability.500. starting April 15.0166667) —————— Amount due on 5-15-99P762. the taxpayer shall already be treated late in payment.00 —————— Balance as of 4-15-99 P750.03 Less: 2nd installment on 5-15-99 (P250. that the taxpayer's request for extension of the period within which to pay is made on or before the deadline prescribed for payment of the tax due. if such request is made after the deadline prescribed for payment.========= 5.00 Less: 1st installment of the tax on or before 4-15-99 P250. No 25% surcharge on extended payment shall be imposed provided.500.000. even if payment of the delinquency be allowed in partial amortization. requested that it be allowed to pay its income tax liability per return for calendar year 1998. 1: In case extended payment of the tax is duly authorized. pursuant to the provisions of Section 249 (D) of the Code. p. the 25% surcharge shall be imposed. However.00.
333.35 interest) —————— Balance as of 6-15-99 P250.166.000. The BIR informed the corporation of its failure to file its said tax return and required that it file the same.333. from 6-15-99 to 7-15-99 (P250. from 5-15-99 to 6-15-99 (P500. inclusive of the 25% surcharge and 20% interest per annum penalties incident to the said omission.333.00 plus P8. 1999.Balance as of 5-15-99 P500.35 Less: 3rd installment on 6-15-99 (P250.00 P258. Assuming that the BIR demanded payment of the unpaid balance of its tax obligation payable by June 15.000.000. on May 15.35 Add: 20% int. On May 15.68 Add: 25% surcharge for late filing and . 1999. p. p. however. 1999.00 times .166.000. the unpaid balance of the corporation's delinquent income tax shall be computed as follows: Calendar Year 1998 Income tax due per return P1. inclusive of the delinquency penalties.00 P254.000.00 but.68 P4.000. — Example: GHI CORPORATION did not file its final adjustment income tax return for the calendar year 1998 which was due on April 15.333. 1999 it advised that its income tax due for the said year amounts to P1. Hence. due to its adverse financial condition at the moment.000. 2: Computation of tax delinquency in case of partial payment of the tax due without prior BIR authorization for extended payment.000.a.00.0166667) —————— Amount due on 6-15-99P508.00 times . it made a partial payment of P400.000.00 Add: 20% int.a. it will be unable to pay the entire amount.0166667) —————— 4th and final installment on 7-15-99 =========== Illustration No.35 P8.000.
70 times .000. ID.47 ————— Amount still due (exclusive of the suggested compromise penalty for late filing and late payment ========= If the said taxpayer fails to pay the amount of P811. FAILURE TO PAY WITHIN 30 DAYS RENDERS TAXPAYER LIABLE FOR PAYMENT OF 25% SURCHARGE AND 20% INTEREST. the delinquency penalties of 25% surcharge and interest of 20% accrued . the deficiency tax assessment in this case. 1999.111.6 hereof P811.666. only the 20% interest per annum shall be imposed against the taxpayer against the taxpayer.. By reason of petitioner’s default thereon.666. Section 6.666.666. no further 25% surcharge for late payment of the tax shall be imposed. should have been paid within thirty (30) days from receipt thereof. ID.0166667) P14.. 1989. ID.70 Add: 20% interest per annum from 5-15-99 to 6-15-99 (P866.70 P400.late payment P250.70 ————— ————— P1.000.00 20% interest per annum from 4-15-99 to 5-15-99 (P1.00 Amount due as of 5-15-99 Less: Partial payment on 5-15-99 ————— Balance as of 5-15-99 P866. June 15.70 P266.266.17 by June 15..00 times . computed from due date thereof (i.e. which was the subject of the demand letter of respondent Commissioner dated April 11. the 20% interest per annum shall be computed on the diminishing balance thereof. If said taxpayer pays the same on partial payment basis.444.111. 1.000. pursuant to the procedures in the preceding Illustration No. 1999) until paid. Instead..17 Philippine Refining Co vCA 3. DEFICIENCY TAX ASSESSMENT. — As correctly pointed out by the Solicitor General.0166667) P16.666.000.
the penalty and interest are not penal but compensatory for the concomitant use of the funds by the taxpayer beyond the date when he is supposed to have paid them to the Government. COLLECTION OF PENALTY AND INTEREST IN CASE OF DELINQUENCY. The intention of the law is to discourage delay in the payment of taxes due the Government and. the law imposing penalties for delinquencies would be rendered nugatory..from April 11. ID. so we have long held.584. — Tax laws imposing penalties for delinquencies. are intended to hasten tax payments by punishing evasions or neglect of duty in respect thereof. — We have likewise explained that it is mandatory to collect penalty and interest at the stated rate in case of delinquency. NATIONAL INTERNAL REVENUE CODE.. 4. BPI v CIR – none Tambunting Pawnshop v CIR . in this sense.381.892. 1989.25 is but a part of the original assessment of P1. TAX LAWS IMPOSING PENALTIES FOR DELINQUENCIES. 5. and the maintenance of the Government and its multifarious activities will be adversely affected. MANDATORY. The reduced amount of P237.00. ID. INTENDED TO HASTEN PAYMENT OF TAXES. If penalties could be condoned for flimsy reasons. The fact that petitioner appealed the assessment to the CTA and that the same was modified does not relieve petitioner of the penalties incident to delinquency.
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